>> Sanne Group plc
19 March 2020
Full Year ResultsYear ended 31 December 2019
title style> Caution Statement
THIS PRESENTATION HAS BEEN PREPARED SOLELY FOR THE STATED PURPOSE AND THE INFORMATION CONTAINED IN IT, IS STRICTLY CONFIDENTIAL
THE CONTENT OF THIS PRESENTATION HAS NOT BEEN APPROVED BY AN AUTHORISED PERSON AND NO RELIANCE SHOULD BE PLACED ON THE PRESENTATION BY ANY PERSON ENGAGING IN ANY INVESTMENT ACTIVITY. IT DOES NOT CONSTITUTE OR FORM PART OF, AND SHOULD NOT BE CONSTRUED AS, AN OFFER OR INVITATION TO SELL OR OTHER PROMOTION OF ANY SECURITIES AND THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO PUBLISH ANY UPDATES OR REVISIONS TO IT. NO STATEMENT IN THIS PRESENTATION IS INTENDED TO BE A PROFIT FORECAST.
THE PRESENTATION MAY CONTAIN OTHER STATEMENTS CONTAINING "FORWARD-LOOKING STATEMENTS" WITH RESPECT TO CERTAIN OF THE COMPANY'S PLANS AND ITS CURRENT GOALS AND EXPECTATIONS RELATING TO ITS FUTURE FINANCIAL CONDITION, PERFORMANCE, STRATEGIC INITIATIVES, OBJECTIVES AND RESULTS. FORWARD-LOOKING STATEMENTS SOMETIMES USE WORDS SUCH AS "AIM", "ANTICIPATE", "TARGET", "EXPECT", "ESTIMATE", "INTEND", "PLAN", "GOAL", "BELIEVE", "SEEK", "MAY", "COULD", "OUTLOOK" OR OTHER WORDS OF SIMILAR MEANING. BY THEIR NATURE, ALL FORWARD-LOOKING STATEMENTS INVOLVE RISK AND UNCERTAINTY BECAUSE THEY RELATE TO FUTURE EVENTS AND CIRCUMSTANCES WHICH ARE BEYOND THE CONTROL OF THE COMPANY. AS A RESULT, THE ACTUAL FUTURE FINANCIAL CONDITION, PERFORMANCE AND RESULTS OF THE COMPANY MAY DIFFER MATERIALLY FROM THE PLANS, GOALS AND EXPECTATIONS SET FORTH IN ANY FORWARD-LOOKING STATEMENTS. ANY FORWARD-LOOKING STATEMENTS MADE HEREIN SPEAK ONLY AS OF THE DATE THEY ARE MADE.
FOR THE PURPOSE OF THIS NOTICE, “PRESENTATION” MEANS THIS DOCUMENT, ANY ORAL PRESENTATION, ANY QUESTION AND ANSWER SESSION AND ANY OTHER WRITTEN OR ORAL MATERIAL DISCUSSED OR DISTRIBUTED DURING THE PRESENTATION MEETING.
Forward looking statements
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 2
title style> Agenda
1. 2019 Highlights
2. Strategy Overview
3. Financial review
4. Operational review and Outlook
5. Q&A
Appendix
2019 Full Year Results
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 3
James IrelandChief Financial Officer
Martin SchnaierChief Executive Officer
title style> 2019 Highlights
Strong double digit revenue growth
H2 margin improvement saw full year margin in line with revised guidance
Record-equalling new business wins
Underlying cash flow generation in excess of guidance
Strategic partnership with Colmore and acquisition of Inbhear
Successful conclusion to strategic review of Jersey Private Client business
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 4
Investment in and enhancements to our platform
New offices added to our jurisdictional footprint
title style>
Strategy overviewMartin Schnaier
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 5
title style> Our marketplaceAttractive structural growth drivers
GLOBALISATION
Asset managers have an increasing international focus for investors and investments
Fund structures increasingly multi-jurisdictional
Scaled presence and expertise across jurisdictions and products required
CONSOLIDATION
Highly fragmented industry
Opportunity to accelerate growth
Disciplined approach drives quality
CURRENT MARKET DYNAMICS
1 DEMAND FOR ALTERNATIVESIncreasing number of funds to services
2 INCREASING REGULATIONMore services are needed per fund
AIFMD
FATCA
CRS
DODD-FRANK
MIFID II
BEPS
GDPR
AMLD
OUTSOURCING TREND3Increased demand for outsourced expertise
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 6
title style> Our position in the market
▪ Commoditised service providers▪ High-volume, low touch service▪ Limited ability to provide bespoke services
▪ High-touch, tailored service offering▪ Specialist product focus▪ Professional services model
▪ Wide ranging services provided ▪ Functional approach for scale ▪ Limited ability to provide tailored service
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 7
Corporate and Trust
service providers
Large custodian
banks
Hedge specialists
Closed-ended fund administration and outsourced business services specialists
Local excellence on a global platform
title style> Resilient business model
LONG -TERM RECURRING REVENUES
7-12 year contracts
Negligible mid-life attrition in structures
Inflation linked contracts
1
PROFESSIONAL SERVICES PROFIT MARG INS
2
3 HIGHLY CASH G ENERATIVE
c. 30% EBITDA margin
Strong operational cash generation > 90% conversion
Capital light business
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 8
title style> SANNE’s strategy for growth
D I F F E R E N T I AT E D, B E S T - I N - C L A S S S E R V I C E S
S U C C E S S F U L B U S I N E S S D E V E LO P M E N T
Quality people and professional training
Accredited business processes
New capabilities and technology offering
Roll out full service offering at scale to each office
Ensure one-stop-shop solution for clients
E X PA N D F O OT P R I N T
I N V E S T I N P L AT F O R M
Resilient and scalable platform
Enhancing technology capabilities
Add new locations to support client demand
Access new clients in new markets
I N O R G A N I C G R O W T H
Disciplined and thoughtful approach to M&A
1 4
5
6
E X PA N DS E R V I C E S A C R O S SJ U R I S D I C T I O N S
Cross-selling to existing clients
New clients wins
2
3
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 9
title style>
2019 Financial ReviewJames Ireland
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 10
title style> Key financial highlights
TOTAL G ROUP REVENUE
FY 2019
£165.4mFY 2018: £143.8m
UNDERLYING FREE CASH FLOW AT T. TO EQUITY HOLDERS
FY 2019
£35.1mFY 2018: £23.0m
TOTAL G ROUP UNDERLYING OPERATING PROFIT
FY 2019
£46.7mFY 2018: £44.4m
TOTAL G ROUP UNDERLYING DILUTED EPS
FY 2019
23.6pFY 2018: 24.1p
NEW BUSINESS WINS
FY 2019
£24.5mFY 2018: £24.5m
DIVIDEND PER SHARE
FY 2019
14.1pFY 2018: 13.8p
Note: KPI’s for “Total Group” includes results from both continuing and discontinued operations
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 11
title style> Total Group Income StatementFor the year ending 31 December 2019
KEY HIGHLIGHTS
Total Group*: growth 14.7%; organic growth 12.1%
Continuing Group*: growth 16.2%; organic growth 13.5%
Significant H2 margin improvement
Non-underlying items increased by:
- Earn out payments charged to Income Statement
- SA intangible impairment
Interest cost reflects IFRS 16 costs
Underlying effective tax rate better at 19%
Full year dividend of 14.1p per share
2019 2018£'m £'m % change
Revenue 165.4 143.0 15.7%Gross profit 96.5 88.3 9.3%Gross profit margin 58.4% 61.8% -343bps
Underlying overhead expenses (49.8) (43.9)Underlying operating profit 46.7 44.4 5.0%Underlying operating profit margin 28.2% 31.1% -286bps
Non-underlying items:Amortisation, acquisition and integration costs (17.1) (16.5)Acquisition related earn-outs and share based payments (8.1) (2.4)Intangibles impairment (2.4) 0.0Regulatory settlement and other (1.0) 0.0
Operating profit 18.0 25.6
Underlying interest cost and other gains and losses (4.3) (1.9)Non-underlying interest cost and other gains and losses (0.5) 0.0
Profit before tax 13.3 23.7
Underlying tax (8.0) (7.7)Non-underlying tax 3.6 2.2
Profit for the year 8.9 18.2
Underlying diluted earning per share 23.6 24.2
Dividend per share 14.1 13.8
Note: Income statement presented is for “Total Group” and includes results from both continuing and discontinued operations
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 12
*At constant currency
title style> 2019 Revenue bridgeStrong organic revenue growth
£130m
£135m
£140m
£145m
£150m
£155m
£160m
£165m
£170m
2018 EMEA (organic)
APM NA CI (continuing)
EMEA (inorganic)
CI (discontinued)
2019
£143.0m
£165.4m
+£8.8m
+£3.8m
+£5.2m
+£1.9m
+£3.7m -£1.0m
Organic growth from continuing operations 13.5%*
* At constant currency
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 13
title style> Margin bridgeSecond half margin recovery
20%
22%
24%
26%
28%
30%
32%
2018
31.1% -1.7%
-2.2%
-1.5%
0.6% 26.4%
+2.2% -0.4%
Overhead spend
increase
EMEA / CI efficiency
decline
Increase growth
initiatives
Other items
H1 2019
Overhead improvements
Other items
2019
28.2%
KEY HIGHLIGHTS
Second half recovery driven by overheads improvement
Realignment of revenues across EMEA and CI during H2 to drive gross profit improvement going forward
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 14
title style> Cash flow statement and uses of cashFor the year ending 31 December 2019
OPERATING PROFIT TO FREE CASH FLOW 2019 USES OF CASH FLOW
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cash sources Cash uses
£39m
£23m
£4m
£20m
£38m
2019 2018
£'m £'m % change
Underlying total group operating profit 46.7 44.4
Depreciation (equipment and IFRS 16) 8.2 1.9
Other items 0.4 4.3
Change in working capital 3.2 (14.4)
IFRS 16 lease cost cash charge (6.4) 0.0
Non-underlying items in accruals (2.9) 0.0
Underlying total group operating cash flows 49.3 36.2 35.9%
Underlying cash conversion 105% 82%
Capital expenditure (Equipment and software) (4.2) (4.2)
Tax charge (7.6) (7.3)
Net finance cost (2.3) (1.7)
Underlying free cash flow attributable to equity holders 35.1 23.0 52.9%
Net movement in debt
Free cash flow before capital expenditure
Acquisition related
DividendsCapex
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 15
title style> Working capital and indebtednessFor the year ending 31 December 2019
WORKING CAPITAL POSIT ION NET INDEBTEDNESS
2019 2018
£'m £'m % change
Contract assets - Continuing operations 6.5 6.6
Trade receivables - Continuing operations 42.6 40.3
Contract liabilities - Continuing operations (17.6) (16.1)
Net working capital - Continuing operations 31.4 30.8 2.0%
- as a % of last 12 months continuing revenues 19.7% 22.6%
Net working capital - Discontinued operations 2.4 2.2 7.4%- as a % of last 12 months Discontinued
revenues 41.9% 33.1%
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 16
2019 2018
£'m £'m
Gross debt balance 129.6 85.4
Gross cash balances (51.5) (32.4)
Net indebtedness 78.1 53.0
Restricted cash balances 31 December 2019 10.1 8.9
Total group underlying operating profit 46.7 44.4
Non-IFRS 16 depreciation 2.9 1.9
IFRS 16 adjustment 5.3 -
Recognise leases per IAS17 (6.5) -
Total Group pre-IFRS 16 EBITDA 48.4 46.4
Net debt to pre-IFRS 16 EBITDA 1.6x 1.1x
Restricted cash adjusted net debt to pre-IFRS 16 EBITDA 1.8x 1.3x
title style> COVID-19 UpdateResilient business model despite market uncertainty
▪ APAC offices successfully under BCP since January 2020. Minimal disruption to date
▪ Most offices now operating under full or rotating remote working. No issues to date, but early days
▪ Platform and systems operating well - continue to provide service as usual so far
▪ No significant impact to client activities across our APAC offices
▪ Core activities for structures continue as usual
▪ No impact yet seen on client activity across the rest of the Group, but it remains very early in client enacting their own remote working processes.
▪ SANNE remains well capitalised with healthy liquid resources
▪ Low levels of leverage
▪ Long-term contracts should underpin a resilient performance
▪ Risk of a near-term slow in new business and debtor collections
▪ Broader implications of a global recession on Alternatives industry
ONGOING OPERATIONS
AND SERVICES
CLIENT ACTIVITY
BUSINESS RESILIENCE
FUTURE ASSESSMENT
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 17
title style> Guidance for continuing businessNear-term guidance for 2020
Revenue Growth
Underlying operating profit margin excl. Private Client
Underlying effective tax rate
Underlying operating cash conversion
Capital Expenditure
Double digit
28-30%
19-21%
> 90%
c. 3% of Group revenues
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 18
title style>
Operational review and OutlookMartin Schnaier
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 19
title style> Segmental performance
£30.4m
2018 2019
£
REV
ENU
E
Strong revenue growth in region of 27.6% with organic growth of 20.0%
Continued strong demand for our services and new fund creation in closed-ended alternatives markets, plus good progress made in broadening open-ended services into Dublin
AgenSynd and LIS acquisitions performing well
EUROPE, MIDDLE EAST and AFRICA
2018 2019
£ G
RO
SS P
RO
FIT
£29.6m
£48.1m
£60.5m
£33.7m
£42.7m
£
REV
ENU
E
£43.6m
Good organic growth across the closed-ended alternatives products
Private Client business declining by 15.2% in the year
Successful completion of strategic review and subsequent disposal of private client business
2018 2019
CHANNEL ISLANDS
2018 2019
£ G
RO
SS P
RO
FIT
£26.1m£25.7m
Regional breakdown at a glance
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 20
Discontinued Private Client Gross profit
Discontinued Private Client Revenue
£6.7m£5.7m
£4.0m£3.7m
title style> Segmental performanceRegional breakdown at a glance
£30.4m
2018 2019
£
REV
ENU
E
£34.2m
Another year of strong performance from Asia-Pacific locations
New offices opened in Tokyo and Mumbai
Good level of new business wins in Mauritius in a year of anticipated elevated end-of-life attrition
ASIA -PACIFIC and MAURITIUS
2018 2019
£ G
RO
SS P
RO
FIT
MA
RG
IN
£23.1m£22.1m
2018 2019
£
REV
ENU
E
Strong growth for the North America region at 18.7%
Good pipeline opportunities being seen from first-time outsourcers
Establishment of new San Diego office
NORTH AMERICA
2018 2019
£ G
RO
SS P
RO
FIT
MA
RG
IN
£13.4m
£21.7m£26.9m
£10.8m
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 21
title style> Acquisitions and strategic partnerships
D E A L S I G N E D D E A L C O M P L E T I O N E X P E C T E D
Q4 2019 Q2 2020
D E A L B E N E F I T S TO S A N N E
Enhances global footprint with presence in Cayman Islands and additional team in Dublin
S T R AT EG I C PA R T N E RS H I P E S TA B L I S H E D
September 2019N U M B E R O F P EO P L E
80 expertsacross UK, US and Switzerland
P R O G R E S S M A D E TO DAT E
Strategic relationship enables SANNE to access Colmore’s powerful Limited Partner technology, Helios4GP being developed exclusively for SANNE’s client base
Deploying Colmore’s technology within SANNE’s alternative assets business will give its clients access to market-leading analytics and reporting tools
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 22
P R O G E S S M A D E TO DAT E
Since signing we have received approval from the Cayman Islands regulator and expected approval from the Irish regulator in Q2 2020
title style> US acquisition in 2016How FLSV Fund Administration Services LLC added value to the Group
£18.5m£19.1m
£21.7m
£26.9m
2016 2017 2018 2019
£
REV
ENU
E
DEAL HEADLINES
Acquired in November 2016
Price paid £57.8m (c.12 x run-rate EBITDA)
75 staff in New York and 40 staff in Belgrade
RATIONALE
Establish presence in North America, the world’s largest alternative asset market
Alignment of cultures and approach to client service quality
Enhancing Group’s platform through technology
EFFECTS OF THE TRANSACTION
Double digit ROIC and consistently ahead of acquisition case
Successful capture of new American clients in Europe from cross-sell
Significant reverse synergies delivered for the Group by leveraging Belgrade office as global IT hub
F INANCIAL PERFORMANCE
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 23
title style> 2019 Strategic developments
D I F F E R E N T I AT E D, B E S T - I N - C L A S S S E R V I C E S
Invested in Product Development team
Upgraded legacy policies and procedures
Ongoing development of Helios4GP
Real Asset services rolled out in North America and Spain
Credit fund services launched in Singapore
Closed-ended funds offering in South Africa
E X PA N D F O O T P R I N T
I N V E S T I N P L AT F O R M
I N O R G A N I C G R O W T H
1
2
3
4
5
6
D E V E LO P E DS E R V I C E S A C R O S SF O OT P R I N T
Invested in Business Development team
Successful cross-sell through existing client base
New offices established in Tokyo, Mumbai and San Diego
Relocation from Rotterdam to Amsterdam
Expanded into Cayman through Inbhear
Enhanced existing policies and procedures
First ever Chief Technology Officer
Investment in offices and people
Investment in Colmore
Acquisition of Inbhear
Healthy pipeline of potential opportunities
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 24
S U C C E S S F U L B U S I N E S S D E V E LO P M E N T
title style> Outlook
Good momentum in Alternatives and Corporate businesses positions SANNE well for future growth in 2020
Robust alternatives market backdrop with anticipated growth in addressable markets
Healthy pipeline of acquisition opportunities
Business performing well under business continuity measures and impact of ongoing COVID-19 outbreak assessed daily
Board expects to deliver a resilient performance in 2020 and remains confident in the medium and long-term prospects for the Group
Continue to improve operational efficiency & technology in the Group
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 25
Expected healthy level of cash generation as per guidance
title style>
Q&A
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 26
>> Appendix
title style> New business growth overviewConsistent strong new business wins seen in H2 2019
£13.8m
£20.9m
£5.2m
£13.0m
£24.5m
£7.8m
£7.1m
£6.7m
£10.9m
£10.0m£11.5m
H1 Annualised Sales H2 Annualised sales
2015 2016 2017 2018 2019
£13.0m
£16.0m
£24.5m
£8.5m
New business wins in FY 2019 of £24.5m (FY 2018: £24.5m) which demonstrates consistently strong new business wins year-on-year
Some large mandates from 2019 will be realised in Jan 2020
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 28
title style> Underlying Continuing Group Income StatementFor the year ending 31 December 2019
KEY NOTES
Presented for underlying continuing Group
Excludes some cost allocation that will be removed ex-Private Client
Presents an alternative base position models moving forward
Margin slightly lower in near term without Private Client
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 29
2019 2018
£'m £'m % change
Revenue 159.7 136.2 17.2%
Gross profit 92.5 84.0 10.2%
Gross profit margin 57.9% 61.6% -371bps
Underlying overhead expenses (48.2) (42.5)
Underlying operating profit 44.3 41.4 7.0%
Underlying operating profit margin 27.8% 30.4% -265bps
Non-underlying items (28.7) (18.9)
Operating profit 15.6 22.5
Underlying interest cost and other gains and losses (4.0) (1.6)
Underlying profit before tax 40.4 39.8
Non-underlying interest cost and other gains and losses (0.5) 0.0
Profit before tax 11.2 20.9
Underlying tax (7.8) (7.5)
Profit for the year 32.6 32.3
Underlying diluted earning per share 22.3 22.4
title style> Impact of Private Client business disposal
2019 2018£'m £'m % change
Revenue - Discontinued operations 5.7 6.8 -15.2%
Gross profit - Discontinued operations 3.7 4.0
Operating profit - Discontinued operations 3.7 4.0 -8.6%
Representative allocation of direct costs (0.3) (0.3)Representative allocation of overheads (1.0) (0.7)Underlying operating profit - discontinued operations 2.4 3.0 -21.9%
Tax charge - Discontinued operations (0.4) (0.4)Profit after tax - Discontinued operations 3.3 3.6 -8.6%
Underlying interest charge adjustment (0.3) (0.2)Adjustment to tax charge (at Jersey 10% rate) 0.2 0.1Underlying profit after tax - Discontinued operations 2.2 2.9 -23.4%
Underlying DEPS - Discontinued Operations 1.3p 1.7pAs a % of total group underlying DEPS 5.4% 7.2%
KEY HIG HLIGHTS
Agreement signed in March 2020
Completion expected during 2020
Up to £12m cash consideration
Discontinued results adjusted from IFRS 5 presentation to give more realistic impact of removing business
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 30
title style> What we do for clients globally
EXAMPLE OF SERVICES
Fund and corporate administration
Fiduciary services
Accounting and reporting services
Asset servicing
Loan agency and servicing
AIFMD Depositary
AIFMD Management Company services
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 31
C L O S E D - E N D E D A L T E R N A T I V E
A S S E T S E R V I C E S
Carried interest administration
Company secretary / governance support
Compliance monitoring
Transaction management
Regulatory reporting services
Cash and FX management services
Data analytics and ESG reporting
Note: Representative of continuing operations only
title style>
Information on SANNE and details of its regulators can be accessed via sannegroup.com
MAKING THE DIFFERENCE
19 March 2020/ Sanne Group plc - 2019 Full Year Results /Page 32