For Sanne's (SNN) investors, reports of a record level of new business wins and 13 per cent organic revenue growth might give the impression the alternative asset and corporate business services provider enjoyed a bumper first half. But margins are the protagonist of this story, particularly after the July update forewarned of a four percentage point contraction, which translated into a 3.1 per cent like-for-like decline in underlying operating profit. Statutory earnings were also weighed down by £13m in non-underlying costs.
Following increased investment in business and product development teams, elevated overhead spend relating to office moves and a failure to deliver operational efficiencies, the underlying operating profit margin dropped to 26.4 per cent. With relocations now largely complete and improved cost control on the agenda, the group is guiding to 28-30 per cent for the full year, but that is still down from 31.1 per cent in 2018.
Alternative asset client services represent 89 per cent of overall sales and robust demand in North America and Asia Pacific drove organic revenue for that segment up almost a fifth. But the corporate and private client businesses underwhelmed, with combined revenue falling 13 per cent.
House broker Panmure Gordon forecasts adjusted pre-tax profit of £44.9m and EPS of 24.3p for the full year, rising to £54.7m and 29.6p in 2020.
| SANNE (SNN) | ||||
| ORD PRICE: | 556p | MARKET VALUE: | £811m | |
| TOUCH: | 555-557p | 12-MONTH HIGH: | 762p | LOW: 447p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 60 | |
| NET ASSET VALUE: | 126p* | NET DEBT: | 30%* | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 65.9 | 10.9 | 6.1 | 4.6 |
| 2019 | 78.7 | 5.4 | 2.4 | 4.7 |
| % change | +20 | -50 | -61 | +2 |
| Ex-div: | 19 Sep | |||
| Payment: | 18 Oct | |||
| *Includes intangible assets of £245m, or 168p a share, **Excludes lease liabilities of £40m | ||||
