- Shares move higher on robust full-year numbers
- Company now trades on 19 times 2022 forecasts
If there was a candidate for the UK company least affected by the pandemic, funds administrator Sanne Group (SNN) would be a strong contender. In 2020, its mixture of recurring fees, decent market growth, and muted cost increases boosted the underlying operating margin from 27.3 to 28.3 per cent and pushed up earnings 12 per cent to 25.4p.
Being in a sweet spot business-wise hasn’t resulted in monster payback for investors, however. Even at 578p, the shares are below ground broken at the end of 2017, while the proposed final dividend increase of 5 per cent feels modest.
One reason for this could be Sanne’s run of acquisitions, which has resulted in cash being diverted to earn-out payments and pushed net debt to £89.8m, excluding cash held for regulatory purposes. Management is comfortable with this leverage, and recently increased its committed banking facilities by 40 per cent to £210m on similar commercial terms.
Are we about to see the group’s biggest deal yet? Consensus forecasts are for earnings of 27.9p per share this year, and 31.1p in FY2022. Hold.
| SANNE GROUP (SNN) | ||||
| ORD PRICE: | 578p | MARKET VALUE: | £859m | |
| TOUCH: | 576-580p | 12-MONTH HIGH: | 712p | LOW: 477p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 52 | |
| NET ASSET VALUE: | 120p* | NET DEBT: | 65% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 63.8 | 15.0 | 11.4 | 9.6 |
| 2017 | 113 | 22.4 | 13.1 | 12.6 |
| 2018 | 136 | 19.6 | 10.3 | 13.8 |
| 2019 | 160 | 9.6 | 3.8 | 14.1 |
| 2020 | 175 | 20.5 | 11.1 | 14.7 |
| % change | +9 | +115 | +192 | +4 |
| Ex-div: | 29 Apr | |||
| Payment: | 26 May | |||
| *Includes intangible assets of £227m, or 153p per share | ||||
