Independent, global provider of corporate and fund administration services. Preliminary Results Presentation Year ended 31 December 2015

Transcription

1 Independent, global provider of corporate and fund administration services Preliminary Results Presentation Year ended 31 December 2015

2 Agenda Key highlights and group overview Dean Godwin Financial review Spencer Daley Operational review and strategic update Dean Godwin Q&A 2

3 Key highlights 2015 Sanne recorded a strong performance in its first year as a listed company Group revenue increased 28% to 45.6 million (2014: 35.6 million) Adjusted operating profit before exceptionals up 39% to 15.7 million (2014: 11.3 million) Adjusted operating profit margin of 34.4% (2014: 31.7%) Adjusted Profit before tax up 79% to 14.5 million (2014: 8.1 million) Recommended final dividend of 5.6p per share (Total dividend for 2015: 7p per share) Successful IPO on the Main Market of the London Stock Exchange in April 2015 Pipeline of secured new business increased by 31% to approximately 13.0 million in 2015 (2014: 9.9 million) Strong momentum within Sanne s core alternative focused business divisions (Debt, Real Estate and Private Equity) Since year end: Acquisition of corporate services business in Dublin Entered into agreement to acquire hedge fund administration business in South Africa 3

4 Group overview Specialist provider of outsourced corporate and fund administration, reporting and fiduciary services Business line Client profile Services delivered Debt Global financial institutions and credit fund managers Fund and corporate administration Accounting and reporting services FY15 revenue by division Real Estate Private Equity Real estate management, sovereign wealth funds, pension funds and institutions Asset managers, institutions and family offices Asset servicing Loan agency and servicing (Debt) Depositary services Compliance monitoring Executive Incentives 10% Private Client 13% Treasury 1% Debt 30% Corporate and Institutional Executive Incentives Private Client Treasury Hedge* International corporates, entrepreneurial groups and asset managers Internationally listed companies, private companies and asset managers Ultra high net worth individuals and family offices Sanne clients requiring treasury support South African hedge fund managers Transaction management SPV administration Company secretary / governance support Regulatory reporting services including FATCA and Annex 4 reporting Listing services (CISE) (C&I) Director and trustee services Portfolio reporting (Private client) Philanthropy services (Private Client) Cash and FX management (Treasury) Corporate and institutional 9% Private Equity 15% >600 clients Real Estate 22% >3,200 structures * Subject to completing acquisition of IDS Fund Services 4

5 Our international footprint Presence in major financial centres with Jersey as Group headquarters 31 staff 38 staff 253 staff 26 staff 6 staff 515 staff 11 jurisdictions 51% of staff outside Jersey 10 staff 10 staff 1 staff 1 staff 9 staff 130 staff Note: Estimated Sanne employee numbers as at 21 March 2016 including acquisition of Chartered Corporate Services and IDS Fund Services. Jurisdictions include Cape Town and Malta, both acquired through IDS acquisition 5

6 Agenda Key highlights and group overview Dean Godwin Financial review Spencer Daley Operational review and strategic update Dean Godwin Q&A 6

7 Key performance indicators Strong organic revenue and profit growth across core business lines Change Revenue 45.6m 35.6m +28% Adjusted Operating profit before exceptionals (1) 15.7m 11.3m +39% Adjusted Operating profit margin before exceptionals 34.4% 31.7% +2.7% Operating profit 5.9m 11.0m -46% Adjusted profit before tax (1) 14.5m 8.1m +79% Profit before tax 2.4m 7.8m -69% Adjusted operating cash conversion (1) 124% 94% +30% Notes: 1) Adjustment is for operating expenses related to the Group s IPO and non-continuing and pre-ipo costs 7

8 Group income statement 'm % change Revenue % Gross profit % Margin 65.1% 62.4% Adjusted operating profit % Exceptional items (9.8) (0.3) Operating profit n/a Interest costs and other gains/losses 1 (3.5) (3.2) Profit before tax n/a Tax (0.8) (1.6) Profit after tax n/a Adjusted PAT n/a Adjusted EPS 12.4p 6.3p 96.8% Final dividend per share 5.6p n/a n/a Interim dividend per share 1.4p n/a n/a Total DPS 7.0p n/a n/a Strong organic revenue growth of 25%. Remaining growth as a result of full year impact of 2014 Ariel acquisition New business secured of approximately 13 million on an annualised basis (2014: 9.9 million) Exceptional items comprise IPO expenses and IPO-related loan restructuring costs The Group refinanced at listing and 2.3 million of loan issuance costs were written off One off tax benefits from IPO listing costs. Normalised effective rate of 16.7% (2014: 16.1%). Progressive dividend policy; ⅓:⅔ split (interim dividend payment pro-rated for first three months since IPO) Notes: 1) Interest costs in the period include an exceptional charge of 2.3m that relates to the write off of financing fees connected to the Group s pre-ipo funding structure 8

9 Divisional revenue analysis Revenue growth: 28.0% 'm Revenue % change Gross Margin m 5.8m 4.8m 4.0m 6.6m 5.4m 4.1m 4.0m PF* PF* Debt Debt % 68% 63% Real Real estate Estate % 63% 59% Private Equity % 60% 50% Corporate & Institutional % 64% 66% m 4.2m 6.3m Executive Incentives % 71% 67% m 11.5m m 35.6m Private Client % 67% 69% Treasury / Treasury Other n/a 14% 58% % 65% 62% * 2014 PF figures derived from 2014 half year financials adjusted for integration of Delorean and Ariel transactions 9

10 Group balance sheet and working capital m Intangible assets Plant and equipment Total non-current assets Trade receivables Other receivables Cash Accrued Income Total current assets Preference shares - (19.0) Borrowings (17.7) (42.6) Total non-current liabilities (17.7) (61.6) Trade and other payables (3.2) (2.7) Current tax liabilities (1.4) (1.6) Provisions (0.1) - Deferred revenue (7.0) (1.7) Total current liabilities (11.7) (6.0) Net assets 19.0 (29.4) Working capital Strong control of working capital Shift between trade debtors and accrued/deferred income a result of the date on which quarter end bills are raised Despite the increase in revenue, working capital has remained consistent year on year Post-IPO capital structure and strong cash generation resulted in significant reduction in net debt No impairment of non-current assets to report Refinancing of bank loan on IPO reduced long term bank loan payable Revenue Working capital / Revenue 26% 33% Net cash /(debt) 1.20 (33.6) 10

11 Group cash flow statement m Operating profit Depreciation Amortisation Share-based payment expense Other non-cash movements Operating cash flows before working capital Net movement in working capital 1.2 (3.1) Cash generated by operations Adjusted operating profit cash conversion 124% 94% Income taxes paid (1.1) (1.1) Net cash from operating activities Interest received Purchases of plant and equipment (0.7) (1.4) Acquisition of subsidiaries - (1.7) Net cash used in investing activities (0.7) (3.0) Net cash used in financing activities (3.7) (2.7) Net increase in cash and cash equivalents Cash and bank balances at beginning of the year Effect of FX (0.1) (0.2) Cash and bank balances at the end of the period The IPO included the issue of shares for cash which raised approximately 27 million Exceptional items affecting operating cash flows were 7.0m (2014: 0.3m) Operating profit cash conversion adjusted for exceptional items New debt facility of 18.0 million with HSBC Previous debt facility of 45.0 million repaid Dividends and preference share interest paid during the year of 1.8 million (includes pre-ipo) 11

12 Agenda Key highlights and group overview Dean Godwin Financial review Spencer Daley Operational review and strategic update Dean Godwin Q&A 12

13 Operational review Debt Real Estate Private Equity Revenue of 13.8 million (2014: 11.5 million) Gross profit of 9.4 million Maintained strong market position Focus on non-bank lenders Operational capabilities increased in London and Dublin Development of loan agency service line Revenue of 10.2 million (2014: 6.3 million) Gross profit of 6.4 million UK real estate market continues to attract significant investment Increased trend towards outsourcing of back-office roles Growth in operational capabilities across Jersey, London and Luxembourg Revenue of 6.6 million (2014: 4.2 million) Gross profit of 3.9 million A number of large mandates secured 2015 Supported by a growth in private equity fund raising Investment in platform in Asia and Luxembourg 13.8m Revenue growth: 20% 11.5m 10.2m Revenue growth: 62% 6.3m 6.6m Revenue growth: 57% 4.2m

14 Operational review (continued) Corporate and Institutional Executive Incentives Private Client Revenue of 4.0 million (2014: 4.0 million) Gross profit of 2.6 million Continued focus on developing product suite to sell across all divisions Development of regulatory reporting services (FATCA, AIFMD Annex IV) Investment in depository service proposition Revenue growth: 2% Revenue of 4.8 million (2014: 4.1 million) Gross profit of 3.4 million Continued focus on specialist trusteeship Increased share of UK listed market Initiatives underway to identify cross selling opportunities across Group s client base Revenue growth: 15% Revenue of 5.8 million (2014: 5.4 million) Gross profit of 3.9 million Significant client wins around outsourced family office services Recruitment of senior resource to drive development of UHNW private client base Revenue growth: 9% 4.0m 4.0m 4.8m 4.1m 5.8m 5.4m

15 Operational review (continued) Treasury Group Revenue of 0.4 million Treasury management and payments platform implemented in 2014 Works with business divisions to deliver treasury management and FX services to client structures Being rolled out across the Group s strategic banking relationships Continued investment in Group capabilities to support business growth while maintaining strong control of central overhead to deliver margin improvement Key hires in control functions such as risk and compliance New premises in London to support expansion Assessment and execution of acquisition opportunities which support growth objectives Evaluation of service centres to deliver operational leverage and offer new jurisdictional opportunities 15

16 Delivering growth a compelling strategy Core organic strategy delivered growth story in 2015 Market share development Deepening of key client relationships in core asset classes Increased billing across top 5 clients through take-on of new structures and broadening service scope Expansion of core asset-led offering Continuing to build capabilities across all asset classes Hedge platform delivered through recent South African acquisition completing alternatives suite Expansion of global network and platform Staff number outside Jersey now represent more than 50% of total employees* Scaled operations in London, Luxembourg and Dublin Expansion of services provided Development of treasury services as separate business line Increased scale in depositary and loan agency specialisms Focus on FATCA and Annex 4 reporting as part of a developing regulatory reporting capability Inorganic strategy Acquisition of Chartered Corporate Services in Dublin in Feb 16 Entered into agreement to acquire IDS Fund Services in Cape Town due to complete Q2 16 Continuing to evaluate and progress strategic acquisition targets with strong pipeline * Including recent acquisition of Chartered Corporate Services and IDS Fund Services 16

17 Acquisitions Two acquisitions announced in Q Overview IDS Fund Services Provider of outsourced investment administration services to the domestic South African asset management industry, particularly focused on hedge fund clients. Chartered Corporate Services Corporate services business that specialises in the delivery of company secretarial, liquidations, payroll and VAT reporting services. Price (estimated) R 276 million ( 12.6m) 3.65 million ( 2.9m) Offices Cape Town Malta Dublin Staff Strategic rationale Broadens Sanne s alternative asset capabilities, through delivery of hedge platform and builds operational scale in South Africa and Malta Provides an opportunity to leverage IDS s lower-cost South African platform to deliver wider operational benefits across the Group Delivers a full service corporate team based in Dublin who can be integrated into the C&I business division. Doubles size of Ireland operation in support of expansion of wider servicing capabilities Offers additional product specialisms for C&I to market (liquidations, VAT, payroll) Date signed 14 March February 2016 Target completion date Prior to end of Q2 (subject to receipt of regulatory approvals in both South Africa and Malta) 1 March

18 Geographic focus Sanne s strategic focus is on building scale in established and emerging markets UK & CHANNEL ISLANDS BENELUX / EUROPE ASIA & MIDDLE EAST US / CARIBBEAN AFRICA Existing Sanne offices Jersey Guernsey London Luxembourg Dublin Malta Hong Kong Shanghai Singapore Dubai Cape Town Future focus Amsterdam Frankfurt Japan New York Cayman Mauritius Comment Continue to build out operations in UK and Guernsey to deepen outsource relationships and service proposition across all core asset classes Number of strategic acquisition targets under review Continue to expand Luxembourg base to build market capability in continental Europe Dublin operation reaching critical mass with CCS acquisition Reviewing options in Netherlands Focus on building out operational centres to deliver scale-able operating platform on the ground to service Asia growth Seeking to build out Singapore capability in line with developing client servicing requirements Increasing number of existing client enquiries in relation to servicing of US structures Trend increasingly moving towards outsourcing within alternatives space Undertaking exploratory work in US and Caribbean to identify suitable acquisition targets IDS acquisition delivers strong operational base upon which to build out hedge expertise Also delivers operational leverage across the group platform Continued exploration of complementary jurisdictions 18

19 Summary and outlook Sanne have delivered a strong set of maiden results The board remains confident about the outlook for 2016 Strong momentum in the business and fundamentals remain positive across key markets and specialisms Ongoing focus on building scale in established and emerging markets Integrate acquisitions onto combined platform Continued focus on investing in people and infrastructure while maintaining financial discipline Business lines continue to focus on driving through successful business development strategies Sanne will evaluate and pursue acquisition opportunities that support the core strategy: Market share development Expansion of asset-led offering Jurisdictional expansion Operational leverage 19

20 Agenda Key highlights and group overview Dean Godwin Financial review Spencer Daley Operational review and strategic update Dean Godwin Q&A 20

21 Appendices 21

22 Revenue m Sanne s business model Strong understanding and control of performance drivers Simple Cost Model Recurring Revenue Model 100% 80% 60% 40% 20% 33% 35% 33% 26% 33% 39% Direct costs (staff costs and travel) Central costs (property, IT, head office) EBITDA margin Acquisition opportunities New clients Share of wallet from existing clients 0% Example professional services model Sanne model Existing structures recurring revenue Control of working capital cycle and control of central overhead drives margin performance Majority of revenue is derived from multi-year structures Strong revenue growth driven by share of wallet gains supplemented by new client relationships 22

23 Macro-economic and regulatory trends driving growth Demand for international structures International structures continue to play key role in facilitating capital and investment flows Growing regulatory influence and differentiation Increasing legislation creating further revenue opportunities for administrators International centres responding differently to onshore demands (i.e. transparency with larger more established centres compelled to respond to protect reputations) Independence and substance requirements Greater demand for services provided by administrators, demonstrating 3 rd party checks and local substance Increasing transparency requirements Political pressure driven by fiscal challenges promoting greater cooperation and data sharing between territories Increasing importance of alternative investments Alternative strategies and assets playing an increasingly important role in investment portfolios, driven by a desire for returns uncorrelated with equities and alternative risk premia. 1 Growth in overall market size Increased levels of outsourcing More services required by clients Source 1: Research by Aberdeen Asset Management (November 2014) 23

24 Market context and key segments Fragmented industry with few dominant players ALTERNATIVE (Debt, RE, PE) HEDGE CORPORATE PRIVATE CLIENT TRADITIONAL FUNDS (mutual funds/life funds) Description Fund and corporate administration Accounting and reporting services Loan agency and servicing Compliance monitoring Transaction management Valuation Performance reporting Investor reporting Corporate, regulatory and compliance services SPV administration Company secretary / governance support Regulatory services Carried interest vehicles Listing services (CISE) Treasury management Accounting and administration Fiduciary services Asset administration Portfolio reporting Philanthropy services Establishment of fund structures Fund accounting, calculation of fund performance and investor and regulatory reporting Share holder dealing and registration Industry structure Fragmented Consolidating Fragmented Fragmented Highly consolidated Competition PE Fund Services Sanne s current focus 24

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