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RNS Number : 0787W

Sanne Group PLC

12 April 2019

Sanne Group plc

12 April 2019

Sanne Group plc

("SANNE" or "the Company")

Posting of Annual Report and Accounts and Notice of Annual General Meeting

SANNE, a leading global provider of alternative asset and corporate services, has posted its Annual Report and Accounts for the year ended 31 December 2018 (the "2018 Annual Report and Accounts"), together with the Notice of Annual General Meeting ("AGM") and Form of Proxy, to its shareholders. The 2018 Annual Report and Accounts and the Notice of AGM can also be downloaded from the Company's website at www.sannegroup.com.

Copies of the documents listed below have been submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM:

   --    Annual Report and Accounts for the year ended 31 December 2018 
   --    Notice of the Annual General Meeting 
   --    Form of Proxy 

Information required under Disclosure Guidance and Transparency Rule 6.3.5

This announcement should be read in conjunction with the Company's preliminary results announcement issued on 22 March 2019. Together, these announcements constitute the material required by Disclosure Guidance and Transparency Rule 6.3.5 to be communicated to the media in full unedited text through a Regulatory Information Service. A description of the Principal Risks and Uncertainties and the Directors' Responsibility Statement, extracted in full unedited text from the 2018 Annual Report and Accounts, are set out below. This information should be read in conjunction with, and not as a substitute for, reading the full 2018 Annual Report and Accounts. Page numbers and notes in the following appendices refer to page numbers and notes in the Company's 2018 Annual Report and Accounts.

Appendix A: Principal Risks and Uncertainties

Risk assessment

The Group reviews and monitors risk exposures closely, considering the potential impact and any management actions required to mitigate the impact of emerging issues and potential future events. The Group Risk Register is the principal tool for monitoring risks which are classified in a strict hierarchy (see table on the next page). The highest level (Level 1) identifies five risk categories: Business Model & Strategy, Operational, People, Regulatory and Financial. The next level (Level 2) contains 27 risk categories and the final level (Level 3) carries the detailed risks themselves which are captured and maintained across the Group.

Each Level 2 and Level 3 risk is rated by assessing the likelihood of its occurrence over the next three years and the potential associated impact. A scoring is given to each risk which is then used in conjunction with an assessment of the internal control environment or other mitigations to derive a residual risk score.

Risk appetite

In determining its risk appetite, the Group has defined the levels of risk it is willing to take in the pursuit of its strategic objectives.

This has been articulated as a Risk Appetite Statement with appetite set for each of the Level 2 categories within the Group Risk Register. For each Level 2 risk category, the risk appetite is compared against the associated residual risk to identify areas of focus.

Principal Risks

The risks from the Group Risk Register are discussed, debated and challenged, firstly by senior management and Executive Directors, and then by the Risk Committee, with a view to presenting the key risks to the Board. The Board has agreed that the top risks will be presented in the Annual Report and Accounts as the Principal Risks.

Assessment of Principal Risks and Uncertainties

Using the described approach, the Board is able to confirm that they have carried out a robust assessment of the Principal Risks and Uncertainties facing the Group including those that would threaten its business model, future performance, solvency or liquidity. Included on page 71 is the viability statement, which has been prepared with the assessment of these Principal Risks and Uncertainties in mind.

Business Risk Assessments - global and jurisdictional targets

SANNE's Business Risk Assessment Framework is a key tool within the Group's risk management framework. Underpinned by SANNE's risk appetite, the framework evaluates the adequacy and effectiveness of SANNE's internal controls. Global, and a number of jurisdictional, assessments were completed in 2018 and the outcome included a consolidated view of existing risk exposures supported by agreed risk appetite statements and any remediation work required to strengthen existing control environments. SANNE's jurisdictional Business Risk Assessments will continue into 2019.

 
 Level 1 Risk Category       Level 2 Risk Category               Principal Risk 
                            ----------------------------------  --------------- 
 Business Model & Strategy   Strategy                            Yes 
                              Corporate Governance 
                              Risk Management 
                              Acquisition Due Diligence           Yes 
                              Acquisition Integration 
                              Competitor                          Yes 
                              Client Concentration 
                              Fiduciary 
--------------------------  ----------------------------------  --------------- 
 Operational                 Process                             Yes 
                              Business Change                     Yes 
                              Business Continuity 
                              Technology 
                              Insurance 
                              Outsourcing & Third Parties 
                              Physical Security 
                              Property Security 
                              Cyber Security                      Yes 
                              Data Management                     Yes 
                              Legal 
--------------------------  ----------------------------------  --------------- 
 People                      Staff Culture, Ethics & Behaviour 
                              Staff Resources                      Yes 
--------------------------  ----------------------------------  --------------- 
 Regulatory                  Regulatory Change                   Yes 
                              Listing Rules 
                              Compliance                          Yes 
                              Financial Crime                     Yes 
--------------------------  ----------------------------------  --------------- 
 Financial                   Working Capital 
                              Impairment                           Yes 
                              Accounting & Reporting Errors 
                              Income 
--------------------------  ----------------------------------  --------------- 
 

Business Model & Strategy

Direction of change:

During the period the Group has seen steady progress with the integration of more recent acquisitions. SANNE has experienced a number of years of strong growth, both organically and inorganically, and therefore a number of projects (including strengthening the 3 Lines of Defence model and enhancing minimum internal standards) as mentioned on pages 34 and 35, have continued throughout 2018 to enhance the business model and keep on building stronger foundations for future sustainable growth.

 
 Risk Description                                           Key Mitigants and Controls 
                                                           ----------------------------------------------------------- 
 Acquisition Due Diligence Risk 
 The risk that inadequate due diligence of future            *    Robust due diligence process including 3rd party 
 acquisitions made by the Group give rise                         assessments by top accounting and law firms, prior t 
 to unidentified liabilities or unintended consequences     o 
 and/or acquisitions made by the Group                            recommendations to the Board. 
 are poorly integrated, due to inadequate planning, lack 
 of management oversight or lack of 
 resources.                                                  *    Governance and challenge from independent 
                                                                  Non-executive Directors. 
 
 
                                                             *    Committees set up to manage integration processes in 
                                                                  line with SANNE's acquisition integration framework. 
---------------------------------------------------------  ----------------------------------------------------------- 
 Competitor Risk 
 Risk of declining business revenue or margins by failing    *    Strong pricing and bespoke business offerings driven 
 to invest in SANNE's infrastructure                              by expert industry and client base knowledge. 
 or innovate to react to external market conditions. 
 
                                                             *    Investment in product development capability. 
 
 
                                                             *    Overarching Executive Committee and Board review of 
                                                                  digital/ technology investment. 
---------------------------------------------------------  ----------------------------------------------------------- 
 Strategy Risk 
 Risk of poor strategic business decisions, and/or poor      *    Regular review of business strategy. 
 execution, including poor communication, 
 inadequate resources or a failure to respond to changing 
 market conditions.                                          *    Governance framework to escalate strategy and 
                                                                  appetite issues. 
 
 
                                                             *    Executive Committee and Board review and governance, 
                                                                  including monthly financial and risk reporting. 
---------------------------------------------------------  ----------------------------------------------------------- 
 

Operational

Direction of change:

Continued acquisitions and strong growth in client numbers and staffing has meant increased inherent operational risk exposures for the Group, as anticipated in the 2017 Annual Report and Accounts. These risks have been mitigated, and a number of operational projects and business change initiatives continue to further strengthen the control environment in this respect.

 
 Risk Description                                           Key Mitigants and Controls 
                                                           ----------------------------------------------------------- 
 Business Change Risk 
 Risk of failure to effectively plan, design, communicate     *    Dedicated and skilled change management resource. 
 or execute internal change in a timely 
 manner, leading to resistance, saturation and fatigue. 
                                                              *    Overarching governance of business critical change 
                                                                   programmes by Executive Committee and Change & 
                                                                   Investment Committee. 
 
 
                                                              *    Documented change administration processes. 
 
 
                                                              *    Horizon Scanning enabling early identification of 
                                                                   upstream changes which may impact business 
                                                                   operations. 
---------------------------------------------------------  ----------------------------------------------------------- 
 Cyber Security Risk 
 Risk that SANNE's systems, data or services are not         *    Dedicated team responsible for Information Security. 
 protected from a cyber-attack leading 
 to confidential data being obtained or services being 
 unavailable.                                                *    Staff Training & Awareness programme schedule, with 
                                                                  mandatory training to all staff. 
 
 
                                                             *    Policies and procedures in place. 
 
 
                                                             *    Third Party Management Assessments and contract 
                                                                  reviews. 
 
 
                                                             *    InfoSec and cyber tools to support staff in managing 
                                                                  exposure to cyber risk. 
---------------------------------------------------------  ----------------------------------------------------------- 
 Process Risk 
 Risk of errors, inconsistent or untimely application of     *    Enhanced governance, structure and awareness through 
 critical processes leading to customer                           a Group framework that supports the creation and 
 dissatisfaction or failure to meet statutory or                  implementation of minimum standards. 
 regulatory requirements. 
 
                                                             *    Continued development and documenting of procedures. 
 
 
                                                             *    First Line of Defence Control Testing programme. 
 
 
                                                             *    Continued centralisation of critical processes, 
                                                                  enabling standardisation and improving effectiveness 
                                                            . 
---------------------------------------------------------  ----------------------------------------------------------- 
 Data Management Risk 
 Risk of an inability to identify, maintain and protect       *    Dedicated team in place responsible for Data 
 data within agreed quality parameters,                            Protection, including a Global Data Protection 
 impacting delivery against strategic objectives and               Officer (DPO). 
 regulatory and legal obligations. 
 
                                                              *    Staff Training & Awareness programme schedule, with 
                                                                   mandatory training to all staff. 
 
 
                                                              *    Policies and procedures in place. 
 
 
                                                              *    Data Protection Data Flow Mapping. 
 
 
                                                              *    Third Party Management Assessments and contract 
                                                                   reviews. 
 
 
                                                              *    Mapping and understanding of applicable regulatory 
                                                                   and legal obligations. 
---------------------------------------------------------  ----------------------------------------------------------- 
 

People

Direction of change:

In key jurisdictions in which the Group operates, the fund and corporate administration employment market is increasingly competitive, which, along with the Group's continuing organic growth, can lead to difficulties in attracting and retaining the best resources. Initiatives to create and develop knowledge hubs across the organisation are ongoing, and will help to mitigate this risk over the medium-term. With a new senior leadership team now in place, we continue to progress towards developing more centres of excellence to support our staff.

 
 Risk Description                                            Key Mitigants and Controls 
                                                            ---------------------------------------------------------- 
 Staff Resourcing Risk 
 Risk of failure to attract, retain or engage staff,          *    Investment in training with established industry 
 leading to insufficient capacity and /                            bodies such as ACCA, ICAEW and ICSA, alongside 
 or capability, undermining business performance and               regulatory training, coaching and mentoring. 
 delivery. 
 
                                                              *    Established Remuneration Committee for Executive 
                                                                   Directors. 
 
 
                                                              *    Enhanced Employee Value proposition through market 
                                                                   monitoring, remuneration benchmarking and performan 
                                                             ce 
                                                                   management and bonus structure. 
 
 
                                                              *    Increased focus on succession planning. 
----------------------------------------------------------  ---------------------------------------------------------- 
 

Regulatory

Direction of change:

The Group remains exposed to the political/regulatory risks associated with Brexit and continues to monitor ongoing developments as the 2019 deadline approaches. Regulatory Compliance risk is in part correlated to business model, operational and staff risk, recognising that as the Group becomes larger and more diverse, the risk of an omission or error increases leading to possible regulatory sanction. This increasing risk is being mitigated by various projects, in particular the strengthening of the 3 Lines of Defence model and including an increase in assurance and oversight activity.

 
 Risk Description                                          Key Mitigants and Controls 
                                                          ------------------------------------------------------------ 
 Regulatory Change Risk 
 Risk of failure to identify, assess, communicate and       *    Brexit Committee in place to consider, assess and 
 execute mandatory regulatory changes                            monitor risks and opportunities. 
 to our policies, processes and technology in a timely 
 manner. 
                                                            *    Active dialogue with regulators, governmental and 
                                                                 industry bodies supported by a regulatory liaison 
                                                                 policy framework. 
 
 
                                                            *    Horizon scanning process enabling early 
                                                                 identification of upstream regulatory and legislative 
                                                                 changes which may impact SANNE. 
 
 
                                                            *    Jurisdictional oversight by Compliance and increased 
                                                                 level of monitoring activity. 
--------------------------------------------------------  ------------------------------------------------------------ 
 Compliance Risk 
 Risk of failure to identify non-compliance to mandatory    *    Compliance monitoring plans established in each 
 regulatory requirements and/ or provide                         jurisdiction assessing compliance with local 
 timely, accurate and complete reports and required              requirements. 
 disclosures. 
 
                                                            *    Issues management policy established requiring 
                                                                 incidents to be escalated to jurisdictional and Group 
                                                                 governance committees on a materiality basis. 
 
 
                                                            *    Regulatory liaison policy detailing the requirements 
                                                                 of notification of material events to local 
                                                                 regulators/ licensees. 
 
 
                                                            *    Employee awareness campaigns embedding knowledge 
                                                                 relating to timely escalation of incidents, breaches 
                                                                 and errors. 
--------------------------------------------------------  ------------------------------------------------------------ 
 Financial Crime Risk 
 Risk of inadequate policies, procedures, controls and       *    Financial Crime controls and procedures in place. 
 technology to identify, assess and manage 
 Financial Crime Risks, leading to SANNE being exposed 
 to, and used for, criminal activity.                        *    Manual and automated name screening for sanctions, 
                                                                  Politically Exposed Persons (PEPs) and adverse 
                                                                  information. 
 
 
                                                             *    Financial Crime Risk governance structure with Group 
                                                                  and jurisdictional subject matter expert support. 
 
 
                                                             *    Centralised KYC Data to manage and identify risks. 
 
 
                                                             *    All transactions subject to approval process and 
                                                                  subject to sign-off. 
--------------------------------------------------------  ------------------------------------------------------------ 
 

Financial

Direction of change:

Given the number of acquisitions made by the Group in recent years, there are significant intangible assets (including goodwill) on the balance sheet.

 
 Risk Description                                          Key Mitigants and Controls 
                                                          ------------------------------------------------------------ 
 Impairment Risk 
 Risk of recoverable amounts being below the value of       *    Director led due diligence with 3rd party assessments 
 assets, including intangible assets (e.g.                       by top accounting and law firms. 
 goodwill), due to a decline in value following 
 acquisition. 
                                                            *    Impairment testing and attestations per accountancy 
                                                                 rules. 
 
 
                                                            *    Six monthly value assessments. 
 
 
                                                            *    Ongoing monitoring against performance expectations 
                                                                 and targets. 
 
 
                                                            *    Focus on delivering strategic and financial benefits 
                                                                 from acquired businesses. 
--------------------------------------------------------  ------------------------------------------------------------ 
 

Appendix B: Directors' Responsibility Statement

We confirm that to the best of our knowledge:

-- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the parent Company and its undertakings included in the consolidation taken as a whole; and

-- the Strategic Report and Directors' Report include a fair view of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the Principal Risks and Uncertainties that they face.

For and on behalf of Sanne Group plc

 
Enquiries: 
Sanne Group plc 
 Ian Portal, Group Company   +44 (0) 20 3911 
 Secretary                    1048 
Tulchan Communications LLP   +44 (0) 20 7353 
 Tom Murray                   4200 
 

Notes:

About SANNE

SANNE is a leading global provider of alternative asset and corporate services. Established for over 30 years and listed on the Main Market of the London Stock Exchange and a member of the FTSE 250 index, SANNE employs more than 1,400 people worldwide and administers structures and funds that have in excess of GBP240 billion of assets.

Key clients include alternative asset managers, financial institutions, family offices, ultra-high net-worth individuals and corporates.

SANNE operates from a global network of offices located in leading financial jurisdictions, which are spread across the Americas, Europe, Africa and Asia-Pacific.

www.sannegroup.com

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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