14 September 2021
Sanne Group plc
(the Group, Sanne or the Company)
Interim Results for the six months ended 30 June 2021
Continued growth momentum and strategic progress
Sanne, a leading global provider of alternative asset and corporate services, announces its results for the six months ended 30 June 2021.
| |
6 months to 30 June 2021 |
6 months to 30 June 2020 |
Change | Constant currency change3 |
| Underlying1 | | | | |
| Net revenue2 | £90.7m | £83.9m | 8.1% | 12.5% |
| Operating profit | £24.0m | £23.0m | 4.3% | 12.4% |
| Profit before tax | £22.2m | £22.3m | (0.5%) | 6.4% |
| Diluted earnings per share | 11.5p | 12.3p | (6.5%) | 2.4% |
| Free cash flow attributable to equity holders4 | £14.7m | £14.0m | 5.0% | n.a. |
| Operating profit margin | 26.4% | 27.4% | (100bps) | (3bps) |
| Statutory | | | | |
| Turnover2 | £96.2m | £86.5m | 11.2% | 15.6% |
| Operating profit | £12.6m | £12.3m | 2.4% | 14.7% |
| Profit before tax | £9.4m | £11.6m | (19.2%) | (8.0%) |
| Diluted earnings per share | 4.1p | 6.1p | (32.8%) | (21.3%) |
| Interim dividend per share | - | 4.8p | n.a. | n.a. |
See below for notes
Highlights:
o Robust financial performance:
o Return to double digit net revenue growth on a constant currency basis with growth of 12.5%3 year-on-year and organic growth of 4.0%3
o Returning growth momentum following impact of COVID-19 pandemic on the industry: organic net revenue growth of 4.1% on H2 2020 vs, only 1.4% H2 2020 on H1 2020
o Underlying operating profit growth of 12.4%3
o Underlying operating profit margin flat at 27.3%3, excluding a 1.0 percentage point dilution effect due to FX
o Continued strong cash generation with underlying operating cash conversion in excess of 100%
o Significant growth in new business wins up 41.4% year-on-year with annualised revenue of approximately £15.7 million secured in the first half
o Continued strategic progress:
o Completed acquisitions of PEA6 and Strait7 to add new presence in important Scandinavian markets of Sweden and Denmark as well as expand the Group's North American footprint
o Successful completion of a £79.5m equity placing and refinancing of the Group's revolving credit facility
o Positive progress on roll-out of new Group technology strategy
o Acquisitions completed during 2020 performing well and integrations well underway
o Agreed the acquisition of PraxisIFM Group plc's fund business to augment the Group's presence in the European listed funds market
o Sale of investment in Colmore realising net proceeds of $25.2m (£18.1m), a return of 2.3 times our original investment after two years, with continued commitment to the strategic partnership with Sanne under its new owner, Prequin
o Takeover process
o On 25 August 2021 the Company announced that the Board had reached an agreement with Apex Group Ltd ("Apex") on the terms of a recommended all cash offer of 920p per share to be made by Apex (the "Acquisition")
§ Sanne's Directors intend to recommend unanimously that Sanne Shareholders vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at a Sanne General Meeting
§ It is anticipated that the Acquisition will complete in the first half of calendar year 2022
o As a result of the terms of the Acquisition, the Board concluded it is not recommending the payment of an interim dividend for 2021
Outlook:
o Continued high demand for private asset alternatives driving ongoing market recovery
o Good momentum seen in the first half of 2021 expected to continue into the second half, making the Group well positioned to deliver continued improvement to our organic growth rate.
Martin Schnaier, Chief Executive Officer of Sanne Group plc, said:
"I am delighted by the continued strategic progress that the Company has achieved so far this year, despite the macro-economic uncertainty that prevails. The business has continued to demonstrate its resilience and in the first half we have delivered material new business wins that will further drive future revenue momentum. The efforts of all of our people are thoroughly appreciated and I would like to thank them for their continued excellent service during the first half of the year."
Enquiries:
| Sanne Group plc Martin Schnaier, Chief Executive Officer James Ireland, Chief Financial Officer
| +44 (0) 1534 722 787 |
|
Tulchan Communications LLP Tom Murray Harry Cameron
|
+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:
A dial-in facility is also available, and the details are as follows:
| Dial-in numbers:
| UK: 0800 640 6441 International Access Numbers: +44 20 3936 2999 |
| Participant PIN: | 884963 |
A PDF copy of the 2021 Interim Results presentation will be available to download on Sanne's Investor Relations results and presentation page after the live webcast has ended.
Notes:
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 5 of the consolidated financial statements. Further detail of alternative performance measures is provided in the Alternative Performance Measures section
2. Net revenue comprises turnover less third-party fund management fees. More detail is provided in the Financial Review
3. Constant currency represents the comparative performance using the same FX rates for the 2020 and 2021 performance 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
5. The results shown in the table above and comments below refer to continuing operations only unless otherwise stated
6 Private Equity Administrators Group
7 Strait Capital Company Ltd
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 2,000 people worldwide and administers structures and funds that have in excess of £500 billion of assets.
Key clients include alternative asset managers, financial institutions, family offices, ultra-high net-worth individuals 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.
THE ANNOUNCEMENT MAY CONTAIN "FORWARD-LOOKING STATEMENTS". FORWARD-LOOKING STATEMENTS SOMETIMES USE WORDS SUCH AS "AIM", "ANTICIPATE", "TARGET", "EXPECT", "ESTIMATE", "INTEND", "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 first half of 2021 has been a period of growing momentum for the Group as we begin to see client activity across our end markets recover, with our strong platform and client proposition making us well-placed to benefit. Despite the COVID-19 pandemic continuing to impact the global macroeconomic environment, we have seen a good recovery in investment activity, which in turn has been driving an increase in fund raising activity across our target client base.
This market recovery and our continued investment for growth throughout the pandemic have resulted in a very strong half year for new business wins. The annualised value of new business wins for the first six months of the year was £15.7m, which represents a 41.4% increase compared with the same period in 2020. New business win momentum has been seen across all regions and product strategies and has continued into the second half of the year.
From this strong momentum, the Group has seen a continued improvement in the constant currency organic growth rate, and the Group is well positioned to deliver continued improvement through the second half of 2021. The scale of this new business win activity has resulted in some short-term gross profit margin pressure as we scale up teams to manage the take-on and delivery of new business. However, despite this, the structural changes made over the last two years to manage the Group's well-invested operating platform mean that underlying operating profit margins have remained broadly flat, before the impact of foreign exchange movements, compared with the first half of 2020.
In addition to the robust first half performance and increase in new business wins, Sanne has successfully completed two acquisitions in the first six months of the year and is expected to complete a third in Q4 2021.
Financial performance
| Underlying Group Income Statement | H1 2021 | H1 2020 | % Change | Constant |
| Net revenue | 90,729 | 83,949 | 8.1% | 12.5% |
| Gross profit | 51,795 | 49,649 | 4.3% | 9.3% |
| - Gross profit margin | 57.1% | 59.1% | (200bps) | (170bps) |
| | | | | |
| Overhead costs | (27,821) | (26,668) | | |
| Underlying operating profit from continuing operations | 23,974 | 22,981 | 4.3% | 12.4% |
| - Underlying operating profit margin | 26.4% | 27.4% | (100bps) | (3bps) |
Note: the above table includes Alternative Performance Measures. See the Alternative Performance Measures section for their calculation methodology.
The Group delivered double digit net revenue growth of 12.5%, on a constant currency basis in the first half. As 2021 has seen a significant strengthening of sterling against the Group's other predominant currencies, this has resulted in reported net revenue growth of 8.1%.
The return to double digit net revenue growth on a constant currency basis has been driven by a combination of organic growth as well as the contribution from the five acquisitions that the Group has completed since the start of 2020. Constant currency organic net revenue growth compared with the same period last year was 4.0%. However, a more comprehensive picture of the increasing organic growth performance since the height of the COVID-19 pandemic can be seen by looking at H1 2021's performance compared with H2 2020. The impact of the pandemic on our end markets caused a significant slow-down in new business and transactional activity during 2020, whilst having minimal impact on end-of-life attrition. As a result, we saw net revenue in the second half of 2020 grow by 1.4% on the first half of the same year. By contrast, our first half performance represents constant currency organic net revenue growth of 4.0% on the second half of 2020. The strong new business wins and increase in transactional activity being seen across the business should provide strong momentum in the second half of the year.
We have made improvements in the approach to business development across the Group and benefited from a number of strategic hires into our Product Development team, which have been instrumental in positioning the Group to benefit from the recovery in client fund raising. This has driven the 41.4% increase in the annualised value of new business wins in the first half of 2021 compared with the first half of 2020. We have also seen a reduction in the delays between winning business and generating revenue which were such a feature of 2020.
Despite positive revenue momentum, the mix effect from PEA and Strait, which both join the Group on lower margins, and the strong pick-up in new business wins, which have required a short-term scaling up of the teams ahead of revenue being generated, have resulted in a short-term reduction in the Group's gross profit margin. This has meant that the gross profit margin in the first half was 57.1%, a 170 basis points reduction on a constant currency basis compared with the prior year. The first half constant currency gross profit growth has been 9.3%.
Overheads remain well-managed, and we continue to benefit from operational gearing in our platform. This control over costs has allowed us to reduce overheads as a proportion of revenue whilst simultaneously increasing our spend on technology as we continue the roll out of our new strategy.
Underlying operating profit has increased 12.4% with a broadly flat margin of 27.3%, both at constant currency, despite the short-term dilution in gross profit margin. However, a greater proportion of overhead costs are incurred in sterling which means the strengthening of the currency that has seen a headwind in revenue does not get reflected to the same degree across the Group's cost base.
The Group's cash performance has once again been strong with underlying operating cash conversion for H1 at 100.4%. Underlying free cash flow attributable to equity holders was also up 5.0% on the first half of 2020 to £14.7 million. This has been driven by our continued working capital discipline as well as the resilient nature of our business model.
Continued strategic delivery
We have continued our focus on innovation and driving our use of technology to enhance client service and operational efficiency throughout the first half. The implementation of our new technology strategy has progressed well, and we have continued to develop innovative client facing initiatives such as Sanne.Live, Sanne Rio and Spotlight which are demonstrable differentiators for Sanne in client pitches. The technology strategy has also involved a significant increase in investment in strategic projects to drive improvements in our efficiency, as well as further enhance the quality of client service. These include projects to rebuild the Group's data architecture and data management framework, as well as redesigning key workflows across core administration technologies. We expect these initiatives to free up significant resources within our teams, enabling them to focus on the high-touch service upon which Sanne has built its reputation.
The first half of the year has also seen continued focus on expanding our full range of products and services across our global footprint. Whilst the on-going travel restrictions in place as a result of the COVID-19 pandemic have made expanding expertise across jurisdictions more difficult, we have still seen good successes in the period. This has been most notable as we continue to gain traction in Asia Pacific with loan agency, private debt and hedge services. We have also successfully launched depositary services in Ireland, with Sanne becoming the first independent administrator to be granted a specialised depositary licence in the first half. Compliance and ESG services have also seen significant momentum in the period across all regions.
Our inorganic strategy has continued the strong momentum we achieved during 2020, with the completion of two strategically important deals in the first half and a third announced shortly after the half year end. In March, we completed the acquisition of PEA, a leading independent private equity administration business, which adds two new locations to the Group in Sweden and Denmark, as well as doubling the size of our existing Guernsey operation. We have benefited from a number of early revenue synergies across the PEA client base as we seek to service these clients across other, existing Sanne offices. In April we acquired Strait, a fund administrator largely focused on private equity clients based in Dallas, Texas. As well as expanding our strategically important North American platform, Strait has brought with it a strong management team who will be critical in helping the Group expand more rapidly across the world's largest alternatives market. Both acquisitions have performed well since acquisition and integration remains on track.
Following the end of the period, we have also announced the acquisition of the fund administration business from Praxis IFM Group plc (the "Praxis Funds Business"), a c.80 person fund administration business across Guernsey, the UK, Malta, Luxembourg and Jersey. The acquisition of the Praxis Funds Business should position Sanne as one of the leading players in the European listed funds administration sector, as well as augmenting our presence in Guernsey, a significant domicile for UK and European private equity funds. The acquisition is expected to complete in the second half of the year after gaining relevant regulatory change of control clearances.
During August, we disposed of our minority equity stake in Colmore AG for total net proceeds of $25.2 million (£18.1m) as a result of its sale to Prequin. Sanne invested in Colmore in 2019 and entered into a strategic partnership to work together on certain new business opportunities, as well as develop our data analytics product for General Partner clients, Sanne Spotlight. We remain a close strategic partner with Colmore both in relation to complimentary mandates, as well as in relation to the further development of Sanne Spotlight. We have also realised a significant financial return on the investment with the realised proceeds representing 2.3 times our original equity investment in under two years and equivalent to an annual return on investment of over 50%.
People
People remain the Group's most valuable asset and we continue to work hard to ensure that their health and wellbeing remain a priority of our business. The implications of the COVID-19 pandemic have continued to create challenges for our work force across all regions and I remain humbled and impressed by the resilience, determination and performance of all our team despite these challenges.
Through various initiatives, we continue to actively bring our teams closer together and have seen another six months of impressive CSR and charitable activities across the globe. We have also continued our momentum from 2020 developing our workforce engagement and connectivity. This has involved rolling out new mental wellness support and training, a new wider suite of training and development packages as well as continued focus on our Workforce Advisory Panel and Diversity and Inclusion Committee.
Takeover process and dividend
On 25 August 2021 the Company announced that the Board had reached an agreement with Apex Group Ltd ("Apex") on the terms of a recommended all cash offer of 920p per share to be made by Apex.
As a result of the terms of the Acquisition, the Company will not be paying shareholders an interim dividend for 2021 and similarly does not expect to pay a full year dividend either.
Outlook
The strong market recovery that we have seen during the first half of the year, demonstrating the high demand for private asset alternatives, is expected to continue during the second half of 2021. This positive momentum means that the group
is well placed to deliver continued improvement to our organic growth rate for the year ending 31 December 2021.
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).
Unless otherwise stated, all growth rates discussed in the segmental reviews are on a constant currency basis.
Europe, Middle East and Africa (EMEA)
| EMEA | H1 2021 | H1 2020 | % Change | % Constant currency change |
| Revenue | 33,810 | 30,981 | 9.3% | 10.3% |
| - Alternatives | 33,035 | 29,669 | | |
| - Corporate | 775 | 1,259 | | |
| Gross Profit | 18,486 | 17,253 | 7.1% | 9.0% |
| Gross profit margin | 54.7% | 55.8% | | |
Sanne's EMEA segment operates across Luxembourg, Ireland, the United Kingdom, Spain, France, Denmark, Sweden, 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.
The EMEA segment has seen a good net revenue growth in the period of 10.3% which benefits from the inclusion of the Denmark and Sweden operations of PEA for four months of the period and a full six-month contribution from Inbhear. Organic growth has been 1.7% versus the first half of 2020, but we expect a stronger second half of 2021 as we see markets begin to recover.
The European jurisdictions saw good revenue growth across almost all product lines and jurisdictions, particularly Spain, Ireland and the UK as well as South Africa as it rebounds from a challenging 2020. Sweden and Denmark, which have joined the Group following the completion of the PEA acquisition, have seen impressive revenue growth versus their acquisition case. Luxembourg has seen slightly lower growth as a result of some client attrition at the end of 2020 from the AIFM Manco platform. However, Luxembourg has seen the strongest momentum in new business wins in the first half of the year so is expected to generate a strong second half performance.
The segment's margin on a reported basis in the period is down 110 basis points which is due to mix effect from the lower gross profit margins in the Denmark and Sweden jurisdictions and some FX impact. Excluding the Denmark and Sweden results, the reported gross profit margin for the segment was 55.7% and on a constant currency basis was 56.1%. This margin improvement results from the continued recovery of the margin in Luxembourg and South Africa, in line with management's expectations.
Channel Islands (CI)
| Channel Islands | H1 2021 | H1 2020 | % Change | % Constant currency change |
| Revenue | 20,865 | 20,059 | 4.0% | 4.3% |
| - Alternatives | 15,742 | 15,348 | | |
| - Corporate | 5,123 | 4,711 | | |
| Gross Profit | 11,909 | 11,927 | (0.2%) | 0.5% |
| Gross profit margin | 57.1% | 59.5% | | |
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 for 2020 exclude the contribution from the Group's Jersey Private Client business that was disposed of on 1 July 2020.
Revenues from the CI segment saw growth in the period of 4.3%, which reflects the lower growth in new business in the Channel Islands in recent years. However, the Group has successfully invested in the management teams in both Jersey and Guernsey over the last 12 months, and is starting to see positive results across the new business wins in the period across all core alternative asset classes.
The period has seen a short-term decline in gross profit margin as both jurisdictions have been investing in strengthening their team following good new business momentum in the second quarter. The region is expected to deliver margins in-line with 2020 for the full year.
Asia Pacific and Mauritius (APM)
| Asia/Pacific & Mauritius | H1 2021 | H1 2020 | % Change | % Constant currency change |
| Revenue | 18,876 | 18,152 | 4.0% | 13.5% |
| Gross Profit | 12,885 | 12,715 | 1.3% | 11.0% |
| Gross profit margin | 68.3% | 70.0% | | |
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 13.5%, driven by another strong year across the Asia Pacific offices as well as encouraging progress in Mauritius.
The APAC offices delivered growth of 32.2% as a result of strong growth across three of the four offices. Japan has continued to win a large number of new mandates, as well as benefiting from the inclusion of the Deutsche Bank Trust Company acquired in October 2020. Singapore and Shanghai have also seen strong progress in delivering new-new wins as well as activity from existing clients. Hong Kong saw another slower period, as clients favour Singapore as a new fund destination. Mauritius saw revenue growth of 3.7% which is a good result given the region's largest end market of India has continued to be badly impacted by the CoVID-19 pandemic, and Mauritius itself has suffered from being on the EU's and FATF's blacklist of jurisdictions. The region continues to work towards addressing this and has recently been removed from the FATF blacklist.
The segment's gross profit margins decreased in the period to 68.3%. This was entirely a function of mix effect between the fast-growing APAC region and lower growth but higher margin Mauritian region.
North America (NA)
| North America | H1 2021 | H1 2020 | % Change | % Constant currency change |
| Revenue | 17,178 | 14,810 | 16.0% | 27.2% |
| Gross Profit | 8,515 | 7,754 | 9.8% | 20.7% |
| Gross profit margin | 49.6% | 52.4% | | |
| | | | | |
Sanne's NA segment primarily services closed ended alternative fund clients in North America.
The first half of the year saw revenue growth of 27.2%, the business delivered organic growth of 6.9% and benefited from the inclusion of the Strait acquisition from 1 April 2021. Margins have declined on the prior year due to short term investment in additional heads as well as a result of mix effect following the acquisition of Strait.
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
Unless otherwise stated, all results discussed in the Financial Review refer to continuing operations.
Group Income Statement
| | H1 2021 | H1 2020 | % Change | % Constant currency change |
| | | | | |
| Turnover | 96,170 | 86,475 | | |
| Less: Third-party fund management fees | (5,441) | (2,526) | | |
| Net revenue | 90,729 | 83,949 | 8.1% | 12.5% |
| | | | | |
| Gross profit | 51,795 | 49,649 | 4.3% | 9.3% |
| Margin | 57.1% | 59.1% | | |
| Overheads | (27,821) | (26,668) | | |
| Underlying operating profit | 23,974 | 22,981 | 4.3% | 12.4% |
| Margin | 26.4% | 27.4% | | |
| Non-underlying items | (11,341) | (10,647) | | |
| Operating profit | 12,633 | 12,334 | 2.4% | 14.7% |
| | | | | |
| Other gains and losses | (296) | 1,463 | | |
| Net underlying finance cost | (1,516) | (2,241) | | |
| Non-underlying finance cost and share of net loss of investment | (1,428) | - | | |
| Profit before tax | 9,393 | 11,626 | | |
| Taxation for the period | (3,044) | (2,665) | | |
| Profit after tax | 6,349 | 8,961 | | |
| Discontinued operations | - | 930 | | |
| Total group profit after tax | 6,349 | 9,891 | | |
| | | | | |
| Underlying diluted EPS | 11.5 | 12.3p | | |
| Reported diluted EPS | 4.1 | 6.1p | | |
Turnover and Net Revenue
Turnover for the period grew by 15.6% on a constant currency basis and 11.2% on an actual basis in the first half as a result of increased number of clients where we invoice for and disburse the third-party asset manager fees.
Net revenue increased by 12.5% on a constant currency basis in the period to £90.7 million (2020: £83.9m) whilst organic revenue growth in the period was 4.0% on a constant currency basis.
| | H1 2021 | H1 2020 | | | Constant currency growth |
| | (£'000) | (£'000) | | % Growth | |
| Net revenue | 90,729 | 83,949 | | 8.1% | 12.5% |
| Inbhear 4 month adjustment of H1 revenues DB Trust Company H1 revenues Avalon H1 revenues PEA H1 revenues Strait H1 revenues
| (897) (1,135) (783) (2,299) (1,949 | - - - - - | | | |
| Net organic revenue | 83,666 | 83,949 | | (0.3%) | 4.0% |
Note: See the Alternative Performance Measures section for organic growth calculation methodology
| | H1 2021 | H2 2020 | | | Constant currency growth |
| | (£'000) | (£'000) | | % Growth | |
| Net revenue | 90,729 | 85,743 | | 5.8% | 10.2% |
| DB Trust Company 3 month adj. of H1 revenues Avalon 3 month adj. of H1 revenues PEA H1 revenues Strait H1 revenues
| (375) (392) (2,299) (1,949) | - - - - | | | |
| Net organic revenue | 85,715 | 85,743 | | 0.0% | 4.1% |
Gross profit
Gross profit for the period was £51.8 million (2020: £49.6m). The gross profit margin was 57.1%, down on the prior period result of 59.1%. This reflects both the negative margin impact that arises as a result of both the PEA and Strait acquisitions generating a lower margin than Sanne as well as investment in the first half ahead of new business wins expected to hit the platform in the second half.
Underlying operating profit and overheads
Underlying operating profit grew by 12.4% on a constant currency basis, or to £24.0m (2020: 23.0m) on a reported basis when looking at continuing operations. This reflects 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, increased by only £1.2 million on the prior year despite the double-digit growth in the business. These costs represented 30.7% of net revenue for the first half compared with 31.8% for the first half of 2020. This improvement was achieved despite a significant increase in the absolute and proportional investment in technology in the period.
Non-underlying costs and reported operating profit
Non-underlying costs within operating profit from continuing operations in 2021 saw only a small increase to £11.3 million (2020: £10.6m). Non-underlying items within profit measures include share-based payments and earn-out costs where they relate to acquisitions (£0.6m); acquisition and integration related costs (£2.1m); amortisation of intangible assets (£7.9m) and other costs. For further detail on non-underlying items, please see note 5 in the financial statements.
Reported operating profit for the period has increased in-line with underlying operating profit, up 14.7% on a constant currency basis and 2.4% on an actual basis.
Net finance expense and other gains and losses
The overall net finance expense and other gains and losses cost increased on the prior year to a total of £3.2 million (2020: £0.7m). The underlying net finance expense was actually lower at £1.5m compared with £2.2m in the first half of 2020, as a result of lower overall utilisation of the Group's debt facilities following the equity fund raise in April 2021. However, the Group saw increased non-underlying net finance costs in the first half of 2021 of £0.8m (2020: nil) and a non-underlying FX charge of £0.6m (2020: nil) arising from the refinancing the Group's debt facilities and the acquisition of Deutsche Bank Trust Company respectively. The Group also saw a big swing in other gains and losses where the first half of 2020 saw a benefit of £1.5m of other gains and losses arising from foreign exchange whilst the first half of 2021 has seen foreign exchanges costs of £0.9m.
Taxation
The Group's underlying effective tax rate for continuing operations for the first half was in line with the prior year at 19.1% (2020: 19.3%). When adjusted for non-underlying items, the reported effective rate for the half year for the Group increased substantially on the prior year to 32.4% (2020: 22.9%). The increase in the reported tax rate was driven by higher profitability in jurisdictions such as Luxembourg and North America where there is a higher statutory tax rate.
Diluted earnings per share
As a result of the one-off foreign exchange gains in the first half of 2020 and the increase shares in issue following the equity fund raise in April 2021, diluted underlying earnings per share is down 6.5% to 11.5 pence from 12.3 pence in the same period last year. However, ignoring the impact of foreign exchange, the constant currency growth of diluted underling earnings per share was 2.4%. Reported diluted earnings per share, which includes the post-tax contribution from discontinued operations in 2020, was down to 4.1 pence (2020: 6.1p). The equity fund raise undertaken by the Group in April 2021 has also resulted in an increased number of fully diluted shares which has also caused a short term reduction in diluted earnings per share.
Dividend
The Board is aware of the importance of dividends to our shareholders. However, the Board concluded that in light of the terms of the Acquisition, it is not recommending the payment of an interim dividend for 2021.
Cash flow and working capital
The first half of 2021 has seen another strong period of cash generation with underlying operating cash conversion of 100.4% (2020: 96.1%). The main movements in the cash flow are summarised below:
| | H1 2021 | H1 2020 |
| Underlying operating profit | 23,974 | 22,981 |
| Depreciation (equipment and IFRS16) | 4,126 | 4,493 |
| Other (includes share based payments and movements in provisions) | 1,489 | (2,179) |
| Change in working capital | (3,280) | (3,541) |
| Total cash flows on leases recognised under IFRS16 | (3,513) | (3,337) |
| Non-cash non-underlying items | 1,277 | 3,668 |
| Underlying operating cash flows | 24,073 | 22,085 |
| Underlying operating cash conversion | 100.4% | 96.1% |
| Capital Exp. (Equipment and Software) | (2,755) | (1,898) |
| Tax | (4,051) | (3,993) |
| Loan to minority investments | - | (820) |
| Net finance cost | (2,581) | (1,390) |
| Underlying free cash flow attributable to equity holders | 14,686 | 13,984 |
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 development of new technology product such as Spotlight and Sanne.Live.
Capital management and financing
At 30 June 2021, the Group's net debt was £46.4 million (2020: £100.5m), including gross cash balances of £40.7m (2020: £51.5m). This reflected the strong operating cash generation seen in the year and comes after the funding of both the PEA and Strait acquisitions as well as raising £79.5 million in April 2021 by way of an equity placing. At 30 June 2021 the cash ring fenced for regulatory capital requirements ("regulatory cash") was £11.5 million (2020: £13.3m). As a result, the Group's net debt to underlying earnings before interest, taxation, depreciation and amortisation calculated ignoring IFRS 16 (net debt to pre-IFRS 16 EBITDA) ratio was 0.9x at the period end (2020: 1.9x).
In the period, Sanne successfully refinanced its debt facilities increasing committed facilities by around 40% to £210 million whilst keeping key commercial terms broadly in line with the old facility. The new facility also extends the maturity to 18 March 2023 with extension options of up to two years. The new debt facility is a multi-currency committed £210 million revolving credit facility with an uncommitted accordion facility of £100 million. Sanne is now supported by a syndicate of 6 international banks.
Foreign Exchange
The first half of 2021 has seen a significant strengthening of sterling compared with prior periods which has created a notable headwind to the Group's reported results. The Group's results are exposed to translation risk from the movement in currencies. Overall, the average movement from currencies has decreased net revenue and underlying operating profit by £2.3 million and £1.0 million respectively. 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 £ sterling |
| 2021 | 2020 | % |
| 2021 | 2020 | % |
| Euro |
| 1.165 | 1.101 | 5.8% |
| 1.156 | 1.122 | 3.0% |
| US Dollar |
| 1.380 | 1.238 | 11.5% |
| 1.388 | 1.259 | 10.3% |
Post balance sheet events
In July the Group entered into an agreement to purchase the fund administration business from PraxisIFM Group plc for £54 million in cash. The acquisition remains subject to certain regulatory change of control clearances and is expected to complete in Q4 2021. The acquisition will be settled from the Group's existing resources.
In August, the Group sold its equity investment in Colmore A.G. to Preqin Limited for $25.2 million (£18.1m) in cash. The loan granted to Colmore was also repaid in full as part of the same transaction. The sale agreement includes a contingent consideration, recognisable upon the sale of the shares after the reporting period.
See note 22 of the consolidated financial statements for full details of post balance sheet events.
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 2020 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.
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.
Changes since 2020
In July 2020 the Group disposed of its Jersey Private Client business and the six month contribution from this business was shown as discontinued operations in the 2020 financial year. In order to present the Group's cash flows on a comparable year-on-year basis, the Group's underlying operating cash flow, underlying operating cash conversion and underlying free cash flow attributable to equity holders APMs were calculated on a total Group basis. With the discontinued operations not contributing any performance to the 2021 financial year, these APMs provide a more representative picture of the Group's performance considered on a continuing operations basis only. As such, these cash flow APMs have been changed to look only at continuing operations for both 2021 and the prior year comparatives.
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 recognises these third-party fees as turnover under IFRS 15. 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. A reconciliation of this APM is shown on the face of the income statement.
ORGANIC REVENUE GROWTH
Organic revenue growth is net revenue growth excluding the benefit from acquisitions. Organic revenue growth measures are a key performance indicator for the growth of the business excluding the impacts of any acquisitions undertaken. This provides an indication on how well the business is expanding without the deployment of further capital. Organic revenue growth is calculated by excluding revenue from any acquisition made in the period. Where an acquisition was made part way through the prior year comparative period, the current period contribution will be reduced on a pro-rata to include only the same number of months as had been included in the prior year. A reconciliation is included in the Financial Review.
CONSTANT CURRENCY GROWTH
The year on year percentage change excluding the effects of change in foreign exchange rates. Constant currency metrics give a better reflection of the period on period performance of the business by ignoring the impact of currency movements that are outside the Group's control. Details of the impact of foreign exchange rates are covered in the Financial Review.
OVERHEADS
The Group's cost for all functions and operations that support the client-focused service teams. These costs measure the cost of supporting the delivery of client-service, revenue-generating teams. The Group's overheads are operating expenses as disclosed on the consolidated income statement less non-underlying items and other operating income included within operating profit from continuing operations.
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. Underlying profit measures include underlying operating profit from continuing operations, underlying profit before tax from continuing operations, underlying diluted earnings per share and underlying operating profit margin. Underlying profit measures provide an important period-on-period comparison of profits arising from the Group's core activities, undisturbed by exceptional or one off incomes and costs. These are arrived at by adjusting reported profit measures for non-underlying items as disclosed in note 5 of these financial statements. Underlying operating profit margin is arrived at by dividing underlying operation profit from continuing operations by net revenue.
UNDERLYING OPERATING CASH FLOW
Underlying operating cash flow represents the cash generated by continuing operations in the year, adding back the cash charges within non-underlying items and reducing for the cash out flow in relation to the Group's leases that have been accounted for under IFRS 16. Underlying operating cash flow provides an important measure of how much cash has been created by the operations of the business in the period, excluding the cash flows associated with non-underlying items, financing activities and investing activities. 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 underlying operating profit from continuing operations. This measures the Group's cash-generative characteristics from its operations and is used to evaluate the Group's management of working capital. A reconciliation is included in the Financial Review.
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 provide 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 included in note 6 of the consolidated financial statements.
NET DEBT
This refers to the Group's net indebtedness that is calculated by taking the Group's gross debt balance and reducing it by gross cash balances less the regulatory cash. Net debt acts as an important benchmark for the level of third party funding the Group utilises after netting off cash gross cash balances held on the balance sheet.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE INTERIM STATEMENTS
The Directors confirm that, to the best of their knowledge, these Condensed Interim Financial Statements have been prepared in accordance with EU adopted International Accounting Standard 34 "Interim Financial Reporting" and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
o an indication of important events that have occurred during the first six months 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 financial year; and
o material related party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report.
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.
On 25 August 2021 the Group and Apex Acquisition Company Limited (an indirect wholly-owned subsidiary of Apex Group Ltd) (collectively referred to as "Apex") announced a recommended all cash offer of 920p per share to be made by Apex for the Group. The Group's existing committed debt facilities contain a standard change of control clause which, from the point of completion of the acquisition, could result in the existing committed debt facilities being withdrawn and having not had direct visibility of Apex's post completion funding for the Group at this time, this could create some uncertainty as to the Group's going concern position. Whilst the Directors have not had direct visibility of Apex's post completion funding for the Group, the Directors note the detailed intentions statement included within the announcement on 25 August which states that Apex intend to continue investing in and developing the Group as well as the Group's strong cash generation. Therefore, notwithstanding the uncertainty regarding Apex's post completion funding, the Directors are satisfied that the going concern basis remains appropriate for the preparation of the financial statements. For further details on the impact of the transaction, see note 1 of the financial 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
14 September 2021
Independent review report to Sanne Group plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Sanne Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the Interim Results of Sanne Group plc for the 6 month period ended 30 June 2021 (the "period").
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 issued by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Emphasis of matter - going concern
Without modifying our conclusion on the interim financial statements, we have considered the adequacy of the disclosure made in note 1 to the interim financial statements concerning the Group's ability to continue as a going concern. On 25 August 2021 the Board of Directors of Sanne Group plc ("the Group") and the Board of Directors of Apex Acquisition Company Limited (an indirect wholly-owned subsidiary of Apex Group Ltd) (collectively referred to as "Apex") announced that they have reached agreement on the terms and conditions of a recommended all cash offer for the Group. The Directors have not had detailed visibility of Apex's post completion funding for the Group or the detailed plans behind the intentions statements included within the announcement. This condition indicates the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. The interim financial statements do not include the adjustments that would result if the Group was no longer to be considered a going concern.
What we have reviewed
The interim financial statements comprise:
· the Condensed consolidated balance sheet as at 30 June 2021;
· the Condensed consolidated statement of profit or loss and Condensed consolidated statement of comprehensive income for the period then ended;
· the Condensed consolidated statement of cash flows for the period then ended;
· the Condensed 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 of Sanne Group plc have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as issued by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
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
13 September 2021
| Sanne Group plc | | | | | | | | | | | |
| Condensed consolidated statement of profit or loss | | | | | |||||||
| For the period 1 January 2021 to 30 June 2021 | | | | | | | | | |||
| | | | | | | | | | | | |
| | | | | | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to |
| | | | | | | | 30 Jun 2021 | | 30 June 20201 | | 31 Dec 2020 |
| | | | | | Note | | £'000 | | £'000 | | £'000 |
| | | | | | | | | | | | |
| | Turnover | | | | 4 | | 96,170 | | 86,475 | | 174,874 |
| | Third-party fund management fees | | | | | (5,441) | | (2,526) | | (5,186) | |
| | Net revenue 2 | | | | | | 90,729 | | 83,949 | | 169,688 |
| | Direct costs 2 | | | | | | (38,934) | | (34,300) | | (69,138) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Gross profit |
| | | | | 51,795 |
| 49,649 |
| 100,550 |
| | | | | | | | | | | | |
| | Other operating income | | | | | | 71 | | 14 | | 151 |
| | Operating expenses | | | | | | (39,233) | | (37,329) | | (76,760) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Operating profit |
| | | | | 12,633 |
| 12,334 |
| 23,941 |
| | | | | | | | | | | | |
| | Comprising: | | | | | | | | | | |
| | Underlying operating profit from continuing operations | | 5 | | 23,974 | | 22,981 | | 48,036 | ||
| | Non-underlying items within operating profit from continuing operations | | 5 | | (11,341) | | (10,647) | | (24,095) | ||
| | | | | | | | 12,633 | | 12,334 | | 23,941 |
| | | | | | | | | | | | |
| | Other gains and (losses) | | | | | | (296) | | 1,463 | | 804 |
| | Finance costs | | | | | | (2,962) | | (2,241) | | (4,324) |
| | Finance income | | | | | | 35 | | 70 | | 108 |
| | Share of net loss of investment in associate accounted for using the equity method | | (17) | | - | | - | ||||
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Profit before tax |
| | | | | 9,393 |
| 11,626 |
| 20,529 |
| | | | | | | | | | | | |
| | Comprising: | | | | | | | | | | |
| | Underlying profit before tax from continuing operations | 5 | | 22,162 | | 22,273 | | 44,877 | |||
| | Non-underlying items within profit before tax from continuing operations | | 5 | | (12,769) | | (10,647) | | (24,348) | ||
| | | | | | | | 9,393 | | 11,626 | | 20,529 |
| | | | | | | | | | | | |
| | Tax | | | | 6 | | (3,044) | | (2,665) | | (4,362) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Profit after tax from continuing operations |
| | | 6,349 |
| 8,961 |
| 16,167 | ||
| | | | | | | | | | | | |
| | Discontinued operations | | | | 7 | | - | | 930 | | 8,679 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Profit for the period |
| | | | | 6,349 |
| 9,891 |
| 24,846 |
| | | | | | | | | | | | |
| | Comprising: | | | | | | | | | | |
| | Underlying profit for the period | | | 5 | | 17,936 | | 18,909 | | 37,992 | |
| | Non-underlying items within profit for the period | | 5 | | (11,587) | | (9,018) | | (13,146) | ||
| | | | | | | | 6,349 | | 9,891 | | 24,846 |
| | | | | | | | | | | | |
| | | | | | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to |
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 |
| | | | | | Note | | | | | | |
| | | | | | | | | | | | |
| Earnings per ordinary share ("EPS") from continuing operations (expressed in pence per ordinary share) | |||||||||||
| | | | | | | | | | | | |
| | Basic | | | | 8 | | 4.0 | | 6.2 | | 11.1 |
| | Diluted | | | | 8 | | 4.1 | | 6.1 | | 11.1 |
| | | | | | | | | | | | |
| | Underlying basic | | | | 8 | | 11.7 | | 12.4 | | 25.5 |
| | Underlying diluted | | | | 8 | | 11.5 | | 12.3 | | 25.4 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | 1 Certain expenses amounting to £103k for 30 June 2020 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 turnover less third-party fund management fees. Direct costs comprise direct costs of £44.4 million (30 June 2020: £36.8 million and 31 December 2020: £74.3 million) less third-party fund management fees of £5.4 million (30 June 2020: £2.5 million and 31 December 2020: £5.2 million). | ||||||||||
| | |||||||||||
| | |||||||||||
| Sanne Group plc | | | | | | | | | | | |
| Condensed consolidated statement of comprehensive income | | | |||||||||
| For the period 1 January 2021 to 30 June 2021 | | | | | | | | | |||
| | | | | | | | | | | | |
| | | | | | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to |
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 |
| | | | | | Note | | £'000 | | £'000 | | £'000 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| Profit for the period |
|
|
|
| | 6,349 |
| 9,891 |
| 24,846 |
|
| | | | | | | | | | | |
| | Other comprehensive income/(expense): | | | | | | | | | | |
| | Items that will not be reclassified subsequently to profit and loss: | | | | | | |||||
| | Actuarial gain/(loss) on defined benefit retirement obligation 1 | | 311 | | (558) | | (419) | ||||
| | Income tax relating to items not reclassified | | | | (43) | | 107 | | 95 | ||
| | Changes in the fair value and exchange rate differences on minority equity investments carried at fair value through other comprehensive income | | 17 | | 10,311 | | 595 | | (234) | ||
| | | | | | | | | | |||
| | | | | | | | | | |||
| | | | | | | | | | | | |
| | Items that may be reclassified subsequently to profit and loss: | | | | | | | ||||
| | Exchange differences on translation of foreign operations 2 | | (5,448) | | 13,301 | | (830) | ||||
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| Total other comprehensive (expense)/income for the period | 5,131 |
| 13,445 |
| (1,388) | |||||
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| Total comprehensive income for the period |
|
| | 11,480 |
| 23,336 |
| 23,458 | ||
|
| | | | | | | | | | | |
| | Comprising: | | | | | | | | | | |
| | Total comprehensive income for the period from continuing operations | | 11,480 | | 22,406 | | 14,779 | ||||
| | Total comprehensive income for the period from discontinued operations | | - | | 930 | | 8,679 | ||||
| | Total comprehensive income for the period | | | | | 11,480 | | 23,336 | | 23,458 | |
| | | | | | | | | | | | |
| 1 The actuarial gain 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's balance sheet as a defined benefit retirement obligation. | |||||||||||
| | | | | | | | | | | | |
| 2 Refer to the "Financial review" section for further information relating to the movement in the exchange differences on translation of foreign operations. | |||||||||||
| Sanne Group plc | | | | | | | | | | | |
| Condensed consolidated balance sheet | | | | | | | | | |||
| As at 30 June 2021 | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to |
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 |
| | | | | | Note | | £'000 | | £'000 | | £'000 |
| | | | | | | | | | | | |
| | Assets |
| | | | | | | | | |
| | Non-current assets | | | | | | | | | | |
| | Goodwill | | | | 10 | | 228,244 | | 196,160 | | 188,478 |
| | Other intangible assets | | | | 11 | | 43,892 | | 43,122 | | 38,160 |
| | Equipment | | | | | | 9,266 | | 9,473 | | 8,971 |
| | Minority equity investment | | | | 17 | | - | | 9,227 | | 8,765 |
| | Investment in associate | | | | 12 | | 707 | | - | | - |
| | Financial asset at amortised cost | | | | | - | | 822 | | 830 | |
| | Right-of-use assets | | | | | | 38,776 | | 34,234 | | 33,724 |
| | Contract assets | | | | | | 69 | | 63 | | 66 |
| | Deferred tax asset | | | | | | 11,668 | | 9,316 | | 9,008 |
| | | | | | | | | | | | |
| | Total non-current assets |
|
|
|
|
| 332,622 |
| 302,417 |
| 288,002 |
|
| | | | | | | | | | | |
| | Current assets | | | | | | | | | | |
| | Trade and other receivables | | | | | | 58,524 | | 49,065 | | 53,713 |
| | Cash and cash equivalents | | | | | | 40,660 | | 51,501 | | 57,119 |
| | Contract assets | | | | | | 10,400 | | 9,916 | | 8,244 |
| | Disposal group held for sale | | | | 7 | | - | | 1,220 | | - |
| | Minority equity investment | | | | 17 | | 18,709 | | - | | - |
| | Financial asset at amortised cost | | | | | 839 | | - | | - | |
| | | | | | | | | | | | |
| | Total current assets |
|
|
|
|
| 129,132 |
| 111,702 |
| 119,076 |
|
| | | | | | | | | | | |
| | Total assets |
|
|
|
|
| 461,754 |
| 414,119 |
| 407,078 |
|
| | | | | | | | | | | |
| | Equity and liabilities |
| | | | | | | | | |
| | Equity | | | | | | | | | | |
| | Share capital | | | | 13 | | 1,623 | | 1,466 | | 1,474 |
| | Share premium | | | | | | 299,234 | | 203,423 | | 207,190 |
| | Own shares | | | | | | (449) | | (1,064) | | (562) |
| | Shares to be issued | | | | | | 3,096 | | 8,415 | | 3,006 |
| | Retranslation reserve | | | | | | (19,412) | | 167 | | (13,964) |
| | Accumulated losses | | | | | | (16,761) | | (29,052) | | (18,751) |
| | | | | | | | | | | | |
| | Total equity |
|
|
|
|
| 267,331 |
| 183,355 |
| 178,393 |
|
| | | | | | | | | | | |
| | Non-current liabilities | | | | | | | | | | |
| | Borrowings | | | | 14 | | 75,634 | | 138,786 | | 133,549 |
| | Deferred tax liabilities | | | | | | 17,930 | | 16,457 | | 15,165 |
| | Provisions | | | | | | 3,091 | | 2,084 | | 2,936 |
| | Defined benefit retirement obligation | | | | | 822 | | 1,272 | | 1,086 | |
| | Lease liability | | | | | | 39,001 | | 35,373 | | 34,405 |
| | | | | | | | | | | | |
| | Total non-current liabilities |
|
|
|
| 136,478 |
| 193,972 |
| 187,141 | |
|
| | | | | | | | | | | |
| | Current liabilities | | | | | | | | | | |
| | Trade and other payables | | | | 15 | | 25,056 | | 13,061 | | 15,059 |
| | Current tax liabilities | | | | | | 2,692 | | 3,359 | | 2,661 |
| | Provisions | | | | | | 248 | | 472 | | 359 |
| | Contract liabilities | | | | | | 24,327 | | 15,355 | | 18,542 |
| | Lease liability | | | | | | 5,622 | | 4,343 | | 4,923 |
| | Disposal group held for sale | | | | 7 | | - | | 202 | | - |
| | | | | | | | | | | | |
| | Total current liabilities |
|
|
|
|
| 57,945 |
| 36,792 |
| 41,544 |
|
| | | | | | | | | | | |
| | Total equity and liabilities |
|
|
|
|
| 461,754 |
| 414,119 |
| 407,078 |
| Sanne Group plc | | | | | | | | | |
| Condensed consolidated statement of changes in equity | | | | ||||||
| For the period 1 January 2021 to 30 June 2021 | | | | | | ||||
| | | | | | | | | | |
| | | | Share capital | Share premium | Own shares | Shares to be issued | Retranslation reserve | Accumulated losses | Total equity |
| | | Note | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| | | | | | | | | | |
| | | | | | | | | | |
| | Balance at 1 January 2020 | | 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 vested | | - | - | 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 |
| | | | | | | | | | |
| | Profit for the period | | - | - | - | - | - | 14,955 | 14,955 |
| | Other comprehensive expense for the period | | - | - | - | - | (14,131) | (702) | (14,833) |
| | | | | | | | | | |
| | Total comprehensive income/(expense) for the period | - | - | - | - | (14,131) | 14,253 | 122 | |
| | | | | | | | | | |
| | Issue of share capital - acquisitions | | 8 | 3,767 | - | (3,096) | - | - | 679 |
| | Dividend payments | | - | - | - | - | - | (6,959) | (6,959) |
| | Share-based payments | | - | - | - | 1,189 | - | - | 1,189 |
| | Shares vested | | - | - | 516 | (3,502) | - | 3,007 | 21 |
| | Net buyback of own shares | | - | - | (14) | - | - | - | (14) |
| | | | | | | | | | |
| | Balance at 31 December 2020 | | 1,474 | 207,190 | (562) | 3,006 | (13,964) | (18,751) | 178,393 |
| | | | | | | | | | |
| | Profit for the period | | - | - | - | - | - | 6,349 | 6,349 |
| | Other comprehensive income/(expense) for the period | - | - | - | - | (5,448) | 10,579 | 5,131 | |
| | | | | | | | | | |
| | Total comprehensive income/(expense) for the period | - | - | - | - | (5,448) | 16,928 | 11,480 | |
| | | | | | | | | | |
| | Issue of share capital - acquisitions | 13 | 25 | 15,173 | - | - | - | - | 15,198 |
| | Issue of share capital | 13 | 124 | 76,871 | - | - | - | - | 76,995 |
| | Dividend payments | | - | - | - | - | - | (15,994) | (15,994) |
| | Share-based payments | | - | - | - | 1,223 | - | - | 1,223 |
| | Shares vested | | - | - | 145 | (1,133) | - | 1,056 | 68 |
| | Net buyback of own shares | | - | - | (32) | - | - | - | (32) |
| | | | | | | | | | |
| | Balance at 30 June 2021 | | 1,623 | 299,234 | (449) | 3,096 | (19,412) | (16,761) | 267,331 |
| Sanne Group plc | | | | | | | | | | | |
| Condensed consolidated statement of cash flows | | | | | |||||||
| For the period 1 January 2021 to 30 June 2021 | | | | | | | | | |||
| | | | | | | | | | | | |
| | | | | | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to |
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 |
| | | | | | Note | | £'000 | | £'000 | | £'000 |
| | | | | | | | | | | | |
| | Operating profit from: | | | | | | | | | | |
| | Continuing operations | | | | | | 12,633 | | 12,334 | | 23,941 |
| | Discontinued operations | | | | | | - | | 1,033 | | 8,783 |
| | Operating profit including discontinued operations | | | | 12,633 | | 13,367 | | 32,724 | ||
| | | | | | | | | | | | |
| | Adjustments for: | | | | | | | | | | |
| | Depreciation of equipment | | | | | | 1,098 | | 1,466 | | 2,869 |
| | Depreciation of right-of-use asset | | | | | 3,028 | | 3,027 | | 5,795 | |
| | Lease liability interest | | | | | | (794) | | (773) | | (1,530) |
| | Amortisation of other intangible assets | | | | | 7,949 | | 8,070 | | 15,677 | |
| | Amortisation of developed software | | | | | 165 | | - | | - | |
| | Amortisation of contract assets | | | | | 7 | | 3 | | 10 | |
| | Impairment of right-of-use asset | | | | | - | | - | | 497 | |
| | Share-based payments expense | | | 16 | | 1,402 | | 1,789 | | 2,978 | |
| | Disposal of equipment | | | | | | 25 | | 43 | | 175 |
| | Impairment loss recognised on trade receivables | | | | 315 | | - | | 1,458 | ||
| | Defined benefit retirement obligation | | | | | 59 | | (19) | | 5 | |
| | Gain on disposal of discontinued operations | | | | - | | - | | (7,748) | ||
| | Gain on bargain purchase | | | | | | - | | - | | (38) |
| | Deferred consideration and remuneration | | | | | - | | (3,153) | | (3,153) | |
| | | | | | | | | | | | |
| | Operating cash flows before movements in working capital | | | | 25,887 |
| 23,820 |
| 49,719 | ||
| | | | | | | | | | | | |
| | Increase in receivables | | | | | | (7,395) | | (2,555) | | (5,750) |
| | Increase/(decrease) in contract liabilities | | | | | 6,243 | | (2,652) | | 292 | |
| | (Decrease)/increase in payables | | | | | (2,128) | | 1,666 | | 2,738 | |
| | | | | | | | | | | | |
| | Cash generated from operations | | | | | 22,607 | | 20,279 | | 46,999 | |
| | | | | | | | | | | | |
| | Income taxes paid | | | | | | (4,051) | | (3,993) | | (7,557) |
| | | | | | | | | | | | |
| | Net cash generated from operating activities | | | | 18,556 |
| 16,286 |
| 39,442 | ||
| | | | | | | | | | | | |
| | Investing activities | | | | | | | | | | |
| | Interest income on bank deposits | | | | | 26 | | 68 | | 98 | |
| | Purchases of equipment | | | | | | (1,345) | | (949) | | (1,954) |
| | Software development costs paid | | | 11 | | (1,410) | | (949) | | (2,322) | |
| | Acquisition of subsidiaries | | | | 18 | | (29,938) | | (6,409) | | (11,699) |
| | Acquisition of minority equity investment | | | | | (361) | | - | | (387) | |
| | Proceeds from disposal of discontinued operations | | 7 | | - | | - | | 8,638 | ||
| | Financial assets at amortised cost granted | | | | | - | | (820) | | (820) | |
| | | | | | | | | | | | |
| | Net cash used in investing activities | | | | | (33,028) |
| (9,059) |
| (8,446) | |
| | | | | | | | | | | | |
| | Financing activities | | | | | | | | | | |
| | Dividend payments | | | | | | (15,994) | | (13,624) | | (20,583) |
| | Bank loan interest | | | | | | (1,226) | | (1,390) | | (2,632) |
| | Net buyback of own shares | | | | | | (32) | | (20) | | (34) |
| | Shares vested | | | | | | (5) | | (8) | | (8) |
| | Issue of share capital and share premium | | | | | 76,995 | | - | | - | |
| | Capitalised loan cost | | | | 14 | | (1,355) | | (28) | | (29) |
| | Redemption of bank loans | | | | 14 | | (234,734) | | (7,302) | | (12,302) |
| | New bank loans raised | | | | 14 | | 178,186 | | 14,821 | | 14,821 |
| | Lease liability payments | | | | | | (2,719) | | (2,564) | | (5,006) |
| | | | | | | | | | | | |
| | Net cash used in financing activities |
| | | | (884) |
| (10,115) |
| (25,773) | |
| | | | | | | | | | | | |
| | Net (decrease)/increase in cash and cash equivalents |
| (15,356) |
| (2,888) |
| 5,223 | ||||
| | | | | | | | | | | | |
| | Cash and cash equivalents at the beginning of the period | | | | 57,119 | | 51,454 | | 51,454 | ||
| | Effect of foreign exchange rate changes | | | | | (1,103) | | 2,935 | | 442 | |
| | | | | | | | | | | | |
| | Cash and cash equivalents at the end of the period |
| | | 40,660 |
| 51,501 |
| 57,119 | ||
| | | | | | | | | | | | |
| | Cash flows from continuing operations | | | | | (15,356) | | (5,309) | | (5,836) | |
| | Cash flows from discontinued operations | | | 7 | | - | | 2,421 | | 11,059 | |
| | | | | | | | | | | | |
| | Net (decrease)/increase in cash and cash equivalents |
| (15,356) |
| (2,888) |
| 5,223 | ||||
| Sanne Group plc | | | | | | | | | | | |||
| Notes to the condensed financial statements | | | | | | | |||||||
| For the period 1 January 2021 to 30 June 2021 | | | | | | | | ||||||
| | | | | | | | | | | | | ||
| 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 2021 contain the financial information 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 any public announcements made by Sanne Group plc during the interim reporting period, and the Annual Report for the year ended 31 December 2020, available at www.sannegroup.com. | ||||||||||||
| | | | | | | | | | | | | ||
| | Going concern | | | | | | | | | | | ||
| | The Directors have assessed the potential impact that COVID-19 may have on the Group's ability to continue as a going concern and its continued ability to adapt during the global pandemic. The Directors assessed the Group's current financial position, the principal risks facing the Group and the effectiveness of its strategies to mitigate these risks. The Directors reviewed the Group's financial projections and cash flow forecasts. The Group has healthy cash inflows through a good pipeline of existing and new customers and also has finance facilities available. These assessments reassured the Directors that the Group will continue as a going concern and, based on the outcome of these assessments, the Directors have adopted the going concern basis of accounting in preparing these condensed interim consolidated financial statements.
On 25 August 2021 the Group and Apex announced a recommended all cash offer of 920p per share to be made by Apex for the Group. The Group's existing committed debt facilities contain a standard change of control clause which, from the point of completion of the acquisition, could result in the existing committed debt facilities being withdrawn and having not had direct visibility of Apex's post completion funding for the Group at this time, this could create some uncertainty as to the Group's going concern position. Whilst the Directors have not had direct visibility of Apex's post completion funding for the Group, the Directors note the detailed intentions statement included within the announcement on 25 August which states that Apex intend to continue investing in and developing the Group as well as the Group's strong cash generation. Under International Accounting Standard 1 and the International Standard on Auditing (UK) 570 (Revised) the existence of this scenario is considered to qualify as a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern. Therefore, notwithstanding any uncertainty regarding post completion, the Directors are satisfied that the going concern basis remains appropriate for the preparation of the financial statements. The interim financial statements do not include the adjustments that would result if the Group was no longer to be considered a going concern. | ||||||||||||
| | | | | | | | | | | | | ||
| | 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 pursuant to Regulation (EC) No 1606/2002 as it applies in 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 2020, except as disclosed below. | ||||||||||||
| | | | | | | | | | | | | ||
| | Investment in associate | | | | | | | | | | | ||
| | An associate is an entity over which the Group has significant influence but not control or joint control. Significant influence is obtained if the Group holds between 20% and 50% of the voting rights in a company. However, significant influence can also be demonstrated through other means which include, but are not limited to, representation on the board of directors of the associate, the ability to participate in policy-making decisions (for example dividend declaration), material transactions between the Group and the associate, interchange of managerial personnel or the provision of essential technical information. Investments in associates are initially recognised at cost and are subsequently accounted for using the equity method. | ||||||||||||
| | | | | | | | | | | | | ||
| | Under the equity method, the investment in associate is initially recognised at cost. Thereafter, it is adjusted to recognise the Group's share of the post-acquisition profits or losses of the investee in the Group's profit or loss, and the Group's share of movements in other comprehensive income of the investee in the Group's other comprehensive income. Dividends received or receivable are recognised as a reduction in the carrying amount of the investment. | ||||||||||||
| | | | | | | | | | | | | ||
| | The Group does not recognise its share of losses in an equity-accounted investment that exceed the value of its investment (including any other unsecured long-term receivables) unless it is obligated to, or has made payments on behalf of the other entity. | ||||||||||||
| | | | | | | | | | | | | ||
| | The Group only eliminates unrealised gains on transactions between it and its associate to the extent that they do not exceed the value of the Group's investment in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group for interim reporting. | ||||||||||||
| | | | | | | | | | | | | ||
| | The carrying amount of the investment in associate is tested for impairment if indicators of impairment are identified. For the purpose of impairment testing, an investment in associate is a single cash-generating unit. The Group will impair the cash-generating unit if its recoverable amount is less than its carrying amount. | ||||||||||||
| | | | | | | | | | | | | ||
| | Changes to the accounting standards issued | | | | | | | | | ||||
| | The following changes to accounting standards issued are applicable to the reporting period but have not had an effect on the preparation of these interim condensed consolidated interim financial statements: | ||||||||||||
| | | | | | | | | | | | | ||
| | (a) Covid-19-related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) - Applicable to annual reporting periods beginning on or after 1 April 2021 | ||||||||||||
| | (b) Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) - Applicable to annual reporting periods beginning on or after 1 January 2021 | ||||||||||||
| | | | | | | | | | | | | ||
| 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. If the revision affects both current and future periods, the revisions to the accounting estimates are made in the period of the revision and in future periods. | ||||||||||||
| | | | | | | | | | | | | ||
| | The Annual Report for the year ended 31 December 2020 sets out the estimates, critical accounting judgements, and key sources of estimation uncertainty, made by the Directors in the application of the Group's accounting policies, at that date, which have the most significant effect on the amounts recognised in the financial statements. Other than the key sources of estimation uncertainty set out below, these estimates, critical accounting judgements, and key sources of estimation uncertainty are consistent with those applied in these condensed interim financial statements. | ||||||||||||
| | | | | | | | | | | | | ||
| | Initial recognition of intangible assets | | | | | | | | | ||||
| | During the reporting period, the Group acquired the PEA Group and Strait Capital Company Limited (refer to note 18 for further details). These business combinations gave rise to the recognition of customer and contract intangibles. The Multi-Period Excess Earnings Method (MEEM) was applied to determine the value of these intangible assets. This method requires various judgements to be made, the most significant of which is the number of years the customer base acquired is expected to generate revenue for the Group. The valuation was performed assuming a seven year useful life for both the PEA Group and the Strait Capital Company Limited acquisitions. These periods were based on management's best judgement and historical evidence. | ||||||||||||
| | | | | | | | | | | | | ||
| | The intangible assets recognised as a result of the acquisitions of the PEA Group amounts to £7.5 million and £5.8 million for Strait Capital Limited (using seven years as the expected useful life for the forecast of cash flows in the MEEM model). If the valuation was performed using six years as the expected useful life in the model to determine the fair value of the assets, the fair value would be £0.9 million lower, and if the fair value estimate was performed over eight years, the asset value would be £0.9 million higher for the PEA Group. If the valuation for Strait Capital Limited was performed using six years as the expected useful life in the model to determine the fair value of the assets, the fair value would be £0.7 million lower, and if the fair value estimate was performed over eight years, the asset value would be £0.7million higher. Refer to note 18 for further disclosure on the acquisitions transactions. | ||||||||||||
| | | | | | | | | | | | | ||
| | The world continues to experience the global outbreak of Coronavirus (COVID-19) which has had, and is still having, an unprecedented impact on global markets. The Directors are actively monitoring the situation and have assessed the expected impact on the financial results. While there can be no guarantees as to the future operations or performance of the Group, the most significant immediate impact is on the forward-looking assumptions made in the various impairment tests. Given the impact COVID-19 has had on global markets, the judgements made at 31 December 2020 were assessed and no material changes have been noted between the assessment made at 31 December 2020 and those made at 30 June 2021. The Group believes that the judgements and estimates made at the end of 31 December 2020 are still relevant as these were made when COVID-19 was already spread world-wide. Because the COVID-19 pandemic was already in full swing during the period ending 31 December 2020, and carried forward largely the same momentum for the period ending 30 June 2021, management does not consider it to be an impairment indicator. Consequently, there are no material differences from the disclosure made in the 31 December 2020 Annual Report of the Group relating to the outcome of impairment assessments. | ||||||||||||
| | | | | | | | | | | | | ||
| | 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 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 evaluate segmental performance based on gross profit, after the deduction of the direct costs of staff, marketing and travel. No inter-segment sales are made. | ||||||||||||
| | | | | | | | | | | | | ||
| | The Group's Annual Report for the year ended 31 December 2020 had four reportable segments under IFRS 8, namely EMEA, Asia-Pacific & Mauritius, North America and Channel Islands. | ||||||||||||
| | | | | | | | | | | | | ||
| | On 1 July 2020, the Group disposed of its private client business in Jersey (refer to note 7). This was regarded as a separate business line in the past and forms part of the Channel Islands segment. | ||||||||||||
| | | | | | | | | | | | | ||
| | The reporting of various client contracts and their related costs moved between segments during the six months ending 30 June 2021, 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 where revenue is generated and the work performed. The most significant of these moves was between EMEA and Channel Islands. Certain marketing costs incurred were previously included in operating expenses. These were reassessed and it was concluded that these costs directly contribute to generating revenue and these were consequently reclassified to direct costs. The reclassified costs were £103k for 30 June 2020. The reclassification did not impact the results disclosed for 31 December 2020. | ||||||||||||
| | | | | | | | | | | | | ||
| | Unaudited 6 months to 30 June 2021 | | | | | Revenue | | Direct costs | | Gross profit | |||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Segments | | | | | | | | | | | ||
| | EMEA 1 | | | | | | 33,810 | | (15,324) | | 18,486 | ||
| | Third-party fund management fees | | | | | 5,441 | | (5,441) | | - | |||
| | Asia-Pacific & Mauritius | | | | | | 18,876 | | (5,991) | | 12,885 | ||
| | North America | | | | | | 17,178 | | (8,663) | | 8,515 | ||
| | Channel Islands | | | | | | 20,865 | | (8,956) | | 11,909 | ||
| | Total | | | | | | 96,170 | | (44,375) | | 51,795 | ||
| | | | | | | | | | | | | ||
| | Other operating income | | | | | | | | | | 71 | ||
| | Operating expenses | | | | | | | | | | (39,233) | ||
| | Operating profit | | | | | | | | | | 12,633 | ||
| | | | | | | | | | | | | ||
| | Unaudited 6 months to 30 June 2020 | | | | | Revenue | | Direct costs | | Gross profit | |||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Segments | | | | | | | | | | | ||
| | EMEA 1 | | | | | | 30,928 | | (13,675) | | 17,253 | ||
| | Third-party fund management fees | | | | | 2,526 | | (2,526) | | - | |||
| | Asia-Pacific & Mauritius | | | | | | 18,152 | | (5,437) | | 12,715 | ||
| | North America | | | | | | 14,810 | | (7,056) | | 7,754 | ||
| | Channel Islands 2 | | | | | | | | | | | ||
| | Continuing operations | | | | | | 20,059 | | (8,132) | | 11,927 | ||
| | Discontinued operations | | | | | | 2,006 | | (973) | | 1,033 | ||
| | Total | | | | | | 88,481 | | (37,799) | | 50,682 | ||
| | | | | | | | | | | | | ||
| | Other operating income | | | | | | | | | | 14 | ||
| | Operating expenses | | | | | | | | | | (37,329) | ||
| | Operating profit | | | | | | | | | | 13,367 | ||
| | | | | | | | | | | | | ||
| | Audited 12 months to 31 December 2020 | | | | Revenue | | Direct costs | | Gross profit | ||||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Segments | | | | | | | | | | | ||
| | EMEA 1 | | | | | | 63,493 | | (27,791) | | 35,702 | ||
| | Third-party fund management fees | | | | | 5,186 | | (5,186) | | - | |||
| | Asia-Pacific & Mauritius | | | | | | 36,239 | | (10,894) | | 25,345 | ||
| | North America | | | | | | 29,562 | | (14,074) | | 15,488 | ||
| | Channel Islands 2 | | | | | | | | | | | ||
| | Continuing operations | | | | | | 40,394 | | (16,379) | | 24,015 | ||
| | Discontinued operations | | | | | | 2,006 | | (971) | | 1,035 | ||
| | Total | | | | | | 176,880 | | (75,295) | | 101,585 | ||
| | | | | | | | | | | | | ||
| | Other operating income | | | | | | | | | | 151 | ||
| | Operating expenses | | | | | | | | | | (76,760) | ||
| | Operating profit | | | | | | | | | | 24,976 | ||
| | | | | | | | | | | | | ||
| | Geographical information | | | | | | | | | | | ||
| | The Group's revenue from external customers by geographical location of the contracting Group entity is detailed below. | ||||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Jersey and Guernsey 2 | | | | | | | | | | | ||
| | Continuing operations | | | | | | 17,055 | | 18,615 | | 35,389 | ||
| | Discontinued operations | | | | | | - | | 2,006 | | 2,006 | ||
| | Rest of Europe 1 | | | | | | 36,821 | | 33,569 | | 69,185 | ||
| | Mauritius | | | | | | 11,244 | | 11,938 | | 23,061 | ||
| | Americas | | | | | | 16,350 | | 14,051 | | 28,017 | ||
| | South Africa | | | | | | 1,945 | | 1,558 | | 3,252 | ||
| | Asia-Pacific | | | | | | 7,314 | | 4,218 | | 10,784 | ||
| | Total net revenue from continuing and discontinued operations | | 90,729 | | 85,955 | | 171,694 | ||||||
| | Third-party fund management fees | | | | | 5,441 | | 2,526 | | 5,186 | |||
| | Total turnover from continuing and discontinued operations | | 96,170 | | 88,481 | | 176,880 | ||||||
| | | | | | | | | | | | | ||
| | The geographical revenue is disclosed based on the jurisdiction in which the contracting legal entity is based and is not based on the location of the client or where the work is performed. The geographic revenue split is therefore very different to the segmental reporting split. | ||||||||||||
| | | | | | | | | | | | | ||
| | 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 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 and are limited to the EMEA operations. Given that 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 7 for the total revenue and direct costs attributable to discontinued operations. | ||||||||||||
| | | | | | | | | | | | | ||
| 4. Turnover | | | | | | | | | | | |||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | | | | | | | | | | | | ||
| | Disaggregation of revenue from contracts with customers | | | | | | | ||||||
| | | | | | | | | | | | | ||
| | Basis for fees charged | | | | | | | | | | | ||
| | EMEA | | | | | | | | | | | ||
| | - Assets under management (open-ended funds) | | | | 2,535 | | 2,159 | | 4,380 | ||||
| | - Assets under management (closed-ended funds) | | 11,632 | | 10,991 | | 22,994 | ||||||
| | - Third-party fund management fees | | | | 5,441 | | 2,526 | | 5,186 | ||||
| | - Service-based fees | | | | | | 19,643 | | 17,778 | | 36,145 | ||
| | | | | | | | | | | | | ||
| | Asia-Pacific & Mauritius | | | | | | | | | | | ||
| | - Assets under management (closed-ended funds) | | 556 | | 725 | | 1,378 | ||||||
| | - Service-based fees | | | | | | 18,320 | | 17,427 | | 34,855 | ||
| | | | | | | | | | | | | ||
| | North America | | | | | | | | | | | ||
| | - Service-based fees | | | | | | 17,178 | | 14,810 | | 29,562 | ||
| | | | | | | | | | | | | ||
| | Channel Islands | | | | | | | | | | | ||
| | - Assets under management (closed-ended funds) | | 935 | | 890 | | 1,637 | ||||||
| | - Service-based fees | | | | | | 19,930 | | 19,169 | | 38,737 | ||
| | Total revenue from continuing operations | | | | 96,170 | | 86,475 | | 174,874 | ||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Timing of revenue recognition | | | | | | | | | | |||
| | Over time | | | | | | | | | | | ||
| | EMEA | | | | | | 39,251 | | 33,454 | | 68,705 | ||
| | Asia-Pacific & Mauritius | | | | | | 18,876 | | 18,152 | | 36,233 | ||
| | North America | | | | | | 17,178 | | 14,810 | | 29,562 | ||
| | Channel Islands | | | | | | 20,865 | | 20,059 | | 40,374 | ||
| | Total revenue over time | | | | | | 96,170 | | 86,475 | | 174,874 | ||
| | Total revenue from continuing operations | | | | 96,170 | | 86,475 | | 174,874 | ||||
| | | | | | | | | | | | | ||
| 5. Non-underlying items | | | | | | | | | | | |||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | | | | | | | | | | | | ||
| | Operating profit from continuing operations | | | | 12,633 | | 12,334 | | 23,941 | ||||
| | Non-underlying items within operating profit from continuing operations: | | | | | | | | | ||||
| | | | | | | | | | |||||
| | Share-based payments | | | | (i) | | 484 | | 839 | | 1,951 | ||
| | Amortisation of other intangible assets | | (ii) | | 7,949 | | 8,070 | | 15,677 | ||||
| | Acquisition cost earn-out charges | | | (iii) | | 649 | | 485 | | 485 | |||
| | Acquisition and integration costs | | | (iii) | | 1,410 | | 1,206 | | 2,443 | |||
| | Gain on bargain purchase | | | | (iv) | | - | | (38) | | (38) | ||
| | Impairment of right-of-use asset | | | (v) | | - | | - | | 497 | |||
| | Onerous lease contract | | | | (v) | | (14) | | - | | 691 | ||
| | Settlement agreement costs and related legal fees | | (vi) | | 713 | | - | | 1,326 | ||||
| | Other | | | | (iii) | | 150 | | 85 | | 1,063 | ||
| | Total non-underlying items included in operating profit from continuing operations | | | | 11,341 | | 10,647 | | 24,095 | ||||
| | | | | | | | | | |||||
| | Underlying operating profit from continuing operations | | 23,974 | | 22,981 | | 48,036 | ||||||
| | | | | | | | | | | | | ||
| | Profit before tax from continuing operations | | | | 9,393 | | 11,626 | | 20,529 | ||||
| | Non-underlying items included in profit before tax from continuing operations: | | | | | | | | | ||||
| | | | | | | | | | |||||
| | Total non-underlying items included in operating profit from continuing operations | | | | 11,341 | | 10,647 | | 24,095 | ||||
| | | | | | | | | | |||||
| | Onerous lease contract | | | | (v) | | 5 | | - | | 16 | ||
| | Refinancing | | | | (vii) | | 796 | | - | | - | ||
| | Foreign exchange loss on acquisition restructuring | (iii) | | 610 | | - | | 237 | |||||
| | Share of net loss made by the investment in associate | (ix) | | 17 | | - | | - | |||||
| | Total non-underlying items from continuing operations | | 12,769 | | 10,647 | | 24,348 | ||||||
| | Underlying profit before tax from continuing operations | | 22,162 | | 22,273 | | 44,877 | ||||||
| | | | | | | | | | | | | ||
| | Profit for the period 1 | | | | | | 6,349 | | 9,891 | | 24,846 | ||
| | Non-underlying items within profit for the period from discontinued operations: | | | | | | | | | ||||
| | | | | | | | | | |||||
| | Gain on disposal of discontinued operations before tax | (viii) | | - | | - | | (7,748) | |||||
| | Tax effect of non-underlying items | | | | | (1,182) | | (1,629) | | (3,454) | |||
| | Total non-underlying items from continuing and discontinued operations | | | | 11,587 | | 9,018 | | 13,146 | ||||
| | | | | | | | | | |||||
| | Underlying profit for the period 1 | | | | | 17,936 | | 18,909 | | 37,992 | |||
| | | | | | | | | | | | | ||
| | 1 This figure includes profit for the period after tax 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 relates only to the costs classified as non-underlying. Refer to note 16 for details on all the share-based payments (for underlying and non-underlying in aggregate). All acquisition-related share-based payments plans are awards granted as part 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 the underlying business and are disclosed separately. | ||||||||||||
| | | | | | | | | | | | | ||
| | (ii) The amortisation charges relate to the amortisation of other intangible assets (specifically contract and customer intangible assets) acquired through acquisitions. The amortisation of other intangible assets is directly linked to the acquisitions and is excluded from underlying cost, because these charges are based on judgements around the value and economic life of assets. These assets are not capitalised in normal operating practice. | ||||||||||||
| | | | | | | | | | | | | ||
| | (iii) The Group has completed various acquisitions in the past two years. Acquisition and integration costs include deal advisory fees, one-off costs of integrating companies, accruals for cash earn-out payments, and exchange rate gains / losses made during the integration period. Acquisitions are outside the scope of the Group's underlying business. Therefore, these costs are disclosed as non-underlying to enable shareholders to assess the core ongoing performance of the Group. Most acquisition and integration costs are incurred in the first two years following acquisition. This can be longer depending on the nature of the costs. Integration and deal costs relating to acquisitions for the period ending 30 June 2021 amounted to £1.4 million. Costs incurred in relation to acquisition opportunities not yet executed or abandoned are disclosed as "Other". The "Acquisition costs earn-out charges" amounting to £0.3 million relate to the acquisition of Inbhear Fund Services Limited. Part of the acquisition pay-out is classified as remuneration under IFRS 3 and accrues over time. | ||||||||||||
| | | | | | | | | | | | | ||
| | (iv) On 1 April 2020, the Group acquired all the shares in Inbhear Management Services Limited as part of the wider Inbhear transaction. As with item (iii) above, acquisitions are outside the scope of the Group's underlying business. With the full consideration linked to continued employment, no consideration per IFRS 3 was paid for the acquisition. Consequently, a gain on bargain purchase was recognised. | ||||||||||||
| | | | | | | | | | | | | ||
| | (v) During 2020, the Group decided to make use of the break clause in its office lease agreement in the UK. And thus the Group moved into a new premises in London. COVID-19 and material, prolonged building work and renovations to the previous office building limited the Group's ability to sublease the premises. Because the property is not in use, and the Group is not able to sublease it, the right-of-use asset became idle and was impaired. This impairment is classified as a non-underlying item in order to present only premises expenses incurred for occupied office space and eliminate the effect of double counting premises expenses. The Group provided for onerous lease costs. The premises rental costs are classified as lease components and the lease liability was modified for the change in the lease term. Other costs payable by the Group, per the lease agreement, are classified as non-lease component costs and were provided for as onerous lease costs. The provision relating to the first six months of the year has been reversed to profit or loss. | ||||||||||||
| | | | | | | | | | | | | ||
| | (vi) During the period ending 30 June 2021, the Group incurred fees amounting to £0.7 million for ongoing legal cases, outside of the scope of ordinary business. These expenses are excluded from underlying cost as they are one-off costs. | ||||||||||||
| | | | | | | | | | | | | ||
| | (vii) On 18 March 2021, 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. The refinancing resulted in the recognition of a modification loss of £0.8 million, which is included in finance costs in the condensed consolidated statement of profit or loss. | ||||||||||||
| | | | | | | | | | | | | ||
| | (viii) On 1 July 2020, the Group disposed of its private client business in Jersey, resulting in a gain on disposal of discontinued operations. Refer to note 7 for further details. | ||||||||||||
| | | | | | | | | | | | | ||
| | (ix) The Group has accounted for the investment in associate using the equity-method. Our share of the associate's loss is recognised in profit and loss. This strategic investment was made to utilise the technology and the losses or gains made by the associate is not part of the Group's core business. | ||||||||||||
| | | | | | | | | | | | | ||
| 6. Tax | | | | | | | | | | | |||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Current income tax expense | | | | | | 4,278 | | 4,076 | | 6,935 | ||
| | Adjustments in respect of prior periods | | | | (120) | | (206) | | (321) | ||||
| | Deferred income tax expense | | | | | | (1,071) | | (1,209) | | (2,243) | ||
| | Total income tax expense | | | | | | 3,087 | | 2,661 | | 4,371 | ||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | The income tax expense is attributable to profit from: | | | | | | | ||||||
| | Continuing operations | | | | | | 3,044 | | 2,665 | | 4,362 | ||
| | Discontinued operations | | | | | | - | | 103 | | 104 | ||
| | Deferred tax from other comprehensive income | | | | 43 | | (107) | | (95) | ||||
| | Total income tax expense | | | | | | 3,087 | | 2,661 | | 4,371 | ||
| | | | | | | | | | | | | ||
| | 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 to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Reconciliation of effective tax rates | | | | | | | | | | |||
| | As per the consolidated income statement and statement of comprehensive income: | | | ||||||||||
| | Tax charge from continuing and discontinued operations | | 3,087 | | 2,661 | | 4,371 | ||||||
| | Profit before tax from continuing and discontinued operations | | 9,393 | | 12,659 | | 29,312 | ||||||
| | Effective tax rate on continuing and discontinued operations | | 32.9% | | 21.0% | | 14.9% | ||||||
| | | | | | | | | | | | | ||
| | Tax charge from continuing and discontinued operations | | 3,087 | | 2,661 | | 4,371 | ||||||
| | Adjusted for non-underlying tax charge | | | | 1,182 | | 1,629 | | 3,454 | ||||
| | Underlying tax charge | | | | | | 4,269 | | 4,290 | | 7,825 | ||
| | | | | | | | | | | | | ||
| | Profit before tax from continuing and discontinued operations | | 9,393 | | 12,659 | | 29,312 | ||||||
| | Non-underlying items | | | | | | 12,769 | | 10,647 | | 16,600 | ||
| | Profit before tax and non-underlying items | | | | 22,162 | | 23,306 | | 45,912 | ||||
| | Underlying effective tax rate on continuing and discontinued operations | 19.3% | | 18.4% | | 17.0% | |||||||
| | | | | | | | | | | | | ||
| | The effective tax rate of 32.9% (30 June 2021: 21.0% and 31 December 2020: 14.9%) has increased due to a larger proportion of taxable profits being earned in higher tax jurisdictions. | ||||||||||||
| | | | | | | | | | | | |||
| 7. Discontinued operations | | | | | | | | | | | |||
| | | | | | | | | | | | | ||
| | The Group entered into an agreement on 13 March 2020 to sell the private client business in Jersey to JTC plc, subject to the relevant regulatory approvals. The transaction concluded on 1 July 2020 and the agreed-upon clients and staff members were transferred to JTC plc for a consideration of £9 million with a £0.4 million working capital adjustment. The sale of the business line was reported as a discontinued operation in the prior periods. The revenue and direct costs were included in the Channel Islands reporting segment prior to the disposal. The associated assets and liabilities were consequently presented as held for sale as at 30 June 2020. | ||||||||||||
| | | | | | | | | | | | | ||
| | The Group created a special purpose vehicle ("SPV") to facilitate the sale of the private client business. The SPV was under common control, as the entities involved in the transaction were all ultimately controlled by the same party both before and after the combination and the control was not transitory. The sale of the SPV to JTC plc after the creation of the SPV is not considered transitory control as the entity was created as a conduit to facilitate the lift-out of the private client business in the transaction. | ||||||||||||
| | | | | | | | | | | | | ||
| | The financial information relating to the discontinued operations is set out below: | ||||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Revenue | | | | | | - | | 2,006 | | 2,006 | ||
| | Expenses | | | | | | - | | (973) | | (971) | ||
| | Profit before income tax expense | | | | | - | | 1,033 | | 1,035 | |||
| | Income tax expense | | | | | | - | | (103) | | (104) | ||
| | Profit from discontinued operations after tax | | | | - | | 930 | | 931 | ||||
| | Gain on disposal of discontinued operations after tax | | - | | - | | 7,748 | ||||||
| | Profit from discontinued operations | | | | | - | | 930 | | 8,679 | |||
| | | | | | | | | | | | | ||
| | The following disclosure relates to the cash flows from the discontinued operations: | | | ||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Net cash inflow from operating activities | | | | - | | 2,421 | | 2,421 | ||||
| | Net cash inflow from investing activities (inflow from the proceeds) | - | | - | | 8,638 | |||||||
| | Net increase in cash generated by the disposal group | | - | | 2,421 | | 11,059 | ||||||
| | | | | | | | | | | | | ||
| | The following details relate to the gain on disposal of the discontinued operations: | | | ||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Cash consideration received | | | | | | - | | - | | 8,638 | ||
| | Trade and other payables | | | | | | - | | - | | (55) | ||
| | Carrying amount of net assets | | | | | - | | - | | (835) | |||
| | Gain on sale of discontinued operations before tax | | | | - | | - | | 7,748 | ||||
| | Income tax expense | | | | | | - | | - | | - | ||
| | Gain on disposal of discontinued operations after tax | | - | | - | | 7,748 | ||||||
| | | | | | | | | | | | | ||
| | The carrying amounts of assets and liabilities as at the date of sale (1 July 2020) were: | | | ||||||||||
| | | | | | | | | | | | 01 Jul 2020 | ||
| | | | | | | | | | | | £'000 | ||
| | Contract assets | | | | | | | | | | 850 | ||
| | Trade receivables | | | | | | | | | | 187 | ||
| | Contract liabilities | | | | | | | | | | (202) | ||
| | Carrying amount of net assets | | | | | | | | | 835 | |||
| | | | | | | | | | | | | ||
| | The disposal group disclosed on 30 June 2020 consisted of the trade receivables, contract assets and contract liabilities relating to the private client business contracts. Because internally generated customer relationships are prohibited from being recognised as assets, the Group did not account for these customer contracts as assets. The Group reclassified the trade receivables, contract assets and contract liabilities relating to these clients as a disposal group held for sale in the prior period as these balances gave a reasonable representation of the value that these customer contracts held. | ||||||||||||
| | | | | | | | | | | | | ||
| | The following assets and liabilities were reclassified as a disposal group held for sale in relation to the discontinued operation in the prior period: | ||||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Assets of disposal group classified as held for sale | | | | | | | | | ||||
| | Contract assets | | | | | | - | | 784 | | - | ||
| | Trade receivables | | | | | | - | | 436 | | - | ||
| | Total assets of disposal group held for sale | | | | - | | 1,220 | | - | ||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Liabilities of disposal group classified as held for sale | | | | | | | ||||||
| | Contract liabilities | | | | | | - | | (202) | | - | ||
| | Total liabilities of disposal group held for sale | | | | - | | (202) | | - | ||||
| | | | | | | | | | | | | ||
| 8. Earnings per share | | | | | | | | | | | |||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | | | | | | | | | | | | ||
| | Profit for the period | | | | | | 6,349 | | 9,891 | | 24,846 | ||
| | | | | | | | | | | | | ||
| | Non-underlying items within: | | | | | | | | | | | ||
| | Non-underlying expenses before tax | | | | | 12,769 | | 10,647 | | 16,600 | |||
| | Tax effect of non-underlying items | | | | | (1,182) | | (1,629) | | (3,454) | |||
| | Underlying earnings | | | | | | 17,936 | | 18,909 | | 37,992 | ||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | Weighted average number of ordinary shares in issue | 153,449,163 | 144,907,974 | 145,242,091 | |||||||||
| | Effect of dilutive potential ordinary shares: | | | | | | | | | ||||
| | Deferred consideration shares | | | | | - | | 636,652 | | - | |||
| | Restricted Stock Awards | | | | | | 553,604 | | 1,096,547 | | 467,317 | ||
| | Performance Share Plan | | | | | | 376,595 | | - | | 43,009 | ||
| | Weighted average number of ordinary shares for the purposes of diluted earnings per share | | | 154,379,362 | 146,641,173 | 145,752,417 | |||||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | Earnings per share-based on total operations | | | | | | | | | ||||
| | Basic EPS (pence) | | | | | | 4.0 | | 6.8 | | 17.1 | ||
| | Diluted EPS (pence) | | | | | | 4.1 | | 6.7 | | 17.1 | ||
| | | | | | | | | | | | | ||
| | Underlying basic EPS (pence) | | | | | | 11.7 | | 13.0 | | 26.1 | ||
| | Underlying diluted EPS (pence) | | | | | 11.5 | | 12.9 | | 26.0 | |||
| | | | | | | | | | | | | ||
| | Earnings per share-based on continuing operations | | | | | | | | | ||||
| | Basic EPS (pence) | | | | | | 4.0 | | 6.2 | | 11.1 | ||
| | Diluted EPS (pence) | | | | | | 4.1 | | 6.1 | | 11.1 | ||
| | | | | | | | | | | | | ||
| | Underlying basic EPS (pence) | | | | | | 11.7 | | 12.4 | | 25.5 | ||
| | Underlying diluted EPS (pence) | | | | | 11.5 | | 12.3 | | 25.4 | |||
| | | | | | | | | | | | | ||
| | Earnings per share-based on discontinued operations | | | | | | | ||||||
| | Basic EPS (pence) | | | | | | - | | 0.6 | | 6.0 | ||
| | Diluted EPS (pence) | | | | | | - | | 0.6 | | 6.0 | ||
| | | | | | | | | | | | | ||
| | Underlying basic EPS (pence) | | | | | | - | | 0.6 | | 0.6 | ||
| | Underlying diluted EPS (pence) | | | | | - | | 0.6 | | 0.6 | |||
| | | | | | | | | | | | | ||
| | 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. | ||||||||||||
| | | | | | | | | | | | | ||
| 9. Dividends | | | | | | | | | | | |||
| | | | | | | | | | | | | ||
| | No interim dividend has been declared by the Directors (2020: 4.8 pence). The 2020 final dividend of 9.9 pence was paid on 26 May 2021. | ||||||||||||
| | | | | | | | | | | | | ||
| 10. 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 | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Opening balance | | | | | | 188,478 | | 180,414 | | 180,414 | ||
| | Acquired during the period | | | | | | 44,268 | | 4,433 | | 7,376 | ||
| | Exchange difference | | | | | | (4,502) | | 11,313 | | 688 | ||
| | Closing balance | | | | | | 228,244 | | 196,160 | | 188,478 | ||
| | | | | | | | | | | | | ||
| | On 1 March 2021, the Group acquired the PEA group, consisting of five entities. The acquired entities are Private Equity Administrators Sweden AB and PEA Depositary Services AB, both incorporated in Sweden, Private Equity Administrators ApS and PEA Depositary Services ApS, both incorporated in Demark and Private Equity Administrators Limited, incorporated in Guernsey. | ||||||||||||
| | | | | | | | | | | | | ||
| | On 7 April 2021, the Group acquired Strait Capital Company Limited, incorporated in the United States of America. | ||||||||||||
| | | | | | | | | | | | | ||
| | Refer to note 18 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 more frequently when there is an indicator for impairment as listed in IAS 36. The current COVID-19 pandemic has impacted markets globally since the start of 2020. | ||||||||||||
| | | | | | | | | | | | | ||
| | Over the past year, the world has adapted and responded to the global pandemic. This is evident in global markets as these have largely normalised and various countries are in advanced phases of their vaccination rollout programmes. The Group was able to maintain healthy cash inflows through a good pipeline of existing and new customers. The Group believes that the judgements and estimates made as at 31 December 2020 are still relevant as these were made when COVID-19 was already spread world-wide. The Group no longer considers COVID-19 as a change in the economic environment and therefore an indicator for impairment. No impairment indicators were identified for the period ending 30 June 2021. The Group will perform its annual impairment assessment at 31 December 2021. | ||||||||||||
| | | | | | | | | | | | | ||
| 11. Other intangible assets | | | | | | | | | | | |||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Opening balance | | | | | | 38,160 | | 45,388 | | 45,388 | ||
| | Acquired during the period through acquisitions | | | | 13,286 | | 2,207 | | 5,978 | ||||
| | Software under development costs incurred | | | | 1,410 | | 949 | | 2,322 | ||||
| | Amortisation charge for the period | | | | | (8,114) | | (8,070) | | (15,677) | |||
| | Exchange difference | | | | | | (850) | | 2,648 | | 149 | ||
| | Closing balance | | | | | | 43,892 | | 43,122 | | 38,160 | ||
| | | | | | | | | | | | | ||
| | Refer to note 18 for further details relating to the acquisitions that occurred during the six months ended 30 June 2021. | ||||||||||||
| | | | | | | | | | | | | ||
| | At 30 June 2021, all intangible assets were tested for indicators of impairment. No indicators were identified. | ||||||||||||
| | | | | | | | | | | | | ||
| 12. Investment in associate | | | | | | | | | | | |||
| | | | | | | | | | | | | ||
| | On 23 April 2021, the Group increased its investment in Alternative Assets Accounting Software Inc. from 5.9% to 11.1%. The first investment had a fair value of £0.4 million. The additional investment was acquired for a cash consideration of £0.4 million. The Group will be able to exercise significant influence over Alternative Assets Accounting Software Inc. after this additional investment and have subsequently accounted for the investment as an investment in associate. On the date that the additional investment in Alternative Assets Accounting Software Inc. was made, and the new circumstances assessed, the Group applied step acquisition accounting and transferred the minority equity investment at fair value through profit or loss held before significant influence was obtained to an investment in associate carried at cost. | ||||||||||||
| | | | | | | | | | | | | ||
| | The carrying amount of the minority equity investment presented at fair value through profit or loss at the time of the transaction was £0.4 million. The Group's accounting policy for a step acquisition of an investment in associate is to measure the cost of the investment in associate as the sum of the fair value of the interest previously held plus the fair value of the additional consideration transferred to obtain significant influence (totalling £0.7 million on 23 April 2021). | ||||||||||||
| | | | | | | | | | | | | ||
| | The carrying amount of the equity-accounted investment in associate is as follows for the reporting period: | ||||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Opening balance | | | | | | - | | - | | - | ||
| | Step acquisition of an investment in associate | | | | 722 | | - | | - | ||||
| | Loss for the period | | | | | | (17) | | - | | - | ||
| | Exchange difference | | | | | | 2 | | - | | - | ||
| | Closing balance | | | | | | 707 | | - | | - | ||
| | | | | | | | | | | | | ||
| 13. Share capital | | | | | | | | | | | |||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Opening balance | | | | | | 1,474 | | 1,466 | | 1,466 | ||
| | Issue of shares | | | | | | 149 | | - | | 8 | ||
| | Closing balance | | | | | | 1,623 | | 1,466 | | 1,474 | ||
| | | | | | | | | | | | | ||
| | The Company issued 1,288,502 ordinary shares on 1 March 2021 as part of the acquisition of the PEA group with a further 35,792 ordinary shares issued on 9 April 2021. Refer to note 17 for further details on the acquisition. | ||||||||||||
| | | | | | | | | | | | | ||
| | The Company issued 1,135,095 ordinary shares on 9 April 2021 to fund the acquisition of Strait Capital Company Limited. Note 18 contains further details on the acquisition. | ||||||||||||
| | | | | | | | | | | | | ||
| | On 8 April 2021, the Company issued 12,429,021 ordinary shares in a share placing transaction. The ordinary shares have been placed by Jefferies International Limited and J.P. Morgan Securities plc. | ||||||||||||
| | | | | | | | | | | | | ||
| | On 1 October 2020, the Company issued 119,053 ordinary shares as consideration for the acquisition of Sanne Trustees (Cayman) Limited (previously known as Avalon Trust & Corporate Services Limited). | ||||||||||||
| | | | | | | | | | | | | ||
| | On 2 November 2020, the Company issued 636,656 ordinary shares as the final settlement of the deferred consideration for the acquisition of Sanne Group U.S. LLC on 1 November 2016. | ||||||||||||
| | | | | | | | | | | | | ||
| 14. Borrowings | | | | | | | | | | | |||
| | | | | | | | | | | | | ||
| | On 18 March 2021, the Group refinanced its loan facility. On 19 March 2021, the Group used the refinanced loan facility to repay the existing loan in full. The repayment amounted to £137.1 million. The refinanced facility matures on 18 March 2024 with extension options of up to two years. Interest is charged at LIBOR plus a variable margin. The balance of the unamortised loan costs, relating to the loan that was refinanced, were written off. | ||||||||||||
| | | | | | | | | | | | | ||
| | The new loan is structured as a £210 million multicurrency revolving credit facility plus an uncommitted accordion facility of £100 million with a consortium of six banks namely HSBC Bank plc, Citibank N.A., DNB (UK) Limited, Fifth Third Bank National Association, The Governor and Company of the Bank of Ireland and JP Morgan Chase Bank N.A. 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 18 March 2024 and charge commercial rates. The group drew down £139.7 million from the new facility on the date of refinancing. The drawn amount was utilised to repay the previous facility, as well as the transaction costs incurred. | ||||||||||||
| | | | | | | | | | | | | ||
| | Covenants attached to the loan relate to interest cover and leverage. Undrawn funds in the revolving credit facility are charged at 35% of the interest margin whilst the accordion facility attracts no interest until drawn. | ||||||||||||
| | | | | | | | | | | | | ||
| | The Group assessed if the change to the agreement would constitute a significant modification under IFRS 9. The net present value of the remaining cash flows under the modified terms were less than 10% different from the net present value of the remaining cash flows under the agreement, prior to refinancing. The change to the revolving credit facility's terms did not result in a substantial modification. Consequently, the accounting treatment of the borrowings remains unchanged. | ||||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Available | | | | | | | | | | | ||
| | Revolving credit facility | | | | | | 210,000 | | 150,000 | | 150,000 | ||
| | Uncommitted accordion facility | | | | | 100,000 | | 70,000 | | 70,000 | |||
| | | | | | | | 310,000 | | 220,000 | | 220,000 | ||
| | | | | | | | | | | | | ||
| | Drawn | | | | | | | | | | | ||
| | Revolving credit facility | | | | | | 77,409 | | 140,234 | | 134,913 | ||
| | Capitalised loan fees | | | | | | (1,775) | | (1,448) | | (1,364) | ||
| | Total borrowings | | | | | | 75,634 | | 138,786 | | 133,549 | ||
| | | | | | | | | | | | | ||
| | The above balance for the revolving credit facility represents the carrying value of borrowings at a floating interest rate. The Group does not have fixed rate borrowings. | ||||||||||||
| | | | | | | | | | | | | ||
| | During the 6 months ending 30 June 2021, the Group repaid £97.7 million of the drawn revolving credit facility and drew down a total of £38.4 million from its facility during the six months ended 30 June 2021. This was done in addition to the drawn down and repayment made on 19 March 2021, the refinancing date. The repayment was largely funded through the shares issued on 8 April 2021 (refer to note 13). | ||||||||||||
| | | | | | | | | | | | | ||
| | The Group is exposed to interest rate risk due to the floating interest rate on the borrowings. The interest rates are directly linked to the LIBOR plus a margin based on the leverage ratio of the Group: the higher the leverage ratio the higher the margin on the LIBOR. The risk is managed by the Group maintaining an appropriate leverage ratio and thereby ensuring that the interest rate is kept as low as possible. The Group considered the upcoming LIBOR reforms, but it does not expect a material change to the financial statements, as re-estimating the future interest payments usually has no significant effect on the carrying amount of the borrowings. The Group's financiers will be replacing LIBOR with the Sterling Overnight Index Average ("SONIA") for amounts drawn in Pounds Sterling and with the Secured Overnight Financing Rate ("SOFR") for amounts drawn in United States Dollar. | ||||||||||||
| | | | | | | | | | | | | ||
| | Reconciliation of the borrowings balance | | | | | | | | | ||||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Balance at 1 January | | | | | | 133,549 | | 129,572 | | 129,572 | ||
| | Redemption of bank loans | | | | | | (234,734) | | (7,302) | | (12,302) | ||
| | New bank loans raised | | | | | | 178,186 | | 14,821 | | 14,821 | ||
| | Amortisation for the year | | | | | | 147 | | 78 | | 162 | ||
| | Loan fees paid | | | | | | (1,355) | | (29) | | (29) | ||
| | Loan fees written off | | | | | | 796 | | - | | - | ||
| | Foreign exchange (loss)/gain | | | | | | (955) | | 1,646 | | 1,325 | ||
| | Balance at 31 December | | | | | | 75,634 | | 138,786 | | 133,549 | ||
| | | | | | | | | | | | | ||
| | The following tables detail the Group's remaining contractual maturity for its financial liabilities with agreed repayment terms. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group could be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are from floating rates, the undiscounted amount is derived from interest rates at the balance sheet date. | ||||||||||||
| | | | | | | | | | | | | ||
| | | | < 3 months | | 3-12 months | | 1-5 years | | > 5 years | | Total | ||
| | | | £'000 | | £'000 | | £'000 | | £'000 | | £'000 | ||
| | 30 June 2021 | | | | | | | | | | | ||
| | Bank loans (i) | | 355 | | 1,084 | | 83,167 | | - | | 84,606 | ||
| | Trade payables and accruals (ii) | 13,094 | | - | | 1,051 | | - | | 14,145 | |||
| | Provisions | | 59 | | 189 | | 817 | | 2,274 | | 3,339 | ||
| | Lease liability | | 1,464 | | 4,108 | | 13,691 | | 25,360 | | 44,623 | ||
| | | | 14,972 | | 5,381 | | 98,726 | | 27,634 | | 146,713 | ||
| | | | | | | | | | | | | ||
| | | | < 3 months | | 3-12 months | | 1-5 years | | > 5 years | | Total | ||
| | | | £'000 | | £'000 | | £'000 | | £'000 | | £'000 | ||
| | 30 June 2020 | | | | | | | | | | | ||
| | Bank loans (i) | | 614 | | 1,877 | | 150,200 | | - | | 152,691 | ||
| | Trade payables and accruals (ii) | 12,912 | | - | | - | | - | | 12,912 | |||
| | Provisions | | 265 | | 207 | | 503 | | 1,581 | | 2,556 | ||
| | Lease liability | | 1,123 | | 3,005 | | 13,530 | | 22,058 | | 39,716 | ||
| | | | 14,914 | | 5,089 | | 164,233 | | 23,639 | | 207,875 | ||
| | | | | | | | | | | | | ||
| | | | < 3 months | | 3-12 months | | 1-5 years | | > 5 years | | Total | ||
| | | | £'000 | | £'000 | | £'000 | | £'000 | | £'000 | ||
| | 31 December 2020 | | | | | | | | | | | ||
| | Bank loans (i) | | 571 | | 1,744 | | 144,173 | | - | | 146,488 | ||
| | Trade payables and accruals (ii) | 14,758 | | - | | - | | - | | 14,758 | |||
| | Provisions | | 184 | | 175 | | 947 | | 1,989 | | 3,295 | ||
| | Lease liability | | 1,187 | | 3,735 | | 13,898 | | 20,507 | | 39,327 | ||
| | | | 16,700 | | 5,654 | | 159,018 | | 22,496 | | 203,868 | ||
| | | | | | | | | | | | | ||
| | For the purpose of the above liquidity risk analysis, the amortised value has been adjusted for the: | ||||||||||||
| | (i) future interest payments not yet accrued and the repayment of capital upon maturity. | | | ||||||||||
| | (ii) accrued bank loan interest payable at the balance sheet date. | | | | | | | ||||||
| | | | | | | | | | | | | ||
| 15. Trade and other payables | | | | | | | | | | | |||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Trade creditors | | | | | | 1,075 | | 3,357 | | 599 | ||
| | Other payables | | | | | | 844 | | 530 | | 3,590 | ||
| | Other taxes and social security | | | | | 3,652 | | 2,981 | | 3,634 | |||
| | Accruals | | | | | | 8,619 | | 6,193 | | 6,949 | ||
| | Contingent consideration | | | | | | 10,866 | | - | | 287 | ||
| | Total trade and other payables | | | | | 25,056 | | 13,061 | | 15,059 | |||
| | | | | | | | | | | | | ||
| 16. Share-based payments | | | | | | | | | | | |||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Sanne Group plc | | | | | | | | | | | ||
| | Performance Share Plan | | | | (i) | | 390 | | 263 | | 374 | ||
| | Restricted Stock Awards | | | | (ii) | | 1,011 | | 1,674 | | 2,779 | ||
| | Social security accrual | | | | | | 1 | | 13 | | 14 | ||
| | Total share-based payments | | | | | | 1,402 | | 1,950 | | 3,167 | ||
| | | | | | | | | | | | | ||
| | (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 ordinarily 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 of Performance Share Plans containing a market condition was determined 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 acquisitions 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 considered to be non-underlying costs. | ||||||||||||
| | | | | | | | | | | | | ||
| 17. Fair value measurement of financial instruments | | | | | | | | | |||||
| | | | | | Level | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Categories of financial instruments | | | | | | | | | | |||
| | Financial assets | | | | | | | | | | | ||
| | Financial assets recorded at fair value through other comprehensive income | | | | | ||||||||
| | Minority equity investment | | | | 3 | | 18,709 | | 9,227 | | 8,765 | ||
| | | | | | | | | | | | | ||
| | Financial liabilities recorded at fair value | | | | | | | | | ||||
| | Contingent consideration (Refer to note 15) | | 3 | | (10,866) | | - | | (287) | ||||
| | | | | | | | | | | | | ||
| | 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 have 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 assets: | | | | | ||||||||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Non-current assets | | | | | | | | | | | ||
| | Balance at start of period | | | | | | 8,765 | | 8,632 | | 8,632 | ||
| | Additions | | | | | | - | | - | | 387 | ||
| | Fair value remeasurement through other comprehensive income | | 10,400 | | - | | - | ||||||
| | Foreign exchange gains/(losses) through other comprehensive income | (89) | | 595 | | (234) | |||||||
| | Foreign exchange gains/(losses) through retranslation reserve | | (6) | | - | | (20) | ||||||
| | Transferred to current assets | | | | | | (18,709) | | - | | - | ||
| | Step acquisition of an investment in associate (refer to note 12) | | (361) | | - | | - | ||||||
| | Balance at end of period | | | | | | - | | 9,227 | | 8,765 | ||
| | | | | | | | | | | | | ||
| | The fair value remeasurement through other comprehensive income relates the remeasurement of the minority equity investment held in Colmore A.G. | ||||||||||||
| | | | | | | | | | | | | ||
| | An additional investment of £0.4 million was made into Alternative Assets Accounting Software Inc. on 23 April 2021. This resulted in the Group exercising significant influence over Alternative Assets Accounting Software Inc. Consequently, the transaction was treated as an acquisition performed in stages. Refer to note 12 for further details. | ||||||||||||
| | | | | | | | | | | | | ||
| | Reconciliation of Level 3 fair value measurements of financial assets: | | | | | ||||||||
| | | | | | | | Unaudited | | Unaudited | | Audited | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Current assets | | | | | | | | | | | ||
| | Balance at start of period | | | | | | - | | - | | - | ||
| | Transferred from non-current assets | | | | | 18,709 | | - | | - | |||
| | Balance at end of period | | | | | | 18,709 | | - | | - | ||
| | | | | | | | | | | | | ||
| | On 5 August 2021, the majority shareholders of Colmore A.G. entered into an agreement to sell their shares in Colmore A.G. to Preqin Limited. The Group sold its shares held as a minority equity investment alongside those of the majority shareholders. However, if the majority shareholder had not decided to make the sale, the Group would not have looked to sell its shareholding in Colmore A.G. The Group did not actively market its investment nor did it commit to an active program to locate a buyer. Therefore, the Group disclosed its minority equity investment in Colmore A.G. and the loan granted to Colmore A.G. as current assets instead of a disposal group held for sale. | ||||||||||||
| | | | | | | | | | | | | ||
| | As part of the sale of the investment to Preqin, the Group may be entitled to receive a contingent consideration payment at the end of December 2025. The contingent consideration will be based on Colmore A.G.'s annualised annual recurring revenue and will be settled in cash by Preqin Limited. The contingent consideration was considered as part of the fair value measurement of the investment at the reporting date. Management estimated the fair value of the contingent consideration as £0 as at 30 June 2021, because there are significant uncertainties regarding the probability that the contingent consideration targets will be met. | ||||||||||||
| | | | | | | | | | | | | ||
| | The Group still classifies the minority equity investment in Colmore A.G. as carried at fair value through other comprehensive income at the reporting date. Consequently, the following fair value disclosure is made. | ||||||||||||
| | | | | | | | | | | | | ||
| | Colmore A.G. | | | | | | | | | | | ||
| | The fair value was determined using the market approach. The market approach provides an estimation of the fair value based on the market prices of actual transactions and asking prices for businesses. Due to the sale of the minority equity investment after the reporting period, the Group had a view of the fair value that a market participant is willing to pay for the business, based on the actual asking price for this specific business. The Group did not make use of other unobservable inputs, other than the selling price of Colmore A.G., to determine the fair value. | ||||||||||||
| | | | | | | | | | | | | ||
| | Contingent consideration | | | | | | | | | | | ||
| | The fair value of the contingent consideration disclosed in this note and in note 15 is the aggregate of the fair value of the contingent consideration liability for both acquisitions made during the reporting period. Note 18 sets out the fair value measurement of each acquisition's contingent consideration. | ||||||||||||
| | | | | | | | | | | | | ||
| 18. Business combinations | | | | | | | | | | | |||
| | | | | | | | | | | | | ||
| | PEA Group | | | | | | | | | | | ||
| | On 1 March 2021 the Group acquired 100% of the issued share capital of Private Equity Administrators Sweden AB and PEA Depositary Services AB, both incorporated in Sweden. As part of the same acquisition, the Group acquired 100% of the issued share capital of Private Equity Administrators ApS and PEA Depositary Services ApS, both incorporated in Denmark, as well as Private Equity Administrators Limited, incorporated in Guernsey. PEA specialises in providing boutique fund administration and depositary services to alternative fund structures. | ||||||||||||
| | | | | | | | | | | | | ||
| | The acquisition provides the Group with an opportunity to scale its Guernsey operations, strengthening its position in the Channel Islands. The acquisition also allows the Group to expand its geographical footprint, and its offering for its EMEA operations, into the important Scandinavian markets. | ||||||||||||
| | | | | | | | | | | | | ||
| | The consideration for the acquisition of a controlling interest in the PEA group was satisfied through a payment of £16.9 million (€19.4 million) in cash and the issuance of 1,288,502 ordinary shares in the Company on 1 March 2021 and 35,792 ordinary shares in the Company on 9 April 2021. The fair value of the consideration settled in ordinary shares was £7.6 million (€8.8 million). A contingent consideration payment will be made during September 2021. At acquisition date, the fair value of the contingent consideration was estimated as £2.1 million (€2.4 million). An earn-out payment will be made in 2022, estimated at acquisition as £2.1 million (€2.5 million). The earn-out payment is linked to the continued employment of key management personnel and will consequently be treated as remuneration and not consideration. | ||||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | | | EUR | | GBP | ||
| | | | | | | | | | '000 | | '000 | ||
| | Recognised amounts of identifiable net assets (at fair value) at acquisition: | | | | | ||||||||
| | Non-current assets | | | | Useful economic life | | | | | | | ||
| | Equipment | | | | 3 - 5 years | | | | 112 | | 97 | ||
| | Customer and contract intangibles | | | 7 years | | | | 8,684 | | 7,512 | |||
| | Right-of-use asset | | | | 1 year | | | | 76 | | 66 | ||
| | Deferred tax assets | | | | | | | | 16 | | 14 | ||
| | | | | | | | | | 8,888 | | 7,689 | ||
| | Current assets | | | | | | | | | | | ||
| | Trade and other receivables | | | | | | | | 156 | | 135 | ||
| | Contract assets | | | | | | | | 626 | | 542 | ||
| | Cash and cash equivalents | | | | | | | | 2,629 | | 2,274 | ||
| | | | | | | | | | 3,411 | | 2,951 | ||
| | | | | | | | | | | | | ||
| | Current liabilities | | | | | | | | | | | ||
| | Trade and other payables | | | | | | | | 1,197 | | 1,035 | ||
| | Contract liabilities | | | | | | | | 33 | | 29 | ||
| | Lease liability | | | | | | | | 76 | | 66 | ||
| | Current tax liabilities | | | | | | | | 55 | | 48 | ||
| | | | | | | | | | 1,361 | | 1,178 | ||
| | Non-current liabilities | | | | | | | | | | | ||
| | Deferred tax liabilities | | | | | | | | 1,501 | | 1,298 | ||
| | Identifiable net assets | | | | | | | | 9,437 | | 8,164 | ||
| | | | | | | | | | | | | ||
| | Goodwill | | | | | | | | 21,198 | | 18,384 | ||
| | | | | | | | | | | | | ||
| | Total consideration | | | | | | | | 30,635 | | 26,548 | ||
| | | | | | | | | | | | | ||
| | Total consideration satisfied by: | | | | | | | | | | |||
| | Cash consideration - at acquisition | | | | | | | 19,425 | | 16,862 | |||
| | Equity instruments (1,324,294 shares in Sanne Group plc) | | | | 8,803 | | 7,615 | ||||||
| | Contingent consideration | | | | | | | | 2,407 | | 2,071 | ||
| | Fair value of consideration payable at acquisition date | | | | 30,635 | | 26,548 | ||||||
| | | | | | | | | | | | | ||
| | Net cash inflow arising at acquisition: | | | | | | | | | | |||
| | Cash consideration | | | | | | | | 19,425 | | 16,862 | ||
| | Less: cash and cash equivalents balances acquired | | | | | | (2,629) | | (2,274) | ||||
| | | | | | | | | | | | | ||
| | Net cash outflow at acquisition | | | | | | | 16,796 | | 14,588 | |||
| | | | | | | | | | | | | ||
| | Fair value of consideration | | | | | | | | | | | ||
| | A cash consideration of £14.6 million (€16.8 million) was paid for the controlling interest in of the PEA group on acquisition date. On 1 March 2021 1,288,502 ordinary shares in Sanne Group plc were issued and on 9 April 2021 a further 35,792 ordinary shares in Sanne Group plc were issued. The fair value of the consideration settled in shares amounted £7.6 million (€8.8 million) on acquisition date. | ||||||||||||
| | | | | | | | | | | | | ||
| | A contingent consideration payment will be made during September 2021 estimated to be £2.1 million (€2.4 million). The payment will be settled as a combination of cash and a variable number of ordinary shares in the Company. This payment is based on the change in working capital in the six month period following the acquisition date for the entities located in Sweden and Denmark and the regulatory requirement calculation for the entity located in Guernsey. Management applied best estimates to estimate the contingent payment amount. These estimates were based on historic information. The variable number of shares is valued using the share price as at the end of the reporting period, amounting to a contingent consideration at a fair value of £2.1 million (€2.4 million). | ||||||||||||
| | | | | | | | | | | | | ||
| | An earn-out payment (depending on the continued employment of key employees) will be made in 2022 at an estimated value of £2.1 million (€2.5 million). The earn-out payment is based on the lower of £2.1 million (€2.5 million) and 3 times the increase in gross profit. Management's best estimate was used to determine the fair value of the total earn-out payment. | ||||||||||||
| | | | | | | | | | | | | ||
| | Transaction costs | | | | | | | | | | | ||
| | The Group incurred £0.2 million relating to acquisition and integration expenses during 2021. These costs are included in operating expenses and are disclosed as non-underlying expenses in note 5. | ||||||||||||
| | | | | | | | | | | | | ||
| | Goodwill | | | | | | | | | | | ||
| | Goodwill represents the fair value of 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. | ||||||||||||
| | | | | | | | | | | | | ||
| | Trade and other receivables | | | | | | | | | | | ||
| | The fair value of the financial assets acquired includes trade and other receivables with a fair value of £0.1 million. This gross trade and other receivables balance is expected to be recovered in full. | ||||||||||||
| | | | | | | | | | | | | ||
| | Effect on the results | | | | | | | | | | | ||
| | The acquisition of the PEA Group contributed revenue of £2.3 million and a profit of £0.6 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 on 1 January 2021, on a pro rata basis, the Group's revenue for the period would have been £91.3 million (£1.1 million higher) and net profit £4.3 million (£0.3 million higher) for the period ended 30 June 2021. | ||||||||||||
| | | | | | | | | | | | | ||
| | Strait Capital Company Limited | | | | | | | | | | |||
| | On 7 April 2021, the Group acquired 100% of the issued share capital of Strait Capital Company Limited, incorporated in the United States of America. The acquired company specialises in providing fund administration, financial oversight, and regulatory compliance services for private equity funds, hedge funds, family offices, fund of funds, SPVs, and other investment vehicles. | ||||||||||||
| | | | | | | | | | | | | ||
| | The acquisition provides the Group with an opportunity to grow its existing operations in North America. | ||||||||||||
| | | | | | | | | | | | | ||
| | The consideration for the Strait Capital Company Limited acquisition was satisfied through a cash payment of £15.7 million ($21.6 million) and the issuance of 1,135,095 ordinary shares in the Company valued at £7.6 million ($10.4 million) on 9 April 2021. A contingent consideration payment will be made in 2022, estimated as £8.6 million ($11.8 million) on acquisition date. | ||||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | | | USD | | GBP | ||
| | | | | | | | | | '000 | | '000 | ||
| | Recognised amounts of identifiable net assets (at fair value) at acquisition: | | | | | ||||||||
| | Non-current assets | | | | Useful economic life | | | | | | | ||
| | Equipment | | | | 3 - 5 years | | | | 53 | | 39 | ||
| | Customer and contract intangibles | | | 7 years | | | | 7,935 | | 5,774 | |||
| | Right-of-use asset | | | | | | | | 940 | | 684 | ||
| | Deferred tax assets | | | | | | | | 294 | | 214 | ||
| | | | | | | | | | 9,222 | | 6,711 | ||
| | Current assets | | | | | | | | | | | ||
| | Trade and other receivables | | | | | | | | 364 | | 265 | ||
| | Cash and cash equivalents | | | | | | | | 497 | | 362 | ||
| | | | | | | | | | 861 | | 627 | ||
| | Current liabilities | | | | | | | | | | | ||
| | Trade and other payables | | | | | | | | 609 | | 445 | ||
| | Contract liabilities | | | | | | | | 12 | | 8 | ||
| | Lease liability | | | | | | | | 202 | | 147 | ||
| | | | | | | | | | 823 | | 600 | ||
| | Non-current liabilities | | | | | | | | | | | ||
| | Deferred tax liabilities | | | | | | | | 294 | | 214 | ||
| | Lease liability | | | | | | | | 738 | | 537 | ||
| | | | | | | | | | 1,032 | | 751 | ||
| | | | | | | | | | | | | ||
| | Identifiable net assets | | | | | | | | 8,228 | | 5,987 | ||
| | | | | | | | | | | | | ||
| | Goodwill | | | | | | | | 35,570 | | 25,884 | ||
| | | | | | | | | | | | | ||
| | Total consideration | | | | | | | | 43,798 | | 31,871 | ||
| | | | | | | | | | | | | ||
| | Total consideration satisfied by: | | | | | | | | | | |||
| | Cash consideration - at acquisition | | | | | | | 21,591 | | 15,712 | |||
| | Equity instruments (1,135,095 shares in Sanne Group plc) | | | | 10,420 | | 7,582 | ||||||
| | Contingent consideration | | | | | | | | 11,787 | | 8,577 | ||
| | Fair value of consideration payable at acquisition date | | | | 43,798 | | 31,871 | ||||||
| | | | | | | | | | | | | ||
| | Net cash inflow arising at acquisition: | | | | | | | | | | |||
| | Cash consideration | | | | | | | | 21,591 | | 15,712 | ||
| | Less: cash and cash equivalents balances acquired | | | | | | (497) | | (362) | ||||
| | | | | | | | | | | | | ||
| | Net cash outflow at acquisition | | | | | | | 21,094 | | 15,350 | |||
| | | | | | | | | | | | | ||
| | Fair value of consideration | | | | | | | | | | | ||
| | The payment for the controlling interest in Strait Capital Company Limited is satisfied through a cash payment of £15.7 million ($21.6 million). And the issuance of 1,135,095 ordinary shares in the Company on 9 April 2021 to the value of £7.6 million ($10.4 million). | ||||||||||||
| | | | | | | | | | | | | ||
| | A contingent consideration payment will be made in 2022, estimated to be £8.6 million ($11.8 million) on acquisition date. The contingent consideration is based on a revenue multiple, limited to £8.5 million ($11.7 million). The estimated contingent consideration will be determined on the expected revenue for the period 1 January 2021 to 31 March 2022. The contingent consideration will be settled partly in cash and partly in a variable number of shares in the Company. The variable number of shares are valued using the share price as at the end of the reporting period, resulting in the fair value of the contingent consideration amounting to £8.6 million ($11.8 million). | ||||||||||||
| | | | | | | | | | | | | ||
| | Transaction costs | | | | | | | | | | | ||
| | The Group incurred £1.2 million relating to acquisition and integration expenses during 2021. These costs are included in operating expenses and are disclosed as non-underlying expenses in note 5. | ||||||||||||
| | | | | | | | | | | | | ||
| | Goodwill | | | | | | | | | | | ||
| | Goodwill represents the fair value of 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, along with the acquisition costs incurred, is tax deductible over a period of ten years. | ||||||||||||
| | | | | | | | | | | | | ||
| | Trade and other receivables | | | | | | | | | | | ||
| | The fair value of the financial assets acquired includes trade and other receivables with a fair value of £0.3 million. This gross trade and other receivables balance is expected to be recovered in full. | ||||||||||||
| | | | | | | | | | | | | ||
| | Effect on the results | | | | | | | | | | | ||
| | Strait Capital Company Limited contributed revenue of £2 million and a profit of £0.5 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 on 1 January 2021, on a pro rata basis, the Group's revenue for the period would have been £92.2 million (£2 million higher) and net profit £4.5 million (£0.5 million higher) for the period ended 30 June 2021. | ||||||||||||
| | | | | | | | | | | | | ||
| 19. 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 | ||
| | | | | | | | 6 Months to | | 6 Months to | | 12 Months to | ||
| | | | | | | | 30 Jun 2021 | | 30 Jun 2020 | | 31 Dec 2020 | ||
| | | | | | | | £'000 | | £'000 | | £'000 | ||
| | Short-term employee benefits | | | | | | 1,450 | | 1,493 | | 2,719 | ||
| | Share-based payments | | | | | | 409 | | 225 | | 516 | ||
| | Total short-term payments | | | | | | 1,859 | | 1,718 | | 3,235 | ||
| | | | | | | | | | | | | ||
| 20. Change in accounting estimate | | | | | | | | | | ||||
| | | | | | | | | | | | | ||
| | The estimated total useful lives of certain items of IT equipment used throughout the Group were revised effective 1 January 2021. The net effect of the changes for the period 1 January 2021 to 30 June 2021 was a decrease in depreciation expense of £298,000. The remaining changes are shown for the period 1 July to 30 June. | ||||||||||||
| | | | | | | | | | | | | ||
| | Assuming the assets are held until the end of their estimated useful lives, depreciation in future years relating to these assets will be increased/(decreased) by the following amounts: | ||||||||||||
| | | | | | | | | | | | | ||
| | | | | | | | | | | | Unaudited | ||
| | | | | | | | | | | | 6 Months to | ||
| | | | | | | | | | | | 30 Jun 2021 | ||
| | | | | | | | | | | | £'000 | ||
| | Period | | | | | | | | | | | ||
| | 1 January to 30 June 2021 | | | | | | | | | | (298) | ||
| | | | | | | | | | | | | ||
| | 1 July to 30 June 2022 | | | | | | | | | | (163) | ||
| | 1 July to 30 June 2023 | | | | | | | | | | 137 | ||
| | 1 July to 30 June 2024 | | | | | | | | | | 178 | ||
| | 1 July to 30 June 2025 | | | | | | | | | | 99 | ||
| | 1 July to 30 June 2026 | | | | | | | | | | 35 | ||
| | 1 July to 30 June 2027 | | | | | | | | | | 10 | ||
| | 1 July to 30 June 2028 | | | | | | | | | | 2 | ||
| | | | | | | | | | | | | ||
| 21. Contingent liabilities | | | | | | | | | | | |||
| | | | | | | | | | | | | ||
| | In the ordinary course of business, the Group could be subject to legal claims and/or proceedings. Should such events arise, the Directors would consider the 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. | ||||||||||||
| | | | | | | | | | | | | ||
| 22. Post balance sheet events | | | | | | | | | | | |||
| | | | | | | | | | | | | ||
| | On 8 July 2021, the Group repaid £6 million of its revolving credit facility. | | | | | ||||||||
| | | | | | | | | | | | | ||
| | On 13 August 2021, the Group repaid a further £13.8 million of its revolving credit facility. | | | ||||||||||
| | | | | | | | | | | | | ||
| | On 27 July 2021, the Group entered into an agreement to purchase 100% of the ordinary shares of Praxis Fund Holdings Limited, incorporated in Guernsey, along with its subsidiaries. The Group will also acquire PraxisIFM Luxembourg S.A., incorporated in Luxembourg. Together these entities form the PraxisIFM Group. The PraxisIFM Group augments Sanne's existing presence its EMEA and Channel Islands segments and increases Sanne's footprint in important European Private Equity markets. The total consideration is estimated to be £54 million. At the reporting date, the Group had not yet obtained control over Praxis Fund Holdings Limited, due to contractual requirements that have not yet been met. Consequently, the acquisition accounting is not disclosed under business combinations. The accounting for this transaction is incomplete as at the date of issue of these condensed interim consolidated financial statements. | ||||||||||||
| | | | | | | | | | | | | ||
| | On 5 August 2021, the majority shareholders of Colmore A.G. entered into an agreement to sell their shares in Colmore A.G. to Preqin Limited for £18.1 million ($25.2 million). The loan granted to Colmore A.G. (and any accrued interest) was settled in full as part of the same transaction. The Group sold its shares held as a minority equity investment alongside those of the majority shareholders and have classified the minority equity investment and financial asset at amortised cost as current assets at the reporting date. At the reporting date, the minority equity investment is carried as a financial asset at fair value through other comprehensive income and the loan granted to Colmore A.G. as a financial asset at amortised cost. The sale agreement includes contingent consideration, recognisable when the shares are sold (i.e. after the reporting period). Management estimated the fair value of the contingent consideration as £0 as at 30 June 2021, because there are significant uncertainties regarding the probability that the contingent consideration targets will be met. | ||||||||||||
| | | ||||||||||||
| | On 25 August 2021 the Group announced that the Board had reached an agreement with Apex Group Limited to recommend an all cash offer of 920p per share to be made by Apex Group Limited. This offer remains conditional on shareholder approval and various other regulatory approvals, as disclosed in the announcement on 25 August 2021. It is anticipated that if all conditions are met, the acquisition will complete in the first half of the 2022 financial year. | ||||||||||||
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