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RNS Number : 9462G
Sanne Group PLC
29 July 2019
27 July 2019
This announcement contains inside information for the purposes
of article 7 of EU Regulation 596/2014
Sanne Group plc ("SANNE" or "the Group")
Trading statement and notice of results
SANNE, the global provider of alternative asset and corporate
services, today provides an update on trading for the six months
ended 30 June 2019 and full year outlook.
Key points:
-- Record levels of new business wins from both new and existing clients
-- Very strong revenue performance across all core Alternatives
business segments and jurisdictions
-- Underlying H1 operating cash conversion in excess of 100%
-- Margin lower in H1 leading to lowered margin guidance for the
full year despite expected H2 margin improvement
H1 2019
The Group delivered constant currency organic revenue growth of
13% and factoring in the impact of the prior year acquisitions,
delivered total constant currency revenue growth of 17%. Growth was
due to very strong performances in all of the core Alternatives
business segments across all jurisdictions. However, this growth
was partially offset by weak performance from our European
Corporate and Private Client businesses.
Record levels of new business won in H1 2019 from both new and
existing clients totalled approximately GBP16.0 million (2018:
GBP11.5m) on a projected annualised fee basis.
Revenue growth for the Group's Alternatives businesses globally
was approximately 22% on a constant currency basis. Of this, the
Group's North American Alternatives segment saw constant currency
revenue growth in excess of 25% whilst in the Asia-Pacific
Mauritius Alternatives segment, the business delivered 14%. Under
the old segmental split, the EMEA Alternatives segment saw constant
currency organic revenue growth of approximately 16% increasing to
over 25% when the full period contribution of 2018's acquisitions
is included. Both of the 2018 acquisitions continue to perform
well. The Group opened new offices in Tokyo and Mumbai during the
first half of the year to capture growing opportunities in those
markets.
The Group's European Corporate and Private Client businesses,
previously the CPC segment (13% of 2018 Group revenues), delivered
disappointing first half financial performances. The Corporate
business was flat whilst Private Client was down on the first half
of 2018. Overall combined revenues were down approximately 11% on
the same period in 2018. During H1 2019, these businesses saw
limited new client wins and some client attrition. An update on
initiatives to address the performance issues will be provided in
the interim results statement.
The Group's underlying operating margin in H1 2019 is expected
to be approximately 26%, below our previous expectations for the
current year. The margin performance in the first half was affected
by a combination of items. We have seen a disappointing lack of
delivery of operating efficiencies in the central operations teams
that we highlighted in 2018, and some elevated overhead spend. We
have already taken action to address these issues and continue to
implement initiatives to improve the full year outturn.
The first half also saw the Group continuing to invest in
building a leading, sustainable, global, Alternatives platform.
This includes our Business Development and new Product Development
teams where we are seeing significant benefits, some of which were
reflected in strong first half business wins. In response to some
of the new business wins, we have also hired ahead of their
implementation, particularly within the EMEA Alternatives
segment.
Cash generation was strong during the first half, resulting in
underlying operating cash conversion in excess of 100%.
Full year outlook
The continued outperformance from SANNE's core Alternatives
businesses gives the Board confidence in the Group's full year
revenue expectations, despite the challenges in the Corporate and
Private Client business areas.
Whilst we see good levels of revenue growth, the items impacting
the underlying operating margin in the first half are unlikely to
be fully compensated for in the second half. The Board therefore
expects to report at full year underlying operating profit margin
in the region of 28% to 30%, which is below our previous
expectations.
The very strong growth in our Alternatives business resulted in
a Group blended tax rate of approximately 21% for the first half,
higher than the previous period, which is indicative of a
geographic mix effect where revenues were earned in higher tax rate
jurisdictions. Assuming the continued strong revenue trajectory and
business mix, we would expect a similar blended rate for the full
year.
As a result of the changes to underlying operating margin and
blended tax rate the Board expects to report underlying earnings
per share for the full year below its previous expectations.
M&A
SANNE continues to review various M&A opportunities across a
number of the Group's fastest growing jurisdictions in North
America, EMEA and Asia-Pacific and our new head of M&A has now
been in place for 3 months. We are currently presented with a very
strong pipeline of high quality opportunities, which also include
potential partnerships that would enable access to industry leading
technology capabilities. We will continue to be selective and
undertake our disciplined approach to M&A.
Martin Schnaier, Chief Executive Officer of Sanne Group plc
said:
"The Group has delivered a good revenue performance overall in
the first half. Our core Alternatives businesses across our global
platform operate in growing markets and are therefore well set to
continue driving this revenue growth.
The first half margin is a disappointing outcome and well below
the optimal margin for the business. We have taken action to
address the increased spend and delay in operating efficiencies
being realised.
We remain committed to investing in the significant growth
opportunities that we are delivering on in our core markets and
products. Although this investment is impacting our margin guidance
for the current year, the priority is to ensure the Group is well
positioned to deliver sustainable growth in the medium and long
term."
Analyst and investor conference call
Management will host a conference call for analysts and
investors at 8.30am on Monday 29 July (UK time). To register and
for instructions on how to connect and/or request automatic
dial-in, please click the following link:
https://www.speakservecloud.com/register-for-call/9a3647ee-58da-47cf-a3de-e7f63ac98d2e
Notice of interim results
The Group will announce its interim results for the six months
ended 30 June 2019 on Tuesday 10 September 2019.
The Group will present these results under its new reporting
structure (splitting out Channel Islands from EMEA, as outlined at
its Capital Markets Day on 16 May 2019) and under IFRS16.
Enquiries:
Sanne Group plc
Martin Schnaier, Chief Executive Officer
James Ireland, Chief Financial Officer +44 (0) 1534 722 787
Tulchan Communications LLP
David Allchurch / David Ison +44 (0) 20 7353 4200
Notes
About Sanne
SANNE is a leading global provider of alternative asset and
corporate services. Established for over 30 years and listed as a
FTSE 250 company on the Main Market of the London Stock Exchange,
SANNE employs more than 1,600 people worldwide and administers
structures and funds that have in excess of GBP250 billion of
assets.
Key clients include alternative asset managers, financial
institutions, family offices, UHNWIs and corporates.
SANNE operates from a global network of offices located in
leading financial jurisdictions, which are spread across the
Americas, Europe, Africa and Asia-Pacific.
www.sannegroup.com
Person responsible:
The person responsible for arranging the release of this
announcement on behalf of SANNE is Ian Portal.
Cautionary Statement:
This announcement contains certain statements, statistics and
projections that are or may be forward-looking. The accuracy and
completeness of all such statements, including, without limitation,
statements regarding the future financial position, strategy,
projected costs, plans and objectives for the management of future
operations of Sanne Group plc and its subsidiaries is not warranted
or guaranteed. These statements typically contain words such as
'intends', 'expects', 'anticipated', 'estimates' and words of
similar import. By their nature, forward-looking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. Although Sanne Group
plc believes that the expectations will prove to be correct. There
are a number of factors, many of which are beyond the control of
Sanne Group plc, which could cause actual results and developments
to differ materially from those expressed or implied by such
forward-looking statements. This announcement contains inside
information on Sanne Group plc.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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