'Vindication' signs for Northamber despite ugly H1 figures

Sales plummet, losses widen, and margins erode; but benefits of restructure will 'drop to the bottom line' soon, distie vows

Northamber claims it saw signs that its turnaround plan began to bear fruit in its fiscal first half, despite a hefty decline in sales and pre-tax losses that more than doubled.

The publicly listed distributor issued a biannual trading update today revealing that revenue for the six months to the end of 2013 fell 27.25 per cent year on year to £30.2m. Pre-tax losses stood at £690,000, compared with £310,000 in the corresponding period last year, as gross margins slipped from 7.7 to 6.7 per cent.

Total shareholders' funds have also fallen during the past 12 months, from £23.9m to £22.2m, but debt-free cash reportedly increased by more than £2m to £5.3m. The ongoing restructuring has also facilitated a £770,000 decrease in overheads, nearly half of which is attributed to a reduction in personnel.

Despite the headline bad news, chairman David Phillips wrote in his accompanying statement that Northamber's drive to move away from the low-margin PC and hardware markets is showing "encouraging" signs of progress. He said the need to branch out into new areas has been "amply demonstrated by the exit in very recent weeks of more major A-brand vendors".

He admitted that the H1 results "are poor", but stressed that the necessary "wide-ranging and costly restructuring" that spoiled these numbers would begin to bear fruit in the not-too-distant future.

"The vindication of the changes we have made and are making... can be seen as the foundations of a return to a more worthwhile future," he said.

"We are actively taking ongoing actions to both safeguard our position and to develop a situation which will create a much better future for the company. The start of this calendar year has seen notable improvements and enables confidence that progress is being achieved. Significant changes have already been delivered and will drop to the bottom line over coming months and we believe that progress should be reflected in the results as we go along."