Interim Management Statement

RNS Number : 5084S

Hansard Global plc

08 November 2013

 



8 November 2013

Hansard Global plc

Interim Management Statement

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its Interim Management Statement for the period from 1 July 2013 to date. All figures refer to the three months ended 30 September 2013 ("Q1 2014"), except where indicated.

Summary

·     The transfer of the Hansard Europe Limited policy administration processes to the Group's offices in the Isle of Man has commenced in accordance with plans agreed with the Central Bank of Ireland;

·     New business premiums of Hansard International Limited of £34.4m PVNBP in the quarter have increased by 4.2% (Q1 2013: £33.0m). Regular premium flows of £27.8m have reduced marginally from £28.4m received in Q1 2013, while Single premium flows of £6.6m have increased by £2.0m from Q1 2013;

·     New business margins on the PVNBP basis have reduced to approximately 10.0% (Q1 2013: 10.7%);

·     The Group has traded profitably during the period and generated strong positive cashflows. Decreases in capital market values in the quarter have been reflected in slight reductions in the value of both policyholder Assets under Administration and in the Group's embedded value at 30 September 2013, when compared with 30 June 2013.

 

Gordon Marr, Group Chief Executive Officer, commented:

 "Whilst we have been successful in growing new business this quarter, the second quarter is likely to be below last year because a large distributor has ceased production.

In conjunction with the appointment of our new Chief Distribution Officer we have been undertaking a thorough review of our new business strategy in order to diversify new business flows, reduce risk and increase the scale of our business.  We will be making an announcement about this review in due course in 2014.  We remain confident that we are well positioned in the growth markets for future sales."

For further information:

Hansard Global plc                                                                            [phone]

Gordon Marr, Group Chief Executive Officer

Vince Watkins, Chief Financial Officer

Pelham Bell Pottinger                                                                      [phone]

Daniel de Belder                                                                                                                                            

OVERVIEW

Following the closure of Hansard Europe to new business the Group will focus future reporting of new business performance on Hansard International  and provide comparative results for that company.  As can be seen below, new business levels in Q1 2014 are marginally above the level of the new business earned by Hansard International in the corresponding period of the prior year (Q1 2013).

HANSARD EUROPE LIMITED

As previously announced, plans to achieve an orderly run-off of the activities of Hansard Europe were approved by the Central Bank of Ireland on 1 August 2013. At the date of this Interim Management Statement the implementation of the plans is on target - all administrative processes have been transferred to the Group's offices in the Isle of Man and all employees affected have been made redundant, or dates have been agreed for their departure prior to 31 December 2013.

We have taken a charge of £0.3m in Q1 2014 (Q1 2013: £nil) as a result of redundancy costs, professional fees and other costs arising from the implementation of the plan. Run-off costs in future periods are expected to be minimal.

Litigation AND POLICYHOLDER COMPLAINTS

At the date of this Interim Management Statement there remains a number of writs served upon Hansard Europe totalling €4.6m or approximately £3.9m.

The company continues to deal with a number of policyholder complaints and there can be no guarantee that such complaints will not turn into future litigation. However the Group does not provide investment advice and, accordingly, the Board is of the view that these complaints have no merit and have not made any provision against them. We will continue to defend ourselves vigorously against all claims.

FINANCIAL PERFORMANCE AND POSITION - 3 MONTHS TO 30 SEPTEMBER 2013

·           International Financial Reporting Standards ("IFRS")

The Group has traded profitably during the period and generated strong positive cashflows. IFRS Profit after tax for Q1 2014 is marginally above Q1 2013, despite a charge of £0.3m taken for redundancy costs, professional fees and other costs arising from the implementation of the run-off plan for Hansard Europe. The Group continues to invest in Hansard OnLine, distribution and other infrastructure to support new business activities.

·           European Embedded Value ("EEV")

EEV operating profit continues to be generated through profitable new business written during the period. The effect of the decreases in major capital market levels in Q1 2013 has been to reduce our expectations of future asset-based income streams and contribute to a marginal reduction in EEV at 30 September 2013, when compared with 30 June 2013.

·           Capitalisation and Solvency

The Group continues to be strongly capitalised enabling it to satisfy operational, regulatory, intermediary and policyholder expectations. At 30 September 2013 the aggregate minimum regulatory margins remain covered approximately 10 times by available capital resources.

The Group's solvency position is well insulated against the challenging capital market conditions. At the date of this report, the Group's liquid assets are held with a wide range of deposit institutions and in highly-rated money market liquidity funds.

New Business Flows - THREE months ended 30 September 2013

Following the closure of Hansard Europe to new business the Group will focus future reporting of new business performance on Hansard International and provide comparative results for that company.

 

In Q1 2014 new business levels are marginally above the level ofthe new business earned by Hansard International in the corresponding period in the prior year. New business flows for Q1 2014 are summarised as follows (comparisons to Q1 2013 are on actual currency basis):

	Q1 2014	Q1 2013	%
Basis	£m	£m	change
Compensation Credit	3.5	3.5	- %
Present Value of New Business Premiums	34.4	33.0	4.2 %
Annualised Premium Equivalent	5.4	5.3	1.9 %

·    Present Value of New Business Premiums ("PVNBP")

In line with the Group's strategy to acquire regular premium new business from the growth markets of the Far East and Latin America, regular premium new business levels in the quarter of £27.8m constitute some 80% of total new business (Q1 2013: 78%). 

	Q1 2014	Q1 2013	%
PVNBP by Premium type	£m	£m	change
Regular premium	27.8	28.4	(2.1)%
Single premium	6.6	4.6	43.5 %
	34.4	33.0	4.2 %

	Q1 2014	Q1 2013	%
PVNBP by residence of policyholder	£m	£m	change
Far East	18.8	19.6	(4.1)%
Latin America	8.6	7.0	22.9 %
EU and EEA	4.1	2.8	46.4 %
Rest of world	2.9	3.6	(19.4)%
	34.4	33.0	4.2 %

·    New business margins

The Group's strategy is to focus on generating new single and regular premium business on terms that meet target returns and contribute to profit. The new business margin is sensitive to the product mix and volume. New business margins on the PVNBP basis have reduced to approximately 10.0% (Q1 2013: 10.7%). Reduced overall new business flows and increased expenses have had a negative impact on profitability. 

HANSARD ONLINE

The Group continues to improve Hansard OnLine in order to implement new business initiatives, embed process efficiencies and be flexible in operational deployment. In particular, over 90% of regular premium new business cases have been processed OnLine in Q1 2014 and approximately 90% of investment dealing transactions are currently processed OnLine.

Using Hansard OnLine for the administration of the Hansard Europe book of business allows the Group to process transactions efficiently from the Group's offices in the Isle of Man while meeting the requirements of that company's policyholders, regulators and stakeholders.

Assets under Administration

A continued flow of regular premiums underpins Assets under Administration ("AuA") of £1.0bn at 30 September 2013, but market valuation falls have contributed to a marginal reduction from the position at 30 June 2013.

There have been no significant changes since the year end in the volumes of illiquid assets or impaired fund structures held in AuA, nor in the currency composition of AuA.

Group AuA movement in period ended 30 September	2013	2012
	£m	£m
AuA at 1 July	1,028.1	1,033.8
Premium deposits	30.0	30.4
Deductions from contracts	(47.5)	(44.2)
Effect of market and currency movements	(11.3)	27.6
AuA at 30 September	1,000.3	1,047.6

Results for the half-year ENDING 31 December 2013

New business results for the half-year ending 31 December 2013 are expected to be announced on 29 January 2014. Trading results for the half-year are expected to be announced on 27 February 2014.

Outlook

Whilst we have been successful in growing new business this quarter, the second quarter is likely to be below last year because a large distributor has ceased production.

In conjunction with the appointment of our new Chief Distribution Officer we have been undertaking a thorough review of our new business strategy in order to diversify new business flows, reduce risk and increase the scale of our business.  We will be making an announcement about this review in due course in 2014.  We remain confident that we are well positioned in the growth markets for future sales.

Notes to editors:

·    Hansard Global plc is the holding company of the Hansard Group of companies. The Company was listed on the London Stock Exchange in December 2006. The Group is a specialist long-term savings provider, based in the Isle of Man.

·    The Group offers a range of flexible and tax-efficient investment products within a life assurance policy wrapper, designed to appeal to affluent, international investors.

·    The Group utilises a low-cost distribution model by selling policies exclusively through a network of independent financial advisors, and the retail operations of certain financial institutions who provide access to their clients in more than 170 countries. The Group's distribution model is supported by Hansard OnLine, a multi-language internet platform, and is scaleable.

·    The principal geographic markets in which the Group currently services financial advisors and policyholders are the Far East, Latin America and the Middle East, in the case of Hansard International Limited, and Western Europe in the case of Hansard Europe Limited, the Group's two life assurance companies. Hansard Europe Limited closed to new business with effect from 30 June 2013.

·    The Group's objective is to grow by attracting new business and positioning itself to adapt rapidly to market trends and conditions. The scaleability and flexibility of the Group's operations allow it to enter or develop new geographic markets and exploit growth opportunities within existing markets without the need for significant further investment.

Forward-looking statements:

This announcement may contain certain forward-looking statements with respect to certain of Hansard Global plc's plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward-looking statements involve risk and uncertainties because they relate to future events and circumstances which are beyond Hansard Global plc's control. As a result, Hansard Global plc's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in Hansard Global plc's forward-looking statements. Hansard Global plc does not undertake to update forward-looking statements contained in this announcement or any other forward-looking statement it may make. No statement in this announcement is intended to be a profit forecast or be relied upon as a guide for future performance.

 

END

 

 

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