Sanne FY profits, revenue rise despite Covid impact

Sanne reported a rise in full-year profit and revenue on Friday despite the impact of the Covid-19 pandemic, as it hailed revenue growth across all regions.

In its preliminary results for the year to the end of December 2020, the company said underlying pre-tax profit increased 16% to £44.9m on revenue of £169.7m, up 7.7% on the previous year. On a statutory basis, pre-tax profit was up 114.9% at £20.5m, while turnover grew 9.5% to £174.9m.

The annualised value of recurring new business wins in the year was £22.5m, down marginally on the prior year’s £24.5m but "very encouraging given the prevailing market conditions", Sanne said.

There was a notable pick-up in wins during the fourth quarter of the year and while many of these were funds that had been delayed from earlier in the year, this pick-up, along with a number of funds won earlier in 2020 and finally closing in Q4, gives the business an encouraging exit revenue run-rate into 2021, Sanne said.

"Whilst it remains too early to call a full recovery in the fundraising environment, the high levels of demand for closed-ended alternative asset investment strategies provide us with confidence in the sustainability of the medium and longer term structural growth drivers in our markets," the company said.

Sanne, a provider of asset management services, declared a final dividend of 9.9p, taking the total dividend for the year to 14.7p, compared to 14.1p in 2019.

The company said it began to see the impact of the pandemic as early as January 2020 in some of its Asia Pacific offices. The Covid-19 crisis had a "large" impact on capital deployment, new funds raised, and transactions undertaken across almost all of its client groups.

At the same time, end-of-life attrition was broadly in line with prior years as revenues fell away from structures wound up in 2019 and the early part of 2020.

"These combined effects in the year have inevitably resulted in a slowing of our revenue growth," Sanne said. "However, constant currency organic revenue growth of 5.8% is testament to the resilience of our business model even in the toughest markets."

Chief executive Martin Schnaier said: "Sanne has delivered a robust financial performance in 2020 and continued to make progress against our strategic priorities. We have further enhanced our offering to clients through the rollout of new products and investment in technology, in addition to broadening our global footprint and capabilities with five acquisitions.

"Looking ahead, whilst the Covid-19 pandemic remains ongoing, we are encouraged by the positive trends we have seen in recent months. The long-term prospects for the alternative assets industry remain highly attractive and the strong platform we have built means that Sanne is ideally positioned as markets improve."

Steve Clayton, manager of the HL Select funds, said: "Sanne is one of those elite businesses that made it through the pandemic without seeking government assistance, whilst growing revenues, profits and dividends at the same time. That’s a reflection of the durability of their business model.

"When clients hire Sanne to administer their funds, Sanne tend to stay in situ for the life of the fund, so revenues are highly recurring. Clients did slow down their fundraising efforts through the height of the crisis, but new business levels are now on the mend. Margins are rising too, up 100bp to 28.3% for the full year and backed by robust cash generation. Sanne keep growing their international footprint, with acquisitions in Ireland, Cayman and Tokyo, further diversifying the revenue base."

Clayton said Sanne is held in the HL Select UK funds "because the group offers a rare combination of growth and strongly recurring revenues".