Sanford looking healthier

IT has been a hard slog for Perth-based online stock broker Sanford Limited, however, the company bills its quarterly results that were released this week, as one of its most positive yet.

Commenting on the 27 per cent increase in turnover, chief financial officer Anthony Benino said: “Against poor market conditions we have continued to grow our revenues. Looking forward we are comfortable that we will be able to make a profit over the next year depending on market conditions”.

However, the company, which was launched towards the peak of the tech-boom, still recorded a loss.

Revenue grew from $16.3 million in 2001 to $20.7 million. Losses were cut from $54.6 million to $1.7 million while EBITDA improved from -$9.9million to -$0.4 million.

During the quarter cash levels decreased by $808,000, leaving just $2.1 million in cash reserves.

Cash outflow from operating activities rose to $746,000 compared to $139,000 in the previous quarter.

Mr Benino said cash outflow included a component of $365,000 to reduce the trade creditors’ position to a more comfortable level while the company’s trade debtor position increased by about $200,000.

He said the operating cash-burn rate was a little more than $210,000, leaving the company in a self-sustaining position and unlikely to call on the market for more funds.

The improving financial position did not come without cost.

Staff were slashed in March 2000 from a peak of more than 300 to around half that, providing savings of around $3 million compared with the previous financial year.

However, staff costs still amount to more than $8 million, chewing around 30 per cent of revenue.

Mr Benino said the tough times were in the past for the company.

He said his focus would remain on guiding the company into positive territory and its low share price would worry about itself.

Much of Sanford’s new business rests on the strength of its heads of agreement with the international group, OM AB to establish a back office utility for the Australian stockbroking industry.

Sanford handles more than 10 per cent of all trades executed by the non-advisory stockbroking market.

Technology in the form of its almost bedded down Plato 2 system is also likely to provide the business with more new opportunities.

Sanford recently introduced a managed fund service using National Australia Bank’s Ausmaq platform to its retail and wholesale client base.

It has also restructured its product pricing mix to stay on top in tough trading conditions.

The quarterly report says: “General trading conditions remained flat during the quarter”.

“Concerns over interest rates, terrorism and corporate earnings results and accounting scandals weighed heavily on trading volumes,” it said.

“Sector growth continued to be weak.

“Sanford has restructured its product-pricing mix accordingly and remains the best value for money provider in the Australian market,” it says.

‘The team has made some significant product rollouts including a paper-less managed fund service, website changes to both retail and wholesale service offerings, and continued development and project management process improvements.

“Process and quality improvements have been effected to refine the software to a condition whereby it can be readily sold to third parties.”

However investors, having watched their stock plummet from a high of more than $1.60 down to its current level of 27 cents are not showing any signs of buying into the good news promotions just yet.

Since March Sanford’s share price has slowly drifted southwards by more than 10 cents.

This has left it with a market capitalisation of just $10 million.

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