northamber
REPORT & ACCOUNTS
FULL YEAR ENDED 30th JUNE 2018
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
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REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER SUMMARY INFORMATION
CHAIRMAN’S STATEMENT
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.
Results
The company’s shares were admitted to trading on AIM a market operated and regulated by the London Stock
Exchange under stock symbol “NAR.”
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
2018
£’000
58,136
(489)
(1.74)p
62.2p
0.2p
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
After an overly prolonged disappointing period of change, it is some comfort to report that the loss before
tax for the year has been reduced by 51% to £489,000 by comparison with last year’s loss of £999,000.
The changes of focus and direction I have reported over recent years have resulted in improved margins,
albeit blunted by the high costs of staff recruitment into those areas of skills needed to develop the better
quality opportunities, but we expect to see the benefit of this investment in future years.
At the half year, I reported on the increase in turnover for that period compared with the previous and
comparable period, however, our strategy only allowed some of the improvements in achieved gross
turnover to be continued into the second half. We have continued our long standing policy of exiting
empty revenue offered by lower margin, long standing, commoditised product groups. Margin erosion
in this area is illustrated by a global and leading U.S owned competitor, which has just reported that their
own global quarterly net margins have declined by 0.67% and with Europe being their most competitive
region.
Those areas where we did achieve increases in turnover in the second half by comparison with the first half,
were within the newer higher yielding product groups, and these will continue to be our principal focus.
As a consequence, turnover for the year at £58.1 million was only 1.5% higher than the £57.3 million
reported a year ago. More importantly, the Gross Profit margin increased from 7.7% for the year 2016/7 to
7.8% for the year 2017/8.
There were further savings in the overheads, both in Distribution and in Administration in the second half
compared with the first half, so that for the year the total overheads were reduced by £317,000 (5.8%). For
the year the resulting loss from operations was reduced from £1.05 million to £0.58 million.
Investment income increased from £52,000 to £90,000 so that the pre tax loss for the year was £510,000
less at £489,000 compared with £999,000 last year.
Financial Position
Despite the margin pressures resulting from long standing vendors transferring costs to their distribution
business partners, we have always been proud of the strength of our financial position as reflected in the
Balance Sheet.
Despite the all too frequent vagaries and vicissitudes of the U.K.’s general economic conditions, and
those particularly affecting our section of the industry, we have through constant vigilance and careful
monitoring managed to retain our debt free cash resources at around the £5 million level similar to the end
of the previous year.
In doing so we have reduced the working capital used within the business by around £400,000 compared
with last year. This was achieved mainly by reducing each of the levels of inventory and debtors and
retaining a healthy Net Current Assets ratio of 2.4 compared with 2.2 for the previous year.
At end June 2018 the Net Assets per share were 62.2p (2017: 64.1p), based on the Balance Sheet values
including our two unencumbered freehold properties. We therefore maintained a combined healthy
tangible asset position and liquidity position which gives us confidence for the future.
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 2019.
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
Staff
STRATEGIC REPORT
Due to the changes in the profile of our offered product range, we have regrettably lost a few of our staff
during the year. This is never a pleasant situation either for those affected or for those who remain, I am
therefore very grateful for the efforts and dedication of all members of staff throughout the year.
Outlook
At the half way point in the year, and before the overly protracted Brexit confusion, with a single EU
negotiator able to enjoy the mob confusion offered by our own side, I was able to be more optimistic about
the near term than currently possible.
In those areas where we have strength and which in the last couple of years have shown growth and margin
improvement, we should continue to do well. However there are areas where it is extremely difficult to
make any assessment on the future direction, without wishing to become political, the economic and social
uncertainties which abound all around us do not in my opinion augur well for us.
On that basis I am unable to make any realistic assessment of the next year or so. We shall, as we always
have, work as hard as possible to maximise our opportunities and deliver the best results that we can for
our shareholders.
D.M.Phillips
Chairman
19 September 2018
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.
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | 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
Creditor Days
Net Assets per share
Working Capital Ratio *1
Format
£m
%
Times
Days
Days
Pence
Times
2017-18
58.1
7.82
15.9
42
34
62.2
1.9
2016-17
57.3
7.67
12.7
48
41
64.1
1.8
*1 Working Capital Ratio is calculated by adding Inventory and Net Trade Receivables,
divided by Trade Payables
Debtor days have decreased 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 group 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.
STRATEGIC REPORT (continued)
5. Financial Review and Position
Turnover increased by £0.85 million compared with the previous year. The average debtor days
decreased from 48 to 42 and the average creditor days decreased from 41 to 34.
As a result of the above, our cash balance at the end of financial year was the £0.95 million more than
last year at £5.07m whilst remaining debt free.
Some 45.0% of the Net Assets comprise the depreciated holding value of freehold properties, 28.9%
cash and the balance working capital. The Net Assets were 62.2p per share which represented more
than the highest share price of 32.5p 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.
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER 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
19 September 2018
STRATEGIC REPORT (continued)
Credit Risk
The group’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. Given
the current economic climate the company felt it prudent to take out Credit Insurance during the
year.
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 group 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 group 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.
10
Where products are bought in foreign currency, the group manages the risk inherent in such cur-
rencies 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.
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER REPORT OF THE DIRECTORS
REPORT OF THE DIRECTORS (continued)
The directors have pleasure in presenting their report and the accounts for the year ended 30 June 2018.
Substantial Shareholdings
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 2018.
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 2018
Ordinary dividends
Previous year’s final dividend paid
Interim paid
2018
£’000
2017
£’000
28
28
56
28
28
56
The final proposed dividend of 0.1p (2017: 0.1p) will be paid on 18 January 2019 to all members on the
register at the close of business on 7 December 2018.
Directors
The current directors of the company are listed on page 24.
Share Capital
At 30 June 2018, the company had 28,158,735 (2017: 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.
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 2018.
Mr D.M. Phillips
BNY(OCS) Nominees Limited
Mr H.W. Matthews
Mr & Mrs J.Rockliff
Mr M. Chadwick
Purchase of Own Shares
Ordinary Shares of 1p each
61.23%
11.24%
3.57%
3.55%
3.00%
At the end of the year, the directors had authority, under the shareholders’ resolutions of 12 December
2017 to purchase through the market 2,815,874 (2017: 2,815,874) of the company’s ordinary shares at
prices ranging between 1p and 105% (2017: 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 14 December 2018, 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.
12
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.
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | 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.
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.
REPORT TO SHAREHOLDERS BY THE BOARD ON DIRECTORS’
REMUNERATION
Remuneration Committee
The Remuneration Committee comprised the non-executive directors Mr R.F. Heath (to December 2017)
and Mr G.P. Walters. 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)
the basic salaries and benefits available to executive directors of comparable companies;
(b) the need to attract and retain directors of an appropriate calibre and experience; and
(c)
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
competitive salary that attracts and retains management of the highest quality;
(b)
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.
Applications received from disabled persons are given full and equal consideration but are small in number.
The company fulfils its obligations towards employees who are disabled or who become so whilst in the
employment of the company.
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.
By order of the Board
Salaries and Benefits
S. Yoganathan ACMA
Company Secretary
19 September 2018
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
- Notice period – six months
Mr J.P. Henry
- Notice period – six months
14
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.
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
REPORT TO SHAREHOLDERS BY THE BOARD ON DIRECTORS’
REMUNERATION
Directors’ Detailed Emoluments
Details of directors’ emoluments are as follows:
Executive
Mr D.M. Phillips
Mr J.P. Henry
Non-Executive
Mr G.P. Walters
Mr R.F. Heath
(Resigned on
12 December 2017)
Salaries and Fees
2017
2018
£’000 £’000
Benefits
2017
2018
£’000 £’000
Pension
2017
2018
£’000 £’000
Total
2017
2018
£’000 £’000
-
72
20
10
-
79
20
20
12
5
-
-
12
6
-
-
-
10
-
-
-
10
-
-
12
87
20
10
12
95
20
20
102
119
17
18
10
10
129
147
For the year ended 30 June 2018, Mr D.M. Phillips has waived £180,000 of his salary (2017: £180,000 was
waived).
DIRECTORS’ INTERESTS
Interests in Shares
Directors in office at 30 June 2018 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 2018
17,243,055
5,000
-
-
30 June 2017
17,243,055
5,000
-
-
Between 30 June 2018 and 18 September 2018 there have been no changes in the interests of the above
named directors in the shares of the company.
The market price of the company’s shares at 18 September 2018 was 29.0p.
The range of market prices during the year was 26.5p to 32.5p
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 in 2016 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.
S. Yoganathan ACMA
By order of the Board
19 September 2018
16
17
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | 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.
CORPORATE GOVERNANCE (continued)
Audit Committee
The Audit Committee, currently chaired by Mr G.P. Walters, comprised the two non-executive directors
R.F Heath (to December 2017), 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.
Directors’ Attendance
Overview of the Actions Taken by the Audit Committee to Discharge its Duties
The following table shows the attendance of directors at the board meetings held in the last year.
During the year the audit committee:-
Number of Board Meetings
Entitled to Attend
Attended
Mr David Michael Phillips
Mr John Phelim Henry
Mr Reginald Frank Heath
Mr Geoffrey Paul Walters
4
4
2
4
4
4
1
4
•
•
•
•
•
•
•
reviewed the June 2018 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 2018 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
18
19
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | 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 UK LLP also follows its own ethical guidelines and continually reviews its audit team to
ensure its independence is not compromised.
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.
Remuneration Committee
RELATIONS WITH SHAREHOLDERS
At the year end the Remuneration Committee comprised both non-executive director. 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 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.
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.
ACCOUNTABILITY AND AUDIT
Financial Reporting
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.
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.
20
21
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | 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 April 2018. 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
•
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Strategic Report, the Directors’ Report, Remuneration
Report, Corporate Governance 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(IFRSs) 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 judgements 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.
S. Yoganathan ACMA
Company Secretary
19 September 2018
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 director 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
19 September 2018
22
23
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER DIRECTORS AND ADVISERS
Non-Executive Directors
Geoffrey Paul Walters *† (Age 66) 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 Limited.
Reginald Frank Heath *† (Age 77) FCIS, FIMI
Non executive director.
Reginald Heath(resigned on 12 December 2017) 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 73)
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 56)
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
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 2018, which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated and Company Statements of Changes in Equity, the Consolidated
and Company Statements of Financial Position, the Consolidated and Company Statements of Cash
Flows, and notes to the financial statements, 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 2018 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in accordance with the provisions of the Companies
Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
•
•
•
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 company 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
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NORTHAMBER PLC
(continued)
Overview of our audit approach
• We performed a full scope audit of the financial statements of Northamber plc (the
parent company), and targeted procedures on the financial information of Anitass
Limited (its subsidiary), focussing on its freehold property.
• Overall materiality: £581,000, which represents 1% of the group’s revenue.
• The key audit matter identified was revenue recognition.
Key audit matters
The graph below depicts the audit risks identified and their relative significance, based on the extent
of their financial statement impact and the extent of management judgement.
HIGH
Potential
financial
statement
impact
LOW
Quantity of
inventory
Cost of inventory
Carrying value
of inventory
Revenue
recognition
Creditor completeness
Management
override of
controls
Valuation of PPE
Trade debtor existence
Trade debtor recoverability
Key Audit Matter
How the matter was addressed in the audit
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 ISA (UK) 240 ‘The
Auditor’s Responsibilities Relating to
Fraud in an Audit of Financial Statements’
there is a presumed risk that revenue
may be misstated due to the improper
recognition of revenue.
We therefore identified revenue
recognition as a significant risk, which was
one of the most significant assessed risks
of material misstatement.
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
accounting policies and assessing whether revenue was
recognised in accordance with such policies;
Obtaining a breakdown of revenue, and reconciliation 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 to the financial statements, and related
disclosures are included in note 3.
Key observations
Our testing identified that revenue was often not recognised
in accordance with the accounting policies. In response to
this we quantified the potential cut-off error near period-
end. Overall, our assessment did not identify a material error.
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.
LOW
Extent of management judgement
HIGH
Materiality was determined as follows:
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
Materiality Measure
Financial statements
as a whole
Performance materiality
used to drive the extent
of our testing
Communication of
misstatements to the
audit committee
Group
£581,000, 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
we determined for the year
ended 30 June 2017, to reflect
increased revenue during the
year.
Parent
£552,000, which represents 1% of the compa-
ny’s revenue, capped at 95% of group material-
ity. This benchmark is considered the most ap-
propriate because it is a stable and prominent
key performance indicator. It also ensures that
we would obtain sufficient and appropriate
evidence to support our company opinion.
Materiality for the current year is higher than
the level we determined for the year ended 30
June 2017, to reflect increased revenue during
the year and the capping referred to above.
75% of financial statement ma-
teriality, being £436,000.
75% of financial statement materiality, being
£414,000.
£29,050 and misstatements
below that threshold that, in
our view, warrant reporting on
qualitative grounds.
£27,600 and misstatements below that thresh-
old that, in our view, warrant reporting on
qualitative grounds.
27
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER Overview of the scope of our audit
Responsibilities of directors for the financial statements
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 the Key Audit Matter
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 Limited 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 arithmetically correct.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, 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 & 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
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 FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountant
Oxford
19 September 2018
29
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER NORTHAMBER PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
NORTHAMBER PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2018
At 30 June 2018
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
2018
Total
£’000
58,136
(53,589)
4,547
(2,850)
(2,276)
(579)
90
(489)
-
(489)
(1.74)p
Notes
3
4
6
7
9
2017
Total
£’000
57,288
(52,896)
4,392
(3,042)
(2,401)
(1,051)
52
(999)
-
(999)
(3.55)p
Share
Capital
£’000
Share
Retained
Capital
Premium Redemption Earnings
Reserve
Capital
Account
£’000
£’000
£’000
Total
Equity
£’000
Balance at 1 July 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
Dividends
Transactions with owners
Loss and total comprehensive loss for the year
-
-
-
-
-
-
-
-
-
(56)
(56)
(56)
(56)
(489)
(489)
Balance at 30 June 2018
281
5,734
1,505
10,000
17,520
30
31
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
NORTHAMBER PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2018
At 30 June 2018
Share
Capital
£’000
Share
Retained
Capital
Premium Redemption Earnings
Reserve
Account
£’000
£’000
£’000
Total
Equity
£’000
Balance at 1 July 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)
Non current assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Notes
10
12
13
14
Balance at 30 June 2017
281
5,734
1,505
8,050
15,570
Dividends
Transactions with owners
Loss and total comprehensive loss for the year
-
-
-
-
-
-
-
-
-
(56)
(56)
(56)
(56)
Total assets
Current liabilities
Trade and other payables
(1,014)
(1,014)
Total liabilities
Balance at 30 June 2018
281
5,734
1,505
6,980
14,500
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Retained earnings
Equity shareholders’ funds
2018
Total
£’000
2017
Total
£’000
7,894
8,025
3,378
8,145
5,067
16,590
24,484
15
(6,964)
16
(6,964)
17,520
281
5,734
1,505
10,000
17,520
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
The financial statements on pages 30 to 53 were approved by the board of directors on 19 September 2018
and were signed on its behalf by:
D.M. Phillips J.P. Henry
Chairman
Operations Director
32
33
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
COMPANY STATEMENT OF FINANCIAL POSITION
At 30 June 2018
NORTHAMBER PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
For the year ended 30 June 2018
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
2018
£’000
1,841
6,588
8,429
3,378
8,145
5,034
16,557
24,986
2017
£’000
1,900
6,588
8,488
4,176
9,052
4,934
18,162
26,650
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 in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operations
Income taxes paid
15
(10,486)
(11,080)
Net cash from operating activities
16
(10,486)
(11,080)
14,500
15,570
281
5,734
1,505
6,980
281
5,734
1,505
8,050
14,500
15,570
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
2018
Total
£’000
(579)
188
-
(391)
798
907
(1,196)
118
-
118
90
(57)
-
33
(56)
(56)
95
4,972
5,067
2017
Total
£’000
(1,051)
166
(4)
(889)
830
(593)
355
(297)
-
(297)
52
(197)
4
(141)
(56)
(56)
(494)
5,466
4,972
The Loss after Tax for the individual parent company was £1,014 million (2017:£1,514 million)
The financial statements on pages 30 to 53 were approved by the board of directors on 19 September 2018
and were signed on its behalf by:
D.M. Phillips J.P. Henry
Chairman
Operations Director
Company Registration number: 01499584
34
35
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
COMPANY STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
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 in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/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
2018
£’000
(1,103)
115
-
(988)
798
907
(594)
123
-
123
90
(57)
-
33
(56)
(56)
100
4,934
5,034
2017
£’000
(1,567)
94
(4)
(1,477)
830
(593)
931
(309)
-
(309)
52
(183)
4
(127)
(56)
(56)
(492)
5,426
4,934
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 54. 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 2018 or 30 June 2017.
The directors of Anitass Limited, the subsidiary of Northamber Plc, have claimed audit exemption, for
the year ended 30 June 2018 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
2018 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.
36
37
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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.
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 consider the Non-recognition of deferred tax assets in relation to tax losses is a
significant critical accounting judgements. No other critical accounting judgement made by
management.
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.
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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.
Supplier vendor rebates are deducted from cost of sales when probable they will be achieved.
Deferred tax balances have not been discounted.
Investment revenue is accrued on a time basis in accordance with the effective interest rate method.
Property, plant and equipment
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
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
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Depreciation is charged so as to write off the cost of assets less any residual value, other than land, over
their estimated useful lives, using the straight line method, on the following bases:
Land and Buildings:
Freehold premises
4% on freehold buildings, freehold improvements 25% straight line
Plant and equipment
25% straight line
The gain or loss arising on the disposal or retirement of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Material residual value estimates are updated as required, but at least annually.
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.
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 less 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 statement of comprehensive income.
Finance charges, including premiums payable on settlement or redemption and direct issue costs,
are charged to the statement of comprehensive income 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:
Consignment stock
40
Consignment stock is not recorded where 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.
Share Capital
– represents the nominal value of equity shares.
Share Premium
consideration received for equity shares, net of expenses of the share issue.
– represents the excess over nominal value of the fair value of
41
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 2017
Total Segment revenue
Year to 30 June 2018
Total Segment revenue
UK
£’000
56,996
57,661
Other
£’000
292
475
Total
£’000
57,288
58,136
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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
2018
£’000
(56)
188
17
-
6
48
4
2017
£’000
(62)
166
43
(4)
6
48
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 £1,014,000 (2017: loss of £1,514,000) 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
2018
Number
39
31
14
1
85
2018
£’000
2,953
313
82
3,348
2017
Number
36
35
17
2
90
2017
£’000
3,010
315
84
3,409
One customer accounted for more than 10% (2017: 10%) of the group’s revenue for the year, being
£7.6m (2017:£7.4m).
42
43
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Included in the above is key management personnel compensation of £129,000 (2017: £147,000).
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
Rental income
7. Tax on loss/profit on ordinary activities
Current taxation
Charge for the year
2018
£’000
6
84
90
2018
£’000
Group
Group
2017
£’000
14
38
52
2017
£’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
2018
£’000
(489)
Tax at the UK corporation tax rate of 19.00% average (2017:19.75%) (93)
Other differences
Deferred tax asset not recognised
Total actual amount of charge for the year
26
67
-
The Group has tax losses of £4,237,150 (2017: £3,946,190) to carry forward.
Group
2017
£’000
(999)
(197)
29
168
-
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
8. Dividends
Amounts recognised as distribution to equity holders in the period:
Dividends paid in year
Final – for year ended 30 June 2017
Interim – for year ended 30 June 2018
2018
2017
Pence Per
Share
0.10
0.10
0.20
£’000
28
28
56
Pence Per
Share
0.10
0.10
0.20
Proposed final for the year ended 30 June 2018
0.10
28
0.10
£’000
28
28
56
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:
Loss for the year attributable to equity holders of the parent company
(489)
(999)
2018
£’000
2017
£’000
Number of shares
Weighted average number of ordinary shares for the purpose of basic
earnings per share and diluted earnings per share
2018
Number
2017
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 2017 and 2018.
Net Assets per share, as disclosed within the summary of the last five years of trading, is calculated by
dividing the net assets as disclosed in the consolidated statement of financial position by the number
of ordinary shares in issue at the year end.
44
45
NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
10. Property, plant and equipment
Land and
Buildings
£’000
Plant and
Equipment
£’000
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
Group
Cost
At 1 July 2017
Additions
Disposals
At 30 June 2017
Depreciation
At 1 July 2017
Depreciation charge for the year
Disposals
At 30 June 2018
Net book value at 30 June 2018
9,252
13
-
9,265
1,329
128
-
1,457
7,808
9,265
-
-
9,265
1,457
128
-
1,585
7,680
1,469
183
(85)
1,567
1,397
38
(85)
1,350
217
1,567
57
(258)
1,366
1,350
60
(258)
1,152
214
Total
£’000
10,721
196
(85)
10,832
2,726
166
(85)
2,807
8,025
10,832
57
(258)
10,631
2,807
188
(258)
2,737
7,894
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
group to be £9,900,000 (2017: £9,800,000), which exceeds the carrying amount by £2,220,000
(2017: £1,992,000).
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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
Company
Cost
At 1 July 2017
Additions
Disposals
At 30 June 2018
Depreciation
At 1 July 2017
Depreciation charge for the year
Disposals
At 30 June 2018
Net book value at 30 June 2018
Land and
Buildings
£’000
Plant and
Equipment
£’000
2,574
-
-
2,574
835
56
-
891
1,683
2,574
-
-
2,574
891
56
-
947
1,627
1,469
183
(85)
1,567
1,397
38
(85)
1,350
217
1,566
57
(258)
1,365
1,350
59
(258)
1,151
214
Total
£’000
4,043
183
(85)
4,141
2,232
94
(85)
2,241
1,900
4,140
57
(258)
3,939
2,241
115
(258)
2,098
1,841
46
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
11. Investment in group companies
Company
Cost
At 1 July 2017 and 30 June 2018
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
12. Inventories
Goods for resale
Country of
Incorporation
England
England
England
England
% owned
100
99
100
100
Status
Operational
Dormant
Dormant
Dormant
Group and Company
2017
2018
£’000
£’000
3,378
4,176
Cost of sales include £53,588,000 (2017:£52,744,000) 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
2018
£’000
8,097
(85)
2017
£’000
9,027
(82)
2018
£’000
8,097
(85)
2017
£’000
9,027
(82)
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
The average days credit is 42 days (2017: 48 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
2018
£’000
20
89
118
227
2017
£’000
8
20
56
84
As at 30 June 2018 trade receivables of £85,000 (2017: £82,000) 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
2017
£’000
-
7
75
2018
£’000
-
3
82
85
82
Net trade receivables
8,012
8,945
8,012
8,945
Trade and other receivables allowance for doubtful debts
Other receivables
Prepayments
-
133
22
85
-
133
22
85
8,145
9,052
8,145
9,052
An allowance has been made for estimated at risk amounts from the sale of goods of £85,000
(2017: £82,000). 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.
Balance at beginning of period
Amounts written off as uncollectable
Potential impairment increase
Total
Group and Company
2017
£’000
2018
£’000
82
(42)
45
85
80
(17)
19
82
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.
48
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
14. Cash and cash equivalents
Group
Bank balances and cash in hand
2018
£’000
5,067
Cash & cash equivalents in statement of cash flows 5,067
2017
£’000
4,972
4,972
Company
2018
£’000
2017
£’000
5,034
5,034
4,934
4,934
15. Trade and other payables
Trade payables
Inter group payables
Other payables
VAT
Other tax and social security
Accruals and deferred income
Group
Company
2018
£’000
6,054
-
37
541
84
248
2017
£’000
7,155
-
41
642
81
241
2018
£’000
6,054
3,568
37
521
84
222
2017
£’000
7,155
2,967
41
619
81
217
6,964
8,160
10,486
11,080
The financial liabilities shown above are those which were outstanding at 30 June 2018. The average credit
period taken for trade payables is 34 days (2017: 41 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.
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
16. Share capital Group and Company
Number
£’000
At 30 June 2018 and 2017
80,000,000
2,000
Issued and fully paid shares of 1p each
At 30 June 2018 and 2017
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 2018 (2017: £Nil).
18. Operating lease arrangements
Minimum lease payments under operating
leases recognised in profit or loss for the year
Group
2018
£’000
2017
£’000
Company
2018
£’000
2017
£’000
6
6
607
607
At 30 June 2018, 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
2018
£’000
2017
£’000
6
6
12
6
6
12
Company
2018
£’000
2017
£’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.
50
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
19. Related party transactions
During the year, the company paid £601,000 (2017: £601,000) rent to Anitass Limited, a wholly owned
subsidiary. At the year end Northamber plc owed Anitass Limited £3,568,000 (2017: £2,967,000).
At the year end, £178,000 (2017: £680,000) was held by the company on Mr D.M. Philips’ behalf. This
amount has not been included in the cash and cash equivalents balance reported in the Consolidated
Statement of Financial Position at the year end.
Interest of £749 (2017: £2,714) earned during the year, is included within the balance of £178,000
(2017: £680,000).
During the year company paid £13,400 for Administrational and support work to Bernadette Henry, the
wife of the Operational Director Mr. John Henry. In the directors’ opinion the payments are at an arm
length basis.
20. Post balance sheet events
The Company has purchased 802,149 of own shares for the total value of £224,601.72 on 17 August
2018 for cancellation.
21. Contingent liabilities
There are no Contingent liabilities to report.
22. Financial instruments exposure
The interest rate exposure of the financial assets and liabilities of the group and company as at 30 June
2018 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
4,575
462
30
-
5,067
-
-
-
8,145
8,145
Total
£’000
4,575
462
30
8,145
13,212
NORTHAMBER PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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
-
-
-
-
-
5,078
934
42
37
6,091
Floating
£’000
Zero
£’000
4,542
462
30
-
5,034
Floating
£’000
-
-
-
-
-
-
-
-
8,145
8,145
Zero
£’000
5,078
934
42
3,568
37
9,659
Total
£’000
5,078
934
42
37
6,091
Total
£’000
4,542
462
30
8,145
13,179
Total
£’000
5,078
934
42
3,568
37
9,659
The directors estimate that an increase or decrease in annual average interest rates of 0.5% would
increase/decrease profit before tax by approximately £25,000 (2017: £26,000).
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.
52
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 | NORTHAMBER
NOTICE OF MEETING
NOTICE OF MEETING (continued)
Notice is hereby given that the Annual General Meeting of Northamber plc will be held at Namber House,
23 Davis Road, Chessington, Surrey KT9 1HS on 14 December 2018 at 12 noon for the following purposes:-
1.
To receive and adopt the company’s accounts for the year ended 30 June 2018 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 2018 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
(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;
(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.
7.
To re-appoint Grant Thornton UK LLP as auditors and to authorise the directors to fix their
remuneration.
By Order of the Board
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
£182,378 (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 8 above up to
an aggregate nominal amount of £91,188 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 2020 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 2,735,659 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);
54
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.
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NORTHAMBER | REPORT & ACCOUNTS FULL YEAR ENDED 30 JUNE 2018 northamber
Northamber plc • Namber House • 23 Davis Road • Chessington • Surrey • KT9 1HS
UK Telephone: (+44) 020 8296 7000 • Fax: (+44) 020 8296 7060 • www.northamber.com