Sanderson sees profits rise but economy still a concern
SOFTWARE and IT services group Sanderson has announced improved full year profits on flat revenues, blaming the sales performance on the slow pace of the economic recovery.
The Coventry-based group said it had focused on selling and supplying higher margin services based on its own products and this had resulted in an improved gross margin of 71.7% (2010: 69%). The higher gross profit of £18.95m (2010: £18.63m) helped offset the slight decline in revenues from £26.99m in 2010 to £26.42m in 2011.
Recurring revenues from annual software licences, support and managed service contracts increased to £13.70m, representing 52% of total revenue (2010: £13.66m – 51% of revenue). Operating profit, before the amortisation of acquisition-related intangibles and the charge in respect of share-based payments, increased by 7% to £3.30m (2010: £3.09m). Profit attributable to shareholders increased to £0.80m (2010: £0.27m) resulting in basic earnings per share increasing to 1.9p (2010: 0.6p).
The group said it had gained customers in all of its new product areas and its Warehouse and Factory Automation products have already accounted for nearly £1m of additional new business since launch in 2010. Going forward, it said it believed the group’s Green IT, SaaS and Cloud solutions would further drive growth.
It said it had made good progress since 2009 notwithstanding challenging conditions in its core markets. It said it business model, which is based on strong cash flows and high levels of recurring revenue, provided good resilience in challenging markets and a solid foundation for future growth.
In August, the group announced the refinancing of its term debt and working capital facilities with HSBC, having replaced RBS as its banker. The group said this was achieved ahead of schedule and provided the group with an improved banking arrangement and significant cost savings.
Christopher Winn, chairman, said: “Sanderson has continued to trade well with a good level of momentum across its multi-channel retail and manufacturing businesses. Whilst the group’s trading has continued to be impacted by the slow pace of recovery in the UK economy and more challenging trading conditions on the high street, the new products and services introduced over the last two years have driven the improvement in the group’s trading performance.”
Looking ahead, the board said it remained cautious in its outlook due to conditions in the general economy. However, a strong order book and improved competitive market position provided a reasonable level of confidence as it moved into the latest financial year, ending September 30, 2012.
