The trend for outsourcing as a means of dealing with growing regulation in financial services is continuing to reap rewards for Sanne (SNN). The administration and reporting specialist more than doubled underlying operating profit to £21.5m in the first half of 2017, powered by acquisitions made in 2016. Organic revenue growth was still strong though, at 15.3 per cent.
As of January, the company established four core business units to further its growth. The first three are its businesses in North America, Emea, Asia Pacific & Mauritius. The fourth is its corporates and private client segment.
The European financial services market is roughly 60 per cent outsourced, according to management, although demand has increased in Luxembourg and Dublin from businesses looking to hedge against the outcome of the Brexit negotiations. By contrast, the US market is only about 30 per cent outsourced, providing opportunity for expansion. Sanne entered the US market in earnest in November last year with the acquisition of FLSV Fund Administration Services. At the period-end, the North American alternatives business had revenue of £9.5m with gross profit of £4.7m.
Due to a favourable move in its expected tax rate, the group now expects to beat EPS expectations, marginally. Analysts at Investec are forecasting EPS of 24.7p from adjusted pre tax profit of £40.1m in 2017 (from 17.4p and £22m in 2016).
| SANNE (SNN) | ||||
| ORD PRICE: | 778p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 776-779p | 12-MONTH HIGH: | 792p | LOW: 445p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 63 | |
| NET ASSET VALUE: | 113p* | NET DEBT: | 15% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 27.6 | 8.1 | 6.3 | 3.2 |
| 2017 | 56.3 | 12.5 | 7.3 | 4.2 |
| % change | +104 | +54 | +16 | +31 |
| Ex-div: | 14 Sep | |||
| Payment: | 13 Oct | |||
| *Includes intangible assets of £172m, or 122p a share | ||||
