Last checked at 12 May 2008 06:00
Hansard Global plc
Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, announces its second interim management statement in the financial year ending 30 June 2008. Data are presented for the 10 months to 2 May 2008 or as at 2 May 2008 where applicable and the comparative period or date in 2007 except where otherwise stated.
Summary
Total new business flows lower by 9.9%(1) on an actual currency basis under APE, reflecting maintained regular business flows and significantly reduced single premium business as a result of weakness in the financial markets PVNBP of new business flows for the period is £197.9m, down12.5% Sustained new business margins of approximately 8.0%(2) in difficult markets Assets under Administration rose 3.9% to £1.17 billion from 30 June 2007 to 2 May 2008, despite a reduction of 3.6% in the last four months of that period as a result of declines in global capital marketsNotes
APE basis
PVNBP basis
Leonard Polonsky, Chief Executive of Hansard Global, commented:
"The new business performance of the Group in the ten months to 2 May 2008 reflects continuing tough market conditions. Regular premium flows, particularly in the Far East and Latin America, for the period have built on the performance of the previous financial year. However, the downturn in major markets caused by the global credit crisis has accelerated since January, which has impacted single premium flows, largely derived from Europe. Hansard expects continuing uncertainty in the financial markets to have a similar ongoing effect in the near term.
"Assets under administration, however, rose 3.9% in the period from 30 June 2007 to 2 May 2008, reflecting high retention of policyholders and positive premium flows despite the continued decline in capital markets over the period since January.
"Forecast IFRS profits for the year to 30 June 2008 are likely to be ahead of market expectations. The Board's policy is to pay dividends based on 70% of IFRS profit. On this basis, the dividend for the current financial year will be fully covered by this year's operating cash flows.
"Hansard receives business from a strong and well-diversified portfolio of intermediaries around the world. This, together with the Group's robust balance sheet, means that Hansard Global has the strength to withstand the current economic and financial market conditions and is well positioned for growth in volume and profit as the macro environment improves."
For further information
Hansard Global 01624 688 000
Leonard Polonsky, Chief Executive
Gordon Marr, Director
Overview
Financial performance and position
IFRS profit for the period under review was as expected based on the half-year results, underpinned by high policyholder retention, the strength of the book of existing policies, and the relative strength of the Euro against Sterling. Based on this, forecast IFRS profits for the year to 30 June 2008 are likely to be ahead of market expectations.
The Group continues to be substantially capitalised to satisfy operational, regulatory and Policyholder expectations. The Group's liquid assets are held with a wide range of deposit institutions, in AAA-rated money market liquidity funds and in UK Government Stocks. The Group had no borrowings during the period or at the period end (30 June 2007: £Nil).
At 30 June 2007 liquid assets stood at £70.8m. During the period to date we have paid £22m in dividends. Despite this, liquid assets at 2 May 2008 stood at £59.9m, reflecting the strong cash generative nature of our business model.
In the period under review, new business margins were maintained at approximately 8.% on the Present Value of New Business Premiums basis. Despite continuing current adverse market conditions these margins are well above industry average. The EEV of the Group's operations continues to grow.
New Business Flows
The Group has achieved continued strong Regular Premium new business flows, particularly from the Far East and Latin America. The reduced flow of Single Premium business from Europe reflects continued investor uncertainty in the direction of capital markets and investment reticence in the target market.
New business sales volumes are expressed in terms of the Group's internal metric, Compensation Credit ("CC"), and two bases generally made available to the market, Annualised Premium Equivalent ("APE") and the Present Value of Future New Business Premiums (''PVNBP''). The Group believes that CC is an appropriate measure of new business as it indicates the relative value of each piece of new business to allow the Group to maintain margins and protect capital, and it is a measure aligned to the interests of the intermediaries that provide business to the Group.
New business premiums received in currencies other than sterling are translated at the rate of exchange ruling on the transaction date. Comparisons against the corresponding period are on an actual currency basis..
New business flows for the ten months to 2 May 2008 (comparative period: ten months to 2 May 2007) are as follows:
| Basis | 2008 | 2007 | % change |
| CC | £13.9m | £14.6m | (4.8%) |
| APE | £26.4m | £29.3m | (9.9%) |
| PVNBP | £197.9m | £226.3m | (12.5%) |
Approximately 50% of new business in APE terms in the period was received in US dollars; 26% in Euros and 6% in Norwegian Krone.
Assets under Administration ("AUA")
Significant falls in global markets since 31 December 2007 have caused the value of AUA to decline by 3.6% in the four months to 2 May 2008 (compared to double-digit falls in many markets), however the Group is still experiencing net inflows of AUA. The value as at 2 May 2008, at £1.17bn, has risen by 7.5% since the same point in 2007, with a net growth of 3.9% since 30 June 2007.
The value of AUA is linked directly to Policyholder investment choices, new business flows and prevailing market conditions. Despite the uncertainty in capital markets over the period the value of AUA has continued to grow. This reflects net positive cash flows and the ability of Policyholders to rotate assets held within policy contracts, which contrasts favourably with the levels of withdrawals experienced by a number of retail funds in the last six months.
20% of the Group's AUA at 2 May 2008 was held in funds offering downside protection in volatile capital markets (2 May 2007: 16%). This reflects the ability of the Policyholder to reposition assets within portfolios to suit their changing requirements.
At 2 May 2008 approximately 38% of the Group's financial investments were held in dollar-denominated assets; 33% in euro-denominated, and 18% in sterling assets.
Technological Developments
In accordance with the Group's intentions to continually upgrade its technology platforms, advances in the modelling of cash-flows are being implemented before the end of this financial year. This is expected to result in the identification and release of value within the EEV operating cashflows, particularly in relation to partial withdrawals under policy contracts. Management estimates that this would increase EEV operating profit for this year, subject to review and testing by external advisors before implementation.
Account Executive recruitment
The Group's strategy of recruiting Account Executives to develop relationships with Intermediaries is an important step in increasing new business levels. Three experienced Account Executives have been recruited since 31 December 2007. We intend to recruit a further two Executives within the next three months.
Sharesave Scheme
At the Company's Annual General Meeting on 19 November 2007, the establishment of the Hansard Sharesave scheme and the rules of the scheme were approved. An initial allocation of 500,000 shares has taken place to accommodate subscriptions under the scheme and such shares were listed on the London Stock Exchange on 25 April 2008.
As a result of the listing of the shares under the scheme, the issued capital of the Company is 137,781,202 shares of 50p each at the date of this Interim Management Statement.
Outlook
In the near term, the Hansard Board expects continuing uncertainty in the financial markets to impact single premium business, notably in Europe. Therefore, in spite of the sustained demand for regular premium business, management anticipates that total new business on an APE basis for the year to 30 June 2008 will be approximately 10-15% less than that achieved in the prior year. New business premiums on a PVNBP basis are expected to be some 15%-20% lower than the prior year. The timing of any significant single premium flows prior to the year end may give rise to distortions within forecasts.
The effect of expense assumptions at current levels of new business and a relaxation of margin in relation to recently introduced European Single premium new business is expected to result in new business margins being maintained at recently experienced levels. Management expects that the effect of currently experienced lower new business volumes on EEV operating profit for the current year will be offset by the impact of the technological developments referred to above.
Forecast IFRS profits for the year to 30 June 2008 are likely to be ahead of market expectations. The Board's policy is to pay dividends based on 70% of IFRS profit. On this basis, the dividend for the current financial year will be fully covered by this year's operating cash flows.
Hansard receives business from a strong and well-diversified portfolio of intermediaries around the world. This, together with the Group's robust balance sheet, means that Hansard Global has the strength to withstand the current economic and financial market conditions and is well positioned for growth in volume and profit as the macro environment improves.
The Board remains confident that the longer-term structural growth in the Group's target marketplace, together with its margin-focused business model, will continue to see Hansard deliver long-term value to shareholders.
Preliminary Results for the year ending 30 June 2008
Preliminary Results for the year ending 30 June 2008 (presented under IFRS) will be announced on 25 September 2008.
New business results for the year to 30 June 2008 will be reported on 28 July 2008.
HANSARD GLOBAL PLC
NEW BUSINESS RESULTS FOR THE PERIOD ENDED 2 MAY 2008
1. APE on an Actual Exchange Rate basis
| Unaudited Ten months ended 2 May | |||
| 2008 £m | 2007 £m | Change % | |
| New Business Premiums (APE)(1) | |||
| Single | 11.2 | 13.9 | (19.4)% |
| Regular | 15.2 | 15.4 | (1.3)% |
| 26.4 | 29.3 | (9.9)% | |
| New Business Premiums (APE)(1)(3) | |||
| Far East | 9.5 | 8.4 | 13.1 % |
| EU and EEA | 9.0 | 14.0 | (35.7)% |
| Latin America | 4.3 | 4.1 | 4.9 % |
| Rest of World | 2.6 | 2.8 | (7.1)% |
| 26.4 | 29.3 | (9.9)% | |
2. APE on a Constant Currency Basis
| Unaudited Ten months ended 2 May | |||
| 2008 £m | 2007 £m | Change % | |
| New Business Premiums (APE)(1)(2) | |||
| Single | 11.2 | 14.7 | (23.8)% |
| Regular | 15.2 | 15.1 | 0.7 % |
| 26.4 | 29.8 | (11.4)% | |
| New Business Premiums (APE)(1)(2)(3) | |||
| Far East | 9.5 | 8.2 | 15.8 % |
| EU and EEA | 9.0 | 14.9 | (39.6)% |
| Latin America | 4.3 | 4.0 | 7.5 % |
| Rest of World | 2.6 | 2.7 | (3.7)% |
| 26.4 | 29.8 | (11.4)% | |
3. Present Value of New Business Premiums
| Unaudited Ten months ended 2 May | |||
| 2008 £m | 2007 £m | Change % | |
| Actual Exchange Rate Basis (PVNBP)(4)(5) | 197.9 | 226.3 | (12.5%) |
| Constant Currency Basis (PVNBP)(4) | 197.9 | 231.8 | (14.6%) |
HANSARD GLOBAL PLC
4. ASSETS UNDER ADMINISTRATION AS AT 2 MAY 2008
| Unaudited As at | Unaudited As at | % Change | Audited As at | |
| 2 May 2008 £m | 2 May 2007 £m | 2 May 2008 vs 2007 | 30 June 2007 £m | |
| Assets under Administration (5) | 1,174 | 1,092 | 7.5% | 1,130 |
New business from long-term savings is calculated on an APE basis in table 1 above in accordance with the life assurance industry convention by adding new regular premiums and one tenth of single premiums. Premiums arising in foreign currencies are translated to sterling at the rates of exchange ruling at the transaction date.
APE in the period ended 2 May 2007 is presented in table 2 above on a constant currency basis. Premiums arising in foreign currencies in the period are translated to sterling at the average rates of exchange applicable to the period ended 2 May 2008.
The geographical split of new business premiums is based on the country of residence of the policyholder.
The present value of new business premiums (PVNBP) in table 3 above is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine new business contribution. Premiums arising in foreign currencies are translated to sterling at the rates of exchange ruling at the transaction date.
PVNBP in the period ended 2 May 2007 is also presented in table 3 above on a constant currency basis. Premiums arising in foreign currencies in the period are translated to sterling at the average rates of exchange applicable to the period ended 2 May 2008.
Assets under Administration are valued at market values at the relevant date, using closing exchange rates against sterling.
The principal exchange rates applied are as follows:
| U.S Dollar | Euro | |
| 2 May 2008 | £1 = $1.97 | £1 = €1.28 |
| 30 June 2007 | £1 = $2.01 | £1 = €1.48 |
| 2 May 2007 | £1 = $1.99 | £1 = €1.47 |
| Average to 2 May 2008 | £1 = $2.01 | £1 = €1.39 |
Notes to editors:
Hansard Global plc is the holding company of the Hansard Group of companies. The Company was listed on the London Stock Exchange on 18 December 2006. The Group is a specialist long-term savings provider, based in the Isle of Man.
The Group offers a range of flexible and tax-efficient investment products within a life assurance policy wrapper, designed to appeal to affluent, international investors.
The Group utilises a low-cost distribution model by selling policies exclusively through a network of financial services intermediaries, independent financial advisers and the retail operations of certain financial institutions (collectively "Intermediaries"), who provide access to their clients in more than 170 countries. The Group's distribution model is supported by an award-winning, multi-language internet platform, Hansard Online, and is scaleable.
The principal geographic markets in which the Group currently services Intermediaries and policyholders 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.
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.