Sanne profits halved despite revenue jump

Sanne Group said on Tuesday that its interim profits more than halved as one-off costs and investment in new employees outweighed double-digit revenue growth.

The trust and fund administration services provider said profit before tax was £5.4m for the six-month period ended 30 June, down 50.3% on the same period last year, as non-underlying costs rose from £8.5m to £13.3m.

This increase came as Sanne faced costs related to the refinancing of its banking facilities, as well as a regulatory fine.

First-half underlying operating margins declined from 30.4% to 26.4% as the company said it invested in people in its client service teams, before being able to recognise revenues from new clients.

Total revenue for the period rose 20% to £78.7m following 13% organic revenue growth and full contributions from LIS in Luxembourg as well as AgenSynd in Madrid, which was acquired in the second half of last year.

The FTSE 250 company proposed an interim dividend of 4.7p per share, up from 4.6p last year.

Sanne said it is taking action to improve its underlying operating margin but warned that the items impacting profitability in the first half are unlikely to be fully compensated for in the second. As a result, the full-year underlying operating profit margin is set to be between 28% and 30%, while earnings per share are still expected to fall in line with revised expectations announced in July.

Chief executive Martin Schnaier said: "Our record new business wins demonstrate that Sanne's client proposition remains very attractive and our increasing focus on fast-growing Alternative asset classes is driving significant revenue momentum. However it is clearly disappointing that the first half profitability has come in materially below our original expectations."

Sanne Group shares were down 1.40% at 564.00p at 0944 BST.