Sanderson – what a difference a year makes!

(By Anthony Miller – Tuesday 30th June 2009 9:00am). Just follow the UKHotViews trail. This time last year retail/manufacturing software ‘Little British Battler’ Sanderson was on a roll (see Why I still like Sanderson), basking in the glory of a fine set of interim results which pushed the share price up to 40p. However, despite our long-term soft-spot for the company (and executive chairman Chris Winn), we really didn’t believe Sanderson had a future as an independent, let alone listed, company.

Roll forward six months. December '08. Full year results in line with the reduced expectations after October’s profit warning, but management cuts the div (see Sanderson cuts dividend to conserve cash). We said again, “We still think Sanderson’s future lies in the arms of a potential suitor”.

Roll forward four months. April '09. Another profit warning (see Warning from Sanderson). Shares dive another 10% to under 10p.

Now, back to the present, and today we see that Sanderson in fact fell into loss in 1H09 (see here). For the most part, the net losses derived from a £1.5m goodwill write-down from the deeply sub-scale and shrinking Manufacturing division (at £3m, about 30% of Sanderson’s 1H09 revenues), along with a near-£600K hit due to a misjudged interest rate hedging call. Even excluding these costs, ‘adjusted’ operating margins almost halved from 15% to 8%.

Winn’s outlook statement sums Sanderson’s prospects up thus: “against the backdrop of a general lack of business confidence and economic uncertainty, the number and size of opportunities are fewer and the deferment of investment decisions, which was experienced towards the end of the 2008 financial year has continued into the current year.” Sanderson’s shares closed 7% up yesterday at 11.2p but we haven’t seen any trades yet today.