Last checked at 28 Feb 2008 07:01
Hansard Global plc28 February 2008 Hansard Global plc Results for the half-year ended 31 December 2007 Financial highlights • Statutory profit after tax up 18.9% to £12.6m (31 December 2006: £10.6m) • Statutory earnings per share up 19.5% to 9.2 pence (2006: 7.7 pence) • Interim dividend per share up 25% to 5.0 pence (US$ equivalent: 9.9c) (2006: 4.0 pence) • Assets under Administration up 18.4% to £1.22bn (31 December 2006: £1.03bn) European Embedded Value (EEV) highlights • EEV operating profit up 46.6% to £17.3m (2006: £11.8m) • New business contribution up 1.9% to £10.5m (2006: £10.3m) • EEV up 19.8% to £231.5m (2006: £193.2m) Operating highlights •Sustained new business despite financial market volatility •Stable new business margins of 8% Leonard Polonsky, Chief Executive of Hansard Global, commented: "Performance in the six months to 31 December 2007 underlined the robustness ofour business model. Against the backdrop of volatile financial markets, weincreased pre-tax statutory profits by 20% to £12.7m, we generated £24.2m inoperating cash flow and we have increased our interim dividend by 25% to 5p pershare. We have retained our focus on profitability and positive cash flow generation.Whilst new business APE was broadly flat, due principally to the impact ofchallenging financial markets, we maintained our new business margins at 8%. Theincrease in our EEV operating profit, up 46.6% to £17.3m and the increase of18.4% in assets under administration is testimony to the efficiency of our lowcost operating model and the high retention of policyholders, which helps tomaintain the high proportion of income that is derived from in-force policies. In the near term, we expect continuing uncertainty in the financial markets toimpact single premium business, notably in Europe. Therefore, in spite of thegrowth in our regular premium business, we anticipate that new business on anAPE basis for the year to 30 June 2008 will be broadly in line with performancein the prior year. However, given our emphasis on profitability, we would expectour new business margin to remain consistently high at around 8%. The Board remains confident that the longer term structural growth in our targetmarketplace, together with our margin-focused business model, will continue todeliver value to our shareholders." For further information Hansard Global 01624 688000 Leonard Polonsky, Chief ExecutiveGordon Marr, Director Bell Pottinger 020 7861 3232 Ben WoodfordDaniel de Belder Chairman's Statement I am pleased to report that the strong performance achieved over the last fewyears has continued in the first half of the financial year ending on 30 June2008. It has been a challenging period, which has seen many participants in thefinancial services sector suffer from the global credit crisis. However theHansard business model has been robust in withstanding turbulent marketconditions and we have registered a resilient performance across the business. Iwould like to thank all our employees for their dedication throughout thisperiod. FINANCIAL PERFORMANCE FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 The Group has implemented International Financial Reporting Standards ("IFRS"),as adopted by the European Union, in respect of the year ending 30 June 2008.Prior to this, the consolidated financial statements of the Group were preparedin accordance with UK Generally Accepted Accounting Practice ("UK GAAP"). Thereare no differences between profits and retained earnings as at 31 December 2007calculated on the basis of IFRS and those calculated on the basis of UK GAAP. Additionally certain information relating to embedded value is presented, usingthe European Embedded Value ("EEV") methodology. The Board believes that the EEVinformation, read in conjunction with the other financial information producedby the Group, provides additional insight into the financial performance of theGroup, year on year. The Group has delivered strong performance in all the measures discussed withinthis report. The profit after tax for the period was £12.6 million, an increase of 18.9 %over the profit of £10.6m earned in the corresponding period of the previousfinancial year. This is especially pleasing, given increased investments ininfrastructure, contract servicing and ancillary activities in the period.Earnings per share are 9.2 pence, an increase of 19.5% over the correspondingperiod Throughout the period under review the Group has written new business onprofitable terms and has maintained new business margins that meet the Group'sreturn requirements. These factors have contributed to significant growth in theGroup's EEV. The after-tax EEV operating profit of £17.3 m represents anincrease of 46.6% over the EEV operating profit of £11.8m in the correspondingperiod. The EEV of the Group, following the payment of dividends totalling£15.1m in November 2007, has risen to £231.5m, an increase of 6.2% from thevalue at 30 June 2007. NEW BUSINESS The Group has achieved solid new business flows, benefitting from thegeographical spread of the intermediaries with whom we deal, and the diversityof their client base. Strong growth in regular premium flows has been achieved,particularly in the Far East and Latin America, while turbulent marketconditions over the last quarter, particularly in Europe and Scandinavia havehad the impact of reducing the flow of single premium cases. Recruitment andother activity continues to provide new distribution capability for the Group innew markets, strengthen existing relationships and expand the range ofinvestment opportunities for Policyholders. New business flows using the Group's internal metric, Compensation Credit("CC"), totalled £9.0m for the six months to 31 December 2007 compared with£8.2m (on an actual currency basis) in the corresponding period of the lastfinancial year, an increase of 9.8%. New business premiums on an Annualised Premium Equivalent ("APE") basis insterling terms during the six months to 31 December 2007 totalled £17.1m. Thisrepresents a decrease of 0.6% over the £17.2m APE in the corresponding period inthe previous financial year, calculated on a constant currency basis. Stronggrowth of 11.9% in regular premium flows has been achieved, particularly in theFar East and Latin America. New business margins were 8.0% on the Present Value of Future New BusinessPremiums ("PVNBP") basis, consistent with the corresponding period and withlevels maintained historically. These margins are well above industry average,principally due to the Group's continued focus on value and on the maintenanceof the margin. These factors have contributed to significant growth in theGroup's EEV. FINANCIAL INVESTMENTS The value of financial investments to cover liabilities under investmentcontracts as at 31 December 2007, at £1.22 billion, has risen by 18.4% since 31December 2006. Despite the declines in capital markets over the six months to 31December 2007, the value has continued to grow. This reflects positive cashflows and the flexible nature of our products which allows Policyholders theability to determine the investment mix held within policy contracts, which hasreduced the level of withdrawals relative to those experienced by a number ofretail funds in the last few months. The diverse nature of these investments,our strong growth in emerging markets and lack of exposure to the UK and USmarkets have helped to protect the Group from the current market uncertainties. The Group's liquid assets are held with a wide range of deposit institutions, inAAA-rated money market liquidity funds and in UK government stocks. The Grouphad no borrowings during the period or at the period end (31 December 2006:£Nil). SIGNIFICANT SHAREHOLDINGS The shareholder base of the Company has been broadened during the half-year as aresult of donations by the Polonsky Foundation and a placing of shares inNovember 2007 held by the Foundation. As a result the Company now has a freefloat of 47%. At the date of this report I have the largest beneficialshareholding in the Company, being 42% of the issued share capital and thePolonsky Foundation has 5.4%. Other significant shareholdings notified to us atthe date of this report are F&C Asset Management with 5.3% and Lloyds TSB GroupPlc with 5.0%. Readers may be aware that Polar Cap Limited was the holding company of theHansard Group at the time of the listing. As a result of the reorganisationreferred to in our prospectus, Polar Cap has distributed its shareholding to itsmembers and is now in voluntary liquidation. The reorganisation did not affectthe number of the Company's shares in issue. FTSE INDEX CONSTITUENT The Company is pleased to have been included in the UK Series of the FTSEALL-SHARE index with effect from 24 December 2007. The company is also aconstituent of the following indices: FTSE All-Share ex Investment Trusts; FTSESmall Cap; and FTSE Small Cap Ex Investment Trusts. As a result of theacceptance of the Company's shares as a constituent of the FTSE All-Share index,we believe that a number of index-tracker funds have acquired holdings in thecompany. DIVIDENDS Statutory profit performance in the first six months of this financial year isencouraging and in line with management's expectations. The Board has thereforeresolved to pay an interim dividend of 5 p per share (2007: 4 p). This will bepaid on 3 April 2008 to those shareholders on the Register at the close ofbusiness on 7 March 2008. Shareholders will be aware that on 23 November 2007 the Company paid a finaldividend of 6p per share and a special dividend of 5p per share, togethertotalling £15.1m. Including the proposed dividend referred to above, thisresults in amounts totalling 16p per share or £22m being paid to investorsduring this financial year. This has been paid out of the Group's operating cashflows. We have made arrangements to allow investors to receive the proposed dividend inUS Dollars, if they require. OUTLOOK The Group's objective is to grow by attracting new business and positioningitself to adapt rapidly to market trends and conditions. The scaleability andflexibility of the Group's operations allow us to enter or develop newgeographic markets and exploit growth opportunities within our existing markets,without the need for significant further investment. The long-term trends in our chosen markets will allow intermediaries with whomwe work to capitalise on these opportunities. In the near term, we expect continuing uncertainty in the financial markets toimpact single premium business, notably in Europe. Therefore, in spite of thegrowth in our regular premium business, we anticipate that new business on anAPE basis for the year to 30 June 2008 will be broadly in line with performancein the prior year. However, given our emphasis on profitability, we would expectour new business margin to remain consistently high at around 8%. The Board remains confident that the longer term structural growth in our targetmarketplace, together with our margin-focused business model, will continue tosee Hansard deliver value to our shareholders. Dr L S Polonsky Chairman27 February 2008 Interim Management Report Business Review Business The Group is a specialist long-term savings provider based in the Isle of Man(since 1986) and in the Republic of Ireland (since 1995). It offers a range offlexible, tax-efficient investment products allowing accumulation andadministration of financial investments within a life assurance policy wrapper.This appeals to affluent international investors. The Group has designed its products, distribution methods and cost base with aview to reducing operational and financial risks. The Group's products aredistributed utilising its low-cost distribution model, exclusively throughfinancial services intermediaries, independent financial advisers or the retailoperations of financial institutions (together, ''Intermediaries''), supportedby its award winning, multi-language internet platform, Hansard OnLine. TheGroup has established a network of Account Executives providing local languageand other support services to Intermediaries in a number of areas around theworld. The Company's principal office is in Douglas, Isle of Man, and its regulatedlife assurance subsidiaries operate out of the Isle of Man, and Dublin, Republicof Ireland. Its location on the Isle of Man allows the Group freedom to flourishwithin a highly regarded regulatory framework, with a zero rate of corporationtax, and with access to an educated workforce and a robust telecommunicationsinfrastructure. The Policyholder Protection legislation enacted by the Isle ofMan Government provides security of up to 90% of the liability to policyholders.Our operations in Dublin allow the Group's products access to the European Unionmarketplace under the "freedom of services" provisions of the EU LifeDirectives. Strategy The Group continues to operate its existing business model, which is designed toreduce operational and financial risk, and to grow its business through: • a target of doubling the number of Account Executives by December 2012; • developing and enhancing profitable relationships with Intermediaries, institutions and other wealth management groups; and • increasing the functionality of Hansard OnLine to continue to meet the needs of Intermediaries and Policyholders. Key Performance Indicators The Group has established a range of financial and non-financial Key PerformanceIndicators, that are designed to ensure that performance against targets ismonitored and variances explained. • Cash Bank balances and significant cash movements are reported weekly to seniormanagement. The strategy of the Group remains the financing of capital andbusiness development requirements through cash flows generated from tradingactivities. A more detailed analysis of the Group's cash and cash equivalentposition is set out later in this report. • Expenses The Group maintains a rigorous focus on expense levels; the objective being tolimit increases in Administrative expenses to inflation, whilst meeting therequirements of our sales strategy. • New business The Group has developed a metric for measuring new business production that isdesigned to indicate the relative value of each piece of new business to allowthe Group to maintain margins and protect capital. This measure is calledCompensation Credit ("CC"). The Directors consider CC to be a more meaningfulmeasure of new business value than Annualised Premium Equivalent ("APE"), whichhas limited correlation with the profitability of new business. The Group'sobjective is to grow new business at a rate of 10%-15% per annum over the mediumterm on this measure. NEW BUSINESS FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 The Group has achieved solid new business flows, benefitting from thegeographical spread of the intermediaries with whom we deal, and the diversityof their client base. Strong growth in regular premium flows has been achieved,particularly in the Far East and Latin America, while turbulent capital marketconditions over the second quarter and increased competitor activity in Europehave had the impact of reducing the flow of single premium cases relative to thefirst quarter of this financial year. We continue to develop institutionalrelationships with a view to building our distribution and expanding the rangeof investment opportunities for Policyholders. The strengthening of sterling against the US Dollar in the first 4 months of theperiod has had the effect of depressing a proportion of our new businessfigures, as approximately 50% of new business in the period was received in USDollars. Recruitment of Account Executives Three new Account Executives took up positions in Russia, Latin America andCentral America with effect from 4 January 2008 to provide distributioncapability for the Group in new markets, and to strengthen existingrelationships. This recruitment is in accordance with the Group's strategy ofdoubling the number of Account Executives by December 2012. New Business Volumes New business sales volumes are expressed in terms of the Group's internalmetric, CC and two bases generally made available to the market, APE and thePresent Value of Future New Business Premiums (''PVNBP''). New business premiums received in currencies other than sterling are translatedat the rate of exchange ruling on the transaction date. Comparisons against thecorresponding period are on an actual currency basis. • New Business CC New business flows totalled £9.0m CC for the half-year, compared with £8.2m inthe corresponding period of the previous financial year, an increase of 9.8% onan actual currency basis. • New Business APE New business premiums during the half-year were £17.1m APE (2006: £17.3m) on anactual currency basis. The calculation of APE is in accordance with the lifeassurance industry convention of adding new annualised regular premiums and onetenth of single premiums. A significant proportion of the Group's new business premiums is denominated incurrencies other than sterling. Approximately 50% of new business on an APEbasis in the period was received in US dollars (2006: 50%), with new businesspremium flows in Euros and Norwegian Krone providing 25% (2006: 23%) and 9%(2006: 15%) respectively. Maintaining consistent levels of new business on theAPE basis despite the adverse currency and other market movements throughout theperiod shows the benefits of having a well-diversified distributor network. The table below provides a summarised breakdown of New Business APE, analysedbetween single and regular premium cases, and also by residence of policyholder: Half year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £mBy type of productAnnualised regular premiums 9.4 8.7 18.8Single premiums 7.7 8.6 16.7 17.1 17.3 35.5 By geographical areaEU and EEA 6.0 6.9 13.2Far East 6.0 4.6 10.3Latin America 2.6 2.3 5.0Rest of world 2.5 3.5 7.0 17.1 17.3 35.5 •New business PVNBP New Business premiums on a PVNBP basis were £130.5m during the period (comparedwith £129.5m for the corresponding period), an increase of 0.8%. The calculationof PVNBP is equal to total single premium sales in the period plus thediscounted value of premiums expected to be received over the term of newregular premium policies, and is calculated at the point of sale. The New Business Margin, being the contribution from new business expressed as apercentage of PVNBP, in sterling terms, has been maintained at 8.0% for theperiod, identical to the margin earned in the corresponding period. This marginis well above industry average, principally due to the Group's continued focuson value and on the maintenance of the margin. NEW BUSINESS DEVELOPMENTS Product developments are underway to maintain growth of new business. Inaddition to the continuous success in the areas referred to above, theincremental production from the additional presence on the ground and otherdevelopments in Europe, should, despite the difficult market conditions, allowus to deliver new business production for this financial year, broadly in linewith new business levels delivered in the last financial year. FINANCIAL INVESTMENTS The value of financial investments is linked directly to Policyholder investmentchoices, new business flows and prevailing market conditions. The value of Assets under Administration to support Policyholder liabilities("AUA") as at 31 December 2007, at £1.22bn, has risen by 7.8% since 30 June2007. Despite the uncertainty in capital markets over the period the value ofAUA has continued to grow. This reflects positive cash flows and the ability ofPolicyholders to rotate assets held within policy contracts, which has reducedthe level of withdrawals relative to those experienced by a number of retailfunds in the last few months. Since 31 December 2006, the value of AUA has grownby 18.4%. The ability to manage financial investments is illustrated by the fact that 19%of the Group's AUA at the balance sheet date (2006: 16%) were held in fundsoffering downside protection in volatile capital markets. The increase inholdings of assets of this nature further reflects Policyholder investmentchoices and the ability of the Policyholder to reposition assets withinportfolios. As an international business, we hold a diversified currency portfolio ofinvestments. At the balance sheet date approximately 39% of the Group'sfinancial investments were held in dollar-denominated assets; 31% ineuro-denominated, and 19% in sterling assets. The Group's liquid assets are held with a wide range of deposit institutions, inAAA-rated money market liquidity funds and in UK government stocks. The Grouphad no borrowings during the period or at the period end (31 December 2006:£Nil). FINANCIAL PERFORMANCE FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 Introduction The Group has implemented International Financial Reporting Standards ("IFRS"),as adopted by the European Union, in respect of the year ending 30 June 2008. In addition to IFRS reporting, the Group prepares embedded value information inaccordance with the European Embedded Value (''EEV'') methodology. In theDirectors' opinion, the EEV information, read in conjunction with the otherfinancial information produced by the Group, provides a helpful insight into thefinancial performance of the Group year on year. Commentary on the Group'sresults for the period under review, reported on the EEV basis, is set out laterin this section. The Group has delivered strong performance in all the measures discussed below.Throughout the period under review the Group has written new business onprofitable terms and at new business margins that meet the Group's returnrequirements. 1. Results for the half-year ended 31 December 2007 These condensed consolidated financial statements for the half-year ended 31December 2007 have been prepared in accordance with the Disclosure andTransparency Rules of the Financial Services Authority and with IAS 34 'InterimFinancial Reporting' as adopted by the European Union. There are no differencesbetween profits and retained earnings as at 31 December 2007 calculated on thebasis of IFRS and those calculated on the basis of UK GAAP. The adoption of IFRShas however resulted in the reclassification of certain assets disclosed underUK GAAP as financial investments. A reconciliation of the balance sheet as at 30 June 2007 as presented in theGroup's UK GAAP consolidated financial statements to that prepared under IFRS isincluded in these half-yearly financial statements. The profit for the period before tax under IFRS is £12.7m, compared with theprofit for the corresponding period of the previous financial year of £10.6m.This represents an increase of 19.8%. Taxation for the period, attributable largely to the operations of HansardEurope Limited, is £0.1m (2006: £Nil). Profit after taxation for the period is£12.6m, compared with £10.6m, an increase of 18.9%. Earnings per share are 9.2p,compared with 7.7p in the corresponding period. 1.1 Income Fees and commissions for the period are £26.9m, compared with revenues for thecorresponding period of £24.2m. This represents an increase of 11.2%, causedprincipally by the impact of fees received from investment contracts that werebeing administered by the Group at the beginning of the period and the timing ofnew business flows in the current period. Changes in the relative levels of Sterling against the US Dollar and Euro haveresulted in significant holding gains on foreign currency balances held,compared with the results of comparative periods. All the costs of listing the Company in December 2006 were met by its thenholding company, Polar Cap Limited. The Company received some £1.47m from PolarCap for services rendered in connection with the listing, which is included inother operating income in the half-year ended 31 December 2006. No amounts werereceived from Polar Cap during the half-year ended 31 December 2007. 1.2 Expenses New business commissions, together with the directly attributable incrementalcosts incurred on the issue of a policy by the Group, are included withinOrigination costs in the consolidated income statement in the relevant periodand are deferred as an explicit deferred origination cost asset in theconsolidated balance sheet. All other costs are reflected within Administrationand other expenses. Investment management expenses and administration costs payable by the Group aremet from charges deducted from the relevant investment contracts administered. A summary of Administrative and other expenses is set out below: Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £mInvestment management and other fees 2.0 1.6 3.2New business related costs 2.0 1.7 3.4Administrative expenses 6.6 5.4 11.4 10.6 8.7 18.0 Investment management expenses and other fees payable by the Group are met fromcharges deducted from the contracts administered, and do not impact on profit.The increase over the corresponding period reflects continued growth in assetssubject to investment management arrangements. New business related costs include all costs of operation of Account Executives,Intermediary incentives and related expenditure. The increase over thecorresponding period reflects the expansion of new business support initiatives. The increase in administrative expenses for the period reflects continuedinvestment in infrastructure, contract servicing and ancillary activities,together with amounts totalling £0.5m for the additional professional fees,insurance and other expenses of operating in a listed company environment. 1.3 Taxation Profitable trading by Hansard Europe Limited has resulted in the utilisation oftax losses incurred in prior years. A provision of £0.1m for Corporation Tax hasbeen included in these financial statements, based on the tax rate of 12.5%levied in the Republic of Ireland on the taxable income for the period. 1.4 Cash Flows Operating cash flows in the period were strongly positive, allowing the Group tofund its growth in new business from its own resources and pay in November 2007the dividends referred to below. Cash and cash equivalent balances, excludingthose held to cover liabilities under investment contracts, at 31 December 2007stood at £56.0m. This represents a decrease of £14.8m compared to the balancesat 30 June 2007, reflecting in part the payment of the dividends and theinvestment by a subsidiary company of £10m in short-term UK Treasury Bonds tomitigate credit risk. Under IFRS reporting, financial investments held to cover contract liabilitiesare analysed separately on the Group's balance sheet by category. The result isthat cash and cash equivalents disclosed on the consolidated balance sheet nowinclude amounts previously reported under UK GAAP within financial investments.The following table analyses cash and cash equivalents in the consolidatedbalance sheet prepared under IFRS between those balances previously reportedunder financial investments and those under cash and cash equivalents. 31 December 31 December 30 June 2007 2006 2007 £m £m £mShareholder cash and cash equivalents 56.0 64.3 70.8Financial investments reclassified as cash and cash equivalents 88.6 55.7 70.1Cash and cash equivalents reflected in IFRS balance sheet 144.6 120.0 140.9 Cash and cash equivalents reflected in the consolidated IFRS balance sheet haveincreased as a result of Policyholder investment activity to reduce capitalmarket exposures offset by the payment of dividends of £15.1m by the Group andan investment of £10m in UK Treasury stock. The Group had no borrowings duringthe period or at the period end (2006: £Nil). 1.5 Dividends The Board has resolved to pay an interim dividend of 5 p per share (2007: 4 p).This will be paid on 3 April 2008 to those shareholders on the Register at theclose of business on 7 March 2008. Shareholders who elect, prior to the recorddate, to receive the proposed dividend in US Dollars, will be paid at anexchange rate published on 28 February 2008. Shareholders will be aware that on 23 November 2007 the Company paid a finaldividend of 6p per share and a special dividend of 5p per share, togethertotalling £15.1m. Including the proposed dividend referred to above, thisresults in amounts totalling 16p per share or £22m being paid to investorsduring this financial year, out of the Group's operating cash flows. 2. EEV Information The EEV is an estimate of the value of the shareholders' interest in the lifeand related businesses of the Group, represented by the total of the Net Worthof the Group and the value of future profits from business written by the Groupas at the relevant valuation date (in-force business). The EEV informationcovers the entire business of the Group, including its life assurance companiesand subsidiaries providing administration, distribution and other services. EEVexcludes the value of any future new business that the Group's life assurancecompanies may write after the valuation date, and it is calculated net ofcorporation tax. The methodology used to derive the EEV at 31 December 2007 and at 31 December2006 is consistent with the methodology used in the consolidated financialstatements in respect of the year ended 30 June 2007. 2.1 EEV Profit The EEV Profit after tax provides a measure of the Group's performance over theperiod. It is defined as the change in EEV over a period, adjusted for anyamounts such as dividends released from the Group. The EEV Operating Profit for the period is £17.3m, compared with £11.8m in theperiod ended 31 December 2006, an increase of 46.6%. This represents ahalf-yearly return of 7.9% (2006: 6.6%) on opening embedded value generatedprincipally by profitable new business. The New Business Contribution ("NBC")for the period was £10.5m (2006: £10.3m), and the expected return on existingbusiness was £4.3m (2006: £3.2m). Readers may recall that improvements wereintroduced in the corresponding prior period to the modelling of single premiumcases with a premium above £1m. This led to a one-off negative adjustment of£3.9m that is reflected within the EEV Operating Profit for that period. The EEV Profit for the period is £28.6m, compared with £14.6m in the periodended 31 December 2006. This represents a half-yearly return of 13.1% (2006:8.2%) on opening embedded value of £218.0m. Movements in exchange rates havecontributed £6.8m to the EEV Profit (2006: £3.4m loss). After dividend payments of £15.1m in November 2007 (2006: £Nil), the totalincrease in EEV over the period was £13.5m (2006: £14.6m). 2.2 Analysis of Embedded Value The EEV as at 31 December 2007 was £231.5m, representing an increase of 6.2%over the value at 30 June 2007. Throughout the period, the Group has written newbusiness on profitable terms and at consistent New Business Margins. Thesefactors have contributed to the growth in the Group's EEV. Net worth is the market value of shareholders' funds adjusted to exclude certainaccounting items such as deferred origination costs and deferred income reserve.At the balance sheet date, cash and cash equivalents and short-term UK TreasuryBonds represent the net worth of the Group. The table below provides a summarised breakdown of the EEV at the reportingdates. 31 December 31 December 30 June 2007 2006 2007 £m £m £mNet worth 53.0 52.9 56.5Value of future profits 178.5 140.3 161.5European Embedded Value 231.5 193.2 218.0 The calculation of EEV is sensitive to interest rates, foreign exchange rates,asset values and a number of other factors. A summary of the effect of thesefactors is contained within the EEV information set out later in these condensedconsolidated half-yearly financial statements. 3. Net Asset Value The net asset value per share at 31 December 2007, on an IFRS basis, is 35.4p.Following the payment of interim, final and special dividends, this representsan increase of 2.3% from the net asset value at 31 December 2006. The net assetvalue per share is based upon the consolidated shareholders' funds at thebalance sheet date divided by the number of shares in issue at that date, being137,281,202 ordinary shares. EEV per share at 31 December 2007 is 169p. This represents an increase of 19.8%or 28p from 31 December 2006. 4. Capitalisation and Solvency The Group continues to be substantially capitalised to satisfy operational,regulatory and Policyholder expectations. At the balance sheet date the Group'scapital position in relation to the regulatory requirements of subsidiarycompanies is as set out below. 31 December 31 December 30 June 2007 2006 2007 £m £m £m Total capital available to meet regulatory capital requirements 68.7 68.4 72.0Aggregate minimum regulatory margin 4.4 4.0 4.1 The table reflects the fact that the regulatory capital of the life assurancesubsidiaries is calculated based on local regulation and financial statementspresented under GAAP applicable to that jurisdiction. OPERATIONAL AND FINANCIAL RISKS 1. Risk profile The factors affecting the Group's risk profile are kept under continual review.During the period the Group continued with the implementation and reportingarising from its Enterprise-wide Risk Management framework. 2. Risks relating to the Group There is in place an ongoing process for managing the significant risks faced bythe Group. The Board believes that the principal risks facing the Group arethose relating to the operation of the Group's business model and to theenvironment within which the Group operates. The principal risks facing theGroup are those identified in the Annual Report & Accounts for the year ended 30June 2007. The Group has designed its products, distribution methods and costbase with a view to reducing operational and financial risks. There have been no significant changes in the Group's risk profile during theperiod. The adverse economic, political and market factors existing at the dateof this report, however, could lead to a reduction in the Group's ability toissue new business in the short term. RELATED PARTY TRANSACTIONS There have been no significant changes to related parties or related partytransactions in the period. Related party transactions affecting the results ofprevious periods and an understanding of the Group's financial position atprevious balance sheet dates are as disclosed in the Annual Report & Accountsfor the year ended 30 June 2007 and in section 1.1 above. At the Company's Annual General Meeting on 19 November 2007, the establishmentof the Hansard Sharesave scheme and the rules of the scheme were approved. Thescheme was implemented with effect from 25 February 2008. FORWARD-LOOKING STATEMENTS Certain statements in this half-yearly report are forward-looking. Although theGroup believes that the expectations reflected in these forward-lookingstatements are reasonable, we can give no assurance that these expectations willprove to have been correct. Because these statements involve risk anduncertainties, actual results may differ materially from those expressed orimplied by these forward-looking statements. We undertake no obligation to update any forward-looking statements whether as aresult of new information, future events or otherwise. Half-yearly results for the period ended 31 December 2007 +----------------------------------------------------------------------------+|Consolidated Income Statement |+----------------------------------------------------------------------------+| |+---------------------------------+---+-----+---------------------+----------+| | | | Half-year ended |Year ended|+---------------------------------+---+-----+----------+----------+----------+| | | | 31| 31| 30 June|| | | | December| December| |+---------------------------------+---+-----+----------+----------+----------+| | | | 2007| 2006| 2007|+------------------------+--------+---+-----+----------+----------+----------+| | | |Notes| £m| £m| £m|+------------------------+--------+---+-----+----------+----------+----------+| | | | | | | |+------------------------+--------+---+-----+----------+----------+----------+| | | | | | | |+------------------------+--------+---+-----+----------+----------+----------+|Fees and commissions | | 4 | 26.9| 24.2| 49.2|+------------------------+--------+---+-----+----------+----------+----------+| | | | | | | |+------------------------+--------+---+-----+----------+----------+----------+|Investment income | | | | 78.8| 51.1| 130.8|+------------------------+--------+---+-----+----------+----------+----------+| | | | | | | |+------------------------+--------+---+-----+----------+----------+----------+|Other operating income | | | 5 | 0.3| 1.8| 2.2|+------------------------+--------+---+-----+----------+----------+----------+| | | | | | | |+------------------------+--------+---+-----+----------+----------+----------+| | | | | 106.0| 77.1| 182.2|+------------------------+--------+---+-----+----------+----------+----------+| | | | | | | |+------------------------+--------+---+-----+----------+----------+----------+|Investment contract benefits | 11 | (74.7)| (49.9)| (128.2)|+------------------------+--------+---+-----+----------+----------+----------+| | | | | | | |+------------------------+--------+---+-----+----------+----------+----------+|Origination costs | | | | (8.0)| (7.9)| (16.3)|+------------------------+--------+---+-----+----------+----------+----------+| | | | | | | |+------------------------+--------+---+-----+----------+----------+----------+|Administrative and other expenses | | (10.6)| (8.7)| (18.0)|+------------------------+--------+---+-----+----------+----------+----------+| | | | | (93.3)| (66.5)| (162.5)|+------------------------+--------+---+-----+----------+----------+----------+| | | | | |+-------------------------------------+-----+----------+----------+----------+|Profit on ordinary activities before | 5 | 12.7| 10.6| 19.7||taxation | | | | |+-------------------------------------+-----+----------+----------+----------+| | | | | |+-------------------------------------+-----+----------+----------+----------+|Taxation on profit on ordinary | 6 | (0.1)| -| -||activities | | | | |+-------------------------------------+-----+----------+----------+----------+| | | | | |+-------------------------------+-----+-----+----------+----------+----------+|Profit for the period after | | | 12.6| 10.6| 19.7||taxation | | | | | |+------------------------+------+-----+-----+----------+----------+----------+| | | | | | | |+------------------------+------+-+---+-----+----------+----------+----------++------------------------+------+-+---+-----+----------+----------+----------+ +---------------------------------------------------------------------------+|Earnings Per Share |+-----------------------+--+-------+-----+-----------------------+----------+| | | | | Half-year ended |Year ended|+-----------------------+--+-------+-----+-----------+-----------+----------+| | | | |31 December|31 December| 30 June|+-----------------------+--+-------+-----+-----------+-----------+----------+| | | | | 2007| 2006| 2007|+-----------------------+--+-------+-----+-----------+-----------+----------+| | | |Note | (pence)| (pence)| (pence)|+-----------------------+--+-------+-----+-----------+-----------+----------+| | | | | | | |+-----------------------+--+-------+-----+-----------+-----------+----------+|Basic | | | 7 | 9.2| 7.7| 14.4|+-----------------------+--+-------+-----+-----------+-----------+----------+| | | | | | | |+-----------------------+--+-------+-----+-----------+-----------+----------+|Diluted | | | 7 | 9.2| 7.7| 14.4|+-----------------------+--+-------+-----+-----------+-----------+----------+| | | | | | | |+-----------------------+--+-------+-----+-----------+-----------+----------+ +-----------------------------------------------------------------------------+|Consolidated Statement of Changes in Equity |+--------------------------------+---------------------+-----------+----------+| | | | |+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | Half-year ended |Year ended|+---------------------------+----+---+-----+-----------+-----------+----------+| | | | |31 December|31 December| 30 June|+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | 2007| 2006| 2007|+---------------------------+----+---+-----+-----------+-----------+----------+| | | |Notes| £m| £m| £m|+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | | | |+---------------------------+----+---+-----+-----------+-----------+----------+|Opening consolidated | | | 51.1| 36.9| 36.9||shareholders' funds | | | | | |+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | | | || | | | | | | |+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | | | || | | | | | | |+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | | | || | | | | | | |+---------------------------+----+---+-----+-----------+-----------+----------+|Profit for the financial period,| | | | | ||being total recognised income | | | | | ||for the period | | | 12.6| 10.6| 19.7|+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | | | || | | | | | | |+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | 63.7| 47.5| 56.6|| | | | | | | |+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | | | || | | | | | | |+---------------------------+----+---+-----+-----------+-----------+----------+|Less dividends paid | 8 | (15.1)| -| (5.5)|+---------------------------+----+---+-----+-----------+-----------+----------+| | | | | | | |+---------------------------+----+---+-----+-----------+-----------+----------+|Closing consolidated shareholders' | | 48.6| 47.5| 51.1||funds | | | | |+------------------------+-------+---+-----+-----------+-----------+----------+| | | | | | | |+------------------------+--+----+---+-----+-----------+-----------+----------++------------------------+--+----+---+-----+-----------+-----------+----------+ +----------------------------------------------------------------------------+|Consolidated Balance Sheet |+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+| | | | | 31| 31| 30 June|| | | | | December| December| |+------------------------+------+----+-------+----------+----------+---------+| | | | | 2007| 2006| 2007|+------------------------+------+----+-------+----------+----------+---------+| | | | Notes | £m| £m| £m|+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Assets | | | | | | |+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Deferred origination | | | | 98.9| 90.1| 94.6||costs | | | | | | |+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Property, plant and | | | 9 | 1.0| 0.6| 0.8||equipment | | | | | | |+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Financial investments | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Equity securities | | | | 100.8| 106.8| 73.8|+------------------------+------+----+-------+----------+----------+---------+|Investments in collective investment| | 970.7| 820.5| 947.2||schemes | | | | |+------------------------+------+----+-------+----------+----------+---------+|Fixed income securities | | | | 58.7| 43.0| 32.0|+------------------------+------+----+-------+----------+----------+---------+|Total financial | | | | 1,130.2| 970.3| 1,053.0||investments | | | | | | |+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Other receivables | | | | 25.7| 22.0| 20.9|+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Cash and cash | | | | 144.6| 120.0| 140.9||equivalents | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Total assets | | | | 1,400.4| 1,203.0| 1,310.2|+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Liabilities | | | | |+------------------------------------+-------+----------+----------+---------+| | | | | |+------------------------------------+-------+----------+----------+---------+|Financial liabilities under | 11 | 1,217.4| 1,034.4| 1,130.2||investment contracts | | | | |+------------------------------------+-------+----------+----------+---------+| | | | | |+------------------------------------+-------+----------+----------+---------+|Deferred income reserve | | 113.8| 105.7| 109.9|+------------------------------------+-------+----------+----------+---------+| | | | | |+------------------------+------+----+-------+----------+----------+---------+|Amounts due to | | | | | | ||investment contract | | | | | | ||holders | | | | 12.9| 8.7| 12.4|+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Other payables | | 7.7| 6.7| 6.6|+------------------------+------+----+-------+----------+----------+---------+|Total liabilities | | | | 1,351.8| 1,155.5| 1,259.1|+------------------------+------+----+-------+----------+----------+---------+|Net assets | | | | 48.6| 47.5| 51.1|+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Shareholders' equity | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Called up share capital | | | 12 | 68.6| 68.6| 68.6|+------------------------+------+----+-------+----------+----------+---------+|Other reserves | | | | (48.5)| (48.5)| (48.5)|+------------------------+------+----+-------+----------+----------+---------+|Retained earnings | | | | 28.5| 27.4| 31.0|+------------------------+------+----+-------+----------+----------+---------+| | | | | | | |+------------------------+------+----+-------+----------+----------+---------+|Total shareholders' | | | | 48.6| 47.5| 51.1||equity | | | | | | |+------------------------+------+----+-------+----------+----------+---------+ The notes to the financial statements form an integral part of these condensedconsolidated half-yearly financial statements. +-------------------------------------------------------------------------------+|Consolidated Cash Flow Statement |+-------------------------+-------+----------------------+----------------------+| | | | |+-------------------------+-------+--+-------+-----------+-----------+----------+| | | | | Half-year ended |Year ended|+-------------------------+-------+--+-------+-----------+-----------+----------+| | | | |31 December|31 December| 30 June|+-------------------------+-------+--+-------+-----------+-----------+----------+| | | | 2007| 2006| 2007|+-------------------------+-------+--+-------+-----------+-----------+----------+| | | | | £m| £m| £m|+-------------------------+-------+--+-------+-----------+-----------+----------+| | | | | | | |+-------------------------+-------+--+-------+-----------+-----------+----------+|Cash flow from operating | | | | | ||activities | | | | | |+---------------------------------+--+-------+-----------+-----------+----------+|Profit before tax for the period | | 12.7| 10.6| 19.7|+------------------------------------+-------+-----------+-----------+----------+|Adjustments for: | | | | |+------------------------------------+-------+-----------+-----------+----------+|Depreciation | | 0.2| 0.2| 0.4|+------------------------------------+-------+-----------+-----------+----------+|Foreign exchange (gains)/losses | | (1.4)| 0.3| 1.3|+------------------------------------+-------+-----------+-----------+----------+| | | | | |+------------------------------------+-------+-----------+-----------+----------+|Changes in operating assets and | | | | ||liabilities | | | | |+------------------------------------+-------+-----------+-----------+----------+|(Increase)/decrease in debtors | | (4.6)| 5.4| 5.4|+------------------------------------+-------+-----------+-----------+----------+|Increase in deferred origination | | (4.3)| (3.5)| (8.0)||costs | | | | |+------------------------------------+-------+-----------+-----------+----------+|Increase in deferred income reserve | | 3.9| 2.7| 6.9|+------------------------------------+-------+-----------+-----------+----------+|Increase/(decrease) in creditors | | 1.6| (2.9)| 0.7|+------------------------------------+-------+-----------+-----------+----------+|Increase in financial investments | | (67.4)| (97.8)| (180.4)|+------------------------------------+-------+-----------+-----------+----------+|Increase in financial liabilities | | 83.5| 87.8| 183.6|+------------------------------------+-------+-----------+-----------+----------+|Cash generated from operations | | 24.2| 2.8| 29.6|+------------------------------------+-------+-----------+-----------+----------+| | | | | |+------------------------------------+-------+-----------+-----------+----------+|Cash flows from investing activities| | | | |+-----------------------------+---+--+-------+-----------+-----------+----------+|Purchase of tangible assets | | | | (0.4)| (0.2)| (0.6)|+-----------------------------+---+--+-------+-----------+-----------+----------+|Acquisition of investments | | | | (9.9)| (0.1)| (0.1)|+-----------------------------+---+--+-------+-----------+-----------+----------+|Net cash flows from investing activities | (10.3)| (0.3)| (0.7)|+-----------------------------+---+--+-------+-----------+-----------+----------+| | | | | | | |+-----------------------------+---+--+-------+-----------+-----------+----------+|Cash flows from financing | | | | | ||activities | | | | | |+-----------------------------+---+--+-------+-----------+-----------+----------+|Dividends paid | | | | (15.1)| -| (5.5)|+-----------------------------+---+--+-------+-----------+-----------+----------+| | | | | | | |+-----------------------------+---+--+-------+-----------+-----------+----------+|Net (decrease)/increase in cash and cash | (1.2)| 2.5| 23.4||equivalents | | | |+--------------------------------------------+-----------+-----------+----------+|Cash and cash equivalents at beginning of | 140.9| 119.9| 119.9||period as previously reported | | | |+------------------------------------+-------+-----------+-----------+----------+|Effect of exchange rate changes | | 4.9| (2.4)| (2.4)|+------------------------------------+-------+-----------+-----------+----------+|Cash and cash equivalents at period | | 144.6| 120.0| 140.9||end | | | | |+-----------------------------+---+--+-------+-----------+-----------+----------+| | | | | | | |+-----------------------------+---+--+-------+-----------+-----------+----------+| | | | | | | |+-------------------------+---+---+--+-------+-----------+-----------+----------++-------------------------+---+---+--+-------+-----------+-----------+----------+ In accordance with IAS 7, Cash Flow Statements, the cash flow statement includescash flows relating to the long-term assurance business of the Group. Notes to the Condensed Consolidated Financial Statements 1 General information The Company is a limited liability company incorporated and domiciled in theIsle of Man. The address of its registered office is Harbour Court, Lord Street,Box 192, Douglas, Isle of Man, IM99 1QL. The Company has its primary listing on the London Stock Exchange. The principal activity of the Company is to act as the holding company of theHansard Group of companies. The activities of the principal operatingsubsidiaries include the transaction of life assurance business and relatedactivities. The Group offers long-term savings products packaged as single andregular premium unit-linked life assurance policies, providing exposure to theperformance of a wide range of underlying investments. These condensed consolidated half-yearly financial statements were approved forissue on 27 February 2008. These condensed consolidated half-yearly financial statements do not comprisestatutory accounts. The board of directors approved statutory accounts for theyear ended 30 June 2007 on 26 September 2007. The report of the auditor on thoseaccounts 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-yearended 31 December 2007 have been prepared in accordance with the Disclosure andTransparency Rules of the Financial Services Authority ("DTR") and with IAS 34'Interim Financial Reporting' as adopted by the European Union. The condensed consolidated half-yearly financial statements should be read inconjunction with the annual financial statements for the year ended 30 June2007, which were prepared in accordance with United Kingdom Generally AcceptedAccounting Practice ("UK GAAP"). Except where otherwise stated, all figures included in the consolidatedhalf-yearly financial statements are stated in pounds sterling, which is alsothe functional currency of the Company, rounded to the nearest hundred thousandpounds. The following standards, amendments and interpretations to existing standardsare not yet effective and have not been early adopted by the Group: • IFRS 8, 'Operating Segments' (effective from 1 January 2009). This standard will require explanation of the basis on which segment information is prepared and a reconciliation to the amount recognized in the consolidated financial statements. The Group will apply IFRS 8 from 1 July 2009. • IAS 23 (Amendment), 'Borrowing Costs' (effective 1 January 2009). This amendment will not have any impact on the Group's financial statements. • IAS 1 (Revised), 'Presentation of Financial Statements' (effective from 1 January 2009). This revision will not have any impact on the Group's financial statements. • IFRIC 11, 'Group and Treasury Share Transactions' (effective for annual periods beginning on or after 1 March 2007). This IFRIC deals with the application of two particular issues relating to the application of IFRS 2, 'Share-based payments'. The Group will apply IFRIC 11 for the year ended 30 June 2008, where applicable. • IFRIC 14 - IAS 19, 'The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction' (effective for annual periods beginning on or after 1 January 2008). This IFRIC will not have any impact on the Group's financial statements. 3 Adoption of International Financial Reporting Standards The financial results for the half-year ended 31 December 2007 have beenpresented in accordance with International Accounting Standard 34, Interimfinancial reporting, as adopted by the European Union and the DTR. In accordancewith DTR requirements, the Group has adopted International Financial ReportingStandards ("IFRS"), as adopted by the European Union, in respect of the yearending 30 June 2008. Prior to this, the consolidated financial statements of theGroup were prepared in accordance with applicable UK standards and the Statementof Recommended Practice issued by the Association of British Insurers inDecember 2005. Following the adoption of IFRS, the directors have reviewed the Group'saccounting policies. In the opinion of the directors, the basis for recognisingand measuring assets and liabilities is the same as the previous UK GAAP.However, under IFRS, a more detailed description and analysis of accountingpolicies is required and this will be provided in the financial statements forthe year ended 30 June 2008. In addition, the terminology used under IFRSdiffers from UK GAAP. The directors confirm that there is no impact on the Group's reported financialposition or performance as a result of adopting IFRS as at the required dates.Under IFRS, certain assets and liabilities accounted for as financialinvestments under UK GAAP, such as policyholder cash and cash equivalents andunsettled trades, are now classified according to the nature of those assets andliabilities. The UK GAAP consolidated balance sheets as at 30 June 2007 and 31December 2006, as restated to comply with IFRS classification are set out innotes 17 and 18 to these condensed consolidated half-yearly financialstatements. The condensed consolidated cash flow statement has been restated toreflect the reclassification of certain assets and liabilities in the balancesheet comparatives. The significant accounting policies applied in the preparation of the auditedfinancial statements for the year ended 30 June 2007 can be accessed on theCompany's website: www.hansard.com. 4 Segmental information In the opinion of the directors, the Group operates in a single businesssegment, that of the distribution and servicing of long-term investment productsthrough the Group's life assurance subsidiaries. 4.1) Fees and commissions analysed by type Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £mContract fee income 17.9 17.2 34.5Fund management charges 6.7 5.2 10.5Commission receivable 2.3 1.8 4.2 26.9 24.2 49.2 4.2) Geographical analysis of fees and commissions by origin Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £mIsle of Man 20.9 20.0 39.9Republic of Ireland 6.0 4.2 9.3 26.9 24.2 49.2 4.3) Geographical analysis of profit before taxation Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £mIsle of Man 9.8 10.3 18.1Republic of Ireland 2.9 0.3 1.6 12.7 10.6 19.7 4.4) Geographical analysis of financial investments 31 December 31 December 30 June 2007 2006 2007 £m £m £mIsle of Man 762.5 693.2 703.5Republic of Ireland 367.7 277.1 349.5 1,130.2 970.3 1,053.0 4.5) Geographical analysis of net assets 31 December 31 December 30 June 2007 2006 2007 £m £m £mIsle of Man 36.2 39.8 41.6Republic of Ireland 12.4 7.7 9.5 48.6 47.5 51.1 The following information is provided in relation to new business premiumsreceived on investment contracts. The application of the Group's accountingpolicies require that premiums received on investment contracts are not includedin the consolidated income statement but are reported as deposits to investmentcontract liabilities in the consolidated balance sheet. 4.6) New business premiums on an APE basis by residence of policyholder Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £mEU and EEA 6.0 6.9 13.2Rest of world 11.1 10.4 22.3 17.1 17.3 35.5 5 Operating profit Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £mFees received from holding company - 1.5 1.6Foreign exchange gains/(losses) 1.4 (0.3) (1.3) Profit on ordinary activities before taxation is after the following: The Company received £1.47m from its then holding company, Polar Cap Limited, inthe half-year ended 31 December 2006 for services in relation to the Company'slisting on 18 December 2006. This amount is included in other operating incomein the comparative period. No amounts were received from Polar Cap Limited inthe half-year ended 31 December 2007. The Group holds significant operating net assets in currencies other thansterling, which gives rise to exchange gains or losses reflected in theconsolidated income statement. Included in investment income are exchange gainsand losses on operating net assets as set out above. 6 Taxation The Group's profits arising from its Isle of Man-based operations are taxable atzero percent. Corporation tax for the Republic of Ireland-based operations isbased on the effective annual rate for taxable income of 12.5%, applied to theexpected profits for the period. Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £mCorporation tax 0.1 - - 7 Earnings per share Earnings per share is based upon the profit for the period after taxationdivided by the average number of shares in issue throughout the period. There isno difference between basic and diluted earnings per share. Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007Profit after tax (£m) 12.6 10.6 19.7Weighted average number of shares in issue 137,281,202 137,281,202 137,281,202Earnings per share in pence 9.2 7.7 14.4 8 Dividends Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £mInterim dividend of 4p per share paid on 4 May 2007 - - 5.5Final dividend of 6p per share paid on 23 November 2007 8.3 - -Special dividend of 5p per share paid on 23 November 2007 6.8 - -Total 15.1 - 5.5 9 Property, plant and equipment 31 31 December 30 June December 2007 2006 2007 £m £m £mNet book value at start of period 0.8 0.6 0.6Additions 0.4 0.2 0.6Depreciation (0.2) (0.2) (0.4)Net book value at end of period 1.0 0.6 0.8 10 Financial investments held to cover liabilities The following investments (including cash and cash equivalents), other assetsand liabilities are held to cover financial liabilities under investmentcontracts. They are included within the relevant headings on the consolidatedbalance sheet. 31 December 31 December 30 June 2007 2006 2007 £m £m £mAssetsEquity securities 100.8 106.8 73.8Investment in collective investment schemes 970.6 820.5 946.9Fixed income securities 48.8 43.0 32.0Cash and cash equivalents 88.6 55.7 70.1Other receivables 10.4 9.8 9.0Total 1,219.2 1,035.8 1,131.8Other payables (1.8) (1.4) (1.6)Financial investments held to cover liabilities 1,217.4 1,034.4 1,130.2 11 Financial liabilities under investment contracts +-----------------------------------+---+----------+------------+----------+| | | 31| 31 December| 30 June|| | | December| | |+-----------------------------------+---+----------+------------+----------+| | | 2007| 2006| 2007|+-----------------------------------+---+----------+------------+----------+| | | £m| £m| £m|+-----------------------------------+---+----------+------------+----------+|At 1 July | | 1,130.2| 947.2| 947.2|+-----------------------------------+---+----------+------------+----------+|Deposits to investment contracts | 84.7| 96.0| 185.4|+---------------------------------------+----------+------------+----------+|Benefits paid | (72.2)| (58.7)| (130.6)|+---------------------------------------+----------+------------+----------+|Investment contract benefits | 74.7| 49.9| 128.2|+-----------------------------------+---+----------+------------+----------+|Closing balance | | 1,217.4| 1,034.4| 1,130.2|+-----------------------------------+---+----------+------------+----------+ The value of these financial liabilities is determined by the fair value offinancial investments held to cover liabilities at the balance sheet date. 12 Called up share capital+-------------------------------------+----------+----------+----------+| | 31| 31| 30 June|| | December| December| |+-------------------------------------+----------+----------+----------+| | 2007| 2006| 2007|+-------------------------------------+----------+----------+----------+| | £m| £m| £m|+-------------------------------------+----------+----------+----------+|Authorised: | | | |+-------------------------------------+----------+----------+----------+|200,000,000 ordinary shares of 50p | 100| 100| 100|+-------------------------------------+----------+----------+----------+|Issued and fully paid: | | | |+-------------------------------------+----------+----------+----------+|137,281,202 ordinary shares of 50p | 68.6| 68.6| 68.6|+-------------------------------------+----------+----------+----------+ 13 Exchange rates The closing exchange rates used by the Group for the translation of balancesheet items from US$ and • to sterling were US$2.0 and €1.36, respectively, at31 December 2007 and US$1.96 and €1.48, respectively, at 31 December 2006. 14 Related party transactions The financial results of intra-Group transactions are eliminated onconsolidation and are not disclosed separately here. Fees received in theprevious financial year in relation to services provided to the Company's thenholding company are disclosed elsewhere within these condensed consolidatedfinancial statements. There have been no significant changes to related parties or related partytransactions in the period. Related party transactions affecting the results of previous periods and anunderstanding of the Group's financial position at previous balance sheet datesare as disclosed in note 5 above and in the Annual Report & Accounts for theyear ended 30 June 2007. 15 Ultimate controlling party Until 31 October 2007 the ultimate controlling party of the Group was Dr LeonardPolonsky, a director of the company. At the balance sheet date Dr Polonskyretains direct and indirect beneficial interests in 47.4% of the Company'sissued share capital. 16 Statement of directors' responsibilities The directors of Hansard Global plc are as listed in the Hansard Global plcAnnual Report & Accounts for the year ended 30 June 2007. A list of currentdirectors is maintained on the Group's website: www.hansard.com. The directors are responsible for the maintenance and integrity of the corporateand financial information included on the Company's website. Legislation in theIsle of Man governing the preparation and dissemination of financial statementsmay differ from legislation in other jurisdictions. The directors confirm that, to the best of their knowledge, this condensed setof consolidated half-yearly financial statements has been prepared in accordancewith IAS 34, as adopted by the European Union, and that the interim managementreport herein includes a fair review of the information required by DTR 4.2.7and DTR 4.2.8. By order of the Board R E G HallChief Operating Officer G S MarrGroup Counsel 27 February 2008 17 Reconciliation of UK GAAP to IFRS balance sheet +--------------------------------------------------------------------------+|As at 30 June 2007 |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | UK GAAP|Reclassification| IFRS|+--------------------+------+----+------+--------+----------------+--------+| | | | | £m| £m| £m|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Assets | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Deferred origination| | | | 94.6| -| 94.6||costs | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Tangible assets | | | | 0.8| -| 0.8|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Total financial | | | | 1,130.4| (77.4)| 1,053.0||investments | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Other receivables | | | | 11.9| 9.0| 20.9|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Cash and cash | | | | 70.8| 70.1| 140.9||equivalents | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Total assets | | | | 1,308.5| 1.7| 1,310.2|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Liabilities | | | | |+--------------------------------+------+--------+----------------+--------+| | | | | |+--------------------------------+------+--------+----------------+--------+|Financial liabilities under investment | 1,130.2| -| 1,130.2||contracts | | | |+--------------------------------+------+--------+----------------+--------+| | | | | |+--------------------------------+------+--------+----------------+--------+|Other liabilities and reserves | | 127.2| 1.7| 128.9|+--------------------+------+----+------+--------+----------------+--------+|Total liabilities | | | | 1,257.4| 1.7| 1,259.1|+--------------------+------+----+------+--------+----------------+--------+|Net assets | | | | 51.1| -| 51.1|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Shareholders' equity| | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Called up share | | | | 68.6| -| 68.6||capital | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Other reserves | | | | (48.5)| -| (48.5)|+--------------------+------+----+------+--------+----------------+--------+|Retained earnings | | | | 31.0| -| 31.0|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Total shareholders' | | | | 51.1| -| 51.1||equity | | | | | | |+--------------------+------+----+------+--------+----------------+--------+ See note 3 to these condensed consolidated half-yearly financial statements. 18 Reconciliation of UK GAAP to IFRS balance sheet +--------------------------------------------------------------------------+|As at 31 December 2006 |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | UK GAAP|Reclassification| IFRS|+--------------------+------+----+------+--------+----------------+--------+| | | | | £m| £m| £m|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Assets | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Deferred origination| | | | 90.1| -| 90.1||costs | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Tangible assets | | | | 0.6| -| 0.6|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Total financial | | | | 1,034.6| (64.3)| 970.3||investments | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Other receivables | | | | 12.0| 10.0| 22.0|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Cash and cash | | | | 64.4| 55.6| 120.0||equivalents | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Total assets | | | | 1,201.7| 1.3| 1,203.0|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Liabilities | | | | |+--------------------------------+------+--------+----------------+--------+| | | | | |+--------------------------------+------+--------+----------------+--------+|Financial liabilities under investment | 1,034.4| -| 1,034.4||contracts | | | |+--------------------------------+------+--------+----------------+--------+| | | | | |+--------------------------------+------+--------+----------------+--------+|Other liabilities and reserves | | 119.8| 1.3| 121.1|+--------------------+------+----+------+--------+----------------+--------+|Total liabilities | | | | 1,154.2| 1.3| 1,155.5|+--------------------+------+----+------+--------+----------------+--------+|Net assets | | | | 47.5| -| 47.5|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Shareholders' equity| | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Called up share | | | | 68.6| -| 68.6||capital | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Other reserves | | | | (48.5)| -| (48.5)|+--------------------+------+----+------+--------+----------------+--------+|Retained earnings | | | | 27.4| -| 27.4|+--------------------+------+----+------+--------+----------------+--------+| | | | | | | |+--------------------+------+----+------+--------+----------------+--------+|Total shareholders' | | | | 47.5| -| 47.5||equity | | | | | | |+--------------------+------+----+------+--------+----------------+--------+ See note 3 to these condensed consolidated half-yearly financial statements. Independent review report to Hansard Global plc Introduction We have been engaged by the company to review the condensed set of consolidatedfinancial statements in the half-yearly financial report for the six monthsended 31 December 2007, which comprises the consolidated income statement, theconsolidated statement of changes in equity, the consolidated balance sheet, theconsolidated cash flow statement, and related notes. We have read the otherinformation contained in the half-yearly financial report and considered whetherit contains any apparent misstatements or material inconsistencies with theinformation in the condensed set of consolidated financial statements. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. This interim report has been prepared in accordance with the basis set out innote 1. As disclosed in note 1, the next annual financial statements of thecompany will be prepared in accordance with IFRSs as adopted by the EuropeanUnion. The accounting policies are consistent with those that the directorsintend to use in the next annual financial statements. The condensed set ofconsolidated financial statements included in this half-yearly financial reporthas been prepared in accordance with International Accounting Standard 34,"Interim Financial Reporting", as adopted by the European Union. Our responsibility Our responsibility is to express to the company a conclusion on the condensedset of consolidated financial statements in the half-yearly financial reportbased on our review. This report, including the conclusion, has been preparedfor and only for the company for the purpose of the Disclosure and TransparencyRules of the Financial Services Authority and for no other purpose. We do not,in producing this report, accept or assume responsibility for any other purposeor to any other person to whom this report is shown or into whose hands it maycome save where expressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements 2410, 'Review of Interim Financial Information Performed by theIndependent Auditor of the Entity' issued by the International Auditing andAssurance Standards Board. A review of interim financial information consists ofmaking enquiries, primarily of persons responsible for financial and accountingmatters, and applying analytical and other review procedures. A review issubstantially less in scope than an audit conducted in accordance withInternational Standards on Auditing and consequently does not enable us toobtain assurance that we would become aware of all significant matters thatmight be identified in an audit. Accordingly, we do not express an auditopinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of consolidated financial statements in the half-yearlyfinancial report for the six months ended 31 December 2007 is not prepared, inall material respects, in accordance with International Accounting Standard 34as adopted by the European Union and the Disclosure and Transparency Rules ofthe United Kingdom's Financial Services Authority. PricewaterhouseCoopersChartered AccountantsDouglas Isle of Man27 February 2008 Results on the European Embedded Value Basis for the half-year ended 31 December 2007 1. COMPONENTS OF EEV PROFIT EEV Profit is defined as the change in EEV after tax but before dividends. EEVProfit was £28.6m in the half-year ended 31 December 2007, an increase of 95.9%over the profit of £14.6m in the corresponding period of the previous financialyear. This is equivalent to a half-yearly return of 13.1% (2006: 8.2%) on theopening EEV. EEV Operating Profit is defined as the change in EEV after tax but beforeallowance for dividends, investment return variances and economic assumptionchanges. EEV Operating Profit was £17.3m in the period, an increase of 46.6%over the profit of £11.8m in the corresponding period, and equivalent to ahalf-yearly return of 7.9% (2006: 6.6%) on the opening EEV. Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 £m £m £m New business contribution 10.5 10.3 22.9 Expected return on existing business 4.3 3.2 7.1 Experience variances 1.1 1.2 (0.8) Operating assumption & model changes 0.0 (3.9) 6.7 Expected return on Net Worth 1.4 1.0 2.1 EEV OPERATING PROFIT 17.3 11.8 38.0 Investment return variances 10.0 2.3 6.9 Economic assumption changes 1.3 0.5 0.0 EEV PROFIT 28.6 14.6 44.9 The main components of the EEV profit were as follows: 1.1 New Business Contribution The largest component of EEV profit is the contribution from new businesswritten during the half-year, amounting to £10.5m. This is an increase of £0.2mfrom £10.3m in the corresponding period, which represents 4.8% of the openingEEV and 36.7% of the Group's EEV Profit. 1.2 Expected Return on Existing Business The expected return of £4.3m (2006: £3.2m) is the increase in the value offuture profits over the period, together with the increase in new business fromthe point of sale to the end of the period, due to the time value of money. Thecalculation is based on the risk discount rate at the start of the period. 1.3 Experience Variances Experience variances arise where the Group's actual experience in areas such asexpenses, policy persistency, mortality and fees from policyholder activitydiffer during the period from the assumptions used to calculate the EEV at theprevious year-end. Experience variances gave rise to an EEV profit of £1.1m in the period (2006:£1.2m). Improvements in persistency experience contributed to a gain of £1.0m,while investment in the Group's infrastructure gave rise to an expense overrunof £0.5m. A number of other factors contributed to a gain of £0.6m. Experience variances in the corresponding period include £1.57m received fromPolar Cap during that period. 1.4 Operating Assumption & Model Changes There were no changes to operating assumptions or model changes in the period. During the corresponding period improvements introduced to the modelling ofsingle premium cases with a premium above £1m led to a one-off negativeadjustment to EEV of £3.9m. The analysis and revision of EEV assumptions at 30June 2007 gave rise to a gain of £6.7m (after adjusting for the impact of themodelling change). 1.5 Expected Return on Net Worth The expected return on Net Worth of £1.4m (2006: £1.0m) reflects the anticipatedincrease to shareholder assets over the period due to the time value of moneyand its calculation is based on the risk discount rate at the start of theperiod. 1.6 Investment Return Variances Investment return variances contributed to a gain of £10.0m in the period (2006:£2.3m gain). The main elements contributing to these variances are as follows: •The weakening of sterling against various currencies resulted in a gain of £6.8m, compared with a loss of £3.4m from movements in currency rates in the corresponding period. •Investment performance of policyholder funds was higher than expected, contributing to a gain of £2.5m (2006: £4.9m gain). •The return achieved on shareholder assets was £0.5m higher (2006: £0.4m lower) than expected. •Marketing allowances received from external fund managers were £0.2m higher (2006: £1.2m higher) than expected. 1.7 Economic Assumption Changes Changes to yields in fixed interest markets caused the risk discount rate toreduce from 5.0% at 30 June 2007 to 4.1% at 31 December 2007, with acorresponding reduction to the projected unit growth rate from 2.2% to 1.2%.Reducing the risk discount rate increases the EEV, while reducing the unitgrowth rate reduces the EEV. The net effect of these two changes was to increasethe EEV by £1.3m (2006: £0.5m gain), which illustrates the EEV's limitedexposure to interest rate risk. 2. DETAILED ANALYSIS OF CHANGE IN EEV The EEV comprises the value of in-force business ("VIF") and the Net Worth ofthe Group as at the relevant valuation date, and is calculated net ofcorporation tax. This analysis shows the source of change in VIF and Net Worthover the period. It helps to demonstrate the realisation of projected futureprofits into Net Worth during the period. As in prior periods, the major sourcesof EEV profit are from new business and investment performance. Half-year ended 31 December 2007 31 December 2006DETAILED ANALYSIS OF EEV VIF Net EEV VIF NetCHANGE IN EEV Worth Worth £m £m £m £m £m £m New business contribution 10.5 10.5 0.0 10.3 10.3 0.0Expected return on existing business 4.3 (5.4) 9.7 3.2 (5.6) 8.8Experience variances 1.1 2.7 (1.6) 1.2 1.0 0.2Operating assumption & model changes 0.0 0.0 0.0 (3.9) (3.9) 0.0Expected return on Net Worth 1.4 0.0 1.4 1.0 0.0 1.0EEV OPERATING PROFIT 17.3 7.8 9.5 11.8 1.8 10.0Investment return variances 10.0 7.9 2.1 2.3 2.7 (0.4)Economic assumption changes 1.3 1.3 0.0 0.5 0.5 0.0EEV PROFIT 28.6 17.0 11.6 14.6 5.0 9.6Dividends paid (15.1) 0.0 (15.1) 0.0 0.0 0.0CHANGE IN EEV 13.5 17.0 (3.5) 14.6 5.0 9.6Opening EEV 218.0 161.5 56.5 178.6 135.3 43.3Closing EEV 231.5 178.5 53.0 193.2 140.3 52.9 3. EEV BALANCE SHEET The EEV has grown to £231.5m at 31 December 2007 from £218.0m at 30 June 2007,an increase of 6.2%. The EEV balance sheet is presented below. 31 December 31 December 30 June 2007 2006 2007 £m £m £mFree Surplus 47.3 47.8 51.2Required Capital 5.7 5.1 5.3Net Worth 53.0 52.9 56.5Value of In-Force Business 183.8 145.6 166.8Cost of Required Capital (0.3) (0.3) (0.3)Reduction for Operational Risk (5.0) (5.0) (5.0)Value of Future Profits 178.5 140.3 161.5EEV 231.5 193.2 218.0 4. NEW BUSINESS PROFITABILITY AND MARGIN New Business Margin is defined as New Business Contribution ("NBC") divided byPresent Value of New Business Premiums ("PVNBP"). The calculation of PVNBP isequal to total single premium sales in the period under review plus thediscounted value of regular premiums expected to be received over the term ofnew regular premium policies, and is calculated at the point of sale. The PVNBPof £130.5m represents an increase of £1.0m or 0.8% on the corresponding period. The NBC during the period is the present value of the expected stream ofshareholder cash flows after tax from new business written in that period. TheGroup's NBC has been calculated using the same economic assumptions as thoseused to determine the EEV as at the start of the period and the same operatingassumptions used to determine the EEV as at the end of the period. NBC is shownafter allowing for the cost of required capital, calculated on the same basis asfor in-force business. The contribution of £10.5m from new business hascontributed to significant growth in the Group's EEV and represents an increaseof £0.2m on the new business contribution of the corresponding period. During the period, the Group has written new business on profitable terms, whichresulted in a new business margin (on a PVNBP basis) of 8.0%, consistent withthe margin in the corresponding six-month period, and marginally lower than the8.3% margin on business written during the last full financial year. Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007NEW BUSINESS MARGIN (PVNBP basis)Present Value of New Business Premiums £130.5m £129.5m £277.1mNew Business Contribution £10.5m £10.3m £22.9mNEW BUSINESS MARGIN 8.0% 8.0% 8.3% The increased amounts of regular premium business relative to the correspondingperiod had the impact of increasing NBC by £0.2m. 5. EEV SENSITIVITY ANALYSIS Sensitivities provide an indication of the impact of changes in particularassumptions on the EEV at 31 December 2007 and the NBC for the six-month periodthen ended. In each sensitivity calculation, all other assumptions remainunchanged except where they are directly affected by the revised economicconditions. Impact on EEV NBC £m £mAt 31 December 2007 231.5 10.5100bp decrease in risk discount rate 8.7 0.8100bp increase in investment return 6.7 0.410% increase in the value of equities and property 10.9 0.010% decrease in sterling exchange rates 14.3 0.810% decrease in expenses 4.5 0.510% decrease in lapse rates 5.0 0.410% decrease in mortality rates 0.7 0.010% increase in marketing allowances 3.3 0.2 The EEV and NBC are relatively insensitive to the level of Required Capital. The sensitivity analysis indicates that the Group is exposed, through the impacton the level of future fund-based management income, primarily to movements inequity, property and currency values. NOTES TO THE EUROPEAN EMBEDDED VALUE INFORMATION 1. BASIS OF PREPARATION The half-yearly supplementary information shows certain of the Group's resultsfor the half-year ended 31 December 2007 as measured on the EEV basis. In preparing this EEV information, the board considered the EEV Principlespublished by the CFO Forum, a group comprising the Chief Financial Officers ofcertain major listed and unlisted European assurance companies, in May 2004 andextended by additional guidance published in October 2005. The EEV informationhas been prepared using a ''market consistent'' basis in respect of the economicassumptions, in line with the EEV Principles. Under the EEV methodology, profit is recognised as margins are released frompolicy related balances over the lifetime of each policy within the Group'sin-force business. The total profit recognised over the lifetime of a policyunder EEV methodology is the same as reported under IFRS, but the timing ofrecognition is different. The EEV calculations only consider claims bypolicyholders in the normal course of business under the terms of the policiesissued. They also assume the continuation of current policy terms andconditions, and the Group's interpretation thereof. 2. METHODOLOGY AND ASSUMPTIONS The methodology used to derive the EEV at the valuation date is consistent withthe methodology used in relation to the consolidated financial statements inrespect of the year ended 30 June 2007. Operational assumptions remained unchanged from those used to calculate the EEVat 30 June 2007. Certain economic assumptions have changed, as set out below. The principal economic assumptions used in the EEV calculations are based onrisk free rates, being the market yields of government backed fixed interestsecurities of comparable term to the policy cash flows at the end of thereporting period. A proportion of the Group's income and expenditure iscontracted in currencies other than sterling, in particular US$ and •. Inpractice, the risk free rate used in the valuation is based on a weightedaverage of the yields on fixed interest securities issued within the UK, US andEurope. Any components of the EEV and other balance sheet items denominated inforeign currencies have been translated to sterling using the appropriateclosing exchange rate. The risk discount rate used to value future expected shareholder cash flows isassumed to be the risk free rate plus a margin for any risks that are notallowed for elsewhere in the valuation. Since non-market risk is allowed forseparately through a reduction to the EEV of £5m, the risk margin is nil. The principal economic assumptions used are set out below: Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Risk-free yields 4.1% p.a. 4.4% p.a. 5.0% p.a.Risk discount rate 4.1% p.a. 4.4% p.a. 5.0% p.a.Future expense inflation 5.0% p.a. 5.0% p.a. 5.0% p.a.Corporation Tax - Isle of Man 0% 0% 0%Corporation Tax - Republic of Ireland 12.5% 12.5% 12.5% Review of the European Embedded Value ("EEV") of Hansard Global plc for the sixmonths ended 31 December 2007. Our role Deloitte & Touche LLP has been engaged by Hansard Global plc to act as ReviewingActuaries in connection with results on an EEV basis published in sectionswithin Hansard Global plc's Results for the half-year ended 31 December 2007. Responsibilities The EEV Information and the methodology and assumptions underlying it is thesole responsibility of the Directors of Hansard Global plc. It has been preparedby the Directors of Hansard Global plc, and the calculations underlying the EEVStatements have been performed by Hansard Global plc. Our review was conducted in accordance with generally accepted actuarialpractices and processes. It comprised a combination of such reasonablenesschecks, analytical reviews and checks of clerical accuracy as we considerednecessary to provide reasonable assurance that the EEV Information has beencompiled free of material error. Our review of half yearly EEV informationconsidered the changes since 30 June 2007 and is substantially less in scopethan an annual review and consequently does not enable us to obtain assurancethat we would become aware of all significant matters that might be identifiedin an annual review. The EEV Information necessarily makes numerous assumptions with respect toeconomic conditions, operating conditions, taxes, and other matters, many ofwhich are beyond the Group's control. Although the assumptions used representestimates which the Directors believe are together reasonable, actual experiencein future may vary from that assumed in the preparation of the EEV Information,and any such variations may be material. Deviations from assumed experience arenormal, and are to be expected. The EEV does not purport to be a market valuation of the Group and should not beinterpreted in that manner since it does not encompass all of the many factorsthat may bear upon a market value. For example, it makes no allowance for thevalue of future new business. Opinion On the basis of our limited review, nothing has come to our attention thatcauses us to retract our opinion that: •the methodology and assumptions used to prepare the EEV Information comply in all material respects with the European Embedded Values Principles set out by the CFO Forum in May 2004, and additional guidance released in October 2005 (the "CFO Forum Principles"); •the EEV Information has been compiled on the basis of the methodology and assumptions chosen by the Directors of Hansard Global plc, and complies in all material respects with the CFO Forum Principles. Reliances and Limitations We have relied on data and information, including the value of net assets,management accounting data and solvency information supplied to us by the Group.Further, we have relied on the terms of the contracts, as they have beenreported to us, being enforceable. We have relied on the reported mathematical reserves, the adequacy of thosereserves, and of the methods and assumptions used to determine them. We haveassumed that all provisions made in the audited financial statements for anyother liabilities (whether actual, contingent or potential) of whatever nature,are appropriate. We have also relied on information relating to the current and historicaloperating experience of the Group's life insurance business, including theresults of experience investigations relating to policy persistency, and expenseanalysis. In forming our opinion, we have considered the assumptions used in theEEV Information in the context of the reported results of those investigationsalthough we have not attempted to predict the impact of potential future changesin the competitive forces in markets on the assumptions. Yours faithfullyDeloitte & Touche LLP Deloitte & Touche LLP is a limited liability partnership registered in Englandand Wales with registered number OC303675 and its registered office atStonecutter Court, 1 Stonecutter street, London EC4A 4TR. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte ToucheTohmatsu ("DTT"), a Swiss Verein whose member firms are separate and independentlegal entities. Neither DTT nor any of its member firms has any liability foreach other's acts or omissions. Services are provided by member firms or theirsubsidiaries and not by DTT. Contacts and Advisors +---------------------------------------+----------------------------------+|Registered Office |Media Enquiries || | ||Harbour Court |Bell Pottinger Corporate & || |Financial ||Lord Street |6th Floor, Holborn Gate || |330 High Holborn ||Box 192 | || |London ||Douglas | || |WC1V 7QD ||Isle of Man | || |Tel: +44 (0)20 7861 3881 ||IM99 1QL |Fax: +44 (0)20 7861 3233 || | || | || | ||Tel: +44 (0)1624 688000 | || | ||Fax: +44 (0)1624 688008 | || | ||www.hansard.com | |+---------------------------------------+----------------------------------+|Chairman & Chief Executive |Broker || | ||Dr L S Polonsky |Panmure Gordon (UK) Limited || | ||Dr.polonsky@hansard.com |Moorgate Hall || |155 Moorgate || |London || |EC2M 6XB || | || | || |Tel. +44 (0)20 7459 3600 || | || |Fax. +44 (0)20 7459 3609 |+---------------------------------------+----------------------------------+|Financial Advisor | || | ||Lazard & Co. Limited | || | ||50 Stratton Street | || | ||London | || | ||W1J 8LL | || | || | ||Tel. +44 (0)20 7187 2000 | |+---------------------------------------+----------------------------------+|Auditor |Registrar || | ||PricewaterhouseCoopers |Chamberlain Fund Services Limited || | ||Sixty Circular Road |3rd Floor Exchange House || | ||Douglas |54-62 Athol Street || | ||Isle of Man |Douglas || | ||IM1 1SA |Isle of Man || | || |IM1 1JD || | ||Tel: +44 (0)1624 689689 | || | ||Fax: +44 (0)1624 689690 |Tel: + 44 (0)1624 641560 || | || |Fax: +44 (0)1624 641561 |+---------------------------------------+----------------------------------+|Reviewing Actuaries |UK Transfer Agent || | ||Deloitte & Touche LLP |Capita IRG Limited || | ||Hill House |The Registry || | ||1 Little New Street |34 Beckenham Road || | ||London |Beckenham || | ||EC4A 3TR |Kent || | || |BR3 4TU || | ||Tel: +44 (0)20 7936 3000 | ||Fax: +44 (0)20 7583 1198 | || |Tel: +44 (0)20 8639 2236 || |Fax: +44 (0)20 8639 2279 |+---------------------------------------+----------------------------------+ +---------------------------------------+----------------------------------+|Financial Calendar | |+---------------------------------------+----------------------------------+|Ex-dividend date for interim dividend |5 March 2008 || | ||Record date for interim dividend |7 March 2008 || | ||Payment date for interim dividend |3 April 2008 || | ||Interim Management Statement and |16 May 2008 || | ||announcement of 3rd quarter new | ||business figures | || |30 July 2008 ||Announcement of 4th quarter new | ||business figures |30 September 2008 || | ||Preliminary announcement of results | |+---------------------------------------+----------------------------------+ This information is provided by RNS The company news service from the London Stock Exchange
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Share Price:
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