Enterprise software provider Sanderson says that trading is showing signs of improvement.
Recurring revenues accounted for 55% of revenues of £24.9m in the year to September 2009 - the previous year‘s revenues were £27.6m. Underlying profits fell from £3.2m to £1.4m. Activity levels are improving but most of the deals are falling into this financial year. Admin expenses have been reduced to just over £14m a year, against just under £15.6m last year.
The contributions of both the manufacturing and multi-channel retail divisions were lower. The latter contributes more than two-thirds of profits and new products will be launched in 2010. Food is increasing in importance to the manufacturing division.
The final dividend is unchanged at 0.2p a share, although the total for the year is down from 1.4p a share to 0.4p a share.
Despite the slump in profit Sanderson still managed to cut net debt by £700,000 to £9.96m in the year to September 2009. Charles Stanley believes the net debt could be cut to £5m by the end of September 2012. The bank facility was renegotiated in July.
Charles Stanley forecasts a recovery in underlying pre-tax profits to £1.9m in the year to September 2010.
At 19.5p a share, Sanderson is valued at £8.46m. The shares are trading on less than five times 2009-10 prospective earnings, falling to less than four in 2010-11. These are based on a nil tax charge.
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