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15 Oct 2008 12:34
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For immediate release 15 October 2008
Sanderson Group plc ("Sanderson" or "the Group")
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Trading update
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The Board of Sanderson,Β the software and IT services business specialising in multi-channel retail and manufacturing markets in the UK and Ireland,Β announcesΒ the following tradingΒ updateΒ ahead ofΒ Β the Group'sΒ preliminary results for the year ended 30Β SeptemberΒ 2008, whichΒ will beΒ Β publishedΒ inΒ November 2008.
Subject to final audit, revenues for the yearΒ endedΒ 30Β SeptemberΒ 2008Β are expected to beΒ approximatelyΒ Β£27.5Β million, a 52% increase on last year,Β with adjustedΒ profit before taxΒ of not less than Β£3.0Β million,Β both ofΒ which areΒ belowΒ current market expectations.
The revenue and profitΒ derivedΒ from the Group's ManufacturingΒ businessΒ wereΒ in line withΒ expectationsΒ as were the results of theΒ Multi-Channel Sales business.Β The shortfall against expectations was causedΒ primarilyΒ byΒ a slowdown in the Retail businesses, mainly at the smaller end of the market,Β with several clientsΒ deferringΒ orΒ withdrawingΒ newΒ projectsΒ and related software licence purchases. ThisΒ slowdownΒ occurredΒ against the backdrop ofΒ increasingΒ economicΒ uncertaintyΒ especiallyΒ in the weeks immediately prior toΒ the year end,Β Β traditionally aΒ veryΒ profitableΒ period forΒ the Group.
However, cash flowsΒ haveΒ remainedΒ strongΒ with an operating profit to cash conversion rateΒ of aroundΒ 100% for the year. In addition to paying Β£500,000 of deferred consideration from cash flows, the Group accelerated its loan repayments during the yearΒ and netΒ bankΒ debt at 30Β SeptemberΒ 2008 was reducedΒ toΒ belowΒ Β£11Β million. Following a review ofΒ theΒ taxation position, the Group expects to pay aΒ considerablyΒ lower effectiveΒ taxΒ charge over the nextΒ 3Β years.
The Group'sΒ proven business modelΒ generatesΒ approximately 50%Β of revenue fromΒ pre-contractedΒ annual software licences and support services.Β Β The strength of theΒ large, well establishedΒ customerΒ base is expected to enable the Group to trade robustly in the current financial year, subject, to the generalΒ marketΒ conditions prevailing within the UK economy.
ends
Enquiries:
Sanderson Group plc
David O'Byrne, Managing DirectorΒ Telephone: 01709 787924
Adrian Frost, Finance DirectorΒ Telephone: 02476 555466
Arden Partner plc
Richard Day Telephone: 0207 398 1600
Winningtons FinancialΒ
Paul Vann / Tom Cooper Telephone: 0117 920 0092
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