15 April 2019 – trading update
The specialist provider of digital technology solutions, innovative software and managed services for the retail, wholesale, supply chain logistics, food and drink processing and manufacturing market sectors has issued a trading update. The announcement was made ahead of the announcement of its interim results for the six months ended 31 March 2019, which are scheduled to be released on 15 May. Trading results for the six month period ending 31 March 2019, stated under the new IFRS 15 accounting standard, were ahead of management’s expectations. Revenue was approximately £17.0m (2018: £14.6m) and operating profit (stated before the amortisation of acquisition-related intangibles, share-based payment charges and ‘one-off’ non-recurring items) was up around a third to £2.8m (2018: £2.1m). IFRS 15 was adopted with effect from 1 October 2018 on a modified retrospective basis meaning that the prior year comparatives have not been restated. On a comparable basis, excluding the impact of IFRS 15, revenues have risen by over 15% to £16.9m and operating profit (stated before the amortisation of acquisition-related intangibles, share-based payment charges and ‘one-off’ non-recurring items) has increased by over 20% to £2.5m. Sales order intake has continued to grow and the order book was approximately £8.0m at the period-end. Sanderson continues to be cash generative and as at 31 March 2019, the net cash balance stood at £3.29m (31 March 2018: £1.39m), ahead of management’s expectations.
Digital Retail continued to perform strongly in the six month period ending 31 March 2019 and achieved further double-digit revenue and operating profit growth. This division has continued to benefit from increased investment in sales and marketing capability with the sales order intake being above prior year levels and continued strong sales prospects. The Enterprise Division has also continued to make good progress. Sales order intake in the Manufacturing business grew by over 10% against the previous year, with the business which focusses on the food & drink processing sector performing particularly strongly. The Group businesses addressing the supply chain logistics sector, strengthened by the acquisition in November 2017, have made a strong start to the current financial year with continued growth which is expected to continue into the second half of the financial year. The company is sensibly managed and its cautious optimism is likely to see continuing progress moving forwards. The shares have further to go. BUY.