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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sondrel (holdings) Plc | LSE:SND | London | Ordinary Share | GB00BJN54579 | ORD GBP0.001 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 4.00 | 3.80 | 4.20 | 4.00 | 4.00 | 4.00 | 290,202 | 08:00:25 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Cmp Integrated Sys Design | 17.51M | -3.19M | -0.0365 | -1.10 | 3.5M |
From Apr 2019 to Apr 2024
TIDMSND
RNS Number : 0797Z
Sanderson Group PLC
15 May 2019
FOR IMMEDIATE RELEASE 15 MAY 2019
SANDERSON GROUP PLC
Interim Results for the six months ended 31 March 2019
"Further strong progress across the Group with trading results and cash ahead of management expectations;
GBP4 million acquisition completed post period end."
Sanderson Group plc ('Sanderson' or 'the Group'), 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, announces its interim results for the six month period ended 31 March 2019.
Commenting on the results, Chairman, Christopher Winn, said:
"The Group has made further strong progress during the six month period ended 31 March 2019, with trading results, stated under the new IFRS 15 accounting standard, ahead of management's expectations with strong performances from both the Digital Retail and Enterprise Divisions."
Highlights - Financial
Hot Features
Premium
-- Revenue increased by 18% to GBP17.17 million (pre IFRS 15 revenue rose by 16% to GBP16.91 million from GBP14.61
million in 2018).
-- Operating profit* rose by 34% to GBP2.79 million (pre IFRS 15 operating profit* rose by over 20% to GBP2.53
million (2018: GBP2.08 million).
-- High gross margin of 79% (79% pre IFRS 15 and 80% in 2018).
-- Pre-contracted recurring revenues (including hosted managed solutions) grew to GBP9.53 million (GBP9.46 million
pre IFRS 15 and GBP8.25 million in 2018) representing 55% of total revenue in the period.
-- Well-balanced order book of GBP8.20 million (2018: GBP8.61 million).
-- Net cash balance at 31 March 2019 ahead of management's expectations, at GBP3.29 million (2018: GBP1.39 million).
-- Interim dividend increased by 20% to 1.50 pence per ordinary share (2018: 1.25 pence).
-- Basic earnings per share of 3.0 pence (2018: 2.3 pence); adjusted basic earnings per share** of 4.1 pence (2018:
3.1 pence).
* Operating profit is stated before amortisation of acquisition-related intangibles, share-based payment charges and 'one-off' non-recurring items
** Adjusted for amortisation of acquisition-related intangibles, share-based payment charges and 'one-off' non-recurring items
Highlights - Operational
-- High level of sales order intake at GBP8.34 million (2018: GBP7.71 million) with 15 new customers gained during
period (2018: 7 new customers).
-- Strong performances from both Digital Retail and Enterprise Divisions.
-- Digital Retail produced double digit revenue and operating profit growth with revenue of GBP5.98 million (GBP5.91
million pre IFRS 15 and GBP5.37 million in 2018) and operating profit* of GBP1.22 million (GBP1.10 million pre
IFRS 15 and GBP0.94 million in 2018) respectively.
-- Enterprise Division included a full contribution from the November 2017 acquisition, recording increases in
revenue and operating profit* of more than 20% to GBP11.20 million (pre IFRS 15 revenue of GBP11.00 million) and
GBP1.57 million (GBP1.44 million pre IFRS 15 and GBP1.14 million in 2018) respectively.
-- Large sales orders gained from several existing customers including Richer Sounds, Office Holdings Limited, NHS
Blood and Transplant and Centrica plc; new customers gained during period include Hawes & Curtis Limited and
Rhodes Freight Services Limited.
-- Launch of new "Lean Retailer" initiative aimed at continually improving operational efficiency generating good
level of early interest.
-- Post period end acquisition of Gould Hall for a maximum consideration of GBP4 million in cash and shares.
* Operating profit is stated before amortisation of acquisition-related intangibles, share-based payment charges and 'one-off' non-recurring items
On current trading and prospects, Group Chief Executive, Ian Newcombe, added:
"The Board continues to be cautious in its approach, monitoring the general economic environment carefully and being sensitive to market conditions. Nevertheless, following the strong trading momentum built in the first half of the year, a healthy order book, high recurring revenue and a strong, cash-backed balance sheet, combined with the Group's proven reputation and track record, the Board is confident that the Group is well positioned to make further progress in the current financial year ending 30 September 2019. This will enable the Board to maintain its progressive dividend policy and to build further shareholder value."
Enquiries:
Christopher Winn, Chairman 0333 123 1400
Ian Newcombe, Group Chief Executive
Richard Mogg, Finance Director
020 7496
Mark Taylor/James White 3000
N+1 Singer (Nominated Adviser and Broker)
Paul Vann, Walbrook PR Limited 020 7933 8780
or 07768 807631
This announcement contains inside information for the purposes of Article of EU Regulation 596/2014
SANDERSON GROUP PLC
Interim Results for the six months ended 31 March 2019
CHAIRMAN'S STATEMENT
Sanderson Group plc ('Sanderson' or 'the Group'), 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, announces its interim results for the six-month period ended 31 March 2019.
Financial results
The Group has made further strong progress during the six-month period ended 31 March 2019, with trading results, stated under the new IFRS 15 accounting standard, ahead of management's expectations with strong performances from both the Digital Retail and Enterprise Divisions. Revenue grew by 18% to GBP17.17 million (2018: GBP14.61 million) and operating profit* increased by 34% to GBP2.79 million (2018: GBP2.08 million). The Group adopted IFRS 15 on a modified retrospective basis with effect from 1 October 2018 and therefore the prior year comparatives have not been restated. On a comparable basis, excluding the impact of IFRS 15, revenue rose by 16% to GBP16.91 million (2018: GBP14.61 million) and operating profit* increased by over 20% to GBP2.53 million (2018: GBP2.08 million). Sanderson was enhanced by the acquisition of Anisa Group in November 2017 and the trading results for the six-month period ended 31 March 2019 now include a full six months' contribution from this acquisition.
Gross margin remained high at 79% (79% pre IFRS 15 and 80% in 2018) reflecting sales of Sanderson-owned proprietary software solutions. The Group continues to focus on building its pre-contracted recurring revenue stream, which now includes revenues derived from hosted managed solutions. Pre-contracted recurring revenue continues to grow, reaching GBP9.53 million (GBP9.46 million pre IFRS 15 and GBP8.25 million in 2018), representing 55% of total revenue in the period.
The value of the order book at the period end remained strong at GBP8.20 million (2018: GBP8.61 million) and is now well balanced across the Group's businesses which reflects an improved delivery and implementation performance by the Sanderson staff during the period.
Sanderson continues to be a cash-generative business with an established history of converting substantially all of its profit to cash and of retaining a robust balance sheet. Ahead of management's expectations, the Group's net cash balance at 31 March 2019, stood at GBP3.29 million (2018: GBP1.39 million). Excluding the five-year repayable term debt facility assumed with the acquisition of November 2017, the Group's cash balance was strong at GBP6.05 million (2018: GBP5.06 million). Following the period end the final deferred consideration payment of GBP0.50 million was paid in April 2019 in respect of the 2017 acquisition; the initial and deferred cash consideration payments have been satisfied entirely from the Group's own cash resources.
Dividend
The Board is committed to maintaining a progressive dividend policy and is pleased to declare a further increase of 20% in the level of the interim dividend to 1.50 pence per ordinary share (2018: 1.25 pence). The dividend will be paid on 19 July 2019 to shareholders on the register at the close of business on 5 July 2019. The ex-dividend date will be 4 July 2019.
Post period-end event - Acquisition
On 2 May 2019 the Group announced the acquisition of Gould Hall, a specialist provider of logistics solutions, for a maximum consideration of GBP4 million payable in cash and shares. This latest acquisition provides software solutions to customers operating in the supply chain and distribution sectors. The business employs 27 staff, operates from offices in Skelmersdale, Lancashire and provides full enterprise solutions for its customers. The acquisition further builds on the Group's capability and is expected to be earnings enhancing in its first full financial year under Sanderson ownership.
Strategy
The strategy of the Board is to achieve sustained growth by continuing to develop and to build the Sanderson businesses which address the Group's target markets. By deploying Sanderson solutions, customers are able to grow their businesses whilst effecting both productivity improvement and efficiency gains, as well as making cost savings. The opportunity to achieve increased productivity and to deliver cost savings are key drivers in customers' investment decisions. Whilst investment continues across all of the Group's businesses, particular emphasis will again be placed on enhancing mobile and ecommerce solutions which are designed to capitalise on the drive for digital transformation in the retail, wholesale and supply chain logistics sectors. Mobile applications and business intelligence solutions continue to be developed to address all of the Group's markets. The Group also plans to further strengthen its proposition in the food and drink processing sector where Sanderson has enjoyed considerable success and built a strong reputation over a number of years. There are exciting new opportunities to expand subscription, cloud and managed services revenue across the Group; hosted managed solutions are now available to all Sanderson customers from the Group's own data centre.
In order to augment organic growth, selective acquisition opportunities continue to be considered. Management adopts a measured approach to acquisitions and carefully assesses any risks which might be involved. The Executive Management Team also remains focused on continuing to deliver both organic and acquisitive growth, achieving 'on target' results, growing earnings, and delivering strong cash generation backed by a robust balance sheet. This enables the Board to further increase shareholder value and to maintain progressive dividend returns.
Management and staff
Sanderson staff have specialist expertise and a very high level of experience in the market sectors which the Group addresses. On behalf of the Board, I would like to express the Board's appreciation and thank everyone for their hard work, support, dedication and valued contribution to the ongoing development of the Group.
Christopher Winn
Chairman
15 May 2019
* Operating profit is stated before the amortisation of acquisition-related intangibles, share-based payment charges and 'one-off' non-recurring items.
SANDERSON GROUP PLC
Interim Results for the six months ended 31 March 2019
GROUP CHIEF EXECUTIVE'S BUSINESS REVIEW
Sanderson products and services are primarily targeted at the SME (small and medium-sized enterprise) market. The Group has a well-developed business model based on the long-term relationships it builds with its customers. These relationships deliver a robust revenue stream which typically accounts for around 90% of Group revenue and comprises a high proportion of sales from pre-contracted recurring revenue, complemented by incremental sales to the Group's strong, well-established and growing customer base.
The Group's owned and proprietary software is marketed and sold under a 'right to use' licence, with all sales, marketing, delivery, support and services carried out by the Group's own expert staff. On-premise, cloud-based and hosted managed solutions are now available to Sanderson Group customers.
The Group's proprietary solutions are designed in anticipation of technological developments, often in conjunction and collaboration with customers. Solutions deliver 'value for money', with cost effective, timely and tangible business benefits that allow customers to gain competitive advantage, which is particularly important in challenging market times. Such benefits typically enable customers to grow sales whilst also achieving improved productivity, additional efficiencies and cost savings. Sanderson customers usually achieve rapid return on their investment (often within a year of implementation). Productivity improvements and cost savings are key investment 'decision drivers' for customers.
The Group continues to invest in the development of its software and services, as well as in its sales and marketing. Particular emphasis has been placed on Sanderson businesses specialising in retail, wholesale distribution and supply chain logistics, where digital transformation is a key driver for their customers. Emphasis has also been placed on the Group businesses operating in food and drink processing where software is key to efficient manufacturing as well as to traceability of ingredients and compliance with regulatory standards.
Reflecting this investment, Sanderson has continued to achieve a high level of sales order intake. The Group gained 15 new customers during the period (2018: 7) and order intake was GBP8.34 million (2018: GBP7.71 million).
Review of Digital Retail
The Group provides comprehensive and innovative IT solutions to businesses operating in ecommerce, mobile commerce and retail. The market and demand for digital solutions in these markets continues to be very active and constantly developing, as retailers strive to deliver seamless shopping experiences and create 'digital theatre' to engage with consumers in-store and online. Sanderson partners with retailers in their digital transformation programmes, providing in-store technology, mobile and ecommerce solutions and powerful business intelligence. These solutions allow retailers to capitalise on the widespread use of smart devices, to exploit 'mobile' as a fully integrated sales channel and to improve customer service in order to maximise sales.
The Digital Retail business of Sanderson, which works with leading retailers such as, Hugo Boss AG, Hotel Chocolat Limited, Superdry and JD Sports, continues to perform strongly with double-digit revenue and operating profit growth. Divisional revenue and operating profit* grew to GBP5.98 million (GBP5.91 million pre IFRS 15 and GBP5.37 million in 2018) and GBP1.22 million (GBP1.10 million pre IFRS 15 and GBP0.94 million in 2018) respectively.
A new 'lean retailer' initiative aimed at continually improving operational efficiency has been launched generating a good level of early interest. The business continues to benefit from increased investment in product innovation, sales and marketing capability and delivery capacity. An order was secured with new customer Hawes & Curtis Limited, a leading formal-wear retailer, which, after a successful pilot scheme, is now being rolled out in-store for enhanced customer service. Demand from existing customers also remains high, with large sales orders gained from a number of customers including Richer Sounds, David Austin Roses Limited and Office Holdings Limited.
Sales order intake increased by over 25% in the period to GBP3.11 million (2018: GBP2.48 million). With good sales prospects and further pilot schemes in place, strong partnerships with existing customers, and continuing innovation, the Digital Retail business is well placed to maintain its growth.
Review of Enterprise
Overall, the Enterprise division now comprises three market-focused businesses which operate in the manufacturing, wholesale distribution and supply chain logistics sectors. Productivity gains, improved efficiency and cost savings are key drivers in these markets.
The Enterprise business has continued to make good progress. Divisional revenue, which includes an additional two months' contribution from the 2017 acquisition, grew by over 20% to GBP11.20 million (GBP11.00 million pre IFRS 15 and GBP9.24 million in 2018) and operating profit* rose to GBP1.57 million (GBP1.44 million pre IFRS 15 and GBP1.14 million in 2018). The order book grew by more than 15% and at 31 March 2019, stood at GBP5.96 million (2018: GBP5.01 million). The Enterprise division enters the second half of the financial year well positioned for further progress, with robust recurring revenue, the strong order book and a good list of sales prospects.
Enterprise - Manufacturing
The main areas of specialisation for Sanderson comprise businesses in the engineering, plastics, aerospace, electronics and print ('general manufacturing'), and food and drink processing sectors. The Group continues to invest in product development to meet industry needs, as well as in sales and marketing, especially in the food and drink processing sector where levels of activity remain high. Traceability of ingredients, management of allergens and compliance with increasingly stringent supermarket and regulatory standards are key industry requirements and the Sanderson solution is uniquely designed to meet these. Sales order intake grew by 18% over the previous year, with the business focused on food and drink processing performing particularly strongly. Large orders from existing customers included Newly Weds Foods Limited and Adelie Foods Group Limited.
Enterprise - Wholesale Distribution
Sanderson has a strong, well-established market position supplying solutions to the wholesale distribution, delivered wholesale and cash and carry sectors. The business continues to trade well, building on the momentum from the second half of the previous financial year. Anticipating the drive towards digital transformation in the sector, the Group launched an innovative suite of digital solutions in November 2018. The new product suite enables customers to capitalise on the increased use of mobile devices by improving productivity and sales. Strong interest in these solutions continues and this positions the business well for further progress in the second half year.
Enterprise -Supply Chain Logistics
The business specialises in the provision of world-class, integrated supply chain and ERP solutions, supporting customers worldwide on a 24-hour, 365 days-a-year basis. Best-of-breed logistics solutions include integrated transport and warehouse management software to streamline complex distribution environments, improving visibility, efficiency and customer service.
Strengthened by the acquisition in November 2017, the business made a strong start to the current financial year. The market is very active and eight new customers were gained during the period (2018: 3) including Arbor Forest Products Limited, Storage on Site Limited, Rhodes Freight Services Limited, Rory J Holbrook Limited and Anchor Bay Construction Products Limited. Major orders from existing customers included NHS Blood and Transplant, Logical Freight Solutions Pty. Limited, Vivarail Limited and Centrica plc. The sales pipeline is very strong and continued growth is expected in the second half of the financial year.
Outlook
The Board continues to be cautious in its approach, monitoring the general economic environment carefully and being sensitive to market conditions. Nevertheless, following the strong trading momentum built in the first half of the year, a healthy order book, high recurring revenue and a strong, cash-backed balance sheet, combined with the Group's proven reputation and track record, the Board is confident that the Group is well positioned to make further progress in the current financial year ending 30 September 2019. This will enable the Board to maintain its progressive dividend policy and to build further shareholder value.
Ian Newcombe
Group Chief Executive
15 May 2019
* Operating profit is stated before the amortisation of acquisition-related intangibles, share-based payment charges and 'one-off' non-recurring items.
CONSOLIDATED INCOME STATEMENT
For the six months to 31 March 2019
Note Unaudited Unaudited Audited
six months six months year to
to 31/03/19 to 31/03/18 30/09/18
GBP000 GBP000 GBP000
Revenue 2 17,174 14,608 32,054
Cost of sales (3,523) (2,973) (6,530)
------------ ------------ ---------
Gross profit 13,651 11,635 25,524
Other operating expenses (11,520) (10,051) (21,930)
------------ ------------ ---------
Results from operating activities 2 2,131 1,584 3,594
Results from operating activities
before adjustments in respect
of the following: 2 2,786 2,081 5,175
Amortisation of acquisition-related
intangibles (479) (225) (942)
Acquisition-related and restructuring
costs - (264) (385)
Share-based payment charges (176) (8) (254)
------------ ------------ ---------
Results from operating activities 2 2,131 1,584 3,594
Net finance expense (154) (152) (305)
Acquisition-related finance expense (20) - (56)
------------ ------------ ---------
Profit before taxation 1,957 1,432 3,233
Taxation (182) (94) (207)
------------ ------------ ---------
Profit for the period attributable
to equity holders of the parent 1,775 1,338 3,026
============ ============ =========
Earnings per share
From profit attributable to the
owners of the parent undertaking
during the period
Basic earnings per share 43.0p 2.3p 5.2p
Diluted earnings per share 42.9p 2.3p 5.0p
==== ==== ====
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 31 March 2019
Unaudited Unaudited Audited
six months six months year to
to 31/03/19 to 31/03/18 30/09/18
GBP000 GBP000 GBP000
Profit for the period 1,775 1,338 3,026
Other comprehensive income/(expense)
Items that will not subsequently
be reclassified to profit or
loss
Remeasurement of net defined
benefit liability - - 1,972
Deferred taxation effect of
defined benefit pension plan
items
Change in the fair value of - - (375)
investments 2 - -
------------- ------------- ----------
2 - 1,597
Items that will subsequently
be reclassified to profit or
loss
Change in the fair value of
available for sale financial
asset - 26 (57)
Foreign exchange translation
differences (24) (28) (10)
Total comprehensive income
for the period 1,753 1,336 4,556
------------- ------------- ----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 March 2019
Unaudited Unaudited Audited
as at as at as at
31/03/19 31/03/18 30/09/18
GBP000 GBP000 GBP000
Non-current assets
Intangible assets 42,777 43,199 43,265
Property, plant & equipment 984 979 1,078
Deferred tax asset 1,068 1,294 1,038
Investments 227 150 225
Trade and other receivables 474 - -
---------- ---------- ----------
45,530 45,622 45,606
---------- ---------- ----------
Current assets
Inventories 32 32 32
Trade and other receivables 8,665 9,395 8,985
Current tax - - 284
Other short-term financial - 213 -
assets
Cash and cash equivalents 6,045 5,060 6,471
---------- ---------- ----------
14,742 14,700 15,772
---------- ---------- ----------
Current liabilities
Bank loans and overdrafts (916) (916) (916)
Loan notes (258) (1,047) (1,047)
Trade and other payables (6,881) (6,471) (6,672)
Deferred consideration (443) (1,138) (987)
Hire purchase (132) - (132)
Current tax liabilities (148) (174) -
Deferred income (9,467) (8,985) (8,965)
---------- ---------- ----------
(18,245) (18,731) (18,719)
---------- ---------- ----------
Net current liabilities (3,503) (4,031) (2,947)
---------- ---------- ----------
Total assets less current liabilities 42,027 41,591 42,659
---------- ---------- ----------
Non-current liabilities
Bank loans and overdrafts (1,834) (2,751) (2,522)
Hire purchase (135) - (224)
Deferred tax liabilities (1,554) (775) (1,749)
Deferred consideration - (500) -
Deferred income (853) - -
Pension and other employee
obligations (3,609) (6,086) (3,789)
(7,985) (10,112) (8,284)
---------- ---------- ----------
Net assets 34,042 31,479 34,375
---------- ---------- ----------
Equity
Called-up share capital 5,997 5,964 5,997
Share premium 9,557 9,410 9,557
Merger reserve 2,394 2,394 2,394
Fair value reserve 2 - -
Available for sale reserve - 101 -
Foreign exchange reserve (87) (99) (63)
Retained earnings 16,179 13,709 16,490
---------- ---------- ----------
Total equity 34,042 31,479 34,375
---------- ---------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months to 31 March 2019
Share capital Share Merger Other Retained Total
GBP000 premium reserve reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2018, as previously
reported 5,997 9,557 2,394 (63) 16,490 34,375
Adjustment from adoption of IFRS
9 and IFRS 15 (net of tax) - - - - (1,212) (1,212)
------ --------- --------- ---------- ---------- --------
Restated balance at 1 October
2018 5,997 9,557 2,394 (63) 15,278 33,163
------ --------- --------- ---------- ---------- --------
Dividend paid - - - - (1,050) (1,050)
Share-based payment charge - - - - 176 176
Transactions with owners - - - - (874) (874)
------ --------- --------- ---------- ---------- --------
Profit for the period - - - - 1,775 1,775
Other comprehensive income:
Foreign exchange translation difference - - - (24) - (24)
Change in fair value of investment - - - 2 - 2
Total comprehensive income/(expense) - - - (22) 1,775 1,753
------ --------- --------- ---------- ---------- --------
At 31 March 2019 5,997 9,557 2,394 (85) 16,179 34,042
------ --------- --------- ---------- ---------- --------
For the six months to 31 March 2018
Share capital Share Merger Other Retained Total
GBP000 premium reserve reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2017 5,507 9,133 - 4 13,287 27,931
------ ------ --------- ---------- ---------- --------
Shares issued as consideration 399 - 2,394 - - 2,793
Exercise of share options 58 277 - - - 335
Dividend paid - - - - (924) (924)
Share-based payment charge - - - - 8 8
Transactions with owners 457 277 2,394 - (916) 2,212
------ ------ --------- ---------- ---------- --------
Profit for the period - - - - 1,338 1,338
Other comprehensive income:
Foreign exchange translation
difference - - - (28) - (28)
Change in fair value of available
for sale financial asset - - - 26 - 26
Total comprehensive income/(expense) - - - (2) 1,338 1,336
------ ------ --------- ---------- ---------- --------
At 31 March 2018 5,964 9,410 2,394 2 13,709 31,479
------ ------ --------- ---------- ---------- --------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
For the year ended 30 September 2018
Share capital Share Merger Other Retained Total
GBP000 premium reserve reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2017 5,507 9,133 - 4 13,287 27,931
------ --------- --------- ---------- ---------- --------
Exercise of share options 91 424 - - - 515
Shares issued as consideration 399 - 2,394 - 2,793
Dividend paid - - - - (1,674) (1,674)
Share-based payment charge - - - - 254 254
Transactions with owners 490 424 2,394 - (1,420) 1,888
------ --------- --------- ---------- ---------- --------
Profit for the year - - - - 3,026 3,026
Other comprehensive income:
Remeasurement of net defined benefit
liability - - - - 1,972 1,972
Deferred tax on above - - - - (375) (375)
Foreign exchange translation differences - - - (10) - (10)
Change in fair value of available
for sale financial asset - - - (57) - (57)
------ --------- --------- ---------- ---------- --------
Total comprehensive income/(expense) - - - (67) 4,623 4,556
At 30 September 2018 5,997 9,557 2,394 (63) 16,490 34,375
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months to 31 March 2019
Unaudited Unaudited Audited
six months six months year to
to 31/03/19 to 31/03/18 30/09/18
Note GBP000 GBP000 GBP000
Profit for the period 1,775 1,338 3,026
Adjustments for:
Depreciation and amortisation 1,027 637 1,988
Share-based payment charges 176 8 254
Net finance expense 174 152 361
Profit on sale of investment - - (136)
Income tax charge 182 94 207
============= ============= ==========
Operating cash flow from continuing
operations before working capital
movements 3,334 2,229 5,700
Movement in working capital (109) (640) 21
============= ============= ==========
Cash generated by continuing operations 3,225 1,589 5,721
Income tax received 306 258 158
Payments to defined benefit pension
scheme (270) (180) (586)
Net cash from operating activities 3,261 1,667 5,293
------------- ------------- ----------
Investing activities
Purchases of property, plant &
equipment (143) (122) (216)
Acquisition of subsidiary undertakings,
net of cash acquired - (1,291) (1,291)
Investment in unlisted company - - (75)
Deferred consideration paid (564) (13) (593)
Dividend received - 9 9
Bank interest received 5 2 2
Expenditure on product development (301) (321) (956)
Sale of investment - - 266
============= ============= ==========
Net cash used in investing activities (1,003) (1,736) (2,854)
============= ============= ==========
Financing activities
Equity dividends paid 5 (1,050) (924) (1,674)
Issue of shares, net of costs - 335 515
Finance lease repayments (89) - (152)
Bank loan repayments (688) (458) (688)
Bank loan interest (47) - (87)
Hire purchase interest (5) - (7)
Loan note interest (16) - (51)
Loan note repayment (789) - -
Net cash used in financing activities (2,684) (1,047) (2,144)
============= ============= ==========
(Decrease)/increase in cash and
cash equivalents (426) (1,116) 295
Cash and cash equivalents at start
of the period 6,471 6,176 6,176
Cash and cash equivalents at end
of the period 6,045 5,060 6,471
------------- ------------- ----------
NOTES TO THE INTERIM RESULTS
1. Basis of preparation
The Group's interim results for the six month period ended 31 March 2019 are prepared in accordance with the Group's accounting policies which are based on the recognition and measurement principles of International Financial Reporting Standards ('IFRS') as adopted by the EU and effective, or expected to be adopted and effective, at 30 September 2019. As permitted, this interim report has been prepared in accordance with the AIM rules and not in accordance with IAS34 'Interim financial reporting'. The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the changes arising from the adoption of new standards, which are detailed below.
These interim results do not constitute full statutory accounts within the meaning of section 434(5) of the Companies Act 2006 and are unaudited. The unaudited interim financial statements were approved by the Board of Directors on 10 May 2019.
The consolidated financial statements are prepared under the historical cost convention as modified to include the revaluation of financial instruments. The statutory accounts for the year ended 30 September 2018, which were prepared under IFRS, have been filed with the Registrar of Companies. These statutory accounts carried an unqualified Auditors' Report and did not contain a statement under either Section 498(2) or (3) of the Companies Act 2006.
Adoption of new and revised standards
The Group has adopted IFRS 9 "Financial instruments" and IFRS 15 "Revenue from contracts with customers" from 1 October 2018. The effects of adopting these standards are explained in Note 3.
The directors considered the impact on the Group of other new and revised accounting standards, interpretations or amendments. IFRS 16 "Leases" (effective 1 January 2019) will be applicable to the Group from 1 October 2019 and the Group is in the process of assessing the impact of its adoption. The Group is not yet in a position to quantify the impact of IFRS 16 on the Group's reported results or financial position.
2. Segmental reporting
The Group is managed as two separate divisions: Enterprise and Digital Retail. Substantially all revenue is generated within the UK.
Enterprise Digital Retail Total
Six **Six **Year Six **Six **Year Six Six Year
months months Ended months months Ended months months Ended
31/03/19 31/03/18 30/09/18 31/03/19 31/03/18 30/09/18 31/03/19 31/03/18 31/09/18
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non recurring
revenue 4,488 3,549 8,415 3,158 2,808 6,034 7,646 6,357 14,449
Recurring
revenue 6,708 5,692 12,446 2,820 2,559 5,159 9,528 8,251 17,605
--------- --------- ---------- --------- --------- --------- --------- --------- ---------
Total revenue 11,196 9,241 20,861 5,978 5,367 11,193 17,174 14,608 32,054
--------- --------- ---------- --------- --------- --------- --------- --------- ---------
Operating
profit before
adjustments* 1,571 1,139 3,121 1,215 942 2,054 2,786 2,081 5,175
--------- --------- ---------- --------- --------- --------- --------- --------- ---------
Amortisation (346) (50) (592) (133) (175) (350) (479) (225) (942)
Share-based
payment (92) (4) (168) (84) (4) (86) (176) (8) (254)
Acquisition-related
and restructuring
costs - (250) (352) - (14) (33) - (264) (385)
--------- --------- ---------- --------- --------- --------- --------- --------- ---------
Operating
profit 1,133 835 2,009 998 749 1,585 2,131 1,584 3,594
--------- --------- ---------- --------- --------- ---------
Net finance
expense (174) (152) (361)
Profit before tax 1,957 1,432 3,233
--------- --------- ---------
* Adjustments to operating profit in respect of amortisation of acquisition-related intangibles, share-based payment charges and acquisition-related and restructuring costs.
** During the six months to 31 March 2019, a moderate divisional re-structuring program was undertaken which has resulted in the restatement of the segmental analysis for comparative periods.
3. Effect of new accounting standards
The following table summarises the impact of transition to IFRS 9 "Financial instruments" and IFRS 15 "Revenue from contracts with customers" on the Group's retained earnings at 1 October 2018.
Impact of transition to IFRS 9 and IFRS 15
Ref Impact on retained
earnings at
01/10/18
GBP000
IFRS 9
Change in fair value of investment (a) 2
Recognition of lifetime expected credit
losses (b) (105)
Deferred tax impact 20
------------------------------
Impact of transition to IFRS 9 (83)
------------------------------
IFRS 15
Spreading of licence revenue over implementation
period (c) (268)
Net deferral of licence revenue relating
to "Option" until future renewal dates (d) (1,247)
Recognition of variable consideration previously
deferred until certain (e) 48
Reallocation of discounts across performance
obligations (f) (7)
Capitalisation of contract costs relating
to "Option" until future renewal dates (g) 82
Deferred tax impact 263
------------------------------
Impact of transition to IFRS 15 (1,129)
------------------------------
Total net impact on retained earnings at
1 October 2018 (1,212)
------------------------------
3.Effect of new accounting standards (continued)
IFRS 9 "Financial instruments"
IFRS 9 sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The adoption of IFRS 9 has had two principal impacts on the Sanderson Group.
(a) Classification and measurement
In most regards the classification and measurement of the Group's financial assets and liabilities are unchanged under IFRS 9. However, the Group's investment in a related entity which was previously categorised as "Available for Sale" is now categorised as "Equity investments at Fair Value through Other Comprehensive Income" with the "Available for Sale" category no longer being available under IFRS 9. The Group has made an irrevocable election to present subsequent changes in this investment's fair value in Other Comprehensive Income ("OCI"). This election is made on an investment-by-investment basis. As a result, all net gains and losses are recognised in OCI and are never reclassified to profit and loss. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
The fair value of the investment at the transition date of 1 October was estimated having regard to the performance of the underlying entity compared to listed entities at a similar stage of development.
(b) Impairment of financial assets
IFRS 9 replaces the "incurred loss" model in IAS 39 with a forward-looking "expected credit loss" ("ECL") model. Previously, the Group assessed debts on a case-by-case basis and impairment losses against particular debts were recognised to the extent that any risk of default was identified. The Group now measures its loss allowances against trade and other receivables at an amount equal to lifetime ECLs. ECLs are estimated using a provision matrix based on the Group's historic credit loss experience, adjusted for management judgement concerning factors that are specific to the receivables. The provision matrix is applied to all debts based upon their days past due. As a result, credit losses are now recognised to a greater extent than under IAS 39.
There is no impact upon actual recoverability of debts and the Group's cashflow is unaffected by the accounting policy change.
IFRS 15 "Revenue from contracts with customers"
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces IAS 18 "Revenue", IAS 11 "Construction Contracts" and related interpretations.
The Group has adopted IFRS 15 using the modified retrospective method with the effect of initially applying the standard recognised at the date of initial application, i.e. 1 October 2018. Accordingly, the information presented for previous reporting periods has not been restated, i.e. it is presented as previously reported under IAS 18, IAS 11 and related interpretations.
The Group has applied IFRS 15 retrospectively only to contracts that are not completed contracts at 1 October 2018 (IFRS 15 C7) and has used the practical expedient in paragraph C5(c) of the standard, allowing for all contract modifications prior to 1 October 2018 to be considered in aggregate.
The details of the new significant accounting policies and the nature of the changes to previous accounting policies are set out below.
3.Effect of new accounting standards (continued)
Type of Nature, timing and Nature of change in accounting
product/service satisfaction of performance policy
obligations, significant
payment terms
(c) Software Customers obtain full Under IAS 18, initial licence
licences control of software fees
licences once the were recognised upon the
associated software provision
is installed and operational of software to the customer.
on their system. Under IFRS 15 the licensed
Invoices for the software software
are usually issued does not qualify as distinct
at the start of a from the
project, on standard implementation services required
terms of 30 days. to
Although payments make it fully operational.
might be made over Therefore,
the term of the agreement licence revenue is now bundled
the agreement is binding with
for the negotiated associated services and is
term. recognised
over the implementation period
based
upon stage of completion.
Implementation
periods vary considerably
depending
upon the scale of the project
but are
very rarely greater than one
year.
The result of this change was a
net
decrease in revenue recognised
to date
and an increase in deferred
income
on the balance sheet. There was
also
a small increase in accrued
revenue
reflecting the deferred timing
of billing
and recognition under IAS 18 on
a limited
number of contracts.
------------------------------------------ --------------------------------------------
(d) Recurring Where customers contract Under IAS 18, initial licence
annual licences with the Group under fees
a rolling annual agreement were recognised upon the
fees are typically provision
significantly higher of software to the customer.
in the first year, Under IFRS 15, these
with an upfront licence arrangements are
fee payable. In subsequent treated as containing an Option
years only the annual for
support fee is payable. a renewal at a discounted price
The customer is required (the
to purchase the annual price of the annual support).
support in order to The amount
maintain an active of initial licence fee which is
licence. The contract assessed
renews annually until as relating to the Option is
either the Group or therefore
the customer terminates deferred and recognised at
the contract. subsequent
points in time when the Option
is exercised.
Based upon the amortisation
periods
of the related products, the
Group
defers two thirds of initial
licence
fees and releases this revenue
on the
first and second renewal dates.
The result of this change was a
decrease
in revenue recognised to date
and an
increase in deferred income
(including
non-current deferred income) on
the
balance sheet.
------------------------------------------ --------------------------------------------
(e) Variable In some instances Under IAS 18, recognition of the
consideration where customers contract variable
for a longer period consideration was deferred until
the licence revenue it
varies based upon was billable.
usage over the contractual Under IFRS 15, the Group
period. estimates
the highly probable value of
variable
consideration at each reporting
date,
and where necessary accrues
additional
revenue based upon this
estimation.
The result of this change was an
increase
in revenue recognised to date
and an
increase in accrued revenue.
------------------------------------------ --------------------------------------------
(f) Discounts Discounts are entirely Under IAS 18, discounts were
on products discretionary and allocated
or services may be applied to to deliverables based upon the
one or more products contract
or services that a with the customer.
customer has contracted Under IFRS 15, discounts must be
to receive. proportionately
allocated across all performance
obligations
in the contract.
The result of this change was
varied
but insignificant.
------------------------------------------ --------------------------------------------
(g) Costs In some instances Under IAS 18, large initial
of delivering the Group is required costs were
recurring to purchase rolling matched against initial licence
annual licences annual licences from revenues
third parties in order and recognised upon provision of
to provide a solution software
to the end user. Arrangements to the customer.
with these third parties Where an "Option" is recognised
vary but include arrangements under
with a large up-front IFRS 15, an element of up-front
fee followed by smaller third-party
annual renewals. licence costs is allocated to
the material
right to renew and recognition
is deferred
until the associated revenue is
released.
The result of this change was a
decrease
in cost of sales recognised to
date
and an increase in trade and
other
receivables.
------------------------------------------ --------------------------------------------
3.Effect of new accounting standards (continued)
The year-to-date impact of the adoption of IFRS 15 at 31 March 2019 has been an increase in revenue of GBP260,000; this is due to a series of significant licence contracts renewing in the first half of the year, generating the release of Option revenue. In the second half of the year a series of new licence orders are forecast and the resulting deferral of revenue from these orders, combined with a lower level of significant licence contracts renewing than in the first half, means a cumulative adverse impact for the full 2019 financial year as a result of the adoption of IFRS 15 is expected.
A detailed revenue recognition accounting policy will be included in the financial statements for the full 2019 financial year.
Accounting judgements and estimates
In addition to the quantitative impacts outlined above the application of the two new standards has required the Group to make certain additional judgements and estimates. The most significant are:
-- The establishment of standalone selling prices that are used as the basis for the apportionment of transaction price to separate performance obligations. This is a new concept introduced by IFRS 15 compared to current requirements and can impact the timing of revenue recognition. In particular, the Group has had to arrive at assumptions for determining the standalone selling price of the Option to renew, which is not directly observable from the contract.
-- Determining the appropriate period over which to defer Option revenue and associated costs. Assumptions on renewals are based upon the frequency of expenditure on intellectual property and on the pattern of amortisation of associated development costs, in order to determine the period over which the customer's right to renew constitutes a "material" right.
-- Identifying circumstances in which the Option to renew constitutes a "material" right. The Group has a high volume of relatively low value transactions with existing customers and has determined that Option revenue should only be deferred for the most significant contracts as the run rate for lower value contracts is fairly constant.
The following summary consolidated statements of comprehensive income and financial position summarise the impact of adopting IFRS 9 and IFRS 15 on the Group for the period ended 31 March 2019. It should be noted that the adoption of the standards has no effect on total contract value or on the cash flow of the Group.
Summary consolidated statement of comprehensive income
Unaudited Unaudited
six six
months months
to Impact Impact to
31/03/19 of of 31/03/19
as IFRS IFRS without
presented 9 15 adoption
Ref GBP000 GBP000 GBP000 GBP000
Revenue (c)-(f) 17,174 - 260 16,914
Cost of sales (g) (3,523) - 31 (3,554)
--------------------- ------------------ ------------------ ---------------------
Gross profit 13,651 - 291 13,360
Operating and financing
expenses (11,660) - - (11,660)
Impairment
loss on trade
and other
receivables (b) (34) (34) - -
--------------------- ------------------ ------------------ ---------------------
Profit before taxation 1,957 (34) 291 1,700
Taxation (182) (4) (58) (120)
--------------------- ------------------ ------------------ ---------------------
Profit for the period attributable
to equity holders of the
parent 1,775 (38) 233 1,580
Other
comprehensive
income (a) (22) - - (22)
--------------------- ------------------ ------------------ ---------------------
Total comprehensive income
for the period 1,753 (38) 233 1,558
--------------------- ------------------ ------------------ ---------------------
3.Effect of new accounting standards (continued)
Summary consolidated statement of financial position
Unaudited Unaudited
six six
months months
to Impact Impact to
31/03/19 of of 31/03/19
as IFRS IFRS without
presented 9 15 adoption
Ref GBP000 GBP000 GBP000 GBP000
Non-current
assets
Intangible assets 42,777 - - 42,777
Property, plant & equipment 984 - - 984
Deferred tax asset 1,068 10 130 928
Investments (a) 227 2 - 225
Trade and other receivables 474 (5) - 479
--------------------- ------------------ ------------------ ---------------------
45,530 7 130 45,393
--------------------- ------------------ ------------------ ---------------------
Current assets
Inventories 32 - - 32
Trade and
other
receivables (b)-(g) 8,665 (134) 336 8,463
Cash and cash equivalents 6,045 - - 6,045
--------------------- ------------------ ------------------ ---------------------
14,742 (134) 336 14,540
--------------------- ------------------ ------------------ ---------------------
Current
liabilities
Bank loans and overdrafts (916) - - (916)
Loan notes (258) - - (258)
Trade and other payables (6,881) - - (6,881)
Deferred consideration (443) - - (443)
Hire purchase (132) - - (132)
Current tax liabilities (148) 6 75 (229)
Deferred
income (c)-(d) (9,467) - (584) (8,883)
--------------------- ------------------ ------------------ ---------------------
(18,245) 6 (509) (17,742)
--------------------- ------------------ ------------------ ---------------------
Net current liabilities (3,503) (128) (173) (3,202)
--------------------- ------------------ ------------------ ---------------------
Total assets less current
liabilities 42,027 (121) (43) 42,191
--------------------- ------------------ ------------------ ---------------------
Non-current
liabilities
Bank loans and overdrafts (1,834) - - (1,834)
Hire purchase (135) - - (135)
Deferred tax liabilities (1,554) - - (1,554)
Deferred
income (c) (853) - (853) -
Pension and other employee
obligations (3,609) - - (3,609)
--------------------- ------------------ ------------------ ---------------------
(7,985) - (853) (7,132)
--------------------- ------------------ ------------------ ---------------------
Net assets 34,042 (121) (896) 35,059
--------------------- ------------------ ------------------ ---------------------
Equity
Called-up share capital 5,997 - - 5,997
Share premium 9,557 - - 9,557
Merger reserve 2,394 - - 2,394
Fair value reserve 2 2 - -
Foreign exchange reserve (87) - - (87)
Retained earnings 16,179 (123) (896) 17,198
--------------------- ------------------ ------------------ ---------------------
Total equity 34,042 (121) (896) 35,059
--------------------- ------------------ ------------------ ---------------------
4. Earnings per share
Unaudited Unaudited Audited
six months six months year to
to 31/03/19 to 31/03/18 30/09/18
GBP000 GBP000 GBP000
Earnings:
Result for the period from continuing
operations 1,775 1,338 3,026
Amortisation of acquisition-related
intangibles 479 225 942
Share-based payment charges 176 8 254
Acquisition-related and restructuring
costs - 264 385
Adjusted profit for the period
from continuing operations 2,430 1,835 4,607
============ ============ =========
Number of shares: Unaudited Unaudited Audited
six months six months year to
to 31/03/19 to 31/03/18 30/09/18
No. No. No.
In issue at the start of the year 59,972,484 55,070,668 55,070,668
Effect of shares issued in the period - 3,358,016 3,480,862
Weighted average number of shares
at period end 59,972,484 58,428,684 58,551,530
Effect of share options 1,899,318 663,454 1,863,304
Weighted average number of shares
(diluted) 61,871,802 59,092,138 60,414,834
============ ============ ==========
Earnings per share: Audited
Unaudited Unaudited year to
six months six months
to 31/03/19 to 31/03/18 30/09/18
(pence) (pence) (pence)
Total attributable to equity holders
of the parent undertaking:
Basic 3.0 2.3 5.2
Diluted 2.9 2.3 5.0
------------- ------------- ---------
Earnings per share, adjusted, from
continuing operations:
Basic 4.1 3.1 7.9
Diluted 3.9 3.1 7.6
--- --- ---
5. Equity dividends paid
Unaudited Unaudited Audited
Six months Six months Year to
to 31/03/19 to 31/03/18 30/09/18
GBP000 GBP000 GBP000
Interim dividend - - 750
Final dividend 1,050 924 924
------------- ------------- ----------
Total dividend paid in period 1,050 924 1,674
------------- ------------- ----------
6. Post balance sheet events
Acquisition
On 2 May 2019 the Group acquired control of Gould Hall Computer Services Limited for a maximum enterprise value of GBP3.17 million.
Established for over thirty years, Gould Hall provides software solutions to customers operating in the supply chain and distribution sectors. Gould Hall employs 27 staff, operates from Skelmersdale and provides full enterprise solutions for its customers. The acquisition further builds on the capability of the Sanderson Enterprise division.
The last year of audited accounts to 31 March 2018 show Gould Hall reporting revenue of GBP3.03 million with profit before tax of GBP0.30 million and net assets of GBP1.44 million. At acquisition, the acquired net assets included net cash balances of GBP0.79 million.
The purchase consideration for the acquisition comprises an initial GBP1.81 million, made up of GBP1.27 million in cash (financed from existing Sanderson cash resources) and by the issue of 500,000 Sanderson 10p ordinary shares. These shares are subject to a lock-in period of three years. Deferred consideration, totalling GBP2.15 million, is payable in cash in a number of tranches over the next six years; GBP0.60 million is unconditional and payable by 2023 and a further GBP1.55 million which is conditional upon certain performance criteria having been met.
The initial accounting for the business combination is incomplete due to the close proximity of the acquisition date to the date of preparing these accounts. Certain disclosure requirements including the following therefore cannot be made at this stage:
- Fair value of assets and liabilities acquired at acquisition date - Goodwill to be recognised on acquisition - Acquisition related costs
- The revenue and profit of the combined entity for the current reporting period as though the acquisition date had been as of the beginning of the annual reporting period
7. Interim report
The Group's interim report will be sent to the Company's shareholders. This report will also be available from the Company's registered office and on the Company's website www.sanderson.com.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR EALSSFLNNEEF
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