Half-year sales slipped at retail and manufacturing software supplier, Sanderson – mainly reflecting the end of an old, low-margin contract. But management's focus on driving sales of the group's own software has lifted the gross margin to 84.3 per cent from 81.4 per cent and the shares look too cheaply rated.
Sales at the manufacturing unit actually slipped 2 per cent overall to £2.95m. Although food and drink manufacturing is recording strong growth which, combined with the £0.8m order book, underpins expectations for improved second half results. Meanwhile, strong sales of Sanderson's own products has propelled retail unit operating profit by 26 per cent to £0.58m and the order book here has swelled to £1.3m from £0.8m. Management plans to increase group revenues and profits to £20m and £3m-£4m, respectively, in the next three years. The £11.75m sale of the point of sales business in January has allowed Sanderson to promise a full-year dividend of 1.2p; a 60 per cent hike.
Broker Charles Stanley expects adjusted full-year pre-tax profit of £1.8m, giving adjusted EPS of 3.8p (2011:£2.3m/5.1p).
SANDERSON GROUP (SND) | ||||
|---|---|---|---|---|
| ORD PRICE: | 40p | MARKET VALUE: | £17.4m | |
| TOUCH: | 38-42p | 12-MONTH HIGH: | 44p | LOW: 25p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 44 | |
| NET ASSET VALUE: | 45p* | NET CASH: | £3.56m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 7.04 | 0.37 | 0.6 | 0.3 |
| 2012 | 6.14 | 0.41 | 0.4 | 0.5 |
| % change | -13 | +11 | -33 | +67 |
Ex-div:18 Jul Payment:17 Aug *Includes intangible assets of £22m, or 51p per share | ||||
