2 August 2011 – Trading update/refinancing

The software and IT group has revealed that it has successfully refinanced its term debt, with HSBC taking over as the group’s bankers.  A new four year term facility of £7.4m has been arranged at better terms than with the group’s previous bankers and this is expected to reduce finance costs by £300,000 per annum.  Although there will be a one-off exceptional charge of £400,000 in the current financial year which ends on 30 September this is clearly a good deal for the company.  Sanderson has also confirmed that it is trading in line with expectations and full year profits before the exceptional charge should be £2.4m.  For the year to September 2012, we have increased our pre-tax profit forecast to £3.1m for earnings per share of 5.8p.  We have set a target price of 58p on the stock and believe that the shares are a BUY.