Last checked at 19 Nov 2008 07:00
Hansard Global plc
("Hansard" or the "Company")
Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its interim management statement for the period from 1 July 2008 to 31 October 2008, in advance of its Annual General Meeting being held later today.
Highlights
Resilient new business results despite recent financial market uncertainty
New business APE (actual currency basis) for the four months ended 31 October 2008 is £8.4m (£11.8m for the same period last year, a decrease of 28.9%)
Industry-leading margins of 7.1% on PVNBP basis
Assets under Administration at 31 October 2008 are £1.0 billion, having fallen 12.1% since 30 June 2008 but policyholder cash flows remained positive
The financial position of the Group remains very strong, with no debt or exposure to "toxic" assets
Leonard Polonsky, Chief Executive of Hansard Global, commented:
"The performance of the Group in the first four months of this financial year remained resilient despite the unprecedented volatility in global market conditions. We have achieved strong new business flows at industry-leading margins and have continued to generate net positive cash flows from policyholders.
The Far East and Latin America continue to provide the majority of new business flows, supporting our recruitment of new Account Executives in these regions. The financial position of the Group remains very strong with no borrowings. Short-term factors are expected to impact negatively on the Group's forecast IFRS and EEV profits for the current financial year, but we are confident that the outlook for continued growth in new business and profitability remains positive for the Group in the longer term."
For further information
Hansard Global
Leonard Polonsky, Chief Executive 01624 688000
Gordon Marr, Director 01624 688000
Bell Pottinger 020 7861 3232
Ben Woodford
Daniel de Belder
New Business Flows
In light of the recent turmoil in the financial markets, the Group has achieved resilient new business flows at industry-leading margins.
The flow of single premium business remains significantly restrained as a result of volatile market conditions and economic concerns affecting investor confidence. This has particularly impacted new business flows from Europe and Scandinavia, and the Group has implemented a number of localised incentive arrangements to source new business flows in these areas. Regular premium flows remain healthy although deteriorating economic conditions have begun to impact new business production in the Far East.
Comparisons against the results for the corresponding period of the previous financial year reflect that new business flows in that comparison period were at a record level for the Group, being some 30% above APE in the prior four month period to 31 October 2006.
New business flows for the four month period ended 31 October 2008 are detailed in tables 1 to 4 below and summarised as follows (comparisons on actual currency basis).
|
| 2008 | 2007 |
|
| Basis | £m | £m | % change |
| Compensation Credit | 4.6 | 6.1 | (24.6)% |
| APE | 8.4 | 11.8 | (28.9)% |
| PVNBP | 63.6 | 93.7 | (32.2)% |
New business premiums on an APE basis(1) in sterling terms(1) during the four months to 31 October 2008 totalled £8.4m. This represents a decrease of 28.9% compared with £11.8m APE in the same period in the last financial year, reflecting very good market conditions at that time, before the onset of the global credit crisis.
The flow of single premium business, principally in the EU and Scandinavia, remains significantly restrained as a result of volatile market conditions, and for the four months to 31 October is 38.6% lower than in the same period last year on an APE basis. Approximately £0.9m APE of single premium business was issued in the EU in the first month of the period under the terms of an incentive arrangement established in the previous financial year. The flow of regular premium new business has been impacted by market conditions and is 19.7% lower on an APE basis than in the corresponding four month period last year. The composition of regular premium business reflects continued development of the Latin American market, while the very good market conditions experienced in the Far East in 2007 have not been repeated. Regular premium flows (on an APE basis) account for 58.5% of sales in the period to 31 October 2008, compared to 52.0% in the comparative period.
New business flows using the Company's internal metric, Compensation Credit, totalled £4.6m for the period compared with £6.1m in the comparative period of the last financial year.
New business margins for the period were approximately 7.1% on a PVNBP(6) basis. These margins are well above industry average, principally due to the Group's continued focus on the value of new business. Restrained new business flows, localised incentive arrangements and continued investment in the Group's distribution infrastructure to improve its sales proposition have contributed to the reduction in the margin from the level of 7.8% reported for the year ended 30 June 2008.
The continued strengthening of the US Dollar against Sterling has had a positive impact on new business figures as approximately 50% of new business in the period was received in US Dollars. The presentation of these figures on a constant currency basis provides a more appropriate representation of the activities of the intermediaries who introduce business to the Group.
Hansard receives business from a strong and well-diversified portfolio of intermediaries around the world, which results in new business being received in a range of currencies. The principal currency receipts (as a percentage of APE) are set out below.
| 2008 | 2007 | |
| Currency | % | % |
| US Dollars | 51.1 | 50.0 |
| Euro | 31.5 | 22.0 |
| Sterling | 10.8 | 9.0 |
Recruitment of Account Executives
Recruitment of Account Executives continues, in line with the Group's policy of expanding its reach amongst suitable intermediaries. Four individuals have been recruited since 1 July 2008 to provide local language and other support to intermediaries in the Group's target markets. At the date of this report the Group has a total of 20 Account Executives (31 October 2007: 14). Selective recruitment of Account Executives is expected to continue.
Assets under Administration
Despite the volatility in capital markets and further weakening of Sterling against the US Dollar, positive policyholder cash flows have been experienced in the period. The value of Assets under Administration ("AUA") as at 31 October 2008, at £1.0bn, has fallen by 12.1% since 30 June 2008. Over the period the MSCI World index has fallen by 31% and the FTSE 100 index has declined by 24%.
The value of AUA is impacted by the credit crisis. However, as a result of the diversified portfolio of investments held to cover financial liabilities, the value of AUA is not materially directly impacted by illiquid assets, impaired fund structures or relationships. Under the terms of the unit-linked contracts issued by the Group, the policyholder bears the financial risk attaching to assets to which the contracts are linked. Continued reductions in AUA will cause declines in the Group's asset-based income but will not affect the Group's capital position.
The impact of the recent volatility in global capital markets and the sharp falls in asset values has had the anticipated impact on the composition of the Protected funds administered by the Group insurance companies. These funds, totalling approximately £200m, are now substantially invested in cash balances, rather than equity and other exposures, have met their objectives in protecting policyholder investments. Plans to develop second-generation protected funds to further support policyholders' and intermediaries' requirements are being made.
The following table summarises movement in the value of Assets under Administration
| 2008 | |
| £m | |
| Assets under Administration at 1 July | 1,137 |
| Net deposits to investment contracts | 43 |
| Withdrawals from contracts | (42) |
| Effect of market and currency movements | (138) |
| Assets under Administration at 31 October | 1,000 |
The value of AUA is linked directly to policyholder investment choices, new business flows and prevailing market conditions. The investment choices of policyholders and their agents generally reflect the currency of the territories in which they are resident. The accumulated asset values are therefore subject to currency rate fluctuations. The principal currencies in which assets are designated at 31 October are as follows:
| 2008 | 2007 | |
| Currency | % | % |
| US Dollars | 38.7 | 37.0 |
| Euro | 35.6 | 30.0 |
| Sterling | 17.6 | 20.0 |
Capitalisation and solvency
The Group remains very strongly capitalised for its product range, and for policyholders' and Regulators' expectations. At 30 September 2008 the Regulators' minimum solvency requirements were covered 18.0 times by the Group's free assets (30 June 2008: 16.3 times).
The solvency position is well insulated against the difficult investment markets, with the excess capital resources being invested in a wide range of deposit institutions, in AAA-rated money market liquidity funds and UK Treasury Stock. Exposure to euro exchange rate fluctuations on deposit balances has been reduced by converting a proportion of euro deposits to sterling, as previously reported. Recent reductions in Central Bank rates will have a proportionate impact on the Group's investment income for the current financial year.
Cash flows remain positive. The Group has no borrowings at the date of this report, nor at any time since 1 July 2008. The in-force portfolio has no investment options or guarantees.
Dividends payable
Subject to shareholder approval at the AGM, a total of £9.6m will be paid in dividends on 27 November 2008. This represents a final ordinary dividend of 7p per share to bring the total ordinary dividends in respect of the year ended 30 June 2008 to 12p per share, and reflects the Board's confidence in the Group's prospects. This is an increase of 20% over the ordinary dividends of 10p per share paid in 2007.
These dividends have been funded by operating cashflows.
Results for the half-year
Results for the half-year ending 31 December 2008 will be announced on 26 February 2009.
Outlook
Despite the ongoing global uncertainty, the Group is confident that intermediary relationships will continue to introduce a growing stream of affluent investors. However, in the short-term, single premium new business flows will continue to be significantly restrained. Regular premium new business flows will continue to be affected by economic circumstances and premium reduction activity as experienced in the second half of the last financial year. This will continue to affect new business margins and EEV operating profit.
The recent falls in asset values and in Central Bank base rates will impact negatively on forecast IFRS profits for the year, when compared with the previous year, causing reductions in asset-based fees, commissions receivable and investment income. However, the impact of any continued weakness of Sterling against major currencies will have a positive impact on these aspects.
Despite these factors, the Group is well positioned for growth in volume and profit as the environment improves.
HANSARD GLOBAL PLC
NEW BUSINESS RESULTS FOR THE PERIOD ENDED 31 OCTOBER 2008
1. APE on an Actual Exchange Rate basis
| Unaudited Four months ended 31 October | |||
| 2008 £m | 2007 £m | Change % | |
| New Business Premiums (APE)(1) | |||
| Regular | 4.9 | 6.1 | (19.7)% |
| Single | 3.5 | 5.7 | (38.6)% |
| 8.4 | 11.8 | (28.9)% | |
| New Business Premiums (APE)(1)(3) | |||
| EU and EEA | 2.9 | 4.4 | (34.1)% |
| Latin America | 2.3 | 1.7 | 35.3 % |
| Far East | 2.1 | 4.0 | (47.5)% |
| Rest of World | 1.1 | 1.7 | (35.3)% |
| 8.4 | 11.8 | (28.9)% | |
2. APE on a Constant Currency Basis
| Unaudited Four months ended 31 October | |||
| 2008 £m | 2007 £m | Change % | |
| New Business Premiums (APE)(1)(2) | |||
| Regular | 4.9 | 6.9 | (30.0)% |
| Single | 3.5 | 6.4 | (45.3)% |
| 8.4 | 13.3 | (36.5)% | |
| New Business Premiums (APE)(1)(2)(3) | |||
| EU and EEA | 2.9 | 5.0 | (42.0)% |
| Latin America | 2.3 | 2.0 | 15.0 % |
| Far East | 2.1 | 4.4 | (52.3)% |
| Rest of World | 1.1 | 1.9 | (42.1)% |
| 8.4 | 13.3 | (36.5)% | |
3. Compensation Credit
| Unaudited Four months ended 31 October | |||
| 2008 £m | 2007 £m | Change % | |
| Actual Exchange Rate Basis (CC)(4) | 4.6 | 6.1 | (24.9)% |
| Constant Currency Basis (CC)(4)(5) | 4.6 | 6.8 | (32.4)% |
4. Present Value of New Business Premiums
| Unaudited Four months ended 31 October | |||
| 2008 £m | 2007 £m | Change % | |
| Actual Exchange Rate Basis (PVNBP)(6) | 63.6 | 93.7 | (32.1)% |
| Constant Currency Basis (PVNBP)(6)(7) | 63.6 | 105.0 | (39.4)% |
HANSARD GLOBAL PLC
ASSETS UNDER ADMINISTRATION AS AT 31 OCTOBER 2008
| Unaudited As at |
| Audited As at | ||
|
| 31 October 2008 | 31 October 2007 | Change | 30 June 2008 |
|
| £m | £m | % | £m |
| Assets under Administration (8) | 1,000 | 1,223 | (18.3)% | 1,137 |
Notes
| U.S Dollar | Euro | |
| As at 31 October 2008 | £1 = $1.61 | £1 = €1.26 |
| As at 30 June 2008 | £1 = $2.00 | £1 = €1.26 |
| As at 31 October 2007 | £1 = $2.05 | £1 = €1.43 |
| Average for year to 30 June 2008 | £1 = $2.01 | £1 = €1.39 |
| Average for four months to 31 October 2008 | £1 = $1.85 | £1 = €1.26 |
| Average for four months to 31 October 2007 | £1 = $2.02 | £1 = €1.47 |
Notes to editors:
Hansard Global plc is the holding company of the Hansard Group of companies. The Company was listed on the London Stock Exchange on 18 December 2006. The Group is a specialist long-term savings provider, based in the Isle of Man.
The Group offers a range of flexible and tax-efficient investment products within a life assurance policy wrapper, designed to appeal to affluent, international investors.
The Group utilises a low-cost distribution model by selling policies exclusively through a network of financial services intermediaries, independent financial advisers and the retail operations of certain financial institutions (collectively "Intermediaries"), who provide access to their clients in more than 170 countries. The Group's distribution model is supported by Hansard OnLine, an award-winning, multi-language internet platform, and is scaleable.
The principal geographic markets in which the Group currently services Intermediaries and policyholders are the Far East, the Middle East, and Latin America in the case of Hansard International Limited, and Western Europe in the case of Hansard Europe Limited, the Group's two life assurance companies.
The Group's objective is to grow its business by attracting new business and positioning itself to adapt rapidly to market trends and conditions. The scaleability and flexibility of the Group's operations allow it to enter or develop new geographic markets and exploit growth opportunities within existing markets without the need for significant further investment.
Forward-looking statements:
This announcement may contain certain forward-looking statements with respect to certain of Hansard Global plc's plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward-looking statements involve risk and uncertainties because they relate to future events and circumstances which are beyond Hansard Global plc's control. As a result, Hansard Global plc's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in Hansard Global plc's forward-looking statements. Hansard Global plc does not undertake to update forward-looking statements contained in this announcement or any other forward-looking statement it may make. No statement in this announcement is intended to be a profit forecast or be relied upon as a guide for future performance.