New Business Results

RNS Number : 1108Q

Hansard Global plc

29 July 2010

 



29 July 2010

Hansard Global plc

New business results for the year ended 30 June 2010

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, today announces its new business results for the year ended 30 June 2010. 

Summary

·     New business momentum continues at industry leading margins:

-     New business for the year ended 30 June 2010 of £166.3m is marginally above the level of last year, as anticipated (2009: £166.2m), based on the Present Value of New Business Premiums ("PVNBP");

-     Regular premium new business of £20.1m PVNBP for the three months ended 30 June 2010 is 20% above the quarter ended 31 March 2010 and 46.7% above the corresponding period in the prior year; 

-   New business margins rose to 6.9% on the PVNBP basis for the year ended 30 June 2010(2009:6.1%);

·    Assets under Administration at 30 June 2010 of £1.1 billion increased 13.2% since 30 June 2009.

·    Full year IFRS profit is expected to be around £16.4m, with final dividend in line with market expectations;

·    The financial position of the Group remains very strong, with no debt.

·    Continued investment in systems and processes, including distribution infrastructure and Hansard OnLine to implement new business initiatives and improve operational effectiveness.

Leonard Polonsky, Chief Executive of Hansard Global plc, commented:

"The performance of the Group remains encouraging despite the volatile markets and uncertain economic outlook.  New business momentum has continued and we have achieved increased new business flows from Latin America and the Far East which have underpinned the level of Assets under Administration.

In the absence of adverse economic developments, we are confident that the outlook for sustained growth in new business and profitability remains positive for the Group. Hansard's focus on margins, cashflow, cost control and a continued investment in distribution and systems leaves us well placed for the future."

For further information

Hansard Global plc                                                                     [phone]

Leonard Polonsky, Chief Executive                                       

Gordon Marr, Managing Director

Vince Watkins, Chief Financial Officer                                                          

Pelham Bell Pottinger                                                               [phone]

Daniel de Belder

HANSARD GLOBAL plc

New business performance in the year ended 30 June 2010

Against the backdrop of volatile market conditions and global economic concerns affecting investor confidence, new business for the year is above the level of the previous financial year, as anticipated in the Interim Management Statement published on 14 May 2010. New business, calculated on the Present Value of New Business Premiums ("PVNBP"), is £166.3m compared with £166.2m in the previous year.

While single premium business remains constrained by market volatility, new business momentum identified earlier this year has continued for a third successive quarter and we have achieved increasing regular premium new business flows. Regular premium new business flows of £20.1m PVNBP in the three months to 30 June 2010 are 20% above the level of the previous quarter in this financial year and 47% above the corresponding period in the prior year.

The Group has retained its focus on profitability and positive cash flow generation and has delivered new business margins of 6.9% on the PVNBP basis. Continuing inflows from policyholders' investments in their contracts have underpinned the value of Assets under Administration.

New business flows for the year ended 30 June 2010 aresummarised as follows (comparisons on actual currency basis).

	Three months ended			Twelve months ended
	30 June			30 June
	2010	2009	%	2010	2009	%
Basis	£m	£m	change	£m	£m	change
Compensation Credit	3.7	2.7	37.0 %	11.9	11.6	2.6 %
Present Value of New Business Premiums	48.3	45.7	5.7 %	166.3	166.2	0.1 %
Annualised Premium Equivalent	6.9	5.7	21.1 %	22.3	22.4	(0.4)%

New business flows on the PVNBP basis

Total new business flows of £48.3m PVNBP in the three months to 30 June 2010 are 5.7% above the corresponding period, as shown in the tables below. The comparative figure of £45.7m includes two large cases with combined single premiums approximating £13.75m that were issued in Q4 last year. Ignoring those particular transactions, the new business for Q4 is 151% of Q4 last year, demonstrating the sensitivity of the Group's PVNBP to very large Single Premium cases.

Regular premium new business of £20.1m for the three months ended 30 June 2010 is 20% above the level of the previous quarter in this financial year and 46.7% above the corresponding period in the prior year.  Recovery in regular premium new business was sufficiently strong to neutralise the continuing reduced levels of single premium new business and achieve a positive overall increase in new business.

	Three months ended			Twelve months ended
	30 June			30 June
	2010	2009	%	2010	2009	%
	£m	£m	change	£m	£m	change
Regular premium	20.1	13.7	46.7 %	69.0	62.4	10.6 %
Single premium	28.2	32.0	(11.9)%	97.3	103.8	(6.3)%
PVNBP	48.3	45.7	5.7 %	166.3	166.2	0.1 %

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. The Group's experience of premium reductions during the year has been incorporated into the estimate of value from that business, causing a total reduction in PVNBP for this year of £2m (2009: £7m) compared with the assumptions used in the previous year. These adjustments are reflected in the last quarter of each year.

New business flows by region - PVNBP

	Three months ended			Twelve months ended
	30 June			30 June
	2010	2009	%	2010	2009	%
	£m	£m	change	£m	£m	change
EU and EEA	20.2	24.7	(18.2)%	72.2	80.1	(9.9)%
Latin America	11.4	5.8	96.6 %	37.6	31.0	21.3 %
Far East	7.7	8.6	(10.5)%	31.1	28.1	10.7 %
Rest of world	9.0	6.6	36.4 %	25.4	27.0	(5.9)%
PVNBP	48.3	45.7	5.7 %	166.3	166.2	0.1 %

The Group continues to generate the majority of its new business case count from Latin America and the Far East, as these are predominantly Regular Premium policies. Regular premium products accounted for 41.5% (2009: 37.6%) of the Group's PVNBP in the year. Premium flows from the EU and EEA are predominantly single premium business and the reduced new business flows shown above reflect the continuing difficult market environment that impacts on investor confidence.

Despite shortfalls in single premium new business flows, new business premiums for the year totalled £166.3m PVNBP (2009: £166.2m), a slight increase on last year. This reflects a continuing trend of increases in quarterly new business levels through the financial year, as is demonstrated below.

	Twelve months ended
	30 June
	2010	2009	%
	£m	£m	change
Quarter ended 30 September	32.6	51.5	(36.7)%
Quarter ended 31 December	40.9	41.5	(1.4) %
Quarter ended 31 March	44.5	27.5	61.8 %
Quarter ended 30 June	48.3	45.7	5.7%
PVNBP	166.3	166.2	0.1 %

Hansard receives business from a well-diversified portfolio of intermediaries around the world, which results in new business being received in a range of currencies. The principal currency receipts (as a percentage of PVNBP for the year) are set out below.

	2010	2009
Currency	%	%
US Dollars	38.0	37.0
Euro	29.0	37.0
Sterling	23.0	18.0

 

NEW BUSINESS MARGINS

Despite market conditions, the Group has retained its focus on profitability. New business margins on the PVNBP basis for the year were 6.9%. These margins are well above the industry average, principally due to the Group's continued focus on the value of new business and tight cost control. Increased regular premium flows, which earn higher margins than single premium business, have contributed to the growth in the margin since Q1 2009/10.

Assets under Administration

Retention of Policyholders' Assets under Administration ("AUA") remains strong. Due to the sharp rise in volatility in capital markets in Q4 and the strengthening of Sterling against the US Dollar and Euro over much the same period, AUA have declined slightly since 31 March 2010, standing at £1.1bn at 30 June 2010 compared with £1.2bn at Q3. In the same period, however, we have received policyholder premium flows of £53m, highlighting the resilience of our business through turbulent times.

Despite recent falls in value, the value of AUA has increased by 13.2% over the year ended 30 June 2010, compared with an increase of 6.8% in the MSCI World Index.

	Unaudited	Unaudited
	Three months ended	Twelve months ended
	30 June 2010	30 June 2010
	£m	£m
Deposits to investment contracts	53.0	166.1
Withdrawals from contracts	(54.1)	(181.2)
Effect of market and currency movements	(95.0)	147.9
	(96.1)	132.8
Opening Assets under Administration	1,230.9	1,002.0
Assets under Administration at 30 June 2010	1,134.8	1,134.8

Deposits to investment contracts for the year have been reduced by approximately £13.75m representing the cancellation during the contractual notice period of two single premium cases as reported in the interim results.  Excluding the cancellation of those two contracts and with the impact of premium reductions experienced during the year, we have experienced largely neutral policyholder cash flows in the financial year with marginal net outflows in Q4.

AUA Currency Composition

The investment choices of policyholders and their agents generally reflect the currency of the territories in which they are resident. However, the value of a policyholder's assets is subject to currency rate fluctuations and therefore the proportion of AUA held in any given currency can change as a result of currency movements and other factors.

The principal currencies in which assets are designated at 30 June are as follows:

	2010	2009
Currency	%	%
US Dollar	49.0	42.0
Euro	28.3	34.0
Sterling	15.3	16.0

Results for the year ended 30 June 2010

Trading results for the year ended 30 June 2010 are expected to be announced on 23 September 2010.

Outlook

While conditions remain challenging and uncertain particularly in Europe, we remain optimistic as regular premium flows continue to exceed those of the corresponding period. Distribution resources are being targeted, primarily, to source regular premium new business, particularly from Latin America and the Far East.

With continuing investment in its distribution infrastructure, systems and online platform, Hansard is confident that its business model and prospects remain strong.

As a result of the strengthening of Sterling against the US Dollar and the Euro during the last three months of the financial year that has caused a reversal of earlier foreign exchange gains, Hansard expects post-tax IFRS profit for the year to be around £16.4m. EEV operating profit is expected to be broadly in line with expectations.

Despite short-term reductions in IFRS profit, we believe that the Group will continue to generate positive cash flows. The Board expects to be able to declare a full year dividend in line with market expectations, underpinned by the Group's strong balance sheet.

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 on 18 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 financial services intermediaries, independent financial advisers and the retail operations of certain financial institutions (collectively "Intermediaries"), who provide access to their clients in more than 170 countries. The Group's distribution model is supported by an award-winning, multi-language internet platform, and is scaleable.

·    The principal geographic markets in which the Group currently services Intermediaries and policyholders are the Far East, the Middle East, and Latin America in the case of Hansard International Limited, and Western Europe in the case of Hansard Europe Limited, the Group's two life assurance companies.

·    The Group's objective is to grow its business 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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