Annual Report and Accounts 2020 Sanne is a leading global provider of alternative asset and corporate services. Contents 01 03 04 Introduction Governance Financial Statements 01 Financial and operational highlights of 56 Chairman’s Introduction 110 Independent Auditors' Report YMJ࣢^JFW 58 Corporate Governance Report 118 Consolidated Income Statement 02 Sanne at a glance 60 Board of Directors 119 Consolidated Statement of Comprehensive Income 62 Sanne’s Executive Committee 120 Consolidated Balance Sheet 02 63 Leadership 121 Consolidated Statement of Changes in Equity 64 Board Effectiveness Strategic Report 122 Consolidated Cash Flow Statement 70 Directors’ Report 123 Notes to the Consolidated 06 Chairman’s Statement 74 Nomination and Governance Financial Statements Committee Report 08 Chief Executive Officer’s Statement 171 Glossary of Terms 77 Audit Committee Report 12 Value Chain 173 Shareholder and Corporate Information 82 Risk Committee Report 14 Business Model 85 Directors’ Remuneration at-a-glance 16 Our Stakeholders 86 Remuneration Committee Report 20 Strategy Review 97 Annual Report on Remuneration 24 Key Performance Indicators 107 Directors’ Responsibilities Statement 28 Segmental Review 30 Chief Financial Officer’s Review 34 Alternative Performance Measure definitions 36 ESG and Sustainability 46 Risk Management 52 Viability Statement www.sannegroup.com/annualreport Introduction Strategic Report Governance Financial Statements Financial and operational highlights of the year Robust financial performance, 2 1 with strong profit growth despite the Net revenue (underlying ) Turnover (statutory) impact of the COVID-19 pandemic: • Revenue growth of 7.3%3, positive across all regions, with organic growth of 5.8%3 • Underlying operating profit growth of 8.4%3 £169.7m £174.9m • Continued underlying operating profit margin (2019: £157.5m) +7.7% (2019: £159.7m) +9.5% improvement of 100bps to 28.3% driven by management actions • Strong cash generation with underlying cash conversion of 99.5% 1 • Resilient new business wins, with pick-up Operating profit (underlying ) Operating profit (statutory) in Q4, resulting in annualised new business revenue of approximately £22.5 million secured in 2020 (2019: £24.5 million) • Final dividend of 9.9 pence (14.7 pence total), £48.0m £23.9m reflecting the Board’s confidence in the future of the Group and consistent with the Group’s (2019: £43.0m) +11.7% (2019: £14.3m) +67.6% progressive dividend policy Continued progress on organic 1 growth strategy: Profit before tax (underlying ) Profit before tax (statutory) • Implementation of new technology strategy with a range of innovative new client-facing services and tools launched • New product offerings introduced, including £44.9m £20.5m compliance and regulatory services, to (2019: £38.7m) +16.0% (2019: £9.6m) +114.9% support both new and existing clients • Well-invested platform enabled uninterrupted shift to remote working across the Group in response to COVID-19 Diluted earnings per share Diluted earnings per share Strategic activity to augment the (underlying1) (statutory) Group platform and strengthen the client proposition: • Acquisitions of Inbhear in Ireland and Cayman, and of Avalon in Cayman, and the lift-out of 25.4p 11.1p Deutsche Bank’s Trust Company in Japan all (2019: 21.3p) +19.2% (2019: 3.8p) +192.1% completed in the period, broadening jurisdictional reach and scale, and already generating value for the Group Full year dividend per share Underlying1 free cash flow • Acquisition of PEA to provide the Group’s 4 first presence in the Scandinavian region and attributable to equity holders additional scale in Guernsey signed in the year and completed in Q1 2021 • New minority investment in Alternative Assets 14.7p Accounting Software Inc., a US-based data (2019: 14.1p) +4.3% £33.6m analytics and software business focused on (2019: £35.1m) -4.5% delivering market-leading analytics and data services to closed-ended GP and LP clients • Disposal of legacy Jersey-based Private Client business to refine the Group’s focus on Alternative Assets and corporate services • Successful refinancing with a 40% increase in the Group’s facilities, increasing committed funding to £210 million with a £100 million accordion. :SIJWQ^NSLWJXZQYXKTWYMJ^JFWMF[JGJJSUWJXJSYJIFKYJWYMJJ]HQZXNTSTKSTSћZSIJWQ^NSLNYJRXYMNWIUFWY^KZSIRFSFLJRJSYKJJX and discontinued activities. Further details of non-underlying items can be found in note 9 of the consolidated financial statements. A detailed reconciliation of alternative profit measures is provided in the Alternative Profit Measures definitions section. 2. Net revenue comprises turnover less third-party fund management fees. More detail is provided in the CFO’s Review. 3. Constant currency represents the 2020 performance based on applicable 2019 FX rates to eliminate movements due to FX. 4. Free cash flow attributable to equity holders is the total cash generated in the year before acquisitions, capital expenditure, financing activities and cash non-underlying costs. Sanne Group plc Annual Report and Accounts 2020 1 Sanne at a glance Sanne delivers specialist professional fiduciary services to a highly valued, global client base. Highly skilled teams service clients and their key advisors through a highly valued, global network that spreads across 22 international financial centres located in the Americas, Europe, Africa and Asia-Pacific. Sanne is an award-winning global provider of People globally Clients globally alternative asset and corporate administration services. Specialist experts deliver professional services to clients in Private Debt, Capital Markets, Real Assets, Private Equity, Hedge 1,900+ 1,950+ and Corporate Services. (+600% on 2015) (+290% on 2015) Locations AUA Net revenue 22 £465bn+ £169.7m (+200% on 2015) (+900% on 2015) (+270% on 2015) Structures and funds administered Total acquisitions 9,500+ 15 (+280% on 2015) (+650% on 2015) Global reach Sanne operates from a global network of 22 offices located in leading financial jurisdictions, which are spread across the Americas, Europe, Africa and Asia-Pacific. Our global reach ь3TWYM&RJWNHF ь(MFSSJQ.XQFSIX ь*ZWTUJYMJ2NIIQJ*FXY and Africa ь&XNF5FHNKNH 2FZWNYNZX 2 Sanne Group plc Annual Report and Accounts 2020 Introduction Strategic Report Governance Financial Statements Investment case Global industry AuM 2016-2020 ($’billion) 01. 12,000 Focused firmly on the global alternatives high growth markets 10,000 We operate in highly regulated markets where clients are of a 8,000 high-calibre and institutional nature. 6,000 02. Well-positioned business in our industry to take 4,000 advantage of market opportunities We are present across key 2,000 international financial centres and jurisdictions, meaning we are 0 exposed to the largest markets and 2016 2017 2018 2019 2020 have the ability to service clients Source: Preqin Special Report: Future of Alternatives 2025: at a local level and globally across Data Pack multiple jurisdictions. ь5WN[FYJ*VZNY^ ь5WN[FYJ)JGY 03. ь-JILJ ь7JFQ*XYFYJ Attractive growth-led ь.SKWFXYWZHYZWJ financial model ь3FYZWFQ7JXTZWHJX The growth prospects for our sector continue to be highly attractive. Our client relationships and contracts are long term which means we have high recurring revenues. 04. Robust operating platform supported by continuing investment Our business is built on well-established and robust compliance and risk management frameworks, accredited business processes and policies. Sanne Group plc Annual Report and Accounts 2020 3 Strategic Report 06 Chairman’s Statement 08 Chief Executive Officer’s Statement 12 Value Chain 14 Business Model 16 Our Stakeholders 20 Strategy Review 24 Key Performance Indicators 28 Segmental Review 30 Chief Financial Officer’s Review 34 Alternative Performance Measure definitions 36 ESG and Sustainability 46 Risk Management 52 Viability Statement 4 Sanne Group plc Annual Report and Accounts 2020 Introduction Strategic Report Governance Financial Statements We play an increasingly important Accuracy role in our global financial community as it continues to evolve; standing makes us consistent, for professionalism, innovation and quality, we work in partnership gives you the edge. to make every day count. It’s our commitment to service that means that we remain one step ahead for our clients and employees. Sanne Group plc Annual Report and Accounts 2020 5 Chairman’s Statement Sanne has delivered a robust performance in 2020 despite the unprecedented challenges for both the Group and our clients amidst the enduring global COVID-19 pandemic. Rupert Robson Chairman I am proud of how the Group and its employees The pandemic has had a large impact on capital US-based business aimed at creating further have adapted to these challenges, maintaining deployment, new funds raised, and transactions industry leading data management, reporting uninterrupted services to clients and supporting undertaken across almost all of our client groups. and analytics tools. our employees and suppliers throughout. At the same time, end-of-life attrition was broadly in line with prior years as we saw revenues fall Inorganically, we have completed three Whilst the pandemic caused a slowdown in new away from structures wound-up in 2019 and the acquisitions in the year and entered into an fund activity amongst our core clients during the early part of 2020. These combined effects in the agreement for a fourth which has completed in year, the Group has demonstrated its resilience year have inevitably resulted in