Interim Management Statement

RNS Number : 4066W

Hansard Global plc

07 November 2014

 



7 November 2014

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 2014 to date. All figures refer to the three months ended 30 September 2014 ("Q1 2015"), except where indicated.

Summary

·    We have entered into business relationships with a number of new significant IFA networks and other institutions in our target markets and plans are being implemented which will provide a platform for sustainable and diversified new business flows in the medium to long term;

·    The Group has traded profitably during the period and generated positive cash flows;

·    As previously reported, new business in Q1 2015 is approximately 30% less than Q4 2014;

·    Our estimate of the Group's exposure, including professional costs, in relation to the issue of Chargeable Events Certificates previously announced, remains unchanged at £5m;

·    Writs totalling approximately £5.9m remain outstanding against Hansard Europe (FY 2014: £5.9m);

·    An increased final dividend of 5.0p per share was approved at the Annual General Meeting, for payment on 13 November 2014 (2013: 4.75p).

Gordon Marr, Group Chief Executive Officer, commented:

"We remain confident that, through the implementation of our Strategic Plan, the Group will be better placed to deliver increased levels of profitable new business, and diversify our exposure across a range of distributors and countries."

For further information:

Hansard Global plc                                                                           [phone]

Gordon Marr, Group Chief Executive Officer

Vince Watkins, Chief Financial Officer

Bell Pottinger                                                                                    [phone]

Duncan Mayall

Hansard Globalplc

INTERIM MANAGEMENT STATEMENT

OVERVIEW

The Group continues to invest in Hansard OnLine, distribution and other infrastructure to support its strategic plans. There has been increased interest in our products from both existing and new intermediaries which we believe will provide a platform for sustainable diversified new business flows in the latter part of this financial year. However, as reported at our full year results in September, levels of new business in Q1 2015 were approximately 30% below the level of Q4 2014.

STRATEGY IMPLEMENTATION

Following the launch of our reinvigorated strategy and new products in Q4 2014, market development activities have generated encouraging interest among Independent Financial Advisors and contract holders around the world. As a result we have entered into business relationships with a number of new significant IFA networks and other institutions in target markets such as Asia and the Middle East. Plans are being implemented which will provide a platform for sustainable and diversified new business flows in the medium to long term.

Since we began building the base for our new distribution strategy we have added 33 new Terms of Business with networks.

FINANCIAL PERFORMANCE AND POSITION - 3 MONTHS TO 30 SEPTEMBER 2014

·           International Financial Reporting Standards ("IFRS")

The Group has traded profitably during the period and generated positive cash flows. IFRS profit after tax for Q1 2015, taking into account increased expenditure on the Group's strategic plans, is approximately 10% below Q1 2014.

·           European Embedded Value ("EEV")

EEV at 30 September 2014 has increased marginally when compared with £203.8m at 30 June 2014. Positive investment return variances have offset an EEV operating loss driven largely by a negative new business contribution.

·           Capitalisation and Solvency

The Group continues to be strongly capitalised enabling it to satisfy operational, regulatory, intermediary and policyholder expectations. At 30 September 2014 the aggregate minimum regulatory margins remain covered approximately 13 times by available capital resources (FY 2014: 12 times).

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 - QUARTER ENDED 30 SEPTEMBER 2014

New business opportunities and strategic initiatives in our target markets continue to be explored.

The Group continues to focus on the distribution of regular premium products in a range of jurisdictions. Relationships have been established with a number of major IFA networks in our target markets in Asia and the Middle East and plans are being implemented to extend the Group's distribution potential in those areas. The results of this activity, supported by the introduction of product-based incentive arrangements, the launch of new products, and by enhancements to Hansard OnLine, has underpinned new business flows. 

Our new distribution capability continues to be work in progress and, while recent new business from our existing distribution has been subdued, we are confident that our newly-introduced products are well-tailored to the requirements of our target clients.

New business flows for Hansard International for Q1 2015 on a range of metrics are summarised as follows. The results for the comparative period have been adjusted to remove the new business introduced by the Japanese distributor that suspended its operations in October 2013:

					Q1 2015	Q1 2014
Basis					£m	£m	change
Compensation Credit					1.2	2.0	(40.0)%
Present Value of New Business Premiums					13.8	23.6	(41.5)%
Annualised Premium Equivalent					2.1	3.7	(43.2)%

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

New business flows for Hansard International for Q1 2015 on the basis of PVNBP are summarised as follows:

					Q1 2015	Q1 2014
PVNBP by product type					£m	£m	change
Regular premium					7.7	17.0	(54.7)%
Single premium					6.1	6.6	(7.6)%
Total					13.8	23.6	(41.5)%

					Q1 2015	Q1 2014
PVNBP by geographical area					£m	£m	change
Latin America					5.8	8.6	(32.6)%
Far East					3.7	8.0	(53.7)%
Rest of World					4.0	2.9	37.9 %
EU and EEA					0.3	4.1	(92.7)%
Total					13.8	23.6	(41.5)%

·    New business margins

Continued low volumes of new business impact directly on the Group's new business margins.  The largely fixed nature of the expense base combined with low levels of new business results in a negative new business margin for the period.

Assets under Administration ("AUA")

The level of AuA is underpinned by regular premium flows. The value of AuA is based upon the assets selected by or on behalf of policyholders to meet their needs from time to time. Reflecting the wide geographical spread of the Group's policyholders, the majority of premium contributions and AuA are designated in currencies other than sterling. The strengthening of those currencies against sterling in the quarter has contributed to market gains, despite recent weakening of global investment markets.  AuA of £0.93bn as at 30 September 2014 is marginally below the position at 30 June 2014.

Group AuA movement in quarter	Q1 2015	Q1 2014
	£m	£m
AuA at 1 July	943.6	1,028.1
Deposits to investment contracts	25.9	30.0
Withdrawals from contracts and charges	(52.6)	(47.5)
Effect of market and currency movements	16.6	(10.3)
AuA at 30 September	933.5	1,000.3

chargeable events certificates

We continue to estimate the Group's exposure to HMRC, including professional costs, to be approximately £5m.

Litigation and policyholder complaints

The Group continues to carefully manage its litigation and other exposures in order to protect regulatory capital holdings and reduce uncertainty.Writs totalling approximately £5.9m remain outstanding against Hansard Europe at 30 September 2014 (FY 2014: £5.9m). 

Results for the half-year ENDING 31 December 2014

New business results for the half-year ending 31 December 2014 are expected to be announced on 29 January 2015. Trading results for the half-year are expected to be announced on 26 February 2015.

Outlook

Through the implementation of the Group's Strategic Plan and the introduction of new products, the Group will be better placed to deliver increased levels of profitable new business, and diversify its exposure across a range of distributors and countries.

We anticipate that new business sales for H2 2015 will begin to reflect the benefit of the market development activity that continues.

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 controlled 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 policyholders and financial advisors 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.

·    Following the closure of Hansard Europe Limited to new business with effect from 30 June 2013, the Group continues to report new business performance within this document on Hansard International Limited alone. Reporting of Assets under Administration incorporates cash flows relating to insurance policies issued by both Hansard International and Hansard Europe.

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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