Sanderson Group feels pinch as customers cut costs

SANDERSON GROUP, the Sheffield-based IT company, said that it expects turnover and profits to be below market expectations as the unstable economy takes its toll on the business.

The group serves mid-sized companies in sectors such as manufacturing, food and process, mail order and wholesale distribution.

The software and IT service specialist said in a trading update ahead of its preliminary results that turnover is expected to be approximately £27.5m, a 52% increase on last year, with adjusted profit before tax of £3m

Both figures are below current market expectations.

The adjusted result from operating activities – including acquisition costs – was up 43% to £2m compared to £1.4m the previous year.

The group said the slowdown occurred against the backdrop of increasing economic uncertainty especially in the weeks immediately prior to the year end – traditionally a very profitable period for the group.

The shortfall against expectations was blamed primarily on a slowdown in the retail businesses – with several customers deferring or withdrawing new projects and related software licence purchases.

Sanderson said revenues and profit derived from the its manufacturing business were in line with expectations as were the results of the multi-channel sales business.

However, the group said cash flows have remained strong with an operating profit to cash conversion rate of around 100% for the year.