First half earnings fall as Sanne looks for more acquisitions

Sanne Group reported a “good performance” in the first half of 2018 on Tuesday, against strong prior year comparative, with revenue rising 17.1% to £65.9m, or 19.5% at constant currencies.

The FTSE 250 company said it saw “continued growth momentum” across the business, and increased annualised new business wins, which underpinned the board's confidence that the business would deliver its expectations for the full year.

Underlying operating profit was down 4.3% to £20m for the six months to 30 June, however, with operating profit falling 12.9% to £11.5m and underlying profit before tax off 4.4% at £19.4m.

Profit before tax was 12.8% lower at £10.9m, with Sanne’s underlying operating profit margin falling to 30.3% from 37.1%.

Underlying diluted earnings per share for the period were down 6.2% to 12.2p, with the board declaring an interim dividend per share of 4.6p, up 9.5% on the half-year distribution last year.

On the operational front, Sanne said new business wins had continued, with annualised fees of approximately £11.5m won in the first six months, up from £10m a year ago.

It said it saw “strong” underlying performance within its Europe, Middle East and Africa and North America alternatives business divisions, with organic growth in the period of 13.3% and 10.9% respectively, while the Corporate and Private Client business was said to have been broadly flat.

Growth momentum was described as building in the group's Asia-Pacific and Mauritius business, with organic growth in the period of 5.2% and “significant” client wins expected to drive a higher growth rate for the full year.

Sanne claimed it was making a continued investment to drive operational efficiency and effectiveness, and to enhance the platform for future growth.

The company also confirmed that during September it acquired AgenSynd - a European loan agency administration specialist headquartered in Madrid.

Sanne said the acquisition augmented its existing loan agency business, and added an additional footprint in Madrid and Paris as well as enhancing its existing London presence.

The transaction involved upfront consideration of €11.4m, settled 65% in cash and 35% in new Sanne shares, as well as an earn-out based on AgenSynd's performance to 31 December this year.

Looking ahead, Sanne said the “strong momentum” of the business in the first six months had continued into the second half, with the board remaining confident that the group would deliver a full year result in line with its expectations.

The board also noted that it had a “continued focus” on acquisition prospects.

“These results demonstrate the continuing momentum in our business and the result of the investment we are making to enhance our platforms and capabilities,” said Sanne Group chief executive officer Dean Godwin.

“We delivered a strong performance in our core alternatives divisions and we continue to broaden our geographic presence and client offering.

“Our most recent acquisitions in Mauritius and Luxembourg are integrating successfully and contributing to the group's performance and we are pleased to announce today the acquisition of AgenSynd which further expands our European footprint and capabilities within the private debt market.”

Godwin said the board would build on that progress in the second half of the year, given the firm’s strong new business pipeline, and remained confident in meeting expectations for the full year.

“Sanne remains well-positioned to capture the exciting long-term opportunities in our markets.”