New business results - year ended 30 June 2015

RNS Number : 4854U

Hansard Global plc

30 July 2015

 

30 July 2015

Hansard Global plc

New business results for the year ended 30 June 2015

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its new business results for the year ended 30 June 2015 ("FY 2015").

Summary

·   We have continued to drive the implementation of our sales and distribution strategy and have seen increased levels of well diversified new business come through in Q4 FY 2015.  In particular we have been pleased with new business streams in North Asia, the Middle East and Africa;

·   New business in Q4 FY 2015 for Hansard International Limited ("Hansard International") was £19.8m in Present Value of New Business Premiums ("PVNBP") terms vs £10.9m (adjusted for assumption changes) in Q4 FY 2014 and £11.4m in Q3 FY 2015;

·   New business for the full FY 2015 totalled £60.6m PVNBP. As expected, this has decreased from £83.0m in the previous year due to the effect of a large distributor in Japan ceasing to write business during FY 2014;

·   As announced on 5 June 2015, we reached a full and final settlement of £1.4 million regarding liabilities for UK Chargeable Event Certificates with HMRC.  After taking into account professional and advisory fees, this resulted in the release of £3.3m to the profit and loss account as a result of a provision of £5 million having been previously established;

·   Writs totalling approximately £8.8m relating to legacy operations of Hansard Europe Limited ("Hansard Europe") are outstanding against the Group at 30 June 2015 (30 June 2014: £5.9m);

·   The Group as a whole remains profitable and well capitalised.

Gordon Marr, Group Chief Executive Officer, commented:

"With the strategic enhancements to our product range and distribution networks now complete, we have started to see encouraging signs of recovery after a challenging two years.  Organic growth has increased significantly in Q4 and we see this continuing into FY 2016 to date.  We are continuing to develop our presence in targeted locations where we believe that new licences could offer significant opportunities in the next 12 months.  The Group remains profitable and is well capitalised to take advantage of the new business opportunities that we have identified."

For further information:

Hansard Global plc                                                                                [phone]

Gordon Marr, Group Chief Executive Officer

Tim Davies, Chief Financial Officer

Bell Pottinger                                                                                          [phone]

Ben Woodford                                                            

Hansard Global plc

NEW BUSINESS RESULTS FOR THE YEAR ENDED 30 JUNE 2015

OVERVIEW

In the quarter to 30 June 2015 the Group has undertaken a wide range of activities in target markets to roll out its Strategic Plan and new products.  A total of 25 launch events have taken place in North and South-East Asia, Latin America and the Middle East.  These have generated considerable interest among Independent Financial Advisors and subsequently with policyholders.

We are confident that our newly-introduced products are well-tailored to the requirements of our target clients and believe that our new products, augmented sales team and an increasing pool of distribution relationships will provide a platform for sustainable diversified new business flows going forward.

New Business Flows - year ended 30 june 2015

New business flows for Hansard International for FY 2015 on a range of metrics are summarised as follows:

	Three months ended				Year ended
	30 June				30 June
	2015	2014	%		2015	2014	%
Basis	£m	£m	change		£m	£m	change
Compensation Credit	1.7	1.7	0.0 %	5.5		9.3	(40.9)%
Present Value of New Business Premiums	19.8	10.9	81.7 %	60.6		83.0	(27.0)%
Annualised Premium Equivalent	3.1	2.8	10.7 %	9.7		14.3	(32.2)%

We continue to develop relationships with financial advisers around the world, particularly in our target markets in the Far East, Latin America and the Middle East.  We have added a further 17 Terms of Business during Q4. We also continue to expand and develop our international sales and support capabilities out of the Isle of Man and our other key service hubs in Asia and the Middle East.  

We have been pleased with new business streams in North Asia, the Middle East and Africa. This together with our ongoing proactive marketing activity provides us with a springboard for growth and positions us to take advantage of economies of scale.

While recent new business flows have been growing, on a full year basis the suspension of activities by a large distributor in Japan during FY 2014 continues to predominantly account for the year-on-year reduction in business flows.

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

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

	Three months ended				Year ended
	30 June				30 June
	2015	2014	%		2015	2014	%
PVNBP by product type	£m	£m	change		£m	£m	change
Regular premium	12.1	6.5	86.1 %		36.8	63.7	(42.2)%
Single premium	7.7	4.4	75.0 %		23.8	19.3	23.3 %
Total	19.8	10.9	81.7 %		60.6	83.0	(27.0)%

	Three months ended				Year ended
	30 June				30 June
	2015	2014	%		2015	2014	%
PVNBP by geographical area	£m	£m	change		£m	£m	change
Far East	5.9	3.1	90.3 %		16.1	35.9	(55.2)%
Latin America	5.8	4.4	31.8 %		21.6	27.0	(20.0)%
Rest of World	4.3	1.3	230.8 %		12.2	9.5	28.4 %
Middle East and Africa	2.1	1.5	40.0 %		7.5	3.4	120.6 %
EU and EEA	1.7	0.6	183.3 %		3.2	7.2	(55.6)%
Total	19.8	10.9	81.7 %		60.6	83.0	(27.0)%

The value of new business premiums is influenced, among other factors, by the Group's expectations of future premium collections on regular premium contracts issued during the year. Where these expectations at year end are different from the assumptions used in the calculation in prior quarters, the assumptions are amended in Q4 to better report the cumulative value of new business. As has been the case in previous years, this adjustment is reflected in Q4 FY 2015 reporting.

The impact of assumption changes in the current year has been to increase PVNBP for the year by £0.5m or 0.7%, compared with the assumptions used in the previous year.  Before that adjustment, cumulative new business flows for FY 2015 would have been reported as £60.1m and new business in Q4 FY 2014 would have been reported as £19.3m.  The Q4 FY 2014 figure of £10.9m similarly contains the effect of last year's assumption change adjustment which was a decrease of £7.5m. Adjusting for the effects of these basis changes, the equivalent of the £19.8m PVNBP number for Q4 FY 2015 would be approximately £17.6m for Q4 FY 2014. 

·    New business margins

Low volumes of new business impact directly on the Group's new business margins.  These reduced volumes, coupled with the changed product design and continuing investment in channel development, have resulted in margins of approximately -6.2% (negative) on the PVNBP basis for FY 2015 (FY 2014: 4.0%).  As business volumes recover, the cost base is highly scaleable and we plan to target a blended margin at mid-single digit levels over the medium term.

Assets under Administration ("AUA")

The level of AuA is underpinned by regular premium flows, reflecting the Group's strategic aims.

The following table summarises Group AuA performance and includes additional contributions of approximately £5m (FY 2014: £7m) relating to single and regular premium contracts issued by Hansard Europe in prior years.

	Three months ended			Year ended
	30 June			30 June
	2015	2014		2015	2014
	£m	£m		£m	£m
Deposits to investment contracts - regular premiums	18.7	19.4		79.5	85.1
Deposits to investment contracts - single premiums	7.3	4.3		21.5	19.6
Withdrawals from contracts and charges	(42.3)	(50.8)		(185.0)	(196.5)
Effect of market and currency movements	(17.1)	9.4		42.8	7.3
	(33.4)	(17.7)		(41.2)	(84.5)
Opening balance	935.8	961.3		943.6	1,028.1
Assets under Administration at 30 June	902.4	943.6		902.4	943.6

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 overall decline in AuA is affected by the expected run-off of Hansard Europe assets, which was closed to new business in 2013.  Hansard International AuA have decreased from £704.6m at 30 June 2014 to £687.5m at 30 June 2015. 

chargeable events certificates

As announced on 5 June 2015, we reached a full and final settlement of £1.4 million regarding liabilities for UK Chargeable Event Certificates with HMRC.  After taking into account professional and advisory fees, this resulted in the release of £3.3m to the profit and loss account as a result of a provision of £5 million having been previously established.

Litigation and policyholder complaints

The Group continues to carefully manage its litigation relating to the legacy operations of Hansard Europe. Writs totalling approximately £8.8m are outstanding against Hansard Europe at 30 June 2015 (30 June 2014: £5.9m). The increase is substantially as a result of writs received in Q4 for £3.8m relating to claims in Belgium.  While in some instances, the Group may enter into commercial settlements to avoid the expense and distraction of extended litigation, we believe the arguments made for these new writs are without merit and intend to robustly defend them.

Results for the year ENDING 30 june 2015

Results for the year are expected to be announced on 23 September 2015.

Outlook

As we continue to implement and embed the Group's Strategic Plan, we have seen increased levels of well diversified new business come through in Q4 FY 2015 and we anticipate new business sales for Q1 FY 2016 to maintain this trend.  We are continuing to develop our presence in targeted locations where we believe that new licences could offer significant opportunities in the next 12 months. 

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.

 

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