Northamber clocks up #1.87m bad debt

Results Distributor counts cost of Electro-Wide administration.

The insolvency and subsequent liquidation of Electro-Wide constituted a 'large proportion' of the #1.87 million bad debt incurred by Northamber in its financial year.

Northamber was understood to be one of the largest trade creditors of the West Glamorgan systems builder after Electro-Wide plunged into administration on 23 February, leaving debts believed to be #3 million (PC Dealer, 25 February).

Although the distributor increased its debtor provision, it refused to reveal the size of the debt.

In a statement, Northamber revealed: 'A large proportion of the bad debt charge arises from the insolvency of one supplier ... the company was in preliminary discussions with the supplier regarding the purchase ... of certain assets of the supplier relating to the assembly of PCs.'

It claimed due diligence work did not suggest financial difficulties or any irregularities, adding: 'Subsequently the supplier was placed into administration ... with an estimated total deficiency of between #2.5 million and #3.1 million.'

Eddie Pacey, credit manager at Ideal Hardware, also a creditor of Electro-wide, said: 'Undoubtedly the bulk of the bad debt provision relates to Electro-Wide.'

Julian Morse, financial analyst at Beeson Gregory, added: 'The bad debt was worrying, but Northamber has taken it on the chin and admitted that it got it wrong.'

Northamber reported higher profit and an improved pre-tax margin for the year ended 30 June.

Despite operating in what David Phillips, chairman of Northamber, described as 'hesitant conditions', profit increased to #8.81 million for the year, compared with #7.93 million for the previous 14-month period.

Pre-tax margin increased to three per cent, up from 2.5 per cent last time around, although revenue was #293 million, down from #314 million the previous year.