Last checked at 30 Nov 2010 07:00
For Immediate Release 30 November 2010
SANDERSON GROUP PLC
Preliminary Results for the year ended 30 September 2010
Positive trading momentum continues
Sanderson Group plc ("Sanderson" or "the Group"), the software and IT services business specialising in the multi-channel retail and manufacturing markets in the UK and Ireland, announces Preliminary Results for the financial year ended 30 September 2010.
Commenting on the results, Chairman, Christopher Winn, said:
"Sanderson has continued to experience the improved level of momentum in its businesses which commenced in the late summer of 2009, achieving an increased order intake and further growth in its order book during the year. Notwithstanding the UK economy's slow recovery from recession and competitive market conditions, the Group has continued to gain an increased value of business from new customers in both its manufacturing and multi-channel retail divisions."
Highlights - Financial
§ Revenues up 8% to £26.99m (2009: £24.90m).
§ Operating profit of £1.69m (2009: loss of £0.33m).
§ *Adjusted operating profit up 12% to £3.09m (2009: £2.76m).
§ Basic earnings per share of 0.6p (2009: loss per share of 2.7p).
§ *Adjusted basic earnings per share of 3.9p (2009: 4.0p).
§ Cash generated from operations up 80% to £3.37m (2009: £1.87m).
§ Net debt at year-end further reduced by £2.12m to £7.84m (2009: £9.96m).
§ Proposed final dividend of 0.35p per share (2009: 0.2p) making total dividend for the year of 0.6p (2009: 0.4p), an increase for the year of 50%.
*Before amortisation of acquisition-related intangibles, exceptional costs, impairment of goodwill and share-based payment charges.
Highlights - Operational
§ Total order intake up 22% to £15.55m (2009: £12.73m) which included £3.96m of orders from new customers (2009: £1.33m).
§ Recurring revenues of £13.66m representing 51% of total revenues (2009: £13.56m, 55% of total revenues).
§ "Business Assurance" and "Factory Automation" product and service suites introduced last year gained further traction.
§ Green IT product suite launched during the year.
§ Multi-channel retail operations increased revenues from both new and existing customers by 10% to £21.17m (2009: £19.16m); 24 new customers during the year, including Hamleys, David Austin Roses, T J Hughes and Links of London.
§ Manufacturing operations increased revenues to £5.83m (2009: £5.73m); 4 new customers including Bromford Industries and Piroto Labelling.
On current trading and prospects, Mr. Winn, added:
"Whilst the Board remains cautious in its outlook and sensitive to conditions in the general economy, the new financial year has started well. The Group continues to be busy and improving business momentum, illustrated by the increasing value of the order book, provides the Board with a good level of confidence moving into the financial year ending 30 September 2011."
Enquiries:
Christopher Winn, Chairman Telephone: 024 7655 5466
Adrian Frost, Finance Director
Paul Vann, Winningtons Financial Telephone: 0117 985 8989 or 07768 807631
Mark Taylor, Charles Stanley Securities
(Nominated Advisor) Telephone: 020 7149 6000
SANDERSON GROUP PLC
Preliminary Results for the year ended 30 September 2010
CHAIRMAN'S STATEMENT
Introduction
Sanderson has continued to experience the improved level of momentum in its businesses which commenced in the late summer of 2009, achieving an increased order intake and further growth in its order book during the year. Notwithstanding the UK economy's slow recovery from recession and competitive market conditions, the Group has continued to gain an increased value of business from new customers in both its manufacturing and multi-channel retail divisions.
The Group has continued to invest resources into both improving service levels, as well as, in the development of new software products, including the Group's managed service offering, which the Board anticipates will further enhance market competitiveness and future profitability.
Revenues increased during the year ended 30 September 2010 and the efficiency measures implemented over the course of the previous year contributed to the increase in the Group's overall profitability. Sanderson has added significantly to its customer base, with a continued focus on retaining and growing its recurring revenues. In addition, the Group has maintained efficient and prudent management of working capital. Strong cash generation during the year has enabled the Group to report a further significant reduction in net debt of more than £2million.
Results
Revenues for the year ended 30 September 2010 increased by 8% to £26.99 million (2009: £24.90 million) with recurring revenues from annual software licences, support and managed service contracts increasing to £13.66 million and representing 51% of total revenue (2009: £13.56 million, 55% of revenue). Operating profit, before the amortisation of acquisition-related intangibles, exceptional costs, impairment of goodwill and before the charge in respect of share-based payments, increased by 12% to £3.09 million (2009: £2.76million). Profit before taxation, before the amortisation of acquisition-related intangibles, exceptional costs, impairment of goodwill and before the charge in respect of share-based payments increased by 79% to £1.91 million (2009: £1.07 million).
Cash generated from operations in the twelve months to 30 September 2010 increased by 80%, to £3.37 million (2009: £1.87 million). The Group remains focused on strong cash generation and net debt has fallen to £7.84 million at 30 September 2010 (2009: £9.96 million) from a peak of £12.46 million at 31 March 2008. Further reductions in net debt form a key part of the Group's plans to strengthen the balance sheet in the short to medium term.
Deferred income increased by 3% from the prior period, to stand at £7.10million at the year end (2009: £6.91 million). Whilst a creditor, deferred income is an important measure of the strength of the Sanderson business model, being the amount of recurring revenue paid in advance but deferred for revenue recognition purposes to future accounting periods.
Business Review
Sanderson provides a wide range of software solutions to the multi-channel retail and manufacturing markets. These solutions comprise primarily the Group's proprietary software often integrated with other market-leading products, which are installed, supported and serviced by Sanderson staff. The efficient provision of cost effective solutions fully supported by the Group's staff, with an emphasis on quality, consistency and reliability, continues to ensure both a very high retention of customers, as well as, acting as an excellent reference base for new customers.
Building the aggregate value of recurring revenues remains a key Group objective. Having developed and organically grown a managed services and hosting business now contributing annual revenue in excess of £3.0 million per annum, the Group is undertaking a further capital investment in the Milton Keynes managed services centre in order to improve the platform for further growth.
The Group has continued to increase its sales and marketing efforts, focusing on the improved account management of existing customers, whilst more aggressively competing and gaining new customers. The new product and services suites of Business Assurance and Factory Automation introduced in the previous year, have continued to gain traction in their respective markets. The introduction in March 2010, of solutions based on the latest technologies in the areas of internet retailing and ecommerce have provided further business impetus. The product portfolios were further enhanced by the launch, in the second half year, of a number of energy saving products, collectively branded " Green IT".
Total order intake for the year was strong at £15.55million compared to £12.73million in the previous financial year, with orders from new customers in the twelve months to 30 September 2010 of £3.96 million (2009: £1.33 million). At 30 September 2010, the order book stood at £3.03 million compared to £1.92 million at 30 September 2009.
Review of multi-channel retail
The Group provides end-to-end, comprehensive IT solutions to businesses operating in retail, mail order, fulfilment and wholesale distribution, and increasingly, to those with an online sales presence. Revenues derived from multi-channel retail operations increased by 10% to £21.17 million (2009: £19.16 million). Activity levels from the larger existing retail customers have continued to be strong, especially in the areas of fraud prevention and PCI compliance. Business from our smaller retail customers, including charities, has begun to recover from the low levels of the previous year.
A total of 24 new customers were gained during the year (2009: 21) including Hamley's, David Austin Roses, TJ Hughes, Aquascutum and Links of London. Large projects were awarded by a number of existing customers, including Wilkinson, The Original Factory Shop, Fenwick and Lakeland.
Order intake was much improved at £12.95 million for the financial year (2009: £10.62 million) and the order book at 30 September 2010 was £2.47m (2009: £1.47 million).
Review of manufacturing
The Group's manufacturing business covers the provision of modern, functionally rich, IT solutions to manufacturing companies which operate primarily in the engineering, plastics, aerospace, electronics, print and food process sectors. Revenues were higher at £5.83 million (2009: £5.73 million) and the most marked recovery in activity was in the area of general manufacturing, especially printing and aerospace.
Four new customers were gained including Bromford Industries (aerospace), Piroto Labelling (print), Susan Day Cakes (food processing) and MacSween of Edinburgh (food processing), compared with three in the twelve months ending 30 September 2009. Recurring revenues continue to be strong, accounting for 61% of total revenue (2009: 66%). The gross margin from this revenue stream covers 83% of divisional overheads (2009: 83%).
Strategy
The Group's concentration on the core markets of multi-channel retail and manufacturing ensure a total focus on developing specialist solutions to customers and prospective customers in these sectors. In addition to the new products and services already introduced (Business Assurance, Factory Automation and Green IT) further new developments are scheduled for introduction during the year. We continue to maintain and to enhance market competitiveness designed to deliver an improved financial performance, which in turn will ensure longer term growth prospects and enable the further reduction of net debt.
Dividend
The Board is pleased with the improvement in trading performance reported for the financial year and whilst continuing to focus on reducing debt levels, it is seeking to return to a progressive dividend policy. Subject to approval at the Annual General Meeting of shareholders, expected to be held on 10 March 2011, a final dividend of 0.35 pence per ordinary share is proposed, making a total of 0.60p for the year (2009: 0.40p). The final dividend will be paid on 25 March 2011 to shareholders on the register at the close of business on 4 March 2011.
Management and staff
The Group Operating Board (constituted in October 2008) and 'new management team', has continued to be instrumental in delivering an improved and improving business performance. In total, the Group employs approximately 270 staff, who have a high level of experience in the specialist markets which the Group addresses. The commitment of staff to the development of the Sanderson business is crucial and we would like to thank all of our staff for their support, commitment and contribution to the Group's progress.
Outlook
The Group's strategy is to be the supplier of choice in target markets by offering modern, functionally rich products, backed by a high quality service, thereby delivering cost effective solutions to customers and long-term growth in earnings and enhanced value to our investors.
The successful introduction of our Business Assurance and Factory Automation solutions has recently been complemented by the introduction of internet retailing, ecommerce and Green IT products. Software as a Service ('SaaS') will be launched during the next quarter. 'SaaS' is defined by TechMarketView LLP, the UK's leading research and analysis business for the technology sector, as "the off-premise provision of applications on demand on a pay-for-use basis by the IP owner". The new SaaS offering will initially target smaller manufacturing businesses looking to move to their first enterprise-wide system, a new sector of the market for Sanderson.
Whilst the Board remains cautious in its outlook and sensitive to conditions in the general economy, the new financial year has started well. The Group continues to be busy and improving business momentum, illustrated by the increasing value of the order book, provides the Board with a good level of confidence moving into the financial year ending 30 September 2011.
Christopher WinnChairman
30 November 2010
Consolidated income statement
for the year ended 30 September 2010
Note | Before amortisation and impairment of intangibleassets | Amortisation andimpairment of intangibleassets | Total 2010 | Total 2009 | |
£000 | £000 | £000 | £000 | ||
Revenue | 2 | 26,999 | - | 26,999 | 24,896 |
Cost of sales | (8,366) | - | (8,366) | (6,868) | |
Gross profit | 18,633 | - | 18,633 | 18,028 | |
Technical and development costs | (8,813) | - | (8,813) | (8,789) | |
Administrative and establishment expenses | (4,473) | (1,381) | (5,854) | (7,275) | |
Sales and marketing costs | (2,277) | - | (2,277) | (2,297) | |
Results from operating activities | 3,070 | (1,381) | 1,689 | (333) | |
Results from operating activities before adjustments in respect of the following: |
2 |
3,093 |
- |
3,093 |
2,763 |
Amortisation of acquisition-related intangibles | - | (1,381) | (1,381) | (1,381) | |
Exceptional operating costs | - | - | - | (190) | |
Impairment of goodwill | - | - | - | (1,499) | |
Share-based payment charges | (23) | - | (23) | (26) | |
Results from operating activities | 3,070 | (1,381) | 1,689 | (333) | |
Finance income | 391 | - | 391 | 405 | |
Finance expenses | (1,578) | - | (1,578) | (1,537) | |
Movement in fair value of derivative financial instrument | 4 | - | 4 | (561) | |
Profit / (loss) before taxation | 1,887 | (1,381) | 506 | (2,026) | |
Taxation | 3 | (234) | - | (234) | 841 |
Profit / (loss) for the year attributable toequity holders of the parent | 1,653 | (1,381) | 272 | (1,185) |
Earnings/(loss) per share From continuing operations |
| ||||||
Basic earnings/(loss) per share | 5 | 0.6p | (2.7p) | ||||
Diluted earnings/(loss) per share | 5 | 0.6p | (2.7p) | ||||
Consolidated statement of comprehensive income
for the year ended 30 September 2010
2010 | 2009 | |||
£000 | £000 | |||
| ||||
Profit / (loss) for the year | 272 | (1,185) |
| |
| ||||
Other comprehensive income |
| |||
Foreign exchange differences | - | (13) |
| |
Defined benefit pension plan actuarial losses | (2,163) | (2,223) |
| |
Deferred taxation effect of defined benefit pension plan items | 606 | 622 |
| |
Other comprehensive income for the year, net of taxation | (1,557) | (1,614) |
| |
| ||||
| ||||
Total comprehensive expense attributable to equity holders of the parent | (1,285) | (2,799) |
| |
Consolidated statement of financial position
at 30 September 2010
2010 | 2009 | |||
£000 | £000 | |||
Non-current assets | ||||
Property, plant and equipment | 430 | 491 | ||
Intangible assets | 32,997 | 34,340 | ||
Deferred tax assets | 1,721 | 1,874 | ||
35,148 | 36,705 | |||
Current assets | ||||
Inventories | 321 | 361 | ||
Trade and other receivables | 7,669 | 6,171 | ||
Income tax receivable | 81 | 506 | ||
Cash and cash equivalents | 248 | - | ||
8,319 | 7,038 | |||
Current liabilities | ||||
Bank loans and borrowings | (1,644) | (1,672) | ||
Trade and other payables | (5,043) | (3,697) | ||
Derivative financial instrument | (485) | (489) | ||
Deferred income | (7,098) | (6,672) | ||
(14,270) | (12,530) | |||
Net current liabilities | (5,951) | (5,492) | ||
Total assets less current liabilities | 29,197 | 31,213 | ||
Non-current liabilities | ||||
Loans and borrowings | (6,440) | (8,286) | ||
Pension and other employee obligations | (3,779) | (1,839) | ||
Deferred income | - | (234) | ||
Deferred tax liabilities | (759) | (1,178) | ||
(10,978) | (11,537) | |||
Net assets | 18,219 | 19,676 |
Equity attributable to equity holders of the Company | ||||
Share capital | 4,338 | 4,338 | ||
Share premium | 4,178 | 15,178 | ||
Retained earnings | 9,703 | 160 | ||
Total equity | 18,219 | 19,676 |
Consolidated statement of changes in equity
For the year ended 30 September 2010
| Share Capital | Share Premium | Retained Earnings | Total Equity | |
£000 | £000 | £000 | £000 | ||
At 1 October 2009 | 4,338 | 15,178 | 160 | 19,676 | |
Dividend paid | - | - | (195) | (195) | |
Share-based payment charge | - | - | 23 | 23 | |
Capital reconstruction | - | (11,000) | 11,000 | - | |
Transactions with owners | - | (11,000) | 10,828 | (172) | |
Profit for the year | - | - | 272 | 272 | |
Other comprehensive income: | |||||
Actuarial result on employee benefits | - | - | (2,163) | (2,163) | |
Deferred tax on above | - | - | 606 | 606 | |
Total comprehensive expense | - | - | (1,285) | (1,285) | |
At 30 September 2010 | 4,338 | 4,178 | 9,703 | 18,219 |
For the year ended 30 September 2009
| Share Capital | Share Premium | Retained Earnings | Total Equity | |
£000 | £000 | £000 | £000 | ||
At 1 October 2008 | 4,338 | 15,178 | 3,107 | 22,623 | |
Dividend paid | - | - | (174) | (174) | |
Share-based payment charge | - | - | 26 | 26 | |
Transactions with owners | - | - | (148) | (148) | |
Loss for the year | (1,185) | (1,185) | |||
Other comprehensive income: | |||||
Foreign exchange differences | - | - | (13) | (13) | |
Actuarial result on employee benefits | - | - | (2,223) | (2,223) | |
Deferred tax on above | - | - | 622 | 622 | |
Total comprehensive expense | - | - | (2,799) | (2,799) | |
At 30 September 2009 | 4,338 | 15,178 | 160 | 19,676 |
Consolidated statement of cash flows
for the year ended 30 September 2010
2010 | 2009 | ||
£000 | £000 | ||
Cash flows from operating activities | |||
Profit / (loss) for the year after taxation | 272 | (1,185) | |
Adjustments for: | |||
Amortisation and impairment of intangible assets | 1,495 | 2,988 | |
Depreciation | 260 | 240 | |
Share-based payment expense | 23 | 26 | |
Net finance expense | 1,183 | 1,693 | |
Income tax | 234 | (841) | |
Operating cash flow before changes in working capital and provisions | 3,467 | 2,921 | |
Movement in trade and other receivables | (1,527) | 762 | |
Movement in inventories | 40 | 36 | |
Movement in trade and other payables | 1,648 | (1,611) | |
Payments to employee benefit plan | (258) | (234) | |
Cash generated from operations | 3,370 | 1,874 | |
Interest paid | (1,245) | (1,372) | |
Income tax received | 541 | 653 | |
Net cash flow from operating activities | 2,666 | 1,155 | |
Cash flow from investing activities | |||
Purchase of plant and equipment | (199) | (129) | |
Development expenditure capitalised | (152) | (92) | |
Net cash flow from investing activities | (351) | (221) | |
Cash flow from financing activities | |||
Repayment of bank borrowing | (1,459) | (2,200) | |
Repayment of finance lease principal | (12) | (21) | |
Equity dividends paid | (195) | (174) | |
Net cash flow from financing activities | (1,666) | (2,395) | |
Net increase/(decrease) in cash and cash equivalents | 649 | (1,461) | |
Cash and cash equivalents at beginning of year | (401) | 1,060 | |
Cash and cash equivalents at the end of the year | 248 | (401) |
Notes
1. Basis of preparation
The Group financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS'). The Company's shares are listed on the Alternative Investment Market of the London Stock Exchange. The principal accounting policies of the Group, which have been applied consistently, are set out in the annual report and financial statements.
2. Segmental reporting
The Group is managed as two separate divisions, providing IT solutions and associated services to the manufacturing and multi-channel retail sectors. Substantially all revenue is generated within the UK. The information provided to the chief operating decision maker is analysed between divisions as follows:
Manufacturing | Multi-Channel | Total | |||||
2010 £000 | 2009 £000 | 2010 £000 | 2009 £000 | 2010 £000 | 2009 £000 | ||
Revenue - external customers | 5,832 | 5,733 | 21,167 | 19,163 | 26,999 | 24,896 | |
Operating profit before amortisation, impairment, share-based payment charges and exceptional items |
836 |
758 |
2,257 |
2,005 |
3,093 |
2,763 | |
Amortisation of acquisition-related intangibles | - | - | (1,381) | (1,381) | (1,381) | (1,381) | |
Impairment of goodwill | - | (1,499) | - | - | - | (1,499) | |
Exceptional operating costs | - | (44) | - | (146) | - | (190) | |
Share-based payment charges | (5) | - | (18) | (26) | (23) | (26) | |
Operating profit/(loss) | 831 | (785) | 858 | 452 | 1,689 | (333) | |
Net finance expense | (1,183) | (1,693) | |||||
Profit/(loss) before taxation | 506 | (2,026) | |||||
Property, plant and equipment | 100 | 198 | 330 | 293 | 430 | 491 | |
Intangible assets | 11,228 | 11,209 | 21,769 | 23,131 | 32,997 | 34,340 | |
Inventory | 18 | 37 | 303 | 324 | 321 | 361 | |
Cash and cash equivalents | 734 | - | 922 | 92 | 1,656 | 92 | |
Trade and other receivables | 1,319 | 1,263 | 6,350 | 4,908 | 7,669 | 6,171 | |
Total assets | 13,399 | 12,707 | 29,674 | 28,748 | 43,073 | 41,455 | |
Bank overdraft | - | (493) | - | - | - | (493) | |
Trade and other payables | (1,266) | (659) | (3,777) | (3,038) | (5,043) | (3,697) | |
Deferred income | (1,721) | (2,059) | (5,377) | (4,851) | (7,098) | (6,906) | |
Total liabilities | (2,987) | (3,211) | (9,154) | (7,889) | (12,141) | (11,096) | |
Allocated net assets | 10,412 | 9,496 | 20,520 | 20,859 | 30,932 | 30,359 | |
Other unallocated assets and liabilities | (12,713) | (10,683) | |||||
Net assets | 18,219 | 19,676 | |||||
Included within other unallocated assets and liabilities are bank overdrafts totalling £1,408,000 in respect of certain shared operations. Bank balances in respect of shared operations cannot be allocated between operating divisions.
3. Taxation
2010£000 | 2009 £000 | |
Current tax expense | ||
UK corporation tax for the current year | - | - |
Overseas corporation tax for the current year | 11 | - |
Relating to prior periods | (117) | (146) |
Total current tax | (106) | (146) |
Deferred tax | ||
Deferred tax for the current year | 185 | (692) |
Relating to prior periods | 124 | (3) |
Relating to change in rate of tax | 31 | - |
Total deferred tax | 340 | (695) |
Taxation charged /(credited) to the income statement | 234 | (841) |
Reconciliation of effective tax rate
The current consolidated tax charge for the period is greater (2009: credit greater) than the standard rate of corporation tax in the UK of 28%. The differences are explained below.
2010 | 2009 | |
£000 | £000 | |
Profit/(loss) before taxation | 506 | (2,026) |
Tax using the UK Corporation tax rate of 28% (2009: 28%) | 142 | (567) |
Effects of: | ||
Expenses not deductible for tax purposes | 70 | 497 |
Utilisation of losses not previously recognised | (16) | (821) |
Under/(over) provision in previous years | 7 | (149) |
Losses not utilised in year | - | 202 |
Change in tax rate | 31 | - |
Change in temporary differences | - | (3) |
Total tax in income statement | 234 | (841) |
4. Dividends
2010 £000 | 2009 £000 | |||
Interim dividend of 0.25p per share (2009: 0.20p) | 108 | 87 | ||
Final dividend relating to previous financial year of 0.20p per share (2009: 0.20p) | 87 | 87 | ||
Total dividend for the financial year | 195 | 174 | ||
5. Earnings per share
Basic and diluted earnings per share are calculated by dividing the result after tax for the year by the weighted average number of ordinary shares during the year and the diluted weighted average number of ordinary shares during the year respectively. In order to better demonstrate the performance of the Group, an adjusted earnings per share calculation has been presented below which adds back items typically adjusted for by users of the accounts. The calculations for earnings and the number of shares relevant to all of the measures of earnings per share described in the foregoing are set out below.
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings: | 2010 | 2009 |
£000 | £000 | |
Result for the year from continuing operations | 272 | (1,185) |
Amortisation of acquisition related intangible assets | 1,381 | 1,381 |
Impairment charge | - | 1,499 |
Share-based payment charges | 23 | 26 |
Adjusted profit for the year | 1,676 | 1,721 |
Number of shares: | 2010 | 2009 |
No. | No. | |
In issue at the start of the year | 43,383,946 | 43,383,946 |
Effect of shares issued in the year | - | - |
Weighted average number of shares at year end | 43,383,946 | 43,383,946 |
Effect of share options | 3,038,637 | 1,780,258 |
Weighted average number of shares (diluted) at year end | 46,422,583 | 45,164,204 |
2010 (pence) | 2009 (pence) | |
Earnings / (loss) per share: | ||
Basic | 0.6 | (2.7) |
Diluted | 0.6 | (2.7) |
Adjusted earnings per share: | ||
Basic | 3.9 | 4.0 |
Diluted | 3.6 | 3.8 |
There is no dilution to the basic loss per share in 2009 owing to a loss for the year being reported.
6. Annual Report and Accounts
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.
The Consolidated Income Statement, Consolidated Statement of Financial Position, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows, together with associated notes, have been extracted from the Group's 2010 statutory financial statements upon which the auditors opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006.
The accounts for the year ended 30 September 2010 will be laid before the Company at the Annual General Meeting, to be held at the Company's registered office on 10 March 2011. A copy of this preliminary statement will be available to download on the Group's website www.sanderson.com. Copies of the Annual Report and Accounts will be posted to shareholders in due course at which time the Annual Report and Accounts will be made available to download on the Group's website www.sanderson.com in accordance with AIM Rule 26.