REPORT & ACCOUNTS
FULL YEAR ENDED 30th JUNE 2017
CONTENTS
Summary Information ........................................................................................................................................4
Chairman’s Statement .................................................................................................................................... 5-6
Strategic Report .............................................................................................................................................. 7-11
Report of the Directors ...............................................................................................................................12-14
Report to Shareholders by the Board on Directors’ Remuneration ...........................................15-16
Corporate Governance ...............................................................................................................................17-22
Statement of Directors’ Responsibilities ................................................................................................... 23
Directors and Advisers..................................................................................................................................... 24
Report of the Independent Auditor ......................................................................................................25-29
Statement of Comprehensive Income ....................................................................................................... 30
Statements of Changes in Equity ........................................................................................................... 31-32
Statements of Financial Position ............................................................................................................33-34
Statements of Cash Flows ........................................................................................................................35-36
Notes to the Financial Statements ........................................................................................................ 37-53
Notice of Meeting ........................................................................................................................................54-55
3
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER SUMMARY INFORMATION
Northamber plc and its subsidiaries are primarily distributors of computers, peripheral equipment and related
services to resellers who then sell on to the general public and corporations – the end users.
The company’s shares were admitted to trading on AIM a market operated and regulated by the London Stock
Exchange under stock symbol “NAR.”
The shares were formerly traded on the full listing of the London Stock Exchange
Summary of last five years’ trading
Revenue
(Loss)/Profit before tax
(Loss)/earnings per share
Net Assets per share
Dividends per share (net)
Years ending 30 June
2017
£’000
57,288
(999)
(3.55)p
64.1p
0.2p
2016
£’000
61,844
(1,233)
(4.38)p
67.9p
0.4p
2015
£’000
65,452
(886)
(3.15)p
72.7p
0.6p
2014
£’000
62,865
(1,155)
(4.10)p
76.4p
0.6p
2013
£’000
77,521
(1,047)
(3.49)p
81.0p
1.05p
4
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
CHAIRMAN’S STATEMENT
Results
Despite advising positive and worthwhile progress at the time of the interim results in March and an
improved second half, it is disappointing to advise overall results hampered by a slower transition than
anticipated and a resultant slight 7.4% revenue loss for the year to 30 June 2017 of £57.3 million versus
£61.8 million a year ago.
Overall margins slipped very slightly from 7.8% to 7.7% as we continue our focus on strategic rather than
volume brands, resulting in the Gross Profit being reduced from £4.8 million to £4.4 million. This also
reflects the slight reduction in total revenues with a fall in vendor rebates on those minimal margin volume
products. More attention to overhead efficiencies on non-strategic, less profitable areas, delivered a
further reduction in both distribution and administration costs, resulting in a £234,000 improvement in the
pre tax loss to £999,000 compared with £1,233,000 for last year.
The loss on operations for the second half of the current year was some 32% lower than the comparative
period last year. This combined with a 13% reduction for the first half year comparison resulted in a total
reduction in the loss on operations being 19% lower for the year compared with the previous year.
At the December 2016 half year, I was once again cautious concerning our long standing product offerings
and am since encouraged by the lower rate of decline in second half revenues compared with the first half;
in the first half revenues fell some 10.8% against the prior year but by only 3.5% in the second half (again
compared to the comparable period).
We had also expected that with the newer product elements showing solid improvement gains, the
profit vs revenue trend would have been more positive, however we were thwarted by some reversals
particularly those affecting the retail IT sector, as noted below.
In my report last October, I mentioned three sections of the business, being Wholesale, Solutions and
Retail. I am pleased to report that there were improvements in the year in both revenue and margins for
the Solutions element. This has a higher level of added value and thus better margins than the other
divisions, plus it is an area where we are confident of the value in continued concentration.
Our volume Wholesale section of the business supported refined focus for Financial year 2017 compared
with 2016. However, as you will be aware the end-user Retail sector in computer related products has been
hit by a number of factors which have affected the revenues and also vendor volume rebates as a whole
and an impact on our overall business this year.
Financial Position
The Financial Position remains strong with unencumbered net assets unchanged at £20 million including
£2 million of fair value over the book value of the property assets. Stock turns for the year have improved
by 11% over the previous year, debtor and creditor days remain satisfactory and within the evolving
business model and the liquidity ratios remain strong. Cash balances at 30 June 2017 were £4.97 million
compared with £5.47 million at 30 June 2016.
Board
It is with deep gratitude and great regret that after many years, we will lose Reg Heath from the board at
the AGM. Reg’s highly respected, very acutely succinct and wise input has always been of the utmost value
and will be missed greatly. We wish Reg and his family all the very best for his retirement. We are currently
meeting with prospective candidates for a non-exec role and will provide further updates in due course.
5
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER Dividend
Based on the continuing strength of the group’s debt free tangible asset base, the board is proposing
to pay an unchanged final dividend of 0.1p per share, at a total cost of £28,159 which will be paid on 18
January 2018.
Staff
All businesses rely on the quality and dedication of their staff, particularly so when that business is
primarily a people to people selling based organisation, as opposed to a manufacturing or on-line
business. We are well served by all our staff and especially by the many long serving members thereof, and
I am very grateful to them all.
Outlook
Further newer activities launched over recent months, have started to deliver more purposeful results, but
what can one say about future prospects when volatile uncertainties now prevail in almost every aspect of
all our lives.
Within the evolving business model, the Board can see opportunities to make a constructive difference
in the short to medium term. We shall continue to strive to maximise those areas where we can achieve
benefits and look after those areas where we already have advantages.
D.M.Phillips
Chairman
1 November 2017
6
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 STRATEGIC REPORT
This report provides an overview of the company’s strategy, its business model and a review of how the
company has performed for the year. It also sets out the principal risks involved in its business and the
financial position of the company at the year end. There are also some comments and observations on the
future prospects for the company.
1. The Company’s Strategy
As explained below in the notes on the business model, the company is not directly involved with the
ultimate users of the products it sells. Acting as a hub through which manufacturers provide products
to resellers for sale to the ultimate end user.
This being the case requires us to develop strategies with both suppliers and resellers to satisfy the
needs of those ultimate users of the products.
Our strategy always has been to assess the requirements of the end users and then source quality
products and services from reliable brand named manufacturers and make them available to resellers
at the best prices in the most efficient time frame. With an ever changing product range it has also been
part of our strategy to support fresh new products which will be attractive to end users.
In addition to the supply of hardware and software products we also ensure that our customers are
provided with the technical support either directly or through the suppliers which they may require to
effectively use the high tech products we sell. Thus ensuring quality of supply and satisfaction to users.
2. The Business Model
The Group has, since its inception, been involved in the distribution of electronics and computer related
products. 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.
3. Key Performance Indicators
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.
7
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER STRATEGIC REPORT (continued)
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
Good Debtors (Net Trade Receivables)
Creditor Days
Net Assets per share
Working Capital Ratio *1
Format
£m
%
Times
Days
£m
Days
Pence
Times
2016-17
57.3
7.67
12.7
48
8.9
41
64.1
1.8
2015-16
61.8
7.79
11.4
41
8.3
38
67.9
1.9
*1 Working Capital Ratio is calculated by adding Inventory and Net Trade Receivables,
divided by Trade Payables
Debtor days have increased due to 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.
4. Performance Review
For some time the company has been following a strategy of change away from the basic hardware
type products which are in the main physically larger type products with relatively low margin and
subject to great price pressure, towards more application intensive type products where there is
greater scope for adding value and gaining margin.
Although this process of change was already initiated in previous periods it was intensified in the
current year and particularly during the second half of the period. However such changes need very
careful planning and implementation to minimise the inevitable consequences which usually includes
not only significant costs upfront before the benefits of the changes are manifest but also some tail off
of some parts of the existing business.
There was a continuation of the move towards consolidation in some parts of the industry, particularly
in relation to those parts of the industry towards the ultimate consumer end of the industry. This also
impacted adversely on the company in the second half of the year, although steps are being taken to
also benefit from this consolidation effect elsewhere.
The underlying changes which have been and are continuing to be made to the structure of the
business will, it is anticipated, make significant improvements in both turnover and margins in due
course, although it will take a little time before they are seen to be fully effective and reflected in
results.
8
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 STRATEGIC REPORT (continued)
5. Financial Review and Position
Turnover decreased by £4.55 million compared with the previous year. The average debtor days
increased from 41 to 48 and the average creditor days increased from 38 to 41.
As a result of the above, our cash balance at the end of financial year was the £0.49 million less than
last year at £4.97m whilst remaining debt free.
Some 44.4% of the Net Assets comprise the depreciated holding value of freehold properties, 27.5%
cash and the balance working capital. The Net Assets were 64.1p per share which represented more
than the highest share price of 34.5p in the year.
6. Principal Risks and Uncertainties
Financial Risks
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. 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.
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.
9
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER STRATEGIC REPORT (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 conjunction 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 21.
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 Statement of Financial
Position. 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.
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.
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.
10
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 STRATEGIC REPORT (continued)
The Company recognises the importance of providing additional services to its customers in relation
to next day deliveries, credit limits, handling queries efficiently and maintaining a strong relationship
with the customer and in this way aims to resist the competitive pressures in the sector.
7. Future Prospects
Your board’s long term approach to investment decisions is well documented and often referenced in
these statements. This approach was continued in the last year as we invested in a significant number
of new staff who joined us with the necessary skills to develop our new focus categories and help
drive the business forward. This coupled with other investments in new vendors, customer acquisition
and our renewed strategy leave us excited about the revenue and margin opportunities for the
coming year as we continue on an accelerated path to recovery and profitability.
We see significant potential in both our existing vendors and categories and the new categories we
are developing and exploring. We will continue our customer-centric focus and ensuring that our
offering and service levels allow our customers to profitably grow their business and consequently
grow ours.
By order of the Board
J.P. Henry
Operations Director
1 November 2017
11
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER REPORT OF THE DIRECTORS
The directors have pleasure in presenting their report and the accounts for the year ended 30 June 2017.
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 2017.
Principal Activities
The group’s and company’s principal activities are those of specialist supply of computer hardware,
computer printers and peripheral products, computer telephony products and other electronic
transmission equipment.
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 Strategic Report.
Corporate Governance
The Corporate Governance Report on pages 17 to 22 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 2017
Ordinary dividends
Previous year’s final dividend paid
Interim paid
2017
£’000
2016
£’000
28
28
56
85
28
113
The final proposed dividend of 0.1p (2016: 0.1p) will be paid on 18 January 2018 to all members on the
register at the close of business on 8 December 2017.
Directors
The current directors of the company are listed on page 24.
Share Capital
At 30 June 2017, the company had 28,158,735 (2016: 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.
12
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
REPORT OF THE DIRECTORS (continued)
Substantial Shareholdings
The company has been notified that the following shareholders held beneficial interest of 3 per cent or
more of the company’s issued share capital at 30 June 2017.
Mr D.M. Phillips
BNY(OCS) Nominees Limited
Mr H.W. Matthews
Mr & Mrs J.Rockliff
Quiros Limited
Purchase of Own Shares
Ordinary Shares of 1p each
61.23%
11.24%
3.57%
3.55%
3.32%
At the end of the year, the directors had authority, under the shareholders’ resolutions of 14 December
2016 to purchase through the market 2,815,874 (2016: 2,815,874) of the company’s ordinary shares at
prices ranging between 1p and 105% (2016: 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 12 December 2017, 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.
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 business-like 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 environmental 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 or more than ten.
A director does not require any shareholding in the company as qualification shares and there is no restriction
on the age of a director.
13
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
REPORT OF THE DIRECTORS (continued)
Appointment and Replacement of Directors (continued)
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 following 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 they 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.
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 2017 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.
By order of the Board
14
S. Yoganathan ACMA
Company Secretary
1 November 2017
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 REPORT TO SHAREHOLDERS BY THE BOARD ON DIRECTORS’
REMUNERATION
Remuneration Committee
The Remuneration Committee comprised the non-executive directors Mr R.F. Heath and Mr G.P. Walters,
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)
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;
c) 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.
Share Options
There are no share option schemes in force in the group or company.
Contracts of Service
The two executive directors, Mr D.M. Phillips and Mr J.P. Henry, have service contracts. 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.
Mr D.M. Phillips
Mr J.P. Henry
- Notice period – six months
- 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.
15
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER REPORT TO SHAREHOLDERS BY THE BOARD ON DIRECTORS’
REMUNERATION
Directors’ Detailed Emoluments
Details of directors’ emoluments are as follows:
Salaries and
Fees
2017
2016
£’000 £’000
Benefits
2017
2016
£’000 £’000
Pension
2017
2016
£’000 £’000
Total
2017
2016
£’000 £’000
Executive
Mr D.M. Phillips
Mr J.P. Henry
Non-Executive
Mr R.F. Heath
Mr G.P. Walters
(from 22 February 2016)
Mr A.G.K. Hamilton
(Resigned on 12 January 2016)
-
79
20
20
0
-
70
18
7
9
12
6
11
6
-
10
-
10
-
-
-
-
-
-
-
-
-
-
-
-
12
95
20
20
0
11
86
18
7
9
119
104
18
17
10
10
147
131
For the year ended 30 June 2017, Mr D.M. Phillips has waived £180,000 of his salary (2016: £180,000 was
waived).
Directors’ Interests
Interests in Shares
Directors in office at 30 June 2017 had the following beneficial interests in the shares of the company:
Ordinary Shares of 1p each
Mr D.M. Phillips
Mr R.F. Heath
Mr J.P. Henry
Mr G.P. Walters
30 June 2017
17,243,055
5,000
-
-
30 June 2016
17,243,055
5,000
-
-
Between 30 June 2017 and 20 October 2017 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 20 October 2017 was 27.5p.
The range of market prices during the year was 30.0p to 34.5p
S. Yoganathan ACMA
By order of the Board
1 November 2017
16
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
CORPORATE GOVERNANCE
The Corporate Governance Report forms part of the Directors’ Report included here on pages 12 to 14.
The Group is committed to high ethical values and professionalism in all its activities. As an essential part
of this commitment the Group recognises the importance of good governance. The Board is accountable
to the company’s shareholders for good governance and this statement and the Directors’ remuneration
report describe how the principles of good governance set out in the UK Corporate Governance Code,
published by the Financial Reporting Council are applied within the company. We do not comply with the
UK Corporate Governance Code. However, we have reported on our Corporate Governance arrangements
by drawing upon best practice available, including those aspects of the UK Corporate Governance Code we
consider to be relevant to the company and best practice.
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 24.
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 24, 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.
17
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER 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 meetings held in the last year.
No of meetings:
Mr David Michael Phillips
Mr John Phelim Henry
Mr Reginald Frank Heath
Mr Geoffrey Paul Walters
Board Meetings
4
4
3
4
18
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 CORPORATE GOVERNANCE (continued)
Board Committees
During the year the Audit Committee comprised of two non-executive directors, Mr R.F. Heath and Mr G.P.
Walters
Audit Committee
The Audit Committee, currently chaired by Mr G.P. Walters, 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 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 2017 annual report and financial statements and the December half yearly and
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 2017 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
19
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER 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 follows its own ethical guidelines and continually reviews its audit team to ensure its
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 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 operational 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 is 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.
20
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 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 Strategic Report and the Directors’ Report on pages 7 to 14. 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 Strategic Report 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.
21
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER CORPORATE GOVERNANCE (continued)
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 February 2016. 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
1 November 2017
22
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Strategic Report, the Directors’ 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. 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.
The directors confirm that:
•
•
in so far as each 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.
D.M. Phillips
Chairman
1 November 2017
23
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER DIRECTORS AND ADVISERS
Non-Executive Directors
Geoffrey Paul Walters *† (Age 65) ACA
Non executive director.
Geoffrey Walters has a vast experience in a wide range of industries and he is a Non executive director of
South Kensington Consultants Ltd.
Reginald Frank Heath *† (Age 76) 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 72)
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 55)
Operations director
John Henry joined Northamber plc in 1992 in the Sales Department. He was promoted to Operations
Director in 2012.
Registered Office
Namber House
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
3140 Rowan Place
John Smith Drive
Oxford
OX4 2WB
24
Bankers
Allied Irish Bank (GB)
Mayfair Branch
10 Berkeley Square
London
W1J 6AA
Barclays Bank plc
6 Clarence Street
Kingston upon Thames
Surrey
KT1 1NY
Atlantic Bank
405 Park Avenue
New York
NY 100022
USA
Nominated Advisor & Broker
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London
E14 5RB
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NORTHAMBER PLC
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Northamber plc (the ‘parent company’) and its subsidiary
(together, the ‘group’) for the year ended 30 June 2017, which comprise the Consolidated Statement of
Comprehensive Income, Consolidated and Company Statements of Changes in Equity, Consolidated and
Company Statements of Financial Position, Consolidated and Company Statements of Cash Flows, and
related notes, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union and, as regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
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 2017 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRS 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group and the parent in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Who we are reporting to
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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us
to report to you where:
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
•
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s or the parent company’s ability to continue to adopt
the going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
25
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NORTHAMBER PLC
(continued)
Overview of our audit approach
• We performed a full scope audit covering Northamber plc (the parent), and
targeted procedures covering Anitass Limited (its subsidiary), focussing on its
freehold property.
• Group materiality was set at £573,000, which represents 1% of the group’s revenue.
• Company materiality was set at £516,000, which represents 90% of group
materiality.
• The key audit matter identified was revenue recognition.
Key audit matters
The graph below depicts the audit risks identified and our assessment of their relative significance, based
on the extent of their financial statement impact and the extent of management judgement.
HIGH
Potential
financial
statement
impact
Quantity of
inventory
Cost of inventory
Carrying value
of inventory
Revenue
recognition
Cost of sales
completeness
Creditor completeness
Management
override of
controls
Trade debtor
existence
LOW
LOW
Extent of management judgement
HIGH
Key Audit Matter
Other reasonably possible risk
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified.
These matters included those that had the greatest effect on the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
26
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 Key Audit Matter
How the matter was addressed in the audit
Risk 1 Revenue recognition
Revenue is recognised in accordance
with the Group’s accounting policy and
International Accounting Standard (IAS) 18:
Revenue.
The revenue recorded by the Group is one
of the key determinants of the Group’s
underlying profitability and is one of the
Group’s Key Performance Indicators.
In addition, under International Standard
on Auditing (ISA) (UK) 240 there is a
presumed risk that revenue may be
misstated due to the improper recognition
of revenue.
Our audit work included, but was not restricted to:
• Understanding the processes through which the
business initiates, records, processes, and reports
revenue transactions;
• Understanding the application of revenue recognition
policies, both in general and for selected complex
contracts;
• Obtaining a breakdown of revenue, and reconciling this
to the trial balance;
• Testing a sample of revenue entries to supporting
documentation, such as invoices, sales orders, and
delivery notes; and
• Obtaining shipping documents close to the year-end,
and checking whether revenues were recognised in the
appropriate period.
The group’s accounting policy on revenue recognition is
shown in note 2, and related disclosures are included in
note 3.
Key observations
No audit findings were noted as a result of our work on
revenues.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We
use materiality in determining the nature, timing and extent of our audit work and in evaluating the results
of that work. We defined materiality as follows:
Materiality Measure
Group
Parent
Financial statements as a
whole
Company materiality was initially set at
£573,000, for the same reasons as group
materiality (the company contains 100%
of group external revenues).
It was subsequently capped at £516,000,
being 90% of group materiality, to en-
sure that we would obtain sufficient and
appropriate evidence to support our
group audit opinion.
Group materiality was set at
£573,000, which represents 1%
of the group’s revenue.
This benchmark is considered
the most appropriate because
it is a stable and prominent key
performance indicator.
Materiality for the current year
is higher than the level used
in the previous year, ended 30
June 2016, due to re-bench-
marking the percentage used
against entities with comparable
scrutiny and complexity.
Performance materiality
used to drive the extent of
our testing
Communication of mis-
statements to the audit
committee
75% of financial statement ma-
teriality, being £430,000.
75% of financial statement materiality,
being £387,000.
£28,650 and misstatements
below that threshold that, in
our view, warrant reporting on
qualitative grounds.
£25,800 and misstatements below that
threshold that, in our view, warrant re-
porting on qualitative grounds.
27
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER Overview of the scope of our audit
Our audit approach was a risk-based approach founded on a thorough understanding of the group’s
business, its environment and risk profile and in particular included the following procedures:
•
•
•
•
•
Evaluating the Group’s internal control environment;
Performing process walkthroughs and documenting the controls covering all of the Key Audit Matters
and Other Risks shown in the graph above;
A full scope audit of the financial statements of the parent company, Northamber plc, which includes
100% of the group’s external revenues;
Targeted procedures covering Anitass Limited, its subsidiary, focussing on its freehold property. This
included agreeing cost to prior years; recalculating depreciation; and reviewing local property values
for potential indications of impairment. The freehold property is the only amount in the Anitass
financial statements which is material to the group and does not eliminate on consolidation; and
Re-performing the consolidation of Anitass Limited and Northamber plc, to check management’s
formulae and ensure the group financial statements are consistent with the audited subsidiary figures.
Other reporting requirements by regulations
The directors are responsible for the other information. The other information comprises the information
included in the annual report set out on pages 4 to 53, other than the financial statements and our
auditor’s report thereon. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us 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 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.
28
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 23, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the
parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Mark Bishop ACA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountant
Oxford
1 November 2017
29
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER NORTHAMBER PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2017
Revenue
Cost of sales
Gross Profit
Distribution costs
Administrative costs
Loss from operations
Investment revenue
Loss before tax
Tax (charge)
Loss for the year and total comprehensive loss
Basic and diluted loss per ordinary share
2017
Total
£’000
57,288
(52,896)
4,392
(3,042)
(2,401)
(1,051)
52
(999)
-
(999)
(3.55)p
Notes
3
4
6
7
9
2016
Total
£’000
61,844
(57,025)
4,819
(3,310)
(2,801)
(1,292)
59
(1,233)
-
(1,233)
(4.38)p
30
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 30 June 2017
Share
Capital
£’000
Share
Retained
Capital
Premium Redemption Earnings
Reserve
Capital
Account
£’000
£’000
£’000
Total
Equity
£’000
Balance at 1 July 2015
281
5,734
1,505
12,946
20,466
Dividends
Transactions with owners
Loss and total comprehensive loss for the year
-
-
-
-
-
-
-
-
-
(113)
(113)
(113)
(113)
(1,233)
(1,233)
Balance at 30 June 2016
281
5,734
1,505
11,600
19,120
Dividends
Transactions with owners
Loss and total comprehensive loss for the year
-
-
-
-
-
-
-
-
-
(56)
(56)
(56)
(56)
(999)
(999)
Balance at 30 June 2017
281
5,734
1,505
10,545
18,065
31
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
NORTHAMBER PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
At 30 June 2017
Share
Capital
£’000
Share
Retained
Capital
Premium Redemption Earnings
Reserve
Capital
Account
£’000
£’000
£’000
Total
Equity
£’000
Balance at 1 July 2015
281
5,734
1,505
11,491
19,011
Dividends
Transactions with owners
Loss and total comprehensive loss for the year
-
-
-
-
-
-
-
-
-
(113)
(113)
(113)
(113)
(1,758)
(1,758)
Balance at 30 June 2016
281
5,734
1,505
9,620
17,140
Dividends
Transactions with owners
Loss and total comprehensive loss for the year
-
-
-
-
-
-
-
-
-
(56)
(56)
(56)
(56)
(1,514)
(1,514)
Balance at 30 June 2017
281
5,734
1,505
8,050
15,570
32
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2017
Non current assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Retained earnings
Equity shareholders’ funds
Notes
2017
Total
£’000
2016
Total
£’000
10
12
13
14
15
16
8,025
7,995
4,176
9,052
4,972
18,200
26,225
(8,160)
(8,160)
18,065
281
5,734
1,505
10,545
18,065
5,006
8,459
5,466
18,931
26,926
(7,805)
(7,805)
19,121
281
5,734
1,505
11,601
19,121
The financial statements on pages 30 to 53 were approved by the board of directors on 1 November 2017
and were signed on its behalf by:
D.M. Phillips J.P. Henry
Chairman
Operations Director
33
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
NORTHAMBER PLC
COMPANY STATEMENT OF FINANCIAL POSITION
At 30 June 2017
Non current assets
Property, plant and equipment
Investments
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Retained earnings
Equity shareholders’ funds
Notes
10
11
12
13
14
2017
Total
£’000
1,900
6,588
8,488
4,176
9,052
4,934
18,162
26,650
2016
Total
£’000
1,810
6,588
8,398
5,006
8,458
5,426
18,890
27,288
15
(11,080)
(10,149)
16
(11,080)
(10,149)
15,570
17,139
281
5,734
1,505
8,050
281
5,734
1,505
9,619
15,570
17,139
The Loss after Tax for the individual parent company was £1,514 million (2016:£1,758 million)
The financial statements on pages 30 to 53 were approved by the board of directors on 1 November 2017
and were signed on its behalf by:
D.M. Phillips J.P. Henry
Chairman
Operations Director
Company Registration number: 01499584
34
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
For the year ended 30 June 2017
Cash from operating activities
Operating (loss) from continuing operations
Depreciation of property, plant and equipment
(Profit) on disposal of property, plant and equipment
Operating (loss)/ profit before changes in working capital
Decrease/(increase) in inventories
(Increase) /decrease in trade and other receivables
Increase) in trade and other payables
Cash generated from operations
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash from investing activities
Cash flows from financing activities
Dividends paid to equity shareholders
Net cash used in financing activities
Net(decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2017
Total
£’000
(1,051)
166
(4)
(889)
830
(593)
355
(297)
-
(297)
52
(197)
4
(141)
(56)
(56)
(494)
5,466
4,972
2016
Total
£’000
(1,292)
167
-
(1,125)
(487)
1,716
7
111
-
111
59
(32)
-
27
(113)
(113)
25
5,441
5,466
35
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
NORTHAMBER PLC
COMPANY STATEMENT OF CASH FLOWS
For the year ended 30 June 2017
Cash from operating activities
Operating (loss) from continuing operations
Depreciation of property, plant and equipment
(Profit) on disposal of property, plant and equipment
Operating (loss) before changes in working capital
Decrease/(increase) in inventories
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash from investing activities
Cash flows from financing activities
Dividends paid to equity shareholders
Net cash used in financing activities
Net(decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2017
£’000
(1,567)
94
(4)
(1,477)
830
(593)
931
(309)
-
(309)
52
(183)
4
(127)
(56)
(56)
(492)
5,426
4,934
2016
£’000
(1,817)
95
-
(1,722)
(487)
1,717
580
88
-
88
59
(32)
-
27
(113)
(113)
2
5,424
5,426
36
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
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
page 55. The nature of the company’s operations and its principal activities are set out in the Strategic
Report and the Directors’ Report on pages 7 to 14.
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 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 2017 or 30 June 2016.
The directors of Anitass Limited, the subsidiary of Northamber Plc, have claimed audit exemption, for
the year ended 30 June 2017 under Section 479A (Subsidiary Companies) of Companies Act 2006. The
Board of Northamber PLC have provided a guarantee on behalf of the Parent Company undertaking
stating that it guarantees Anitass Limited under the section 479C of the Companies Act 2006.
Northamber Plc guarantees all outstanding liabilities to which Anitass Limited is subject at 30 June
2017 until they are satisfied in full and the guarantee is enforceable against Northamber Plc by any
person to whom the subsidiary company is liable in respect of those liabilities
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. Information on those expected
to be relevant to the Group’s financial statements is provided below.
IFRS 9 ‘Financial Instruments’ (2014)
The IASB recently released IFRS 9 ‘Financial Instruments’ (2014), representing the completion of its
project to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. The new standard
introduces extensive changes to IAS 39’s guidance on the classification and measurement of financial
assets and introduces a new ‘expected credit loss’ model for the impairment of financial assets. IFRS 9
also provides new guidance on the application of hedge accounting.
The Group’s management have yet to assess the impact of IFRS 9 on these consolidated financial
statements. The new standard is required to be applied for annual reporting periods beginning on or
after 1 January 2018.
IFRS 15 ‘Revenue from Contracts with Customers’
IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 ‘Revenue’, IAS 11
‘Construction Contracts’, and several revenue-related Interpretations. The new standard establishes
a control-based revenue recognition model and provides additional guidance in many areas not
covered in detail under existing IFRSs, including how to account for arrangements with multiple
performance obligations, variable pricing, customer refund rights, supplier repurchase options, and
other common complexities.
37
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
IFRS15 is effective for reporting periods beginning on or after 1 January 2018. The Group’s management
have not yet assessed the impact of IFRS 15 on these consolidated financial statements.
“IFRS 14 ‘Regulatory Deferral Accounts’ has been issued published by the IASB but not yet adopted by the
EU. It is only applicable to first time adopters of IFRS, and therefore is not applicable Northamber plc.”
“IFRS 16 ‘Leases’ replaces IAS 17 and related Interpretations. It completes the IASB’s project to overhaul
lease accounting. Leases will be recorded on the statement of financial position in the form of a right-
of-use asset and a lease liability. IFRS 16 is effective from periods beginning on or after 1 January 2019.
Management is yet to fully assess the impact of the Standard and therefore is unable to provide quantified
information.”
IFRS 17 ‘Insurance Contracts’ has been issued published by the IASB but not yet adopted by the EU. The
management have not yet assessed any impact on Northamber plc.
Key sources of estimation uncertainty and critical accounting judgements
Estimation uncertainty
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.
Critical accounting judgements
The directors do not consider there to be any critical accounting judgements.
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.
Revenue from the sale of goods is recognised when goods are despatched.
Supplier vendor rebates are deducted from cost of sales or inventory as appropriate when probable
they will be achieved.
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.
Rentals payable under operating leases are charged to profit or loss on a straight line basis over the
term of the relevant lease.
38
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
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.
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 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.
39
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
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
Plant and equipment
4% on freehold buildings, freehold improvements 25% straight line
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.
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.
Consignment stock
40
Consignment stock is not recorded since the risks and benefits associated with the consignment stock
do not pass to the Company. Company held consignment stock on behalf of vendors and the legal
title does not generally pass to the Company until the sale to the end customer by the Company. This
is as per the specified terms in the contracts with the vendors.
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Investments
Investment in subsidiaries is held at cost less any provision for impairment.
Financial instruments
Financial assets are classified as loans and receivables. 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 profit or loss.
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.
41
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Capital Redemption Reserve
– represents the nominal value of shares which have been redeemed
and cancelled.
Retained Earnings
– represents all current and prior period retained profits and losses.
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.
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 2016
Total Segment revenue
Year to 30 June 2017
Total Segment revenue
UK
£’000
61,615
56,996
Other
£’000
229
292
Total
£’000
61,844
57,288
One customer accounted for more than 10% (2016: 10%) of the group’s revenue for the year, being
£7.4m (2016:£8.6m).
42
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
4. Loss from operations
Operating loss is stated after (crediting)/charging:
Foreign exchange (Gain)/Loss
Depreciation of property, plant and equipment
Amounts written off inventory
(Profit) on disposal of property, plant and equipment
Operating lease charges – land and buildings
Fees paid to the company’s auditor
for the audit of the company annual financial statements
for non-audit tax compliance services
2017
£’000
(62)
166
43
(4)
6
48
4
2016
£’000
24
167
18
-
6
42
4
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 £1,514,000 (2016: loss of £1,758,000) 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
2017
Number
36
35
17
2
90
2017
£’000
3,010
315
84
3,409
2016
Number
41
33
17
2
93
2016
£’000
3,220
338
84
3,642
43
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Included in the above is key management personnel compensation of £147,000 (2016: £131,000).
Full details of director’s remuneration are set out in the Report to Shareholders by the Board on
Directors’ Remuneration on page 16. 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.
6.
Investment revenue
Bank interest receivable
Other interest receivable
Rental income
7. Tax on loss/profit on ordinary activities
Current taxation
Charge for the year
2017
£’000
14
-
38
52
2017
£’000
-
Group
Group
2016
£’000
30
-
29
59
2016
£’000
-
The charge for the year can be reconciled to the profit per the Statement of comprehensive income as
follows:
Loss on ordinary activities before tax
2017
£’000
(999)
Tax at the UK corporation tax rate of 19.75% average (2016:20%)
(197)
Other differences
Deferred tax asset not recognised
Total actual amount of charge for the year
29
168
-
The Group has tax losses of £3,942,200 (2016: £3,128,600) to carry forward.
Group
2016
£’000
(1,233)
(247)
31
216
-
44
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
8. Dividends
Amounts recognised as distribution to equity holders in the period:
Dividends paid in year
Final – for year ended 30 June 2016
Interim – for year ended 30 June 2017
2017
2016
Pence Per
Share
0.10
0.10
0.20
£’000
28
28
56
Pence Per
Share
0.30
0.10
0.40
Proposed final for the year ended 30 June 2017
0.10
28
0.10
£’000
85
28
113
28
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:
2017
£’000
2016
£’000
Loss for the year attributable to equity holders of the parent company
(999)
(1,233)
Number of shares
Weighted average number of ordinary shares for the purpose of basic
earnings per share and diluted earnings per share
2017
Number
2016
Number
28,158,735
28,158,735
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. Both basic and diluted
earnings per share have been calculated using the loss attributable to shareholders of the parent
company as the numerator; therefore no adjustments to loss were necessary in 2016 and 2017.
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.
45
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
10. Property, plant and equipment
Land and
Buildings
£’000
Plant and
Equipment
£’000
Group
Cost
At 1 July 2015
Additions
Disposals
At 30 June 2016
Depreciation
At 1 July 2015
Depreciation charge for the year
Disposals
At 30 June 2016
Net book value at 30 June 2016
Group
Cost
At 1 July 2016
Additions
Disposals
At 30 June 2017
Depreciation
At 1 July 2016
Depreciation charge for the year
Disposals
At 30 June 2017
Net book value at 30 June 2017
9,252
-
9,252
1,201
128
-
1,329
7,923
9,252
13
-
9,265
1,329
128
-
1,457
7,808
1,437
32
-
1,469
1,358
39
-
1,397
72
1,469
183
(85)
1,567
1,397
38
(85)
1,350
217
Total
£’000
10,689
32
-
10,721
2,559
167
-
2,726
7,995
10,721
196
(85)
10,832
2,726
166
(85)
2,807
8,025
The directors obtained independent valuations on the land and buildings made on a going concern
basis for existing use terms. The valuer has assessed the fair value of the land and buildings held by
the company to be £9,800,000 (2016: £9,150,000), which exceeds the carrying amount by £1,992,000
(2016: £1,227,000).
46
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Company
Cost
At 1 July 2015
Additions
Disposals
At 30 June 2016
Depreciation
At 1 July 2015
Depreciation charge for the year
Disposals
At 30 June 2016
Net book value at 30 June 2016
Company
Cost
At 1 July 2016
Additions
Disposals
At 30 June 2017
Depreciation
At 1 July 2016
Depreciation charge for the year
Disposals
At 30 June 2017
Net book value at 30 June 2017
Land and
Buildings
£’000
Plant and
Equipment
£’000
2,573
-
-
2,573
779
56
-
835
1,738
2,574
-
-
2,574
835
56
-
891
1,683
1,437
32
-
1,469
1,358
39
-
1,397
72
1,469
183
(85)
1,567
1,397
38
(85)
1,350
217
Total
£’000
4,010
32
-
4,042
2,137
95
-
2,232
1,810
4,043
183
(85)
4,141
2,232
94
(85)
2,241
1,900
47
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
11. Investment in group companies
Company
Cost
At 1 July 2016 and 30 June 2017
Total
£’000
6,588
In the opinion of the directors, the 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
Country of
Incorporation
England
England
England
England
% owned
100
99
100
100
Status
Operational
Dormant
Dormant
Dormant
12. Inventories
Goods for resale
Group and Company
2016
2017
£’000
£’000
5,006
4,176
Cost of sales include £52,744,000 (2016:£56,887,000) inventory expensed in the year’s statement of
comprehensive income.
13. Trade and other receivables
Trade receivables
Less provision for impairment of receivables
Group
Company
2017
£’000
9,027
(82)
2016
£’000
8,384
(80)
2017
£’000
9,027
(82)
2016
£’000
8,384
(80)
Net trade receivables
8,945
8,304
8,945
8,304
Other receivables
Prepayments
22
85
48
107
22
85
47
107
9,052
8,459
9,052
8,458
An allowance has been made for estimated at risk amounts from the sale of goods of £82,000 (2016:
£80,000). 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.
48
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
The average days credit is 48 days (2016: 41 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 is 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
Ageing 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
2017
£’000
8
20
56
2016
£’000
262
21
122
84
405
As at 30 June 2017 trade receivables of £82,000 (2016: £80,000) were impaired: the ageing of these
trade receivables was
30 - 60 days past due
60 - 90 days past due
90+ days past due
Total
Group and Company
2016
£’000
-
17
63
2017
£’000
-
7
75
82
80
Trade and other receivables allowance for doubtful debts
Balance at beginning of period
Amounts written off as uncollectable
Potential impairment increase/(reduction)
Total
Group and Company
2016
£’000
2017
£’000
80
(17)
19
82
57
(8)
31
80
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 carrying value of each class of receivable mentioned
above. The group does not hold any collateral as security.
49
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
14. Cash and cash equivalents
Group
Bank balances and cash in hand
2017
£’000
4,972
Cash & cash equivalents in statement of cash flows 4,972
2016
£’000
5,466
5,466
Company
2017
£’000
2016
£’000
4,934
4,934
5,426
5,426
15. Trade and other payables
Trade payables
Inter group payables
Other payables
VAT
Other tax and social security
Accruals and deferred income
Group
Company
2017
£’000
7,155
-
41
642
81
241
2016
£’000
7,162
-
38
290
93
222
2017
£’000
7,155
2,967
41
619
81
217
2016
£’000
7,162
2,376
38
269
93
211
8,160
7,805
11,080
10,149
The financial liabilities shown above are those which were outstanding at 30 June 2017. The average credit
period taken for trade payables is 41 days (2016: 38 days).
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 Strategic Report, to ensure that for all practical purposes creditors are paid in
accordance with the credit terms agreed with the suppliers.
50
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
16. Share capital Group and Company
Number
£’000
At 30 June 2017 and 2016
80,000,000
2,000
Issued and fully paid shares of 1p each
At 30 June 2017 and 2016
28,158,735
281
The company has one class of ordinary shares which carry no right to fixed income.
17. Capital commitments
There were no capital commitments at 30 June 2017 (2016: £Nil).
18. Operating lease arrangements
Minimum lease payments under operating
leases recognised in profit or loss for the year
Group
2017
£’000
2016
£’000
Company
2017
£’000
2016
£’000
6
6
607
607
At 30 June 2017, the group had commitments for future minimum lease payments under non-
cancellable operating leases, which fall due as follows:
One year
Between one and five years
Group
2017
£’000
2016
£’000
6
6
12
6
6
12
Company
2017
£’000
2016
£’000
607
757
607
757
1,364
1,364
The freehold of the warehouse was purchased on 23 April 2012 by Anitass Limited, a 100% subsidiary
of Northamber plc.
51
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
19. Related party transactions
Mr D.M. Phillips is the ultimate controlling party of the company.
During the year, the company paid £601,000 (2016: £601,000) rent to Anitass Limited, a wholly owned
subsidiary. At the yearend Northamber plc owed Anitass Ltd £2,967,000 (2016: £2,376,000).
At the year end, £0.68 million (2016: £0.41 million) was held by the company on Mr D.M. Philips’ behalf.
Interest of £2,714 (2016: £4,594) earned during the year, is included within the balance of £0.68 million
(2016: £0.41 million).
During the year Mr J. Henry purchased his company vehicle with nil book value for £4000.
20. Post balance sheet events
There were no material post balance sheet events, adjusting or non-adjusting.
21. Contingent liabilities
During the year to 30 June 2007, the company granted a 175 year lease for an enterprise zone
investment property in Arbroath.
22. Financial instruments exposure
The interest rate exposure of the financial assets and liabilities of the group and company as at 30 June
2017 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 or equity.
Note 13 above refers to further matters relating to credit risk as does the Strategic Report under the
heading of Financial Risk.
Group
Financial assets – loans and receivables
Cash and cash equivalents:
Sterling
US Dollars (Sterling equivalent)
Euros (Sterling equivalent)
Trade and other receivables
Total
Floating
£’000
Zero
£’000
4,287
615
70
-
4,972
-
-
9,052
9,052
Total
£’000
4,287
615
70
9,052
14,024
52
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Financial liabilities at amortised cost
Trade payables:
Sterling
US Dollars (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
Total
Financial liabilities at amortised cost
Trade payables:
Sterling
US Dollars (Sterling equivalent)
Euros (Sterling equivalent)
Inter Group payables
Other payables
Total
Floating
£’000
Zero
£’000
-
-
-
-
-
6,138
959
58
41
7,196
Floating
£’000
Zero
£’000
4,249
615
70
-
4,934
Floating
£’000
-
-
-
-
-
-
-
-
9,052
9,052
Zero
£’000
6,138
959
58
2,967
41
Total
£’000
6,138
959
58
41
7,196
Total
£’000
4,249
615
70
9,052
13,986
Total
£’000
6,138
959
58
2,967
41
10,163
10,163
The directors estimate that an increase or decrease in annual average interest rates of 0.5% would
increase/decrease profit before tax by approximately £26,000 (2016: £27,000).
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 due within 60 days.
53
REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER
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 12 December 2017 at 12 noon for the following purposes:-
1.
To receive and adopt the company’s accounts for the year ended 30 June 2017 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 2017 be received and approved.
3. To declare a dividend on the ordinary shares of the company.
4. Re-elect Mr J.P.Henry as a director.
5. Re-elect Mr D.M. Phillips as a director.
6. Re-elect Mr G.P. Walters as a director
7.
To re-appoint Grant Thornton UK LLP as auditors and to authorise the directors to fix their
remuneration.
ORDINARY RESOLUTION
8 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 10 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
9 THAT, the directors be authorised to allot equity securities pursuant to Resolution 7 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 12 March 2019 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.
10 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
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 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
Company Secretary
Registered Office:
Namber House
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
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REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 | NORTHAMBER THIS PAGE IS INTENTIONALLY LEFT BLANK
58
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2017 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