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July 4, 1993

RESOLUTELY GLOOMY, NORTHAMBER CHAIRMAN DAVID PHILLIPS SEES FEW GREEN SHOOTS

By CBR Staff Writer

Chessington, Surrey computer, printer and peripheral distributor Northamber Plc had another bad year, largely as a result of discontinued operations, and ended with a pre-tax loss of UKP973,000. This was after writing off UKP636,000 for stock depreciation, against last year’s UKP2.7m loss which included depreciation of UKP736,000. Chairman David Phillips gave a gloomy report of the year, and a pessimistic view of the future. He said trading conditions were bad in 1992, although sales rose 10.6% to UKP103m. But he said orders have slowed since the year end and sees no evidence of an improvement in the depressed personal computer market. While pricing firmed up after sterling left the European Exchange Rate Mechanism, Phillips said discounting has since started again. Northamber laid off over 50 staff in the year, to start the 1993-94 year with under 250 employees. It rationalised operations, and cut its direct sales force by replacing it with a more economical telesales team. It also shut down its Irish subsidiary Studley Ltd, acquired five years ago, which contributed to a UKP1.1m loss from discontinued operations before interest and depreciation, mainly as a result of bad debt. Irish dealers, who traditionally need longer credit terms than their UK counterparts due to the market they sell into, will now buy from Northamber on the same credit basis as those counterparts. Software distributor Xitan Ltd, acquired in 1990, has not been a marvellous success according to analyst Chris McFadden from Northamber stockbroker Smith New Court Securities Ltd. Despite the gloom, the firm ended the year with UKP2.4m in its pocket, against UKP1.3m last time, and recommended a final net dividend of 0.6p per share. McFadden was altogether more bullish and predicted UKP500,000 profits for 1993-94, based on the UKP488,000 profit shown on continuing operations before interest. He said Phillips could double the size of the business, but chooses to play it safe. Post-recession, banks may pull the plug on dealers they previously supported, in the hope of recovering one investment: this leaves distributors very vulnerable.

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