Final Results

29 March 2017

Sanne Group plc

("Sanne", "the Group" or "the Company")

Preliminary Results for the year ended 31 December 2016

Sanne, a leading provider of alternative asset and corporate administration services, announces its results for the year ended 31 December 2016.

1. Underlying results for the year have been presented after the add back of non-underlying items. Within operating profit these items include acquisition and integration costs (£3.9m), share based payments (£1.4m) and amortisation of intangible assets (£2.7m). Underlying profit before tax has been further adjusted for non-underlying acquisition related FX gains (£1.2m) and acquisition related loan restructuring costs (£0.2m). Further details can be found in note 8 of the consolidated financial statements.

Financial highlights:

- Group revenue increased 40% to £63.8 million (2015: £45.6 million)

- Underlying operating profit up 31% to £22.7 million (2015: £17.3 million)

- Underlying profit before tax up 37% to £22.0 million (2015: £16.1 million)

- Operating profit up to £14.7 million (2015: £5.9 million)

- Profit before tax up to £15.0 million (2015: £2.4 million)

- Diluted Earnings per share (EPS) at 11.3 pence (2015:1.4 pence), underlying diluted EPS 17.4 pence (2015:13.9 pence)

- Recommended final dividend per share (DPS) of 6.4 pence, bringing the total dividend for the year to 9.6 pence, inclusive of the previously paid 3.2 pence interim dividend (2015:7.0 pence in total)

Operational highlights

- Strong pipeline of new business within Sanne's core alternatives focused business divisions (Debt, Real Estate, Private Equity and Hedge)

- Projected annualised value of new business won in the year of approximately £13.8 million (2015: £13.0 million)

- Acquisitions completed in United States, Mauritius (2017), South Africa, Ireland and the Netherlands broadening capabilities and geographic footprint

Dean Godwin, Chief Executive Officer of Sanne Group plc, said:

"2016 was a transformational year for Sanne. We have continued to deliver strong organic growth with good performances across the business, particularly in our core alternative asset-focused divisions."

"We have also made several strategic acquisitions in the year that have built out our global platform. Significantly, not only have these added additional capability such as a Hedge offering, but they give us meaningful scale in exciting new regions such as North America, one of the world's largest and fastest growing markets. These new geographic and service capabilities provide the Group with even more opportunities for growth."

 "Looking ahead, we are positive. The momentum in our core divisions, new market opportunities, strengthened operational structure and the attractive underlying trends in all our markets give us confidence in delivering continued growth."

Enquiries:

Investor and analyst webcast

The Company will be hosting an investor and analyst presentation at 09:30am (BST) on 29 March 2017. This presentation can be viewed live on the 'investor relations' section of the Sanne Group website: https://www.sannegroup.com/investor-relations/financial-calendar/

Participants can also dial into the presentation in listen-only mode using the following details:

Number: +44 (0)330 221 0088

Access code: 144-527-645

A replay of the presentation will be available on the Sanne Group website shortly after the conclusion of the webcast.

Notes for Editors

About Sanne

Sanne is a leading provider of alternative asset and corporate administration services.

The Group employs more than 1,000 people. Sanne operates from 15 locations: Belgrade; Cape Town; Dubai; Dublin; Guernsey; Hong Kong; Jersey; London; Luxembourg; Malta; Mauritius; New York; Netherlands; Shanghai and Singapore.

www.sannegroupplc.com 

Chairman's Statement

2016 was a significant year for Sanne Group plc with strong underlying growth achieved alongside a number of strategic acquisitions which will assist in the development of a global service platform.

2016 overview

During the period Sanne Group plc ("the Company"), together with its subsidiaries (the "Group" or "Sanne"), continued to deliver strong organic revenue and profit growth across its existing core asset-focused business divisions while also successfully completing a number of acquisitions which will help to create a global platform to address service opportunities in high growth markets.

Dividend

The Board continues to adopt a progressive dividend policy. It still expects to retain sufficient capital to fund ongoing operating requirements, to provide an appropriate level of dividend cover and to invest in the Group's long-term growth.

The Board is recommending a final dividend of 6.4 pence per ordinary share (2015: 5.6 pence). The final dividend will be payable on 23 May 2017 to Shareholders on the register at close of business on 7 April 2017.

Together with the previously paid 2016 interim dividend of 3.2 pence per share, this gives a total dividend for the year of 9.6 pence per share (2015: 7.0 pence).

Strategy

The Board has worked closely with the Executive team to develop and deliver on a corporate strategy which seeks to establish the Group as one of the world's leading providers of alternative asset and corporate administration services. This strategy supports the individual business divisions' objectives to continue to deliver strong organic growth by deepening service capability and market coverage to an increasingly international client base.

In support of this, there is a key focus on the integration of the recently completed acquisitions to deliver the operational and revenue synergies each business offers the combined Group.

There is further evidence of sector consolidation and external investment, demonstrated through recent activity from peer group companies. As such, we will continue to support the Executive team in the identification and execution of further acquisitions which support the strategy.

The Executive team demonstrates a clear understanding of the administration sector and we are pleased to see the progression of the next tier of management as they take greater responsibility for strategic decision making. With the addition of some recent external senior management appointments we believe that the team is well placed to deliver the Group's strategic objectives.

Outlook

The Board considers that the growth prospects for the Group remain positive, despite market uncertainty resulting from wider geo-political events, and that the increasing asset and geographic revenue diversity delivered by recent investments means that Sanne is well placed to continue to deliver strong growth.

Rupert Robson

Chairman

Chief Executive's Officer's Statement

Sanne has continued to grow the business by increasing the breadth and depth of its service offering as well as delivering further jurisdictional growth through strategic acquisitions to build a truly global service platform for existing and new clients.

Summary of 2016 financial performance

A strong focus on revenue growth coupled with continued cost control resulted in revenues increasing to £63.8 million (2015: £45.6 million) and underlying profit before tax increasing to £22.0 million (2015: £16.1 million) during the period. Profit before tax was £15.0 million (2015: £2.4 million). The Group's core business lines have seen good organic growth driven by strong momentum from new business opportunities delivered in the latter part of 2015 and throughout 2016.

During the year, the Group secured new business totalling approximately £13.8 million on a projected annualised value basis (2015: £13.0 million). 

The strong underlying operating profit margin reflects a continued focus on efficient staff utilisation both through forward planning and by beginning to drive capacity through lower cost operational centres. This has allowed the Group to continue to invest in central operational capacity to support platform growth.

Key events in 2016

The result of the EU referendum in June was felt across the financial markets. While the final outcome of the UK's negotiations with the EU will not be known for some time, with operational centres both inside and outside the EU, the Group continues to invest in the development of its client proposition across a range of jurisdictions.

The Group has continued expanding its service provision through the development of new reporting services and the roll-out of capabilities across the existing global network and operating platform. Examples of this include the further development of regulatory reporting services in response to the Common Reporting Standard ("CRS") and the European Alternative Investment Fund Managers Directive ("AIFMD") requirements where Sanne is working with clients to deliver multijurisdictional reporting solutions.

The Group has been acquisitive, completing four deals in 2016 with a further deal completed in January 2017. These acquisitions have delivered geographic diversity with operational capabilities in the US, South Africa and Mauritius as well as offering a more comprehensive product offering in the Group's more established markets through smaller acquisitions in Ireland and the Netherlands. This wider operational footprint provides the Group with a global service platform for existing and new clients to drive future growth.

With a number of these acquisitions operating in lower cost jurisdictions, we are now able to utilise highly skilled labour pools to support client service and operational initiatives while maintaining margins.

Employees

With more than 1,000 staff globally providing professional services to our clients, people remain the single most important asset in the Group. We are committed to ensuring that we continue to recruit the highest calibre staff at every level, providing the necessary support and development framework for them to develop a long term professional career with the Group.

The senior management team continues to be strengthened so as to deliver the necessary strategic capacity to drive the business forward for the next phase of growth. This has included both senior front office and back office hires and the recent appointment of a new Chief Operating Officer in January 2017.

The communication to all staff about a consistent corporate culture is of great importance and remains a key priority as we progress with the integration of the recent acquisitions onto a common global platform. There will be opportunities for employees across the Group to move between offices to assist with this as well as the sharing of best practice.

Focus

The Group's ongoing strategic focus is to continue building scale in established and emerging markets and thereby to be recognised as one of the world's leading providers of alternative asset and corporate administration services.

The Group is committed to continuing to invest in both people and infrastructure in support of its strategic objectives while maintaining the financial discipline required to sustain operating profit margin. This includes further leveraging of the technology platform in support of client service initiatives and an increasing demand for transparent, real time reporting.

While there is a continued focus on integration and delivering organic growth, the Group will evaluate acquisition opportunities that enable Sanne to deepen existing asset capabilities, broaden its product offering and deliver greater jurisdictional strength.

There will be an emphasis on ensuring the successful integration of the recent acquisitions in order to deliver operational and revenue synergies. This will be coupled with further investment in platform infrastructure to ensure there is a robust framework that supports the client service teams by delivering effective technology support.

We believe that there is a continuing trend towards the outsourcing of corporate and fund administration activities from asset managers and institutions driven by increasing regulation, cross-border investment and the growing expectation of independent oversight. Furthermore, there remain strong underlying growth trends within the alternatives sector, a particular area of focus for Sanne.

While the outcome of the EU referendum has created uncertainty in some markets, our strong momentum and diverse geographic presence, as well as the favourable underlying trends in our markets, give us confidence in the continued growth of the Group.

Dean Godwin

Chief Executive Officer

Strategy Review

Business model

By the end of 2016 operations were focused on nine principal divisions: Debt, Real Estate, Private Equity, Corporate and Institutional, Executive Incentives, Private Client, Treasury, Hedge and North America Alternatives. From 1 January 2017 the Group has reorganised into three core management and reporting areas.

These operations span the Group's international footprint with headquarters in Jersey. Core services include general administration, financial reporting, governance, regulatory services, investor services and treasury services.

Client teams are spread over geographies to ensure continuity of service and client relationships.

In the alternatives product space, the Group believes that its ability to win new work and retain existing clients is demonstrative of its ability to provide the high touch and customised services that alternative asset managers require. In addition, structures within the alternatives space tend to be more bespoke in nature which makes automation challenging and reinforces the need for the type of tailored solutions that the Group's qualified and experienced staff are able to provide.

Although Sanne's contracts with its clients are typically terminable by either party given three months' written notice, once an outsourced service provider is contracted to support and administer a structure it is rare that they are replaced before the end of the structure's life.

The Group has a predominantly institutional client base which is well diversified. Levels of client concentration are materially unchanged from 2015, with only two clients accounting for more than 5% each of revenue in 2016 (6.4% and 5.4% respectively). Furthermore, the top ten clients accounted for less than 30% of revenue in the financial year ended 31 December 2016. Following the acquisition of FLSV Fund Administration Services ("FAS") an additional institutional client is predicted to account for circa 10% of revenue in 2017.

Clients of the Debt, Real Estate, Private Equity, Hedge and North America divisions are typically institutions focused on alternative asset classes. Clients of the Private Client division are typically ultra-high net worth individuals and families; Executive Incentives and the Corporate and Institutional division covers the remaining corporate and institutional client base.

IDS Fund Services, the business acquired in South Africa now forms the Hedge fund administration division.

The acquisition of Chartered Corporate Services in Ireland has been integrated in the Corporate and Institutional division and the acquisition of Sorato Trust B.V is included in the Debt division.

The acquisition of FAS is reported separately.

From 1 January 2017, the Group has established three core management and reporting areas to reflect the further growth and globalisation of the service platform. These consist of US Alternatives (to include the US acquisition), EMEA and ROW

Alternatives (to include the existing Debt, Real Estate, Private Equity and Hedge Fund business divisions along with the Mauritius acquisition) and Corporate and Private Client services (to include Corporate and Institutional, Executive Incentives and Private Client Business Divisions). Each area is now led by a Managing Director with significant experience delivering business performance and strategic growth

Strategy

The Group's growth strategy is both organic and inorganic which is reflected in its successful growth track record in recent years. New business is sourced both from capturing increased revenue from existing clients, as they introduce new structures and use the Group for additional services, and from new client relationships.

The strategic focus of the Group is to continue building scale in established and emerging markets and to be recognised as one of the world's leading providers of alternative asset and corporate administration services. The Group will continue to focus on building its client base of alternative asset managers, family offices, financial institutions and corporates.

Divisional review - Debt

Revenues for the year ended 31 December 2016 were £16.4 million (2015: £13.8 million) with a gross profit of £10.7 million (2015: £9.4 million). The division has focused on maintaining its strong market position in the provision of administration services to banks and non-bank lenders including asset managers and peer-to-peer platforms. Operational capabilities have been increased in London, Dublin, Netherlands and Luxembourg to reflect new workflows and this is enabling further business development opportunities driven by an ability to deliver services across a wider geographic footprint.

Divisional review - Real Estate

Revenues for the year ended 31 December 2016 were £13.8 million (2015: £10.2 million) with a gross profit of £8.7 million (2015: £6.4 million). There have been new business wins from both new and existing clients as the UK real estate market continues to attract significant foreign investment following the weakening of the pound since the EU referendum result. There has also been increased demand for fund structures across multiple jurisdictions as managers look forward to new fund raises. New client mandates are also being driven by a trend for fund managers to outsource non-core roles such as back-office accounting. Recruitment continues in key operational centres to service new mandates in these jurisdictions and create capacity to grow existing relationships.

Divisional review - Private Equity

Revenues for the year ended 31 December 2016 were £8.7 million (2015: £6.6 million) with a gross profit of £5.6 million (2015: £3.9 million). The existing client base continues to see growth with the launch of successor funds and new strategies. The division has also expanded its client base. This pattern of growth reflects the ongoing focus on client service and a stronger corporate brand in the private equity community. The division continues to provide a flexible, multi-jurisdictional offering which is adapted to each client's requirements arising from the changes in the geo-political and regulatory environments.

Divisional review - Corporate and Institutional

Revenues for the year ended 31 December 2016 were £5.6 million (2015: £4.0 million) with gross profit of £3.4 million (2015: £2.6 million). The division continues to define and develop a distinct product suite to expand its market offering and take a pro-active approach to cross jurisdiction product development in response to the changing regulatory landscape. Focus has centred on the integration of CCS and leveraging its additional product offerings (liquidations, payroll services and VAT reporting) across the existing client base. There has been continued investment in the Group's depositary service proposition to be promoted across the alternatives focused business divisions and jurisdictions. The division has benefited from the recruitment of key hires and continues to build upon its operational capabilities.

Divisional review - Executive Incentives

Revenues for the year ended 31 December 2016 were £4.7 million (2015: £4.8 million) with a gross profit of £3.1 million (2015: £3.4 million). The annual performance is reflective of the uncertainty generated in the lead up to, and as result of the EU referendum which affected underlying activity levels in the first three quarters of the year in terms of share transactions for existing clients as well as impacting the number of new mandates from private equity and IPO related activity. Quarter four saw a strong return of transactional work in the private equity and IPO arena and this, together with a healthy pipeline of transfer mandates for FTSE 100 and 250 companies represented a positive finish to the year.

Divisional review - Private Client

Revenues for the year ended 31 December 2016 were £7.0 million (2015: £5.8 million) with a gross profit of £4.7 million (2015: £3.9 million). There has been a strong pipeline of new mandates from existing clients and an increase in business development activity has resulted in a growing number of new client opportunities. The division continues its strategic focus on Ultra High Net Worth clients and their family offices. The recruitment of a Global Head of the division will continue to drive the expansion of the Private Client jurisdictional offering and broaden its target client focus into new markets.

Divisional review - Treasury

Revenues for the year ended 31 December 2016 were £0.5 million (2015: £0.4 million) with a gross profit of £0.1 million (2015: £0.1 million). The team continues to position itself as a strategic partner to the other divisions and their clients in relation to their specialist treasury requirements. Both the cash and foreign exchange services have seen a number of client wins across the business divisions with some notable wins towards the end of the year. The continued expansion of the breadth of services provides a platform for the continued growth and development of the division.

Divisional Review - Hedge

Revenues for the year ended 31 December 2016 were £4.0 million with a gross profit of £2.3 million (for the 7 month period post completion). Financial performance was enhanced, in part, by the depreciation of sterling against the South African rand during the period from the acquisition date. During the second half of the year the new business pipeline included portfolios to be transitioned either into the regulated environment or onto other third party structures.

Divisional Review - North America Alternatives

Revenues for the year ended 31 December 2016 were £3.1 million with a gross profit of £1.7 million (for the two month period post completion). In the two months of ownership during the reporting period there was strong revenue performance driven by new client wins and additional services being undertaken for existing client relationships. Stronger than anticipated revenue performance has been driven by new client wins and additional services being undertaken for existing client relationships. The underlying market conditions for alternative asset management have been positive and this is further enhanced by an increased trend toward the outsourcing of back office functions from existing managers driven by increasingly sophisticated reporting requirements as well as an increased demand amongst investors for independent oversight.

Financial Review

The Group delivered another strong year of growth, with revenues rising 40% to £63.8 million (2015: £45.6 million). Organic growth, pre-acquisitions, remained strong at 22%.

Group results

Underlying operating profit was £22.7 million, up 31% (2015: 17.3 million) during the year, with a margin of 35.5% (2015: 37.9%). Operating profit was £14.7 million (2015: £5.9 million).

Non-underlying items within operating profit include acquisition and integrations costs, share based payments and amortisation of intangible assets totalling £8.0 million. For further detail on non-underlying items see note 8 in the Notes to the Consolidated Financial Statements.

Net finance expense

Given the volatility of the foreign currency markets resulting from 'Brexit' the Group saw some larger than normal foreign exchange gains and losses. The underlying net result from foreign exchange gains and losses was a £0.1 million loss. The Consolidated Income Statement presents an overall gain of £1.1 million, as there was a net £1.2 million non-underlying gain relating to acquisition related forward contracts which the Group took out during the year.

The net finance costs were £0.8 million for the year. The Group refinanced to support the acquisition activity and underlying finance costs remain low due to the ongoing historic low interest rates and the continuing strength of the Group's balance sheet

Other Comprehensive Income

With the non-sterling acquisitions made during the year the Groups exposure to exchange differences on translation of foreign operations is increasing. The Group recognised a gain in Other Comprehensive Income of £3.3 million for the year.

Taxation

The Group's effective tax rate for the year was 13.5% (2015: 35.2%). There was significant IPO related activity in the prior year that heavily impacted the effective tax rate and when normalised for non-underlying items the rate for the year was 15.1% (2015: 16.7%).

Deferred tax liabilities have been recognised for a first time through the acquisitions and at the yearend there was £2.3 million on balance sheet.

Earnings per share

Underlying diluted earnings per share of 17.4 pence (2015: 13.9 pence) and diluted earnings per share 11.3 pence (2015: 1.4 pence). 

Statement of financial position and net funds

The significant acquisition activity during the year has seen the carrying value of goodwill and other intangible assets increase to £82.7 million (2015: £7.7 million). This value represents the assets of the acquired companies that are not separately identifiable and the value attributed to the acquired customer relationships and underlying contracts. The Board has established key controls for monitoring the carrying value of these assets.

The cash position of the Group remains strong with cash generated by operations of £18.7 million (2015: 12.4 million), enabling the Board to continue with its progressive dividend policy as the Group grows. There was significant cash outflow during the year in relation to the acquisitions, a £94.5 million capital raise and a net £42 million loan refinancing, which in conjunction with the operations has resulted in net cash at the year-end of £46.1 million (2015: £1.2 million) (see note 18 in the notes to the Consolidated Financial Statements). It should be noted that the year-end position is inclusive of £73.8 million held in readiness and paid for the completion of the acquisition of the IFS Group on 1 January 2017.

Working capital relating to customer invoicing improved year on year with the working capital as a percentage of annualised revenue at 17% (2015: 26%), the reduction largely relates to acquisitions which have proportionally larger elements of invoicing in advance. Trade and other payables were £13.7 million (2015: £3.2 million) with the increase over and above that expected with the growth of the Group being largely attributable to £5.9 million of deferred consideration on the CCS and FAS acquisitions and £1.4m of accrued costs relating to the acquisitions and the capital raise.

Dividend

The Board's progressive dividend policy allows it to retain sufficient capital to fund ongoing operating requirements, an appropriate level of dividend cover and funds to invest in the Group's long-term growth. The board is recommending a final dividend of 6.4 pence per ordinary share.

Together with the previous paid 2016 interim dividend of 3.2 pence per share, this would give a total dividend for the year of 9.6 pence per share (2015: 7.0 pence per share).

Sanne Group plc

Consolidated Income Statement

For the year ended 31 December 2016

All profits in the current and preceding year are derived from continuing operations.

The notes on pages 85 to 117 are an integral part of these Consolidated Financial Statements.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2016

The notes on pages 85 to 117 are an integral part of these Consolidated Financial Statements.

Consolidated Balance Sheet

As at 31 December 2016

The notes on pages 85 to 117 are an integral part of these Consolidated Financial Statements.

The financial statements were approved by the Board of Directors and authorised for issue on 28 March 2017. They were signed on its behalf by:

Dean Godwin Spencer Daley

Chief Executive Officer Chief Financial Officer

Consolidated Statement of Changes in Equity

As at 31 December 2016

Consolidated Cash Flow Statement

For the year ended 31 December 2016

Notes to the Consolidated Financial Statements

For the year ended 31 December 2016

1. General information

Sanne Group plc (the "Company"), incorporated in Jersey on 26 January 2015, is a registered public company limited by shares with a Listing on the London Stock Exchange. The registered office and principal place of business is 13 Castle Street, St Helier, Jersey. The principal activity of the Company and its subsidiaries (collectively the "Group") is fund, company and trust administration.

In the opinion of the Directors there is no ultimate controlling party.

These financial statements are presented in pounds sterling. Foreign operations are included in accordance with the policies set out in note 3. The accounting policies have been applied consistently in the current and prior year, other than as set out below.

2. Adoption of new and revised Standards

The following standards, amendments and interpretations are relevant to the Group, but were not yet effective and in some cases had not been endorsed by the EU. These standards have not been early adopted by the Group.

• IFRS 9 'Financial Instruments' (effective for periods beginning on or after 1 January 2018). This is a new standard which enhances the ability of investors and other users of financial information to understand the accounting for financial assets and reduces complexity. The standard uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing the various rules in IAS 39.

• IFRS 15 'Revenue from contracts with customers' (effective for periods beginning on or after 1 January 2018). The standard establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction Contracts' and related interpretations.

• IFRS 16 'Leases' (effective for periods beginning on or after 1 January 2019). This is a new standard which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract. The standard eliminates the classification of leases as either operating or finance leases as required by IAS 17, and instead, introduces a single lessee accounting model. A lessee will be required to recognise assets and liabilities for all leases with a term of more than 12 months and depreciate lease assets separately from interest in the income statement. The standard replaces IAS 17 'Leases'.

Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed, although the Directors feel it will not be material to reported results.

In the current year, the Group applied a number of amendments to IFRSs and new interpretations issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2016. Their adoption has not had any material impact on the disclosure or on the amounts reported in these financial statements.

3. Significant accounting policies

Basis of accounting

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The financial statements have also been prepared in accordance with IFRS as issued by the International Accounting Standards Board ("IASB").

The financial statements have been prepared on the historical cost basis with fair value being applied to derivative financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The principal accounting policies adopted are set out below.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) during each year. Control is achieved where the Company:

• has the power over the investee;

• is exposed, or has rights, to variable return from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income when the Company obtains control over the subsidiary and ceases when the Company loses control over the subsidiary. Where necessary, adjustments are made to the financial results of the subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

Under Article 105(11) of the Companies (Jersey) Law 1991, the Directors of a holding company need not prepare separate financial statements (i.e. Company only financial statements). Consolidated financial statements for the Company are not prepared unless required to so by the members of the Company by ordinary resolution. The members of the Company had not passed a resolution requiring separate financial statements and, in the Directors' opinion, the Company meets the definition of a holding company. As permitted by law, the Directors have elected not to prepare separate financial statements.

Going concern

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Directors have reviewed the Group's financial projections and cash flow forecasts and believe, based on those projections and forecasts, that it is appropriate to prepare the consolidated financial statements of the Group on the going concern basis. The Group has healthy cash flow and a good pipeline of existing and new customers. Accordingly, they have adopted the going concern basis of accounting in preparing the consolidated financial statements. Further detail is contained in the viability statement included in the Strategic Report on pages 8 to 30.

Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of assets transferred by the Group and liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as non-underlying items within operating expenses.

The acquiree's identifiable assets and liabilities that meet the conditions for recognition under IFRS3 (2008) are recognised at their fair value at the acquisition date.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

When the consideration transferred by the Group in a business combination includes an asset or liability resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement' period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates at fair value with the corresponding gain or loss being recognised in profit or loss.

Goodwill

Goodwill is initially recognised and measured as set out above.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Intangible assets

Intangible assets acquired in a business combination are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, separately intangible assets acquired in a business combination are reported at costs less accumulated amortisation and any impairment losses.

Contract intangibles

Contract intangibles consist of the recognition of the legal relationships gained through acquisition. On initial recognition the values are determined by relevant factors such as business product life-cycles, length of notice, ease of movement and general attrition. This class of intangibles are amortised over their useful lives using the straight-line method, which is estimated at six to eight years, based on management's expectations and client experience. The amortisation charge for the year is included in the consolidated income statement under 'operating expenses' as non-underlying items.

Customer intangibles

Customer intangibles consists of the recognition of value attributed to the customer lists through acquisition. On initial recognition the values are determined by relevant factors such as the Company's growth pattern and ability to cross-sell to existing clients. Subsequently, this class of intangibles are amortised over their useful lives using the straight-line method, which is estimated at six to ten years, based on management's expectations and client experience. The amortisation charge for the year is included in the consolidated income statement under 'operating expenses' as non-underlying items.

Interest income

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.

Rendering of services

Revenue is recognised in the consolidated statement of comprehensive income at the point in time when the Group has the right to receive payment for its services, on an accruals basis.

Accrued income

Accrued income represents the billable provision of services to clients which has not been invoiced at the reporting date.

Accrued income is recorded based on agreed fees billed in arrears and time based charges at the agreed charge out rates in force at the work date, less any specific provisions against the value of accrued income where recovery will not be made in full.

Deferred revenue

Fees in advance and up-front fees in respect of services due under contract are time apportioned to the respective accounting periods, and those billed but not yet earned are included in deferred revenue in the consolidated balance sheet.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

In the event that lease incentives are received on entering into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of the rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Foreign currencies

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the year in which they arise.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's operations with a functional currency other than pounds sterling are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during that year, in which case the exchange rates at the date of transactions are used. Income and expense items relating to entities acquired during the financial year are translated at the average exchange rate for the period under the Group's control. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity in the translation reserve.

On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

Retirement benefit costs

Payments to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered services entitling them to contributions.

Earnings per share

The Group presents basic and diluted earnings per share. In calculating the weighted average number of shares outstanding during the period any share restructuring is adjusted by a factor to make it comparable with the other periods. For diluted EPS, the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential ordinary shares.

Both basic and diluted EPS measures are shown for statutory and adjusted profit positions, as the Group has also presented an alternative version with profit adjusted for non-underlying items to provide better understanding of the financial performance of the Group.

Taxation

Tax on the profit or loss for the period comprises current and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current tax and deferred tax for the year

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Equipment

Equipment is stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method, on the following bases:

 Computer equipment 3 to 5 years

 Fixtures and equipment 5 to 16 years

The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period with the effect of any changes in estimate accounted for on a prospective basis.

The gain or loss arising on the disposal or scrappage of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in profit or loss.

Impairment of tangible and intangible assets (excluding goodwill)

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell or value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value.

All financial assets, other than cash and cash equivalents and derivatives, are classified as 'loans and receivables'.

Loans and receivables

Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.

Financial liabilities

Financial liabilities are classified as either financial liabilities at Fair Value Through Profit and Loss 'FVTPL' or 'other financial liabilities'. The Group does not hold any financial liabilities at FVTPL.

Other financial liabilities

Borrowings are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter year, to the net carrying amount on initial recognition.

Accrued interest is recorded separately from the associated borrowings within current liabilities.

Derivative financial instruments and embedded derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in profit or loss immediately.

Derivatives embedded in other financial instruments are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL. An embedded derivative is presented as a non-current asset or non-current liability if the remaining maturity of the hybrid instrument to which the embedded derivative relates is more than 12 months and is not expected to be realised or settled within 12 months.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the 'other gains and losses' line item.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the income statement as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income at that time is accumulated in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.

Employee share trust/Own shares

Own shares represent the shares of the Company that are held in treasury or by employee share ownership trusts (which are consolidated in the Group financial statements). Own shares are recorded at cost and deducted from equity. When shares vest unconditionally, are cancelled or are reissued they are transferred from the own shares reserve at their weighted average cost. Any consideration paid or received by the Trust for the purchase or sale of the Company's own shares is shown as a movement in shareholders' equity.

Provisions

Provisions are recognised when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are determined by the expected future cash flows at a pre-tax rate that reflects current market assessments of the risks specific to the liability. Onerous lease provisions are measured at the lower of the net cost to fulfil, or to exit the contract, discounted as appropriate.

Fiduciary activities

The assets and liabilities of trusts and companies under administration and held in a fiduciary capacity are not included in these consolidated financial statements.

Share-based payments

Employees of the Group receive remuneration in the form of share-based payment under Performance Share Plan or Restrictive Stock Awards, whereby eligible employees render services as consideration for equity instruments (shares).

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 27.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

Non-underlying items

Non-underlying items are disclosed and described separately in the consolidated financial statements where it is necessary to do so to provide a better understanding of the financial performance of the Group. Further details of the nature of non-underlying items are given in note 8.

Direct costs

Direct costs are defined by management as the costs of the income generating divisions including staff payroll, marketing and travel attributable to the division in relation to the delivery of services and supporting growth.

In the application of the Group's accounting policies, which are described in note 3, 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 reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.

The following are the critical judgements and estimation uncertainty at the balance sheet date that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in financial statements.

4. Critical accounting judgements and key sources of estimation uncertainty

Brexit

The Group continues to appraise the potential impacts of the United Kingdom's referendum on EU membership ("Brexit"). In the short term the Group is a net beneficiary of Sterling's weakness given the value of underlying contracts in USD, EUR and ZAR being in excess of the exposure to increased cost in overseas jurisdictions.

Sterling's weakness and a strengthening of the South African Rand and United States Dollar has resulted in an unrealised £3.3 million gain on retranslation in the period. This relates to the net exchange gain on the assets and liabilities of the non-Sterling functional currency subsidiaries of the Group, with notably a £2.1 million gain on the Intangible assets.

While the final outcome of the UK's negotiations with the EU will not be known for some time, the Group continues to invest in the development of its client proposition across its many operational centres, both inside and outside the EU. Brexit has created uncertainty in some markets, but the Group's strong momentum and diverse geographical presence, as well as the favourable underlying trends in the markets in which we operate, give the Directors confidence in the continued growth in the Group.

Revenue recognition and accrued income

The Group recognises accrued income within revenue and as a receivable for amounts that remain unbilled at the year- end, recorded at the recoverable amount. The recoverable amount of accrued income is assessed on an individual basis using the judgment of management, and takes into account an assessment of the client's financial position, the aged profile of the accrued income and an assessment of historical recovery rates.

Initial recognition and useful life of intangible assets

The Group's management team have assessed each acquisition in the consolidated financial statement period to identify the intangible assets that were acquired in each transaction that qualify for separate recognition. Accordingly, management have recognised two main classes of intangibles being Contract and Customer intangibles.

The valuation method used to value contract and customer intangibles is a multi-period excess earnings method. The intangibles are amortised over their useful economic life ("UEL"). For the contract intangibles, UEL has been assessed to be between six and eight years which has been estimated as the average period for which services are typically provided to contracted client entities. For the customer intangibles, UEL has been assessed to be six to ten years.

Evaluation of impairment of intangible assets

The group actively looks for signs of impairment by reviewing the financial performance of the acquired books of business. While every effort is made to evaluate it correctly there is a high level of judgement in the original and continuing assumptions that underpin the values. In making its judgement management considers income generated against the original business case, internal and external factors effecting economic life and growth assumptions. No signs of impairment were detected and no value in use calculations were performed.

The carrying value of intangible assets at 31 December 2016 was £27.6 million (2015: £7.7 million).

Evaluation of impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill at the balance sheet date was £55.1 million (2015: nil). Details of the calculation are set out in note 13.

Deferred tax on tax deductible intangible assets

The Group claims tax deductions in respect of deductible intangible assets and goodwill. The Group will recognise a deferred tax asset or liability on the difference between the tax carrying value and the accounting carrying value.

Trade and other receivables

Sanne provides services to customers on credit terms with a mix of advance and arrears billing. Certain debts due to the Company will not be paid due to the default of a small number of our customers. Our estimates of doubtful debts, based on our historical experience, are used in determining the level of debts that we believe will not be collected. These estimates consider significant indicators of their recoverability being insolvency/closure, customer liquidity and general creditworthiness issues as identified by management.

5. Segmental reporting

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

The Group has nine reportable segments under IFRS 8: Debt, Real Estate, Private Equity, Corporate and Institutional, Executive Incentives, Private Client, Treasury, Hedge and North America alternatives. No customer represents more than 10% of 2016 revenue.

The chief operating decision maker is the Board of Directors of Sanne Group plc. Each segment is defined as a set of business activities generating a revenue stream determined by divisional responsibility and the management information reviewed by the Board of Directors. The board evaluates segmental performance on the basis of gross profit, after the deduction of the direct costs of staff, marketing and travel.

No inter-segment sales are made.

Geographical information

The Group's revenue from external customers by geographical location of contracting Group entity is detailed below:

6. Finance costs

During the year the initial loan facility with HSBC Bank plc was repaid and refinancing undertaken with HSBC. Details can be found in note 22.

7. Finance income

8. Non-underlying items

The above reflect expenses which are not representative of underlying performance.

i. In the year ended 31 December 2015, the Group expensed fees relating to the IPO of £6.9 million.

ii. Share based payments are detailed in note 27.

iii. During the year ended 31 December 2016 the Group completed four acquisitions, as detailed in note 27. The Group expensed £3.9 million of acquisition and integration expenditure. As detailed in note 30 the Group acquired IFS Group on 1 January 2017, the Group expensed £1.8 million of acquisition expenditure relating to this transaction. In the prior period the Group expensed £90k of legal and professional fees relating to the IDS acquisition and a further £47k of legal and professional fees relating to aborted deals.

iv. The amortisation charges relates to the amortisation of intangible assets acquired through acquisitions.

v. As part of the loan restructuring, accelerated amortisation on issuance costs of £245k (2015: £2.3 million) were expensed,see note 22.

vi. FX forward contracts were taken out to purchase United States Dollars at a fixed price at a fixed date to fund the FAS and IFS Group acquisitions. A net gain of £1.2 million was recognised on these contracts.

9. Tax

The difference between the total current tax shown above and the amount calculated by applying the standard rate of Jersey income tax to the profit before tax is as follows:

Income tax expense computations are based on the jurisdictions in which profits were earned at prevailing rates in the respective jurisdictions.

The Company is subject to Jersey income tax at the standard rate of 0% however, the majority of the Group's profits are reported by Sanne Fiduciary Services Limited, a Jersey incorporated trading company whose principal activity is the provision of trust, fund and company administration. Sanne Fiduciary Services Limited is therefore subject to Jersey income tax at the rate applicable to financial services companies of 10%.

10. Earnings per share

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 31 December 2016.

At 31 December 2016 there were a total of 757,787 contingently issuable ordinary shares granted as part of the Performance Share Plan. These shares were only included in the diluted EPS where the performance conditions have been met at the end of the reporting period. The impact of these shares on weighted average number of ordinary shares for the purposes of diluted EPS is detailed as above.

5,844,507 ordinary shares were issued on 1 January 2017 as part of the IFS Group acquisition (note 30). These shares do not have an impact on the 2016 year EPS.

11. Profit for the year

12. Dividends

The proposed final dividend is subject to approval at the forthcoming AGM and has not been included as a liability in these financial statements. These dividends are shown net of the 10% Jersey tax credit.

13. Goodwill

Goodwill represents the excess of the cost of the acquisition over fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition.

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. The review assesses whether the carrying value of goodwill could be supported by the recoverable amount which is determined through value in use calculations of each cash-generating unit (CGU). The key assumptions applied in the value in use calculations are the discount rates and the projected cash flows.

The goodwill had been allocated to the CGUs as follows:

The recoverable amounts of all CGUs are based on the same key assumptions.

Discount rates

Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money. In assessing the discount rate applicable to the Group the following factors have been considered:

i. Long term treasury bond rate for the relevant jurisdiction

ii. The cost of equity based on an adjusted Beta for the relevant jurisdiction

iii. The risk premium to reflect the increased risk of investing in equities

Using the above assumptions have resulted in weighted average cost of capital of 16.7%- Sanne South Africa, 11.25%- Sanne Americas and 10.4%- Sanne Netherlands.

Projected cash flows

Projected cash flows are calculated with reference to each CGU's latest budget and business plan which are subject to a rigorous review and challenge process. Management prepare the budgets through an assessment of historic revenues from existing clients, the pipeline of new projects, historic pricing, and the required resource base needed to service new and existing clients, coupled with their knowledge of wider industry trends and the economic environment.

Projected cash flows are calculated using the prior period actual result and compounding these results by 15% per annum for five years as per Group strategy. The terminal value growth rate was determined as between 4% and 5%.

Based on the value in use calculations none of the CGUs show indications of impairment.

Sensitivity analysis

The impairment review of the Group is sensitive to changes in key assumptions, most notably projected cash flows and the pre-tax discount rate. Management has independently performed a sensitivity analysis where the weighted average cost of capital used was increased by 10% and the projected cashflows decreased by 10% for all CGUs, with all other assumptions constant and the CGUs do not show indications of impairment.

14. Intangible assets

The method of valuation and subsequent review is outlined in note 3, no triggers of impairment were detected. Contract intangibles are amortised over six to eight years and customer intangibles amortised over six to ten years. The Group has a contractual commitment for the purchase of IFS Group. The purchase accounting for which will include the acquisition of intangible assets, see note 30 for further details.

Analyses of the carrying amount of the intangible assets acquired can be found below:

15. Equipment

As at 31 December 2016 £1.9 million (2015: £495k) of computer equipment and £669k (2015: £365k) of fixtures and equipment is fully depreciated.

16. Subsidiaries

Detailed below is a list of subsidiaries of the Company as at 31 December 2016 which, in the opinion of the Directors, principally affects the profit or the net assets of the Group. All of these subsidiaries are 100% owned by the Group, with 100% of voting power held. They all engage in the provision of trust, nominee and company services or provide related support services. IDS Management Company (PTY) Limited is the only subsidiary with a non co-terminus year-end due to the impact on underlying customer structures.

17. Trade and other receivables

Trade receivables

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost. The Group considers all receivables over 60 days to be past due.

Allowances against doubtful debts are recognised against receivables with reference to these indicators:

• Insolvency or closure of the customer's business;

• Customer liquidity issues; and

• General creditworthiness, including past default experience of the customer.

Receivables as disclosed above include amounts which are past due at the reporting date but against which the Group has not recognised an allowance for doubtful receivables because there are no significant indicators of their irrecoverability.

There are two customers who across multiple contracting entities represent more than 5% of the total balance of trade receivables.

The Directors consider that the carrying value of trade and other receivables is approximately equal to their fair value.

18. Net cash

The Group had undrawn borrowings at 31 December 2016 of £40 million (2015: £7 million). See note 22.

(i) Trapped cash represents the minimum cash balance to be held to meet regulatory capital requirements.

(ii) The cash and cash equivalents balance as at 31 December 2016 included £73.8 million held for purposes of completing the IFS Group acquisition on 1 January 2017 as detailed in note 30.

19. Operating lease arrangements

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Operating lease payments represent rentals payable by the Group for office properties. Leases are negotiated for a variety of terms over which rentals are fixed with break clauses and options to extend for a further period at the then prevailing market rate. Any lease incentives are spread over the term of the lease. The break dates for the lease agreements vary.

20. Share capital

2,644,046 Ordinary shares (2% of the issued share capital) are held by Sanne Group Employees' Share Trust ("EBT") (2015: 2,773,015) and have been treated as treasury shares in accordance with IAS 32 Financial Instruments.

At 31 December 2016 the Company held 98,533 (2015: 278,598) treasury shares.

(i) In the prior year financial statements the share capital was disclosed net of the par value of the own shares held. The share capital is now presented gross of any own shares held.

(ii) On 19 December 2016, 19,286,860 ordinary shares were issued by way of a firm placing, placing and open offer at a price of 490 pence per ordinary share. Gross proceeds to the Company were £94.5 million, which has been allocated appropriately between share capital £193k and share premium £94.3 million. Issue costs totalling £3.7 million were incurred and have been allocated against share premium.

21. Own shares

Sanne Group Employees' Share Trust ("EBT")

During the year, the Sanne Group Employees' Share Trust settled commitments under share based payments of 65,149 shares and repurchased 106,972 shares. On 30 March 2016, to provide liquidity to the EBT, 174,667 shares were sold under the rules of the London Stock Exchange for the net consideration of £625k. In accordance with IAS32 the cost of the shares was recorded in the own share reserve and the gain made was recognised in retained losses.

The remaining shares and cash are held by the trust to fulfil the Group's future obligations under share plans.

Treasury shares

The Company held 98,533 (2015: 278,598) shares in treasury resulting from the repurchases under Restrictive sale Agreements at a cost of £2.

On 1 December 2016 the Company utilised 180,065 shares as part consideration for the acquisition of Sorato B.V. The shares were valued based on the closing share price the day before issuance with this amount appropriately allocated between own shares and share premium.

22. Borrowings

On 26 March 2015 the Group entered into a loan facility with HSBC Plc which was originally repayable on the 26th of March 2020. The loan was for £18 million (drawn) with an extra £7 million (undrawn) available on a revolving credit facility. Covenants attached to the loan monitored interest cover and leverage, with leverage defining the margin above LIBOR. Debt at 1x EBITDA equated to 1.5% margin (as currently measured), moving to 2x EBITDA at 2.15% margin. Undrawn funds were charged at 40% interest charge. £313k of capitalised loan cost were being amortised over the five year term. An accordion facility for a further £15 million was available, but undrawn at no cost. This facility was settled early on 1 November 2016 and replaced through the revised arrangements detailed below. Accelerated amortisation on capitalised loan costs of £245k was recognised.

On 1 November 2016 the Group entered into a new loan facility totalling £60 million with HSBC to replace the existing HSBC facility, which is repayable 30 September 2021. This new facility is a £46 million term loan along with a £14 million revolving credit facility both elements of which were drawn. The total loan was drawn to repay the existing £18 million term loan as well as part-fund the acquisition of FLSV. Covenants attached to the loan monitor interest cover and leverage on the same basis as the original loan detailed above. Undrawn funds are charged at 40% of the interest margin. £482k of capitalised loan costs are being amortised over the five year term. In addition to the committed £60 million, the Group also has access to a new £40 million accordion facility which is currently undrawn and bears no cost. Under the terms of the facility, HSBC holds a charge against the shares of Sanne Fiduciary Services Limited and Sanne Group (Luxembourg) SA and in the event of default may place charges against specific assets of the Group subsidiaries that are party to the facility.

23. Deferred taxation

The deferred taxation liability of £2.5 million (2015: £nil) recognised in the financial statements is set out below:

The movement in the year is analysed as follows:

Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so.

24. Trade and other payables

Trade creditors and accruals principally comprise of amounts outstanding for trade purchases and ongoing costs. The Directors consider the carrying value of the trade and other payables to approximate to their fair value.

(i) Included in deferred consideration is £5.2 million payable for the FAS acquisition and £0.7 million for the CCS acquisition. See note 26.

25. Provisions

The provision carried at 31 December 2015 related to the abandonment of the Group's previous London premises. £182k was provided in regards of rent, service charge and council tax payments and included in operating expense with no allowance made for sub-lease or assignment income. The amount provided had been offset by rent paid in advance of £49k. The rental agreement came to an end during 2016 as new tenants were found to take over the obligation, no provision exists at 31 December 2016.

The provision carried at 31 December 2016 relates to dilapidations for property leases, the 31 December 2015 balance of £102k was included in Other payables.

26. Acquisitions

During the year ended 31 December 2016 the Group made the following acquisitions:

(i) Chartered Corporate Services ("CCS")

(ii) IDS Fund Services ("IDS")

(iii) FLSV Fund Administration Services ("FAS")

(iv) Sorato Trust B.V ("Sorato")

(i) Chartered Corporate Services ("CCS")

On 1 March 2016 the Group acquired 100% of the issued share capital of Castlewood Corporate Services Limited and Castlewood CS Holdings Limited, companies incorporated in Ireland and together trading as CCS.

The business was acquired to expand the Group's offering in Ireland by delivering additional scale and to diversify product capabilities to its corporate and institutional client base.

Deferred tax liabilities

Deferred tax liabilities have been recognised in relation to identified intangible assets, the amortisation of which is non-deductible against Irish Corporation Tax and therefore creates temporary differences between the accounting and taxable profits.

Transaction costs

Legal and professional fees totalled £75k for this acquisition. Due to the legal form of the deferred consideration on this deal there are also additional payments to be made totalling £3 million which are being treated as ongoing remuneration of key management personnel and being expensed over this and future accounting periods, £700k is included in deferred consideration at year-end (note 24), £923k has been expensed for this and other legal and professional fees in this financial period, these have been shown in Operating expenses and further identified as non-underlying as detailed in note 8.

Effect on the results

CCS contributed £1.1 million revenue and a profit of £358k before non-underlying items (£640k loss after non-underlying items) to the Group's profit for the period between the date of acquisition and the balance sheet date. If the business had been acquired at 1 January 2016 on a pro rata basis the Group revenue for the period would have been £64 million (£216k higher) and the net profit £13 million (£72k higher).

(ii) IDS Fund Services ("IDS")

On 1 June 2016 the Group acquired 100% of the issued share capital of IDS Fund Services Holdings (Pty) Limited, a company incorporated in South Africa. The company and its subsidiaries trade as IDS.

The company was acquired to complete the Group's portfolio within the alternatives sector by the addition of a Hedge division. It will create opportunities to expand the current service lines into Africa and the Hedge division into European and Asian markets. It further provides an operational platform in a lower cost jurisdiction to deliver client and support services across the Group.

Deferred tax liabilities

Deferred tax liabilities have been recognised in relation to identified intangible assets, the amortisation of which is non-deductible against South African Corporation Tax and therefore creates temporary differences between the accounting and taxable profits.

Transaction costs

The group has incurred £344k of acquisition and integration expense in this financial period and £90k in the prior period. Principally, legal and professional fees in acquiring the business and travel costs on the integration of the business. These costs have been expensed within operating expenses in this financial period and have further been identified as non-underlying as detailed in note 8.

Goodwill

Goodwill is represented by assets that do not qualify for separate recognition or other factors. These include new business wins to new customers, effects of an assembled workforce and synergies from combining operations of the acquiree and the acquirer.

Effect on the results

IDS contributed £4 million revenue and a profit of £240k before non-underlying items (£104k loss after non-underlying items) to the Group's profit for the period between the date of acquisition and the balance sheet date. If the business had been acquired at 1 January 2016 on a pro rata basis the Group revenue for the period would have been £66.6 million (£2.8 million higher) and the net profit £13.1 million (£171k higher).

(iii) FLSV Fund Administration Services LLC ("FAS")

On 1 November 2016 the Group entered into an agreement to acquire FLSV Fund Administration Services LLC, a United States of America ("US") based provider offering fund administration and reporting services to alternative asset managers, primarily in North America.

The acquisition provides Sanne with a high quality US based platform from which to enter the large and fast growing US alternative assets fund administration market with immediate enhancement to earnings.

Fair value of consideration

The shares were valued based on the closing share price the day before the transaction date. Of the cash consideration, £5.2 million was deferred and remains unpaid at the year-end (note 24).

Transaction costs

The group has so far incurred £658k of acquisition and integration expense in this financial period. Principally, legal and professional fees in acquiring the business and travel costs on the integration of the business. These costs have been expensed within operating expenses in this financial period and have further been identified as non-underlying as detailed in note 8.

Goodwill

Goodwill is represented by assets that do not qualify for separate recognition or other factors. These include new business wins to new customers, effects of an assembled workforce and synergies from combining operations of the acquiree and the acquirer.

Effect on the results

FAS contributed £3.1 million revenue and a profit of £760k before non-underlying items (£102k profit after non-underlying items) to the Group's profit for the period between the date of acquisition and the balance sheet date. If the business had been acquired at 1 January 2016 on a pro rata basis the Group revenue for the period would have been £79.3 million (£15.4 million higher) and the net profit £16.7 million (£3.8 million higher).

(iv) Sorato Trust B.V ("Sorato")

On 1 December 2016 the Group acquired 100% of Sorato Trust B.V., a Netherlands based provider of domiciliation and associated corporate services.

The business was acquired to deliver a regulated footprint in the Netherlands, which supports the Group's growth strategy in Europe.