Interim Results For the six months ended 31 March 2016 Christopher - - PowerPoint PPT Presentation

Interim Results For the six months ended 31 March 2016

Christopher Winn - Chairman | Ian Newcombe - Chief Executive | Adrian Frost - Finance Director

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Interim results for the six months ended 31 March 2016

Contents

• Interim results for the six months to 31 March 2016 (slides 3-10)
• Business review (slides 11-23)
• Sanderson background and investors (slides 24-31)

Sanderson Group plc is a software and IT services business specialising in digital technology and enterprise software for businesses operating in the retail, manufacturing, wholesale distribution and logistics sectors

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Interim results for the six months ended 31 March 2016

Half year to 31 March 2016

• Continued organic growth
• High gross margin reflecting Sanderson Intellectual Property (IP)
• Orders from new customers excellent, resulting in large order book
• A strong second half in prospect

Profit figures are stated before charges for amortisation of acquisition-related intangibles, share-based payment charges and acquisition-related & restructuring costs.

Revenue

8%

Gross Margin

Now

86.2%

22% 7% 5% 11%

Order Intake Operating Profit Adj eps Interim Dividend

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Interim results for the six months ended 31 March 2016

Half year to 31 March 2016

• Investment in human capital

(generates IP & recurring revenue)

• Profit now larger than pre EPoS

disposal in 2012

Consolidated Income Statement 2016 2015 £000 £000 Revenue 9,860 9,090 Gross profit 8,501 7,702 Gross margin 86.2% 84.7% Technical costs (4,176) (3,885) Sales & marketing costs (1,271) (1,037) Admin & establishment costs (1,580) (1,406) Operating profit 1,474 1,374 Amortisation & share-based payments (300) (281) Acquisition & restructuring costs – (87) Net finance costs (145) (101) Pre-tax profit 1,029 905 Taxation (91) (71) Retained profit 938 834 Adjusted eps 2.3p 2.2p Diluted adjusted eps 2.2p 2.2p

Operating profit figures are stated before charges for amortisation of acquisition-related intangibles, share-based payment charges and acquisition-related & restructuring costs.

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Interim results for the six months ended 31 March 2016

Cashflow analysis

Summary cashflow statement H1 2016 H1 2015 £000 £000 Cash from operations 1,633 749 Acquisition consideration (948) Deferred consideration (1,538) (845) Dividends (657) (544) Pension scheme funding (180) (300) Development expenditure (403) (286) Other (76) (31) Movement in cash (1,221) (2,205) Closing cash balance 3,386 3,954 Cash per share (pence) 6.18 7.25

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Interim results for the six months ended 31 March 2016

• Good cash generation
• Strong cash-backed balance

sheet

A strong balance sheet

Consolidated Balance Sheet 2016 2015 £000 £000 Intangible assets 30,502 30,573 Tangible assets 528 359 Current assets excluding cash 5,824 5,384 Current and deferred taxation 292 262 Cash 3,386 3,954 Trade and other payables (3,871) (3,431) Deferred consideration (361) (1,466) Deferred income (4,827) (4,853) Pension obligations (4,539) (4,600) 26,934 26,182 Share capital and premium 14,528 14,470 Other reserves (88) 54 Retained earnings 12,494 11,658 26,934 26,182 1 2 3 4

£m

Cash represents

• c. 6.2p per share

Cash

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Interim results for the six months ended 31 March 2016

Balance sheet analysis

Intangible Analysis - Acquisition Related (Book value, £000) Goodwill Product IP Customer List Totals Sanderson 20,951 20,951 Elucid 722 722 TSM 40 31 26 97 Priam 310 107 115 532 One iota 2,608 1,283 741 4,632 Proteus 1,085 530 150 1,765 Evogenic 188 158 40 386 At 31/03/2016 25,904 2,109 1,072 29,085 6 months to Mar 2016 12 months to Sep 2015 12 months to Sep 2014 £000 £000 £000 Total investment 1,457 2,644 2,341 Expensed (1,054) (1,820) (1,661) Capitalised 403 824 680 Amortisation 270 499 243 R&D Spend

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Interim results for the six months ended 31 March 2016

Sanderson IPR

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Interim results for the six months ended 31 March 2016

Typical revenue breakdown

41% 5%

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Interim results for the six months ended 31 March 2016

Good position going into the second half

Panmure Gordon & Co Research (£m) May 2016 Year to September 2016E 2017E Sales 20.3 21.4 PBT normalised 3.4 3.7 Dividend per share (p) 2.3 2.5

500 1000 1500 2000 2500 3000 3500 £000 Order book value at period end YTD £9.9m

Recurring £5m Order Book £3.2m Gap £2.2m

To Do £10.4m Revenue cover

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Interim results for the six months ended 31 March 2016

Focus on growth in core markets

Digital Retail Enterprise

Wholesale Distribution & Logistics Manufacturing Double digit growth for online Mobile sales exceed 50% for 1st time IMRG Parcel deliveries break 1bn barrier

Royal Mail

1 in 4 shoppers intend to make contactless payment in next year Mastercard Beacons to drive coupons, 80% on mobiles by 2020 Jupiter 79% shoppers think retailers need to do more to attract shoppers BBC Just 29% of major retail bosses confident about next 6 months (60% 3 years) PWC Wholesale: Foodservice improved ‘On the go’ products, convenience and care home market boosting sales FWD Double digit growth for wholesalers adopting technology e.g. online sales & click & collect IGD Logistics: Employs 1 in 12 ONS Driven by ecommerce 75% expect increased capex in IT to drive efficiency & productivity UK Logistics

Confidence Index

Food & Drink: 60% of food manufacturers planning increased capex Food Manufacture 86% expecting revenue growth BDO Consumer expenditure +13% 2015-20 IGD Driven by changing habits & tastes General Manufacturing: UK industry in recession for 3rd time in 8 years ONS/BBC Some sectors showing growth - machinery, fabrication, plastics, automotive ONS

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Interim results for the six months ended 31 March 2016

Digital retail

• 60+ customers
• Comprehensive solutions for ecommerce, mobile

commerce, retail

• Cloud-based store solutions
• Continued strong demand for mobile solutions
• Connected retail joining online & in-store

H1 2016 H1 2015 £000 £000 Revenue 2,945 2,803 Operating profit 328 487 500 1000 1500 Order Book 2014 2015 2016 £780k Order Book 2 months of new revenue Optimum 2 months Gross margin 83%, recurring gross margin covers 39% of overheads

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Interim results for the six months ended 31 March 2016

Digital retail

• Benefiting from retailer focus on digital technology &

innovation to survive & drive growth

• Digital store integrating on & off-line sales & improving the

customer experience

• Continued investment in sales, marketing & development
• Increased annual investment of over £0.5 million

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Interim results for the six months ended 31 March 2016

Case study: Size?

• Retail chain offering designer branded training shoes,

casual sportswear & accessories

• Stores across the UK and in Europe
• Wanted to embrace innovation & omni-channel retail

technology as part of their fixtures & fittings

• Fully connected digital retail experience

– Flagship Carnaby Street Store – Video walls – highly engaging, entertaining, ‘wow factor’ – Promotions, product launches, touchscreen kiosks for purchasing

• Increased footfall & ultimately sales

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Interim results for the six months ended 31 March 2016

Case study: JoJo Maman Bebe

• UK-based, maternity wear & baby clothing retailer

– Founded 1993 as online brand by Laura Tenison MBE

• Customer since 2010

– Then £20m business with 27 shops & 300 employees – Now £44m+, 70+ stores, over 700 employees

• Sanderson multi-channel system supported growth

– Back office, EPoS in stores, web, wholesale in UK & US – Single view of customer, managing stock & sales across

• peration

– Numerous projects, most recently supporting retail expansion online in US

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Interim results for the six months ended 31 March 2016

Enterprise: Manufacturing

• 200+ customers
• Modern, functionally rich solutions match customer

needs & deliver excellent return on investment

• Strong recurring revenue: 58%
• Good reputation for quality products & service
• Large customer base & long-term relationships

H1 2016 H1 2015 £000 £000 Revenue 3,252 3,135 Operating profit 514 365 500 1000 1500 Order Book 2014 2015 2016 £1.16m Order Book 5 months of new revenue Optimum 3 months Gross margin 89%, recurring gross margin covers 79% of overheads

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Interim results for the six months ended 31 March 2016

• Food & drink business performing very strongly
• Demand for solutions to manage traceability of products,

new product development and regulatory compliance

• 4 new food & drink customers this year, value £1.12m (last

year 3, value £216k)

Enterprise: Manufacturing

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Interim results for the six months ended 31 March 2016

• One of top fish processing firms in the UK

– Chilled & frozen seafood products to retailers & foodservice in UK, Europe & North America – £71m privately owned family business, based in Peterhead – 450 employees, 75,000 sq ft facility, freezing capacity 100 tonnes per day

• Sanderson ERP to achieve significant business benefits

– Support growth, efficiencies & management information – ‘One version of the truth’, reduce dependency on spreadsheets & disparate systems – Automation & streamlining of processes – Warehouse, factory floor, quality control

Case study: Thistle Seafoods

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Interim results for the six months ended 31 March 2016

Enterprise: Wholesale distribution & logistics

• 250+ customers
• Comprehensive solutions for wholesale distribution,

cash & carry, warehousing, fulfilment & logistics

• 77% of overhead covered by recurring gross margin
• High demand for IT to drive efficiency & productivity
• Strong market position in wholesale, cash & carry

H1 2016 H1 2015 £000 £000 Revenue 3,663 3,152 Operating profit 632 522 500 1000 1500 Order Book 2014 2015 2016 £1.26m Order Book 5 months of new revenue Optimum 2.6 months Gross margin 88%, recurring gross margin covers 77% of overheads

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Interim results for the six months ended 31 March 2016

Enterprise: Wholesale distribution & logistics

• Strong first half from wholesale business
• Industry consolidation & adoption of new technology

driving IT investment & growth

• Expansion of solutions into warehousing, logistics & supply

chain with acquisition & integration of Priam & Proteus

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Interim results for the six months ended 31 March 2016

Case study: Pedigree Wholesale

• Leading supplier of pet & aquatic products to independent retail

– £40m business, national network with 5 distribution centres

• Proteus WMS (Warehouse Management System)

– Warehouse automation, including voice technology & RF (Radio Frequency) scanning in warehouse – Automate manual tasks, improve efficiency & accuracy

• Multiple benefits

– Time savings, reduced errors, better use of warehouse space, traceability (orders & loads), replenishment based on demand & deadlines, accurate & efficient deliveries, immediate notification of issues, Group-wide stock visibility – Ultimately process more orders per day to meet growth targets & improve customer service – £100k operational savings per year (conservative)

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Interim results for the six months ended 31 March 2016

2015 – 2016 plan

Plan

• Growth driven by digital retail & food &

drink manufacturing - -

• Progressive dividend - - - - - - - - -
• Continued investment & complementary

acquisitions - - - - - - - - - - - - - -

• Strong cash-backed balance sheet - -

June 2016 update

• Very strong orders from food & drink,

wholesale distribution & logistics

• Accelerated investment

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Interim results for the six months ended 31 March 2016

Sanderson three year plan: 2015/16, 2016/17, 2017/18

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Interim results for the six months ended 31 March 2016

• 1983

Sanderson founded

• 1988

Floated on London Stock Exchange

• 1999

Public to private transaction

• 2004

Sanderson Group floated on AIM following demerger

• 2005-07

Multi-channel retail business developed

• Jan 2012

Sale of retail EPoS business – strengthened balance sheet

• 2013 & 14

3 acquisitions in digital retail, fulfilment & logistics

• Current Group

Background

30% 37% 33%

Digital Retail Enterprise

Wholesale Distribution & Logistics Manufacturing

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Interim results for the six months ended 31 March 2016

Sanderson overview – a robust & resilient business

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Interim results for the six months ended 31 March 2016

Good position in multi-channel retail & manufacturing

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Interim results for the six months ended 31 March 2016

Since IPO in December 2004

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Interim results for the six months ended 31 March 2016

Sanderson for shareholders

0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 FY9 FY10 FY11 FY12 FY13 FY14 FY15 pence

Dividend

• 14
• 12
• 10
• 8
• 6
• 4
• 2

2 4 6 8 £m

Cash Surplus/Net Debt

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Interim results for the six months ended 31 March 2016

23.4% 51.3% 6.3% 19%

Plc Board Institutions Known to Us Other Retail

î

Total Ordinary Shares In Issue: 54,851,985

John Paterson David Gutteridge

Ownership of Sanderson Group plc

Includes:-

Hargreave Hale 7,957,504 14.5% Living Bridge 4,818,257 8.8% Miton Asset Management 4,254,522 7.8% Downing LLP 2,603,732 4.7% Unicorn Asset Mgt 2,407,572 4.4% Helium Rising Stars Fund 2,394,753 4.4% Chelverton Asset Mgt 1,000,500 1.8% AXA Investment Mgt 1,000,000 1.8%

South Yorkshire Pension Authority 440,000 0.8% Rathbone Investment Management 385,845 0.7% MD Barnard 282,818 0.5% Liontrust 224,059 0.4% Alliance Trust 177,105 0.3%

Non-Executive Directors

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Interim results for the six months ended 31 March 2016

Good coverage

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Interim results for the six months ended 31 March 2016

Investor relations

Contacts Christopher Winn Erik Anderson 0333 123 1400 Panmure Gordon christopher.winn@sanderson.com 020 7886 2901 Ian Newcombe 0333 123 1400 ian.newcombe@sanderson.com Adrian Frost Paul Vann 0333 123 1400 Walbrook PR adrian.frost@sanderson.com 0117 985 8989 www.sanderson.com/investors