SNN.L Regulatory News (SNN)

10 September 2019

Sanne Group plc

("the Company") together with its subsidiaries ("the Group" or "SANNE")

Interim results for the six months ended 30 June 2019

Sanne Group plc is one of the leading providers of outsourced alternative asset and corporate business services to the world's leading fund managers and corporates.

1. Underlying results for the year have been presented after the exclusion of non‐underlying items. Within operating profit and profit before tax, these items include, amongst other costs, acquisition and integration costs (2019: £0.3m), share based payments where linked to acquisitions (2019: £1.1m), amortisation of intangible assets (2019: £8.3m), earn-out accrual for AgenSynd (2019: £1.2m) and the impairment of intangible assets (2019: £1.9m). Further details can be found in note 4 of the consolidated financial statements

2. Constant currency represents the 2019 performance based on 2018 FX rates to eliminate movements due to FX

Highlights:

·; H1 results (under IFRS 16):

o Constant currency revenue growth of 17.4% (2018: 19.5%)

o Continued very strong Alternatives revenue growth of 25.2% (2018: 20.3%), especially in North America and Asia-Pacific

o Margin lower than previous expectations, as already announced in July trading update

o Cash generation improved with underlying operating cash conversion of 118% (2018: 67.9%)

o Statutory profits impacted by one-off costs in H1 of AgenSynd earn-out accrual and South Africa intangibles impairment

·; Record levels of new business wins from both new and existing customers with annualised fees of approximately £16.0 million won in the first six months (H1 2018: £11.5 million)

·; Actions implemented to improve margin in H2

·; Committed to continued investment to support the Group's growth ambitions in its core markets and products

·; Successful refinancing of Group facilities provides additional flexibility

·; Recently acquired businesses successfully integrated and already adding value to the group

·; Martin Schnaier took over as CEO on 16 May 2019

·; Interim dividend of 4.7p (2018: 4.6p) reaffirms the Board's confidence in the future prospects of the Group

Strategic partnership and minority investment agreed with Colmore AG ("Colmore"):

·; Minority shareholding in Colmore, with its award-winning technology platform will enable SANNE to provide fund management clients with real-time market leading analytics services

Outlook:

The continued outperformance from SANNE's core Alternatives businesses gives the Board confidence in the Group's full year revenue expectations, despite the challenges in the Corporate and Private Client business areas.

Whilst the actions we are taking are improving underlying operating margin, the items impacting profitability in the first half are unlikely to be fully compensated for in the second half. The Board therefore expects to report a full year underlying operating profit margin in the region of 28% to 30% and EPS in line with its revised expectations, as announced in the Group's trading statement on 27 July 2019.

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

 "Our record new business wins demonstrate that SANNE's client proposition remains very attractive and our increasing focus on fast-growing Alternative asset classes is driving significant revenue momentum. However it is clearly disappointing that the first half profitability has come in materially below our original expectations.

Looking at our strengths and market opportunity, I am as excited about the future as I have ever been. As the new CEO, my responsibility is to ensure that SANNE fulfils its significant potential, and I am confident that the global platform we are investing in will be essential to the long-term success of the business. I have two immediate priorities: to focus on addressing the issues that have impacted the Group's margins, and to generate good returns from the Corporate and Private Client business. We are already working hard on each of these, with some positive results already coming through, and I look forward to reporting on our progress in the months ahead."

Enquiries:

The Company will be hosting an investor and analyst presentation at 09:30am (BST) on 10th September 2019, at Haywood & Wren, The Clubhouse, Holborn Circus - 20 St Andrew Street, EC4A 3AG

This presentation can be viewed live on the 'investor relations' section of the SANNE website:Participants can also dial into the presentation in listen-only mode using the following details:

08003589473 (Toll Free)

+44 3333000804 (Toll)

Access Code: 62085336#

International dial-in numbers: http://events.arkadin.com/ev/docs/NE_W2_TF_Events_International_Access_List.pdf

A copy of the 2019 Half Year results presentation will be available on SANNE's Investor Relations pages at www.sannegroup.com after the live webcast has ended.

Notes:

SANNE is a leading global provider of outsourced alternative asset and corporate business services. Established for over 30 years and listed as a FTSE 250 company on the Main Market of the London Stock Exchange, SANNE employs more than 1,600 people worldwide and administers structures and funds that have in excess of £250 billion of assets.

Key clients include leading alternative asset managers, global financial institutions, family offices, UHNWIs and international 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.

sannegroup.com

INTERIM MANAGEMENT STATEMENT

Chief Executive Officer's Report 

Revenue

We have seen continued strong revenue growth across all of SANNE's core alternatives businesses, as the Group improves market penetration as well as benefiting from structural growth trends in global alternatives markets. As a result of these growth drivers, the Group saw overall constant currency revenue growth of 17.4% (19.5% on an actual basis) compared to the same period in the prior year, despite the Corporate and Private Client (CPC) businesses performing below expectations.

The Group's performance was underpinned by good organic revenue growth of 12.8% in constant currency (14.9% on an actual basis) across the Group (organic revenue growth is reported revenue growth adjusted to remove the 2019 H1 contribution from AgenSynd as well as pro-rating the contribution from LIS down to five months, comparable to H1 2018's contribution).

SANNE's Alternative Asset focused client services now represent c.89% of SANNE's total revenues, compared to c.78% four years ago, as the Group continues to build on its leading market position. The Group's alternatives businesses saw constant currency growth in the first half of 22.8% and 17.3% on a comparable organic basis. The Group has also benefited from a full six months' contribution in H1 2019 from LIS in Luxembourg (H1 2018's result included only 5 months) as well as AgenSynd in Madrid, which was acquired during H2 2018. Both these acquisitions continue to perform well and in line with the Group's expectations.

The Group's European Corporate and Private Client businesses, previously the CPC segment (14.8% of 2018 Group revenues), delivered disappointing first half financial performances. The Corporate business was flat compared to the prior period whilst Private Client declined compared to the first half of 2018. Overall combined revenues for these businesses were down approximately 13.2% on the same period in 2018.

New business

In the first half of the year, the Group secured new business from both new and existing clients totalling approximately £16.0 million on a projected annualised fee basis (H1 2018: £11.5 million). This is another record half year result and demonstrates the attractiveness of our offering. Approximately 30% of this was business won from clients new to the Group, with the balance from SANNE's existing customer base. We are pleased to see clients from across the global business placing increasing trust in SANNE as their long term, strategic partner.

Costs and operating margin

Whilst the Group saw a good revenue performance for H1 2019, the underlying operating profit margin was adversely affected by a combination of items, as announced in July 2019. The underlying operating profit margin in the first half fell to 26.4% from 30.4% in H1 2018 and underlying operating profit for the period was broadly flat on the prior year at £20.8 million.

There were a number of reasons for this margin decline. The principal one was a fall in gross profit margins in the new Europe, Middle East & Africa (EMEA) and Channel Islands (CI) reporting segments, as investment in people in our client service teams, was made ahead of being able to recognise revenues from new clients.

Gross profit margins were also impacted by increased spend on the dedicated Business Development team and the creation of the Product Development team. In addition, the Group failed to deliver operating efficiencies in the central operations teams that were established in 2018, which would have largely mitigated this increased spend. The total spend on the Business Development, Product Development and centralised teams has grown to around 2.6% of total revenues in the first half of 2019. Changes have been made to the reporting and operating structure of the centralised teams towards the end of the period and we are confident that these will realise efficiencies in the second half and beyond.

The final item that has impacted the first half margin was elevated overhead spend in relation to increased activity, particularly in relation to recruitment spend and new office moves. The first half has seen significant office moves in Luxembourg, Hong Kong and Shanghai to support the future growth in headcount. In addition, new offices have been established in Amsterdam, Tokyo, Mumbai and San Diego as a direct result of client demand. These small operations enable us to add more value to existing clients on the ground and an ability to enhance our already strong client relationship management.

The majority of office moves for 2019 have taken place in the first half and actions have been taken, including changes to reporting lines and oversight, to focus on managing cost control in areas where spend has been unexpectedly elevated in the first half. As such, overheads are expected to grow more slowly than revenues in the second half.

Strategy for growth

SANNE's strategic focus remains to be one of the world's leading providers of outsourced alternative asset and corporate business services, supporting clients in fast growing markets through local market knowledge and a deep understanding of the asset classes and markets in which they operate.

We continue to see a trend towards clients requiring their service provider to be able to support them across the spectrum of administrative services and throughout all key international finance centres. The Group remains focused on investing to build out its platform capability and jurisdictional footprint to ensure SANNE provides a quality one-stop-shop for local and international alternative asset managers. The opening of four new offices and locations during 2019 aligns with this strategic focus.

In addition to capability and jurisdictional footprint, industry-leading client service is at the heart of SANNE's strategy. Clients in the closed-ended alternatives sector demand bespoke and high-touch services, underpinned by a deep understanding of local markets that meet their ongoing needs. This close partnership approach to client service has always been a differentiator for SANNE and it remains critical to the continued success of the business. The creation of the Product Development team in 2019 provides the Group with experienced senior people who are focused on the continuous development of our client service offering, as well as ensuring that clients continue to benefit from engagement with SANNE as a product and service specialist.

Over the last two years, SANNE has also stepped up its investment in its people, processes and systems to ensure that the Group's global platform is well invested to support long-term growth. Areas of focus include information technology, risk and compliance, management bandwidth and governance, as well as the creation of the dedicated Business Development team to focus on new clients wins and help the Group take advantage of more cross-sell opportunities.

Group structure and management changes

The first half of 2019 saw a material change in the reporting and operating structure of the Group as it shifted from a divisional business reporting structure to a jurisdiction-oriented structure. This change brings with it a number of significant benefits. These include a more robust governance and control framework at local levels, fostering local accountability, as well as bringing an improved focus on local employee engagement across our expanding jurisdictional footprint. The impact of these changes is also outlined in the Operational Review below.

Following the AGM on 16th May 2019, and as previously announced, Martin Schnaier became Chief Executive Officer, succeeding Dean Godwin.

As a result of the CEO succession plan, Mark Law, previously Managing Director of the Group's Asia-Pacific & Mauritius business, was promoted to the Chief Commercial Officer role, replacing Martin Schnaier, with responsibility for SANNE's Client Service teams. Jing Jing Qian has been promoted to the Managing Director position for Asia-Pacific, whilst Peter Nagle joined the Group in 2018 as Managing Director for Mauritius. Michael Riley joined the business as Head of Mergers and Acquisitions during April 2019 and Malcolm Hassan joined as Managing Director for Business Development and Marketing in May 2019.

Our people

As a people business, SANNE's employees are central to the Group's success. The strong top line growth we continue to see across our Group is testament to the hard work and commitment of our employees across the globe and I would take this opportunity to thank them for their efforts. Keeping our people at the centre of our business and our client proposition is key and since the CEO change there has been a renewed focus on our Group culture, and ongoing investment in our people across the global business.

Operational Review

This is the first time SANNE has reported under its new segmental structure. The new structure reflects the change made at the start of the period to move to jurisdictional management and reporting across all parts of the Group. The Group's four reporting segments are now Europe, Middle East and Africa (EMEA); Channel Islands (CI); North America (NA); and Asia-Pacific & Mauritius (APM). The NA and APM segments remain unchanged from prior years. The former EMEA Alternatives and Corporate & Private Client (CPC) segments have been combined and then split between operations in the Channel Islands and outside the Channel Islands. For continuity we will continue to report the old CPC revenues separately within EMEA and CI.

Europe, Middle East & Africa (EMEA)

SANNE's EMEA business includes our services to alternative asset managers and financial institutions across Luxembourg, Dublin, London, Madrid, Paris, Amsterdam, Malta and Cape Town. This segment provides services across all core alternative closed-ended investment strategies as well as the Group's open-ended Hedge business and a small element of Corporate business located in Ireland.

Under the new reporting structure, EMEA delivered constant currency revenue growth of 21.6% on an organic basis and 34.6% on an actual basis, factoring in the full 6 months of LIS and AgenSynd. Separating out the CPC portion of this reporting segment (approximately 3.2% of the segment's first half revenues) the EMEA Alternatives business delivered 22.8% organic growth and 36.5% actual in the period on a constant currency basis. EMEA has seen very little impact from foreign exchange, albeit there has been a very small headwind from the Sterling-Euro exchange rate.

The organic revenue performance for EMEA has been the result of continued buoyant markets, increased market penetration and strong demand for SANNE's closed-ended alternative asset business services. The strong trend in the domiciliation of funds and managers to Luxembourg driven by a number of macro factors including Brexit and the Anti-Tax Avoidance Directive (ATAD) in Europe. Having a large, scaled capability across all key jurisdictions (especially Luxembourg which provides a one-stop-shop service across AIFMD mandates), SANNE is well placed to benefit from this trend.

The Group's Hedge offering, which has traditionally been exclusively focused on the South African market, has seen a subdued performance in the period due to ongoing challenging market conditions in South Africa. We are starting to see progress in expanding the product offering internationally, with European clients won and serviced on the platform during the period. The business has also seen some legacy South African clients serve notice in the period although positive new client wins already signed are expected to mitigate this loss in both the second half and in future periods.

The gross margin for the region has declined by 3.9% in the first half which was partly a result of the business bearing a larger proportional cost of the Business Development, Product Development and centralised teams. Additionally, whilst the changes from the new reporting structure, which are most significant across EMEA, have been bedding in, the region has invested ahead of the curve in resourcing levels. The division also suffered some delays in recognising certain revenues, thus resulting in the cumulative impact of diluting margins. Significant additional work has been undertaken towards the end of the first half and into the second half to manage capacity across regions to prevent this issue recurring in the second half. SANNE continues to invest in the capacity of the business to take on the growth in new structures.

Channel Islands (CI)

SANNE's CI business consists of offices located in both Jersey and Guernsey, servicing alternative asset managers, financial institutions and structures for global corporates and high-net-worth individuals.

Revenues from the new CI segment were slightly lower than the prior year, reflecting the majority of the old CPC segment being included, which materially diluted the overall growth rate. The CI Alternatives business saw organic constant currency growth in the period of 4.4% which reflects the industry backdrop driving much new business to Luxembourg. The old CPC business however represents approximately 41.2% of CI and was down circa 14.3% on the first half of 2018. This was a result of a flat period on period performance from Corporate whilst the Private Client business was significantly down.

Within CI Alternatives, growth has been weighted towards Private Equity, where our high quality services and expertise continues to attract new clients, along with new funds for existing clients. Our Real Estate services business has also seen some growth in clients, supported by a knowledgeable and experienced team providing good practical and technical support to our clients. It is worth noting that the performance of the Real Estate team would have been even greater had it not been for Brexit concerns impacting some of the transaction volume levels within the business. Our Debt business performed in line with budget and growth expectations.

Shortly after the period end, SANNE announced that it had reached a settlement with the Group's regulator in Jersey, the Jersey Financial Services Commission (JFSC), in relation to one of SANNE's local entities and a historical failure to remediate certain issues in the Jersey business within an agreed timeframe. Full details about this are available on the JFSC's website at www.jerseyfsc.org .

The lack of growth in our Corporate Business in H1 2019 was largely attributable to the loss of one large client in late 2018 and occurred due to a domiciliation requirement in a jurisdiction in which we were not able to continue to support the service offering. Efforts continue to replace this lost business with both new clients and cross-selling our broader product offering across the existing client base.

Our Private Client business performed particularly poorly during the period, with revenue falling below 2018 H1 levels. We are well advanced with a strategic review of this business line.

The gross margin for Channel Islands has declined by 1.6% in the first half. As in the EMEA Segment, this has been partly due to CI bearing a larger proportion of cost for the Business Development, Product Development and centralised teams. EMEA and CI together account for 62.8% of overall Group revenues. CI has also suffered from the same issues resulting from the change to jurisdictional reporting structure across the legacy EMEA Alternatives business which has resulted in the segment diluting margins in H1.

Asia-Pacific & Mauritius (APM)

SANNE's APM business includes our services across Hong Kong, Singapore, Shanghai, Tokyo, Mumbai and Mauritius. This segment provides services across all core alternative closed-ended investment products.

The segment saw strong growth in the period of 18.5%. This result benefited from a currency tailwind in the period with much of the revenue recognised in US dollars. Excluding this benefit the constant currency growth was 12.7%.

The performance reflects two differing market dynamics as between Asia-Pacific and Mauritius. Across Asia-Pacific, we have a smaller but very high growth platform benefiting from positive market dynamics and strong client wins. This performance is driven by a high win rate of business from new, high profile asset management clients as well as significant large wins from longer-term clients of the Group.

Our Mauritius business is a market leader in the more mature Mauritian administration industry and prior to SANNE's ownership had not been a growth platform. Whilst we have successfully started generating growth in the Mauritian business compared with the pre-acquisition revenue levels, the local Mauritian market due to its maturity is inherently lower growth than Asia-Pacific. As such the first half of 2019 has seen a broadly flat performance on the first half of 2018 before currency tailwinds are accounted for as the business works through expected end-of-life attrition from the legacy book.

APM also expanded its regional footprint into Tokyo following the office opening in January 2019. This is in direct response to client demand and will serve to further add to our already well-established Asian office network and market expertise. In June 2019, the region obtained its new book-keeping license in China, complementing SANNE's existing fund service offering into the local Chinese registered entity level. The licence allows SANNE to offer a full suite of fund solutions to cater for institutional managers, positioning us well as we seek to further grow our fund servicing business in Asia. The period also saw the opening of a new representative sales office in Mumbai. The majority of the market opportunity through Mauritius today is investment flowing into the Indian market and we see a lot of exciting opportunities to grow in line with the investment flows into the Indian funds industry. Our new sales capability onshore will be critical in capturing more of this opportunity.

During the first half of 2019, we have also created Centre of Excellence in Mauritius focusing on the preparation of financial statements for the wider Group and for external clients. To date we have recruited 27 staff into this outsourcing hub and expect to increase the number of people substantially during the second half of the year, as this initiative is already making a positive contribution to the Group.

Gross margin in the period has remained broadly in line with the prior year. We have seen a small amount of dilution from the increased spend on growth initiatives. However, the main driver for the reported drop has been mix effect as the faster growing Asia-Pacific region becomes a larger proportion of the segment and averages down the margin percentage.

North America (NA)

SANNE's NA Alternatives business primarily services Private Equity and Real Estate clients in North America. We continued making progress during the first half of 2019 in expanding our coverage of our local client base across various closed-ended fund strategies.

NA experienced strong organic growth for the first half of 2019. The constant currency organic revenue growth was 24.9%, increasing to 32.9% when the beneficial currency tailwind is factored in. The increase in the half-year growth rates reflect the aforementioned expansion across our client base, including the introduction of new clients locally through other jurisdictional relationships.

The majority of growth in the first half of the year was driven by continued strong demand from the existing client base that continued expanding both domestically and internationally across different asset products. We continue to see a lower level of administration outsourcing in North America compared with other regions around the globe. However, we do see an increasing trend from asset managers seeking a third-party administrator to increase internal efficiencies and demonstrating receipt of independent servicing to their investor base. There also continues to be positive momentum in new funds coming to market across all asset classes.

Gross margins for the first half of the year are broadly flat compared to the prior period. Margins in our NA segment have always been lower than other regions in the Group largely reflecting structurally different market conditions in North America where the penetration of outsourcing of fund administration with closed-ended fund managers is notably lower.

Strategic partnership with, and minority investment in Colmore

SANNE has entered into a strategic partnership with Colmore, a leading technology solutions business during Q3 2019. This has involved Sanne making a minority investment in Colmore. This partnership will bring leading new technology solutions into our service offering that provides fund management clients with real-time dynamic access to insight reports, analysis and data. This is an important partnership for SANNE as we continue to see technology taking an increasingly important role in how we deliver our services to clients.

M&A

SANNE continues to review various M&A opportunities across a number of the Group's fastest growing jurisdictions in North America, EMEA and Asia-Pacific and our new head of M&A has now been in place for four months. We are currently presented with a very strong pipeline of high quality opportunities. We will continue to be highly selective and undertake a disciplined approach to M&A.

Financial review

Group Income Statement

Revenue

Group revenue increased by 19.5% in the year to £78.7 million (H1 2018: £65.8m) which reflected a constant currency growth rate of 17.4%. Organic revenue growth in the period was 14.9% on an actual basis and 12.8% on a constant currency basis. Organic revenue growth is reported revenue growth adjusted for acquisitions on a like-for-like basis. In order to calculate this growth rate, we have stripped out the 2019 H1 contribution from AgenSynd as well as pro-rating the contribution from LIS down to 5 months, comparable to H1 2018's contribution. The impact of these adjustments is shown below:

Foreign Exchange

The Group's results are exposed to translation risk from the movement in currencies. The Group's major exposure is to Euro and US dollar being translated back into Sterling. These currencies have moved as shown in the table below:

Operating profit

Underlying operating profit for the period was marginally ahead by 3.7% on the prior year at £20.8 million (H1 2018: £20.0m) reflecting the balance of strong top line growth as well as the decline in first half underlying operating profit margins. Statutory operating profit in the period was £7.5m, down from £11.5m in 2018. This is largely a result in significantly higher non-underlying items in H1. In particular the one-off accrual for the AgenSynd earn-out that is linked to on-going employment and therefore recognised through the Group's Income Statement as well as the intangible impairment in South Africa.

Underlying net finance cost

Underlying group net finance costs increased to £1.6 million in the period (H1 2018: £0.6m). Of this increase, £0.4 million was driven by higher interest costs on the Group's loan facilities as a result of the higher debt balance. The remaining £0.6 million related to the recognition of lease interest under IFRS 16 (see below for more detail on IFRS 16).

Non-underlying items

Non-underlying items within operating profit include share-based payments where they relate to acquisitions, acquisition and integration costs, amortisation and impairment of intangible assets and one-off costs related to the refinancing of the Group's banking facilities undertaken in the year and the regulatory fine the Group settled shortly after the period end. Non-underlying costs in the first half were £13.3 million (H1 2018: £8.5m). Included within this amount was £1.9 million related to the impairment of intangible assets recognised with the acquisition in South Africa (see Note 10). Also included was a provision for £0.4m relating to the settlement reached with the JFSC shortly after the period end and associated fees (see Note 4). Further details on non-underlying items is given in Note 4 in the Notes to the Consolidated Results. There is also a non-underlying interest expense in the period of £0.5 million that is the write-off of previously capitalised arrangement fees in relation to the Group's old banking facilities.

Taxation

The Group's underlying effective tax rate for the period was 21% (H1 2018: 17.1%). The increase in the underlying effective tax rate in the period is a result of a greater proportion of the Group's profits being made in higher corporate tax rate jurisdictions.

Earnings per share

Diluted underlying earnings per share were 10.36 pence (H1 2018: 11.18p) and reported diluted earnings per share were 2.37 pence (H1 2018: 5.94p).

IFRS 16

The Group has applied IFRS 16 for the first time to the period beginning 1 January 2019 and has transitioned by adopting the modified retrospective approach which does not require restatement of the comparatives. In order to provide like-for-like comparators, the table below shows the 2019 financials had IFRS 16 not been adopted:

Working capital and cash flow

Working capital at 30 June 2019 as a percentage of annualised revenue was 22.6% (H1 2018: 20.4%). Underlying operating cash flow conversion for the first half was 118% (H1 2018: 68%). The business continues to enjoy an attractive cash flow profile. The strong cash conversion performance in the first half is, in part, a result of normalisation in working capital following a lower conversion rate in the prior year.

Capital expenditure in the first half of the year was £2.9 million (H1 2018: £0.6m). This reflected a large number of office moves that took place in the first half due to continued expansion. Most notable was the consolidation of all the Group's Luxembourg operations into a single location, a doubling of office space in Shanghai, a new, larger premises for the Group's Hong Kong operation, a relocation of the Group's Netherlands office from Rotterdam to Amsterdam as well as new office space in Tokyo and Mumbai.

Indebtedness and refinancing

The Group's net debt position at 30 June 2019 was £64.0 million (H1 2018: £49.3m) reflecting the acquisition of AgenSynd in the second half of 2018 and the capital expenditure seen in the first half. The Group also successfully refinanced its debt facilities in the first half. The new debt facility is a multi-currency committed £150 million revolving credit facility with an uncommitted accordion facility of £70 million. The Group's net debt position includes cash and bank balances held for regulatory capital. Cash held for regulatory capital is £9.1 million (30 June 2018: £11.1m) which would increase the Group's net debt position if excluded.

Dividend

The Board has declared an interim dividend of 4.7 pence per share (H1 2018: 4.6p). The dividend will be paid on 18 October 2019 to shareholders on the register as at the close of business on the record date of 20 September 2019.

Risk

The principal risks facing the Group are reviewed regularly and represented by those set out in the Annual Report 2018. These are categorised as Acquisition Due Diligence Risk; Strategy Risk; Competitor Risk; Business Change Risk; Cyber Security Risk; Process Risk; Staff Resourcing Risk; Data Management Risk; Regulatory Change Risk; Compliance Risk; Financial Crime Risk and Impairment Risk.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE INTERIM STATEMENT

We confirm to the best of our knowledge that:

- The condensed set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; and

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

A. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

B. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

The interim statement contains certain forward looking statements which are made by the directors in good faith based on the information available to them at the time of their approval of this interim statement. Forward looking statements contained within the interim statement should be treated with some caution due to the inherent uncertainties, including economic, regulatory and business risk factors, underlying any such forward looking statements.

We undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise. The interim statement has been prepared by Sanne Group plc to provide information to its shareholders and should not be relied upon by any other party or for any other purpose.

Martin Schnaier

Chief Executive Officer

9 September 2019

Independent review report to Sanne Group plc

Report on the condensed consolidated financial statements

We have reviewed Sanne Group plc's condensed consolidated financial statements (the "interim financial statements") in the Half-year report of Sanne Group plc for the 6 month period ended 30 June 2019. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The interim financial statements comprise:

·; the consolidated balance sheet as at 30 June 2019;

·; the consolidated income statement and consolidated statement of comprehensive income for the period then ended;

·; the consolidated cash flow statement for the period then ended;

·; the consolidated statement of changes in equity for the period then ended; and

·; the explanatory notes to the interim financial statements.

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

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

The Half-year report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half-year report 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 Half-year report 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.

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 Half-year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

London

9 September 2019

1. Refer to note 8 for details of the prior year restatement

2. Refer to note 14 for details relating to the change in accounting policy