Sanne Group plc 11 September 2018 Strictly private and confidential - - PowerPoint PPT Presentation

2018 Interim results Sanne Group plc

Strictly private and confidential

11 September 2018

Caution statement

Forward looking statements This presentation may contain and the Company may make verbal 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, including amongst other things, UK domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its respective affiliates operate, the effect of volatility in the equity, capital and credit markets on the Company's profitability and ability to access capital and credit, a decline in the Company's credit ratings; the effect of operational risks; and the loss of key personnel. 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 by or on behalf of the Company speak only as of the date they are made. Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this presentation to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. No statement in this presentation is intended to be a profit forecast, and no statement in this presentation should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

sannegroup.com 1

Agenda outline 2018 Interim results presentation

2

• 1. Key highlights

> Dean Godwin

• 2. Regional performance

> Dean Godwin

• 3. Financial review

> James Ireland

• 4. Strategy & Outlook

> Dean Godwin

• 5. Q&A

Key highlights

• Dean Godwin

4

• We are a leader in an attractive market supported by compelling fundamentals
• Growth of alternatives and changing regulatory landscape are driving demand and new business
• pportunities
• We are building global scale and broadening our product offering through growth and selective M&A
• Recent acquisitions are driving increased cross-selling. 2018 deals include:
• Luxembourg Investment Solutions (LIS) – acquired in February 2018, which is performing well; and
• AgenSynd – acquired in September 2018, which adds strength-in-depth to our existing Agency Services business
• We have continued to invest to strengthen our capabilities and infrastructure for future growth
• Strong first half momentum provides confidence in full-year expectations

Continued growth momentum across the business

Key financial highlights We continue to build a successful global business

5

GROUP REVENUE

H1’18

£65.9m

H1’17 = £56.3m

UNDERLYING OPERATING PROFIT 1

H1’18

£20.0m

H1’17 = £20.9m

UNDERLYING DILUTED EPS

H1’18

12.2p

H1’17 = 13.0p

H1’18

£19.4m

H1’17 = £20.3M

UNDERLYING PROFIT BEFORE TAX 1

H1’18

4.6p

H1’17 = 4.2p

H1’18 DIVIDEND PER SHARE

NEW BUSINESS WINS IN H1’18

H1’18

£11.5m

H1’17 = £10.0m

Revenue progression Transformational growth since IPO

H1 Revenue H2 Revenue

2014 2015 2016 2017 2018 50% 43% 50% 57% 46% 54% 47% 53% Pre-IPO Post-IPO £65.9m £63.8m £113.2m £45.6m £35.6m

6

• Strong organic and inorganic

growth delivered in 4 years

• Growth momentum

traditionally results in a greater H2 revenue

• 2017 an atypical year due to

FX and timing of some large new business

• Return to traditional H1 / H2

split in 2018

Key operational highlights 2018 Interim report

7

20% on a constant currency basis

STRONG REVENUE GROWTH

Double digit growth across APAC, EMEA and the US

ALTERNATIVES UNDERPIN GROWTH MOMENTUM

Acquisitions of LIS and AgenSynd so far this year

INORGANIC GROWTH CONTINUE TO DELIVER VALUE

£11.5m annualised new business won

STRONG NEW BUSINESS MOMENTUM

Further investment in people, processes and technology

CONTINUED INVESTMENT TO ENHANCE GROUP

Despite headwinds in Private Client and Hedge, the Group remains on track for full year expectations

DIVERSIFIED PRODUCT RANGE PROVIDES STABILITY

New business growth overview Strong organic momentum continues

• New business wins in the period were £11.5m

(H1’17 = £10.0m)

• Momentum building in Group’s Asia-Pacific & Mauritius

business with organic growth in the period of 5.2% and significant client wins expected to drive a higher growth rate for the full year

• Increased levels and frequency of cross-selling

activities, including: ⁻ Good flow of new pipeline opportunities between NA and EMEA alternatives businesses ⁻ Regional cross sell to win joint alternatives fund admin and AIFM mandates

• Strong momentum in the business during the first six

months has continued post period end

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£13.8m £20.9m

£5.2m

£13.0m £11.5m

£7.8m £7.1m £6.7m £10.9m £10.0m £11.5m

H1 Annualised Sales H2 Annualised sales

SALES

2015 2016 2017 2018

M&A update New acquisitions continue to add value

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Luxembourg Investment Solutions (LIS) & Compliance Partners (CP) AgenSynd

Overview

• Leading third party AIFM authorised to deliver

management company services to both alternative investment funds and open ended mutual funds within the EU

• Leading providers of specialist agency services within the

European Private Debt market.

• Deal adds new strategically important locations within

Europe to SANNE.

Offices

• Luxembourg and Dublin
• Madrid, London and Paris

Staff

• 80
• 21

Strategic rationale

• Enhances offering enabling SANNE to provide

integrated Fund administration, AIFMD Depositary & ManCo services

• Builds scale in Luxembourg
• Strengthens Continental European new business access
• Adds new strategic locations
• Brings further strength and depth to existing agency

expertise

• Opportunity to take service into North America, largest

direct lending market in the world

Integration update

• Acquired in Feb 2018
• Dual brand strategy adopted in May 2018
• Acquired in Sept 2018

Regional performance

• Dean Godwin

11

Business divisions revenues & Gross margin Global business with scale across all regions

H1’18

Corporate & Private Client REVENUES:

£9.7m

GROSS MARGIN:

£6.1m

H1’18

EMEA Alternatives REVENUES:

£32.7m

GROSS MARGIN:

£19.7m

H1’18

Asia-Pacific & Mauritius Alternatives REVENUES:

£13.7m

GROSS MARGIN:

£9.9m

PLEASE NOTE: Graphs shown depict % revenues splits by business area across SANNE’s global business

H1’18

North America Alternatives REVENUES:

£9.7m

GROSS MARGIN:

£4.6m

H1’18 Operational review EMEA ALTERNATIVES

12 Business division Operational update Overview

• Revenue growth of 41.2% (39.8% on a constant currency basis)
• Organic growth of 14.0% (13.3% on a constant currency basis)
• Five month contribution from LIS

Debt

• Continued strong growth in capital markets space
• Increased flow of debt funds work in Europe especially Luxembourg
• Maximising cross-sell opportunities in US which is largest and most mature market for private debt globally

Real Estate

• Business has continued to grow quickly and benefited from strong growth in Luxembourg real estate funds
• LIS has provided a number of cross-sell opportunities and exposure to more European focused institutional fund managers
• Increased demand for onshore RE administration services despite the uncertainty around UK CGT provisions and Brexit

negotiations Private Equity

• Continued growth as PE fund raising markets remains strong with both new and existing customers raising new funds
• Due to SANNE’s global PE expertise and platform, it has benefitted from established PE managers who have expanded their

fund raising and deployment of capital into new geographies Hedge

• Challenging period due to net fund outflows in South Africa driven by political uncertainty as well as a c.8% devaluation in

the South African Rand impacting fund performance

• Business has continued to invest despite the difficult backdrop having successfully applied for the amendment of the Irish

administrative license to cover the servicing of hedge fund products in Europe

H1’18

EMEA Alternatives REVENUES:

£32.7m

GROSS MARGIN:

£19.7m

% OF GROUP REVENUE:

49.6%

> Continued impressive performance from Debt, Real Estate, Private Equity > 5 months of LIS increases scale and opportunity in the division > Hedge impacted by Rand and emerging market outflows

H1’18 Operational review NORTH AMERICAN ALTERNATIVES

13 Business division Operational update Overview

• Constant currency revenue growth of 10.9%
• Growth in the period driven by continued fund growth with both existing and new clients partially offset by the

runoff of certain niche, ancillary services

• Building momentum in cross-sell, particularly to SANNE’s EMEA operations
• Continued strong underlying market conditions in North America

H1’18

North America Alternatives REVENUES:

£9.7m

GROSS MARGIN:

£4.6m

% OF GROUP REVENUE:

14.7%

> Continued organic momentum, albeit impacted by FX translation > Pipeline continued to grow through new / new and new / existing client work

H1’18 Operational review ASIA-PACIFIC & MAURITIUS (APM) ALTERNATIVES

14

Business division Operational update

Overview

• On constant currency basis, the business has grown revenue by 5.2%
• Full year growth rate is expected to be higher as the benefits of new growth initiatives start to be realised

Asia

• Strong growth in Hong Kong, Shanghai and Singapore, with this region doubling the number of client groups
• A strong pipeline exists to ensure continued growth despite some business wins deferring launch towards the latter

part of the year Mauritius

• Mauritius has started to grow on a constant currency basis as the integration of IFS Group has been largely

completed

• Focus has moved to rolling out growth initiatives for the business as well as building out infrastructure to support

the wider business

• Growth initiatives have included a significant investment in the senior team as well as setting up a representative

sales office in India to further offer services to Indian corporate and institutional clients which should be fully

• perational by the end of 2018

H1’18

APM Alternatives REVENUES:

£13.7m

GROSS MARGIN:

£9.9m

% OF GROUP REVENUE:

20.9%

> Strong growth in Asia has seen client groups doubled > IFS Group business now largely integrated under SANNE brand with growth initiatives starting to deliver results

15

H1’18 Operational review CORPORATE & PRIVATE CLIENT (CPC)

Business division Operational update

Overview

• This performance represented constant currency revenue growth of 0.7% on the prior year period

Corporate

• Growth delivered across all three legacy businesses (C&I, EI and Treasury)
• The amalgamation of C&I, EI and Treasury further enhances operational synergies and cross-selling opportunities

given the similarity of the client base

• Increasing demand for regulatory and financial reporting services such as FATCA has been strong
• Division has grown support team in SANNE’s South Africa office

Private Client

• Business continues its strategic focus on institutionally minded Ultra High Net Worth (UHNW) families and their

family offices

• A challenging first half to 2018 due in most part to client attrition
• Substantial realignment in H1 2018 as a result to better position the division for sustained growth going forward

H1’18

CPC REVENUES:

£9.7m

GROSS MARGIN:

£6.1m

% OF GROUP REVENUE:

14.8%

> Corporate businesses saw good growth whilst amalgamated into one team > A challenging first half for private client business

Financial review

• James Ireland

Group Income Statement For the six months 1 January 2018 to 30 June 2018

17

Key highlights:

• Good first half performance against strong

prior year comparators

• Organic revenue growth of 8.7% on a

constant currency basis, expected to be in- line with Group’s double digit target for the full year

• H1 margins impacted by continued

investment in international platform, as seen in H2 2017

• Full year margin expected to improve
• Lower H1 reported tax rate, but full year

cash tax rate expected to be c.15%

• Interim dividend of 4.6p, an increase of

9.5% on prior year interim dividend

Divisional Income Statement For the six months 1 January 2018 to 30 June 2018

18

H1 2017 H1 2018

Notes:

• 1) Revenue includes LIS acquired during the year. Constant currency organic growth was 8.7%.
• 2) The % change in revenue is calculated on non-rounded figures

32.7

£70m £60m £50m £40m £30m £20m £10m £0m

13.7 9.7 9.7 23.1 14.0 9.5 9.6

CPC

• N. AMERICA

Alts APM Alts EMEA Alts

£56.3m £65.9m

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Key highlights:

• Acquisition of LIS
• Increased intangibles and deferred

consideration

• Increase in Accrued income
• Restatement of 2017 accounts to correctly

reflect a deferred tax liability against Mauritius acquisition

• Working capital as % of annualised revenue

within recent range for Group

• Net debt increased due to LIS acquisition

Group balance sheet & working capital For the six months 1 January 2018 to 30 June 2018

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Working capital evolution 30 June 2014 to 30 June 2018

Underlying operating cash conversion Impact of Mauritius billing change Impact of relative debtor increase Working capital as % of ann. revenue

Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18

103%

35% 30% 25% 20% 15% 10% 5% 0% 140% 120% 100% 80% 60% 40% 20% 0%

94% 132% 112% 115% 103% 102% 100% 68% Notes:

• 1) Impact of change in billing in Mauritius calculated taking value of annual, in-advance revenue billed in July 2018 rather than April 2018, due to the change, and assumes same % of this revenue would have been collected in

cash as was collected in 2017 between April invoicing and 30 June balance sheet. This equates to implied additional £3.5m cash collected

• 2) The impact of relative debtor shows the additional cash generated if debtors at 30 June 18 had been the same % of revenue as at 31 December 2017. This equates to an implied additional £4.0m cash collected

Group cash flow statement For the six months 1 January 2018 to 30 June 2018

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Ongoing investment that supports our future growth Building for continued future success

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Investment into our processes, global procedures and centralised functions Strengthening of Risk and Compliance Culture Continued investment into SANNE’s premises globally Continued investment into attracting the best people Continued investment into Information Technology platform

Strategy & Outlook

• Dean Godwin

Our journey has seen us grow significantly We’ve evolved and well set up for future growth

24

CLIENTS GLOBALLY STRUCTURES & FUND ADMINISTERED

AuA

PEOPLE GLOBALLY NUMBER OF LOCATIONS

£35m

£113m

1

9 1

7

17 1

270+

1300+ 1

£80bn+

£200+bn

500+

1600+ 1

3000+

7200+ 1

@ IPO

LISTED BUSINESS

SET UP FOR FUTURE GROWTH…

ACQUISITIONS

REVENUE

We’re now a globally positioned business with scaled operations in US, EMEA, AFRICA & APAC We now provide a fully integrated one-stop-shop for all institutional clients’ fund and corporate services needs We will continue to invest into our operational infrastructure to support our growth aspirations so clients continue to receive the highest quality service We’ve expanded the depth and location of our management team around the world, who have brought with them local experience and industry expertise to our leadership team Constantly reviewing our M&A pipeline and looking to make strategic acquisitions in the right markets for the right business

Exciting opportunities in a growth market SANNE is well positioned to take market share

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We’re building a truly global business to capture the growth in a highly fragmented and consolidating market Deep expertise in alterative asset specialisms with a highly skilled team and an integrated global platform to service the growing alternatives markets Evolving model positioning us well to take advantage of the market conditions such as increased regulation and outsourcing We’re a one-stop-shop for our global institutional customer base providing integrated fund administration, corporate, depository and AIFM services to the growing alternatives markets

Summary

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• Continued strong growth
• Strategic acquisitions continue to add product diversification and jurisdictional scale
• Strong pipeline of new business and increased cross-selling from recent acquisitions
• Evolving operating platform and systems to set us up for further growth
• Considerable opportunities for growth in new products and markets through M&A
• Board confident business will deliver its expectations for the full year

Appendices

We are experts in alternative asset and corporate administration services

More than 1,300 people world-wide 17 global locations

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Our regional business at a glance

150+ people 800+ people 350+ people New York, Belgrade Dubai, Dublin, Guernsey, Jersey, London, Luxembourg, Madrid Malta, Netherlands, Paris, South Africa Singapore, Hong Kong, Shanghai, Mauritius Accredited business processes

29

Source data: PwC AWM research centre analysis. Past data based on Lipper, Hedge fund research and Preqin. Source: PwC 2018 report entitled ‘Asset & Wealth management revolution: Putting the Channel Islands centre stage’. Page 24.

A diverse and growing market Global alternatives by type (USD trillion) by region

• Alternative strategies will continue to grow. Real assets –

including infrastructure and real estate – are set to be amongst the fastest expanding.

• Over the four years from 2016 to 2020, PwC forecast a

dramatic 27.5% p.a. growth rate in infrastructure, slowing to 15.0% from 2020-2025.

• Real estate is likely to expand by 6.9% p.a. in the first

period, followed by 7.5% in the second, doubling AuM from USD1.2tn to USD2.2tn.

• Private Equity, which is a more mature asset class, will

expand annually by 7.8% and 9.8% respectively for the two periods, rising from USD4.7tn to USD10.2tn. With surplus capital to put to work, private equity houses will continue to expand into specialist niches, such as technology and energy, as well as becoming even better at extracting value through, for example, longer holding periods.

2004 2007 2012 2016 2020e 2025e

25 20 15 10 5

2.5

5.3

6.4 10.1

13.9

21.1

7.8% 17.1% 6.9% 27.5% 4.5% 9.8% 8.3% 7.5% 15.0% 3.8%

28.5% 4.0% 11.8% 8.5% 8.7% Hedge funds Infrastructure Real Estate Commodities Private Equity CAGR

The market in which we operate is complex SANNE is a leading global alternative asset & corporate administration services provider

30 Perceived competition

Consolidation trends Private equity investment remains the key investor driving consolidation

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Date Acquirer Target Price Jun-18 APEX IPES n/a Apr-18 VISTRA Radius n/a Mar-18 JTC Group listed on FTSE (market cap GBP310m) Dec-17 SGG Group First Names Group n/a Nov-17 Alter Domus Cortland n/a Oct-17 CVC Capital Partners TMF £1.75bn Jun-17 Link Group Capita Asset Services £888m Mar-17 Estera Morgan Sharpe n/a Mar-17 SGG CIM Global Business $90m Feb-17 Alter Domus Carta Fund Services $175m Feb-17 Northern Trust UBS Fund Service $133m Dec-16 SS&C Conifer $89m Jul-16 Vistra Intro International n/a Jun-16 First Names Group Nautilus Trust Company n/a Jun-16 Intertrust Elian $629m

• Accelerated level of M&A in past few years. This will continue as accountancy firms, legal firms and banks

exit the industry.

• Fund administration services sector is a fragmented market, with a limited number of larger independent

players, offering synergies and multiple arbitrage potential.

Selected recent consolidation deals

Further market consolidation expected from mid-market participants

Listed

Information on SANNE and details of its regulators can be accessed via sannegroup.com