Hansard Regulatory News (HSD)

27 February 2014

Hansard Global plc

Results for the six months ended 31 December 2013

Hansard Global plc, ("Hansard" or "the Group") the specialist long-term savings provider, issues its results for the six months ended 31 December 2013 (H1 2014).

SUMMARY

· New business of £55.2m PVNBP in the period is 24.2% below H1 2013, as previously announced;

· IFRS profits increased by 8% over H1 2013 to £6.6m after tax;

· EEV earnings reduced to £5.5m from £9.5m in H1 2013 as a result of reduced new business flows;

· Following settlements of £0.5m in H1 2014 (H1 2013: £nil), writs outstanding against Hansard Europe reduced to £4.6m (H1 2013: £11.6m);

· The Group continues to improve Hansard OnLine to increase service levels for policyholders and intermediaries, and to implement new business initiatives;

· Increased interim dividend of 3.40p per share (H1 2013: 3.25p per share).

presentation of results

The H1 2014 results, together with the results of the review of the Group's new business strategy, will be presented on 4 March 2014.

board composition

Dr Leonard Polonsky has announced his intention to accept the position of President of the Board of Hansard Global and to stand down as Chairman. He is to be replaced as non-executive Chairman by Philip Gregory, the Senior Independent Director, who joined the Board in October 2011. Dr Polonsky will remain Chairman until 30 June 2014 to ensure a smooth hand-over across the Company's global markets. Maurice Dyson will assume the role of Senior Independent Director on 30 June 2014.

Interim Management Statement

The second Interim Management Statement in respect of the year ending 30 June 2014 is expected to be published on 9 May 2014.

Gordon Marr, Group Chief Executive Officer, commented:

"The Group continues to generate positive cash flows, reduce operational risk and actively manage litigation exposures.

While we expect H2 2014 new business metrics to be significantly below the exceptionally strong comparatives of H2 2013, we remain confident that the Group is well positioned and appropriately capitalised to take advantage of significant growth opportunities that we have identified. We look forward to presenting our new business strategy on 4 March. The Group's strong capital position will allow it to pay dividends in line with the guidance previously provided."

Dr Leonard Polonsky, Chairman, commented:

"It has been a pleasure to be Chairman of Hansard Global. I felt the time had come to pass on the role to a new generation, which can continue to exploit the potential of the business. As an ongoing major shareholder and board member I look forward to working with Philip."

Commenting on his appointment Philip Gregory said: "I am very excited at the prospect of becoming Chairman of Hansard. Under the current management, the Company has positioned itself well in the specialist long-term savings market, notwithstanding difficult economic conditions. With the Company having a strong Board and a clear strategy for growth, I am very enthusiastic about the long-term success of the business. On behalf of the whole Company I would like to thank Leonard for his immense contribution as Chairman of the business."

For further information:

Hansard Global plc +44 (0) 1624 688000

Gordon Marr, Group Chief Executive Officer

Vince Watkins, Chief Financial Officer

Bell Pottinger +44 (0) 20 7861 3232

Daniel de Belder

Notes to editors:

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

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

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

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

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

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.

Chairman's Statement

During the first half of this financial year (H1 2014) we have undertaken a thorough review of our business strategy in order to diversify new business flows and increase the scale of our business. We believe there are a number of significant growth opportunities available to the Group which we intend to progress in the next few months. In addition, we have implemented the plans to achieve an orderly run-off of the activities of Hansard Europe Limited.

NEW BUSINESS

Throughout the period the Group has continued to develop relationships with financial advisors in target markets. The results of this activity, supported by the introduction of product-based incentive arrangements and by enhancements to Hansard OnLine, have underpinned new business flows.

During the period a significant introducer in the Far East suspended its new business operations. This has had a negative impact on new business performance in the period. New business sales in H1 2014 for Hansard International were some 25% below the levels of H1 2013.

FINANCIAL PERFORMANCE

Throughout the period we have continued to generate positive operating cash flows to fund new business, invest in our business and pay dividends. The Group's profit under International Financial Reporting Standards ("IFRS") has grown by 8% over H1 2013, to £6.6m after tax. European Embedded Value ("EEV") Operating profit after tax has fallen to £5.5m (H1 2013: £9.5m).

The EEV of the Group, following the payment of a dividend of £6.5m in November 2013, is £217m, fractionally below the value of £226m at 30 June 2013.

CAPITALISATION AND SOLVENCY

The Group is well capitalised to meet the requirements of regulators, policyholders and intermediaries. Aggregate minimum solvency margins are covered 13 times by our capital resources. Our prudent investment policy for shareholder assets has removed much of the market risk and provided a stable and resilient solvency position over recent years.

HANSARD EUROPE LIMITED

We have successfully managed the transition of Hansard Europe to a revised Operating Model. We are pleased that we continue to meet the requirements of that company's policyholders, regulators and stakeholders.

Reflected within the financial results for the period is a charge of £0.5m (H1 2013: £nil) relating to the settlement of legal claims of £2.3m served on Hansard Europe in prior financial years. These settlements include the conclusion of the Norwegian claims served on us some years ago.

DIVIDENDS

The Board has resolved to pay an increased interim dividend of 3.40p per share (2013: 3.25p). This will be paid on 3 April 2014.

BOARD COMPOSITION

I have decided to accept the position of President of the Board of Hansard Global and to stand down from my position as Chairman with effect from 30 June 2014. I will be replaced as Chairman by Philip Gregory who is currently the Senior Independent Director. Following these changes Maurice Dyson will take the role of Senior Independent Director on 30 June 2014. I will remain a Board member and will be pleased to support Philip in his new role.

I am delighted to welcome Andy Frepp as an independent non-executive director with effect from 1 January 2014.  He brings with him a wealth of experience and I look forward to working with him in the years to come.

OUTLOOK

We remain confident that the Group is well positioned to take advantage of the distribution opportunities generated through the review of our business strategy in the latter part of this financial year and in the future.

Dr L S Polonsky CBE

Chairman

26 February 2014

REPORT OF THE GROUP CHIEF EXECUTIVE OFFICER

As I reported in the Annual Report & Accounts in September 2013, we operate in a fast-moving environment that requires us to be open to change. During H1 2014 we began to develop innovations in order to increase the scale of our business, better diversify new business flows and further reduce risk.

STRATEGY

We have reassessed how we can better meet the needs of our policyholders and improve support to Independent Financial Advisors ("IFAs") in our target markets. We recognize though that the benefit of these actions will only be realized from Q4 2014 and in future financial years as we intend to introduce a range of product enhancements commencing from April 2014 following the announcement of the changes at the Group's Sales Convention in March 2014.

During the period we have successfully managed the transition of Hansard Europe to a revised Operating Model: continued to generate positive cash flows to fund new business and dividends, and taken steps to reduce our exposure to operational and business model risk.

NEW BUSINESS DISTRIBUTION

Throughout H1 2014 the Group has continued to develop relationships with financial advisors in a number of target markets, including the Far East, Latin America and the Middle East. In particular, we have increased our sales presence in Malaysia to take advantage of our Labuan license.

The results of this activity, supported by the introduction of product-based incentive arrangements, new account executives and by enhancements to Hansard OnLine, have underpinned new business flows in H1 2014. I would like to thank all financial advisors for the business they have introduced and for their guidance in our strategy review.

During the period a significant introducer in the Far East suspended its new business operations. This, coupled with changes in our assessment of risk associated with other new business relationships in that region, has had a negative impact on new business performance in the period. New business sales in H1 2014 for Hansard International were some 25% below the levels of H1 2013 with a consequent reduction in new business margin to 7.5%.

Despite the strategic changes under consideration new business levels of FY 2014 will be materially below those of FY 2013.

RESULTS FOR THE PERIOD

Reductions in new business flows have a very limited impact on current earnings reported under IFRS, as fees from the accumulated policy contracts that we administer on behalf of policyholders around the world continue to meet the costs of that administration. Despite the costs of litigation settlements and of the Hansard Europe transition that together total £1.1m, IFRS profit after tax is £6.6m, or some 8% higher than the profit of H1 2013.

The Group has continued to generate positive cash flows to fund new business and dividends. Following the payment of a dividend of £6.5m in November 2013, the Group's free cash balances available for investment and distribution have increased by 11.5% to £30.0m.

The shortfall in new business has however had a significant impact on results reported under EEV, which are primarily driven by the levels of new business received, and by investment returns. Reduced volumes of additional policies in the period (and the subsequent spreading of new business expense over fewer policies) are reflected in a reduction in new business margin to 7.5% (from 12.1% in H1 2013) and in EEV operating profit after tax to £5.5m from £9.5m in H1 2013. Additionally, the strengthening of sterling in the period against the currencies favoured by our policyholders has offset market valuation gains related to assets under administration and contributed to a fall of £9m in EEV since 30 June 2013.

The results for H1 2014 are as follows:

Details of the results for the period are contained in the Business and Operating Review.

HANSARD EUROPE LIMITED

Our plans to achieve an orderly run-off of the activities of the company have been implemented successfully. Regulatory control and litigation management continue to be exercised from the company's offices in Dublin. The servicing of policy contracts and other administrative operations is now performed at the Group's head office on the Isle of Man.

We continue to meet the requirements of that company's policyholders, regulators and stakeholders while gaining efficiencies through the use of Hansard OnLine. Professional fees and other costs of £0.6m have been incurred in H1 2014 to progress the plans. We expect that such costs in the remainder of this financial year will not be a material amount.

The Group does not give any investment advice. We continue however to be subject to policyholder complaints in relation to the selection and performance of assets linked to policies and related matters. Hansard Europe has recently received three writs claiming approximately £2.7m which, despite settlements of £0.5m during the period, means that six writs totalling approximately £4.6m remain served on the company at the date of this report. Court dates to answer the majority of these writs have been set for the next few months, but from experience we believe that full resolution may take a considerable period. It is too early to say that the potential for new claims has yet been exhausted.

The total of £4.6m, while disappointing, is significantly below the total of £11.6m reported a year ago. The Group has actively managed these exposures to protect regulatory capital holdings and reduce uncertainty. We do not consider that the remaining claims have any merit and we intend to defend ourselves against all claims.

HANSARD ONLINE

We are pleased with the progress of increased functionality developed for Hansard OnLine to allow intermediaries and policyholders to more efficiently transact with us, which enhances further the value of the insurance wrapper.

As is reported in the Business and Operating Review, 90% of applications for regular premium policies are currently delivered to us electronically, as are approximately 90% of instructions for investment transactions within policy wrappers.

DIVIDEND

In line with previous guidance, the Board has resolved to pay an increased interim dividend of 3.40p per share (2013: 3.25p). This will be paid on 3 April 2014.

G S Marr

Chief Executive Officer

26 February 2014

BUSINESS AND OPERATING REVIEW

BUSINESS

Hansard is a specialist long-term savings provider that began trading in 1987. The Group offers a range of flexible investment products within life assurance or capital redemption bond policy wrappers, developed to appeal to affluent international investors and distributed byIndependent Financial Advisors ("IFAs") and other intermediaries acting for the clients they introduce. These IFAs are supported by Hansard OnLine, the Group's multi-language internet platform.

The Company's head office is in the Isle of Man, and its principal subsidiaries operate from the Isle of Man (including a regulated insurer, Hansard International Limited), and the Republic of Ireland (Hansard Europe Limited). Hansard International has established a branch in Malaysia to support business flows from Asian growth economies.

New business performance

Hansard Europe was closed to new business with effect from 30 June 2013, as a result of which the Group now focuses its new business activities on the target markets of Hansard International such as the Far East, Latin America and the Middle East.

We have been undertaking a thorough review of our new business strategy in order to diversify new business flows and increase the scale of our business. We believe there are a number of significant growth opportunities available to the Group which we will announce on 4 March 2014.

Hansard Europe - Revised Operating Model

The plan to protect the interests of policyholders and other stakeholders of Hansard Europe, achieve an orderly run-off, reduce operational risks and protect capital was approved by the Central Bank of Ireland on 1 August 2013. The plan involved the redundancy of a number of roles throughout the Group linked to new business activities, followed by the implementation of a revised Operating Model for the company's remaining activities. Under the revised Operating Model, regulatory control and litigation management will continue to be exercised from that company's offices in Dublin while the servicing of policy contracts and other administrative operations is now performed at the Group's head office on the Isle of Man.

In H1 2014 the Group completed the implementation of the plan. This has contributed to Group headcount being reduced by a net 8 individuals since 30 June 2013 which is largely in line with expectations, and professional fees and other costs totalling £0.6m being incurred in the period as a direct result of the implementation. We anticipate that professional fees of £0.2m will be incurred in H2 2014 to deliver the requirements of the Central Bank of Ireland.

As required by the Central Bank of Ireland, the embedding of the revised Operating Model and the outcome of litigation management will drive the timing of the release of excess capital from Hansard Europe. The limitations on the distribution of that company's capital are summarised in the commentary below.

Hansard Europe - Litigation settlements and policyholder complaints

The Group continues to deal with policyholder complaints, principally in relation to asset performance issues and product questions arising from policyholders resident in Europe. A small number of cases have proceeded to litigation, mediation or arbitration.

Incorporated within the results under both IFRS and EEV are three amounts totalling £0.5m (H1 2013: £nil) representing full and final settlement of underlying claims of approximately €2.3m served upon Hansard Europe in previous financial years. These claims included the final case served upon Hansard Europe in Norway.

These settlements were made, without any admission of liability, in order to avoid the expense and distraction of extended litigation and to allow management to focus fully on our strategy of driving growth in regular premium products in fast growing markets.

Following these settlement agreements, writs totalling approximately £4.6m (€5.6m) remain outstanding against Hansard Europe at the date of this report (H1 2013: £11.6m). The significant components of this total are those relating to:

· Asset performance and other issues raised in Belgium (€4.7m), where hearings have been set for February and March 2014 and;

· Madoff-related litigation (a net €0.4m) where the case has been stayed and we have no firm commencement date.

The Board is of the view that these complaints have no merit. While it is not possible to forecast or determine the final results of pending or threatened legal proceedings, based on the pleadings and advice received from the company's legal representatives, the Directors believe that the Group will be successful in its defence of these claims. The Group intends to defend itself against all claims strenuously. Accordingly no provisions have been made.

HANSARD ONLINE

Hansard OnLine is the Group's multi-language internet platform. It is a secure extranet platform hosting all information about the policies administered by the Group. We provide access to relevant portions of this information to policyholders and intermediaries around the world, around the clock, to allow them to better manage their objectives.

Hansard OnLine is a valuable sales and administration tool that continues to be developed to meet the needs of policyholders and intermediaries. Functionality introduced recently aims to enhance the OnLine servicing capability, enhance data access, increase security and reduce operational risks, which, in turn, has allowed the Group to reduce its expense base.

This generates a significant increase in data security and processing efficiency. These facilities continue to be enhanced and we believe they will be more widely used by policyholders and financial advisors.

Over 90% of all new business applications are introduced electronically by those financial advisors in international markets using Hansard OnLine and almost 90% of all available policy investment transactions are now processed electronically.

Meeting policyholders' requirements

Through an OnLine account policyholders can view all the documentation relating to their policy. Policy information (policy valuations, premium collection and investment performance information) is available OnLine with content presented in 11 different languages. Almost 15,000 OnLine accounts are used regularly.

Certain policyholders now have the functionality to be flexible in payment of premiums by credit card and to perform policy investment transactions to better meet their objectives.

Supporting intermediaries' business models

Hansard OnLine functionality allows a majority of policy-related transactions to be performed seamlessly. Pre-sale policy illustrations, new business applications and policy investment transactions are now processed electronically and a range of analytical tools are available through the Personal Investment Review and the Unit Fund Centre.

Reducing Operational risk

The straight-through processing of policyholder instructions (whether received directly or through their appointed agents) reduces the Group's operational risk exposures, as does the ability of the Group to communicate electronically with policyholders and intermediaries, irrespective of geographical boundaries.

Hansard OnLine is a vital component of the revised Operating Model for Hansard Europe, meeting the needs of that company's regulators, policyholders and intermediaries while allowing more efficient management of operations from the Isle of Man.

New business

Following the closure of Hansard Europe to new business with effect from 30 June 2013, the new business performance reported below, for H1 2014 and the comparative periods, is that of Hansard International alone.

Strategy

The Group has access to a large portfolio of distributors who know that our combined efforts can meet the needs of policyholders around the world. We recognise, as do they, that we operate in a fast-moving new business environment that requires us to be open to change.

Upon deciding to close Hansard Europe to new business we determined to complete a thorough review, with the assistance of external professional resources, of the sales and marketing operations of the Group. As a result we have resolved to implement strategic and tactical adjustments to better diversify new business flows, further reduce risk and increase the scale of our business, some of which are discussed below.

· Policyholders and Product

We are developing a range of savings and investment products that will allow us to access business more successfully in a number of target markets. These products will be launched in Q4 2014.

· Distribution

We have continued negotiations with a number of established distributors involved in both expatriate and local markets around the world. We hope to have agreements in place ready for the launch of the new products at the start of Q4 2014.

· Hansard OnLine

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

· Resources

We have recruited two highly experienced account executives, one in Malaysia and one in the Middle East and have signed leases on larger offices in those regions to enable us to provide better training services for distributors.

New business performance for the six months ended 31 December 2013

Throughout H1 2014 the Group has continued to develop relationships with financial advisors in a number of target markets, including the Far East, Latin America and the Middle East. In particular, we have increased our sales presence in Malaysia to take better advantage of our licensed position through Labuan and early signs are very positive.

The results of this activity, supported by the introduction of product-based incentive arrangements and by enhancements to Hansard OnLine, have underpinned new business flows in H1 2014. In particular, offers launched in October for single premium business were successful in boosting business by 12.5% in H1. We anticipate that recent distribution agreements signed in H1 will help this trend to continue.

However, following the suspension of production activities of a large distributor, with a consequent shortfall in new business issued in Q2 2014, new business emanating from the Far East is significantly reduced from the prior year comparative period which was particularly strong. Therefore new business sales, on all metrics reported by the Group, areapproximately 25% below the level of new business earned by Hansard International in H1 2013.

New business sales are expressed in terms of the Group's internal metric, Compensation Credit ("CC") and Present Value of New Business Premiums ("PVNBP"). Comparisons against the corresponding periods are on an actual currency basis. 

To allow comparison with results published by other companies, the following commentary relates to new business flows calculated on the basis of PVNBP.

New business flows are received in a range of currencies.Approximately 43% (as a percentage of PVNBP) of new business premiums in the period were denominated in US Dollar, 33% in Japanese Yen, 12% in Sterling and 11% in Euro.

FINANCIAL PERFORMANCE FOR THE SIX MONTHS ENDED 31 DECEMBER 2013

The design of the Group's products means that new business flows will contribute to income streams over many years, but continued investment in systems and other resources will outweigh the initial growth in income reported under IFRS.

Our business is long term in nature, and for this reason we present the results on an EEV basis, which better reflects the true profitability of new business, in addition to the statutory IFRS basis. EEV results are set out in section 2 below.

1. Results under IFRS

While the profitability of the Group's recent new business flows has contributed to an increase of almost 8% in contract fee income over H1 2013, the first half of this financial year has seen the Group incur significant costs that have had a negative impact on the financial performance of the Group, even though they are necessary to support the Group's longer-term objectives.

Consolidated profit after taxation for the period is £6.6m (H1 2013: £6.1m), even after taking into account costs of £1.1m (H1 2013: £nil) arising from the settlement of some of the litigation served upon Hansard Europe in prior financial years, and the implementation of the revised Operating Model for that company. Prior to those exceptional items the IFRS profit before tax would have been £7.8m, an increase of £1.6m or 25.8% over the pre-tax profit of £6.2m in H1 2013, as can be seen below.

Volatility in foreign exchange markets continued throughout the period. Having regard to the composition of net assets of Hansard Europe, the geographic spread of the Group's policyholders, and the range of currencies in which Assets under Administration are denominated, the strengthening of sterling since 30 June 2013 reduced IFRS earnings by £0.5m (H1 2013: £nil).

The following is a summary of key items to allow readers to better understand the results of strategy implementation, as represented under accounting disclosures affecting the consolidated income statement, an analysis of cashflows and the consolidated balance sheet. A small number of comparative figures have been restated in this section, to ensure consistency of presentation.

Abridged consolidated income statement

The consolidated income statement presented under IFRS which is presented within these half-year results reflects the financial results of the Group's activities during the period. This income statement however, as a result of its method of presentation, incorporates a number of features that might affect a clearer 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 policyholders. These assets are selected by the policyholder or an authorised intermediary and the policyholder bears the investment risk. Valuation gains, net of foreign currency losses, attributable to policyholder assets were £2.0m (H1 2013: £46.2m).

· 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 Group's income statement under IFRS, this 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 the current year third party fund management fees attributable to policyholder assets were £2.2m (H1 2013: £2.3m). These are reflected in both income and expenses under the IFRS presentation.

An abridged consolidated income statement is presented below, excluding the items of income and expenditure indicated above.

Fees and commissions

Fees and commissions for the half-year have increased by 6.5% to £27.9m, compared to £26.2m in H1 2013.

Elements of contract fee income are largely fixed in nature, representing both the smoothing of up-front income required under IFRS, and policy servicing charges as required by the policy terms and conditions. Increased levels of contract fee income reflect the strength of the existing book of business, as the fees from increased levels of new business in previous periods are taken to income under IFRS over the life of the contract.

Approximately 30% of the Group's fees and commissions, being fund management fees and commissions receivable from third parties, are related directly to the value of policyholder assets under administration ("AuA") and are thus exposed to market movements and valuation judgements. Income of £7.4m from these sources in the period is in line with the comparative period and reflects consistent levels of AuA underpinning the Group's results.

A summary of fees and commissions attributable to Group activities is set out below:

Included in contract fee income is £10.6m (H1 2013: £10.1m) representing the amounts prepaid in previous years, as can be seen below in the reconciliation of deferred income. 

Foreign Exchange

The Group's own assets are held predominantly in sterling and invested in short-term deposits. Hansard Europe holds Euro currency balances to support its regulatory capital requirements.

Volatility in foreign exchange markets continued throughout the period. Having regard to the composition of the net assets of Hansard Europe, the geographic spread of the Group's policyholders, and the range of currencies in which Assets under Administration are denominated, the strengthening of sterling since 30 June 2013 has reduced investment and other income by £0.6m (H1 2013: £nil).

Further information about the Group's foreign currency exposures is disclosed in note 13 to these condensed consolidated financial statements.

Origination costs

Under IFRS, new business commissions paid, together with the directly attributable incremental costs incurred on the issue of a policy contract, are deferred and amortised over the life of that policy. The life of a regular premium contract is the term of the individual policy which is typically between 10 years and 25 years. The life of a typical single premium contract is 15 years.This accounting policy reflects that the Group will continue to earn income over the long-term from policies issued in a given financial year. The impact on current year fee income of contracts issued this year is minimal.

Other origination costs incurred, for example recruitment costs and salary payments to new Account Executives, which reflect investment in distribution resources in line with our strategy, are expensed as incurred.

With the reduction in new business flows discussed above, and following the closure of Hansard Europe to new business with effect from 30 June 2013, the Group's new business levels in H1 2014 are some 36% below the total of those for H1 2013. This is reflected in the reduced level of origination costs, as compared to those for H1 2013.

Origination costs in the period are:

Administrative expenses

The Group continues to invest for future growth in the business through targeted expenditure. Projects to improve Hansard OnLine,streamline administrative processes and reduce operational risk have continued in the period. We believe that the headcount reductions and other efficiencies gained in H1 2014 from the implementation of the revised Operating Model for Hansard Europe are a result of our investment in prior years in Hansard OnLine and other systems.

Administrative and other expenses have reduced by 8% from H1 2013 to £9.6m.

A summary of administrative and other expenses attributable to the Group is set out below:

CASH FLOW ANALYSIS

The Group's in-force policy book continues to generate strongly positive cash flows to support the Group's main business objectives of investing in new business, enhancing distribution and other infrastructure, and paying dividends.

The operational surplus of £19.0m (fees deducted from contracts and commissions received, less operational expenses) in H1 2014 has increased by £0.3m over the comparative period despite the litigation settlements incurred in the period and the closure costs relating to Hansard Europe referred to above.

As can be seen below, the Group invested £9.0m (H1 2013: £11.3m) in new business during the period which was funded by the existing policy book. Investment in new business earns a return of at least 13% (H1 2013:15%) annually. Continued investment in profitable regular premium contracts produces a short-term cash strain as a result of the commission and other costs incurred at inception of a contract.

Following this investment in new business, cash at 31 December 2013 stood at £69.1m. This is a marginal increase from the value of £67.2m reported at 30 June 2013, despite the payment of a dividend of £6.5m during the period. This further reflects the Group's continued cash generative capability.

The following summarises the Group's own cash flows in the period:

Abridged consolidated balance sheet

The condensed consolidated balance sheet presented under IFRS elsewhere in this report properly reflects the financial position of the Group at 31 December 2013. As a result of its method of presentation, the consolidated balance sheet incorporates the value of assets under administration held to back the Group's liability to policyholders, and also incorporates the equivalent liability to policyholders. Additionally, some elements of the Group's own capital resources of £69.1m are disclosed in different positions based on maturity date of bank deposits.

The abridged consolidated balance sheet presented below, excluding those assets and liabilities, allows a better understanding of the Group's own capital position.

The IFRS profit of £6.6m in H1 2014 has marginally exceeded the dividend of £6.5m paid during the period, and has therefore caused an increase in Shareholders' equity since 30 June 2013.

Deferred origination costs

Deferral of origination costs reflects that the Group will continue to earn income over the long-term from policies 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 continued amortisation of profitable contracts acquired in prior years, taken with the reduction of the Group's investment in new business compared with H1 2013, has resulted in a decrease of £1.7m in value since 30 June 2013.

The movement in value of DOC over the period is summarized below.

Bank deposits and money market funds

The Group's liquid assets at the balance sheet date are held in highly-rated money market liquidity funds and with a wide range of deposit institutions. Some of the deposits have maturity dates between 4 months and 16 months of the balance sheet date.

Having regard to the conditions imposed by the Central Bank of Ireland as a result of the implementation of the revised Operating Model for Hansard Europe, dividends or other distributions from that company to the holding company will be delayed until such time as the revised Operating Model is fully embedded and the legal cases referred to in note 14 to the condensed consolidated balance sheet are concluded. No conditions have been placed on the use of that company's resources to manage its own business.

Under those circumstances the Group cash available for investment and distribution at the balance sheet date can be summarised as:

Deferred income reserve

Consistent with the treatment of deferred origination costs, the treatment of deferred income ensures that initial fees are taken to the consolidated income statement in equal instalments over the longer-term, reflecting the services provided over the period of the contract. The deferred income reserve represents the unamortised balance of accumulated initial fees collected on new business.

The proportion of income deferred in any one year is dependent upon the mix and volume of business flows. The Group's focus on profitable 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 period relates to charges taken from policies issued in prior financial years demonstrating the cash generative nature of the business. Policies issued in this financial period will generate the majority of their initial fees over the next 18 months on average. The movement in value of DIR over the period is summarized below:

Assets under administration

In the following paragraphs, assets under administration ("AuA") refers to net assets held to cover financial liabilities as analysed in note 10 to the condensed consolidated financial statements presented under IFRS.

The Group has retained positive cash flows from the large number of regular premium contracts that the Group administers on behalf of policyholders around the world, which demonstrates the success of the Group's strategic aims. Increased levels of regular premiums have underpinned AuA performance in H1 2014, despite continued levels of premium holidays enjoyed by policyholders.

The closure of Hansard Europe to new business and the changing mix of new business have caused a decline in the flow of single premium contracts for the Group. While this has affected the value of gross policyholder cash flows we believe that the level of regular premium contracts (with more stable, recurring cash inflows) will increase in the longer term.

The following table summarises Group AuA performance and therefore includes additional contributions relating to single and regular premium policies issued by Hansard Europe in prior years.

Taken with the effects of limited net valuation gains in H1 2014, AuA of £0.99bn as at 31 December 2013 is some 4% below the position at 30 June 2013. AuA of Hansard International has decreased by 2% since 30 June 2013, while that of Hansard Europe has fallen by 9% to £260m at 31 December 2013.

The value of AuA is based upon the assets selected by or on behalf of policyholders to meet their needs from time to time. Reflecting the wide geographical spread of the Group's policyholders, the majority of AuA are designated in currencies other than sterling. The strengthening of sterling against those currencies in H1 2014 has largely offset market gains.

At the balance sheet date 54% of AuA is denominated in US Dollars, with a further 26% denominated in Euro. Additional information concerning the Group's foreign currency exposures is set out in note 13 to the condensed consolidated financial statements.

DIVIDENDS

A final dividend of 4.75p per share in relation to the previous financial year was paid in November 2013. This amounted to £6.5m.

The Board has considered the results for H1 2014, the Group's continued cash flow generation and its future expectations and has resolved to pay an increased interim dividend of 3.40p per share (2013: 3.25p). This will be paid on 3 April 2014.

2. Embedded Value Results

Our business is long term in nature and therefore we present the results on a European Embedded Value ('EEV') basis as well as a statutory IFRS basis. The EEV is a discounted valuation of the future profits expected to emerge in the future on certain assumptions. The EEV takes into account the expected timing of those profits.

Regardless of the measurement basis used, the projected total profit from the issue of a new insurance contract is the same. That said:

· The EEV basis recognises profit from new insurance contracts as a lump sum addition to the Value of In-force ('VIF') equal to the discounted value of future profits (called the New Business Contribution or 'NBC'). The VIF is converted to cash ('Net Worth') in future years as the business progresses. The NBC reflects the shareholder value added from new business: the change in EEV will reflect the cash impact of writing new business as well as other changes within the business.

· The IFRS basis smoothes the recognition of profit from new insurance contracts by spreading the initial revenues and corresponding costs evenly over their expected lives. The IFRS new business result therefore reflects neither the shareholder value added from writing new business, nor its cash impact.

Results for H1 2014 under European Embedded Value

The EEV results reflect the closure of Hansard Europe to new business with effect from 30 June 2013, litigation settlements and the impact on Hansard International of a significant introducer suspending its new business operations in the period.

Sales volumes for Hansard International have fallen to £55.2m from £72.8m in H1 2013. The new business contribution has reduced to £4.1m (H1 2013 £10.1m) having allowed fully for a new business expense over run of £2.2m. As a result of lower sales, the budgeted sales expenses are spread over fewer policies, thus reducing the new business margin, the internal rate of return and the break-even point.

New business performance

The average IRR on new business written during the year has reduced to 13% per annum. The average BEP for new business written during the year is 5.1 years (H1 2013: 2.1 years). These reductions reflect the lower than expected sales and the subsequent cost over-run.

During the year, the proportion of regular premium business PVNBP has remained around 80% (H1 2013: 80%) of total PVNBP.

We have been undertaking a thorough review of our new business strategy in order to diversify new business flows and increase the scale of our business. We believe there are a number of significant growth opportunities available to the Group which we intend to progress in the next few months.

Headline results for the Group's European Embedded Value (EEV) are shown in the table below:

Operating Profit has reduced, at £5.5m (H1 2013: £9.5m), due mainly to the reduction in new business volumes. The Investment Return Variance - generally outside the Group's control - includes £6.6m (H1 2013: £7.6m) of investment gain offset by £14.5m of foreign exchange movement loss (H1 2013 (£6.7m) as sterling has strengthened. The overall investment impact is negative at £(7.7m) (H1 2013: £1.0m).

The Closing EEV is lower than the prior year at £217.0m (H1 2013: £223.9m) having paid dividends of £6.5m (H1 2013: £11.0m) during the period.

EEV Profit after tax

The Group's EEV Profit after tax is lower than last year at £(2.2m) (H1 2013: £10.5m). The most significant components are the lower New Business Contribution (NBC) and the Exchange Rate component of the Investment Return Variances which has offset market gains on policyholder assets under administration. The components areshown in the table below:

Experience Variances

The sum of experience variances is £nil (H1 2013 £(2.4m)), comprising a number of small positive and negative variances. The ongoing expense variance is small and positive at £0.6m (H1 2013 £0.4m): at least a part of this variance reflects the timing of expected expenditure.

Operating Assumption Changes

There have been no operating assumption changes in the period: management has the view that the experience variances do not indicate a need for assumptions to change at this time. A review of operating assumptions is conducted annually towards the year-end.

Investment Performance Variances

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

EEV balance sheet

Following the payment of dividends of £6.5m (H1 2013: 11.0m), the EEV has decreased by £8.7m since 30 June 2013 to £217.0m (30 June 2013: £225.7m, H1 2013: £223.9m).

The composition of the EEV balance sheet has changed over the period:

· The increase in Net Worth reflects the netting off effects of cash released from the Value of In-Force, lower investment of cash in new business and cash of £6.5m (H1 2013: £11.0m) paid as dividend.

· The Required Capital has increased by some £9.1m since 31 December 2012. As reported previously, following the decision to close Hansard Europe Limited to new business the Group has given an undertaking to not release capital from that business until its new operating model has stabilised and other regulatory requirements have been satisfied. The Group estimates that this additional required capital will be constrained for three years.

· The decrease in VFP reflects the value of policyholder funds at 31 December 2013, the conversion of expected future profit to cash (or Net Worth) and the addition of new 'future profits' from this year's sales. The conversion from future profits to Net Worth is rapid: over 50% of the VFP is expected to be converted into Net Worth within 5 years.

Cash generation

The change in the Net Worth over the year shows the cash-generative capacity of the Group's operations and its use of cash in the period. The business has generated net cash of £23.0m (H1 2013: £20.5m), of which £10.8m (H1 2013: £13.2m) has been invested in new business (shown as New Business Strain), as shown below.

Net asset value per share

On an EEV basis, the net asset value per share at 31 December 2013 is 158.0p (H1 2013: 163.0p) based on the EEV at the balance sheet date divided by the number of shares in issue at that date, being 137,379,634 ordinary shares (H1 2013: 137,379,634).

The net asset value per share at 31 December 2013 on an IFRS basis is 29.1p (H1 2013: 29.1p).

CAPITALISATION AND SOLVENCY

The Group's authorised life insurance subsidiaries continue to be well capitalised with free assets well in excess of the regulatory requirements in each relevant jurisdiction. Aggregate minimum solvency margins are covered 12.9 times (31 December 2012: 13.3 times; 30 June 2013: 12 times) by the Group's capital resources.

Solvency capital is a combination of future margins, where permitted by regulation, and capital. Where future margins are denominated in non-sterling currencies, it is vulnerable to the weakening of those currencies relative to sterling. All of the Group's excess capital is invested in a wide range of deposit institutions and highly-rated money market liquidity funds. This approach immunises the Group's capital base from stock market falls.

The in-force portfolio has no material investment options or guarantees that could cause capital strain and retains very little of the mortality risk that it has accepted (the balance being reinsured with premium reinsurers). There is no longevity risk exposure.

The introduction of Solvency II will see a fundamental change in the way EU-based insurers assess their capital requirements and risk management standards. Based on current guidance we do not expect additional capital requirements as a result of these legislative changes.

3. Risks relating to the Group's financial and other exposures

Hansard's business model involves the controlled acceptance and management of risk exposures. The steps taken to minimise those exposures include the operation of unit-linked insurance business. Under the terms of the unit-linked investment contracts issued by the Group, the policyholder 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 policyholders. By definition, there is a precise match between the investment assets and the policyholder liabilities, and so the market risk and credit risk lie with policyholders.

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 13 to the condensed consolidated financial statements. Additionally, the EEV Information includes a summary of the sensitivity of the Group's EEV results to economic and other factors.

The Board believes that the principal risks facing the Group are those relating to the operation of the Group's business model and to the environment within which the Group operates. The Group has designed its products, distribution methods and cost base with a view to reducing operational and financial risk, and has in place an Enterprise Risk Management framework that is continually being refreshed to better support our objectives and to recognise regulatory and legislative change.

While the Group's business model has served to minimise the principal risks facing the Group, the responses to the extreme financial and market circumstances that continue to be encountered may impact on the Group's strategic objectives, profitability or capital requirements.

A comprehensive review of the principal risks and uncertainties facing the business, and the Group's approach to managing these risks and uncertainties, are outlined on pages 28 to 31 of the 2013 Annual Report. These principal risks and uncertainties have not changed materially since the 2013 Annual Report was published.

A summary of those principal key risks and uncertainties which could impact the Group for the remainder of the current financial year are outlined below. Where necessary, the Group will implement controls to mitigate the risks and minimise the potential impact of the risks on the Group as far as possible.

Condensed consolidated financial statements for the half-year ended 31 December 2013

The Group has no other items of Comprehensive Income and as such has not presented a separate consolidated Statement of Comprehensive Income.

The notes on pages 28 to 38 form an integral part of these condensed consolidated

half-yearly financial statements.

The notes on pages 28 to 38 form an integral part of these condensed consolidated

half-yearly financial statements.

The notes on pages 28 to 38 form an integral part of these condensed consolidated

half-yearly financial statements.

The notes on pages 28 to 38 form an integral part of these condensed consolidated

half-yearly financial statements.

 Notes to the Condensed Consolidated Financial Statements

1 General information

The principal activity of the Company is to act as the holding company of the Hansard Group of companies. The activities of the principal operating subsidiaries include the transaction of life assurance business and related activities.

The Company has its primary listing on the London Stock Exchange.

These condensed consolidated half-yearly financial statements were approved for issue on 26 February 2014.

These condensed consolidated half-yearly financial statements do not comprise statutory financial statements and are unaudited. The board of directors approved the statutory financial statements for the year ended 30 June 2013 on 25 September 2013. The report of the auditor on those financial statements was unqualified and did not contain an emphasis of matter paragraph.

2 Basis of presentation

These condensed consolidated half-yearly financial statements for the half-year ended 31 December 2013 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority ("DTR") and with IAS 34 "Interim Financial Reporting" as adopted by the European Union ("EU"). The condensed consolidated half-yearly financial statements should be read in conjunction with the annual financial statements for the year ended 30 June 2013, which were prepared in accordance with International Financial Reporting Standards as adopted by the EU.

Except where otherwise stated, all figures included in the condensed consolidated half-yearly financial statements are stated in pounds sterling, which is also the functional currency of the Company, rounded to the nearest hundred thousand pounds.

Going Concern

As shown within the Business and Operating Review, the Group's capital position is strong and well in excess of regulatory requirements. The long-term nature of the Group's business results in considerable positive cash flows arising from existing business. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

The Directors are satisfied that the Company and the Group have adequate resources to continue to operate as a going concern for the foreseeable future and have prepared the condensed consolidated financial statements on that basis.

3 Accounting policies

The principal accounting policies applied, and the critical accounting estimates and judgements in applying them, are consistent with those of the annual financial statements for the year ended 30 June 2013 which can be accessed on the Company's website: www.hansard.com.

4 Segmental information

Disclosure of operating segments in these condensed consolidated 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 through the Group's subsidiaries.

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 total 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 Group maintains a close control over the margins realised on new business, which are consistent across the Group's products and, hence, NICC is a reliable indicator of value.

Hansard Europe was closed to new business with effect from 30 June 2013. As a result, NICC for the six months ended 31 December 2013 disclosed in this note relates to the Group's Isle of Man operation only. Comparative figures include those of Hansard Europe.

The following table analyses NICC geographically and reconciles NICC to direct origination costs during the period:

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

 6 Administrative and other expenses

7 Taxation

The Group's profits arising from its Isle of Man-based operations are taxable at zero percent.

Corporation tax for the Republic of Ireland-based operations is based on the effective annual rate for taxable income of 12.5%, applied to the expected taxable profits for the period.

8 Earnings per share

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 4.8p pence per share.

9 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 period:

The Board have resolved to pay an interim dividend of 3.40p per share. This amounts to £4.6m and will be paid on 3 April 2014 to shareholders on the register at 7 March 2014.

10 Financial investments held to cover liabilities under investment contracts

The following investments, other assets and liabilities are held to cover financial liabilities under investment contracts. They are included within the relevant headings on the consolidated balance sheet.

11 Called up share capital

12 Related party transactions

Intra-Group transactions are eliminated on consolidation and are not disclosed separately here.

There have been no significant related party transactions in the period nor changes to related parties. Related party transactions affecting the results of previous periods and an understanding of the Group's financial position at previous balance sheet dates are as disclosed in the Annual Report & Accounts for the year ended 30 June 2013.

There have been no significant awards during the period under the Save As You Earn (SAYE) share-save programme for employees, nor the long-term incentive plans in existence at the balance sheet date. The estimated fair value of the schemes and the imputed cost for the period under review is not material to these financial statements.

13 Financial risk management

The Group's operations expose it to a variety of financial risks. 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 principal method by which the Group seeks to manage risk is through the operation of unit-linked business, whereby the policyholder bears the financial risk relating to the financial assets and liabilities arising from such contracts.

Under the unit-linked investment contracts that are written by the Group, policyholders bear the investment risk on the assets in the unit-linked funds, as the policy benefits are directly linked to the fair value of the assets. These assets are managed consistent with the expectations of the policyholders. By definition, there is a precise match between the investment assets and the policyholder liabilities, and so the market risk and credit risk lie with policyholders.

The Group's exposure is limited to the extent that certain fees and commission income are based on the value of assets in the unit-linked funds.

Information concerning the operation of the Enterprise Risk Management framework to manage financial and other risks is contained within the Report & Accounts for the year ended 30 June 2013, and particularly in note 22 thereto, "Financial risk management". There have been no significant changes to the frameworks in the period to 31 December 2013.

The more significant financial risks to which the Group is exposed, and an estimate of the potential financial impact of each on the Group's IFRS earnings, are set out below. For each category of risk, the Group determines its risk appetite and sets its investment, treasury and associated policies accordingly.

13.1 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.

(a) Price risk

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% pa, are based on the market value of assets under administration. Similarly, due to the fact that some of these charges may be deducted from policies in foreign currency, a change in foreign exchange rates relative to sterling can result in fluctuations in management fee income and expenses reflected in these financial statements. The approximate impact on the Group's profits and equity of a 10% change in unit-linked fund values, either as a result of price or currency fluctuations, is £1.6m (H1 2013: £1.5m) in a financial year.

(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. The Group has mitigated its exposure to cash flow interest rate risk by placing a proportion of its cash holdings on longer-term, fixed-rate deposits.

Taking into account the proportion of Group funds held on longer-term, fixed-rate deposits, a change of 1% p.a. in interest rates will result in an increase or decrease of approximately £0.7m (H1 2013: £0.7m) in the Group's annual investment income and equity.

(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.

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.

(c) (i) Group foreign currency exposures

The Group is exposed to currency risk on the foreign currency denominated bank balances and other net operating assets that it holds to the extent that they do not match liabilities in those currencies. The Group's currency risk is minimised by frequent repatriation of excess foreign currency funds to sterling. At the balance sheet date the Group had exposures in the following currencies: