TIDMSNN

RNS Number : 3977Y

Sanne Group PLC

09 September 2020

9 September 2020

Sanne Group plc

(the Group , SANNE or the Company )

Interim Results for the six months ended 30 June 2020

SANNE, a leading global provider of alternative asset and corporate services, announces its results for the six months ended 30 June 2020.

 
                                                                           Constant 
                                    6 months       6 months     Change     currency 
                                  to 30 June     to 30 June               change(3) 
                                        2020           2019 
 Underlying(1) 
                               -------------  -------------  ---------  ----------- 
 Net revenue(2)                     GBP83.9m       GBP75.9m      10.7%         9.5% 
                               -------------  -------------  ---------  ----------- 
 Operating profit                   GBP23.0m       GBP19.2m      20.0%        14.0% 
                               -------------  -------------  ---------  ----------- 
 Profit before tax                  GBP22.3m       GBP17.5m        27%        12.1% 
                               -------------  -------------  ---------  ----------- 
 Diluted earnings per share            12.3p           9.4p      30.9%        12.9% 
                               -------------  -------------  ---------  ----------- 
 Free cash flow attributable        GBP15.0m       GBP12.9m      16.3%         n.a. 
  to equity holders(4) 
                               -------------  -------------  ---------  ----------- 
 Operating profit margin               27.4%          25.3%     210bps         n.a. 
                               -------------  -------------  ---------  ----------- 
 Statutory 
                               -------------  -------------  ---------  ----------- 
 Turnover(2)                        GBP86.5m       GBP76.0m      13.8%        12.6% 
                               -------------  -------------  ---------  ----------- 
 Operating profit                   GBP12.3m        GBP5.9m     108.5%        90.0% 
                               -------------  -------------  ---------  ----------- 
 Profit before tax                  GBP11.6m        GBP3.8m     205.3%       141.9% 
                               -------------  -------------  ---------  ----------- 
 Diluted earnings per share             6.1p           1.4p     335.7%       229.4% 
                               -------------  -------------  ---------  ----------- 
 Interim dividend per share             4.8p           4.7p       2.1%         n.a. 
                               -------------  -------------  ---------  ----------- 
 

(1.) Underlying results for the year have been presented after the exclusion of non--underlying items, third-party fund management fees and discontinued activities. Further details of non-underlying items can be found in note 3 of the consolidated financial statements

(2.) Net revenue comprises turnover less third-party fund management fees. More detail is provided in the Financial Review

(3.) Constant currency represents the 2020 performance based on applicable 2019 FX rates to eliminate movements due to FX

(4.) Free cash flow attributable to equity holders is the total cash generated in the year before acquisitions, capital expenditure, financing activities and cash non-underlying costs

Highlights:

   o   Robust financial performance: 

o Net revenue growth of 9.5%(3) with organic growth of 8.9%(3) reflecting the resilience of client book but Q2 COVID-19 related slowdown in new fund activity

o Underlying operating profit growth of 14.0%(3)

o Underlying operating profit margin improvement of 210bps to 27.4% in the first half resulting from actions in H2 2019

o Strong cash generation with underlying operating cash conversion in excess of 100%

o New business wins with annualised revenue of approximately GBP11.1 million secured in the first half with an encouraging pick up since June

   o   Fast adaptation to COVID-19 implications with no interruption to client service: 

o Well invested platform allowed smooth and immediate shift in working patterns under COVID-19 with no interruption to client service

o Prioritised health, safety and wellbeing of our people across all locations throughout the period

o Actively supported COVID-19 related charitable causes across the globe with colleague volunteering and financial contributions

   o   Progress on strategic goals: 

o Continued innovation of technology solutions for improved servicing of customers

o Organic initiatives to sharpen focus and fuel further growth

o Acquisition of Inbhear to increase Dublin capability and open new Cayman office

o Bolt on acquisitions agreed in Cayman and Tokyo to augment presence and drive growth (expected to complete in the second half)

o Completed the disposal of the Jersey Private Client business on 1 July 2020

o Interim dividend of 4.8 p (2019: 4.7p), reflecting the Board's confidence in the prospects for the Group

Outlook:

o The business has shown good resilience during H1 2020 during unprecedented conditions, with the operational platform continuing to deliver quality client service and remaining in a good position to overcome any potential future lockdowns

o Whilst economic uncertainty remains around the medium and longer term impact of COVID-19 and the Brexit process, the business model is robust in that revenues are long term, margins are healthy and the resulting cash flow generation is strong

o Signs of market progress have been seen during Q3 and pipeline of new business continues to grow

o These observations give the Board confidence in delivering a full year performance in line with its expectations, and we continue to see the long-term strategic opportunity for the Group

Martin Schnaier, Chief Executive Officer of Sanne Group plc, said:

"The changes that we have made to the business over the past fifteen months have enabled the Group to deliver a resilient financial performance during the first half despite the backdrop of the COVID-19 pandemic. Our ambition remains to provide high quality, professional services to our clients and this year we have particularly focused on technology across the Group which I see as a really exciting development. Operationally we have prioritised the health, safety and wellbeing of all our people and I would like to thank everyone for their continued efforts in delivering uninterrupted quality service to our clients. We remain excited about the long-term opportunities for the business and committed to our stated strategy."

Enquiries:

 
 Sanne Group plc 
  Martin Schnaier, Chief Executive Officer 
  James Ireland, Chief Financial Officer      +44 (0) 1534 722 787 
 
   Tulchan Communications LLP 
   Tom Murray 
   Tom Blundell                                 +44 (0) 20 7353 4200 
 

The Company will be hosting a virtual investor and analyst presentation at 9.30am (GMT) this morning. A webcast will be provided and is available by registering at the following link: https://www.sannegroup.com/investors/results-presentations/

A dial-in facility is also available, and the details are as follows:

 
 Dial-in numbers:    UK: +44 33 0606 1122 
                      ITFS: International Access 
                      Numbers 
 Room number:        878505 
                    ---------------------------- 
 Participant PIN:     4297 
                    ---------------------------- 
 

A PDF copy of the 2020 Interim Results presentation will be available to download on SANNE's Investor Relations results and presentation page after the live webcast has ended.

Notes:

SANNE is a leading global provider of alternative asset and corporate services. Established for over 30 years and listed on the Main Market of the London Stock Exchange and a member of the FTSE 250 index, SANNE employs more than 1,800 people worldwide and administers structures and funds that have in excess of GBP250 billion of assets.

Key clients include alternative asset managers, financial institutions, family offices and corporates.

SANNE operates from a global network of offices located in leading financial jurisdictions, which are spread across the Americas, Europe, Africa and Asia-Pacific.

www.sannegroup.com

THE ANNOUNCEMENT MAY CONTAIN "FORWARD-LOOKING STATEMENTS". FORWARD-LOOKING STATEMENTS SOMETIMES USE WORDS SUCH AS "AIM", "ANTICIPATE", "TARGET", "EXPECT", "ESTIMATE", "INT", "PLAN", "GOAL", "BELIEVE", "SEEK", "MAY", "COULD", "OUTLOOK" OR OTHER WORDS OF SIMILAR MEANING. BY THEIR NATURE, ALL FORWARD-LOOKING STATEMENTS INVOLVE RISK AND UNCERTAINTY BECAUSE THEY RELATE TO FUTURE EVENTS AND CIRCUMSTANCES WHICH ARE BEYOND THE CONTROL OF THE COMPANY. AS A RESULT, THE ACTUAL FUTURE FINANCIAL CONDITION, PERFORMANCE AND RESULTS OF THE COMPANY MAY DIFFER MATERIALLY FROM THE PLANS, GOALS AND EXPECTATIONS SET FORTH IN ANY FORWARD-LOOKING STATEMENTS. ANY FORWARD-LOOKING STATEMENTS MADE HEREIN SPEAK ONLY AS OF THE DATE THEY ARE MADE AND THE COMPANY DOES NOT ASSUME OR UNDERTAKE ANY OBLIGATION OR RESPONSIBILITY TO UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS ANNOUNCEMENT, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT TO THE EXTENT LEGALLY REQUIRED.

Strategic Review

Chief Executive Officer's Statement

The Group has delivered a strong performance during the first half despite the unprecedented COVID-19 conditions during the period. This performance underlines the resilience of our business during a period of considerable uncertainty within global markets that has impacted on new alternative asset fund launches. In our core closed-ended alternatives book, we continued to see healthy revenue growth despite some delays to fundraisings and a lower level of transactional activity during Q2. Overall, the Group increased profitability and continued to benefit from the structural changes that were made last year which continued to yield material improvements in overhead cost control.

The business has continued to track the key strategic ambition of providing best-in-class client service as we smoothly transitioned from office working to remote working across all our locations. Our focus throughout the period has been to prioritise the health, safety and wellbeing of our people and I am incredibly proud of how well they have performed, globally, under such challenging conditions.

In addition to a robust organic performance, SANNE has successfully negotiated two new acquisitions in 2020. In Cayman, the Group signed an agreement to acquire Avalon Trust & Corporate Services Limited and in Japan, we have signed an agreement to lift-out Deutsche Bank's trust company operations. Both transactions are expected to complete during the second half and should help accelerate our growth ambitions in these attractive jurisdictions. The Group also completed the disposal of the Jersey Private Client business on 1 July.

As SANNE continues to build upon its reputation as a leader in our industry, providing our clients with local service excellence on a global, scalable platform, we have refreshed our branding to reflect the tangible evolution of the business during the past year. The new branding communicates a differentiated, technological evolution of our service proposition, enhanced service quality and further ambitions for the exciting opportunities that lie ahead for all our stakeholders. Initial client feedback has been positive, with many noting this better reflects SANNE's evolution to a scaled, industry leading platform focused on high quality client service.

Financial performance

 
                                                                                 Constant 
                                                                                 currency 
                                      H1 2020             H1 2019                       % 
 Underlying Group Income 
  Statement                         (GBP'000)           (GBP'000)   % change       change 
-------------------------  ------------------  ------------------  ---------  ----------- 
 Net revenue                           83,949              75,861      10.7%         9.5% 
 Gross profit                          49,752              45,307       9.8%         7.8% 
  - Gross profit margin                 59.3%               59.7% 
 
 Overhead costs                      (26,771)            (26,150) 
 Underlying operating 
  profit                               22,981              19,157      20.0%        14.0% 
  - Underlying operating 
   profit margin                        27.4%               25.3% 
 

The Group delivered revenue growth of 9.5% on a constant currency basis which was nearer 11% on an actual basis. This is a robust revenue performance for the Group given the backdrop of the global COVID-19 pandemic and demonstrates the resilience of our business and the non-discretionary nature of the majority of the services we provide to clients.

While we are confident that the substantial, long term market opportunity remains for alternative assets, we did see a temporary impact from COVID-19 on our business in two main areas. Firstly, across our core closed-ended business, we saw a shift in client focus away from new fundraising activity and towards portfolio management. While this shift in focus is expected to be temporary, it has caused some delays to actual conversion of our pipeline for new business and slowed transactional activity, particularly in real estate, and therefore contributed to a softer revenue growth rate overall. Secondly, our Hedge business saw a delay in AuM ramp-up from large, new engagements that would have offset the effect of previously reported client attrition in South Africa during 2019. While we still expect these new funds to ramp up, COVID-19 conditions have delayed this, resulting in a soft performance from our principal AuM-based product line for H1 and potentially most of 2020.

Despite this slowdown in new fundraising activity, new business wins with expected annual revenue of over GBP11m demonstrate a positive result for the Group given the market conditions in the first half.

The Group gross profit has grown in line with revenues at a consistent gross margin compared to the prior year. This result reflects a small underlying gross margin improvement within three of the four reporting segments whilst the EMEA segment margin has been held back as a result of the reduced revenue in the Hedge business and increased costs in Luxembourg following the revenue realignment exercise that we discussed at the full year results. We have also continued to invest in the Group's Product, Business Development and Marketing teams, including work to refresh the Group's branding during the period.

The first half underlying operating profit has materially improved by 20.0% on an actual basis. This improvement reflects the successful actions taken in the second half of 2019 to manage and control overheads after a period of significant investment in our people, processes and systems. It is especially pleasing to see this performance despite our renewed focus and investment in technology.

This performance has meant that the business has delivered a good improvement in underlying operating profit margin from 25.3% in 2019 to 27.4% for the first half. Whilst this has been helped by some one-off cost savings driven by COVID-19, principally travel, most of this improvement is as expected.

The Group has also delivered another period of strong cash generation despite H1 traditionally being the slower period as a result of the timing of invoicing in our Mauritian business. The underlying operating cash conversion for H1 was 101% with free cash flow attributable to equity holders up 16.3% on the first half of 2019 to GBP15.0 million. This has been driven by our continued working capital discipline as well as the resilient nature of our business model.

Continued strategic delivery

Notwithstanding the global conditions during the first half and the priority to ensure the health and safety of our people in the face of COVID-19, we have continued to make progress against our core strategic goals.

As we reported previously, we have focused on innovation and our use of technology to enhance client service and operational efficiency across the global business. As such, following the restructure of the management team in 2019, we created a new role of Chief Technology Officer. Marie Measures was appointed on 1 January and has already had a significant impact on capability, approach and delivery for the business. An example has been how well the expedited roll out of remote access technology for the entire business during Q1 was managed. This resulted in a smooth transition to remote working when lockdown conditions required and thereby allowed SANNE to continue delivering best-in-class services to our clients. In addition, a thorough review of our legacy systems, team capabilities and user experience has enabled us to identify opportunities to become more efficient in how we work and improve the use of technology internally and in a technology-led client service proposition. In addition to this internal focus, the Technology Team continue to work closely with the Group's Product Development Team to generate significant revenue opportunities through a data and technology led client offering.

Our Product Development Team continued to evolve following its launch last year and we have seen real benefits of having credible, market-leading figures interacting with our key clients, prospective clients and market intermediaries. The Team has also been built out to include enhanced, client-facing regulatory and technology expertise. Together with the Technology Team, the Product Development Team has been leading the development of the Helios4GP data analytics product that was brought into the Group following the investment in Colmore last summer. Our clients have been eager to take up this new product and we believe that this shows what an important service enhancement this will be, especially as it is a unique offering at this time. This product will be available on SANNE's new integrated client portal called Sanne.Live, through which clients will be able to access direct data, analytics and other services. This development launched this year and again shows the progression we are making in delivering a technology-led client proposition.

Despite remote working conditions in the first half, we have continued to be active in delivering on our inorganic strategic goal. We completed the Inbhear Fund Services deal in H1 which provided the Group its first jurisdictional footprint in Cayman and enhanced our existing Irish service offering in Dublin. We have seen continued good performance from this business since acquisition and a healthy amount of cross selling from other parts of the business. Just after the period end, we agreed to enter into two new acquisitions. In Cayman, the Group further expanded by signing an agreement to acquire Avalon Trust & Corporate Services Limited. In Japan, we have signed an agreement to lift-out Deutsche Bank's trust company operations. Since opening our Tokyo office in January 2019, we have seen good progress to date and some encouraging new business wins. Both transactions are expected to complete during the second half and should help accelerate our growth ambitions in these jurisdictions by utilising the trust licences that they have. Both these jurisdictions represent large market opportunities for SANNE where the Group has historically either not been present or been significantly under represented.

The Group completed the disposal of the Jersey based Private Client business on 1 July, and now has a tighter strategic focus on our core markets. I would like to take the opportunity to thank our former colleagues and clients, as well as wishing them all the best for the future.

We continue to see many potential acquisition opportunities across our markets. SANNE has a track record of targeting and integrating high quality strategic acquisition opportunities to build out the client service offering and proposition as well as expanding our physical footprint. We will continue to be disciplined in our approach and assessment of acquisitions.

People, Diversity and ESG

Our people remain our core asset and we have worked hard to ensure that they feel highly valued. The performance of our people during unprecedented COVID-19 conditions in the first half is testament to their quality and resilience and I would like to extend my thanks to everybody for their efforts during the period. We have always prioritised the health and safety of our people during COVID-19 and we will continue to do so.

We have brought our people closer together during the first half and our organisation feels more collaborative than ever. This feeling is reflected by the number of CSR activities run by our people across the globe, voluntarily, that have helped to improve the lives of other people who are less fortunate than ourselves. We have shared many initiatives over social media and these are also shown on our website, but they have included a GBP40,000 donation to the Mind Charity in Jersey, a EUR20,000 donation to the Irish Red Cross, Focus and Basis Point Charities in Ireland, as well as donating thousands of family food packs and care kits to NGO partners in Mauritius through the SANNE Solidarity Fund.

During the period we launched an important new initiative and established our first Diversity & Inclusion Committee. This initiative was introduced to provide a channel for our business to deliver enhanced capability through our people's diversity. The Committee was formed by volunteers drawn from around our global business and will be reporting directly to the Group's Executive Committee. Together with the 2019 initiative to form a Workforce Advisory Panel made up of a selection of colleagues from around the Group and attended by several non-executive directors, we believe that our people have valuable, open avenues to help drive ideas for change across the business as well as the employee proposition at SANNE.

As reported during the 2019 full year results, we continue to make great progress in our ESG programme, both for the Group as well as for our clients. As such, we have appointed our first Global Head of ESG who will take responsibility for articulating and delivering our approach internally and in relation to helping our clients. Following the end of the period, SANNE has become a proud signatory of the United Nations supported Principles for Responsible Investment (PRI) Initiative, an international network working together to put the six Principles for Responsible Investment into practice.

Outlook

Whilst acknowledging the uncertainty around the medium and longer-term economic impacts of the global COVID-19 pandemic and the continuing lack of clarity around the Brexit process, the first half performance of the Group demonstrates the resilience of its business model that is predicated on diversified markets, long-term recurring revenues, healthy margins and strong cash generation. This, together with the performance to date and an encouraging pipeline of new business opportunities, gives the Board confidence in both delivering a full year performance in line with its expectations, as well as the long-term strategic opportunity.

Martin Schnaier

Chief Executive Officer

Operational Review

The Group's four reporting segments are: Europe, Middle East and Africa (EMEA); Channel Islands (CI); North America (NA); and, Asia-Pacific & Mauritius (APM). As highlighted in the full year result for 2019, a realignment of client revenues between EMEA and CI was undertaken at the end of 2019 to better match client revenues with the jurisdictions within which the client teams operate. Whilst this exercise was largely done by the end of 2019 and therefore the full year segmental reporting reflected this, the results below for the first half of 2019 have been re-presented to reflect the new alignment.

Unless otherwise stated, all growth rates discussed in the segmental reviews are on a constant currency basis.

Europe, Middle East and Africa (EMEA)

 
                                                         % constant 
                         H1 2020    H1 2019                currency 
 EMEA                    GBP'000    GBP'000   % Change       change 
---------------------  ---------  ---------  ---------  ----------- 
 Revenue                  30,981     28,379       9.2%         8.8% 
   - Alternatives         29,989     27,120 
   - Corporate               992      1,259 
 Gross Profit             17,332     17,434     (0.6%)       (4.9%) 
 Gross profit margin       55.9%      61.4% 
 

SANNE's EMEA segment operates across Luxembourg, Ireland, the United Kingdom, Spain, France, the Netherlands, Malta and South Africa. This division provides services across all our closed-ended investment strategies (Private Debt, Capital Markets, Real Estate, Private Equity and Loan Agency, including Depositary) as well as the Group's open-ended Hedge and corporate clients.

Following a strong revenue performance and good momentum coming out of 2019, the EMEA business saw a good start for revenue growth in 2020 which was subsequently adversely impacted by the COVID-19 pandemic from mid-March. Despite this the segment saw robust revenue growth of 8.8% versus the prior year.

The European jurisdictions saw solid performances across almost all product lines. During the period we have successfully launched our closed-ended fund administration capability in Spain with our first Real Estate fund clients. Good growth was also seen across the Loan Agency book which has benefited from a strong return to activity towards the end of the period. The Group is also well progressed in the process of applying for its AIFM Depositary licence in Ireland which would add a significant additional service offering for the jurisdiction at a time where few other third-party administrators can offer the service.

The most severe effects of the COVID-19 pandemic were seen in the first half across the Group's Hedge business in South Africa and Malta. As highlighted last year, the business had seen abnormally high one-off client losses in 2019 which were expected to be offset by particularly strong new business wins. However, whilst the new funds came on to the platform in Q1 of this year, COVID-19 has significantly delayed the allocation of capital into the new funds. Whilst this delay in allocation is expected to be temporary, given the ad valorum fee structure in the Hedge business, this has materially impacted the first half performance.

The segment's margin in the period has been disproportionately impacted by the delay in revenues in the Hedge business as this product offering is highly operationally levered. This combined with elevated costs in Luxembourg as we reorganise the operation following the revenue reallocation exercise has led to a dilution of the margin in the first half.

The first half of the year has also seen the acquisition of the Inbhear in Dublin on 30 April 2020. During the first half the Inbhear team relocated into SANNE's office and the integration process in progressing well.

Channel Islands (CI)

 
                                                         % constant 
                         H1 2020    H1 2019                currency 
 Channel Islands         GBP'000    GBP'000   % Change       change 
---------------------  ---------  ---------  ---------  ----------- 
 Revenue                  20,006     18,200       9.9%         9.8% 
   - Alternatives         14,616     13,489 
   - Corporate             5,390      4,711 
 Gross Profit             11,893     10,030      18.6%        21.8% 
 Gross profit margin       59.4%      55.1% 
 

Note: The results above include only continuing operations

SANNE's CI segment operates in both Jersey and Guernsey. The segment provides services across all our closed-ended investment strategies (Private Debt, Capital Markets, Real Estate and Private Equity). The segment also includes the majority of the Group's services to corporate clients. The results exclude the contribution from the Group's Jersey Private Client business in the first half following agreement to dispose of the business. The disposal completed on 1 July 2020.

Revenues from the CI segment saw growth in the period of 9.8% which reflects a similar impact from COVID-19 as seen and discussed above in EMEA. The segment saw a solid performance across all asset classes with PE and Debt funds driving much of the growth whilst Real Estate in particular saw subdued transaction activity as a result of COVID-19. The period has seen us invest in the management teams across both jurisdictions with new Heads of each appointed and settling in well. Following 2019 the Group has sought to invest in Guernsey in particular. SANNE has historically been underweight on the island but there continue to be good growth opportunities that we can target with the new team in place.

The realignment of client revenues at the start of the period has allowed local management to start driving an improved margin performance in the first half which is expected to continue to improve.

Asia Pacific and Mauritius (APM)

 
                                                              % constant 
                              H1 2020    H1 2019                currency 
 Asia/Pacific & Mauritius     GBP'000    GBP'000   % Change       change 
--------------------------  ---------  ---------  ---------  ----------- 
 Revenue                       18,152     16,398      10.7%         8.3% 
 Gross Profit                  12,762     11,260      13.3%         9.8% 
 Gross profit margin            70.3%      68.7% 
 

SANNE's APM segment operates across Hong Kong, Singapore, Shanghai, Tokyo, Mumbai and Mauritius. This segment provides services across all core products areas.

The segment delivered revenue growth of 8.3% driven by another strong year across the Asia Pacific offices as well as encouraging growth in Mauritius.

The APAC offices delivered growth of 16.2% in the first half despite the impact of COVID-19 affecting almost the entire period. This was helped with the contribution of revenues from Japan compared with none in the prior year as well as good levels of new business, particularly across private equity. In addition to COVID-19, the region continues to see a certain level of disruption in Hong Kong due to on-going protests and unrest. However, given the non-discretionary work SANNE undertakes, this disruption has had minimal impact on existing structures.

Mauritius saw revenue growth of 4.5%. Again, the region has been impacted by COVID-19, particularly in the region's largest end market of India, but has also benefited from good levels of new business wins and continues to perform very well against the local competitors.

The segment's gross profit margins increased in the period to 70.3%. This was delivered despite the new and fast-growing office in Japan dampening margins slightly and was largely driven by an improved margin in Mauritius.

North America (NA)

 
                                                         % constant 
                         H1 2020    H1 2019                currency 
 North America           GBP'000    GBP'000   % Change       change 
---------------------  ---------  ---------  ---------  ----------- 
 Revenue                  14,810     12,884      14.9%        12.4% 
 Gross Profit              7,765      6,583      18.0%        16.4% 
 Gross profit margin       52.4%      51.1% 
 
 

SANNE's NA segment primarily services closed-ended alternative fund clients in North America.

The first half of the year saw revenue growth of 12.4% whilst slightly improved margins helped contribute to 16.4% gross profit growth. The majority of the segment's operations are in New York which was impacted particularly heavily from mid-March onwards by COVID-19 related restrictions which have had a similar impact to the rest of the Group, dampening growth particularly in the second quarter.

This strong performance continued to be delivered from opportunities across the region's traditionally strong presence in the Private Equity sector. Travel restrictions have delayed the launch of the Group's loan agency offering in the region, but this is expected to launch later in the second half.

Financial Review

Group Income Statement

 
                                                                                    % constant 
                                                    H1 2020    H1 2019                currency 
                                                    GBP'000    GBP'000   % Change       change 
-------------------------------------  --------------------  ---------  ---------  ----------- 
 
 Turnover                                            86,475     75,994 
 Less: Third-party fund management 
  fees                                              (2,526)      (133) 
-------------------------------------  --------------------  ---------  ---------  ----------- 
 Net Revenue                                         83,949     75,861      10.7%         9.5% 
 
 Gross profit                                        49,752     45,307       9.8%         7.8% 
   Margin                                             59.3%      59.7% 
 Overheads                                         (26,771)   (26,150) 
 Underlying operating profit                         22,981     19,157      20.0%        14.0% 
   Margin                                             27.4%      25.3% 
 Non-underlying items                              (10,647)   (13,309) 
 Operating profit                                    12,334      5,848     110.9%        90.0% 
-------------------------------------  --------------------  ---------  ---------  ----------- 
 
 Net finance cost and other 
  gains and losses                                    (708)    (2,078) 
 Non-underlying finance cost                              -      (457) 
 Profit before tax                                   11,626      3,313 
 Taxation for the period                            (2,665)    (1,783) 
 Profit after tax from continuing 
  operations                                          8,961      1,530 
 Discontinued operations                                930      1,474 
 Total group profit after tax                         9,891      3,004 
 
 Underlying diluted EPS - continuing 
  operations                                          12.3p       9.4p 
 Reported diluted EPS - total 
  group                                                6.7p       2.4p 
 

Turnover and Net Revenue

In these interim results, we have sought to separate out third party fund management fees for the first time. These relate to asset management fees for a small number of funds that are clients of the Group's AIFM Management Company in Luxembourg. These revenues are the management fees for the asset manager in each funds case, but contractually are paid by the fund entity to SANNE's management company before being dispersed to the relevant asset manager. This has started occurring as a result of new engagement structures through the management company that result in these fees being recognised as turnover for SANNE under IFRS 15. Given these revenues are not economically SANNE's we have sought to separate these out. Historically, these amounts have not been material, but given strong growth of management fees in H1 2020, it is deemed appropriate to split these out and refer to Net Revenue as the relevant income for SANNE. Turnover for the period grew by 12.6% on a constant currency basis and 13.8% on an actual basis in the first half when the third-party asset manager fees are included.

Net revenue increased by 9.5% on a constant currency basis in the period to GBP83.9 million (2019: GBP75.9m). Organic revenue growth in the period was up 8.9% on a constant currency basis for the whole group. This ignores the revenues earned in the period from discontinued operations.

 
                         H1 2020     H1 2019 
                                                           Constant 
                                                            currency 
                        (GBP'000)   (GBP'000)   % growth     growth 
 Net revenue             83,949      75,861      10.7%       9.5% 
 Inbhear H1 revenues      (462)         - 
 Net organic revenue     83,487      75,861      10.1%       8.9% 
                       ----------  ----------  ---------  ---------- 
 

Note: See the Alternative Profit Measures section for organic growth calculation methodology

Gross profit

Gross profit for the period was GBP49.8 million (2019: GBP45.3m). The gross profit margin was 59.3%, broadly flat on the prior period result of 59.7%. This result reflects both the negative margin impact that arises as a result of issues in the South African Hedge business, where the direct cost base is largely fixed, so the drop in revenues has a notable impact on gross margin and the continued increase in investment in the Group's Product and Business Development teams. These have been offset by improvements to resourcing controls in the EMEA and CI divisions following the reallocation of client revenues at the end of 2019.

Underlying operating profit and overheads

Underlying operating profit grew by 14.0% on a constant currency basis to GBP23.0m (2019: 19.2m). This reflected the robust net revenue and gross profit growth as well as an improvement in the overheads cost as a proportion of net revenues.

Group overheads, excluding non-underlying items, were broadly flat on the prior year despite the growth in the business. These costs represented 31.9% of net revenue for the first half compared with 34.5% for the first half of 2019. These overhead costs continue to contain the costs to support the discontinued activities which are not separated as they were not part of the disposal perimeter.

Non-underlying costs and reported operating profit

Non-underlying costs in 2019 saw a decrease to GBP10.6 million (2019: GBP13.8m). Non-underlying items within profit measures include share-based payments and earn-out costs where they relate to acquisitions (GBP1.2m); acquisition and integration costs (GBP1.2m); amortisation of intangible assets (GBP8.1m) and other costs. For further detail on non-underlying items, please see note 4 in the financial statements.

Reported operating profit for the period has increased significantly in the first half of 2020, up 90.0% on a constant currency basis and 109% on an actual basis. This is a result of both the growth in underlying profits as well as the drop in non-underlying items, most notably the lack of any impairments recognised compared with last year.

Net finance expense and other gains and losses

Net finance expense was broadly flat on the prior year at GBP2.2 million (2019: GBP2.3m). However, the Group benefited from GBP1.5m of foreign exchange gains (2019: GBP0.2m). The foreign exchange gains arose largely as a result of the Group holding funds to settle the Inbhear acquisition which saw some delays in completion at a time sterling devalued materially against the Euro.

Taxation

The Group's underlying effective tax rate for the first half was 18.4% (2019: 21.0%). When adjusted for non-underlying items, the reported effective rate for the half year for the Group was 21.0% (2019: 36.0%).

Diluted earnings per share

Underlying diluted earnings per share grew significantly to 12.3 pence (2019: 9.4p). Reported diluted earnings per share, which includes the post-tax contribution from discontinued operations, also grew significantly to 6.7 pence (2019: 2.4p).

Dividend

Despite the backdrop of the current global COVID-19 crisis, SANNE continues to be a highly resilient and cash generative business. This enables the Board to continue to adopt a progressive dividend policy where it seeks to increase the absolute value of the dividend each year, subject always to maintaining a sufficient level of dividend cover. Accordingly, the Board is recommending an interim dividend of 4.8 pence per ordinary share (2019: 4.7 pence). The interim dividend will be payable on 16 October 2020 to Shareholders on the register at close of business on 18 September 2020.

Cash flow and working capital

The first half of 2020 has seen another strong period of cash generation with underlying operating cash conversion of 101% (2019: 111%). The main movements in the cash flow are summarised below:

 
                                                               H1 2020                H1 2019 
                                                             (GBP'000)              (GBP'000) 
---------------------------------------------  -----------------------  --------------------- 
 Total Group Underlying operating profit                        24,014                 20,795 
 Depreciation (equipment and IFRS16)                             4,536                  3,962 
 Other (includes share based payments and 
  movements in provisions)                                     (2,222)                   (73) 
 Change in working capital                                     (3,541)                   (51) 
 Total cash flows on leases recognised under 
  IFRS16                                                       (3,337)                (2,882) 
 Non-cash non-underlying items                                   3,668                  (458) 
 Underlying operating cash flows                                23,118                 21,293 
                                               -----------------------  --------------------- 
 Underlying operating cash conversion                           100.6%                 111.1% 
 Capital Exp. (Equipment and Software)                         (1,898)                (2,891) 
 Tax                                                           (3,993)                (4,563) 
 Loan to minority investments                                    (820)                      - 
 Net finance cost                                              (1,390)                  (945) 
 Underlying free cash flow attributable to 
  equity holders                                                15,017                 12,894 
                                               -----------------------  --------------------- 
 

Following the development of improved processes during 2019, SANNE has continued to manage working capital well resulting in high levels of cash conversion.

Capital expenditure in the year comprised equipment and software purchases and software development costs. The purchase of equipment and software largely relates to office fit-out costs in the Group. The software development costs relate to the joint development project with Colmore, which will offer the Helios technology and data analytics platform to our global alternatives client base.

The payment of deferred consideration of GBP3.3 million shown in the Group cash flow statement and included in the above table in the cash flow statement within "Non cash non-underlying items" relates entirely to the final settlement of the earn-out payment for AgenSynd which has been accruing as a non-underlying item since the acquisition.

Capital management and financing

At 30 June 2020, the Group's net debt was GBP87.3 million (2019: GBP55.0m), including gross cash balances of GBP51.5m (2019: GBP44.2m). This reflected the strong operating cash generation seen in the year and comes after the funding of the earn-out payment for AgenSynd, the acquisition of Inbhear and dividends paid to shareholders. As a result, the Group's headline net debt to underlying earnings before interest, taxation, depreciation and amortisation calculated ignoring IFRS 16 (net debt to pre-IFRS 16 EBITDA) ratio was 1.7x at the period end (2019: 1.2x). At 30 June 2020 the cash ring fenced for regulatory capital requirements ("regulatory cash") was GBP13.3 million (2019: GBP9.0m). Excluding this regulatory cash from available cash, the Group's net debt to pre-IFRS 16 EBITDA ratio increases to 1.9x (2019: 1.4x).

Foreign Exchange

The Group's results are exposed to translation risk from the movement in currencies. Overall, the average movement from currencies has increased net revenue and underlying operating profit by GBP0.9 million and GBP1.1 million respectively. In addition, this currency movement in the first half has resulted in GBP13.3 million of other comprehensive income recognised in the Consolidated Statement of Changes in Equity which relates to the non-cash translation gain on the Group's goodwill balances where they are created in non-sterling currencies. During the six months ended 30 June 2020 the key individual exchange rates have moved, as shown in the table below.

 
                      At 30 June               Half year average 
                     ----------------         -------------------- 
 Per GBP sterling     2020     2019     %      2020       2019       % 
------------------   -------  -------  -----  ---------  ---------  ----- 
 Euro                 1.101    1.1175   1.5%   1.1217     1.1354     1.2% 
 US Dollar            1.2379   1.2695   2.5%   1.2586     1.2924     2.6% 
 

Discontinued activities

SANNE entered into an agreement during the first half of 2020 to sell its Jersey based private client business. The results for this business are included in these financial statements as discontinued operations under IFRS 5 with further details in note 6.

Principal risks facing the business

SANNE operates an embedded risk management framework which ensures the principal risks facing the Group are reviewed regularly by the Board. There are a number of potential risks that could have a material impact on the Group's financial performance and position which remain as set out in the 2019 Annual Report. These are categorised as Acquisition Risk; Strategy Risk; Competitor & Client Demand Risk; Data & Cyber Security Risk; Process Risk; Staff Resources Risk; Compliance Risk; Financial Crime Risk; Fiduciary Risk and Financial Performance Risk. In response to the COVID-19 pandemic our Group-wide response programme was initiated during January 2020 as our APAC offices started to be impacted. The Group continued to service clients throughout the period and all of our offices have re-opened with full COVID-control measures.

ALTERNATIVE PERFORMANCE MEASURE DEFINITIONS

The Group uses alternative performance measures (APMs) to provide additional information on the underlying performance of the business. Management use these key measures to assess the underlying performance of the Group's business and the adjusted performance enables further comparability between reporting periods. The APMs used to manage the Group are as follows:

NET REVENUE

Net revenue comprises turnover less third-party fund management fees. These third-party fund management fees relate to asset management fees for a small number of funds that are clients of the Group's AIFM Management Company in Luxembourg. These revenues are the management fees for the asset manager in each funds case, but contractually are paid by the fund entity to SANNE's management company before being disbursed to the relevant asset manager. SANNE has started recognising these third-party fees as turnover under IFRS 15 because of new engagement structures through the management company. Given these revenues are not economically SANNE's we have sought to separate these out and believe that net revenues are a more accurate reflection of the income that SANNE earns for its services to the relevant fund entity.

ORGANIC REVENUE GROWTH

Organic revenue growth is net revenue growth adjusted for acquisitions on a like-for-like basis. To arrive at a like-for-like basis, revenue from any acquisition made in the year is excluded. Where an acquisition was made part way through the prior year, the current year contribution will be reduced to include only the same period as had been included in the prior year. A reconciliation is included in the Financial Review. Organic revenue growth measures are a key performance indicator for the growth of the business excluding the impacts of any acquisitions undertaken.

CONSTANT CURRENCY GROWTH

To highlight our period on period performance, we discuss our results in terms of growth at constant currency. This represents growth calculated after translating both year's performance at the prior year's applicable exchange rates.

UNDERLYING PROFIT MEASURES

Underlying profit measures are used to present the period on period performance of the Group excluding one-off or non-trading related income and costs. These are arrived at by adjusting reported profit measures for non-underlying items as disclosed in note 4 of these financial statements.

UNDERLYING OPERATING CASH FLOW

Underlying operating cash flow represents the cash generated by total operations in the year, adding back the cash charges within non-underlying items and reducing for the total cash out flow in relation to the Group's leases that have been accounted for under IFRS 16. A reconciliation is included in the Financial Review.

UNDERLYING OPERATING CASH CONVERSION

Underlying operating cash conversion is the underlying operating cash flow as a percentage of continuing underlying operating profit. This measures the Group's cash-generative characteristics from its underlying operations and is used to evaluate the Group's management of working capital.

UNDERLYING FREE CASH FLOW ATTRIBUTABLE TO EQUITY HOLDERS

Free cash flow attributable to equity holders represents our underlying free cash flow prior to any acquisitions, refinancing or share capital cash flows. It is a key measure of cash earned for the shareholders of the Group that can be used to generate cash returns or be invested in the future growth of the business. A reconciliation is included in the Financial Review.

UNDERLYING EFFECTIVE TAX RATE

The underlying effective tax rate is determined as the reported tax rate for the Group adjusted for the tax effects of non-underlying costs. The underlying effective tax rate best reflects the applicable tax payable in relation to the underlying performance of the Group. A reconciliation is provided in note 5 to these financial statements for the underlying effective tax rate.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE INTERIM STATEMENT

We confirm to the best of our knowledge that:

o The unaudited condensed set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and give a true and fair view of the assets, liabilities, financial position and profit for the Group; and

o The interim management report includes a fair review of the information required by:

A. DTR 4.2.7R of the Disclosure Guidance 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 Guidance 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.

Martin Schnaier

Chief Executive Officer

9 September 2020

Independent review report to Sanne Group plc

Report on the consolidated financial statements

Our conclusion

We have reviewed Sanne Group plc's consolidated financial statements (the "interim financial statements") in the Interim Results of Sanne Group plc for the 6 month period ended 30 June 2020. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

   --    the Consolidated Balance Sheet as at 30 June 2020; 

-- the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the period then ended;

   --    the Consolidated Cash Flow Statement for the period then ended; 
   --    the Consolidated Statement of Changes in Equity for the period then ended; and 
   --    the explanatory notes to the interim financial statements. 

The interim financial statements included in the Interim Results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Interim Results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the Interim Results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

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 enquiries, 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, 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.

We have read the other information contained in the Interim Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

London

8 September 2020

 
 Sanne Group plc 
 Consolidated Income Statement 
 For the period 1 January 2020 
  to 30 June 2020 
 
                                                    Unaudited    Unaudited            Audited 
                                                     6 Months     6 Months          12 Months 
                                                           to           to                 to 
                                                       30 Jun       30 Jun             31 Dec 
                                                         2020     2019 (1)           2019 (1) 
                                             Note     GBP'000      GBP'000            GBP'000 
 
  Turnover                                             86,475       75,994            159,707 
  Third-party fund management 
   fees                                               (2,526)        (133)            (2,190) 
  Net Revenue (2)                                      83,949       75,861            157,517 
                                            -----  ----------   ----------  --- 
  Direct costs (2)                                   (34,197)     (30,554)           (63,505) 
 
 
  Gross profit                                         49,752       45,307             94,012 
 -----------------------------------------  -----  ----------   ----------  ---  ------------ 
 
  Other operating income                                   14          121                185 
  Operating expenses                                 (37,432)     (39,580)           (79,916) 
 
 
  Operating profit                                     12,334        5,848             14,281 
 -----------------------------------------  -----  ----------   ----------  ---  ------------ 
 
     Comprising: 
    Underlying operating profit 
     from continuing operations               4        22,981       19,157             42,988 
    Non-underlying items within 
     operating profit from continuing 
     operations                               4      (10,647)     (13,309)           (28,707) 
                                                       12,334        5,848             14,281 
 -----------------------------------------  -----  ----------   ----------  ---  ------------ 
 
  Other gains and losses                                1,463          186              (216) 
  Finance costs                                       (2,241)      (2,340)            (4,672) 
  Finance income                                           70           76                158 
 
 
  Profit before tax                                    11,626        3,770              9,551 
 -----------------------------------------  -----  ----------   ----------  ---  ------------ 
 
     Comprising: 
    Underlying profit before 
     tax from continuing operations           4        22,273       17,536             38,715 
    Non-underlying items within 
     profit from continuing operations        4      (10,647)     (13,766)           (29,164) 
                                                       11,626        3,770              9,551 
 -----------------------------------------  -----  ----------   ----------  ---  ------------ 
 
  Tax                                         5       (2,665)      (1,783)            (4,007) 
 
 
  Profit after tax from continuing 
   operations                                           8,961        1,987              5,544 
 -----------------------------------------  -----  ----------   ----------  ---  ------------ 
 
    Discontinued operations                   6           930        1,474              3,330 
 
 
  Profit for the period                                 9,891        3,461              8,874 
 -----------------------------------------  -----  ----------   ----------  ---  ------------ 
 
 Earnings per ordinary share ("EPS") from continuing 
  operations (expressed in pence per ordinary share) 
 
    Basic                                     7           6.2          1.4                3.8 
    Diluted                                   7           6.1          1.4                3.8 
 
    Underlying basic                          7          12.4          9.5               21.6 
    Underlying diluted                        7          12.3          9.4               21.3 
 
 Earnings per ordinary share ("EPS") from continuing and discontinued 
  operations (expressed in pence per ordinary share) 
 
    Basic                                     7           6.8          2.4                6.2 
    Diluted                                   7           6.7          2.4                6.1 
 
    Underlying basic                          7          13.0         10.5               23.9 
    Underlying diluted                        7          12.9         10.4               23.6 
 
 
 (1) Certain expenses amounting GBP683k for June 2019 and 
  GBP1,175k for December 2019 were reclassified between direct 
  costs and operating expenses. This change did not affect the 
  profit for the period. Please see note 3 for more detail. 
 
 (2) Net Revenue comprises revenue less third-party fund management 
  fees. Direct costs comprise direct costs of GBP36,723k less 
  third-party fund management fees of GBP2,526k. 
 
 
 
 Sanne Group plc 
 Consolidated Statement of Comprehensive 
  Income 
 For the period 1 January 2020 
  to 30 June 2020 
 
                                                  Unaudited   Unaudited     Audited 
                                                   6 Months    6 Months   12 Months 
                                                         to          to          to 
                                                     30 Jun      30 Jun      31 Dec 
                                                       2020        2019        2019 
                                                    GBP'000     GBP'000     GBP'000 
 
 
  Profit for the period                               9,891       3,461       8,874 
 ----------------------------------------------  ----------  ----------  ---------- 
 
  Other comprehensive income/(expense): 
  Items that will not be reclassified 
   subsequently to profit and loss: 
    Actuarial (loss) / gain 
     on defined benefit retirement 
     obligation (2)                                   (558)          44        (67) 
    Deferred tax relating to 
     items not reclassified                             107         (6)          10 
    Revaluation of minority 
     equity investment                                  595           -       (715) 
 
  Items that may be reclassified 
   subsequently to profit and loss: 
    Exchange differences on 
     translation of foreign operations 
     (1)                                             13,301         270    (10,663) 
 
 
  Total other comprehensive income/(expenses) 
   for the period                                    13,445         308    (11,435) 
 ----------------------------------------------  ----------  ----------  ---------- 
 
  Total comprehensive income/(expenses) 
   for the period                                    23,336       3,769     (2,561) 
 ----------------------------------------------  ----------  ----------  ---------- 
 
  Comprising: 
    Total comprehensive income/(expenses) 
     for the period from continuing 
     operations                                      22,406       2,295     (5,891) 
    Total comprehensive income 
     for the period from discontinued 
     operations                                         930       1,474       3,330 
 
 
  Total comprehensive income/(expense) 
   for the period                                    23,336       3,769     (2,561) 
 ----------------------------------------------  ----------  ----------  ---------- 
 
  (1) Refer to the "Financial review" section for further 
   information relating to the movement in the exchange differences 
   on translation of foreign operations. 
  (2) The actuarial loss in the period relates to the Group's 
   retirement gratuity obligations in Mauritius under the Mauritian 
   Employments Rights Act which is recognised on the Group balance 
   sheet as a defined benefit pension obligation. 
 
 
 Sanne Group plc 
 Consolidated Balance Sheet 
 As at 30 June 2020 
                                          Unaudited   Unaudited    Audited 
                                             30 Jun      30 Jun     31 Dec 
                                               2020        2019       2019 
                                   Note     GBP'000     GBP'000    GBP'000 
 Assets 
  Non-current assets 
  Goodwill                          9       196,160     189,226    180,414 
  Other intangible assets           10       43,122      56,019     45,388 
  Equipment                                   9,473      10,537      9,984 
  Minority equity investment                  9,227           -      8,632 
  Contract assets                                63           -          - 
  Deferred tax asset                          9,316       8,787      8,324 
  Right-of-use asset                         34,234      34,491     32,733 
  Financial asset at amortised                  822           -          - 
   cost 
 
  Total non-current assets                  302,417     299,060    285,475 
 -------------------------------  -----  ----------  ----------  --------- 
 
  Current assets 
  Trade and other receivables                49,065      44,546     47,941 
  Cash and bank balances                     51,501      44,228     51,454 
  Contract assets                             9,916       8,330      6,460 
  Disposal group held for 
   sale                             6         1,220       2,324      2,979 
 
  Total current assets                      111,702      99,428    108,834 
 -------------------------------  -----  ----------  ----------  --------- 
 
  Total assets                              414,119     398,488    394,309 
 -------------------------------  -----  ----------  ----------  --------- 
 
 Equity 
  Share capital                     11        1,466       1,460      1,466 
  Share premium                             203,423     200,270    203,423 
  Own shares                                (1,064)     (1,102)    (1,166) 
  Shares to be issued                         8,415      10,178      7,723 
  Retranslation reserve                         167     (2,201)   (13,134) 
  Accumulated losses                       (29,052)    (24,549)   (26,487) 
 
  Total equity                              183,355     184,056    171,825 
 -------------------------------  -----  ----------  ----------  --------- 
 
  Non-current liabilities 
  Borrowings                        13      138,786      99,275    129,572 
  Deferred tax liabilities                   16,457      18,219     15,931 
  Defined benefit retirement 
   obligation                                 1,272         568        684 
  Provisions                                  2,084       2,108      2,024 
  Lease liability                            35,373      35,104     33,549 
 
  Total non-current liabilities             193,972     155,274    181,760 
 -------------------------------  -----  ----------  ----------  --------- 
 
  Current liabilities 
  Trade and other payables                   13,061      37,412     14,472 
  Current tax liabilities                     3,359       2,666      3,301 
  Provisions                                    472           2        451 
  Contract liabilities                       15,355      13,964     17,634 
  Lease liability                             4,343       4,832      4,291 
  Disposal group held for 
   sale                             6           202         282        575 
 
  Total current liabilities                  36,792      59,158     40,724 
 -------------------------------  -----  ----------  ----------  --------- 
 
  Total equity and liabilities              414,119     398,488    394,309 
 -------------------------------  -----  ----------  ----------  --------- 
 
 
 Sanne Group plc 
 Consolidated Statement of Changes in 
  Equity 
 For the period 1 January 2020 
  to 30 June 2020 
 
                                   Share      Share       Own    Shares   Retrans-lation   Accumu-lated      Total 
                                 Capital    Premium    shares        to          reserve         Losses     Equity 
                                                                     be 
                                                                 issued 
                                 GBP'000    GBP'000   GBP'000   GBP'000          GBP'000        GBP'000    GBP'000 
 
 
 Balance at 1 January 2019         1,460    200,270   (1,470)    12,278          (2,471)       (17,955)    192,112 
-----------------------------  ---------  ---------  --------  --------  ---------------  -------------  --------- 
 
  Profit for the period 
   as previously reported              -          -         -         -                -          3,461      3,461 
  Other comprehensive income 
   for the period                      -          -         -         -              270             38        308 
 
 
 Total comprehensive income 
  for the period                       -          -         -         -              270          3,499      3,769 
-----------------------------  ---------  ---------  --------  --------  ---------------  -------------  --------- 
 
  Dividend payments                    -          -         -         -                -       (13,254)   (13,254) 
  Share-based payments                 -          -         -     1,391                -              -      1,391 
  Shares vesting                       -          -       559   (3,491)                -          3,161        229 
  Net buyback of own shares            -          -     (191)         -                -              -      (191) 
 
 
 Balance at 30 June 2019           1,460    200,270   (1,102)    10,178          (2,201)       (24,549)    184,056 
-----------------------------  ---------  ---------  --------  --------  ---------------  -------------  --------- 
 
  Profit for the period                -          -         -         -                -          5,413      5,413 
  Other comprehensive expense 
   for the period                      -          -         -         -         (10,933)          (810)   (11,743) 
 
 
 Total comprehensive 
  income/(expense) 
  for the period                       -          -         -         -         (10,933)          4,603    (6,330) 
-----------------------------  ---------  ---------  --------  --------  ---------------  -------------  --------- 
 
  Issue of share capital 
   - acquisitions                      6      3,153         -   (3,159)                -              -          - 
  Dividend payments                    -          -         -         -                -        (6,775)    (6,775) 
  Share-based payments                 -          -         -       946                -              -        946 
  Shares vesting                       -          -         -     (242)                -            234        (8) 
  Net buyback of own shares            -          -      (64)         -                -              -       (64) 
 
 
 Balance at 31 December 2019       1,466    203,423   (1,166)     7,723         (13,134)       (26,487)    171,825 
-----------------------------  ---------  ---------  --------  --------  ---------------  -------------  --------- 
 
  Profit for the period                -          -         -         -                -          9,891      9,891 
  Other comprehensive income 
   for the period                      -          -         -         -           13,301            144     13,445 
 
 
 Total comprehensive income 
  for the period                       -          -         -         -           13,301         10,035     23,336 
-----------------------------  ---------  ---------  --------  --------  ---------------  -------------  --------- 
 
  Dividend payments                    -          -         -         -                -       (13,624)   (13,624) 
  Share-based payments                 -          -         -     1,789                -              -      1,789 
  Shares vesting                       -          -       122   (1,097)                -          1,024         49 
  Net buyback of own shares            -          -      (20)         -                -              -       (20) 
 
 
 Balance at 30 June 2020           1,466    203,423   (1,064)     8,415              167       (29,052)    183,355 
-----------------------------  ---------  ---------  --------  --------  ---------------  -------------  --------- 
 
 
 Sanne Group plc 
 Consolidated Cash Flow Statement 
 For the period 1 January 2020 
  to 30 June 2020 
                                        Unaudited   Unaudited    Audited 
                                           30 Jun      30 Jun     31 Dec 
                                             2020        2019       2019 
                                          GBP'000     GBP'000    GBP'000 
 
  Operating profit from: 
  Continuing operations                    12,334       5,848     14,281 
  Discontinued operations                   1,033       1,638      3,700 
  Operating profit including 
   discontinued operations                 13,367       7,486     17,981 
  Adjustments for: 
  Depreciation of equipment                 1,466       1,353      2,867 
  Depreciation of right-of-use 
   asset                                    3,027       2,609      5,313 
  Lease liability interest                  (773)       (680)    (1,607) 
  Amortisation of other intangible 
   assets                                   8,070       8,266     16,487 
  Amortisation of contract                      3           -          - 
   assets 
  Impairment of other intangible 
   assets                                       -       1,879      2,425 
  Share-based payments expense              1,789       1,475      2,377 
  Disposal of equipment                        43           -         64 
  Increase in provisions                        -       (400)      (147) 
  Defined benefit retirement 
   obligation                                (19)       (100)       (68) 
  Deferred consideration and 
   remuneration                           (3,153)           -      4,242 
 
  Operating cash flows before 
   movements in working capital            23,820      21,888     49,934 
 ------------------------------------  ----------  ----------  --------- 
 
  Increase in receivables                 (2,555)     (1,312)    (3,492) 
  (Decrease)/Increase in contract 
   liabilities                            (2,652)     (2,089)      1,874 
  Increase in payables                      1,666       3,350      4,769 
 
  Cash generated by operations             20,279      21,837     53,085 
 ------------------------------------  ----------  ----------  --------- 
 
  Income taxes paid                       (3,993)     (4,563)    (7,641) 
 
  Net cash from operating 
   activities                              16,286      17,274     45,444 
 ------------------------------------  ----------  ----------  --------- 
 
  Investing activities 
  Interest received                            68          76        158 
  Purchases of equipment                    (949)     (2,891)    (3,914) 
  Software development costs 
   paid                                     (949)           -      (276) 
  Payment of deferred consideration             -           -   (28,638) 
  Acquisition of subsidiaries             (6,409)           -          - 
  Acquisition of minority 
   equity investment                            -           -    (9,347) 
  Loan granted                              (820)           -          - 
 
  Net cash used in investing 
   activities                             (9,059)     (2,815)   (42,017) 
 ------------------------------------  ----------  ----------  --------- 
 
  Financing activities 
  Dividends paid                         (13,624)    (13,254)   (20,029) 
  Interest on bank loan                   (1,390)       (945)    (2,293) 
  Buyback of own shares                      (20)       (191)      (255) 
  Shares vested                               (8)           -          - 
  Capitalised loan cost                      (28)     (1,255)    (1,711) 
  Redemption of bank loans                (7,302)    (85,850)   (85,850) 
  New bank loans raised                    14,821     100,800    132,060 
  Lease liability payments                (2,564)     (2,202)    (4,757) 
 
  Net cash used in financing 
   activities                            (10,115)     (2,897)     17,165 
 ------------------------------------  ----------  ----------  --------- 
 
  Net (decrease)/increase 
   in cash and cash equivalents           (2,888)      11,562     20,592 
 ------------------------------------  ----------  ----------  --------- 
 
  Cash and cash equivalents 
   at the beginning of the 
   period                                  51,454      32,411     32,411 
  Effect of foreign exchange 
   rate changes                             2,935         255    (1,549) 
 
  Cash and cash equivalents 
   at the end of the period                51,501      44,228     51,454 
 ------------------------------------  ----------  ----------  --------- 
 
  Cash flows from continuing 
   operations                             (5,309)      10,034     17,029 
  Cash flows from discontinued 
   operations                               2,421       1,528      3,563 
 ------------------------------------  ----------  ----------  --------- 
 
  Net (decrease)/increase 
   in cash and cash equivalents           (2,888)      11,562     20,592 
 ------------------------------------  ----------  ----------  --------- 
 

Sanne Group plc

Notes to the condensed financial statements

For the period from 1 January 2020 to 30 June 2020

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 2020 comprise of 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. These financial statements should be read in conjunction with the Annual Report for the year ended 31 December 2019, available at www.sannegroup.com.

Going concern

The Directors have considered the potential impact that COVID-19 may have on its ability to continue as a going concern. They assessed the Group's current financial position, principal risks facing the Group and the effectiveness of its strategies to mitigate the impact. An assessment was performed to determine the potential impact of COVID-19 on the Group's ability to trade. The Directors reasonably expect that the Group has adequate resources to continue to operate 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 these condensed interim consolidated financial statements on a going concern basis. Accordingly, the Directors have adopted the going concern basis of accounting in preparing these condensed interim consolidated financial statements.

Accounting policies

The financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The accounting policies adopted in the preparation of the condensed consolidated financial statements are consistent with those followed in the preparation of the Group's financial statements for the year ended 31 December 2019, except as disclosed below.

The following changes to accounting standards have been issued and applied from 1 January 2020, however none of these standards had an effect on the preparation of the financial statements.

(a) Definition of Material - amendments to IAS 1 and IAS 8

(b) Definition of a Business - amendments to IFRS 3

(c) Revised Conceptual Framework for Financial Reporting

(d) Interest Rate Benchmark Reform - amendments to IFRS 9, IAS 39 and IFRS 7

2. Estimates, critical accounting judgements and key sources of estimation uncertainty

When applying 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 continually reviewed. 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 Annual Report for the year ended 31 December 2019 set out the critical judgements and estimations of uncertainty, made by the Directors during the application of the Group's accounting policies, at the balance sheet date, that have the most significant effect on the amounts recognised in the financial statements.

The world is currently experiencing a global outbreak of Coronavirus (COVID-19) which is having an unprecedented impact on global markets. Management is actively monitoring the situation and has assessed the expected impact on the financial results. While there can be no guarantees as to the future operations or performance, the most significant immediate impact is on the forward-looking assumptions made in the various impairment tests. Given the impact COVID-19 had on global markets, the judgements made at 31 December 2019 were assessed and no material changes have been noted between the assessment made at 31 December and those made at 30 June 2020. The group believes that the judgements and estimates made at the end of 31 December 2019 are still relevant, as the assumptions made were stretched to include potential impacts from the Coronavirus outbreak. Management further stretched the reasonable possible change scenario based on the current distressed market conditions and while this could potentially change in the future, there were no material differences from the sensitivities disclosed in the 31 December 2019 annual report.

Seasonality

Given the composition of the Group's customers and contracts, seasonality is not expected to have a significant bearing on the financial performance of the Group.

3. Segmental Reporting

The reporting segments engage in corporate, fund and private client administration, reporting and fiduciary services. Declared revenue is generated from external customers.

The Group's Annual Report for the year ended 31 December 2019 had four reportable segments under IFRS 8, namely EMEA, Asia-Pacific & Mauritius, North America and Channel Islands.

The chief operating decision-makers are the Executive 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 Executive Directors. The Executive Directors evaluates segmental performance on the basis of gross profit, after the deduction of the direct costs of staff, marketing and travel. No inter-segment sales are made.

The Group classified its private client contracts and employee group held in Jersey as a discontinued operation due to significant contracts being designated as held for sale. This was regarded as a major business line in the past and forms part of the Channel Islands segment. Please refer to note 6 for additional details relating to the sale. The reporting of various client contracts and their related costs moved between segments during the six months ending 30 June 2020, the comparative numbers were also adjusted to reflect this change. The change in the segmental allocation of the contracts (and related costs) was driven by the reassessment of the where the revenue is generated and the work performed. The most significant of these moves was between EMEA and Channel Islands. Staff costs incurred in two departments were previously included in direct costs. These were reassessed and it was concluded that these costs don't directly contribute to generating revenue and were consequently reclassified to operating expenses. The reclassified costs were GBP683k for June 2019 and GBP1,175k for December 2019.

 
 Unaudited 6 Months                           Revenue     Direct      Gross 
  to 30 Jun 2020                                           costs     profit 
                                              GBP'000    GBP'000    GBP'000 
 Segments 
   EMEA (1)                                    30,981   (13,649)     17,332 
       Third-party fund management fees         2,526    (2,526)          - 
   Asia-Pacific & Mauritius                    18,152    (5,390)     12,762 
   North America                               14,810    (7,045)      7,765 
   Channel Islands (2) 
       Continuing operations                   20,006    (8,113)     11,893 
       Discontinued operations                  2,006      (973)      1,033 
 Total                                         88,481   (37,696)     50,785 
-------------------------------------------  --------  ---------  --------- 
 
 Other operating income                                                  14 
 Operating expenses                                                (37,432) 
 Operating profit                                                    13,367 
-------------------------------------------  --------  ---------  --------- 
 
 Unaudited 6 Months                           Revenue     Direct      Gross 
  to 30 Jun 2019                                           costs     profit 
                                              GBP'000    GBP'000    GBP'000 
 Segments 
   EMEA (1)                                    28,379   (10,945)     17,434 
       Third-party fund management fees           133      (133)          - 
   Asia-Pacific & Mauritius                    16,398    (5,138)     11,260 
   North America                               12,884    (6,301)      6,583 
   Channel Islands (2) 
       Continuing operations                   18,200    (8,170)     10,030 
       Discontinued operations                  2,726    (1,088)      1,638 
 Total                                         78,720   (31,775)     46,945 
-------------------------------------------  --------  ---------  --------- 
 
 Other operating income                                                 121 
 Operating expenses                                                (39,580) 
 Operating profit                                                     7,486 
-------------------------------------------  --------  ---------  --------- 
 
 Audited 12 Months to                         Revenue     Direct      Gross 
  31 Dec 2019                                              costs     profit 
                                              GBP'000    GBP'000    GBP'000 
 Segments 
   EMEA (1)                                    58,659   (22,756)     35,903 
       Third-party fund management fees         2,190    (2,190)          - 
   Asia/Pacific & Mauritius                    34,302   (10,920)     23,382 
   North America                               26,897   (13,211)     13,686 
   Channel Islands (2) 
       Continuing operations                   37,659   (16,618)     21,041 
       Discontinued operations                  5,736    (2,036)      3,700 
 Total                                        165,443   (67,731)     97,712 
-------------------------------------------  --------  ---------  --------- 
 
 Other operating income                                                 185 
 Operating expenses                                                (79,916) 
 Operating profit                                                    17,981 
-------------------------------------------  --------  ---------  --------- 
 

Geographical information

The Group's revenue from external customers by geographical location of contracting Group entity is detailed below. The jurisdiction of the contracting entity can differ from the jurisdiction for segment reporting purposes.

 
                                         Unaudited   Unaudited     Audited 
                                          6 Months    6 Months   12 Months 
                                                to          to          to 
                                            30 Jun      30 Jun      31 Dec 
                                              2020        2019        2019 
                                           GBP'000     GBP'000     GBP'000 
 
 Jersey and Guernsey 
  (2)                                       20,621      20,747      42,187 
 Rest of Europe (1)                         33,569      28,238      59,667 
 Mauritius                                  11,938      11,096      22,984 
 Americas                                   14,051      12,726      26,376 
 South Africa                                1,558       2,617       4,852 
 Asia-Pacific                                4,218       3,163       7,187 
--------------------------------------  ----------  ----------  ---------- 
 Total Net Revenue from continuing 
  and discontinued operations               85,955      78,587     163,253 
 Third-party fund management 
  fees                                       2,526         133       2,190 
 Total Turnover from continuing 
  and discontinued operations               88,481      78,720     165,443 
--------------------------------------  ----------  ----------  ---------- 
 

(1) The EMEA revenue and costs are shown as net revenue and net direct costs. This is because net revenue and net direct costs exclude the impact of third-party fund management fees, which are not considered relevant in allocating resources to segments. Third-party management fees relate to asset management fees for a small number of funds that are clients of the Group's AIFM Management Company in Luxembourg and are limited to the EMEA operations. Given these revenues are not economically the Group's, the Group sought to separate these and believe that net revenues are a more accurate reflection of the income that the Group earned for its services to the relevant fund entity.

(2) The above mentioned amounts for the Channel Islands include the results from both the continuing and discontinued operations. Refer to note 6 for the total revenue and direct costs attributable to discontinued operations.

4. Non-underlying items

 
                                                       Unaudited    Unaudited      Audited 
                                                        6 Months     6 Months    12 Months 
                                                              to           to           to 
                                                          30 Jun       30 Jun       31 Dec 
                                                            2020         2019         2019 
                                                         GBP'000      GBP'000      GBP'000 
 
 Operating profit (1)                                     13,367        7,486       17,981 
 Non-underlying items within operating 
  expenses: 
   Share based payments                           (i)         839        1,048        1,777 
    Amortisation of intangible 
     assets                                      (ii)       8,070        8,266       16,487 
  Acquisition cost earn 
   out charges                                  (iii)         485        1,610        6,317 
   Acquisition and integration 
    costs                                       (iii)       1,206           73          662 
    Bargain purchase                       (iv)             (38)            -            - 
  Impairment of intangible 
   assets                                         (v)           -        1,879        2,425 
  Regulatory fine and 
   fees                                          (vi)          85          433        1,039 
                                                          10,647       13,309       28,707 
 
 Underlying operating 
  profit (1)                                              24,014       20,795       46,688 
 
 Profit before tax (1)                                    12,659        5,408       13,251 
 Non-underlying items within other 
  costs: 
   Refinancing                                  (vii)           -          457          457 
 Total non-underlying 
  items                                                   10,647       13,766       29,164 
----------------------------------------------------  ----------   ----------   ---------- 
 Underlying profit before 
  tax (1)                                                 23,306       19,174       42,415 
----------------------------------------------------  ----------   ----------   ---------- 
 
 

(1) These amounts include the profits from both continuing and discontinued operations.

In the opinion of the directors, as explained below, the above disclosures reflect expenses which are not representative of the underlying performance and strategy of the Group.

(i) The share based payments expense above only relates to the costs classified as non-underlying. For details on all the Share based payments (for underlying and non-underlying in aggregate) refer to note 12. All acquisition related share based payments ("RSA" plan) are awards granted as part of the mechanics of acquisitions to act as retention tools for key management and to recruit senior management to support the various acquisitions. These grants are thus not in the normal course of business and are disclosed separately.

(ii) The amortisation charges relate to the amortisation of intangible assets acquired through acquisitions. The amortisation of intangibles is directly linked to the acquisitions and excluded from underlying cost because these charges are based on judgements about the value and economic life of assets that, in the case of items, for example customer relationships, would not be capitalised in normal operating practice.

(iii) The Group has completed various acquisitions in the past two years. Acquisition and integration costs included deal advisory fees, one-off costs of integrating companies and accruals for cash earn-out payments. Integration and deal costs relating to acquisitions for the period ending 30 June 2020 were GBP0.5 million. Also included was GBP0.5 million relating to the AgenSynd acquisition earn-out accrual which is expensed per IFRS 3 due to settlement being linked to continued employment. With acquisitions being outside the day-to-day activities of the ongoing business of the Group, these costs are disclosed as non-underlying to enable shareholders to assess the core ongoing performance of the Group. The majority of acquisition and integration costs are incurred in the first 2 years after acquisition. This could be longer depending on the nature of the costs.

(iv) On 1 April 2020 the Group acquired all the shares in Inbhear Management Services Limited. No consideration was paid for the acquisition and consequently a gain on bargain purchase was recognised. Refer to note 15 for further information.

(v) The Group's South African hedge fund business, acquired in 2016, suffered a one-off loss of clients during 2019. As a result, the contract intangibles were impaired by GBP1.9 million at the end of June 2019. The total impairments for the year ending 31 December 2019 on Intangible Assets amounted to GBP2.4 million. As with the amortisation of intangible assets, this cost was excluded from underlying cost as it does not form part of the core business of the Group.

(vi) Regulatory fine and fees relates to a settlement and related costs with the Jersey Financial Services Commission. This expense is excluded from underlying cost as it is one-off in nature. The fine amounted to GBP381k, with the additional costs of GBP658k being the legal fees incurred during the settlement process, for the year ending 31 December 2019. During the period ended 30 June 2020 the Group incurred fees amounting to GBP85k for on-going legal cases.

(vii) On 1 March 2019 the Group refinanced its loan facility. The balance of the unamortised loan costs was written off and classified as non-underlying because the refinancing was done to support future acquisitions and is not part of the day to day operations of the Group.

5. Tax

 
                                                      Unaudited    Unaudited      Audited 
                                                       6 Months     6 Months    12 Months 
                                                             to           to           to 
                                                         30 Jun       30 Jun       31 Dec 
                                                           2020         2019         2019 
                                                        GBP'000      GBP'000      GBP'000 
 
 Current income tax 
  expense                                                 3,870        3,293        7,152 
 Deferred income tax 
  expense                                               (1,209)      (1,340)      (2,785) 
 Total income tax expense                                 2,661        1,953        4,367 
---------------------------------------------------  ----------   ----------   ---------- 
 
 The income tax expense is attributable 
  to profit from: 
 Continuing operations                                    2,665        1,783        4,007 
 Discontinued operations                                    103          164          370 
 Deferred tax from other comprehensive 
  income                                                  (107)            6         (10) 
 Total income tax expense                                 2,661        1,953        4,367 
---------------------------------------------------  ----------   ----------   ---------- 
 
 

Income tax expense is calculated across the Group based on the prevailing income tax rates in the jurisdictions in which profits are earned.

 
                                                     Unaudited    Unaudited      Audited 
                                                      6 Months     6 Months    12 Months 
                                                            to           to           to 
                                                        30 Jun       30 Jun       31 Dec 
                                                          2020         2019         2019 
                                                       GBP'000      GBP'000      GBP'000 
 
 Reconciliation of effective 
  tax rates 
 As per the consolidated income 
  statement: 
 Tax charge from continuing and 
  discontinued operations                                2,661        1,953          4,367 
 Profit before tax from continuing 
  and discontinued operations                           12,659        5,408         13,251 
----------------------------------------------      ----------   ----------   ------------ 
 Effective tax rate                                      21.0%        36.0%        33.0% 
 
 Tax charge from continuing and 
  discontinued operations                                2,661        1,953          4,367 
 Adjusted for non-underlying tax 
  charge                                                 1,629        2,076        3,590 
 Underlying tax charge                                   4,290        4,029        7,957 
--------------------------------------------------  ----------   ----------   ---------- 
 
 Profit before tax from continuing 
  and discontinued operations                           12,659        5,408         13,251 
 Non-underlying items                                   10,647       13,766       29,164 
 
 Profit before tax and non-underlying 
  items                                                 23,306       19,174         42,415 
----------------------------------------------      ----------   ----------   ------------ 
 Underlying effective 
  tax rate                                               18.4%        21.0%        18.8% 
 
 

6. Discontinued operations

During the prior year, the Group made a strategic decision to sell the private client business in Jersey, within the next twelve months after balance sheet date for a cash consideration. The group classified its private client book in Jersey as a discontinued operation, due to significant contracts having been designated as held for sale. This was regarded to be a major business line in the past. The disposal group consists of the trade receivables, contract assets and contract liabilities relating to the contracts. Due to the fact that internally generated customer relationships are prohibited from being recognised as assets, the group did not account for these customer contracts as assets. The Group deemed it necessary to reclassify the trade receivables relating to these clients as a disposal group held for sale as these balances give a reasonable representation of the value that these customer contracts hold. The revenue and direct costs are included in the Channel Islands operating segment. The acquisition, subject to the relevant regulatory approvals, was signed on 13 March 2020 and saw the designated clients and staff, transferring to JTC Plc. The transaction concluded on 1 July 2020 and the agreed upon clients and staff members were transferred to JTC for a consideration of GBP9 million.

The financial information relating to the discontinued operations is set out below:

 
                                Unaudited   Unaudited     Audited 
                                 6 Months    6 Months   12 Months 
                                       to          to          to 
                                   30 Jun      30 Jun      31 Dec 
                                     2020        2019        2019 
                                  GBP'000     GBP'000     GBP'000 
 Revenue                            2,006       2,726       5,736 
 Expenses                           (973)     (1,088)     (2,036) 
-----------------------------  ----------  ----------  ---------- 
 Profit before income 
  tax expense                       1,033       1,638       3,700 
 Income tax expense                 (103)       (164)       (370) 
 Profit from discontinued 
  operations                          930       1,474       3,330 
-----------------------------  ----------  ----------  ---------- 
 

The following disclosure relates to the cash flows from the discontinued operations:

 
 Net cash inflow from operating 
  activities                                   2,421       1,528       3,563 
 Net increase in cash generated 
  by the subsidiary                            2,421       1,528       3,563 
---------------------------------------   ----------  ----------  ---------- 
 
                                           Unaudited   Unaudited     Audited 
                                            6 Months    6 Months   12 Months 
                                                  to          to          to 
                                              30 Jun      30 Jun      31 Dec 
                                                2020        2019        2019 
                                             GBP'000     GBP'000     GBP'000 
 Assets of disposal group classified 
  as held for sale 
  Contract assets                                784          24         334 
  Trade receivables                              436       2,300       2,645 
----------------------------------------  ----------  ----------  ---------- 
 Total assets of disposal group 
  held for sale                                1,220       2,324       2,979 
 
 Liabilities of disposal group 
  classified as held for sale 
  Contract liabilities                         (202)       (282)       (575) 
----------------------------------------  ----------  ----------  ---------- 
 Total liabilities of disposal 
  group held for sale                          (202)       (282)       (575) 
 

7. Earnings per share

 
                                                  Unaudited           Unaudited       Audited 
                                                   6 Months            6 Months     12 Months 
                                                         to                  to            to 
                                                     30 Jun              30 Jun        31 Dec 
                                                       2020                2019          2019 
                                                    GBP'000             GBP'000       GBP'000 
 
 Profit for the period                                9,891               3,461         8,874 
 Non-underlying items 
  within: 
   Non-underlying operating expenses                 10,647              13,309        28,707 
   Non-underlying other 
    costs                                                 -                 457           457 
 Tax effect of non-underlying 
  items                                             (1,629)             (2,076)       (3,590) 
 Underlying earnings                                 18,909              15,151        34,448 
---------------------------------------------  ------------  ------------------  ------------ 
 
 Weighted average number of ordinary 
  shares in issue                               144,907,974         143,677,970   144,019,578 
 Effect of dilutive potential 
  ordinary shares: 
   Deferred consideration 
    shares                                          636,652           1,273,308       636,652 
   Restricted Stock Awards                        1,096,547           1,241,272     1,280,821 
   Performance Share Plan                                 -              64,364        49,501 
 Weighted average number of ordinary 
  shares for the purposes of diluted 
  earnings per share                            146,641,173         146,256,914   145,986,552 
--------------------------------------------   ------------  ------------------  ------------ 
 
                                                  Unaudited           Unaudited       Audited 
                                                   6 Months            6 Months     12 Months 
                                                         to                  to            to 
                                                     30 Jun              30 Jun        31 Dec 
                                                       2020                2019          2019 
 Earnings per share based on total 
  operations 
 Basic earnings per 
  share (pence)                                         6.8                 2.4           6.2 
---------------------------------------------  ------------  ------------------  ------------ 
 Diluted earnings per 
  share (pence)                                         6.7                 2.4           6.1 
---------------------------------------------  ------------  ------------------  ------------ 
 
 Underlying basic earnings per 
  share (pence)                                        13.0                10.5          23.9 
--------------------------------------------   ------------  ------------------  ------------ 
 Underlying diluted earnings per 
  share (pence)                                        12.9                10.4          23.6 
--------------------------------------------   ------------  ------------------  ------------ 
 
                                                  Unaudited           Unaudited       Audited 
                                                   6 Months            6 Months     12 Months 
                                                         to                  to            to 
                                                     30 Jun              30 Jun        31 Dec 
                                                       2020                2019          2019 
 Earnings per share based on continuing 
  operations 
 Basic earnings per 
  share (pence)                                         6.2                 1.4           3.8 
---------------------------------------------  ------------  ------------------  ------------ 
 Diluted earnings per 
  share (pence)                                         6.1                 1.4           3.8 
---------------------------------------------  ------------  ------------------  ------------ 
 
 Underlying basic earnings per 
  share (pence)                                        12.4                 9.5          21.6 
--------------------------------------------   ------------  ------------------  ------------ 
 Underlying diluted earnings per 
  share (pence)                                        12.3                 9.4          21.3 
--------------------------------------------   ------------  ------------------  ------------ 
 
                                                  Unaudited           Unaudited       Audited 
                                                   6 Months            6 Months     12 Months 
                                                         to                  to            to 
                                                     30 Jun              30 Jun        31 Dec 
                                                       2020                2019          2019 
 Earnings per share based on discontinued 
  operations 
 Basic earnings per 
  share (pence)                                         0.6                 1.0           2.3 
---------------------------------------------  ------------  ------------------  ------------ 
 Diluted earnings per 
  share (pence)                                         0.6                 1.0           2.3 
---------------------------------------------  ------------  ------------------  ------------ 
 
 Underlying basic earnings per 
  share (pence)                                         0.6                 1.0           2.3 
--------------------------------------------   ------------  ------------------  ------------ 
 Underlying diluted earnings per 
  share (pence)                                         0.6                 1.0           2.3 
--------------------------------------------   ------------  ------------------  ------------ 
 

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.

8. Dividends

An interim dividend of 4.8 pence per ordinary share (2019: 4.7 pence) was declared by the Directors on 4 September 2020 and will be payable on 16 October 2020 to shareholders on the record on 18 September 2020. The 2019 final dividend of 9.4 pence was paid on 20 May 2020.

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 
                                2020        2019      2019 
                             GBP'000     GBP'000   GBP'000 
 
 Opening balance             180,414     188,928   188,928 
 Acquired during the           4,433           -         - 
  period 
 Exchange difference          11,313         298   (8,514) 
 Closing balance             196,160     189,226   180,414 
------------------------  ----------  ----------  -------- 
 

On 1 May 2020 it acquired Inbhear Fund Services Limited. Refer to note 15 for further details on the acquisitions.

In accordance with the Group's accounting policy, the carrying value of goodwill is not subject to systematic amortisation but is reviewed annually for Impairment or when there is an indicator for impairment as listed in IAS 36. The review assesses whether the carrying value of goodwill could be supported by the recoverable amount (which is determined to be the higher of the value in use or fair value less cost of disposal) for each cash-generating unit (CGU). Due to the impact the recent COVID-19 pandemic has had on markets globally, the group assessed its goodwill for impairment. Value-in-use calculations were performed. The result of the goodwill impairment assessment undertaken is that each of the CGUs maintained sufficient headroom. As a result none of the cash generating units are impaired.

The value-in-use calculation is based on assumptions. The most significant of which are revenue growth, the cost margin, discount rate and the terminal growth rate. The expected cash flows are based on a combination of the reforested budgets and historic data. Projected revenue and costs are calculated using the prior period actual result, excluding the lost client revenue and, compounding these results by the budgeted numbers. Growth rates used are specific to the cash generating units and vary between 1% to 13%. The expected revenue growth was adjusted to incorporate a downturn in future revenues due to the impact of COVID-19 on global markets and was based on conservative cash flow projections. The terminal growth rate applied after five years was based on the forecasted nominal GDP and inflation of the operating jurisdiction, these were also adjusted for the expected long term effect that COVID-19 may have on global markets.

Management believes that any reasonably possible change in the key assumptions, on which recoverable amount per Cash Generating Unit ("CGU") is based, would not cause the aggregate carrying amount to materially exceed the recoverable amount on the CGUs.

10. Other intangible assets

 
                                               Unaudited   Unaudited    Audited 
                                                  30 Jun      30 Jun     31 Dec 
                                                    2020        2019       2019 
                                                 GBP'000     GBP'000    GBP'000 
 
 Opening balance                                  45,388      66,122     66,122 
 Acquired during the period through                2,207           -          - 
  acquisitions 
 Software under development 
  costs                                              949           -        276 
 Amortisation charge for the period/year         (8,070)     (8,266)   (16,487) 
 Impairments                                           -     (1,879)    (2,425) 
 Exchange difference                               2,648          42    (2,098) 
 Closing balance                                  43,122      56,019     45,388 
--------------------------------------------  ----------  ----------  --------- 
 

Refer to note 15 for further details relating to the acquisition of Inbhear Fund Services Limited on 1 May 2020.

At 30 June 2020 all intangible assets were tested for indicators of impairment. No indicators were noted. The group recognised impairment losses at 30 June 2019 and 31 December 2019, due to one off client losses in South Africa. This was a one-off occurrence and did not reoccur as at 30 June 2020.

11. Share capital

 
                             Unaudited   Unaudited     Audited 
                              6 Months    6 Months   12 Months 
                                    to          to          to 
                                30 Jun      30 Jun      31 Dec 
                                  2020        2019        2019 
                               GBP'000     GBP'000     GBP'000 
 
 Opening balance                 1,466       1,460       1,460 
 Issue of shares        (i)           -           -           6 
 Closing balance                 1,466       1,460       1,466 
--------------------------  ----------  ----------  ---------- 
 

(i) The Company issued 636,656 shares on 1 November 2019 in relation to the Company's acquisition of FLSV Fund Administration Services LLC which completed on 1 November 2016. The shares issued represent an element of the deferred share consideration.

12. Share based payments

 
                                         Unaudited   Unaudited   Audited 
                                            30 Jun      30 Jun    31 Dec 
                                              2020        2019      2019 
                                           GBP'000     GBP'000   GBP'000 
 Sanne Group plc 
   Performance Share Plan           (i)         263         129      (40) 
   Restricted Stock Awards         (ii)       1,674       1,346     2,482 
   Social security accrual                      13           -      (65) 
 Total share based payments                  1,950       1,475     2,377 
--------------------------------------  ----------  ----------  -------- 
 

(i) During the current and prior year 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 three-year performance period from grant date. All the awards were granted for a nil consideration. New awards were made throughout the year. The Group estimates the number of shares to be vested based on the performance targets set to be achieved and the current performance of the Group. This is then increased by an assumed rate in line with Group forecast as per market expectation to determine the probable performance at vesting date. The vesting periods of the grants are not more than 3 years.

The fair value for Performance Share Plans containing a market condition was valued on grant date using the Geometric Brownian Motion, which incorporated a Monte Carlo simulation. This was performed by determining the share price at grant date and applying the module under certain assumptions, for example the reinvesting of dividends and a risk free rate linked to a 3-year UK government bond.

(ii) During the current and prior periods, the Group granted awards over its ordinary shares in the form of Restrictive Stock Awards ("RSA"). The awards are granted as part of the mechanics of an acquisition to act as a retention incentive for staff, they are also used as Annual Performance Bonuses for senior management. The vesting of the awards is subject to continued employment over an agreed period. All the awards were granted for a nil consideration. RSA's awarded as part of Annual Performance Bonuses are considered to be an underlying cost for the Group. RSA's granted in relation to acquisitions or the recruitment of senior management, are deemed to be non-underlying costs.

13. Borrowings

On 1 March 2019, the Group refinanced its loan facility and repaid the existing loan in full. The facility matures in February 2023 with extension options of up to two years. Interest is charged at LIBOR plus a variable margin. The balance of the unamortised loan costs was written off.

The new loan facility is for GBP150m plus an accordion facility of GBP70m with a consortium of five banks namely HSBC, Bank of Ireland, LIoyds, Royal Bank of Canada and Santander. The new loan is now structured solely as a revolving credit facility that can be drawn down and repaid by the Group at any time. The loan and accordion have a maturity of February 2023 and charge commercial rates.

Covenants attached to the loan relate to interest cover and leverage. Undrawn funds in the revolving credit facility are charged at 40% of the interest margin whilst the accordion facility attracts no interest until drawn.

The balances available and drawn are as follows:

 
                                 Unaudited   Unaudited   Audited 
                                     as at       as at     as at 
                                    30 Jun      30 Jun    31 Dec 
                                      2020        2019      2019 
                                   GBP'000     GBP'000   GBP'000 
 Available 
 Revolving credit facility         150,000     150,000   150,000 
 Accordion                          70,000      70,000    70,000 
                                   220,000     220,000   220,000 
                                ----------  ----------  -------- 
 Drawn 
 Revolving credit facility         140,234     100,800   131,175 
                                   140,234     100,800   131,175 
                                ----------  ----------  -------- 
 Capitalised loan fees               1,448       1,525     1,603 
 Total borrowings                  138,786      99,275   129,572 
                                ----------  ----------  -------- 
 

During the 6 months ending 30 June 2020, the Group repaid GBP7.3 million on the revolving credit facility and drew down a total of GBP15.0 million from the revolving credit facility.

14. Fair value measurement of financial instruments

The following table presents the Group's financial assets and liabilities measured at fair value as at 30 June 2020 and 31 December 2019. There were no financial assets or liabilities carried at fair value at 30 June 2019.

 
                                  Level   Unaudited   Unaudited   Audited 
                                              as at       as at     as at 
                                             30 Jun      30 Jun    31 Dec 
                                               2020        2019      2019 
                                            GBP'000     GBP'000   GBP'000 
 Categories of financial 
  instruments 
 Financial assets 
 Financial assets recorded 
  at fair value 
   Minority equity investment       3         9,227           -     8,632 
-------------------------------  ------  ----------  ----------  -------- 
 

The fair value measurement of the Group's financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the 'fair value hierarchy'):

Level 1: Quoted prices in active markets for identical items;

Level 2: Observable direct or indirect inputs other than Level 1 inputs; and

Level 3: Unobservable inputs, thus not derived from market data.

The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.

Fair value measurement of the minority equity investment

Reconciliation of Level 3 fair value measurements of financial instruments:

 
                                       Unaudited   Unaudited   Audited 
                                           as at       as at     as at 
                                          30 Jun      30 Jun    31 Dec 
                                            2020        2019      2019 
                                         GBP'000     GBP'000   GBP'000 
 Balance at start of                       8,632           -         - 
  period 
 Additions                                     -           -     9,347 
 Foreign exchange gains/(losses)             595           -     (715) 
 Balance at end of period                  9,227           -     8,632 
------------------------------------  ----------  ----------  -------- 
 

Fair value measurement of the minority equity investment

The fair value was based on a combination of the income approach (discounted cash flow model) and the market approach. The discounted cash flow provides an estimation of the fair value based on the cash flows that a business can be expected to generate in the future. The market approach provides an estimation of the fair value based on market prices on actual transactions and asking prices for businesses. The process is a comparison between the subject business and other similar businesses.

In the income approach, the revenue was forecasted over a ten year period. The following unobservable inputs were used, weighted average revenue growth between 15% and 25%, terminal growth rate of 2% and WACC 18% to discount the cash flows. The discount rate and the terminal growth rate have been identified to be the assumptions that are the most sensitive to change.

In the market approach a list of broadly comparable listed companies was identified through public sources. Since there are a limited number of public companies offering technology solutions to fund administration businesses services, the group considered comparable companies offering technology and software services to companies engaged in the broader financial services industry. The valuation was based on revenue multiple. A revenue multiple of 7.5x was used in the estimate. The unlisted shares are held in a company trading in the same industry as the Group. The world-wide pandemic known as COVID-19 has caused a downturn in a number of markets. The market multiple used as an estimate remained unchanged from the assumptions made in the 31 December 2019 annual report, as the Group and the target entity trade in a reasonably stable market segment. The segment saw a slight down turn at the start of the reporting period, but has since then recovered to a near normal state.

The group performed a sensitivity analysis on the fair value. Because a combined approach is used, the group assessed the combined impact of changes in key assumptions. Should the WACC increase to 19% and the long term growth rate only yield 1.5% in the income approach and on the market approach a multiple of 6.7 is used instead of 7.5, the value would be GBP1.5 million lower.

15. Business combinations

Inbhear Management Services Limited and Inbhear Fund Services Limited

On 1 April 2020 the Group acquired 100% of the issued share capital of Inbhear Management Services Limited, incorporated in the Cayman Islands. As part of the same acquisition, the Group acquired 100% of the issued share capital of Inbhear Fund Services Limited on 1 May 2020.

The acquisition provides the Group with an opportunity to expand its platform into the Cayman Islands and Ireland, growing its existing North America and EMEA operations.

The consideration for the Inbhear Fund Services Limited acquisition is satisfied through a payment of GBP8.2 million (EUR9.4 million) in cash. A contingent payment will be made in 2022, estimated to be GBP1.2million (EUR1.4 million) and is linked to the employment of key management.

The consideration for the Inbhear Management Services Limited acquisition will be accounted for as a contingent payment and will amount to the issuance of approximately 711,155 consideration shares. At 30 June 2020 no issuance of shares has occurred. The contingent consideration will be based on a multiple of the average gross profit generated by the business operations over the next three years.

 
                                                         EUR       GBP 
                                                        '000      '000 
 Recognised amounts of identifiable net assets (at 
  fair value) at acquisition: 
 Non-current assets                    Useful 
                                      economic 
                                        life 
                                              3 - 5 
   Equipment                                  years        11        10 
   Customer & contract 
    intangibles                             7 years     2,513     2,207 
   Deferred tax assets                                     3         3 
                                                       2,527     2,220 
     ---------------------------------------------  --------  -------- 
 Current assets 
   Trade and other receivables                           377       332 
   Cash and cash equivalents                           2,130     1,870 
                                                       2,507     2,202 
     ---------------------------------------------  --------  -------- 
 Current liabilities 
   Trade and other payables                              268       235 
   Current tax liabilities                                70        62 
                                                         338       297 
     ---------------------------------------------  --------  -------- 
 Non-current liabilities 
   Deferred tax liabilities                              314       276 
                                                         314       276 
     ---------------------------------------------  --------  -------- 
 
 Identifiable net assets                               4,382     3,849 
--------------------------------------------------  --------  -------- 
 
 Goodwill                                              5,048     4,433 
 Gain on bargain purchase                               (43)      (39) 
 
 Total consideration                                   9,387     8,243 
--------------------------------------------------  --------  -------- 
 
 Total consideration 
  satisfied by: 
  Cash consideration 
   - on acquisition                                    9,387     8,243 
 Fair value of consideration payable 
  at acquisition date                                  9,387     8,243 
------------------------------------------------    --------  -------- 
 
 Net cash inflow arising 
  on acquisition: 
   Cash consideration                                  9,387     8,243 
   Less: cash and cash equivalent 
    balances acquired                                (2,130)   (1,870) 
 
 Net cash outflow at 
  acquisition:                                         7,257     6,373 
--------------------------------------------------  --------  -------- 
 

Fair value of consideration

The payment for the controlling interest in Inbhear Management Services Limited will solely be made in the form of share-based payments, to the value of GBP3.8 million ($4.8 million). The number of shares that will be issued is based on the performance of Inbhear Management Services Limited in 2020, 2021 and 2022. The consideration will be accounted for as non-underlying share based payments.

A cash consideration was paid for the controlling interest in Inbhear Fund Services Limited on the date of acquisition to the value of GBP8.2 million (EUR9.4 million). A contingent payment will be made in 2022 to an estimated value of GBP1.2 million (EUR1.4 million), depending on the continued employment of the previous owners.

Transaction costs

The Group incurred GBP0.2 million relating to acquisition and integration expenses in 2020 during the first half of 2020. These costs have been expensed within operating expenses and are disclosed as non-underlying expenses in note 4.

Goodwill

Goodwill is represented by assets that do not qualify for separate recognition or other factors. These include the opportunities for new business wins from new customers, the effects of an assembled workforce and synergies from combining operations of the acquiree and the acquirer. Goodwill is not tax deductible and was recognised on the acquisition on Inbhear Fund Services Limited.

Gain on bargain purchase

A gain on bargain purchase was recognised because the fair value of the assets exceeded the consideration paid in terms of the accounting standards. The group believes the new acquisition will yield opportunities for new business wins, the effects of an assembled workforce and synergies from combining operations of the acquiree and the acquirer. A gain of bargain purchase is not taxable and was recognised on the acquisition on Inbhear Management Services Limited.

Trade and other receivables

The fair value of the financial assets acquired includes trade and other receivables with a fair value of GBP332k. The gross amount receivable is GBP332k of which all debt is expected to be collected.

Effect on the results

Inbhear Management Services Limited and Inbhear Fund Services Limited contributed GBP0.5 million of revenue and a profit of GBP0.1 million to the Group's profit for the period between the date of acquisition and the balance sheet date. If the business had been acquired at 1 January 2020 on a pro rata basis the Group revenue for the period would have been GBP89.1 million (GBP0.9 million higher) and net profit GBP9.6 million (GBP0.2 million higher) for the period ended 30 June 2020.

16. 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 related parties are key management personnel, comprising all members of the plc Board 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 at the end of the period is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures for the period they served as key management personnel.

 
                                      Unaudited   Unaudited   Audited 
                                          as at       as at     as at 
                                         30 Jun      30 Jun    31 Dec 
                                           2020        2019      2019 
                                        GBP'000     GBP'000   GBP'000 
 Short-term employee 
  benefits                                1,493       1,882     2,289 
 Share based payments 
  (see note 12)                             225         245       222 
 Contracted through consultancy 
  firm                                        -           -        60 
 Total short term payments                1,718       2,127     2,571 
-----------------------------------  ----------  ----------  -------- 
 

Other than the items listed above, the Group has not entered into any material transactions with related parties since the last annual report.

17. Contingent liabilities

In the ordinary course of business the Group could be subject to legal claims and/or proceedings. Should such events arise, the Board would consider its best estimate of the amount required to settle the obligation and, where appropriate, establish a provision. While there can be no assurances that circumstances will not change, based upon information currently available, the Directors do not believe there is any such claim or proceeding that could have a material adverse effect on the Group's financial position.

18. Post balance sheet events

On 1 July 2020 the Group completed its sale of its private client business line to the value of GBP9.0 million. The Group will recognise a gain on disposal of GBP7.8 million after the reporting period. Please refer to note 6 for further detail on the discontinued operations.

On 13 July 2020, the Group entered into an agreement to purchase 100% of the ordinary shares of Avalon Trust & Corporate Services Ltd, incorporated in the Cayman Islands. This acquisition provides the Group with a opportunity to expand its platform in the Cayman Islands and enhance the Group's proposition in its existing North American operations. The total consideration is estimated to be GBP7.5 million. The accounting for this transaction is incomplete as at the date of issue of these condensed interim consolidated financial statements.

On 15 July 2020, the Group entered into an agreement to purchase 100% of the ordinary shares of Deutsche Trust Company Limited, incorporated in Japan. This acquisition provides the Group with an opportunity to expand its platform in the Japan and enhance the Group's proposition in its existing Asia-Pacific operations. The accounting for this transaction is incomplete as at the date of issue of these condensed interim consolidated financial statements. The total consideration was not yet finalised at the date of signing.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

IR UWUWRRVUKRAR

(END) Dow Jones Newswires

September 09, 2020 02:00 ET (06:00 GMT)

Grafico Azioni Sanne (LSE:SNN)
Storico
Da Ott 2020 a Nov 2020 Clicca qui per i Grafici di Sanne
Grafico Azioni Sanne (LSE:SNN)
Storico
Da Nov 2019 a Nov 2020 Clicca qui per i Grafici di Sanne