Hansard Regulatory News (HSD)

6 May 2014

Hansard Global plc

Interim Management Statement

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its Interim Management Statement for the period from 1 July 2013 to date. All figures refer to the nine months ended 31 March 2014 ("Q3 2014"), except where indicated.

Summary

· A successful launch of a range of new product features and a refreshed branding in the last week of March 2014;

· New business of Hansard International Limited of £72.1m PVNBP in the period is 44.8% below Q3 2013, as anticipated;

· We have recently identified weaknesses in the Group's procedures in relation to the issue of Chargeable Events certificates required by HMRC. We are at an early stage in quantifying the impact of this issue but we currently estimate the Group's exposure, including professional costs, to be approximately £5m;

· New business margins on the PVNBP basis are approximately 5.5% (H1 2014: 7.5%) as a result of reduced sales volume;

· Following recent settlements, writs totalling approximately £3.5m remain outstanding against Hansard Europe (Q3 2014: £11.7m);

· An increased interim dividend of 3.40p per share was paid to shareholders on 3 April 2014.

Gordon Marr, Group Chief Executive Officer, commented:

"We believe there are a number of significant growth opportunities available to the Group and we remain confident that the Group is well positioned in growth markets and appropriately capitalised to take advantage of those distribution opportunities. Notwithstanding potential exposures arising from the issues in relation to Chargeable Events certificates, the Group's strong capital position will allow it to pay dividends in line with the guidance previously provided.

While we expect Q4 2014 new business to be significantly below the strong comparative of £40m PVNBP in Q4 2013, we anticipate that sales will start to improve from June 2014 onwards following the launch of a range of new product features and a refreshed branding in the last week of March 2014."

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

Hansard Global plc

INTERIM MANAGEMENT STATEMENT

OVERVIEW

The Group has traded profitably during the period, generated strong positive cash flows and paid an increased interim dividend. Additionally we successfully launched a range of new product features and a refreshed branding in the last week of March 2014. We believe that actions planned will diversify new business flows and increase the scale of our business.

As a result of the transfer of Hansard Europe's administration to the Isle of Man we have recently identified weaknesses in the Group's procedures in relation to the issue of Chargeable Events certificates required by HMRC. We are at an early stage in quantifying the impact of this issue but we currently estimate the Group's exposure, including professional costs, to be approximately £5m.

As anticipated, new business volumes in the nine months to Q3 2014 are approximately 45% below the level of new business for the comparative period in the prior financial year. This is largely as a result of the suspension of new business flows from Japan, as previously announced.

Following the closure of Hansard Europe Limited to new business with effect from 30 June 2013, the Group continues to focus reporting of new business performance within this document on that of Hansard International Limited alone. Reporting of Assets under Administration incorporates cash flows relating to insurance policies issued by both Hansard International and Hansard Europe.

STRUCTURED FOR GROWTH - IMPLEMENTATION OF STRATEGIC PLANS

In March 2014 the Group announced a refreshed business strategy designed to add significant scale to the business, on a more diversified basis, through organic growth at acceptable levels of risk and profitability.

The strategy, encompassing a renewed focus on the breadth of distribution opportunities, improvements to policyholder outcomes, refreshed branding, and enhanced customer service - all supported by the functionality of the Group's Hansard OnLine platform - is now beginning to be implemented.

In the last week of March 2014 we successfully launched a range of new products in target markets, enhanced certain product features, and introduced additional unit funds to extend the range of investment opportunities for policyholders. Additionally we have introduced enhanced functionality to OnLine Client Accountsand refreshed Corporate branding.

FINANCIAL PERFORMANCE AND POSITION - NINE MONTHS TO Q3 2014

· International Financial Reporting Standards ("IFRS")

The Group has traded profitably during the period and generated strong positive cash flows. Before any adjustment for the Chargeable Events certificate issues reported above, IFRS Profit after tax for Q3 2014 is largely in line with the results of the first half of this financial year. The Group continues to invest in Hansard OnLine, distribution and other infrastructure to support new business activities.

· European Embedded Value ("EEV")

Reductions in sales volumes in the quarter have had a negative impact on the value of new business and margins. Dividends paid and the effect of the strengthening of sterling have contributed to a marginal reduction in EEV at 31 March 2014, when compared with 31 December 2013.

· Capitalisation and Solvency

The Group continues to be strongly capitalised enabling it to satisfy operational, regulatory, policyholder and intermediary expectations. At 31 March 2014 the aggregate minimum regulatory margins are covered approximately 12 times by the Group's capital resources.

The Group's solvency position is well insulated against the challenging capital market conditions. At the date of this report, the Group's liquid assets are held with a wide range of deposit institutions and in highly-rated money market liquidity funds.

· Increased interim dividend

In line with guidance, an increased interim dividend of 3.40p per share (2013: 3.25p) was paid on 3 April 2014.

New Business Flows

New business flows for Hansard International for Q3 2014 are summarised as follows:

Throughout the period 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 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.

However, following the suspension of activities of a large distributor in Japan, with a consequent shortfall in new business issued in the period to Q3 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 in that quarter, on all metrics reported by the Group, are significantly below the levels of Q3 2013.

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

New business premiums of £72.1m in the period are 44.8% below Q3 2013. As a result, regular premium flows of £57.2m have reduced from £115.0m received to Q3 2013, and single premium flows of £14.9m have decreased by 4.5% over the same period.

· New business margins

Product and other incentives introduced during the period, coupled with reduced volumes have resulted in margins of 5.5% on the PVNBP basis (H1 2014: 7.5%).

HANSARD ONLINE

The Group continues to improve Hansard OnLine in order to implement new business initiatives, increase service levels for policyholders and intermediaries, and embed process efficiencies. In particular, over 90% of regular premium new business cases, and over 90% of investment dealing transactions, are currently processed OnLine.

Assets under Administration ("AUA")

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.

The level of AuA is underpinned by increased regular premium flows, reflecting the Group's strategic aims. As a result of the closure of Hansard Europe to new business the overall level of single premium flows received by the Group has reduced from the previous year.

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 the period to Q3 2014 has largely offset market gains on the underlying assets and AuA of £0.96bn as at 31 March 2014 is marginally below the position at 31 December 2013. 

HANSARD EUROPE LIMITED

Hansard Europe continues to carefully manage its litigation and other exposures in order to protect regulatory capital holdings and reduce uncertainty.Following recent settlements, writs totalling approximately £3.5m remain outstanding against the company (Q3 2013: £11.7m).

Results for the year ENDING 30 june 2014

New business results for the year are scheduled to be announced on 24 July 2014. Trading results for the year are expected to be announced on 25 September 2014.

Outlook

We remain confident that the Group is well positioned in growth markets and is appropriately capitalised to take advantage of the distribution opportunities that we have identified.

While we expect Q4 2014 new business to be significantly below the strong comparative of £40m PVNBP in Q4 2013, we anticipate that sales will start to improve from June 2014 onwards following the launch of a range of new product features and a refreshed branding in the last week of March 2014.

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.