a Sanne Group plc Group Sanne Annual Report for the year ended 31 December 2018 Annual Report and Accounts for the year ended 31 December 2018 sannegroup.com Stock code: SNN Sanne Group Plc AR2018 - Front.indd 3 08/04/2019 11:49:23 26236 8 April 2019 11:48 am Proof 13 Welcome to Sanne Group plc’s 2018 Annual Report and Accounts SANNE is a leading global provider of outsourced alternative asset and corporate services. We provide high quality administration, reporting and fiduciary services to the leading alternative asset managers, financial institutions, family offices and corporates. We service clients from 18 locations spread across the Americas, Europe, Africa and Asia- Pacific. Our dedicated asset class and market experts are supported by the latest industry technology, systems and accredited business processes. Sanne Group Plc AR2018 - Front.indd 4 08/04/2019 11:49:24 26236 8 April 2019 11:48 am Proof 13 Annual Report and Accounts for the year ended 2018 Stock code: SNN sannegroup.com notes-heading-level- one What you’ll find inside this report notes-heading-level-two notes-heading-level-three notes-heading-level-four SANNE operates across global markets and in a highly Introduction notes-strapline specialised industry, serving a wide range of alternative Investment Proposition 4 notes-text-body asset managers, financial institutions, family offices Operational Highlights 6 > notes-list-bullet and corporates. Chairman’s Statement 8 > notes-list-bespoke Chief Executive Officer’s Statement 10 − notes-list-dash Strategic Report d. notes-list-alpha Strategy 16 5. notes-list-number Investment Strategic KPIs 18 vi. notes-list-roman Proposition Report Segmental Reporting 20 Chief Financial Officer’s Review 26 Marketplace 30 We have evolved, Understand how our Business Model 32 grown and established business strategy, Risk Management 34 ourselves over the accredited business Corporate Social Responsibility 41 past 30 years to processes and be one of the leading global fund platforms provide high quality Governance administrators and our professionally outsourced business services. Chairman’s Introduction 46 qualified people enable us to continue to grow in a highly fragmented market. Corporate Governance Report 48 Composition of the Board 49 SANNE’s Executive Committee 52 Leadership 54 Read more on pages 4 and 5 Read more on pages 14 – 43 Board Effectiveness 56 Heading Heading Heading Directors’ Report 60 Table plain text Default Default Default Nomination and Governance 64 Background 1 2 3 Committee Report Border 1 2 3 Border 1 2 3 Audit Committee Report 67 Risk Committee Report 74 Financial Remuneration Committee Report 78 Governance Statements Annual Report on Remuneration 93 Directors’ Responsibility Statement 101 Independent Auditor’s Report 102 Understand how Understand the Financial Statements our corporate numbers behind our governance global performance. Consolidated Income Statement 112 principles are Consolidated Statement of 113 evolving in line with the revised UK Comprehensive Income Corporate Governance Code. Consolidated Balance Sheet 114 Consolidated Statement of 115 Changes in Equity Read more on pages 44 – 100 Read more on pages 110 – 154 Consolidated Cash Flow Statement 116 Notes to the Consolidated 117 Financial Statement Shareholder and Corporate 155 Information 1 Sanne Group Plc AR2018 - Front.indd 1 08/04/2019 11:49:28 26236 8 April 2019 11:48 am Proof 13 Introduction Introduction Investment Proposition 4 Operational Highlights 6 Chairman’s Statement 8 Chief Executive Officer’s Statement 10 “ I would absolutely recommend SANNE. Any questions we have on the rules and regulations of the industry are answered quickly.” Taken from our Client Survey 2018 2 Sanne Group Plc AR2018 - Front.indd 2 08/04/2019 11:49:28 26236 8 April 2019 11:48 am Proof 13 Annual Report and Accounts for the year ended 2018 Stock code: SNN sannegroup.com 3 Sanne Group Plc AR2018 - Front.indd 3 08/04/2019 11:49:28 26236 8 April 2019 11:48 am Proof 13 Introduction Investment Proposition Our focus remains firmly on the alternatives high growth We offer clients a fully integrated service offering: markets globally – This captures more of the clients share-of-wallet We operate in highly regulated markets – Establishes SANNE as a higher value service provider Clients are of a high quality institutional nature to clients Our services are highly bespoke and by their very nature Proven M&A capability to deliver value to the business create high barriers to entry, as does the professional and ultimately client offering expertise of our people Attractive financial model We operate in highly regulated market environments which again create barriers to market entry Our client relationships and contracts are long-term which means we have high recurring revenues Well positioned business in our industry to take advantage We deliver attractive margins of market opportunities We are a highly cash-generative business We are present across the key international financial centres and jurisdictions, this means: Robust and consistently invested-into operating platform – We are exposed to the largest markets Our business is built on a well-established and robust – We have the ability to service clients at a local compliance and risk management framework, accredited level and globally cross-border business processes and policies Our position and market growth has enabled us to We employ the best people in the industry – they are broaden our strategic capabilities, this means: professionally qualified, experienced and knowledgeable across a wide range of asset-classes and global markets – We are able to service global asset managers through our office network We continually invest into industry recognised applications and systems alongside our own in-house development – We have added complementary products and services platforms to drive efficiency and support our client service to our clients so that our business is fully diversified and teams, so they can focus their efforts on servicing clients not reliant on one revenue stream and nurturing relationships Our history timeline Divisional structure built around asset specialisms, particularly alternatives. Inception, private Operational focus away from Listed on Main LIS & CP client focused fiduciary single jurisdiction Inflexion partnership Market of LSE IFS Group acquisition services business - Dean Godwin joins as CEO (April 2015) acquisition - - Jersey, Isle of Man, - - - Luxembourg Jersey Dublin & Luxembourg London London Mauritius Dublin 1988 2003 2012 2015 2017 2018 - - - - - - 2003 2010 2013/14 2016 2017 2018 - - - - - - Business re-focused International State Street acquisition CCS acquisition SANNE enters AgenSynd to develop a corporate expansion to grow (May 2013) IDS acquisition FTSE 250 acquisition and funds offering new markets State Street acquisition Sorato acquisition - - - (April 2014) FLSV FAS acquisition Madrid, London & Paris Jersey & Isle of Man Hong Kong, Investment in senior - Shanghai & Dubai management team Dublin, South Africa, Malta, - Netherlands, US Guernsey & Singapore & Belgrade 4 Sanne Group Plc AR2018 - Front.indd 4 08/04/2019 11:49:29 26236 8 April 2019 11:48 am Proof 13 Annual Report and Accounts for the year ended 2018 Stock code: SNN sannegroup.com 1,750+ 9 Our journey has seen 500+ us grow significantly 1 Clients Aquisitions globally 1 April 2015 1,400+ £35m £143m 270+ 1 January 2019 Revenue People Our growth globally since our IPO Number of AuA locations 7 £80bn+ Structures & fund administered £240bn 18 3,000+ 7,800+ Luxembourg Investment Solutions LIS & CP (LIS) & Compliance Partners (CP) acquisition - Luxembourg Dublin Leading 3rd party AIFM authorised to Enhanced SANNE’s fund offering deliver management company services enabling business to now offer to both alternative investment funds & integrated administration, AIFM ManCo 2018 open-ended mutual funds within EU services & AIFMD Depositary Service - 80 staff AgenSynd 2018 - Leading providers of specialist agency Brings further strength and depth services within the European Private to existing agency expertise AgenSynd Debt market acquisition Opportunity to take service into - North America, largest direct lending Madrid, London & Paris Deal adds new strategically important locations within Europe to SANNE market in the world 21 staff 5 Sanne Group Plc AR2018 - Front.indd 5 08/04/2019 11:49:29 26236 8 April 2019 11:48 am Proof 13 Introduction Operational Highlights Group revenue growth of 27.2%1 with organic revenue growth of 12.3%1 Record new business wins with annualised revenue of approximately £24.5 million secured in 2018 (2017: £20.9 million) Strong performance for the year within the Group’s closed-ended Alternatives and Corporate Businesses (86% of Group revenues): EMEA and North America Alternatives segments delivered organic growth of 16.3%1 and 16.1%1 respectively Momentum continues to build in the Group’s Asia-Pac & Mauritius business with organic growth in the period of 12.2%1 Targeted investment across the Group’s people, processes and systems strengthening the Group’s scalable global platform Underlying operating profit margin of 31.1% (2017: 34.3%) following the targeted investment, with the second half increasing by more than 100bps versus the first half Increased jurisdictional footprint in the year with the addition of Spain and France as well as Japan shortly after the year-end Integration of the acquisitions of LIS2, CP2 and AgenSynd are progressing well Successful refinancing of the Group’s