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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sanne Group Plc | LSE:SNN | London | Ordinary Share | JE00BVRZ8S85 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 921.00 | 919.00 | 920.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSNN
RNS Number : 0552Q
Sanne Group PLC
07 September 2017
7 September 2017
Sanne Group plc
("the Company") together with its subsidiaries ("the Group" or "SANNE")
Interim results for the six months ended 30 June 2017
Hot Features
Premium
6 months 6 months Change
to 30 June to 30 June
2017 2016
----------------------------- ------------ ------------ -------
Revenue GBP56.3m GBP27.6m +104%
----------------------------- ------------ ------------ -------
Underlying operating profit
(1) GBP21.5m GBP10.3m +109%
----------------------------- ------------ ------------ -------
Operating profit GBP13.2m GBP8.3m +59%
----------------------------- ------------ ------------ -------
Underlying profit before
tax (1) GBP20.9m GBP10.2m +105%
----------------------------- ------------ ------------ -------
Profit before tax GBP12.5m GBP8.1m +54%
----------------------------- ------------ ------------ -------
Underlying operating profit
margin (1) 38.2% 37.3% +0.9%
----------------------------- ------------ ------------ -------
Underlying diluted earnings
per share (1) 13.0p 8.1p +60%
----------------------------- ------------ ------------ -------
Underlying operating cash
conversion (1) 98.9% 117.3% -18.4%
----------------------------- ------------ ------------ -------
Interim dividend per share 4.2p 3.2p +31%
----------------------------- ------------ ------------ -------
(1.) The items classified as non-underlying items are as detailed in note 4.
Highlights
- Group revenue for 2017 H1 increased by 104% to GBP56.3m (2016 H1: GBP27.6m) of which 15.3% was organic growth.
- Continued strong performance within each of the Group's business segments.
- New business with annualised fees of approximately GBP10m won in the first six months with a healthy pipeline continuing into the second half.
- Integration of prior year acquisitions progressing well with continued focus into the second half.
- Acquisition of IFS in Mauritius completed, broadening geographic footprint and significantly increasing scale and expertise.
- Continued strengthening of senior management team to deliver strategic capacity. - Successful implementation of the new global operating structure.
- Development and expansion of the Group's fund technology capability continues to be a key focus.
- Larger office space secured in Hong Kong, Shanghai and Singapore to support growth in Asia-Pacific.
- Due to a change in the Group's expected effective tax rate, the Board now expects to deliver underlying EPS for the full year marginally ahead of its previous expectations.
Dean Godwin, Chief Executive Officer of Sanne Group plc, said:
"We are pleased with the performance of the Group in the first half. We have continued to see strong growth in new business wins, with the increase in cross-selling opportunities across our regional business segments particularly encouraging, and we have a healthy pipeline moving into the second half of the year. Our recent strategic acquisitions are being successfully integrated and already yielding benefits. As our business grows, during the second half of the year, we will continue to invest in our people, processes and technology."
Enquiries:
Sanne Group plc Dean Godwin, Chief Executive Officer Spencer Daley, Chief Financial Officer +44 (0) 1534 722 787 Investec Bank plc Garry Levin / James Ireland Edward Thomas / Matt Lewis +44 (0) 20 7597 5970 Tulchan Communications LLP Tom Murray Matt Low +44 (0) 20 7353 4200
A presentation for analysts will be held at 9.30am today at the offices of Tulchan Communications, 85 Fleet Street, London, United Kingdom. This presentation can be viewed live on the Sanne Group website:
https://www.sannegroup.com/investor-relations/interimsh12017/
Participants can also dial into the presentation in listen-only mode using the following details:
Telephone: +44 20 3713 5011
Access Code: 492-915-541
A copy of this announcement will be available online at www.sannegroupplc.com at 7am today.
Notes:
SANNE provides administration, reporting and fiduciary services to leading alternative asset managers, financial institutions, family offices and corporates.
The Group employs more than 1,000 people worldwide and administers structures and funds that have in excess of GBP160 billion of assets.
The Group has a presence in 15 established strategic locations spread across the Americas, EMEA and Asia-Pacific.
This announcement contains inside information.
SANNE is listed on the Main Market of the London Stock Exchange.
sannegroupplc.com
INTERIM MANAGEMENT REPORT
First half review
The Group has continued to see strong growth in the first half of the year, primarily driven by strong momentum from new business delivered throughout 2016. Continued focus on both organic and inorganic revenue strategies coupled with cost control has resulted in revenue increasing by 104% to GBP56.3m (growth has been largely generated through the acquisitions made in 2016/2017 and organic growth continues to be strong at 15.3%) and underlying operating profit increasing by 109% to GBP21.5m, compared with the same period in the prior year.
In the first six months of the year the Group secured new business from both new and existing clients totalling approximately GBP10m on a projected annualised fee basis (compared to GBP6.7m in the same period in 2016). Of this approximately GBP5m was from new clients to SANNE. The Group is seeing an increase in cross-selling opportunities as a result of our acquisitions. As in previous reporting periods the full revenue impact of many of these new structures will commence in the second half of the year and, in some cases, will continue into 2018 as implementation is completed.
On 1 January 2017, the Group completed the acquisition of International Financial Services ("IFS"). Headquartered in Mauritius, IFS provides fund and corporate services to clients in the attractive growth markets of Asia and Africa. The acquisition broadens SANNE's geographic footprint and increases scale and operational capability across the Group. The Group will also be able to utilise the highly skilled talent pool in this jurisdiction to support client service and operational initiatives.
There has been a continued demand for regulatory services as clients seek to meet requirements of Common Reporting Standards (CRS) and the imminent implications of MiFID II, which comes into force in January 2018. The Group also continues to see an increase in demand for Luxembourg and Dublin structures as clients look to hedge positions against the final outcome of the Brexit negotiations.
The Group continues to invest in staff at both senior and operational levels of the business in order to strengthen the Group's operating platform globally and add further capacity to drive the business forward. Senior appointments have been made in both Client Services and Group Services to support the integration of the acquisitions made in 2016/2017.
Strategy for growth
The Group's ongoing strategic focus is to continue building scale in established and emerging markets and to be recognised as one of the world's leading providers of alternative asset and corporate administration services.
The Group continues to invest in its infrastructure, as well as its people, in support of its strategic objectives while maintaining financial discipline. This includes further leveraging of the technology platform in support of client service initiatives and an increasing demand for timely and transparent client reporting.
While there has been a focus in the period on integration and delivering organic growth, the Group has continued to evaluate acquisition opportunities that enable SANNE to take advantage of a consolidating market.
Operational Review:
Transition from divisional to global operating structure
From 1 January 2017, the Group established four core management and reporting business units to better reflect the continued growth and increasingly global nature of the service platform. These consist of North American Alternatives, EMEA Alternatives, Asia-Pacific and Mauritius (APM) Alternatives and Corporate and Private Clients (CPC). Each business unit is led by a Managing Director with significant experience delivering business performance and strategic growth.
Across each of the regions in which the global business operates, the Group will continue to take advantage of the growing outsourcing trends and increasing level of regulation by positioning itself as a leading expert in asset class and market administration and reporting services.
SANNE's core focus continues to be on providing clients with high quality services and access to a highly skilled and expert workforce who understand the fluctuating requirements that both alternative asset and corporate clients require.
North American Alternatives
Revenues for the first six months were GBP9.5m with a gross profit of GBP4.7m. There are no comparatives for the prior year as the segment was born out of the acquisition of FLSV Fund Administration Services LLC that completed on 1 November 2016.
Our North American Alternatives business achieved a number of new wins from existing clients in H1 as they increased their share of wallet from key client relationships. The business is also starting to build a good pipeline of opportunities from cross-selling into existing EMEA Alternatives clients. Technology enabled fund administration services from our New York office continue to be the core services provided to clients.
The Group has added senior management capacity in the New York office to support expansion both in New York and also focus on the wider North American market.
EMEA Alternatives
SANNE's EMEA Alternatives business includes all of the Group's four key alternative asset strategies (Debt, Real Estate, Private Equity and Hedge). Revenues for the first six months were GBP23.1m (H1 2016: GBP17.2m) with a gross profit of GBP14.2m (H1 2016: GBP11.2m). Comparisons to prior period numbers are impacted by acquisitions made in Ireland and South Africa on 1 March 2016 and 1 June 2016 respectively.
EMEA Alternatives saw positive growth in business wins from new clients, as well as from existing clients. Fund related work contributed to the majority of that growth.
The Debt business division continues to benefit from market leadership in private debt administration services and has seen some good traction within the capital markets space for structured finance.
The Real Estate business division continues to grow quickly across the range of core international jurisdictions with a good mix of new and existing clients.
Due to the internal promotions of Martin Schnaier and Zena Couppey the Debt and Real Estate business divisions have transitioned to new leadership.
During the first half of 2017, the Private Equity business division has continued to grow its offering to institutional private equity houses. In particular, the division has seen a number of opportunities arising through relationships introduced by the North American Alternatives business.
The Hedge business division has performed well given the backdrop of a relatively depressed local market in South Africa. The division successfully completed a highly intensive, long running project to migrate a large portfolio of clients on to a new regulated management company platform, in accordance with regulatory changes in South Africa.
Operational capability in EMEA Alternatives has been increased across Luxembourg, Dublin and Cape Town. The continued development and expansion of SANNE's funds technology capability across the business has considerably strengthened the Group's ability to provide market leading technology solutions to Asset Managers and their investors. These increased capabilities have been beneficial for all asset classes.
Asia-Pacific & Mauritius (APM) Alternatives
The APM Alternatives business is predominantly made up of real estate, private equity and a smaller proportion of credit funds across Asia-Pacific and Mauritius. Revenues for the first six months were GBP14.0m (H1 2016: GBP1.9m) with a gross profit of GBP10.9m (H1 2016: GBP1.3m). The prior period comparatives do not include results of the Mauritius business that was acquired on 1 January 2017.
During the first half of the year, strong growth has been delivered within the real estate and private equity asset classes in Hong Kong, Shanghai and Singapore, with advantage being taken of good cross-selling opportunities from EMEA Alternatives clients.
In Mauritius the integration of IFS-Sanne remains on track. The Group is also seeing an increase in cross-selling opportunities to and from the region, expanding the client offering for both SANNE and IFS-Sanne's client portfolios.
The region displays good growth potential within the existing jurisdictional offering.
Within APM, operational capability has been expanded in Shanghai, Hong Kong and Singapore in line with client requirements and a new Managing Director has now been appointed to head up the regional business.
Corporate & Private Clients (CPC)
CPC comprises four business divisions: Corporate & Institutional, Executive Incentives, Private Client and Treasury. Revenues for the first six months were GBP9.6m (H1 2016: GBP8.5m), with strong growth in all divisions. Gross profit was GBP6.1m (H1 2016: GBP5.5m).
The Corporate & Institutional (C&I) division showed good revenue growth resulting from strong new business wins and cross selling opportunities arising from Alternatives in respect of our Depository offering. There is also increased demand from clients for regulatory reporting services.
The Private Client (PC) division showed growth and continues its strategic focus on institutionally minded Ultra High Net Worth (UHNW) families and their family offices, with a continued focus on outsourcing of their fiduciary and administrative needs.
The Executive Incentives (EI) division showed growth in revenue despite some new larger engagements won in late 2016/early 2017, taking longer to implement. Global trends in regard to executive compensation, including toward equity based plans, deferred compensation & carried interest structures, bode well for the sustained growth of the EI division over the longer term.
The Treasury division showed revenue growth resulting from cash management and foreign exchange transactions wins and strong pipeline has been developed through cross selling initiatives across the global business.
Cash flow and working capital
The Group delivered an impressive level of operating cash flow in the first half with cash from operations of GBP20.9m (GBP11.4m; 2016). This was delivered largely due to the strong profits growth in the period as well as the continued focused management of working capital. Underlying operating cash conversion was 98.9% for the first half (117.3%; 2016). Working capital as a percentage of annualised revenue is 11.8% (30 June 2016: 20.9%).
The Group's net debt position at 30 June 2017 was GBP23.4m (30 June 2016: GBP7.2m).
Dividend
The Board has declared an interim dividend, up 31.3%, of 4.2 pence per share (2016: 3.2 pence). The dividend will be paid on 13 October 2017 to shareholders on the register as at the close of business on 15 September 2017.
Risk
The following top ten risks facing the Group are unchanged from those set out in the Annual Report 2016: Acquisition Risk; Strategic Risk; Competitor Risk; Business Change Risk; Data Security Risk; Process Risk; Staff Resourcing Risk; Political/Regulatory Change Risk; Regulatory Licence (Compliance) Risk; and Intangible Asset Risk.
Detailed explanations of these principal risks together with key mitigants can be found on pages 27 to 30 of the Annual Report 2016.
Outlook
The Board remains confident in the continued growth of the Group. The new business performance in the first half, and healthy pipeline of further opportunities, provide good momentum in the second half and beyond. The successful execution of the Group's organic growth strategy, supported by strategic acquisitions, is deepening SANNE's asset capabilities, broadening its product offering and delivering greater jurisdictional diversification.
The underlying fundamentals in SANNE's markets remain compelling. Increasing regulation, cross-border investment and the growing expectation of independent oversight are driving demand for the outsourcing of administration services. SANNE's brand, market position, high levels of service and strong client base provide a strong platform for continued success.
As a result of continued investments across the Group in support of its growth, with a focus on people, processes, and technology, this year the Board expects to see a more even half one/half two split of profitability than the Group has reported in prior years.
The Board continues to believe that the Group will meet its expectations for underlying profits before tax for the full year and as a result of a lower expected effective tax rate, expects to be able to report underlying EPS marginally ahead of its previous expectations.
Rupert Robson Dean Godwin Chairman Chief Executive Officer 7 September 2017
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE INTERIM STATEMENT
We confirm to the best of our knowledge that:
- The condensed set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; and
- The interim management report includes a fair review of the information required by:
A. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
B. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
The interim statement contains certain forward looking statements which are made by the directors in good faith based on the information available to them at the time of their approval of this interim statement. Forward looking statements contained within the interim statement should be treated with some caution due to the inherent uncertainties, including economic, regulatory and business risk factors, underlying any such forward looking statements.
We undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise. The interim statement has been prepared by Sanne Group plc to provide information to its shareholders and should not be relied upon by any other party or for any other purpose.
Dean Godwin
Chief Executive Officer
7 September 2017
INDEPENT REVIEW REPORT TO SANNE GROUP PLC
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 14. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union and in accordance with IFRSs as issued by the IASB. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
St Helier, Jersey
7 September 2017
Sanne Group plc
Consolidated Income Statement
For the period from 1 January
2017 to 30 June 2017
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
to to to
30 Jun 30 Jun 31 Dec
2017 2016 2016
Notes GBP'000 GBP'000 GBP'000
Revenue 56,310 27,639 63,847
Direct costs (20,337) (9,624) (23,412)
Gross profit 3 35,973 18,015 40,435
------------------------------- ------ -------------- ---------- ----------
Other operating income 128 70 122
Operating expenses (22,925) (9,833) (25,893)
Operating profit 13,176 8,252 14,664
------------------------------- ------ -------------- ---------- ----------
Comprising:
Underlying operating profit 21,534 10,310 22,652
Non-underlying items within
operating expenses 4 (8,358) (2,058) (7,988)
13,176 8,252 14,664
------------------------------- ------ -------------- ---------- ----------
Other gains and losses (74) 60 1,096
Finance costs (604) (251) (914)
Finance income 50 64 115
Profit before tax 12,548 8,125 14,961
------------------------------- ------ -------------- ---------- ----------
Comprising:
Underlying profit before
tax 4 20,931 10,183 21,994
Non-underlying items (8,383) (2,058) (7,033)
12,548 8,125 14,961
------------------------------- ------ -------------- ---------- ----------
Tax 5 (2,452) (1,007) (2,013)
Profit for the period/year 10,096 7,118 12,948
------------------------------- ------ -------------- ---------- ----------
Earnings per ordinary share ("EPS")
(expressed in pence per ordinary share)
Basic 6 7.3 6.3 11.4
Diluted 6 7.1 6.3 11.3
Underlying basic 6 13.4 8.1 17.6
Underlying diluted 6 13.0 8.1 17.4
All profits in the current and preceding periods
and year are derived from continuing operations
Sanne Group plc
Consolidated Statement of Comprehensive
Income
For the period from 1 January
2017 to 30 June 2017
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
to to to
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit for the period/year 10,096 7,118 12,948
------------------------------------------ -------------- ---------- ----------
Other comprehensive income
Items that will not be reclassified
subsequently to the profit and
loss:
Actuarial loss on pension (7) - -
scheme
Income tax relating to items 1 - -
not reclassified
Items that may be reclassified
subsequently to the profit
and loss:
Exchange differences on translation
of foreign operations (8,712) 2,086 3,317
Total comprehensive income
for the period/year 1,378 9,204 16,265
------------------------------------------ -------------- ---------- ----------
Sanne Group plc
Consolidated Balance Sheet
As at 30 June 2017
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2017 2016 2016
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 9 103,678 7,393 55,094
Other intangible assets 10 68,168 16,026 27,587
Equipment 3,185 1,568 2,832
Deferred tax asset 728 - 239
Total non-current assets 175,759 24,987 85,752
---- --------------------------------- --------- ------------ --------- ---------------------- -------------------------
Current assets
Trade and other receivables 24,356 18,255 22,746
Cash and bank balances 32,560 14,520 108,673
Accrued income 4,750 2,107 1,535
Total current assets 61,666 34,882 132,954
---- --------------------------------- --------- ------------ --------- ---------------------- -------------------------
Total assets 237,425 59,869 218,706
---- --------------------------------- --------- ------------ --------- ---------------------- -------------------------
Equity
Share capital 11 1,411 1,160 1,353
Share premium 169,279 44,745 135,354
Own shares (692) (369) (562)
Shares to be issued 15,014 333 13,867
Retranslation reserve (5,615) 1,866 3,097
Retained losses (20,513) (25,092) (21,745)
Total equity 158,884 22,643 131,364
---- --------------------------------- --------- ------------ --------- ---------------------- -------------------------
Non-current liabilities
Borrowings 13 50,569 17,730 59,518
Deferred tax liabilities 2,158 2,290 2,527
Retirement gratuity liability 602 - -
Total non-current liabilities 53,329 20,020 62,045
---- --------------------------------- --------- ------------ --------- ---------------------- -------------------------
Current liabilities
Trade and other payables 7,581 7,352 13,695
Current tax liabilities 3,801 2,293 2,609
Provisions 388 84 353
Deferred revenue 13,442 7,477 8,640
Total current liabilities 25,212 17,206 25,297
---- --------------------------------- --------- ------------ --------- ---------------------- -------------------------
Total equity and liabilities 237,425 59,869 218,706
---- --------------------------------- --------- ------------ --------- ---------------------- -------------------------
Sanne Group plc
Consolidated Statement of Changes
in Equity
As at 30 June 2017
Shares
to
Share Share Own be Re-translation Retained Total
Capital Premium shares issued reserve Earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2016 1,130 44,770 (122) - (220) (26,573) 18,985
---------------------- --------------- --------- ------------ --------- ---------------------- --------- ------------
Profit for the
period - - - - - 7,118 7,118
Other
comprehensive
income for the
period - - - - 2,086 - 2,086
Total comprehensive
income for the
period - - - 2,086 7,118 9,204
---------------------- --------------- --------- ------------ --------- ---------------------- --------- ------------
Dividend
payments - - - - - (6,335) (6,335)
Net sale of own
shares - - 9 - - 620 629
Net buyback of
own
shares 30 (25) (256) - - - (251)
Share based
payment
- employees - - - 333 - 78 411
Balance at 30 June
2016 1,160 44,745 (369) 333 1,866 (25,092) 22,643
---------------------- --------------- --------- ------------ --------- ---------------------- --------- ------------
Profit for the
period - - - - - 5,830 5,830
Other
comprehensive
income for the
period - - - - 1,231 - 1,231
Total comprehensive
income for the
period - - - - 1,231 5,830 7,061
---------------------- --------------- --------- ------------ --------- ---------------------- --------- ------------
Issue of share
capital 193 94,313 - - - - 94,506
Cost of share
issuance - (3,704) - - - - (3,704)
Dividend
payments - - - - - (3,618) (3,618)
Share based
payment
- employees - - - 774 - 198 972
Share based
payment
- acquisitions - - - 12,760 - - 12,760
Net buyback of
own
shares - - (201) - - - (201)
Reissue of own
shares - - 8 - - 937 945
Balance at 31
December
2016 1,353 135,354 (562) 13,867 3,097 (21,745) 131,364
---------------------- --------------- --------- ------------ --------- ---------------------- --------- ------------
Profit for the
period - - - - - 10,096 10,096
Other
comprehensive
income for the
period - - - - (8,712) (6) (8,718)
Total comprehensive
income for the
period - - - - (8,712) 10,090 1,378
---------------------- --------------- --------- ------------ --------- ---------------------- --------- ------------
Issue of own
shares 58 34,132 - - - - 34,190
Cost of share
issuance - (207) - - - - (207)
Net buyback of
own
shares - - (130) - - - (130)
Dividend
payments - - - - - (8,858) (8,858)
Share based
payment
- employees - - - 1,147 - - 1,147
Balance at 30 June
2017 1,411 169,279 (692) 15,014 (5,615) (20,513) 158,884
---------------------- --------------- --------- ------------ --------- ---------------------- --------- ------------
Sanne Group plc
Consolidated Cash Flow Statement
For the period from 1 January
2017 to 30 June 2017
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Operating profit 13,176 8,252 14,664
Adjustments for:
Depreciation of equipment 731 466 1,085
Amortisation of intangible
assets 6,609 955 2,707
Share-based payment expense 1,318 411 1,383
Increase/(decrease) in
provisions 35 (50) 219
Operating cash flows before
movements in working capital 21,869 10,034 20,058
---- -------------------------------------------- ------------ --------- ---------------------- -----------------------
(Increase)/decrease in
receivables (1,398) 212 (3,207)
Increase/decrease in deferred
revenue 2,033 441 (1,434)
(Decrease)/Increase in payables (1,616) 712 3,234
Cash generated by operations 20,888 11,399 18,651
---- --------------------------------- --------- ------------ --------- ---------------------- -----------------------
Income taxes paid (2,803) (251) (985)
Net cash from operating
activities 18,085 11,148 17,666
---- --------------------------------- --------- ------------ --------- ---------------------- -----------------------
Investing activities
Interest received 50 63 115
Purchases of equipment (1,289) (210) (1,501)
(Decrease)/increase in deferred
consideration (5,619) - 5,916
Acquisition of subsidiaries (68,543) (9,979) (56,030)
Net cash used in investing
activities (75,401) (10,126) (51,500)
---- --------------------------------- --------- ------------ --------- ---------------------- -----------------------
Financing activities
Dividends paid (8,858) (6,335) (9,953)
Interest on bank loan (698) (243) (585)
Proceeds on issue of shares - - 94,506
Net proceeds on sale of own - 378 -
shares
Costs of share issuance (207) - (3,217)
Buyback of own shares (130) - (462)
Capitalised loan cost - - (482)
Net proceeds on ordinary
shares by employee benefit
trust - - 629
Redemption of bank loans (14,000) - (18,000)
New bank loans raised 5,000 - 60,000
Net cash (used in)/from
financing
activities (18,893) (6,200) 122,436
---- --------------------------------- --------- ------------ --------- ---------------------- -----------------------
Net (decrease)/increase in
cash and cash equivalents (76,209) (5,178) 88,602
---- --------------------------------- --------- ------------ --------- ---------------------- -----------------------
Cash and cash equivalents
at beginning of period/year 108,673 19,445 19,445
Effect of foreign exchange
rate changes 96 253 626
Cash and cash equivalents
at end of period/year 32,560 14,520 108,673
---- --------------------------------- --------- ------------ --------- ---------------------- -----------------------
Sanne Group plc
Notes to the consolidated
results
For the period from 1 January
2017 to 30 June 2017
1. Basis of
preparation
Sanne Group plc ("the Company") is a company incorporated
in Jersey, Channel Islands. The unaudited, condensed
and consolidated financial statements for the six months
ended 30 June 2017 comprise the Company and its subsidiaries
(collectively the "Group").
The consolidated results have been prepared in accordance
with International Accounting Standard 34 'Interim
Financial Reporting' as adopted by the European Union
("EU"). The financial statements are therefore presented
on a condensed basis as permitted and do not include
all disclosures that would otherwise be required in
a full set of financial statements and should be read
in conjunction with the Annual Report for the year
ended 31 December 2016, available at www.sannegroup.com.
Going concern
The Directors have a reasonable expectation that the
Group has adequate resources to continue in operational
existence for the foreseeable future. The Directors
have reviewed the Group's financial projections and
cash flow forecasts and believe, based on those projections
and forecasts, that it is appropriate to prepare the
consolidated financial statements of the Group on a
going concern basis. Accordingly, they have adopted
the going concern basis of accounting in preparing
the consolidated financial statements.
Accounting policies
The Group has applied consistent accounting policies,
presentation and methods of calculation as those followed
in the preparation of the Group's consolidated financial
statements for the year ended 31 December 2016, in
accordance with IFRS as adopted by the EU.
The Directors have considered all new, revised or amended
standards and interpretations which are mandatory for
the first time for the financial year ending 31 December
2017, and concluded that they have had no significant
impact on these interim financial statements. New,
revised or amended standards and interpretations that
are not yet effective have not been early adopted and
the Directors do not expect that the adoption of the
standards will have an impact other than as identified
and disclosed in the Annual Report for the year ended
31 December 2016.
2. Estimates, critical accounting judgements
and key sources of estimation uncertainty
In the application of the Group's accounting policies,
the Directors are required to make judgements, estimates
and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions
are based on historical experience and other factors
that are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate
is revised if the revision affects only that period,
or in the period of the revision and future periods
if the revision affects both current and future periods.
The critical judgements and estimations of uncertainty
at the balance sheet date that the Directors have made
in the process of applying the Group's accounting policies
and that have the most significant effect on the amounts
recognised in the financial statements are as set out
in the Annual Report for the year ended 31 December
2016.
Seasonality
Given the makeup of the Group's customers and contracts,
seasonality is not expected to have a significant bearing
on the financial performance of the Group.
Brexit
While the final outcome of the UK's negotiations with
the EU will not be known for some time, the Group continues
to invest in the development of its client proposition
across its many operational centres, both inside and
outside the EU. Brexit has created uncertainty in some
markets, but the Group's strong momentum and diverse
geographic presence, as well as the favourable underlying
trends in the markets in which we operate, give the
Directors confidence in the continued growth of the
Group.
3. Segmental
Reporting
The reporting units engage in corporate, fund and private
client administration, reporting and fiduciary services.
Declared revenue is generated from external customers.
The Group's consolidated financial statements for the
year ended 31 December 2016 had nine reportable segments
under IFRS 8: Debt, Real Estate, Private Equity, Corporate
and Institutional, Executive Incentives, Private Client,
Treasury, Hedge and North American Alternatives. Given
the continuing growth of the Group, these nine segments
have been reorganised into four segments from the beginning
of the reporting period ended 30 June 2017. The four
new segments are EMEA Alternatives (EMEA), Asia/Pacific
and Mauritius Alternatives (APM), North American Alternatives
(NA) and Corporate and Private Client (CPC).
The comparative numbers for the segmental reporting
have been restated to reflect the four new segments
created in the current reporting period.
The chief operating decision maker is the board of
directors of Sanne Group plc. Each segment is defined
as a set of business activities generating a revenue
stream determined by segmental responsibility and the
management information reviewed by the board of directors.
The Board evaluates segmental performance on the basis
of gross profit, after the deduction of the direct
costs of staff, marketing and travel.
Unaudited 6 Months Direct Gross
to 30 Jun 2017 Revenue costs profit
GBP'000 GBP'000 GBP'000
Segments
EMEA Alternatives 23,136 (8,961) 14,175
Asia-Pacific &
Mauritius
Alternatives 14,025 (3,098) 10,927
North American
Alternatives 9,508 (4,772) 4,736
Corporate &
Private
Client 9,641 (3,506) 6,135
Total 56,310 (20,337) 35,973
-------------------- ----- --------- --------- ------------ --------- ----------------------
Other operating
income 128
Operating expenses (22,925)
Operating profit 13,176
-------------------- ----- --------- --------- ------------ --------- ----------------------
Unaudited 6 Months Direct Gross
to 30 Jun 2016 Revenue costs profit
GBP'000 GBP'000 GBP'000
Segments
EMEA Alternatives 17,218 (5,990) 11,228
Asia-Pacific &
Mauritius
Alternatives 1,926 (674) 1,252
North American - - -
Alternatives
Corporate &
Private
Client 8,495 (2,960) 5,535
Total 27,639 (9,624) 18,015
-------------------- ----- --------- --------- ------------ --------- ----------------------
Other operating
income 70
Operating expenses (9,833)
Operating profit 8,252
-------------------- ----- --------- --------- ------------ --------- ----------------------
Audited 12 Months Direct Gross
to 31 Dec 2016 Revenue costs profit
GBP'000 GBP'000 GBP'000
Segments
EMEA Alternatives 38,668 (14,040) 24,628
Asia-Pacific &
Mauritius
Alternatives 4,196 (1,511) 2,685
North American
Alternatives 3,092 (1,396) 1,696
Corporate &
Private
Client 17,891 (6,465) 11,426
Total 63,847 (23,412) 40,435
-------------------- ----- --------- --------- ------------ --------- ----------------------
Other operating
income 122
Operating expenses (25,893)
Operating profit 14,664
-------------------- ----- --------- --------- ------------ --------- ----------------------
Geographical
information
The Group's revenue from external customers by geographical
location of contracting Group entity is detailed below:
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
to to to
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Jersey 19,638 17,875 36,747
Rest of Europe 11,701 8,812 19,475
Mauritius 11,224 - -
Americas 9,508 - 3,092
South Africa 3,302 441 3,341
Asia - Pacific 937 511 1,192
Total Revenue 56,310 27,639 63,847
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
4. Underlying profit
before tax Unaudited Unaudited Audited
6 Months 6 Months 12 Months
to to to
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit before tax 12,548 8,125 14,961
Non-underlying
items
within operating
expenses:
Share based
payments (i) 1,318 411 1,391
Acquisition and
integration
expense (ii) 413 692 3,870
Amortisation of
intangible
assets (iii) 6,609 955 2,707
Other items 18 - 20
8,358 2,058 7,988
Non-underlying
items
within finance
costs:
Loan restructuring
within finance
costs (iv) 25 - 245
FX gains and
losses (v) - - (1,200)
Underlying profit
before tax 20,931 10,183 21,994
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
In order to present the normalised performance of the
Group the Directors have adjusted for the above non-underlying
expenses.
(i) Share based payments are detailed in Note 12.
(ii) During the period ended 30 June 2017 the Group
completed the acquisition of IFS Group as detailed
in Note 8. The Group completed four acquisitions during
the twelve months ending 31 December 2016. Integration
costs relating to these acquisitions for the period
ending 30 June 2017 were GBP413k.
(iii) The amortisation charges relate to the amortisation
of Customer and Contract intangibles acquired through
acquisitions.
(iv) As part of a loan restructuring, previously capitalised
issuance costs of GBP245k were expensed during 2016
and legal costs of GBP25k were expensed during the
current period.
(v) During 2016, FX forward contracts were taken out
to purchase United States Dollars at a fixed price
on a fixed date to fund the FLSV Fund Administration
Services LLC and IFS Group acquisitions. A net gain
of GBP1.2 million was recognised on these contracts.
5. Tax Unaudited Unaudited Audited
6 Months 6 Months 12 Months
to to to
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Current income tax 3,208 1,036 2,289
Deferred income tax (756) (29) (276)
Total income tax 2,452 1,007 2,013
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Income tax is calculated across the Group based on
the prevailing income tax rates in the jurisdictions
in which profits are earned.
6. Earnings per
share Unaudited Unaudited Audited
6 Months 6 Months 12 Months
to to to
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit for the
period/year 10,096 7,118 12,948
Non-underlying
items
within:
Operating
expenses 8,358 2,058 7,988
Other costs 25 - (955)
Underlying earnings 18,479 9,176 19,981
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Weighted average number of
ordinary shares for the purposes
of basic earnings per share 138,327,654 113,013,392 113,693,355
Effect of dilutive
potential
ordinary shares:
Deferred
consideration
shares 2,546,626 - 417,480
Performance share
plan 528,719 - 202,172
Restricted stock
awards 1,143,340 97,245 235,974
Weighted average number of
ordinary shares for the purposes
of diluted earnings per share 142,546,339 113,110,637 114,548,981
-------------------------------------- ----------------------- --------------------------------- -----------------------
Basic earnings per
share (pence) 7.3 6.3 11.4
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Diluted earnings
per
share (pence) 7.1 6.3 11.3
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Underlying basic
earnings
per share (pence) 13.4 8.1 17.6
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Underlying diluted
earnings
per share (pence) 13.0 8.1 17.4
--------------------------- --------- --------- ------------ --------- ---------------------- --------- ------------
The Group presents basic and diluted earnings per share
("EPS") data for its ordinary shares.
Basic EPS is calculated by dividing the profit attributable
to ordinary shareholders by the weighted average number
of ordinary shares in issue during the period.
Diluted EPS takes into consideration the Company's
dilutive contingently issuable shares as disclosed
above. These arrangements have no impact on the earnings
or underlying earnings figures used to calculate diluted
EPS. The weighted average number of ordinary shares
used in the diluted calculation is inclusive of the
number of shares which are expected to be issued to
satisfy the awards when they become due and where the
performance criteria, if any, have been deemed to have
been met as at the respective period end.
At 30 June 2017 there were a total of 1,019,857 contingently
issuable ordinary shares granted as part of the Performance
Share Plan. A portion of these shares were included
in the diluted EPS as some of the conditions had been
met at the end of the reporting period.
7. Dividends
An interim dividend of 4.2 pence per ordinary share
(2016: 3.2 pence) was declared by the Directors on
6 September 2017 and will be payable on 13 October
2017 to holders on record on 15 September 2017. The
2016 final dividend of 6.4 pence was paid on 23 May
2017.
8. Business
combinations
International Financial Services Limited
("IFS Group")
On 1 January 2017 the Group acquired 100% of the issued
share capital of International Financial Services Limited
and IFS Trustees, these entities are incorporated in
Mauritius and together trade as the IFS Group.
This acquisition provides the Group with a significant
platform to both support clients in attractive regions
and grow the Group's emerging markets presence. IFS
Group forms the core of the Asia-Pacific and Mauritius
Alternatives segment.
The consideration for the acquisition was satisfied
through a payment of approximately GBP74.6 million
(US$92 million) in cash and the issuance of 5,844,507
consideration shares.
USD GBP
'000 '000
Recognised amounts of identifiable
net assets (at fair value):
Useful economic
Non-current assets life
3 -
Equipment 7 years 383 310
Customer &
contract
intangibles 6 years 62,078 50,306
Deferred tax
asset 111 91
62,572 50,707
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Current assets
Trade and other
receivables 1,769 1,433
Cash and cash
equivalents 7,463 6,048
Accrued income 2,460 1,994
11,692 9,475
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Current liabilities
Trade and other
payables 1,349 1,093
Current tax
liabilities 961 778
Deferred income 3,416 2,769
5,726 4,640
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Non-current
liabilities
Retirement
gratuity
liability 691 560
691 560
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Identifiable net
assets 67,847 54,982
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Goodwill 66,389 53,799
Total consideration 134,236 108,781
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Total consideration
satisfied by:
Cash consideration
- on acquisition 92,045 74,591
Equity instruments - ordinary shares
(5,844,507 shares in Sanne Group plc) 42,191 34,190
Fair value of consideration
payable at acquisition date 134,236 108,781
-------------------------------------- --------- ------------ --------- ---------------------- --------- ------------
Net cash outflow
arising
on acquisition:
Cash
consideration 92,045 74,591
Less: cash and cash equivalent
balances acquired (7,463) (6,048)
Net cash outflow
arising
on acquisition: 84,582 68,543
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Fair value of
consideration
The shares were valued based on the closing share price
the day before reissuance with this amount appropriately
allocated between share capital and share premium.
Transaction costs
The Group incurred GBP319k (net of FX gain of GBP1.5
million) of acquisition and integration expense in
2016. During the first half of 2017 the Group incurred
integration costs of GBP74k and a reduction in transaction
costs of GBP87k after an accrual for the 2016 financial
period was reversed. These costs have been expensed
within operating expenses in this financial period
and have further been identified as non-underlying
as detailed in Note 4.
Goodwill
Goodwill is represented by assets that do not qualify
for separate recognition or by other factors. These
include the opportunities for new business wins from
new customers, the benefits of an established workforce
and synergies from combining operations of the acquiree
and the acquirer.
Effect on the
results
IFS Group contributed GBP11.2 million revenue and a
profit of GBP6 million to the Group's profit for the
period between the date of acquisition and the balance
sheet date. The date of acquisition was 1 January 2017
and therefore there are no differences in the revenue
and profit which would have been contributed on a pro
rata basis from the start of the period.
9. Goodwill
Goodwill represents the excess of the cost of the acquisition
over the fair value of the Group's share of the net
identifiable assets of the acquired subsidiary at the
date of acquisition.
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Opening balance 55,094 - -
Acquired during the
period/year 53,799 6,392 53,244
Exchange difference (5,215) 1,001 1,850
Closing balance 103,678 7,393 55,094
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
10. Other intangible
assets
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Opening balance 27,587 7,712 7,712
Acquired during the
period 50,306 8,031 20,458
Amortisation charge
for the
period/year (6,609) (955) (2,707)
Exchange difference (3,116) 1,238 2,124
Closing balance 68,168 16,026 27,587
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
11. Share capital Unaudited Unaudited Audited
6 Months 6 Months 12 Months
to to to
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Opening balance 1,353 1,160 1,160
Issue of shares (i) 58 - 193
Closing balance 1,411 1,160 1,353
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
(i) The Company issued 5,844,507 shares on 1 January
2017 as part consideration in the acquisition of IFS
Group (Note 8).
12. Share based
payments Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Sanne Group plc
Employee Share
Gift
award (i) - - 276
Performance Share
Plan (ii) 605 315 676
Restricted Stock
Awards (iii) 713 96 439
Total share based
payments 1,318 411 1,391
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
(i) Details of the prior period share based payment
charges can be found in the Group's annual report for
the year ended 31 December 2016.
(ii) During the current and previous periods the Group
granted awards over its ordinary shares under the terms
of its Performance Share Plan ("PSP"). The exercise
of awards under the PSP is conditional upon the achievement
of one or more challenging performance targets set
at the time of the grant and measured over a 3 year
performance period.
(iii) During the current and previous periods the Group
granted awards over its ordinary shares in the form
of Restricted Stock Awards ("RSA"). The majority of
awards were granted as part of the mechanics of acquisitions
to act as retentions for key management. The awards
are also used as part of the Group's recruitment policy
for certain key management. The vesting of the awards
is subject to continued employment over an agreed period.
13. Borrowings
The Group had borrowings with HSBC to the value of
GBP60 million at 31 December 2016. The Group settled
borrowings with HSBC to the value of GBP14.1 million
during the period, GBP14.0 million related to principal
loan balance and GBP58k to interest accrued thereon.
The Group also drew down GBP5 million during the period.
The balance at period end is GBP51 million (2016: GBP18
million).
14. Related party
transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in
this note.
The Group's only other significant related parties
are key management personnel, comprising all members
of the plc Board of directors and the Executive Committee
who are responsible for planning and controlling the
activities of the Group.
The remuneration of any employee who met the definition
of key management personnel of the Group during the
period is set out below in aggregate for each of the
categories specified in IAS 24 Related Party Disclosures.
Unaudited Unaudited Audited
as at as at as at
30 Jun 30 Jun 31 Dec
2017 2016 2016
GBP'000 GBP'000 GBP'000
Short term payments
Short-term
employee
benefits 2,301 1,267 1,956
Share Based
Payments
(see Note 12) 344 286 477
Total short term
payments 2,645 1,553 2,433
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
Other
Ordinary
Dividends 506 466 764
Total other
payments 506 466 764
-------------------- ----- --------- --------- ------------ --------- ---------------------- --------- ------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UBOVRBSAKRRR
(END) Dow Jones Newswires
September 07, 2017 02:01 ET (06:01 GMT)
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