Hansard Regulatory News (HSD)

22 September 2016

Hansard Global plc

Results for the year ended 30 June 2016

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its results for the year ended 30 June 2016 ("FY 2016").

Summary

* subject to approval at the AGM

NEW BUSINESS

As previously announced, our new business levels of £119.3m are up 97% on FY 2015 on a Present Value of New Business Premiums basis. We achieved significant growth in our 'Middle East & Africa' and 'Rest of World' regions, consistent with our previously communicated strategy.

Strategy IMPLEMENTATION

Our priority this year was to leverage the changes made in previous years to our distribution team, operations and technology to drive greater levels of new business. This objective has been successfully achieved with a near doubling of our new business over the course of the year.

As we continue with our plans for further growth, we have many distribution relationships still in their infancy and we expect these to deliver improved sales in coming years. We are continuing initiatives to secure additional licences and partnerships in a small number of targeted locations.

We have also delivered significant efficiencies and customer-focused improvements in FY 2016 as part of a two-year programme of process reengineering.

TRADING RESULTS

IFRS profit after tax for the year was £8.3m (2013: £14.9m). Excluding one-off items, underlying IFRS profit was £9.2m compared with £12.0m in FY 2015. The main driver of this reduction is a reduction in fee and commission income from £56.3m in FY 2015 to £51.3m in FY 2016. The primary contributors to this were reduced income levels as a result of Hansard Europe being closed to new business, reductions in contract-holder activity margins and refinements made to the deferred income reserve (outlined in more detail below).

During the year, the Group's two life insurance subsidiaries adopted the new UK and Ireland reporting standard, FRS 101 'Reduced Disclosure Framework'. This standard allows qualifying entities to adopt the recognition and measurement requirements of EU-adopted IFRS with certain amendments. As part of preparing for this adoption, we took the opportunity to review and enhance the calculation models for deferred income and deferred origination costs. As a result, a number of refinements have been made to the consolidated Group's deferred income and cost balances which have the net effect of reducing the amount of income and consolidated profit earned in FY 2016 by £0.8m. This is a one-off adjustment where the income will instead be earned in future years.

Excluding the £3m exceptional write back of a provision in FY 2015, administrative expenses were managed to a level slightly below FY 2015 despite the substantially increased new business levels.

The Group European Embedded Value ("EEV") of £196m has increased marginally from £195m last year, after dividends paid to shareholders during the year of £12.2m. An EEV operating loss of £1.1m was incurred (FY 2015: loss of £6.3m) as a return to a positive New Business Contribution of £0.2m was offset by negative experience variances. Positive investment return variances driven primarily by the weakening of sterling resulted in an EEV profit of £13.1m for the year (FY 2015: £2.9m).

DIVIDENDS

The Board has proposed a final dividend of 5.3p per share (2015: 5.25p) which, if approved by the shareholders, represents an increased total dividend of 8.9p (2015: 8.75p) per share in respect of the financial year.

CURRENT TRADING

We are continuing to deliver further new business growth in Q1 FY 2017 compared to Q1 FY 2016 with Middle East & Africa continuing to outperform. 

Following the UK referendum on EU membership in June 2016, sterling weakened against the US dollar and euro. If exchange rates remain at their current levels across the course of the 2017 financial year, income from the current level of assets under administration would increase by approximately £1m relative to FY 2016 levels.

contract holder complaints AND LITIGATION

The Group continues to manage carefully its litigation exposures relating to the legacy operations of Hansard Europe. Outstanding writs total €15.7m (£13.1m), up €1.6m from the half-year. Three court decisions in the Group's favour in Belgium and Italy had reduced outstanding writs at the half-year by €1.4m. These have now been added back as all of these cases have been appealed. The Group continues to believe it has strong defences against the claims being made. The claims are recorded as contingent liabilities in the annual report and accounts. 

INTERIM MANAGEMENT STATEMENT

The first Interim Management Statement in respect of the year ending 30 June 2017 is expected to be published on 10 November 2016.

Gordon Marr, Group Chief Executive Officer, commented:

"We are very pleased with the delivery of sustained new business growth over the past year. The doubling of our full year business levels has put us on a strong footing after a year of transition in 2015. We see further opportunities for growth in new and existing markets and are confident of achieving this in the coming financial year."

For further information:

Hansard Global plc +44 (0) 1624 688000

Gordon Marr, Group Chief Executive Officer

Tim Davies, Chief Financial Officer

Bell Pottinger +44 (0) 20 3772 2500

Daniel de Belder

Duncan Mayall

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 contract holders and financial advisors are the Middle East, the Far East and Latin America, in the case of Hansard International Limited, and Western Europe in the case of Hansard Europe Designated Activity Company, the Group's two life assurance companies. Hansard Europe Designated Activity Company 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.s

· Following the closure of Hansard Europe Designated Activity Company 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 contracts issued by both Hansard International Limited and Hansard Europe Designated Activity Company.

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.

This announcement contains inside information which is disclosed in accordance with the Market Abuse Regime.

Chairman's Statement

Strategy

I indicated in my two previous Chairman's Statements that the benefits of the strategic review that we undertook in financial year 2014 would take several years to be realised. I am pleased to report that financial year 2016 has been the year when the strategic changes made to our products, distribution, processes and executive management started to improve our performance.

New business

The first signs of recovery in our new sales appeared in Q4 of the 2015 financial year. I am pleased to report that this trend has continued throughout financial year 2016. On the Present Value of New Business Premiums metric, our new business of £119.3m is 97% up on the last financial year. As a consequence our new business activities have made a positive contribution to our EEV in financial year 2016, after a negative contribution in 2015. The sales momentum has continued through July and August 2016.

The Group continues to work on a number of new initiatives that would enable us to sell our products in new markets. Although obtaining regulatory access to these markets has taken much longer than we envisioned, we hope that the remaining hurdles should be surmounted to assist our sales growth in financial year 2018 and beyond.

Customer service

In financial year 2016, we have undertaken a significant amount of process re-engineering to improve customer service and operational efficiency. The initiative has improved the speed, accuracy and efficiency with which our staff are able to respond to our customers' needs. We anticipate that this programme will continue for most of financial year 2017. In addition, we continue to make improvements to Hansard OnLine in response to contract holder and Independent Financial Advisor ("IFA") demands.

Financial performance

Our IFRS profit for the year after taxation of £8.3m (2015: £14.9m) is, as expected, lower than financial year 2015 which benefitted from a £3.0m release of a provision. In addition, the continuing run-off of Hansard Europe and the transition in Hansard International from the older, more profitable in-force policies to the competitively priced policies sold in the last three years has reduced income by £5.0m. This trend will continue until the level of income generated by the increasing new business exceeds the loss of revenue from surrenders and maturity of the in-force business.

On an EEV basis the profit for the year after taxation was £13.1m (2015: £2.9m). The most significant component of the increase in EEV has been caused by the fall in Sterling against the US dollar and euro following the UK's Brexit vote. Approximately three quarters of our income is earned in currencies other than Sterling, whilst most of our expenses are incurred in Sterling; consequently the future profitability of our in-force book has increased.

During the last two financial years, the Group has generated large amounts of surplus cash, as the cash generated from the in-force book was much larger than the amounts reinvested in the acquisition of new business. In financial year 2016 the near doubling of the new business has meant that the net cash inflow before dividends was only £1.2m (2015: £16.7m). Higher new business in future financial years will result in a net outflow of cash until such time as the cash generated from the increased new in-force business is sufficient to cover the new business strain. The Group had cash and deposits of £76.6m on 30 June, 2016 (2015 £80.9m) out of which it can finance this anticipated cash outflow. Your Board will be managing carefully the cash position over the next few years.

Capitalisation and solvency

The Group remains well capitalised to meet the requirements of regulators, contract holders, intermediaries and other stakeholders. Aggregate minimum solvency margins are covered by £35.5m of excess assets. We have maintained our prudent investment policy for shareholder assets, which minimises market risk and has provided a stable and resilient solvency position over recent years.

Dividends

The Board has resolved to pay an increased final dividend of 5.3p per share (2015: 5.25p). The dividend is subject to approval at the Annual General Meeting. If approved, this will represent total dividends for the financial year of 8.9p per share. The final dividend will be paid on 17 November, 2016.

Concluding remarks

Financial year 2016 has been encouraging, with clear evidence that the strategic changes made by the Group over the last three years are working. In financial year 2017 we will continue with those strategic changes, particularly in opening new markets and completing our process re-engineering initiative.

Philip Gregory

Chairman

21 September 2016

GROUP CHIEF EXECUTIVE OFFICER'S OVERVIEW

The year has been a positive one for the Group as we see the results of the hard work over the last two years bear fruit. We have returned to a level of new business that provides a positive new business margin and are working hard to ensure the momentum in growth is maintained in the coming year.

Economic and political circumstances in many places across the world remain uncertain. One example was the unexpected outcome of the UK referendum on EU membership. While Brexit in itself will not pose any restrictions for Hansard in terms of our market access, the vote has provoked significant movements in stock and foreign exchange markets which affect our assets under management and the income earned from such assets

While external developments present challenges and volatility, we remain focused on what is in our control. We continue to see opportunity and, given our size and flexibility, we believe we are well positioned to take advantage of those opportunities.

STRATEGY DEVELOPMENT

The Group's strategy is to direct its efforts "to be the preferred choice of distributors when recommending international savings and investment products to their clients".

I mentioned last year that having refreshed our product range, our priority this year was to leverage our distribution team, infrastructure and technology to drive greater levels of new business. This objective has been successfully achieved with a near doubling of our new business over the course of the year.

There is much more to do. We have many distribution relationships which are still in their infancy and we expect these to deliver improved sales in the coming year. We continue initiatives to secure additional licenses and partnerships in a small number of targeted locations.

In 2016 we have continued to deliver significant process efficiencies and customer focussed improvements as part of a two year programme of process reengineering.

We also will need to react to and take account of rapidly changing regulations at home and abroad. The Isle of Man is expected to introduce a number of significant changes in the coming years, including in the area of consumer disclosure and intermediary regulation.

RESULTS FOR THE YEAR UNDER REVIEW

We believe that the following areas are the fundamental factors for the success of the Group.

I would draw your attention to the following. Additional information is contained in the Business and Financial Review.

1. New Business distribution

Following the closure of Hansard Europe DAC (previously Hansard Europe Limited) to new business with effect from 30 June 2013, new business performance commentary within this document will relate to Hansard International Limited alone, except where indicated.

The level of new business we earned during the financial year ("FY") of £119.3m (using the basis of Present Value of New Business Premiums ("PVNBP") metric) is some 97% above the £60.6m from FY 2015.

We experienced very strong growth in the Middle East and Africa which increased almost four-fold from 2015. This is a strong endorsement of the time and resources spent on enhancing our products and distribution network over the past two years.

During the year, we introduced an improved regular premium proposition and are in the process of doing the same with our single premium proposition - providing wider choices and better value for our distributors and customers.

Under the guidance of our Chief Distribution Officer, we have initiatives planned for all regions during FY 2017 to increase sales.

2. Operational, Business and Financial Risks

Our business model involves the acceptance of a number of risks. We maintain an enterprise risk management framework to identify, assess, manage, monitor and control current and emerging risks. However the system of internal control can only provide reasonable and not absolute assurance against material misstatement or loss. The Group's internal control and risk management processes have operated satisfactorily throughout the year. There are a number of areas outlined below which are of significance for understanding the results and operating environment of the Group.

2.1 Complaints and potential litigation

We continue to deal with complaints in circumstances where a contract holder believes that the performance of an asset linked to a particular contract is not satisfactory. We do not give investment advice and are not party to the selection of the asset and therefore we believe that such claims have no merit. Sometimes these complaints progress to litigation with the resulting increase in cost and resource to the Group. In many cases the litigation relates to decisions taken by individuals during, or as a result of, the global financial crisis some years ago.

At the beginning of this financial year Hansard Europe was facing litigation based on writs totalling €12.4m (approximately £8.8m) as a result of these and related complaints. We have seen some additional contract holders join these group actions which has increased the overall level of writs outstanding at the end of the year to €15.7m (approximately £13.1m).

We have however had some positive developments. During the year the Group successfully won three cases in Belgium and Italy which affirms confidence in the Group's legal arguments. The outstanding writs have not been reduced for these cases (totalling €1.4 or £1.1m) however as they have all since been appealed.

In general, each case is considered on its merits and where appropriate we will consider circumstances where it is in our best interests to reach a resolution with regard to certain of those claims (without any admission of liability). At this time it is not possible to put a reliable estimate on the ultimate liability of such writs. Such writs continue to be treated as contingent liabilities within the Annual Report and Accounts.

3. Leverage Hansard OnLine

Hansard OnLine is a powerful sales and business administration tool that is used by IFAs and clients the world over. It is an integral part of the Group's operating model and allows us to better service IFAs and clients, embed process efficiencies and be flexible in operational deployment.

Hansard OnLine provides IFAs and clients with a reliable online self-service model which they can access 24/7 from anywhere around the world with an internet connection. It provides an important foundation to our strategic goal of delivery of excellent customer service.

We have continued to invest in the system over the last year, extending its functionality and reporting capabilities.

Additional information concerning developments in Hansard OnLine is set out in the Business and Financial Review.

4. Operating cash flows and dividends

The Group generates positive operating cash flows to fund investment in new business and support dividend payments.

As highlighted in previous public announcements, our strategy included a restructure of our product proposition to ensure we are well placed in the market to increase sales and meet our target growth. This is reflected in the significant increase in new business investment reported in the Business and Financial Review in this Report & Accounts.

The results reflect that the Group generated a net £1.2m (2015: £16.7m) in net cash flows before dividends, after the investment of £15.4m (2015: £8.6m) in new business. Dividends of £12.2m were paid in the financial year (2015: £11.7m), reflecting the strong cash reserves we have in place while we return the business to the necessary scale.

An interim dividend of 3.6p per share was declared on 25 February 2016. A final dividend of 5.3p per share has been proposed by the Board and will be considered at the Annual General Meeting on 12 November 2016. When the final dividend is paid at this level, these dividends will total 8.9p per share in respect of this financial year, in line with our strategic commitment.

FINANCIAL PERFORMANCE

Results for the year

Financial performance is summarised as follows. A detailed review of performance is set out in the Business and Financial Review that follows this report.

IFRS results

Fees and commissions were £51.3m for the year, down 9% or £5m from 2015. The decreased level of fee income is largely as a result of the movement from previous product types which had higher levels of initial income to our newer products which earn fees more evenly over their life time. The run-off of Hansard Europe, together with a number of other smaller items, also contributed to the overall reduction. Further detail and analysis is contained in the Business and Financial Review.

Administrative and other expenses were £25.3m for the year, increased from £22.8m in 2015. However after eliminating the effect caused by the release of an exceptional provision of £3m in 2015, administrative and other expenses are lower on a like for like basis.

After eliminating significant, once-off items, the underlying profit after tax was £9.2m compared to £12.0m in 2015. This reduction is primarily driven by the lower fees and commissions noted above.

EEV results

During the year, the Group has continued to invest in the development and implementation of its strategic objectives, while at the same time managing the expenses of supporting its existing business. Operating cash flows have remained positive.

With distribution levels increasing during the year, New Business Contribution has recovered to a positive £0.2m for the year (2015: negative £3.7m). Together with strong investment return variances (driven predominantly by favourable foreign currency movements) an overall EEV profit after tax of £13.1m was produced (2015: £2.9m).

The key drivers of these variances were:

Following the payment of dividends of £12.2m (2015: £11.7m), the Group's EEV is £195.9m at 30 June 2016 (30 June 2015: £195.0m).

Capitalisation and solvency

Our key financial objective is to ensure that the Group's solvency is managed safely through the economic cycle to meet the requirements of regulators, contract holders, intermediaries and shareholders. The Group is well capitalised. The required minimum solvency margins are covered by excess assets of £35.5m, which are typically held in a wide range of deposit institutions and in highly-rated money market liquidity funds. This prudent investment policy for shareholder assets minimises market risk and has provided a stable and resilient solvency position over recent years.

We recognise that Hansard Europe's capital surplus is not available for distribution in the near future. It is therefore included within the total of Required Capital of £27.4m in the analysis of the Group's EEV balance sheet at 30 June 2016. Allowing for this, the EEV balance sheet reflects that the Group has a free surplus of £27.6m (2015: £36.5m) available for investment and distribution.

our people

The Group has a dedicated dynamic workforce across a number of locations around the world. We recognise that our people are key to our success. Both the front facing distribution team and the head office administration and support functions have achieved an immense amount during the past year. This is seen in our sales figures but also in the results of our customer service surveys and in the efficiency gains achieved in the re-engineering of numerous back office processes. We continue to promote a mix of talent from within and externally to ensure we have the best possible team to meet the goals and challenges ahead. I would like to thank all of our employees for their continued commitment to Hansard.

G S Marr

Group Chief Executive Officer

21 September 2016

BUSINESS AND FINANCIAL REVIEW

Our Business Model and Strategy

Hansard is a specialist long-term savings provider that has been providing innovative financial solutions for international clients since 1987. We focus on helping financial advisors and institutions to provide their clients (individual and corporate investors) with savings and investment products in secure life assurance wrappers to meet long-term savings and investment objectives.

We administer assets in excess of $1 billion for over 500 financial advisor businesses with over 40,000 client accounts in as many as 155 countries.

Business

The Company's head office is in Douglas, Isle of Man, and its principal subsidiaries operate from the Isle of Man and the Republic of Ireland. Hansard International Limited ("Hansard International") is regulated by the Isle of Man Financial Services Authority rnment and has a branch in Malaysia, regulated by the Labuan Financial Services Authority, to support business flows from Asian growth economies. Hansard Europe DAC ("Hansard Europe", previously Hansard Europe Limited) is regulated by the Central Bank of Ireland. Hansard Europe ceased accepting new business with effect from 30 June 2013.

Our products are designed to appeal to affluent international investors, institutions and wealth-management groups. They are distributed exclusively through independent financial advisors ("IFAs") and the retail operations of financial institutions.

Our network of Account Executives provides local language-based support services to financial advisors in key territories around the world, supported by our multi-language online platform, Hansard OnLine.

Strategy

Our aim is to be the preferred choice of distributors when recommending international savings and investment products to their clients.  

We have developed attractive products and services and will continue to improve them. We recognise that clients are at the heart of our business and, consequently, we must work hard to build long-term positive relationships with them.

Our vision encompasses every part of our business. Beneath this, we have identified a range of strategic objectives to meet this target and continue to work towards them. Through careful execution of our plans in each of the following areas we intend to add increased scale to the business, on a diversified basis, at acceptable levels of risk and profitability.

· More long-term relationships with distributors;

· Better value for clients;

· A more visible profile in the market;

· Excellent client service;

· A motivated and engaged workforce; and

· Market-leading online systems.

Products

The Group's products are unit-linked regular or single premium life assurance and investment contracts which offer access to a wide range of investment assets. The contracts are flexible, secure and held within "wrappers" allowing life assurance cover or other features depending upon the needs of the client. The contract benefits are directly linked to the value of those assets that are selected by, or on behalf of, the client and held within the wrapper. The Group does not offer investment advice. Contract holders bear the investment risk.

The Group's products do not include any contracts with financial options and/or guarantees regarding investment performance and, hence, unlike the situation faced by some other life assurers, the Group carries no guarantee risk that can cause capital strain. 

As a result of high levels of service, the nature of the Group's products, the functionality of Hansard OnLine, and the ability of the contract holder to reposition assets within a contract, we expect to retain the contract holder relationship over the long term.

Contract holder servicing and related activities are performed by Hansard Administration Services Limited, which is authorised by the Isle of Man Financial Services Authority to act as an Insurance Manager to both Hansard International and Hansard Europe.

During the past year we successfully leveraged our refreshed product range, growing business substantially in the Middle East & Africa and Rest of World regions. We continue to enhance our products, having recently launched a more flexible version of our Vantage Platinum product and a number of additional pricing options for our single premium products.

Revenues

The main sources of income for the Group are the fees earned from the administration of insurance contracts. These fees are largely fixed in nature and amount. Approximately 30% of the Group's revenues, under IFRS, are based upon the value of assets under administration. The new business generated in a particular year is expected to earn income for an average period of 14 years. Accordingly, with careful expense management, this provides a healthy return on the capital invested in that business. Our business is therefore long term in nature both from a contract holder perspective and with regards to the income that is generated.

From this income we meet the overheads of the business, invest in our business, invest to acquire new insurance contracts and pay dividends.

Managing Risk

While markets have substantially emerged from the recent financial crisis, there remains fragility to global economic and market growth. Surprise developments, such as the UK referendum result on EU membership, can cause significant volatility to stock market and foreign exchange markets. We therefore continue to maintain a robust, low risk balance sheet. We believe this prudent approach to be appropriate to meet the requirements of regulators, contract holders, intermediaries and shareholders.

We are conscious that managing operational risk is critical to our business and we are continuously developing our enterprise risk management system and controls. Further details of our approach to risk management and the principal risks facing the Group are outlined in the Risk Management and Internal Control Section.

The regulatory environment continues to evolve and our risk framework will have to respond to a number of developments, including:

· The Isle of Man Financial Services Authority has outlined its timetable for significant changes to the regulatory framework, which will impact on Hansard International;

· Solvency II, which became live on 1 January 2016 for Hansard Europe, fundamentally changes the approach to capital and risk management for the European insurance industry, together with enhanced governance and reporting requirements. It is expected that broadly equivalent requirements will become applicable to Hansard International over time; and

· The roll-out of automatic information exchange programmes through regulations such as FATCA and Common Reporting Standards will impact on the entire business

Online Systems, Customer Service & Operational Efficiencies

Hansard OnLine

Hansard OnLine is a powerful tool that is used by our IFAs around the world. It allows them to access vast amounts of information about their clients, to generate reports for their clients, to submit new business applications online, to place dealing and switch instructions online, to access all client correspondence and to access a library of forms and literature.

Over 2 million reports and actions are processed through Hansard OnLine every year and 85% of new business applications and dealing/switch instructions are submitted online. In a recent survey, our IFAs awarded this online platform a 99% satisfaction rating.

Online Accounts

Whilst many of our IFAs are technologically sophisticated and have been utilising our online offering for years, our client base has typically lagged behind. However, we are now observing a growing trend amongst our clients to take more control of their financial wellbeing by embracing mobile technology to better monitor and manage their finances.

To support our commitment to delivering 'excellent customer service', we believe it is vital to provide our clients with a modern and secure online platform that allows them to access their finances easily and comprehensively, 24/7. We provide this through our client-facing version of Hansard OnLine, called Online Accounts. Similar to our IFA-facing online platform, the client's Online Account allows them to access all their policy information, valuation statements, transaction history, premium reports, switch their funds online, access all correspondence, access a library of forms and literature, and much more.

Clients can view all documentation and communications relating to their contracts via their Online Account and the number of clients choosing to receive post electronically, rather than in hard-copy form, has risen to 66%. This provides a more secure, faster and cost efficient means of communication with clients.

In a recent survey, which received over 5,000 responses, our clients awarded the Online Account platform a 95% satisfaction rating.

New Online Functionality

When it comes to improving how we operate and the proposition we offer, we value the views of our clients and IFAs. This means that we regularly seek feedback through surveys and office visits in order to identify ways in which we can improve our systems and processes to best meet their needs. Over the last two years alone, we have implemented 160 changes from such feedback, helping us to remain useful and relevant.

Last year we provided IFAs with the facility to make a payment online and we have now extended that facility to allow clients to pay a premium online by credit card or debit card.

We have also developed a facility for IFAs and clients to instruct a withdrawal payment online, which was piloted by a small number of IFAs over the last few months and is expected to be launched shortly.

Given the trend for clients to manage their finances on their mobile devices, we have added further smartphone-friendly features to our client online platform.

Hansard OnLine Lite

This time last year we reported the recent launch of a new version of our IFA-facing online platform, called Hansard OnLine Lite, which provides prospective and new IFAs with easy access to a subset of the online system. Its purpose is to showcase our online proposition to prospective and new IFAs and to allow easy access to non-sensitive documents and functionality.

The system has proven to be very popular, with over 500 IFAs using the system in the year, accessing documents, generating fund reports, reading company news and even submitting new business online.

Excellent Customer Service

Given our commitment to providing 'excellent customer service', last year we undertook a significant restructure of the business in order to facilitate First Contact Resolution of client queries and instructions. The re-structure involved a move away from a hierarchical structure to a more modern and self-organising organisational structure of highly empowered and connected multi-disciplinary teams. The restructure has facilitated the removal of many hand-offs of work, thus improving processing efficiency and reducing customer waiting times by 50%.

In the customer survey referred to above, which received over 5,000 responses, our clients awarded our customer service a 94% satisfaction rating.

Within a range -100% to +100%, our customers also awarded Hansard an impressive Net Promoter Score of +52%, which compares very favourably against the insurance industry average which is less than zero.

Process Re-engineering 

Last year, Hansard embarked upon a significant programme of process re-engineering in order to improve customer service levels, reduce operational waste, improve operational efficiency, improve productivity and increase scalability.

The initiative now has significant momentum and is proving to be a huge success. To date, 83 processes have been re-engineered with an overall average process efficiency savings of 60% being delivered. This re-engineering work is expected to continue for at least another year.

Key performance indicators

The Group's senior management team monitors a wide range of Key Performance Indicators, both financial and non-financial, that are designed to ensure that performance against targets and expectations across significant areas of activity are monitored and variances explained.

business AND FINANCIAL REVIEW

Strategy DEVELOPMENT

We have sought to build distribution relationships for the long term over a diversified geographical base.  With a refreshed product suite and a number of further additions to our distribution team, we have been focussed in 2016 in leveraging our proposition across new and existing distribution channels.

Many of our intermediaries are newly appointed in the last 2-3 years and we are starting to see significant results from a number of key relationships. In particular we have been pleased with the progress of the Middle East & Africa and the Rest of World regions and expect to replicate this success in other regions over time.

Our strategy takes account of current and future regulatory developments and we have a target to increase the level of onshore business written through new licenses or partnerships in a small number of jurisdictions where we believe attractive levels of business can be obtained.

STRATEGIC INITIATIVES

These initiatives impact upon the whole of the Group's business, its clients and other stakeholders.

· Contract holders and Product

The Group has developed a range of savings and investment products that are designed to allow the Group to access business more successfully in a number of target markets, having made a range of product improvements to the benefit of the consumer and distributor. In March 2016, we launched the upgraded version of our regular premium product, Vantage Platinum, which has been well received in the market.

· Distribution

The Group continues to build long-term relationships with distributors in key markets with growing economies and high concentrations of wealth. We continue to work towards the acquisition of licenses or partnership arrangements in targeted locations.

· Hansard OnLine

As reported in the section on Hansard OnLine above, we believe that Hansard OnLine is a very powerful resource and have committed to continually increase accessibility and functionality.

· Resources

The Group's proposition is to develop and enhance relationships with contractholders and intermediaries through the use of our people, products and technology in a way that meets shared objectives. We have continued to recruit talented and experienced employees with additions made during the year in particular to our distribution team and senior management team.

New Business Flows - year ended 30 june 2016

New business performance for the year is summarised in the table below:

New business figures were substantially higher than the prior year as the business continued the roll-out of its refreshed product proposition through substantially new distribution channels than that of previous years. The Middle East & Africa and the Rest of World regions performed particularly well.

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

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

We continue to receive business from a diverse range of financial advisors around the world. There has been no significant change in the currencies in which contractual premiums were received.

· New business margins

New business margins (calculated on a PVNBP basis) are sensitive to sales levels and product mix (regular premium products and smaller premium sizes typically have a higher margin). During 2016, we experienced significantly higher new business levels than 2015 which was the primary factor in our improved new business margin of 0.2% for the year (2015: negative margin of 6.2%). The percentage of single premium business and larger case sizes increased during the year which reduced the overall margin. Our target is to progress towards a mid single digit level. 

Presentation of financial results

Our business is long term in nature. For this reason we present the results on an EEV basis in addition to the statutory IFRS basis. We believe that EEV is a valid measure of profitability and shareholder value. Our embedded value is based on the EEV principles which were set out as an industry standard by the Chief Financial Officers (CFO) Forum in 2004 and extended in 2016.

The profit that the Group expects to earn from the issue of an insurance contract is the same, irrespective of the basis of measurement, however:

· The EEV result is a discounted cash flow valuation of the future profits expected to emerge from the current book of insurance contracts and provides a more complete recognition of management's activity throughout the financial year. It demonstrates the expected emergence of shareholder cash over the long term, by reflecting the net present value of the expected future cash flows.

· The IFRS methodology smoothes recognition of profit from new business by spreading the initial costs (and revenues) evenly over the life of the business. The IFRS result therefore, reflects neither the future shareholder value added, nor the cash impact of the new business in a particular year.

Results for the year

The following is a summary of key items to allow readers to better understand the results for the year. A small number of comparative figures have been restated in this section to ensure consistency of presentation. IFRS profit after tax for the year is £8.3m (2015: £14.9m).

The reduction in IFRS profit in 2016 is driven by reduced income primarily due to the following factors:

Income levels in general from the Group's newer products have less upfront fees than in the past and as a result have a longer earning period.

2015 profit benefitted by the one-off release of a provision of £3.0m related to the settlement of a provision for chargeable event certificates costs provided for in 2014.

Prior to those significant, once-off items totalling a cost of £0.8m (2015: benefit of £2.9m), the underlying IFRS profit was £9.2m before taxation, compared with £12.0m in 2015.

Abridged consolidated income statement

The consolidated statement of comprehensive income presented under IFRS reflects the financial results of the Group's activities during the year. This income statement however, as a result of its method of presentation, incorporates a number of features that might affect an understanding of the results of the Group's underlying transactions. This relates principally to:

· Investment income, gains and losses relating to the assets administered by the Group to back its liability to contract holders. These assets are selected by the contract holder or an authorised intermediary and the contract holder bears the investment risk. Investment gains during the year attributable to contract holder assets were £60.8m (2015: £47.8m).

· Fund management fees paid by the Group to third parties having a relationship with the underlying contract. While fund management fees paid are properly recorded in the consolidated statement of comprehensive income under IFRS, the disclosure distorts results compared with an understanding of the Group's own entitlement to fund management fees and any requirement to pay such fees for services rendered in respect of the Group's own assets. In 2016, third party fund management fees attributable to contract holder assets were £3.6m (2015: £3.8m). These are reflected in both income and expenses under the IFRS presentation.

An abridged non-GAAP consolidated income statement in relation to the Group's own activities is presented below, excluding the items of income and expenditure indicated above.

Fees and commissions

Fees and commissions for the year attributable to Group activities were £47.6m, a decrease of £4.9m or 9% over the previous year.

Contract fee income totalled £34.4m for the year (2015: £38.7m). Contract fee income includes the amortised element of up-front income deferred under IFRS and contract-servicing charges. Fee income is falling generally as the Group's newer products have less upfront income than the Group's older products which are reducing as time goes by. The reduction in the year is also driven by the continuing run-off of Hansard Europe which closed to new business in 2013 (£1.7m), reductions in contract holder activity driven margins (£0.7m) and adjustments to the estimate of the deferred income reserve (£0.8m).

Fund management fees accruing to the Group and commissions receivable from third parties totalling £13.2m (2015: £13.8m) are related directly to the value of assets under administration and are therefore exposed to market movements, currency rates and valuation judgements.

A summary of fees and commissions is set out below:

Included in contract fee income is £18.5m (2015: £20.0m) representing the amortisation of fees prepaid in previous years, as can be seen in the analysis set out below.

Investment and other income

Historically low UK interest rates continue to result in relatively modest levels of interest income earned on the Group's deposits and money market funds. Volatility in foreign exchange markets continued during the year. In particular the weakening of sterling after the UK referendum on EU membership resulted in the Group benefiting from gains on foreign currency denominated net assets.

A summary of Investment and other income is set out below:

Origination costs

Under IFRS, new business commissions paid, together with the directly attributable incremental costs incurred on the issue of a contract, are deferred and amortised over the anticipated life of that contract to match the longer-term income streams expected to accrue from the contracts issued this year. Typical terms range between 6 years and 16 years, depending on the nature of the product. Other elements of the Group's new business costs, for example recruitment costs and initial payments to new Account Executives, which reflect investment in distribution resources in line with our strategy, are expensed as incurred.

With the significantly increased new business volumes which the Group experienced during the year, origination costs are significantly increased from the prior year. While most of these are deferred, the amortisation of previous years' origination costs continue to exceed those deferred in the current year. Overall, net origination costs expensed to the consolidated statement of comprehensive income were relatively unchanged at £20.2m compared to £20.1m in 2015.

Amounts totalling £17.7m (2015: £18.0m) have been expensed to match contract fee income earned this year from contracts issued in previous financial years, as can be seen in the analysis below.

Origination costs in the year were:

Administrative and other expenses

We continue to robustly manage our expense base to control administrative expenses while supporting our strategic developments and other new business activities with targeted expenditure.

Administrative expenses prior to significant one-off items were marginally down in 2016, despite the significant increase in business.

Total administrative expenses in 2015 were reduced by an exceptional write-back of £3m in relation to a provision for chargeable event certificates costs.

An analysis of administrative and other expenses is set out in notes 8 and 9 to the consolidated financial statements under IFRS. The following summarises some of the expenses attributable to the Group's own activities.

Salaries and other employment costs have increased by £0.5m or 5% to £10.0m. Salaries in general have remained relatively flat. As a result of hitting targets, bonuses of £0.3m were payable for the year which were not payable in 2015. Costs of £0.3m were incurred in recruitment and other handover costs relating to a number of senior management positions. Management has sought to offset such increases by continuing its programme of operational efficiency and business process re-engineering. Administrative headcount is running at 9 less than at the end of the 2015 financial year.

The average Group headcount for the 2016 financial year was 206 people (2015: 206 people).

Other administrative expenses have decreased slightly, from £6.7m to £6.6m, following the reduction of some IT costs.

Growth investment spend represents internal and external costs to generate opportunities for growth. The Group continues to invest to build its business and to implement product and technological changes to support intermediaries, contract holders and other stakeholders. The amount of expenditure has decreased from the previous year reflecting reduced external advisory costs in the financial year.

Professional fees including audit in the year include legal fees of £0.5m (2015: £0.9m) incurred to protect the Group's position against complaints and litigation; amounts totalling £0.6m paid to the Group's auditor (2015: £0.5m); £0.4m (2015: £0.3m) for administration, custody, dealing and other charges paid under the terms of the investment processing outsourcing arrangements; recruitment costs of £0.1m (2015: £0.3m) and costs of Investor Relations activities of £0.4m (2015: £0.4m).

Cash Flow ANALYSIS

Operating cash flows continue to be positive albeit reduced from previous years as the Group's newer products earn less upfront cash than its older products and as the Hansard Europe portfolio continues to reduce after closing to new business in 2013.

The operational cash surplus (fees deducted from contracts and commissions received, less operational expenses paid) for the year was £15.9m (2015: £24.3m). This surplus was sufficient to fund the significant increase in new business investment in the year of £15.4m (2015: £8.6m).

Writing new business, particularly regular premium business, produces a short-term cash strain as a result of the commission and other costs incurred at the inception of a contract. Annual management charges offset this strain and produce a positive return over time.

Future increases in new business levels can be funded where necessary by the Group's significant cash resources, but over time as the level of contract holder assets is built up, the annual management charges that are earned from the Group's newer products will become sufficient to sustain new business growth.

To reduce the risk that the targeted return on investment in new business is jeopardised, the Group withholds a portion of initial commission from certain intermediaries pending completion of the initial period of particular contracts. At the balance sheet date, amounts totalling £1.6m (2015: £2.0m) had been withheld. These amounts are reflected within "Other payables" in note 19 to the consolidated balance sheet.

The following non-GAAP tables summarise the Group's own cash flows in the year. This analysis demonstrates that the in-force contract book generated the cash required to support the Group's primary business objective of investing in new business whilst enhancing distribution and other infrastructure. Dividends of £12.2m (2015: £11.7m) paid during the year were funded primarily by the Group's excess cash resources. Overall cash and deposits have decreased from £80.9m at 30 June 2015 to £76.6m at 30 June 2016.

Bank deposits and money market funds

The Group holds its liquid assets in highly-rated money market liquidity funds and with a wide range of deposit institutions to minimise market risk. Deposits totalling £15.6m have original maturity dates greater than 3 months and are therefore excluded from the definition of "cash and cash equivalents" under IFRS as reflected in note 16 to the consolidated balance sheet (2015: £15.5m). The following table summarises the total shareholder cash and deposits at the balance sheet date.

The longer-term term deposits have maturity dates of between 4 months and 11 months from the balance sheet date.

Abridged consolidated balance sheet

The consolidated balance sheet on presented under IFRS reflects the financial position of the Group at 30 June 2016. As a result of its method of presentation, the consolidated balance sheet incorporates the financial assets held to back the Group's liability to contract holders, and also incorporates the net liability to those contract holders of £923.5m (2015: £907.1m). Additionally, that portion of the Group's capital that is held in bank deposits is disclosed in "cash and cash equivalents" based on original maturity terms, as noted above. 

The abridged consolidated balance sheet presented below, adjusted for those differences in disclosure, allows a better understanding of the Group's own capital position.

Deferred origination costs

The deferral of origination costs reflects that the Group will earn fees over the long-term from contracts issued in a given financial year. These costs are recoverable out of future net income from the relevant contract and are charged to the income statement on a straight-line basis over the life of each contract. 

The Group has continued to invest in new business during the year under review but the reduction in the rate of acquisition, as compared with recent years, is reflected in a net decrease in carrying value of deferred origination costs since 30 June 2015.

The movement in value over the financial year is summarised below.

Deferred income

The treatment of deferred income ensures that contract fees are taken to the consolidated statement of comprehensive income in equal installments over the longer-term, reflecting the services to be provided over the period of the contract. This is consistent with the treatment of deferred origination costs. Deferred income at the balance sheet date is the unamortised balance of accumulated initial amounts received on new business.

The proportion of income deferred in any one year is dependent upon the mix and volume of new business flows in previous years. The Group's focus on regular premium business means that these fees are received over the initial period of the contract, rather than being received up front, as is typically the case with single premium contracts. 

The majority of initial fees collected during the year relates to charges taken from contracts issued in prior financial years demonstrating the cash generative nature of the business. Regular premium contracts issued in this financial year will generate the majority of their initial fees over the next 18 months on average.

The movement in value of deferred income over the financial year is summarised below.

CONTRACT holder Assets under administration

In the following paragraphs, contract holder assets under administration ("AuA"), refers to net assets held to cover financial liabilities, as analysed in note 17 to the consolidated financial statements presented under IFRS.

The Group enjoys a stream of cash flows from the large number of regular premium contracts administered on behalf of clients around the world. The Group has also built an increasing stream of single premium business which increased to £52m this year (2015: £21.5m). The majority of premium contributions are designated in currencies other than sterling, reflecting the wide geographical spread of those contract holders. Premium contributions during the year also includes additional contributions of approximately £4.3m (2015: £5.4m) relating to single and regular premium contracts issued by Hansard Europe in prior years.

These flows are offset by charges and withdrawals, by premium holidays affecting regular premium policies and by market valuation movements. During the year, the Group benefitted from lower levels of outflows and from significant currency movements, primarily the weakening of sterling against the US dollar.

The currency composition of AuA at the balance sheet date is similar to that as at 30 June 2015, with 69% of AuA designated in US dollar (2015: 59%) and 12% in euro (2015: 19%).

The value of AuA at 30 June 2016 was £923.5m, £16.4m above the value at 30 June 2015.

The analysis of AuA held by each Group subsidiary to cover financial liabilities is as follows:

As expected the level of assets in Hansard Europe continues to decline after closing to new business in 2013.

complaints and potential litigation

In valuation issues such as those referred to above, financial services institutions can be drawn into disputes in cases where the performance of assets selected directly by or on behalf of contract holders through their advisors fails to meet their expectations. This is particularly relevant in the case of more complex products distributed throughout Europe.

Even though the Group does not give any investment advice, as this is left to the contract holder directly or through an agent, advisor or an entity appointed at their request or preference, the Group has been subject to a number of complaints in relation to the performance of assets linked to contracts.

Some of these complaints escalate into litigation, particularly in Europe. At the beginning of this financial year the Group was facing litigation based on writs totalling €12.4m (£8.8m).

During the year the Group successfully won three cases in Belgium and Italy which affirms confidence in the Group's legal arguments. The outstanding writs have not been reduced for these cases (totalling €1.4 or £1.1m) however as they have all since been appealed. A number of additional complainants have been added to existing writs which has increased the overall level of writs outstanding.

The total level of writs outstanding at the end of the year was €15.7m (£13.1m).

While it is not possible to forecast or determine the final results of such litigation, based on the pleadings and advice received from the Group's legal representatives, we believe we have a strong chance of success in defending these claims. The writs have therefore been treated as contingent liabilities and are disclosed in note 26 to the consolidated financial statements.

Results for the year under European Embedded Value

Headline results

During the course of the 2016 financial year, the Group made a European Embedded Value ("EEV") profit of £13.1m (2015: profit of £2.9m), analysed into an EEV operating loss of £1.1m (2015: loss of £6.3m) and gains from investment return variances and economic assumption changes of £14.2m (2015: gains of £9.2m).

The EEV operating loss is primarily driven by a negative experience variance of £3.8m. Experience variances arise when actual experience differs from that assumed in the prior year's EEV.

Headline results for the EEV are shown in the tables below:

The EEV at 30 June 2016 has marginally increased to £195.9m from the 30 June 2015 level of £195.0m following the payment of dividends of £12.2m for the year (2015: £11.7m).

Sales metrics

New business comparatives are shown below:

The change is primarily due to the increase in new business volumes over the period and the existence of a greater number of insurance contracts to spread initial expenses over.

The high-level components of the EEV are shown in the table below:

Net Worth has reduced to £55.5m from £63.5m as profits are earned from the existing business offset by the dividend paid. It is represented by liquid cash balances.

Free Surplus, which is available for investment and distribution, has reduced by 24% to £27.9m from £36.5m reflecting the fact that more of the cash which continues to emerge from the existing policies was needed to invest in increasing levels of new business. Required Capital has increased marginally. It currently includes around £20m of Hansard Europe capital, the use of which management estimates is constrained for up to three years.

The increase in VFP reflects sterling exchange rates on 30 June 2016, increased new business levels, the conversion of VFP to Net Worth and the impact of contract holder behaviour and renewal expenses.

The Other component of VFP is the reduction for non-market risk and frictional costs, neither of which have changed substantially over the year.

Change in Net Worth

The Net Worth is lower than projected by £1.7m (2015: higher by £2.2m) primarily because of worse than assumed investment experience during the year. The Net Worth has grown by £22.8m (2015 £36.0m), of which £18.6m (2015: £14.1m) has been invested in new business (shown as New Business Strain) and £12.2m has been paid in dividends (2015: £11.7m).

EEV profit after tax

The Group's EEV profit after tax is £13.1m (2015: £2.9m). New business, experience variances, operating assumptions and model changes drive this result at an operating profit level. Thereafter, the impact of positive investment return variances and economic assumption changes more than offset the loss at an operating level.

Experience variances arise when the behavior of the existing book differs from that assumed. Major contributors to the experience variances this year include a reallocation of the expense base from initial to recurring expenses and worse than assumed encashment and premium persistency.

The primary change in operating assumption changes during the year was a strengthening of the assumption for partial encashments to reflect experience during the year.

Investment return variances

Investment performance principally reflects the investment choices, by nature and currency, made by contract holders. It is therefore largely outside the Group's control.

Economic assumption changes

There was a negative variance of £4.6m (2015: positive £4.9m) from economic assumption changes. This reflects changes to government yields for the currencies to which the Group is exposed in line with EEV Principles.

Net asset value per share

On an EEV basis, the net asset value per share at 30 June 2016 is 142.5p (2015: 141.9p) based on the EEV at the balance sheet date divided by the number of shares in issue at that date, being 137,440,456 ordinary shares (2015: 137,388,669 shares).

The net asset value per share at 30 June 2016 on an IFRS basis, is 26.3p (2015: 29.2p).

Risk management and internal control

As with all businesses, the Group is exposed to risk in pursuit of its objectives. The Board has overall responsibility for the Group's system of risk management and internal control and for reviewing its effectiveness. The schedule of powers reserved to the Board ensures that the Directors are responsible for determining, evaluating and controlling the nature and extent of the principal risks which the Board is willing to take in achieving its strategic objectives and the Board oversees the strategies for principal risks that have been identified.

The Executive Management Team works within the risk appetite established by the Board and the governance, risk management and internal control arrangements which constitute the Group Enterprise Risk Management (ERM) Programme and which direct the Group, including setting the cultural tone and expectations from the top, delegating authorities and monitoring compliance.

Having regard to the Financial Reporting Council's 'Guidance on Risk Management, Internal Control and Related Financial and Business Reporting', the ERM Programme encompasses the policies, processes, tasks, behaviours and other aspects of the Group's environment, which cumulatively:

· Facilitate the effective and efficient operation of the Group and its subsidiaries by enabling appropriate responses to be made to significant business, operational, financial, compliance and other risks to business objectives, so safeguarding the assets of the Group;

· Help to ensure the quality of internal and external reporting. This requires the maintenance of proper records and processes that generate a flow of timely, relevant and reliable information from within and outside the Group;

· Seek to ensure compliance with applicable laws and regulations and also with internal policies with respect to the conduct of business.

Approach

The ERM Programme is structured in accordance with the component elements and supporting principles of the Committee of Sponsoring Organisations of the Treadway Commission (COSO) Enterprise Risk Framework and has been designed to be appropriate to the nature, scale and complexity of the Group's business at both corporate and subsidiary level.

The ERM Programme is built upon the 'three lines of defence' model, which addresses how specific duties relating to risk management and internal control are assigned and coordinated between front line management (first line), risk and compliance monitoring functions (second line) and the independent assurance services of internal audit (third line). Each of the three lines plays a distinct role within the Group's overarching governance framework.

The ERM Programme seeks to add value through embedding risk management and effective internal control systems as continuous and developing processes within strategy setting, programme level functions and day-to-day operating activities. The ERM Programme also acknowledges the significance of the Group's operating culture and values in relation to risk management and their impact on the overall effectiveness of the internal control framework.

The ERM Programme promotes the pursuit of its overarching performance, information and compliance objectives through focus on five interrelated elements, which enable the management of risk at strategic, programme and operational level to be integrated, so that layers of activity support each other. The five interrelated elements are defined as:

· Management oversight and the control culture

· Risk recognition and assessment

· Control activities and segregation of duties

· Information and communication

· Monitoring activities and correcting deficiencies

Risk management processes are undertaken on both a bottom-up and top-down basis. The top-down aspect involves the Board assessing, analysing and evaluating what it believes to be the principal risks facing the Group. The bottom-up approach involves the identification, review and monitoring of current and forward-looking risks on a continuous basis at functional and divisional levels, with analysis and formal reporting to the Management Risk Committee, established by the Board, on a quarterly basis and onward analytical reporting to the Board. The terms of reference of the Committee are published on the Company's website.

The system of internal control is designed to manage rather than eliminate risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

Review of risk management and internal control systems

The results of the risk management processes combine to facilitate identification of the principal business, financial, operational and compliance risks and any associated key risks at a subordinate level. Established reporting cycles enable the Board to maintain oversight of the quality and effectiveness of risk management and internal control activities throughout the year and ensure that the entirety of the governance, risk management and internal control frameworks, which constitute the ERM Programme, are operating as intended. These processes have been in place throughout the year under review and up to the date of this report.

Independently of the quarterly cyclical risk reporting arrangements and in accordance with provision C.2.1 of the UK Corporate Governance Code, the Board has conducted its annual review of the effectiveness of the company's risk management and internal control systems including financial, operational and compliance controls. This review is undertaken in collaboration with the Audit Committee and is based upon analysis and evaluation of:

· Attestation reporting from subsidiary companies of the Group as to the effective functioning of the risk management and internal control framework and the ongoing identification and evaluation of risk within each subsidiary;

· Formal compliance declarations from senior managers at divisional level that key risks are being managed appropriately within the functional and operational areas falling under their span of control and that controls have been examined and are effective;

· The cumulative results of cyclical risk reporting by senior and executive management via the Management Risk Committee, covering financial, operational and compliance controls;

· Independent assurance work by the Group Internal Audit Department to identify any areas for enhancements to internal controls and work with management to define associated action plans to deliver them.

The Board has determined that there were no areas for enhancement which constituted a significant weakness for the year under review and they are satisfied that the Group's governance, risk management and internal control systems are operating effectively and as intended.

Financial reporting process

The Group maintains a process to assist the Board in understanding the risks to the Group of failing to meet its objectives. This incorporates a system of planning and sensitivity analysis incorporating Board approval of forecast financial and other information. The Board receives regular representations from the senior executives.

Performance against targets is reported to the Board quarterly through a review of the Group's and Company's results based on accounting policies that are applied consistently throughout the Group. Draft financial statements are prepared quarterly by the Chief Financial Officer ("CFO"). The members of the Audit Committee review the draft financial statements for the half year ended 31 December annually and for the full financial year, and meet with the CFO to discuss and challenge the presentation and disclosures therein. Once the draft document is approved by the Audit Committee, it is reviewed by the Board before final approval at a Board meeting.

Outsourcing

The majority of investment dealing and custody processes in relation to contract holder assets are outsourced to Capital International Limited ("CIL"), a company authorised by the Isle of Man Financial Services Authority and a member of the London Stock Exchange.

These processes are detailed in a formal contract that incorporates notice periods and a full exit management plan. Delivery of services under the contract is monitored by a dedicated relationship manager against a documented Service Level Agreement and Key Performance Indicators.

CIL is required to confirm monthly that no material control issues have been identified in their operations. Each year they are required to confirm and evidence the adequacy and effectiveness of their internal control framework through an Assurance report on their internal controls. Every second year, an external independent review is performed. The last such report, which included an external independent review, was issued by CIL on 13 May 2016 and did not reveal any material control deficiencies in the period reviewed from 1 January 2015 to 31 December 2015.

Risks relating to the Group's financial and other exposures

Hansard's business model involves the controlled acceptance and management of risk exposures. Under the terms of the unit-linked investment contracts issued by the Group, the contract holder bears the investment risk on the assets in the unit-linked funds, as the policy benefits are directly linked to the value of the assets in the funds. These assets are administered in a manner consistent with the expectations of the contract holders. By definition, there is a precise match between the investment assets and the contract holder liabilities, and so the market risk and credit risk lie with contract holders.

The Group's exposure on this unit-linked business is limited to the extent that income arising from asset management charges and commissions is generally based on the value of assets in the funds, and any sustained falls in value will reduce earnings. In addition, there are certain financial risks (credit, market and liquidity risks) in relation to the investment of shareholders' funds. The Group's exposure to financial risks is explained in note 3 to the consolidated financial statements.

The Board believes that the principal risks facing the Group's earnings and financial position are those risks which are inherent to the Group's business model and to the environment within which the Group operates. Whilst the Group's business model has historically served to minimise the principal risks facing the Group, the regulatory environment continues to evolve at both a local and international level and the risk management and internal control frameworks of the Group will need to remain responsive to a number of developments, examples of which include:

Principal Risks

The following table sets out the principal inherent risks that may impact on the Group's strategic objectives, profitability or capital and how such risks are managed or mitigated. The Board robustly reviews and considers its principal risks on at least an annual basis.

Other Key Risks

In addition to the principal risks identified above, there are other key risks that the Group is subject to that derive from the nature of the business it operates. These are outlined below, together with how they are managed.

Further detail around financial risks is outlined in Note 3 (Financial Risk Management) to the consolidated financial statements.

Consolidated Statement of Changes in Equity

for the year ended 30 June 2016

Notes to the consolidated financial statements

1 Principal accounting policies

Hansard Global plc ("the Company") is a limited liability company, incorporated in the Isle of Man, whose shares are publicly traded. The principal activity of the Company is to act as the holding company of the Hansard group of companies. The registered office of the company is Harbour Court, Lord Street, Box 192, Douglas, Isle of Man, IM99 1QL.

These consolidated financial statements incorporate the assets, liabilities and the results of the Company and its subsidiary undertakings ("the Group"). The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below or, in the case of accounting policies that relate to separately disclosed values in the primary statements, within the relevant note to these consolidated financial statements. These policies have been consistently applied, unless otherwise stated.

1.1 Basis of presentation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRSs"), International Financial Reporting Standards Interpretations Committee ("IFRSIC") interpretations, and with the Isle of Man Companies Acts 1931 to 2004. The financial statements have been prepared under the historical cost convention as modified by the revaluation of financial investments and financial liabilities at fair value through profit or loss. The Group has applied all International Financial Reporting Standards adopted by the European Union and effective at 30 June 2016.

The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

There has been no significant impact in the financial statements due to the mandatory application of new accounting standards for the year ended 30 June 2016. 

The following new standards and interpretations are in issue but not yet effective and have not been early adopted by the Group:

· Amendment to IAS 16 ,'Property, plant and equipment' and IAS 38,'Intangible assets', on depreciation and amortisation Amendments to IAS 27, 'Separate financial statements' on equity accounting IAS 39, 'Financial Instruments' - Recognition and measurement

· IAS7. 'Statement of cash flows in disclosure initiative

· IFRS 9, 'Financial instruments'

· IFRS 11, 'Joint arrangements in acquisition of an interest in a joint operation'

· IFRS 12, 'Disclosures of Interest in Other Entities'

· IFRS 15 'Revenue from contracts with customers'

· Annual improvements 2014

· IFRS 2, 'Share based payments'

· IFRS 9, 'Financial instruments'

· IFRS 16, 'Leases'

Amendments to IAS 1,'Presentation of financial statements' disclosure initiative. The adoption of the above standards is not expected to have any material impact on the Group's results.

There are no other standards, amendments or interpretations to existing standards that are not yet effective, that would have a material impact on the Group's financial statements.

The financial statements are presented in pounds sterling rounded to the nearest one hundred thousand pounds.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting year. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 2.

1.2 Basis of consolidation

The consolidated financial statements incorporate the assets, liabilities and the results of the Company and of its subsidiary undertakings. Subsidiaries are those entities in which the Company directly or indirectly has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Where necessary, accounting policies applied by subsidiary companies have been adjusted to present consistent disclosures on a consolidated basis. Intra-group transactions, balances and unrealised gains and losses arising from intra-group transactions, are eliminated in preparing these consolidated financial statements.

2 Critical accounting estimates and judgements in applying accounting policies

Estimates, assumptions and judgements are used in the application of accounting policies in these financial statements. Critical accounting estimates are those which involve the most complex or subjective judgements or assessments. Estimates, assumptions and judgements are evaluated continually and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes may differ from assumptions and estimates made by management.

2.1 Accounting estimates and assumptions

The principal areas in which the Group applies accounting estimates and assumptions are in deciding the type of management expenses that are treated as origination costs and the period of amortisation of deferred origination costs and deferred income. Estimates are also applied in determining the recoverability of deferred origination costs.

2.1.1 Origination costs

Management expenses have been reviewed to determine the relationship of such expense to the issue of an investment contract. Certain expenses vary with the level of new business production and have been treated as origination costs. Other expenses are written off as incurred.

2.1.2 Amortisation of deferred origination costs and deferred income

Deferred origination costs and deferred income are amortised on a straight-line basis over the life of the underlying investment contract. Deferred origination costs and deferred income are amortised over the anticipated life of the contract estimated to be between 6 and 16 years, depending on the product type.

2.1.3 Recoverability of deferred origination costs

Formal reviews to assess the recoverability of deferred origination costs on investment contracts are carried out at each balance sheet date to determine whether there is any indication of impairment based on the estimated future income levels by product family level.

If, based upon a review of the remaining contracts, there is any other indication of irrecoverability or impairment, the contract's recoverable amount is estimated. Impairment losses are reversed through the statement of comprehensive income if there is a change in the estimates used to determine the recoverable amount. Such losses are reversed only to the extent that the contract's carrying amount does not exceed the carrying amount that would have been determined, net of amortisation where applicable, if no impairment loss had been recognised. 

2.2 Judgements

The primary areas in which the Group has applied judgement in applying accounting policies are as follows:

· the classification of contracts between insurance and investment business. All contracts are treated as investment contracts as they do not transfer significant insurance risk;

· the Group has elected to treat all assets backing its contracts at fair value through profit or loss although some of the assets in question may ultimately be held to maturity;

· the fair value of certain financial investments. Where the directors determine that there is no active market for a particular financial instrument, fair value is assessed using valuation techniques based on available relevant information and an appraisal of all associated risks. This process requires the exercise of significant judgement on the part of Directors, as is discussed further in note 3.5 to these consolidated financial statements and;

· to determine whether a provision is required in respect of any pending or threatened litigation, which is addressed in note 26

 3 Financial risk management

Risk management objectives and risk policies

The Group's objective in the management of financial risk is to minimise, where practicable, its exposure to such risk, except when necessary to support other objectives. The Group seeks to manage risk through the operation of unit-linked business whereby the contract holder bears the financial risk. In addition, shareholder assets are invested in highly rated investments.

Overall responsibility for the management of the Group's exposure to risk is vested in the Board. To support it in this role, an enterprise risk management framework is in place comprising risk identification, risk assessment, control and reporting processes. Additionally, the Board and the Boards of subsidiary companies have established a number of Committees with defined terms of reference. These are the Actuarial Review, Audit, Executive, Investment and Risk Committees. Additional information concerning the operation of the Board Committees is contained in the Corporate Governance section of this Report and Accounts.

The more significant financial risks to which the Group is exposed are set out below. For each category of risk, the Group determines its risk appetite and sets its investment, treasury and associated policies accordingly.

3.1 Market risk

This is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices, analysed between price, interest rate and currency risk. The Group adopts a risk averse approach to market risk, with a stated policy of not actively pursuing or accepting market risk except where necessary to support other objectives. However, the Group accepts the risk that the fall in equity or other asset values, whether as a result of price falls or strengthening of sterling against the currencies in which contract holder assets are denominated, will reduce the level of annual management charge income derived from such contract holder assets and the risk of lower future profits.

Sensitivity analysis to market risk

The Group's business is unit-linked and the direct associated market risk is therefore borne by contract holders (although there is a secondary impact as shareholder income is dependent upon the markets, as mentioned above). Financial assets and liabilities to support Group capital resources held outside unitised funds primarily consist of units in money market funds, cash and cash equivalents, and other assets and liabilities. Cash held in unitised money market funds and at bank is valued at par and is unaffected by movement in interest rates. Other assets and liabilities are similarly unaffected by market movements.

As a result of these combined factors, the Group's financial assets and liabilities held outside unitised funds are not materially subject to market risk, and movements at the reporting date in interest rates and equity values have an immaterial impact on the Group's profit after tax and equity. Future revenues from annual management charges may be affected by movements in interest rates, foreign currencies and equity values.

(a) Price risk

Unit linked funds are exposed to securities price risk as the investments held are subject to prices in the future which are uncertain. The fair value of financial assets (designated at fair value through profit or loss) exposed to price risk at 30 June 2016 was £830.7m (2015: £862.1). In the event that investment income is affected by price risk then there will be an equal and opposite impact on the value of the changes in provisions for investment contract liabilities in the same accounting period. The impact on the profit or loss before taxation in a given financial year is negligible.

An overall change in the market value of the unit-linked funds would affect the annual management charges accruing to the Group since these charges, which are typically 1% per annum, are based on the market value of contract holder assets under administration. The approximate impact on the Group's profits and equity of a 10% change in fund values, either as a result of price, interest rate or currency fluctuations, is £1.3m (2015: £1.4m).

(b) Interest rate risk

Interest rate risk is the risk that the Group is exposed to lower returns or loss as a direct or indirect result of fluctuations in the value of, or income from, specific assets arising from changes in underlying interest rates.

The Group is primarily exposed to interest rate risk on the balances that it holds with credit institutions and in money market funds. A change of 1% p.a. in interest rates will result in an increase or decrease of approximately £0.8m (2015: £0.8m) in the Group's annual investment income and equity.

A summary of the Group's liquid assets at the balance sheet date is set out in note 3.2.

(c) Currency risk

Currency risk is the risk that the Group is exposed to higher or lower returns as a direct or indirect result of fluctuations in the value of, or income from, specific assets and liabilities arising from changes in underlying exchange rates.

(c)(i) Group foreign currency exposures

The Group is exposed to currency risk on the foreign currency denominated bank balances, contract fees receivable and other liquid assets that it holds to the extent that they do not match liabilities in those currencies. The impact of currency risk is minimised by frequent repatriation of excess foreign currency funds to sterling. The Group does not hedge foreign currency cash flows. At the balance sheet date the Group had exposures in the following currencies:

The approximate effect of a 5% change: in the value of US dollars to sterling is less than £0.1m (2015: less than £0.1m); in the value of the euro to sterling is £0.1m (2015: £0.2m); and in the value of the yen to sterling is less than £0.1m (2015: less than £0.1m).

(c)(ii) Financial investments by currency

Certain fees and commissions are earned in currencies other than sterling, based on the value of financial investments held in those currencies from time to time.

The sensitivity of the Group to the currency risk inherent in investments held to cover financial liabilities under investment contracts is incorporated within the analysis set out in (a) above.

At the balance sheet date the analysis of financial investments by currency denomination is as follows, US dollars: 69.2% (2015: 59.4%); euro: 11.7% (2015: 18.9%); sterling: 16.3% (2015: 16.3%); other: 2.8% (2015: 5.4%).

3.2 Credit risk

Credit risk is the risk that the Group is exposed to lower returns or loss if another party fails to perform its financial obligations to the Group. The Group has adopted a risk averse approach to such risk and has a stated policy of not actively pursuing or accepting credit risk except when necessary to support other objectives.

The clearing and custody operations for the Group's security transactions are mainly concentrated with one broker, namely Capital International Limited, a member of the London Stock Exchange. At 30 June 2016 and 2015, substantially all contract holder cash and cash equivalents, balances due from broker and financial investments are placed in custody with Capital International Limited. These operations are detailed in a formal contract that incorporates notice periods and a full exit management plan. Delivery of services under the contract is monitored by a dedicated relationship manager against a documented Service Level Agreement and Key Performance Indicators, and attested periodically by external advisors. Investment risk is borne by the contract holder.

The Group has an exposure to credit risk in relation to its deposits with credit institutions and its investments in unitised money market funds. To manage these risks; deposits are made, in accordance with established policy, with credit institutions having a short-term rating of at least F1 and P1 from Fitch IBCA and Moody's respectively and a long-term rating of at least A and A3. Investments in unitised money market funds are made only where such fund is AAA rated. Additionally maximum counterparty exposure limits are set both at an individual subsidiary company level and on a Group-wide basis.

At the balance sheet date, an analysis of the Group's own cash and cash equivalent balances and liquid investments was as follows (an analysis by maturity date is provided in note 3.4):

3.3 Liquidity risk

Liquidity risk is the risk that the Group, though solvent, does not have sufficient financial resources to enable it to meet its obligations as they fall due, or can only secure them at excessive cost. The Group is averse to liquidity risk and seeks to minimise this risk by not actively pursuing it except where necessary to support other objectives.

The Group's objective is to ensure that it has sufficient liquidity over short- (up to one year) and medium-term time horizons to meet the needs of the business. This includes liquidity to cover, amongst other things, new business costs, planned strategic activities, servicing of equity capital as well as working capital to fund day-to-day cash flow requirements.

Liquidity risk is principally managed in the following ways:

· Assets of a suitable marketability are held to meet contract holder liabilities as they fall due.

· Forecasts are prepared regularly to predict required liquidity levels over both the short- and medium-term.

The Group's exposure to liquidity risk is considered to be low since it maintains a high level of liquid assets to meet its liabilities.

3.4 Undiscounted contractual maturity analysis

Set out below is a summary of the undiscounted contractual maturity profile of the Group's assets.

There is no significant difference between the value of the Group's assets on an undiscounted basis and the balance sheet values.

Assets held to cover financial liabilities under investment contracts are deemed to have a maturity of up to one year since the corresponding unit-linked liabilities are repayable and transferable on demand. In certain circumstances the contractual maturities of a portion of the assets may be longer than one year, but the majority of assets held within the unit-linked funds are highly liquid. The Group actively monitors fund liquidity.

The contractual maturity analyses of financial and other liabilities are included in notes 17 and 19 to the consolidated balance sheet.

3.5.1 Fair value estimation

The Group closely monitors the valuation of assets in markets that have become less liquid. Determining whether a market is active requires the exercise of judgement and is determined based upon the facts and circumstances of the market for the instrument being measured. Where the directors determine that there is no active market for a particular financial instrument, for example where a particular collective investment scheme is suspended from trading, fair value is assessed using valuation techniques based on available, relevant, information and an appraisal of all associated risks. When a collective investment scheme recommences regular trading, the value would be transferred back to Level 1. This process requires the exercise of significant judgement on the part of Directors.

If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

IFRS 13 requires the Group to classify fair value measurements into a fair value hierarchy by reference to the observability and significance of the inputs used in measuring that fair value. The hierarchy is as follows:

· Level 1: fair value is determined as the unadjusted quoted price for an identical instrument in an active market.

· Level 2: fair value is determined using observable inputs other than unadjusted quoted prices for an identical instrument and that does not use significant unobservable inputs.

· Level 3: fair value is determined using significant unobservable inputs.

The following table analyses the Group's financial assets and liabilities at fair value through profit or loss, at 30 June 2016:

3.5.2 Transfers into and out of Level 3

During this financial year, no assets were transferred from Level 2 to Level 1. Assets with a fair value of £2.8m were transferred from Level 1 to Level 3, due to the change in market for the related assets. Assets with a value of £3.3m were reclassified from Level 1 to Level 3 and subsequently valued at zero by the Directors, as they believe this reflects the fair value of these assets at the balance sheet date. Assets with a fair value of £57.3m were transferred from Level 2 to Level 3 during the year as the directors believe that valuations can no longer be obtained for these assets from an observable market price due to suspension in trading or the asset becoming illiquid.

No assets were transferred from Level 3 to Level 1 or Level 2 during the financial year.

The following table analyses the Group's financial assets and liabilities at fair value through profit or loss, at 30 June 2015:

During the previous financial year, no assets were transferred from Level 2 to Level 1. Assets with a fair value of £8.4m were transferred from Level 1 to Level 2. Assets with a value of £0.3m were reclassified from Level 1 to Level 3 and subsequently valued at zero by the Directors, as they believe this reflects the fair value of these assets at the balance sheet date. No assets were reclassified from Level 3 to Level 1 or Level 2 during the previous financial year.

Due to the unit-linked nature of the contracts administered by the Group's insurance undertakings, any change in the value of financial assets held to cover financial liabilities under those contracts will result in an equal and opposite change in the value of contract liabilities. The separate effect on financial assets and financial liabilities is included in investment income and investment contract benefits, respectively, in the consolidated statement of comprehensive income.

4 Segmental information

Disclosure of operating segments in these financial statements is consistent with reports provided to the Chief Operating Decision Maker ("CODM") which, in the case of the Group, has been identified as the Executive Committee of Hansard Global plc.

In the opinion of the CODM, the Group operates in a single reportable segment, that of the distribution and servicing of long-term investment products. New business development, distribution and associated activities in relation to the Republic of Ireland ceased with effect from 30 June 2013. All other activities of the Group are continuing.

The Group's Executive Committee uses two principal measures when appraising the performance of the business: Net Issued Compensation Credit ("NICC") and expenses. NICC is a measure of the value of new in-force business and top-ups on existing single premium contracts.  NICC is the amount of basic initial commission payable to intermediaries for business sold in a period and is calculated on each piece of new business. It excludes override commission paid to intermediaries over and above the basic level of commission.

The following table analyses NICC geographically and reconciles NICC to origination costs incurred during the year as set out in the Business and Operating Review section of this Report and Accounts.

The net issued compensation credit figure of £9.4m for the year all relates to continuing operations based in the Isle of Man (2015: £4.8m).

Revenues and expenses allocated to geographical locations contained in sections 4.1 to 4.4 below reflect the revenues and expenses generated in or incurred by the legal entities in those locations.

4.1 Geographical analysis of fees and commissions by origin

4.2 Geographical analysis of profit before taxation

4.3 Geographical analysis of gross assets

4.4 Geographical analysis of gross liabilities

5 Fees and commissions

Fees are charged to the contract holders of investment contracts for contract administration services, investment management services, payment of benefits and other services related to the administration of investment contracts. Fees are recognised as revenue as the services are provided. Initial fees that exceed the level of recurring fees and relate to the future provision of services are deferred in the balance sheet and amortised on a straight-line basis over the life of the relevant contract. These fees are accounted for on the issue of a contract and on receipt of incremental premiums on existing single premium contracts.

Regular fees charged to contracts are recognised on a straight-line basis over the period in which the service is provided. Transactional fees are recorded when the required action is complete.

Commissions receivable arise principally from fund houses with which investments are held. Commissions are recognised on an accruals basis in accordance with the relevant agreement.

6 Investment income

Investment income comprises dividends, interest and other income receivable, realised gains and losses on investments and unrealised gains and losses. Movements are recognised in the statement of comprehensive income in the period in which they arise. Dividends are accrued on the date notified. Interest is accounted for on a time proportion basis using the effective interest method.

7 Origination costs

Origination costs include commissions, intermediary incentives and other distribution-related expenditure. Origination costs which vary with, and are directly related to, securing new contracts and incremental premiums on existing single premium contracts are deferred to the extent that they are recoverable out of future net income from the relevant contract. Deferred origination costs are amortised on a straight-line basis over the life of the relevant contracts. Origination costs that do not meet the criteria for deferral are expensed as incurred.

8 Administrative and other expenses

Included in administrative and other expenses is the following:

9 Employee costs

 The Group provides a range of benefits to employees, including annual bonus arrangements, paid holiday arrangements and defined contribution pension plans.

Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.

The Group pays fixed pension contributions on behalf of its employees (defined contribution plans). Once the contributions have been paid the Group has no further payment obligations. The contributions are recognised as an expense when they are due. Amounts not paid are shown in accruals in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.

The Group operates an annual bonus plan for employees. An expense is recognised in the profit and loss account when the company has a legal or constructive obligation to make payments under the plan as a result of past events and a reliable estimate of the obligation can be made.

9.1 The aggregate remuneration in respect of employees (including sales staff and executive Directors) was as follows:

Total salary and other staff costs for the year are incorporated within the following classifications:

The above information includes Directors' remuneration. Details of the Directors' remuneration, share options, pension entitlements and interests in shares are disclosed in the Report of the Remuneration Committee.

9.2 The average number of employees during the year was as follows:

10 Taxation

Taxation is based on profits and income for the period as determined with reference to the relevant tax legislation in the countries in which the Company and its subsidiaries operate. Tax payable is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Tax is recognised in the income statement except to the extent that it relates to items recognised in equity. Tax on items relating to equity is recognised in equity.

The Group's profits arising from its Isle of Man-based operations are taxable at zero percent. Profits in the Republic of Ireland are taxed at 12.5%. Taxation for Hansard Europe dac includes £0.1m representing the recalculation of historic tax arising from that company's adoption of FRS 101 'Reduced Disclosure Framework' with effect from 1 July 2014.

There is no material difference between the current tax charge in the income statement and the current tax charge that would result from applying standard rates of tax to the profit before tax.

11 Earnings per share

The calculation for earnings per share is based on the profit for the year after taxation divided by the average number of shares in issue throughout the year.

The Directors believe that there is no material difference between the weighted average number of shares in issue for the purposes of calculating either basic or diluted earnings per share. Earnings under either measure is 6.0p per share (2015: 10.9p).

12 Dividends

Interim dividends payable to shareholders are recognised in the year in which the dividends are paid. Final dividends payable are recognised as liabilities when approved by the shareholders at the Annual General Meeting.

The following dividends have been paid by the Group during the year: