It's been a long time since Sanderson (SND:AIM) enjoyed the sort of exposure and household name-iness of the days as a regular shirt sponsor of both Southampton and Sheffield Wednesday football clubs. A lot has happened since those heady days in the late 1990s but this remains a company worth a second glance by investors.
Today's interims are roughly in line with expectations, which means double-digit growth in both revenues and pre-tax profits, not bad given odd delays on some workflow. The shares are up nearly 2.5% to 66.5p. It has now got a new full time chief executive in Ian Newcombe, someone capable of giving long-standing, and highly personable, executive chairman Chris Winn more of a helping hand.
Coventry-based Sanderson concentrates on supplying e-commerce and enterprise resource planning (ERP) software to its more resilient wholesale retail and manufacturing customers, where investment spending is holding up much better.
These areas are more robust for several reasons, including increasing compliance (food standards, for example), an overall transition to multi-channel IT integration, even making IT clean and green by using less power and throwing off less wasted heat. But the really big theme remains the boom in mobile devices being used by business, such as in shop-floor automation, product tracking and managing, and shifting customer data to the cloud. These are areas where Sanderson has thrived, building growing recurring revenues (52% in the half), helped by the company's early development of a cloud-based software-as-a-service model to complement its traditional licence sales.
Some will question the balance sheet of the company, especially given cash outflows of £2.2 million that leaves the net cash position of £4 million substantially down on the £5.1 million of 12 months ago. There's also a legacy £4.8 million pension deficit the consider. But investors need to contrast the cash position in the context of a busy spell of M&A, where it paid out £1 million net for Proteus, £800,000 of deferred payments on its One iota acquisition, and spent half a million of dividends.
Incidentally, the One iota business was largely responsible to two landmark retail deals this year, with JD Sports and Superdry.