Second half turnaround leaves Sanne in 'strong' position

Sanne reported “strong” revenue momentum in its final results on Thursday, with 16.2% revenue growth in continuing operations, of which organic growth was 13.5%.

The FTSE 250 company said total group revenue was 14.7% higher at constant currency to £165.4m for the year ended 31 December, with organic total sales growth was 12.1%.

It reported “strong” new business wins, with annualised revenue of around £24.5m secured in 2019, in line with 2018, adding that the momentum had continued into 2020.

The firm reported a second half recovery, as it expected, with “strong” cash flow, explaining that there was a “material improvement” in its second half underlying operating profit margin to deliver 28.2% for the full year, up from 26.4% year-on-year.

That, Sanne said, followed “decisive action” addressing its first half challenges.

Its operating profit rose 2.9% to £46.7m, while its profit before tax slipped 2.1% to £42.4m and diluted earnings per share were off 4.2% at 23.6p, all on an underlying constant currency basis.

Underlying operating cash flow generation was 105% for the year.

Sanne continued its “active strategic development programme” for “growth and focus” through 2019, disposing of its legacy private client business for up to £12m to focus on core alternative and corporate markets.

It extended its global network, with office openings in Tokyo, San Diego and Mumbai, and acquired Inbhear, establishing a Cayman presence and strengthening its Ireland service offering.

The company also invested in Colmore, bringing a new data analytics offering to its clients.

Sanne’s board noted that its statutory profits reflected exceptional one-off costs largely related to earn-out payments for LIS and AgenSynd of £6.3m, as well as an intangible impairment in South Africa of £2.4m.

Its statutory profit before tax was down 36.3% at constant currency at £9.6m, while statutory diluted earnings per share were off 53.2% at 3.8p.

The directors proposed a final dividend of 9.4p, making for a total dividend of 14.1p and reflecting their confidence in the prospects of the group, consistent with its progressive dividend policy.

Looking ahead, Sanne reported good momentum in alternatives and corporate businesses, positions it well for further growth in 2020.

It said there was a “positive” alternatives market backdrop with continued growth in the addressable market, adding that it had a “healthy” pipeline of acquisition opportunities.

The firm claimed to be “well prepared” for potential operational impacts from the Covid-19 coronavirus pandemic, as a result of its “resilient” business model.

Its board said it expected to deliver a resilient performance in 2020, adding that it remained confident in the medium and long-term prospects for the group.

“During 2019 we have continued to build on our strong market position and benefitted from the structural growth drivers within the alternative asset markets that we address,” said chief executive officer Martin Schnaier.

“We have also worked successfully to address the challenges facing the business during the first half of the year.

“We made the decision to continue to invest in our platform to support our growth aspirations, expand our footprint and thereby continue to deliver the highest levels of client service.”

That investment for growth, Schnaler said, had been supported by a simplification of the group through the sale of its legacy Jersey private client business.

“As we continue into 2020, our core business remains resilient and is underpinned by a robust model.

“This resilience has been critical for us to have coped well to date with the Covid-19 outbreak from an operational perspective.”

Schnaler said many of the company's offices had been operating under business continuity plans with a “minimal impact” on service delivery to clients.

“We remain confident that Sanne is well positioned to capture the exciting opportunities that exist within our core markets in the years to come.”

At 0941 GMT, shares in Sanne Group were up 17.61% at 551p.