2016 Final Results

RNS Number : 4864Q

Sanderson Group PLC

30 November 2016

 

FOR IMMEDIATE RELEASE                                                                          30 NOVEMBER 2016

SANDERSON GROUP PLC

Preliminary Results for the year ended 30 September 2016

Strong trading momentum; further profitable growth; final dividend up 16%

Sanderson Group plc ('Sanderson' or 'the Group'), the software and IT services business specialising in digital retail technology and enterprise software for businesses operating in the manufacturing, wholesale distribution and logistics sectors, announces its preliminary results for the year ended 30 September 2016.

Commenting on the results, Chairman, Christopher Winn, said:

"The Group's trading results for the year ended 30 September 2016 are in line with market expectations in terms of profit whilst revenue is slightly ahead of expectations.  Revenue has increased by 11% to £21.32 million (2015: £19.18 million), with adjusted operating profit* growing by almost 12% to £3.69 million (2015: £3.30 million).  Profit before tax increased by 37% to £2.78 million (2015: £2.03 million).

"Gross margin remains strong at 84% (2015: 85%), reflecting a continuing emphasis on the supply of Sanderson proprietary software and services.  Sales order intake grew by over 20% to £12.26 million (2015: £10.03 million) and this increase included over £3.83 million of business gained from new customers.

"Sanderson has a strong, cash-generative business model which has enabled the Board to maintain a progressive dividend policy whilst continuing to invest in the further development of the Group's businesses.  The Board is proposing an increase of 16% in the final dividend to 1.4 pence per share (2015: 1.2 pence)."

Highlights - Financial 

• Revenue increased by 11% to £21.32 million (2015: £19.18 million).
• Pre-contracted recurring revenue grew 10% to £10.75 million (2015: £9.77 million), representing approximately 50% of total revenue in the year (2015: 51%).
• Operating profit* increased 12% to £3.69 million (2015: £3.30 million).
• Profit before tax of £2.78 million (2015: £2.03 million), an increase of 37%.
• Diluted earnings per share of 4.4 pence (2015: 3.4 pence), an increase of 29%.
• Adjusted** diluted earnings per share of 5.5 pence (2015: 4.9 pence).
• Cash balance at year-end of £4.34 million (2015: £4.61 million) after acquisition related cash consideration payments of £1.66 million and dividend payments during the year of £1.21 million.
• Proposed final dividend up 16% to 1.4 pence per share (2015: 1.2 pence). 

* Operating profit is stated before amortisation of acquisition-related intangibles, share-based payment charges and acquisition-related and restructuring costs.

** Adjusted for amortisation of acquisition-related intangibles, share-based payment charges and acquisition related and restructuring costs.
 

Highlights - Operational

• New reporting structure comprising two divisions:  Digital Retail and Enterprise Software.
• Significantly improved order intake of £12.26 million (2015: £10.03 million).
• Robust order book up by over 25% at year-end to £3.02 million (2015: £2.35 million).
• Digital Retail revenue increased by 8.8% to £6.40 million (2015: £5.88 million); with strong demand from existing customers including Axminster Tools & Machinery and Thorntons.
• Enterprise Division had a very successful year with revenues up 12% to £14.92 million (2015: £13.30 million); robust order book up by over 40% at year-end to £2.10 million (2015: £1.43 million); strong demand from both existing as well as new customers.
• Mr Philip Kelly, a Non-Executive Director since November 2004, retired from the Board in June after over eleven years of valued service and support to the Group, to the Board and to the shareholders.

On current trading and outlook, Group Chief Executive, Ian Newcombe, added:

"Sanderson has maintained a strong balance sheet and a robust business model which is built upon long-term relationships with customers, generates strong recurring revenues and which the Board believe positions the Group well in its target markets.

"Together with a strong order book and good sales momentum, the Board has a good level of confidence that, at this relatively early stage of the new financial year, the Group will make further progress and deliver trading results which are again, at least, in line with market expectations for the year ending 30 September 2017."

Enquiries:                                                                                      

Christopher Winn, Chairman                                                                Telephone: [phone]

Ian Newcombe, Group Chief Executive

Adrian Frost, Finance Director

Mark Taylor,

James White

N+1 Singer                                                                                          Telephone: [phone]

(Nominated Adviser and Broker)

Paul Vann, Walbrook PR Limited                                                          Telephone: [phone]

                                                                                                            Mobile:      [phone]

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

SANDERSON GROUP PLC

Preliminary Results for the year ended 30 September 2016

CHAIRMAN'S STATEMENT

Sanderson Group plc ('Sanderson' or 'the Group'), the software and IT services business specialising in digital retail technology and enterprise software for businesses operating in the manufacturing, wholesale distribution and logistics sectors, announces Preliminary Results for the financial year ended 30 September 2016.

Financial results

The Group's trading results for the year ended 30 September 2016 are in line with market expectations in terms of profit whilst revenue is slightly ahead of expectations.  Revenue has increased by 11% to £21.32 million (2015: £19.18 million), with adjusted operating profit (stated before the amortisation of acquisition-related intangibles, share-based payment charges and acquisition-related and restructuring costs) growing by almost 12% to £3.69 million (2015: £3.30 million). Profit before tax increased by 37% to £2.78 million (2015: £2.03 million).

Gross margin remains strong at 84% (2015: 85%), reflecting a continuing emphasis on the supply of Sanderson proprietary software and services.  Recurring revenue from pre-contracted licence and ongoing support services grew to £10.75 million (2015: £9.77 million) representing 50% of total revenue in the period (2015: 51%).  Sales order intake grew by over 20% to £12.26 million (2015: £10.03 million).  This increase included over £3.83 million of business gained from new customers, representing almost twice the level of the prior year (2015: £2.00 million).  The Group order book at the year-end had grown by over 25% to £3.02 million (2015: £2.35 million).

Sanderson has a strong cash-generative business model which resulted in a cash balance at 30 September 2016 of £4.34 million (2015: £4.61 million).  This balance is stated after the payment of £1.66 million of deferred consideration in respect of businesses acquired in 2013 and 2014, as well as dividend payments which, in the year, totalled £1.21 million.

Dividend

Strong cash generation has enabled the Board to maintain a progressive dividend policy whilst continuing to invest in the further development of the Group's businesses.  Subject to the approval of shareholders at the Annual General Meeting, scheduled to be held on 2 March 2017, the Board is proposing an increase of 16% in the final dividend to 1.4 pence per ordinary share (2015: 1.2 pence).  The total of 2.4 pence per ordinary share for the year represents an increase of 14% over the prior year dividend (2015: 2.1 pence).  The final dividend, if approved, will be paid on 17 March 2017, to shareholders on the register at the close of business on 3 March 2017.

 

Strategy

The strategy of the Board is to achieve sustained growth by continuing to build and to develop the Sanderson business.  Whilst investment is planned across all of the Group's businesses, particular emphasis will again be placed on enhancing the range of mobile and ecommerce solutions in Digital Retail and on further strengthening the Group's proposition in its Enterprise Software Division, especially in food and drink processing.  The Group has enjoyed considerable success and has built a strong reputation over a number of years, within the wholesale distribution market and further investment is planned in this area together with complementary products covering the logistics, fulfilment and supply chain market areas.  Mobile solutions continue to be developed to address all of the Group's target markets.

In order to augment organic growth, selective acquisition opportunities are under continued consideration and a number of potential opportunities are currently being developed.  Management adopts a careful and measured approach to acquisitions and cautiously considers any risks which might be involved.  The Board remains focused upon further increasing shareholder value by continuing to deliver both organic and acquisitive growth, achieving 'on target' results, increased earnings, maintaining strong cash generation and a robust balance sheet.  This will enable the Board to maintain progressive dividend returns to shareholders.

Management and staff

Sanderson now employs 230 staff who have a high level of experience and specialist expertise in the market sectors which the Group addresses.  On behalf of the Board, I would again like to express our appreciation and thank everyone for their hard work, support, dedication and contribution to the ongoing development of the Group.

Mr Philip Kelly, a Non-Executive Director since November 2004, retired from the Board following the release of the Interim Results announcement in June, after over eleven years of valued service and support to the Group, the Board and shareholders.  On behalf of the Board, I would like to thank Philip, for his support and contribution to the development of the Group.

Christopher Winn

Chairman

 

SANDERSON GROUP PLC

Preliminary Results for the year ended 30 September 2016

GROUP CHIEF EXECUTIVE'S BUSINESS REVIEW

The target market for Sanderson products and services primarily comprises of small and medium-sized enterprises.  The Group's well-developed business model is to foster long-term customer relationships which result in a high proportion of sales arising from pre-contracted recurring revenue, complemented by incremental sales to its strong, well established and growing customer base.  This steady business stream usually accounts for around 90% of Group revenues.  Sanderson proprietary software is developed in anticipation of technological developments and in conjunction and collaboration with its large customer base.  Sanderson proprietary software is marketed and sold under licence with all sales, marketing, delivery, support and services being carried out by the Group's own expert staff.

Group business solutions are developed and marketed in order to provide customers with 'value for money' IT systems, designed to offer timely and tangible business benefits.  These solutions typically enable customers to increase revenue whilst also achieving additional efficiencies by making and maintaining cost savings, both often within twelve months of implementation.  The Group continues to invest in the development of its software products and services, as well as in increasing its sales and marketing capacity and capability.  Particular emphasis has been placed on the Group businesses specialising in the UK food and drink processing, wholesale distribution sectors and especially, in the market for digital retail solutions with the development of mobile and ecommerce solutions.  These solutions enable retailers to capitalise on the significant growth arising from the widespread adoption of smartphones and tablets and to exploit 'mobile' as a sales channel that is fully integrated with existing business systems.

At the core of the Group's well-developed business model is Sanderson proprietary software with both on-premise as well as cloud-based solutions being offered to customers on an ongoing annual contractual basis, together with accompanying consultancy, support and maintenance services.  In the year ended 30 September 2016, these pre-contracted recurring revenues amounted to £10.75 million (2015: £9.77 million) representing 50% of total revenues (2015: 51%). The gross margin from recurring revenues covered 63% of total Group overheads in the financial year (2015: 67%). 

Reflecting both prior and continuing investment in the Group's sales and marketing function, Sanderson achieved a significantly improved level of order intake during the year of £12.26 million compared with £10.03 million in the prior year.  The Group experienced an increase in sales orders in the fourth quarter and overall, during the year, 22 new customers contributed orders to the value of £3.83 million (2015: 21 new customers generated orders to the value of £2.00 million).

Review of Digital Retail

Sanderson provides comprehensive IT solutions to businesses operating in the ecommerce, mobile commerce and retail sectors of the UK.  Mobile enablement and deployment continues to be a key business driver in this market sector with increasing levels of business activity.  This market is still at a relatively early stage of development.

Revenue increased by 8.8% to £6.40 million (2015: £5.88 million), whilst operating profits (stated before the amortisation of acquisition-related intangibles, share-based payment charges and acquisition-related and restructuring costs)  of £0.89 million (2015: £1.29 million) partly reflect the planned further investment of over £0.5 million per annum in management, sales and delivery capacity in anticipation of continued rapid growth within the digital retail market.  Demand from existing customers for the Group's latest release of its ecommerce solution continued to grow with sales orders gained from a number of customers including Axminster Tools & Machinery and Thorntons.  The Digital Retail Division experienced a slower first half year to 31 March 2016, but second half activity levels improved, with some orders which had been delayed in the half year to March coming through in the second half.  A large new customer was gained in the final month of the year.  The Sanderson solution is scheduled to be delivered to this customer during the current financial year ending 30 September 2017. 

The year-end order book was £0.92 million (2015: £0.92 million) and with a number of developing sales prospects, active pilot projects and strengthening partnerships with existing customers, the Digital Retail business is well-positioned to take advantage of the growth in this market.

Review of Enterprise Software Division

The Enterprise Software Division of Sanderson comprises two market-focused businesses which are based upon the manufacturing and the wholesale, distribution and logistics sectors.  The Enterprise Software Division has had a very successful year gaining business from a number of new customers some of whom had delayed investment decisions in the prior year.  Divisional revenue increased by 12% to £14.92 million (2015: £13.30 million) and an improvement in efficiency levels produced a 39% increase in operating profit (stated before the amortisation of acquisition-related intangibles, share-based payment charges and acquisition-related and restructuring costs) to £2.80 million (2015: £2.01 million).  The Enterprise Division has built up a strong order book which, at the financial year-end, was valued at £2.10 million (2015: £1.43 million), an increase of over 40% from the prior year. 

Businesses in the engineering, plastics, aerospace, electronics, print ('general manufacturing') and food and drink processing sectors represent the main areas of specialisation for Sanderson in manufacturing markets.  The Group continues to invest in product development and in its sales and marketing capability.  Traceability of products and ingredients through the food manufacturing and supply chain and the assurance of product compliance with the latest regulatory standards are strong features of the Group's solution; these are key requirements for businesses operating in the food and drink processing industry.  The manufacturing business overall gained seven new customers during the year, including Thistle Seafoods and Peter's Food Service, at an increased average order value of £185,000 (2015: £59,000). 

Sanderson activities in the wholesale, distribution and logistics sectors have been strengthened by the 2013 and 2014 acquisitions which have expanded the application of Sanderson solutions for the wholesale distribution, cash and carry and fulfilment sectors into the specialist warehousing, logistics and supply chain market sectors.  Further potential for growth is anticipated from the logistics, fulfilment and supply chain sector of the Group's target market.  Thirteen new customers were gained during the year, at an average initial order value of £160,000 (2015: £46,000), including Pedigree Wholesale, Robinson's and Purity Soft Drinks.  This compares with eight new customers in the prior year.  Large orders from existing customers included Hancocks and Kitwave Wholesale Group. 

Outlook

The Board has a stated three-year business plan to accelerate the Group's growth and development both organically as well as by making selective acquisitions, to further increase profitability and dividends in order to enhance shareholder value.  The Board will continue to invest in its digital retail solutions as well as in its enterprise software businesses, in order to ensure that product offerings continue to both attract new customers, as well as, maximise and encourage additional investment in system enhancements and new technological developments from existing customers.  The combination of more rapid growth available via the Digital Retail Division and a renewed impetus for growth from the Enterprise Software Business is expected to enable the Group to meet its strategic targets over the next three years and beyond. 

The Board and Sanderson senior management carefully monitor the development of sales prospects and the progression of prospects to customers, especially since the Brexit vote in June.  The Group has not yet detected any loss of confidence from either existing or prospective customers to invest in Sanderson business solutions.  Sanderson has maintained a strong balance sheet and a robust business model which is built upon long-term relationships with customers, generates strong recurring revenues and which the Board believe positions the Group well in its target markets.  Together with a strong order book and good sales momentum, the Board has a good level of confidence that, at this relatively early stage of the new financial year, the Group will make further progress and deliver trading results which are again, at least, in line with market expectations for the year ending 30 September 2017.

Ian Newcombe

Group Chief Executive

 

Consolidated income statement

for the year ended 30 September 2016

		2016	2015
	Note	£000	£000
Revenue	2	21,320	19,182
Cost of sales		(3,399)	(2,964)
Gross profit		17,921	16,218
Technical and development costs		(8,428)	(7,858)
Administrative and establishment expenses		(3,875)	(3,774)
Sales and marketing costs		(2,592)	(2,165)
Profit from operating activities		3,026	2,421
Profit from operating activities before adjustments in respect of the following:		3,686	3,303
Amortisation of acquisition-related intangibles		(513)	(483)
Acquisition-related and restructuring costs		(62)	(310)
Share-based payment charges		(85)	(89)
Profit from operating activities		3,026	2,421
Finance income	3	27	47
Finance expenses	4	(180)	(185)
Acquisition-related finance expense	4	(92)	(252)
Profit before taxation		2,781	2,031
Taxation	5	(354)	(164)
Profit for the year		2,427	1,867

All operations are continuing.

All of the profit for the year is attributable to equity holders of the parent undertaking.

Earnings per share

From profit attributable to the owners of the parent undertaking during the year
Basic earnings per share		7	4.4p	3.4p
Diluted earnings per share		7	4.3p	3.3p

Consolidated statement of comprehensive income

for the year ended 30 September 2016

		2016	2015
		£000	£000
Profit for the year		2,427	1,867
Other comprehensive income/(expense)
Items that will not subsequently be reclassified to profit or loss
Re-measurement of net defined benefit liability		(3,678)	(90)
Deferred taxation effect of defined benefit pension plan items		568	18
		(3,110)	(72)
Items that may subsequently be reclassified to profit or loss
Change in fair value of available for sale financial asset		19	(31)
Foreign exchange translation differences		31	(78)
Total other comprehensive expense		(3,060)	(181)
Total comprehensive (expense)/income attributable to equity holders of the parent		(633)	1,686

Consolidated statement of financial position

at 30 September 2016

			2016	2015
			£000	£000
Non-current assets
Property, plant and equipment			524	469
Intangible assets			30,473	30,627
Deferred tax assets			1,755	1,319
			32,752	32,415
Current assets
Inventories			20	83
Trade and other receivables			7,032	5,472
Other short-term financial assets			209	190
Cash and cash equivalents			4,344	4,607
			11,605	10,352
Current liabilities
Trade and other payables			(4,570)	(3,909)
Deferred consideration			(155)	(1,594)
Income tax payable			(337)	-
Deferred income			(5,270)	(4,830)
			(10,332)	(10,333)
Net current assets			1,273	19
Total assets less current liabilities			34,025	32,434
Non-current liabilities
Pension obligations			(8,155)	(4,627)
Deferred consideration			(115)	(244)
Deferred tax liabilities			(824)	(936)
			(9,094)	(5,807)
Net assets			24,931	26,627

Equity attributable to equity holders of the parent company
Share capital			5,485	5,460
Share premium			9,056	9,023
Available for sale reserve			79	60
Foreign exchange reserve			(56)	(87)
Retained earnings			10,367	12,171
Total equity			24,931	26,627

Consolidated statement of changes in equity

for the year ended 30 September 2016
	Share capital	Share premium	Available for sale reserve	Foreign exchange reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000
At 1 October 2015	5,460	9,023	60	(87)	12,171	26,627
Exercise of share options	25	33	-	-	-	58
Dividend paid	-	-	-	-	(1,206)	(1,206)
Share-based payment charge	-	-	-	-	85	85
Transactions with owners	25	33	-	-	(1,121)	(1,063)
Profit for the year	-	-	-	-	2,427	2,427
Other comprehensive income:
Remeasurement of net defined benefit liability	-	-	-	-	(3,678)	(3,678)
Deferred tax on above	-	-	-	-	568	568
Foreign exchange translation differences	-	-	-	31	-	31
Change in fair value of available for sale financial asset	-	-	19	-	-	19
Total comprehensive income/(expense)	-	-	19	31	(683)	(633)
At 30 September 2016	5,485	9,056	79	(56)	10,367	24,931
for the year ended 30 September 2015
	Share capital	Share premium	Available for sale reserve	Foreign exchange reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000
At 1 October 2014	5,406	8,809	91	(9)	11,520	25,817
Exercise of share options	54	214	-	-	(150)	118
Settlement of share options	-	-	-	-	(48)	(48)
Dividend paid	-	-	-	-	(1,035)	(1,035)
Share-based payment charge	-	-	-	-	89	89
Transactions with owners	54	214	-	-	(1,144)	(876)
Profit for the year	-	-	-	-	1,867	1,867
Other comprehensive income:
Remeasurement of net defined benefit liability	-	-	-	-	(90)	(90)
Deferred tax on above	-	-	-	-	18	18
Foreign exchange translation differences	-	-	-	(78)	-	(78)
Change in fair value of available for sale financial asset	-	-	(31)	-	-	(31)
Total comprehensive income	-	-	(31)	(78)	1,795	1,686
At 30 September 2015	5,460	9,023	60	(87)	12,171	26,627

Consolidated statement of cash flows

for the year ended 30 September 2016
		2016	2015
		£000	£000
Cash flows from operating activities
Profit for the year after taxation		2,427	1,867
Adjustments for:
Amortisation of intangible assets		1,026	982
Depreciation		199	156
Share-based payment charge		85	89
Net finance expense		245	390
Income tax charge		354	164
Operating cash flow before changes in working capital		4,336	3,648
Movement in trade and other receivables		(1,560)	(105)
Movement in inventories		63	(37)
Movement in trade and other payables		1,135	(629)
Cash generated from operations		3,974	2,877
Payments to defined benefit pension scheme		(330)	(450)
Income tax paid		-	(5)
Net cash flow from operating activities		3,644	2,422
Cash flow from investing activities
Purchase of property, plant and equipment		(254)	(296)
Acquisition of subsidiary undertakings, net of cash acquired		-	(1,041)
Payment of deferred consideration in respect of subsidiary undertakings		(1,660)	(895)
Dividend received		15	12
Bank interest received		12	35
Development expenditure capitalised		(872)	(824)
Net cash flow from investing activities		(2,759)	(3,009)
Cash flow from financing activities
Issue of shares, net of costs		58	118
Settlement of share options		-	(48)
Equity dividends paid		(1,206)	(1,035)
Net cash flow from financing activities		(1,148)	(965)
Net decrease in cash and cash equivalents		(263)	(1,552)
Cash and cash equivalents at beginning of year		4,607	6,159
Cash and cash equivalents at the end of the year		4,344	4,607

 

Notes

1.   Basis of preparation

The Group financial statements have been prepared 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 digital retail and enterprise software sectors. The information provided to the CODM is analysed between the divisions as follows:

	Digital Retail		Enterprise Software			Total
	2016 £000	2015 £000	2016 £000	2015 £000	2016 £000		2015 £000
Revenue - external customers	6,398	5,877	14,922	13,305	21,320		19,182
Cost of sales	(1,099)	(719)	(2,300)	(2,245)	(3,399)		(2,964)
Gross profit	5,299	5,158	12,622	11,060	17,921		16,218
Depreciation +	(58)	(52)	(141)	(104)	(199)		(156)
Operating profit before adjustments	885	1,293	2,801	2,010	3,686		3,303
Amortisation*	(266)	(266)	(247)	(217)	(513)		(483)
Acquisition-related and restructuring costs	-	-	(62)	(310)	(62)		(310)
Share-based payment charges	(53)	(53)	(32)	(36)	(85)		(89)
Result from operating activities	566	974	2,460	1,447	3,026		2,421
Net finance expense					(245)		(390)
Taxation					(354)		(164)
Profit attributable to equity holders					2,427		1,867

 *Amortisation of acquisition-related intangibles

+ Depreciation charged to operating profit

The CODM uses both gross profit and operating profit measures in assessing the performance of the Group's divisions.

Included within other unallocated assets and liabilities are cash balances totalling £0.72m (2015: £1.60 million) and an investment held for resale.  Amounts in respect of shared operations cannot be allocated between operating divisions.

Analysis of items contained within the Statement of Financial Position Digital Retail Enterprise Software Total
	2016 £000	2015 £000	2016 £000	2015 £000	2016 £000	2015 £000
Property, plant and equipment	135	76	389	393	524	469
Intangible assets	6,092	6,127	24,381	24,500	30,473	30,627
Deferred tax assets	117	83	1,638	1,236	1,755	1,319
Inventory	20	83	-	-	20	83
Cash and cash equivalents	860	257	2,765	2,754	3,625	3,011
Trade and other receivables	1,912	1,634	5,120	3,838	7,032	5,472
Total assets	9,136	8,260	34,293	32,721	43,429	40,981
Trade and other payables	(1,214)	(246)	(3,356)	(3,663)	(4,570)	(3,909)
Deferred income	(717)	(695)	(4,553)	(4,135)	(5,270)	(4,830)
Income tax	(56)	-	(281)	-	(337)	-
Deferred taxation	(275)	(174)	(549)	(762)	(824)	(936)
Deferred consideration	(50)	(1,384)	(220)	(454)	(270)	(1,838)
Pension obligations	-	-	(8,155)	(4,627)	(8,155)	(4,627)
Total liabilities	(2,312)	(2,499)	(17,114)	(13,641)	(19,426)	(16,140)
Allocated net assets	6,824	5,761	17,179	19,080	24,003	24,841
Other unallocated assets and liabilities					928	1,786
Net assets					24,931	26,627

 

3.   Finance income

	2016 £000	2015 £000
Bank interest received	12	35
Dividend received	15	12
	27	47

4.   Finance expenses

	2016 £000	2015 £000
Net interest on defined benefit pension scheme deficit	180	185

The Company is required by International Accounting Standards to calculate the fair value of deferred consideration by discounting expected future cash payments using the Company's cost of capital. The charge of £92,000 (2015: £252,000) has been reported as an acquisition-related finance expense.

5.   Taxation

Current tax expense	2016 £000	2015 £000
UK corporation tax for the current year	334	-
Relating to prior periods	-	26
Total current tax	334	26
Deferred tax
Deferred tax for the current year	29	216
Relating to prior periods	51	(78)
Arising on change in rate of deferred tax	(60)	-
Total deferred tax	20	138
Taxation charged to the income statement	354	164

 

Reconciliation of effective tax rate

The current consolidated tax charge for the period is lower (2015: lower) than the average standard rate of corporation tax in the UK during the period of 20% (2015: 20.5%).  The differences are explained below.

	2016	2015
	£000	£000
Profit before taxation	2,781	2,031
Tax using the average UK Corporation tax rate of 20% (2015: 20.5%)	556	416
Effects of:
Expenses not deductible for tax purposes	70	74
Utilisation and recognition of losses	(153)	(262)
Under/(over) provision in previous years	51	(52)
Change in tax rate	(60)	(12)
Expenses not reported in the income statement	(110)	-
Total tax in income statement	354	164

6.   Dividends

		2016 £000	2015 £000
Interim dividend of 1.00 per share (2015: 0.90p)		549	491
Final dividend relating to previous financial year of 1.20p per share (2015: 1.00p)		657	544
Total dividend for the financial year		1,206	1,035

A final dividend of 1.40 pence per ordinary share in respect of the financial year ended 30 September 2016 will be proposed at the Annual General Meeting of the Company, expected to be held on 2 March 2017. If approved by shareholders, the total final dividend payment will amount to £767,928. The directors will receive a proportion of this dividend by virtue of their shareholdings in the Company, details of which are disclosed in the Directors' Report.

 

7.   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 at the end of the year and the diluted weighted average number of ordinary shares at the end of 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:

Earnings:	2016	2015
	£000	£000
Result for the year	2,427	1,867
Amortisation of acquisition-related intangibles	513	483
Share-based payment charges	85	89
Acquisition- related and restructuring costs	62	310
Adjusted profit for the year	3,087	2,749

Number of shares:	2016	2015
	No.	No.
In issue at the start of the year	54,600,550	54,063,808
Effect of shares issued in the year	173,846	347,143
Weighted average number of shares at year end	54,774,396	54,410,951
Effect of share options	1,520,615	1,446,115
Weighted average number of shares (diluted)	56,295,011	55,857,066

Earnings per share:	2016 (pence)	2015 (pence)
Total attributable to equity holders of the parent undertaking:
Basic	4.4	3.4
Diluted	4.3	3.3

Earnings per share, adjusted, from continuing operations:
Basic	5.6	5.1
Diluted	5.5	4.9

8.   Annual Report & 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 2016 statutory financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498(2) or (3) of the Companies Act 2006.

The accounts for the year ended 30 September 2016 will be laid before the Company at the Annual General Meeting, expected to be held at the Company's registered office on 2 March 2017. 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, and will be delivered to the Registrar of Companies in due course.
 

 

END

 

 

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