Interim Results

7 September 2016

Sanne Group plc

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

Interim results for the six months ended 30 June 2016

1. The items classified as non-underlying are as detailed in note 4.

Financial highlights:

- Group revenue increased 31% to £27.6 million (2015: £21.1 million) of which 26.5% was organic growth

- Underlying operating profit up 30% to £10.3 million (2015: £7.9 million)

- Strong underlying operating cash conversion of 117.3% (2015: 114.9%) in the period

- Underlying diluted earnings per share stood at 8.1 pence (2015: 6.4 pence)

- The Board has declared a 3.2 pence interim dividend for 2016 (2015: 1.4 pence)

Operational highlights

- Strong underlying performance within the Group's core alternatives focused business divisions (Real Estate, Private Equity and Debt)

- New business with annualised fees of approximately £6.7 million won in the first six months with good pipeline continuing into the second half

- Acquisitions completed in Ireland and South Africa and acquisition signed in Netherlands broadening capabilities, geographic footprint and increasing scale

- Larger office space secured in Dublin to support growth in the jurisdiction

Outlook and current trading

- Strong momentum of the business in the first six months has continued with current trading in line with the Board's expectations

This announcement contains inside information.

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

 "We are pleased with the performance of the Group in the first half as we continue to win new business from both existing and new clients. In addition to strong organic growth, our recent acquisitions demonstrate the Group's commitment to a targeted acquisition strategy which develops market share, expands Sanne's asset and jurisdictional offerings and creates opportunities for operational leverage. While the outcome of the EU referendum has created uncertainty in some markets, our strong momentum and diverse presence, as well as the favourable underlying trends in our markets, give us confidence in the continued growth of the Group."

Enquiries:

A presentation for analysts will be held at 09.30am today at the offices of Investec Bank plc, 2 Gresham Street, London, EC2V 7QP, United Kingdom.

A copy of this announcement will be available online at www.sannegroupplc.com at 7am today.

Notes:

Sanne is a specialist provider of outsourced corporate, fund and private client administration, reporting and fiduciary services. Established for over 25 years and listed on the Main Market of the London Stock Exchange, the Group employs approximately 600 people worldwide and administers structures and funds that have in excess of £90 billion of assets.

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

The Group has a presence in established, international financial centres including Jersey, Guernsey, London, Luxembourg, Dublin, Malta, South Africa, Dubai, Hong Kong, Shanghai and Singapore.

www.sannegroup.com

INTERIM MANAGEMENT REPORT

First half review

The Group's core business lines have seen good growth in the first half of the year driven by strong momentum from new business opportunities delivered in the latter part of 2015. Revenue increased by 31% to £27.6 million and underlying operating profit increased by 30% to £10.3 million, compared with the same period in the prior year.

In the first six months of the year the Group has secured new business from both new and existing clients totalling approximately £6.7 million on a projected annualised fee basis. Of this approximately £2.4 million was from new clients to Sanne. As in previous reporting periods the full revenue impact of many of these new structures will commence in the second half of the year and, in some cases, will continue into 2017 as implementation is completed.

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 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 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, in particular AIFMD related services, in order to be best positioned to react to any market shift.

During the period the Group acquired Chartered Corporate Services ("CCS"), a Dublin-based corporate services business that specialises in the delivery of company secretarial, liquidation, payroll and VAT reporting services. CCS will complement the Group's existing operations in Ireland, delivering additional scale and product capabilities across the corporate services offering and demonstrates a commitment to acquiring businesses that support existing growth opportunities and deliver greater jurisdictional and product diversity. Following the integration of CCS, new office premises have been taken on in Dublin to support operational expansion and provide space for further growth and recruitment.

The Group also acquired IDS Fund Services ("IDS") during the period, a company headquartered in South Africa, which provides outsourced investment administration services to the asset management industry, particularly focused on hedge fund clients. The acquisition of IDS broadens Sanne's alternative asset capabilities through the delivery of a hedge fund platform which can be leveraged across the wider Group network and delivers a new addressable market in South Africa. The acquisition also offers a lower cost operational platform.

The Group continues to invest in staff at both a senior and operational level to ensure new work can be serviced effectively, particularly in key functions such as risk and compliance. Senior business appointments have also been made with a focus on the global expansion of fund, corporate and private client products and services in support of divisional business objectives. Sanne has continued to recruit in operational centres outside of its Jersey headquarters as the Group expands its service offering and client base globally.

After the period end, the Group has entered into an agreement to acquire Sorato Trust B.V. ("Sorato"), a Netherlands based domiciliation and associated corporate services business. Sorato has been Sanne's business partner in the Netherlands for more than five years and the acquisition brings Sorato's capability formally into the Group as well as delivering a regulated footprint in the Netherlands, which supports the Group's growth strategy in Europe. The transaction is due to complete within three months following receipt of the necessary regulatory approvals.

Strategy for growth

The Group's ongoing strategic focus is to continue building scale in established and emerging markets to be a leading provider of corporate, fund and private client administration, reporting and fiduciary 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.

While there is a core focus on delivering organic growth, the Group will continue to evaluate acquisition opportunities that enable Sanne to deepen existing asset capabilities, broaden its product offering and deliver greater jurisdictional diversification through operational scale in existing offices as well as entering new markets.

Divisional review:

Debt

Revenues for the first six months were £7.8 million (6 months to June 2015: £6.5 million) with a gross profit of £5.1 million (6 months to June 2015: £4.3 million). The division has focused on maintaining its strong market position in the provision of administration services to banks and non-bank lenders including peer-to-peer platforms and asset managers. The division continues to see a strong pipeline of loan agency business across a range of institutional clients. Operational capabilities have been increased in London and Dublin to reflect new work flows and this is enabling further business development opportunities driven by an ability to deliver services across a wider geographic footprint.

Real Estate

Revenues for the first six months were £6.6 million (6 months to June 2015: £4.4 million) with a gross profit of £4.2 million (6 months to June 2015: £2.7 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. A funds platform has been implemented in the division which will enhance Sanne's administration capabilities and service clients' increasing reporting requirements. Recruitment continues in key operational centres (Jersey, London, Dublin, Luxembourg and Asia) to service new mandates in these jurisdictions and create capacity to grow existing relationships.

Private Equity

Revenues for the first six months were £4.2 million (6 months to June 2015: £2.9 million) with a gross profit of £2.8 million (6 months to June 2015: £1.7 million). The division has seen growth from both existing clients launching successor funds or new strategies as well as new clients to the division. The funds platform continues to develop to deliver more efficient service and reporting to clients across the division with particular focus on transparency of reporting and adaptability in response to regulatory and tax reporting reforms. The increasingly global client base continues to drive investment in cross border service capabilities.

Corporate and Institutional

Revenues for the first six months were £2.6 million (6 months to June 2015: £2 million) with a gross profit of £1.7 million (6 months to June 2015: £1.2 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 the acquisition of CCS and leveraging its additional product offerings (liquidations, payroll services and VAT reporting) across the existing client base and beyond. 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 benefitted from the recruitment of key hires and continues to build upon its operational capabilities.

Executive Incentives

Revenues for the first six months were £2.3 million (6 months to June 2015: £2.3 million) with a gross profit of £1.5 million (6 months to June 2015: £1.7 million). The performance is reflective of the uncertainty generated in advance of the EU referendum which has affected underlying activity levels in the first half of the year in terms of share transactions for existing clients as well impacting the number of new mandates from private equity and IPO related activity in the period. The pipeline of transfer mandates for FTSE 100 and 250 companies requiring specialist trusteeship of their employee share trusts remains healthy.

Private Client 

Revenues for the first six months were £3.4 million (6 months to June 2015: £2.7 million) with a gross profit of £2.3 million (6 months to June 2015: £1.8 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 recent recruitment of a Global Head of the division will continue to drive the expansion of the Private Client offering and broaden its target client focus into newer markets.

Treasury

Revenues for the first six months were £0.2 million (6 months to June 2015: £0.2 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 period. The continued expansion of the breadth of services provides a platform for the continued growth and development of the division.

Hedge

While the acquisition of IDS only completed in June 2016, there are a number of developments within the hedge fund sector in South Africa which are reflected in the revenue performance of the business, which now forms the hedge fund division within the Group. The industry is expected to continue to become increasingly institutionalised following the introduction of new regulations which will increase oversight and reporting requirements for funds and will likely drive further outsourcing opportunities for incumbent administrators such as IDS.

Working capital and cash flow

The Group continues to manage its working capital carefully, maintaining the level of working capital despite good growth in revenue. Working capital as a percentage of annualised revenue is 20.9% (30 June 2015: 27.1%).[1]

The Group's net debt position at 30 June 2016 was £7.2 million (30 June 2015: £8.6 million).[2] This net debt position has been maintained while the company has adhered to its progressive dividend policy and utilised £10.0 million of cash for the acquisitions in Ireland and South Africa.

Dividend

The Board has declared an interim dividend of 3.2 pence per share (2015: 1.4 pence). The dividend will be paid on 14 October 2016 to shareholders on the register as at the close of business on 16 September 2016.

Our people

Our employees remain core to the quality of the service offering to clients and we will continue to recruit high calibre individuals as we grow. We are committed to encouraging employees to continue with their professional development both through recognised qualification routes as well as continuous, industry specific learning programmes.

We are also committed to developing the employee value proposition to ensure that Sanne is recognised as nurturing a positive and supportive working environment which recognises and rewards individual and collective performance.

We have continued to recruit in operational centres outside of the Jersey headquarters as the Group expands its service offering and client base globally. Investment has been made in the central functions to ensure sufficient support and capability is in place to support organic and inorganic growth. The recent acquisition in South Africa also offers a lower cost operational model to enable further investment in centralised functional capabilities.

Risk

The principal risks facing the Group are unchanged from those set out in the Annual Report 2015, with the following two exceptions:

- The result of the EU referendum has led to a period of uncertainty increasing the Group's exposure to political/regulatory risk. It is noted that in the short term the Group is a net beneficiary of Sterling's recent weakness given the value of underlying contracts in USD and EUR being in excess of the mild exposure to increased costs in overseas jurisdictions; and

- Slight adjustments to the risk profiles have seen Business Continuity risk replaced by Compliance risk as one of the Group's principal risks. This has been driven by the Group's international expansion resulting in a greater number of regulated jurisdictions (e.g. South Africa, Malta) as well as an increase in the range of regulated services and reporting capabilities offered to clients. 

During the period the Group completed the acquisitions of IDS and CCS (along with the acquisition after the balance sheet date of Sorato). Notwithstanding this activity, the Group's net risk determination with respect to acquisition risk (which includes integration risk) remains unchanged.

Outlook

The Board sees continued opportunities for growth across all the Group's core markets. A healthy level of new business wins in the first half of the year means there is a good level of forward momentum, particularly within those business lines focused on the alternatives markets.

While market uncertainty has been felt across many sectors of the economy in response to the result of the EU referendum, Sanne has comprehensive and regulated operational capabilities in a number of premier European financial centres, both inside and outside the EU, including the Channel Islands, London, Dublin and Luxembourg. The Group remains well placed to continue to service the ongoing structuring and administration requirements of its clients.

The Board believes 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.

 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 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 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.

Dean Godwin

Chief Executive Officer

7 September 2016

INDEPENDENT REVIEW REPORT TO SANNE GROUP PLC

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 12. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the financial statements of the group are prepared in accordance with IFRS as adopted by the European Union and in accordance with IFRS as issued by the IASB. The half-yearly financial statements are presented on a condensed basis as permitted and do not include all disclosures that would otherwise be required in a full set of financial statements and should be read in conjunction with the Annual Report for the year ended 31 December 2015.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

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 inquiries, 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 Ireland) 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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

St Helier, Jersey

7 September 2016