Interim Results

Sanderson Group PLC 26 April 2005 FOR IMMEDIATE RELEASE 26 APRIL 2005 SANDERSON GROUP PLC Maiden Interim Results and Board Appointment 'Sanderson continues to deliver growth' Sanderson Group plc ('Sanderson' or 'the Group), the software and IT services business specialising in commercial markets in the UK and Ireland, announces interim results for the period ended 31 March 2005. The Group provides software and IT services to businesses with annual turnovers typically between £5million and £250million. Key Points • Pro forma* turnover up 7% to £7.897million (2004:£7.395million) • Pro forma* adjusted operating profit up 11% to £1.291 million (2004: £1.166million) • Pro forma* adjusted profit before tax up 11% to £1.236million (2004: £1.111million) • Cash Generation was strong with net cash flow from operating activities since flotation at 96% of operating profit • Statutory turnover for the period was £7.897million and loss before tax was £1.001million. • Maiden Interim Dividend of 1.1 pence per Ordinary 10p Share Commenting on the results, Christopher Winn, Chairman, said: 'The Group continues to achieve above average organic growth in its markets, with strong profitability and cash flow underpinning the overall result. Over the last six months, the Group has been successful in gaining a number of new clients as well as increasing the range of products and services which are provided to existing clients. We are pleased to be able to announce a maiden interim dividend and we believe that the continued development of the business and the solid financial performance to date, provide a strong platform for future growth and enhancement of shareholder value'. * Pro forma information shows the results for the Group as if it had been trading in its current form for the full six month period. Board Appointment • New Finance Director, Adrian Frost, appointed with effect from 3 May 2005 Enquiries: Christopher Winn, Executive Chairman Tel: 02476 555466 David O'Byrne, Managing Director Tel: 01709 787787 Sanderson Group plc Paul Vann/Victoria Stephens - Binns & Co PR Limited Tel: 020 7153 1482 CHAIRMAN'S STATEMENT Introduction We are pleased to report our first set of interim results since the admission of the Company's shares to the AIM market on 16 December 2004. Trading Results - Statutory The statutory results to 31 March 2005 (Page 5), represent the trading of the Group from 1 October 2004 to 16 December 2004, when the Group was a private equity backed business and then from 16 December 2004 to 31 March 2005 when the business became a public company. The comparative results for 2003-2004 reflect the trading of the Group from its formation on 23 December 2003 up until 31 March 2004. The results for the 26 weeks to 31 March 2005 show turnover of £7.897million and operating profit, before amortisation, exceptional items, and LTIP charges of £1.317million. Exceptional items in the period of £1.016million represent the expenses and associated reorganisation costs incurred in relation to the admission of Sanderson Group plc to AIM on 16 December 2004. Trading Results - Pro forma We have produced pro forma trading results for the six month period in order to provide a more meaningful comparison of trading. The pro forma results show trading as if the Group had been a public company for the full six month period. Comparative pro forma information is provided for the first six months of the previous financial year. The pro forma financial information shows the Group reporting an increase of 7% in turnover and 11% in operating profit compared with the six month period to 31 March 2004. Pro forma six Pro forma six months months ended 31 ended 31 March 2005 March 2004 (unaudited) (unaudited) £000 £000 Turnover 7,897 7,395 Cost of sales (1,744) (1,466) ----------- ----------- Gross profit 6,123 5,929 Administrative expenses (4,832) (4,763) ----------- ----------- Adjusted operating profit* 1,291 1,166 Interest payable (55) (55) ----------- ----------- Adjusted profit on ordinary activities before 1,236 1,111 taxation* Taxation (370) (333) ----------- ----------- Adjusted profit on ordinary activities after 866 778 taxation* ----------- ----------- Adjusted earnings per share - basic 2.14p 1.92p Adjusted earnings per share - diluted 1.92p 1.72p * Before amortisation, exceptional items and LTIP charges. (Also see Notes 1,2, and 3) Balance Sheet The balance sheet at 31 March 2005 shows net assets of £16.2million. Operating cash flows since Admission equated to 96% of operating profit, an encouraging figure in what is a low quarter for annual licence collections. Bank debt at 31 March 2005, net of cash balances, amounted to £1.1million. This compares to a net bank debt position of £2.0million when the Company's shares were admitted to the AIM market on 16 December 2004. This strong balance sheet and low level of gearing leaves us well positioned to pursue complementary and earnings enhancing acquisitions. Dividends The Board is keen to ensure that shareholders benefit from the trading performance of the Group with a progressive dividend policy. An interim dividend of 1.1 pence per ordinary share is being declared and this dividend will be paid on 24 June 2005 to shareholders on the register at the close of business on 6 May 2005. Business Review The Group has built up a large client base over the last 22 years and has, over the last decade, adopted a revenue model based upon retaining and developing clients by continuously offering new products (with associated technology) and services which provide clients with a good return on investment (ROI). Historically, more than 50% of turnover arises from recurring licence, support and maintenance contracts, with a further 40% of turnover being derived from additional products and services to existing clients. The balance of turnover is derived from new customers. Software Products The Group's software products are designed to meet all the operational needs of a broad range of businesses. Products cover functions common to all customers, from sales and marketing through to finance, human resources, purchasing, production, supply and distribution whilst also addressing specific requirements such as ingredient handling and call centre operations. Sanderson owns and develops the IPR to its software products and licences their use. During the six month period to 31 March 2005, software sales accounted for 76% of Group turnover, compared with 74% during the financial year ended 30 September 2004. Consultancy Services Customers who contract for a new or upgraded system also contract for consultancy services. These cover the provision of experienced Sanderson personnel who assist in the set-up, installation and implementation of the software as well as the provision of general IT advice. Customers also make annual payments for ongoing technical support and maintenance services. During the six months to 31 March 2005, consultancy accounted for 24% of Group turnover. The turnover split by activity is illustrated below: Markets Sanderson continues to benefit from the modest growth in IT spend within its target markets and independent research continues to forecast growth in expenditure on enterprise applications of approximately 5% per annum for the next three years. Sanderson targets the following market sectors: Manufacturing This sector includes the engineering, plastics, electronics, furniture, printing and automotive parts industries. A number of new contracts were won during the period including Butler & Tanner, Michelmersh Brick Holdings, and Promethean Technologies Group. Manufacturing accounted for 40% of Group turnover in the six month period to 31 March 2005 and this compares with 38% in the same period last year. Food & Process Industries This sector includes customers in the food, cosmetics and pharmaceutical industries. New contracts were gained with Food Partners, Memory Lane Cakes, and Edward Billington. Food & Process Industries accounted for 20% of Group turnover in the six month period to 31 March 2005, unchanged from the same period last year. Mail Order The mail order market comprises both Business-to-Business and Business-to-Consumer operations. New contracts were gained with Grattan, M&M Sports, and Machine Mart. Mail order accounted for 22% of Group turnover in the six month period to 31 March 2005 and this compared with 19% for the same period last year. Wholesale Distribution This sector includes customers involved in cash and carry, wines, catering supplies and frozen food businesses. New contracts were gained with First Choice, Management Wholesale and The Soft Drinks Company. Wholesale Distribution accounted for 18% of Group turnover in the six month period to 31 March 2005, and this compares with 23% for the same period last year. Business Model The Group has a robust model reflecting the large client base which it has built up over the last 22 years. During the period new customers accounted for 14% of turnover compared with 5% for the same period last year: Strategy Our strategy is to continue to build on our leading market position as a specialist provider of software and IT services by a combination of continuing organic growth as well as pursuing selective acquisitions to enhance the size, profitability and earnings of the Group. A small number of acquisition opportunities are currently being developed and progressed. Board Changes We are pleased to announce the appointment of Mr Adrian David Frost, aged 37, as Finance Director of Sanderson Group plc, with effect from 3 May 2005. Deborah Wood is leaving the Group to spend more time with her young family and we would like to thank her for her contribution as Finance Director of Sanderson Limited, the Group's main subsidiary, and latterly, as Group Finance Director. Adrian joined Sanderson in October 2000 and played a key role in both the formation of the Group as well as the Sanderson flotation in December 2004. Adrian is currently Finance Director of Talgentra Holdings Limited and its subsidiaries, as well as being a director of Sanderson Support Limited. Past directorships have included Sonarsend plc and its subsidiaries. Staff We would like to thank all our colleagues and staff for their commitment, expertise, and continued dedication in working with our customers and partners to successfully develop our business. Outlook The investment in improved sales and marketing capabilities is reflected in the increased amount of new business and the strengthening sales prospect pipeline. The progress made in enhancing and expanding our product range will also help to generate further sales, both from existing customers as well as competing to win new customers. In addition, we continue to seek suitable acquisitions in order to accelerate earnings growth and to enhance the value of the Group. We continue to develop our business model and are encouraged by the progress to date. The Board anticipates a satisfactory outcome for the full year. Christopher Winn Chairman 26 April 2005 CONSOLIDATED PROFIT & LOSS ACCOUNT for the period ended 31 March 2005 Notes 26 weeks to 14 weeks to 46 weeks to 31.03.05 31.03.04 30.09.04 (unaudited) (unaudited) (audited) £000 £000 £000 Turnover 7,897 3,845 11,880 Cost of sales (1,774) (681) (2,236) -------- -------- -------- Gross profit 6,123 3,164 9,644 Administration expenses (6,506) (2,709) (8,325) -------- -------- -------- Operating profit before 1,317 763 2,204 amortisation, exceptional items and LTIP charges LTIP charges 2 (102) - - Goodwill amortisation 3 (577) (308) (885) Exceptional items 4 (1,016) - - Operating (loss)/profit (378) 455 1,319 Interest on bank debt 5 (119) (92) (493) Non-recurring interest 5 (504) (416) (1,229) Interest payable (623) (508) (1,722) Interest receivable - - 75 -------- -------- -------- Loss on ordinary activities before taxation (1,001) (53) (328) Taxation (15) - (100) -------- -------- -------- Loss on ordinary activities (1,016) (53) (428) after taxation Dividends 6 (485) - - -------- -------- -------- Retained loss for the (1,501) (53) (428) financial period ======== ======== ======== Basic loss per share (pence) 7 (2.3p) (0.1p) (1.0p) Fully diluted loss per share 7 (2.3p) (0.1p) (1.0p) (pence) CONSOLIDATED BALANCE SHEET as at 31 March 2005 Notes 31.03.05 31.03.04 30.09.04 (unaudited) (unaudited) (audited) £000 £000 £000 Fixed assets Intangible assets 3 21,756 22,788 22,211 Tangible assets 879 952 930 --------- -------- --------- 22,635 23,740 23,141 Current assets Stocks 103 103 103 Debtors 8 3,850 3,053 4,145 Cash at bank and in hand 526 1,516 1,784 --------- -------- --------- 4,479 4,672 6,032 Creditors: amounts falling 9 (8,710) (7,222) (9,523) due within one year --------- -------- --------- Net current liabilities (4,231) (2,550) (3,491) --------- -------- --------- Total assets less current 18,404 21,190 19,650 liabilities Creditors: amounts falling 10 (1,010) (19,461) (18,331) due after more than one year Provisions for liabilities (1,208) (1,282) (1,247) and charges --------- -------- --------- Net assets 16,186 447 72 --------- -------- --------- Capital and reserves 16,186 447 72 --------- -------- --------- CONSOLIDATED CASH FLOW STATEMENT for the period ended 31 March 2005 26 weeks to 14 weeks to 46 weeks to 31.03.05 31.03.04 30.09.04 (unaudited) (unaudited) (audited) £000 £000 £000 Net cash inflow from operating 795 1,483 2,846 activities Returns on investments and servicing (119) (92) (418) of finance Taxation - - - Capital expenditure (54) (77) (146) Acquisitions - 202 202 -------- -------- -------- Net cash inflow before financing 622 1,516 2,484 Movement in loans (3,675) - (700) Issue of ordinary shares 5,795 - - Repayment of loan notes (4,000) - - -------- -------- -------- (Decrease)/increase in cash and cash (1,258) 1,516 1,784 equivalents in the period -------- -------- -------- Reconciliation of net cash inflow from operating activities Operating (loss)/profit (378) 456 1,319 Depreciation and amortisation 682 354 1,022 LTIP charges 102 - - Increase in stocks - (8) (8) Decrease in debtors 173 2,156 669 Increase in creditors 216 (1,475) (156) -------- -------- -------- Net cash inflow from operating activities 795 1,483 2,846 -------- -------- -------- Reconciliation of movement in net debt 30.09.04 Cashflow Non-cash 31.03.05 changes £000 £000 £000 £000 Cash at bank 1,784 (1,258) - 526 Debt due within one year (1,000) 340 - (660) Debt due after more than one year (19,560) 7,335 11,215 (1,010) --------- --------- -------- --------- (18,776) 6,417 11,215 (1,144) --------- --------- --------- --------- NOTES TO THE ACCOUNTS 1. The interim results for the periods ended 31 March 2005 and 31 March 2004 are unaudited and do not constitute statutory accounts within the meaning of s.240 of the Companies Act 1985. They comply with relevant accounting standards and have been prepared on a consistent basis using the accounting policies set out in the 2004 statutory accounts. The comparative figures for the financial period ended 30 September 2004 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. 2. LTIP charges represent the amount chargeable to the profit and loss account in the period in respect of the Long Term Incentive Plan, which was put into place at the time of the Admission. An assumption has been made that all awards under the Plan will vest at the end of the three year performance period. 3. The goodwill arose on the acquisition of Sanderson Group plc from Sonarsend plc, the previous parent company, on 23 December 2003. A number of provisional fair value adjustments have been made in arising at this number. These will be reassessed as at 30 September 2005. Goodwill is being written-off over twenty years. 4. Exceptional items represent the expenses and associated preparation reorganisation costs incurred in relation to the admission of Sanderson Group plc to AIM on 16 December 2004. 5. Interest comprises: Period to Period to Period to 31.03.05 31.03.04 30.09.04 (unaudited) (unaudited) (audited) £000 £000 £000 Unsecured loan note interest 329 416 1,229 Write-off of facility fees 175 - - --------- --------- --------- Total non-recurring interest 504 416 1229 Bank loan interest 119 92 493 --------- --------- --------- Total interest payable 623 508 1,722 --------- --------- --------- The unsecured loan notes were repaid following the Admission. 6. Dividends for the period ended 31 March 2005 total £485,000 and represent a proposed interim dividend of 1.1 pence per ordinary share. It is proposed that the interim dividend will be payable on 24 June 2005 to all shareholders on the register at the close of business on 6 May 2005. 7. Actual loss per share is calculated as follows: Period to Period to Period to 31.03.05 31.03.04 30.09.04 (unaudited) (unaudited) (audited) £000 £000 £000 Loss after taxation (1,016) (53) (428) --------- --------- --------- Weighted average number of shares in issue Basic 44,229,846 36,940,299 44,479,495 Dilutive LTIP 990,045 - - Other dilutive option arrangements 1,751,728 - - ----------- ---------- ---------- Diluted 46,971,619 36,940,299 44,479,495 ----------- ---------- ---------- 8. Analysis of debtors 31.03.05 31.03.04 30.09.04 (unaudited) (unaudited) (audited) £000 £000 £000 Trade debtors 3,279 2,491 3,695 Accrued income and prepayments 571 562 450 --------- --------- --------- 3,850 3,053 4,145 --------- --------- --------- 9. Analysis of creditors due within one year 31.03.05 31.03.04 30.09.04 (unaudited) (unaudited) (audited) £000 £000 £000 Bank loans 660 700 1,000 Trade creditors 990 485 484 Corporation tax 115 - 100 Other taxes and social security 752 598 686 Other creditors 399 652 1,229 Proposed dividend 485 - - Accruals and deferred income 5,309 4,787 6,024 --------- --------- --------- 8,710 7,222 9,523 --------- --------- --------- 10. Analysis of creditors due after more than one year 31.03.05 31.03.04 30.09.04 (unaudited) (unaudited) (audited) £000 £000 £000 Bank loans 1,010 5,300 4,170 Unsecured loan notes - 14,161 14,161 --------- --------- --------- 1,010 19,461 18,331 --------- --------- --------- NOTES ON THE PRO FORMA (UNAUDITED) RESULTS 1. The pro forma results for the six months ended 31 March 2005 comprise the actual results of the Sanderson Group for the period, on the basis of current accounting policies, before LTIP charges, goodwill amortisation and exceptional items, which are charged in the statutory results, and on the basis of plc costs having been incurred for the full six months, notional interest calculated as if the current debt level of £1.67million had been in place for the whole period and at an assumed tax rate of 30%. 2. The pro forma results for the six months ended 31 March 2004 comprise the actual results of the Sanderson Group for the period, on the basis of current accounting policies before LTIP charges, goodwill amortisation and exceptional items, which are charged in the statutory results, and on the basis of notional plc costs, notional interest calculated as if the current debt level of £1.67million had been in place for the whole period and at an assumed tax rate of 30%. 3. Adjusted earnings per share on a pro forma basis have also been included as the Directors consider that this figure is helpful for a better understanding of the underlying business. It has been assumed that 40,438,482 (basic) and 45,210,222 (diluted) ordinary shares were in issue during both pro forma periods. INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLC TO SANDERSON GROUP PLC Introduction We have been engaged by the Company to review the financial information set out below and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. The report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, or for the conclusions we have reached. Director's responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. Review work performed We conducted our review having regard to the guidance contained in Bulletin 1999 /4: Review of the interim financial information issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the twenty-six weeks ended 31st March 2005. KPMG Audit Plc Chartered Accountants Leeds 26 April 2005 This information is provided by RNS The company news service from the London Stock Exchange

Companies

Sondrel (Holdings) (SND)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today