Sanderson targets digital retail as growth sector for 2016

RETAIL and manufacturing software and IT provider, Sanderson Group has identified the digital retail sector as one capable of supplying growth opportunities.

The Coventry-based company has adopted a three-year strategy and has an internal business plan which seeks to further develop the group both organically as well as by way of selective acquisitions.

The strategy will see a restructuring of the group’s operations to reflect the new digital opportunities.

In its latest full year results statement, group chief executive Ian Newcombe said the board believed that the volumes of digital retail business offered the group the ability to develop and expand.  

“Revenues derived from the digital retail market have grown from £4.53m in the year ended September 30, 2014 to £5.87m in the year ended September 30, 2015,” he said.  

“Reflecting the growing importance of the group’s digital retail business, going forward, the group intends to report its breakdown of divisional results in terms of a Digital Retail business division and an Enterprise software division, which consist of a manufacturing business and a warehouse and logistics business.”  

The board will continue to invest in its ERP software businesses, to ensure that product offerings continue to both attract new customers as well as maximise and encourage additional investment in system enhancements from existing customers.  

“The combination of more rapid growth available via a Digital Retail division and the steadier growth from the Enterprise Software business is expected to enable the group to meet its strategic targets over the next three years and beyond,” he added.

The company said it had maintained a strong balance sheet, a robust business model built upon long-term relationships with customers generating strong recurring revenues and was well-positioned in its target markets.  

“Together, these factors provide the board with a good level of confidence that, at this early stage of the new financial year, the group will make further progress and deliver trading results which are, at least, in line with market expectations for the year ending September 30, 2016, added Newcombe.

The trading results for the year ended September 30, 2015 were said to be in line with market expectations.

They show group revenue growing to £19.18m (2014: £16.41m) and adjusted operating profit growing to £3.30m (2014: £2.84m), an increase of 16%.

Commenting on the results, chairman, Christopher Winn, said: “Overall, gross margin has been maintained at 85% (2014: 85%), reflecting a continuing emphasis on the supply of Sanderson proprietary software and services. The group’s order book remains strong and at the year-end stood at a robust £2.35m (2014: £2.41m).

“The group’s cash generative business model has enabled Sanderson to invest in excess of £3m during the year to further develop the group’s operations, including £1.91m of consideration and deferred consideration payments in respect of acquired businesses. Following this investment, at September 30, 2015, Sanderson reported a cash balance of £4.61m (2014: £6.16m).”