Small cap financial services provider Sanne (SNN) gets off to a solid start as a listed company, reporting strong sales growth at its maiden results update.
Revenue in the six months to 30 June 2015 grew 26% to £21.1 million aided by contributions from the Ariel and Delorean contracts acquired from giant US asset administration specialist State Street (STT:NYSE).
Organic sales growth was around 21%, chief executive Dean Godwin tells Shares, driven by Sanne's Alternatives division, which includes real estate, private equity client and debt (fixed income) clients.
Sanne’s other main operating unit, Corporate, which provides fiduciary and executive remuneration services, looks like it grew at a high single-digit rate including acquisitions.
Mergers and acquisitions (M&A) are a big part of the investment proposition at Sanne. Chief financial officer Spencer Daley says Sanne has roughly £30 million of available fire power for deals in the coming year.
Management would consider raising more funds from shareholders or paying for businesses by issuing new stock to sellers, depending on the opportunity.
‘From my perspective, acquisitions are there to supplement the organic growth story,’ says Godwin.
‘So we’ll take a disciplined approach – we’d want any deal to be immediately earnings accretive. It would have to fit in with our acquisition strategy: does it increase our diversification; does it increase our jurisdictional coverage and is it in a lower cost jurisdiction where we can create synergies across the group.
‘We will be disciplined but, depending on the size, we would be looking at one or two deals every six months. it’s very important to integrate new businesses well.’
Sanne delivered a loss-before-tax of £5 million because of exceptional costs of £11.1 million relating to its initial public offering and a financial restructuring prior to becoming a listed company.
Adjusted earnings per share at the half-year stage were 5.3p, according to management calculations.