CHAIRMAN'S REPORT

1 JULY 2015 CREATED
RISK MANAGEMENT
SOLUTIONS DIVISION
EBITDA ROSE BY 19.7%
TO $123.9M

CREATING TRUST
IN A COMPLEX
WORLD

Dear Shareholders, The last year has been a busy one as we set about reorganising SAI Global into a Risk Management Solutions Division and a standalone Australian Property Division. So far the results are positive and we are optimistic that we will continue to reap the rewards of our hard work and focused efforts in FY17.

The new Risk Management Solutions Division came into being as of 1 July 2015, and over the following months the new structure was bedded down with centralised IT, Marketing, and Sales functions being major features of the restructured organisation.

The Risk Management Solutions Division comprises Risk Management Software (Compliance 360), Learning, Assurance and Knowledge (including Standards publishing) businesses. All are substantial competitors in their respective markets. Particularly noteworthy, Compliance 360 has been rated by Forrester Research Inc as a leading Governance, Risk and Compliance (GRC) product, and one that continues to meet constantly expanding customer requirements.

"OUR RISK MANAGEMENT SOFTWARE SOLUTION, COMPLIANCE 360, HAS BEEN RATED BY FORRESTER RESEARCH INC AS A LEADING GRC PRODUCT."

FY17 also ushers in our new Intelligent Risk go-to-market strategy. The Board of Directors and Senior Management believe our integrated platforms of Learning, Knowledge, Risk and Assurance, along with our support Advisory services, give the Company a strategic advantage in the marketplace.

The customer-centric Intelligent Risk strategy has recently been unveiled to our global sales force and select clients. Early feedback from Compliance and Risk Officers in our customer base has been nothing short of exciting. Better yet, we are well-positioned to deliver on this strategy.

"AN INTELLIGENT RISK MODEL HELPS CUSTOMERS STAY AHEAD OF UNCERTAINTY, ACT WITH INTEGRITY, PROTECT THEIR BRANDS, AND DELIVER ON CUSTOMER EXPECTATIONS."

Our latest initiative in the Compliance software sector has been the acquisition of a management software solutions business, Modulo Security LLC, from Brazilian company, Modulo Security Solutions SA. The acquisition complements SAI Global's portfolio of Risk Management Software solutions and provides additional strategic opportunities for this part of the business.

The transaction includes the acquisition of rights to the well-regarded Modulo IT Risk Management software platform which complements Compliance 360, our leading Governance, Risk and Compliance (GRC) software platform. The agreement gives SAI Global a perpetual licence worldwide (with the exception of Brazil, Mozambique and Angola where parent company, Modulo Security Solutions SA will continue to operate).

"THE ACQUISITION COMPLEMENTS SAI GLOBAL'S PORTFOLIO OF RISK MANAGEMENT SOFTWARE SOLUTIONS AND PROVIDES ADDITIONAL STRATEGIC OPPORTUNITIES."

Late in the second half of the year we received an unsolicited approach expressing interest in our Assurance business assets.

Assurance is an attractive business which has been a strong performer for SAI Global. However, we are not the world leader in the Assurance space and this market is undergoing rapid consolidation and digital disruption. The Assurance business could potentially be of more value to a competitor because of our extensive global footprint and strong presence in the food supply risk management market.

The Board believes that it is in shareholders' interests to explore the possibility of a sale of the Assurance business. A virtual data room has been set up and competing potential purchasers have been approached. Should a sale of the Assurance business take place, SAI Global would be in a position to fast-track its expansion into higher margin, higher growth Compliance software, and related digital products and services. The Company will keep staff, shareholders and the Australian Securities Exchange updated as developments occur.

The Standards publishing business continues to grow and operate effectively. Regrettably, we are involved in dispute resolution procedures with Standards Australia, as announced previously, and we will keep the market informed of any material developments as they occur.

Our Property Division business continues to grow and we have diversified our service offerings to expand our suite of mortgage processing solutions. Rigorous measurement and process improvement disciplines have driven processing accuracy success rates to 1:8,000 transactions. This has repositioned the cost base of mortgage processing and we continue to work toward offering a comprehensive 'hybrid model' of manual and digital/electronic processing to support all stakeholders' methods of operation.

"THE PROPERTY DIVISION CONTINUES TO GROW AND WE HAVE DIVERSIFIED OUR OFFERINGS TO EXPAND OUR SUITE OF MORTGAGE PROCESSING SOLUTIONS."

At a statutory level, EBITDA rose by 19.7% to $123.9m, and net profits were up 35.1% to $53.1m. On an underlying basis, however, which takes out the effect of abnormal charges in both this and the previous financial year, EBITDA growth was 4.0%, and net profits rose by 5.3%. Given the change programme undertaken over the past 12 months, this result is not surprising. It is evident that the changes were much needed and we are now gaining momentum heading into FY17.

"THE CHANGES WERE MUCH NEEDED AND WE ARE NOW GAINING MOMENTUM HEADING INTO FY17."

The Board has resolved to increase the final dividend to 9.5 cents per share fully franked.The final dividend takes total dividends for the year to 17 cents per share. The final dividend will be paid on 23 September 2016.

SAI Global is committed to diversity and strives to build a vibrant and inclusive workplace, reflective of the communities in which it operates. Equal opportunity is at the core of the Company's people strategy as the Board believes a diverse workforce is critical to attracting and retaining talented staff.

In particular, the Board is committed to gender diversity in leadership positions and believes this will facilitate innovative thinking, fresh ideas, prudent decision-making, and better business results. While at the end of FY16, 51.7% of the Company's global workforce was female, compared to 52.2% at the end of FY15, the Board would like to see more women in senior management ranks.

In 2011 SAI Global adopted the ASX Corporate Governance Council's gender diversity principles and set a target to increase the proportion of women in senior management roles to between 35% and 40% by the end of FY16. Senior management roles are defined as levels C1 and C2, where the CEO is level C, C1 is a direct report to the CEO, etc. This target was met at the end of FY15, with 36.2% of C1 and C2 being female, and was again met in FY16, with a figure of 40.1%.

If a sale of the Assurance business assets takes place, we will seek to re-invest the funds in areas where we have a strong competitive edge, especially risk software and Business Process Outsourcing. Re-investment may be in software, acquisitions, or joint ventures, which means revenue growth could be both organic and inorganic.

If a sale does not take place, we are well positioned to continue the sales successes emerging in the last quarter of FY16 in the Risk Management Solutions Division.

In closing, I would like to thank our staff, led by Peter Mullins and his senior leadership team, for their efforts during the year, as well as my fellow Board members and our shareholders for their continued support.

Andrew Dutton
Chairman