Rise in half year revenue and profits at software group

SOFTWARE and IT services group Sanderson has attributed an investment in its sales and marketing activities for a rise in half year revenue and profits.

The group, which specialises in multi-channel retail and manufacturing markets in the UK and Ireland, said a pick-up in both its core markets had also helped strengthen results.

Sanderson is headquartered in Coventry and has an operation in Sheffield.

Commenting on the results, chairman, Christopher Winn, said: “The group has made continued progress with revenue improving to £7.94m (2013: £6.37m) and operating profit rising by over 20% to £1.21m (2013: £0.99m).

“The group achieved a very good sales order intake in the period, very much reflecting the investment in the sales and marketing capability and capacity which has been made during the two previous years. 

“Sanderson continues to convert substantially all of its profit into cash and at March 31 had a net cash balance of £5.07m (2013: £4.50m), which represents approximately 10p per ordinary share.”

The financial results were boosted by pre-contracted recurring revenue of £4.41m (2013: £3.96m), making up approximately 56% of total revenue.

There were increases in multi-channel retail division revenue and operating profits to £4.71m (2013: £3.40m) and £0.85m (2013: £0.65m) respectively. Increased business also came from new customers with the trend towards bigger orders. There was a revenue and operating profits contribution of £0.79m and £0.15m from One iota alone.

In the manufacturing division, revenue and operating profits increased to £3.23m (2013: £2.97m) and £0.37m (2013: £0.34m).

Gross margin was maintained at 87%, reflecting a high proportion of delivered and installed proprietary software and other “owned” services.

Pre-tax profit from continuing operations reached £0.78m (2013: £0.85m), while basic earnings per share were down of 1.4p (2013: 1.8p). However, the interim dividend rose 20% to 0.8p per share (2013: 0.65p; 2012: 0.5p).

The strong order book, boosted by new business, rose to £2.47 million at period end (2013: £1.58m).

Seven new multi-channel retail customers were secured during period, including WCF Home Shopping, Astley Clarke and Cloggs; five new customers were added by manufacturing including Prima Foods UK and Rathfinny Estate.

Continued investment in proprietary solutions using mobile technologies helped generate high levels of interest and development activity.

On current trading and prospects, Winn, added: “Whilst the group will continue to invest across all of its businesses, particular emphasis will be placed on further developing the range of solutions for mobile and ecommerce businesses, as well as for the food and drink processing sector. Selective acquisition opportunities will continue to be considered.

“However, in the current year, management intends to focus on delivering ‘on target’ results and on making the 2013 acquisitions of Priam and One iota, successful additions to the group.

“The group’s strong order book, improved market position and the two recent acquisitions provide the board with an expectation that Sanderson will continue to make significant progress during the current financial year.”