Last checked at 28 Jul 2016 07:00
28 July 2016
Hansard Global plc
New business results for the year ended 30 June 2016
Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its new business results for the financial year ended 30 June 2016 ("FY 2016").
Summary
· We have continued to deliver significantly increased new business levels compared to the prior financial year.
· New business for Hansard International Limited ("Hansard International") for the full year to 30 June 2016 was £119.3m PVNBP ("Present Value of New Business Premiums"), approximately 97% higher than the prior year.
· Q4 2016 new business of £32.6m PVNBP continues the growth momentum displayed in the past 4 quarters, having increased from £30.4m in Q3 2016 and being approximately 65% higher than Q4 2015.
· The Middle East and Africa continues to be the standout region with a key product enhancement launched in Q4 being well received.
· The recent vote in the United Kingdom to leave the European Union has no direct impact on Hansard in terms of the operation of its business activities or access to markets. Sterling weakness compared to the US dollar will be a benefit to income and profit levels if rates remain at current levels as the majority of premium contributions and assets under administration are in currencies other than sterling.
Gordon Marr, Group Chief Executive Officer, commented:
"We are pleased to announce the delivery of sustained new business growth quarter on quarter. The full year business levels have put us on a strong footing after a year of transition in 2015. We see further opportunities for growth in new and existing markets and are confident of achieving this in the coming financial year."
For further information:
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Hansard Global plc Gordon Marr, Group Chief Executive Officer
Tim Davies, Chief Financial Officer
| +44 (0) 1624 688000 |
Bell Pottinger Daniel de Belder Duncan Mayall | +44 (0) 20 3772 2561 |
Hansard Global plc
NEW BUSINESS RESULTS FOR THE YEAR ENDED 30 JUNE 2016
OVERVIEW
The Group continues to focus on the distribution of regular and single premium products in a range of jurisdictions around the world.
In Present Value of New Business Premiums ("PVNBP") terms, levels of new business in Q4 2016 were 65% ahead of Q4 2015 and 7% ahead of Q3 2016.
The fourth quarter saw continued progression of the new business growth generated since the start of the year. The Middle East and Africa region continued to be the most successful source of new business with the Rest of World region also performing well. We continue to work on replicating this success in our other regions around the world.
In March 2016, we launched the upgraded version of our regular premium product, Vantage Platinum, which has been well received in the market and has already taken in over £13m PVNBP since launch. Lump sum pension-related business has also shown strong growth.
New Business Flows
New business flows for Hansard International for FY 2016 on a range of metrics are summarised as follows.
| Three months ended |
| Year ended | ||||
| 30 June |
| 30 June | ||||
| 2016 | 2015 | % |
| 2016 | 2015 | % |
Basis | £m | £m | change |
| £m | £m | change |
Compensation Credit | 3.2 | 1.7 | 88.2 % |
| 10.2 | 5.5 | 85.5 % |
Present Value of New Business Premiums | 32.6 | 19.8 | 64.6 % |
| 119.3 | 60.6 | 96.9 % |
Annualised Premium Equivalent | 5.6 | 3.1 | 80.6 % |
| 18.7 | 9.7 | 92.8 % |
· Present Value of New Business Premiums ("PVNBP")
New business flows for Hansard International for FY 2016 on the basis of PVNBP are summarised as follows:
| Three months ended |
| Year ended | ||||
| 30 June |
| 30 June | ||||
| 2016 | 2015 | % |
| 2016 | 2015 | % |
PVNBP by product type | £m | £m | change |
| £m | £m | change |
Regular premium | 20.5 | 12.1 | 69.4 % |
| 65.6 | 36.8 | 78.3 % |
Single premium | 12.1 | 7.7 | 57.1 % |
| 53.7 | 23.8 | 125.6 % |
Total | 32.6 | 19.8 | 64.6 % |
| 119.3 | 60.6 | 96.9 % |
| 2016 | 2015 | % |
| 2016 | 2015 | % |
PVNBP by geographical area | £m | £m | change |
| £m | £m | change |
Middle East and Africa | 15.5 | 2.1 | 638.1 % |
| 36.8 | 7.5 | 390.7 % |
Far East | 7.8 | 5.9 | 32.2 % |
| 25.7 | 16.1 | 59.6 % |
Rest of World | 6.8 | 6.0 | 13.3 % |
| 44.6 | 15.4 | 189.6 % |
Latin America | 2.5 | 5.8 | (56.9) % |
| 12.2 | 21.6 | (43.5) % |
Total | 32.6 | 19.8 | 64.6 % |
| 119.3 | 60.6 | 96.9 % |
· New business margins
New business margins (calculated on a PVNBP basis) are sensitive to sales levels and product mix (regular premium products typically having a higher margin). During FY 2016, we experienced significantly larger new business levels than FY 2015 as highlighted above, but the percentage of single premium business written has increased as a proportion, which reduces the overall average margin. We expect to announce a small, but positive new business margin for the year when we release our full year results on 22 September 2016.
Assets under Administration ("AUA")
The value of AuA is based upon the assets selected by or on behalf of contract holders to meet their needs from time to time. Reflecting the wide geographical spread of the Group's contract holders, the majority of premium contributions and of AuA are designated in currencies other than sterling.
The value of AuA is underpinned by a steady flow of regular contributions from new and existing contract holders around the world. Net withdrawals are typically experienced in Hansard Europe, which closed to new business in 2013.
In aggregate, there was an increase in AuA of £46.9m in Q4 to £923.5m as at 30 June 2016. The main driver of this change was the weakening of sterling following the United Kingdom's vote to exit the European Union.
| Three months ended |
| Year ended | ||
| 30 June |
| 30 June | ||
| 2016 | 2015 |
| 2016 | 2015 |
| £m | £m |
| £m | £m |
Deposits to investment contracts - regular premiums | 18.3 | 18.7 |
| 71.8 | 79.4 |
Deposits to investment contracts - single premiums | 12.1 | 7.3 |
| 52.0 | 21.5 |
Withdrawals from contracts and charges | (37.9) | (42.5) |
| (168.2) | (185.2) |
Effect of market and currency movements | 54.4 | (12.2) |
| 60.8 | 47.8 |
Increase / (decrease) in period | 46.9 | (28.7) |
| 16.4 | (36.5) |
Opening balance | 876.6 | 935.8 |
| 907.1 | 943.6 |
Assets under Administration at 30 June | 923.5 | 907.1 |
| 923.5 | 907.1 |
The movement in AuA is split as follows between Hansard International and Hansard Europe:
| Three months ended |
| Year ended | ||
| 30 June |
| 30 June | ||
| 2016 | 2015 |
| 2016 | 2015 |
| £m | £m |
| £m | £m |
Hansard International | 48.6 | (33.8) |
| 48.8 | (32.1) |
Hansard Europe | (1.7) | 5.1 |
| (32.4) | (4.4) |
Increase / (decrease) in period | 46.9 | (28.7) |
| 16.4 | (36.5) |
Results for the year ENDing 30 june 2016
The Group has traded profitably during the period and remains strongly capitalised. Trading results for the year are expected to be announced on 22 September 2016.
· Adoption of FRS 101
For FY 2016, the Group's insurance subsidiaries, Hansard International and Hansard Europe, are transitioning to Financial Reporting Standard ("FRS") 101 which allows qualifying entities to adopt the recognition and measurement requirements of EU-adopted IFRS with certain amendments. As part of preparing for this adoption, we took the opportunity to review and enhance the calculation models for deferred income and deferred origination costs. As a result, a number of refinements have been made to the consolidated Group's deferred income and cost balances which have the net effect of reducing the amount of consolidated profit earned in FY 2016 (to be earned instead in future years). We expect the negative impact of this adjustment to the Group's FY 2016 profits to be broadly equal to the positive impact of the weakening of sterling due to Brexit (see below).
BREXIT
On 23 June 2016, the United Kingdom held a referendum on European Union membership and voted to leave the EU. For Hansard, this decision has little direct impact on our ability to access markets and write new business. Hansard is incorporated and based in the Isle of Man which is not part of the European Union. Nor is Hansard reliant on the UK's membership of the EU to conduct any of its business.
Investor concern and uncertainty around investment markets is in general not a positive for our industry, but we have not to date experienced any associated fall off in business levels or concerns expressed by our distribution network.
While we prefer stable markets, a decline in sterling has a positive impact on Hansard. Our net asset positions in US dollar and euro are more valuable in sterling terms although such positions are actively managed to avoid material exposure to currency fluctuations where possible. US dollar and euro fee income is also worth more when translated into sterling. As the major movement in sterling only arose in the last week of our financial year, the impact for FY 2016 will be a relatively modest gain. The longer term impact will be dependent on how rates move over the course of FY 2017 and beyond.
The future financial position will also be affected by stock market and interest rate changes. Reductions in global stock markets reduce the fee income we earn from assets under management. We expect that US dollar and euro interest rates are now likely to remain at historic lows for longer and that already low sterling rates may be reduced further. This means Hansard will earn less interest income on its cash and money market holdings and reduce the treasury margin we can earn on policyholder cash.
Further information on sensitivities is set out in our 2015 Annual Report and Accounts in Note 3 "Financial Risk Management". We will also provide additional detail on the financial impact of the above items when we release our full year results on 22 September 2016.
Litigation
The Group continues to carefully manage its litigation relating to the legacy operations of Hansard Europe. There have been no significant developments to report in the period.
Outlook
We are optimistic that we can continue to grow business levels through the on-going delivery of our strategy across the regions in which we operate.
We also continue to work on opportunities for new onshore channels in targeted locations which remain an important part of our plans for the 2017 financial year.
Notes to editors:
· Hansard Global plc is the holding company of the Hansard Group of companies. The Company was listed on the London Stock Exchange in December 2006. The Group is a specialist long-term savings provider, based in the Isle of Man.
· The Group offers a range of flexible and tax-efficient investment products within a life assurance contract wrapper, designed to appeal to affluent, international investors.
· The Group utilises a controlled cost distribution model by selling policies exclusively through a network of independent financial advisors, and the retail operations of certain financial institutions who provide access to their clients in more than 170 countries. The Group's distribution model is supported by Hansard OnLine, a multi-language internet platform, and is scaleable.
· The principal geographic markets in which the Group currently services contract holders and financial advisors are the Middle East, the Far East and Latin America, in the case of Hansard International Limited, and Western Europe in the case of Hansard Europe Designated Activity Company, the Group's two life assurance companies. Hansard Europe Designated Activity Company ceased accepting new business with effect from 30 June 2013.
· The Group's objective is to grow by attracting new business and positioning itself to adapt rapidly to market trends and conditions. The scaleability and flexibility of the Group's operations allow it to enter or develop new geographic markets and exploit growth opportunities within existing markets without the need for significant further investment.
· Following the closure of Hansard Europe Designated Activity Company to new business with effect from 30 June 2013, the Group continues to report new business performance of Hansard International Limited alone within this document. Reporting of Assets under Administration incorporates cash flows relating to insurance contracts issued by both Hansard International Limited and Hansard Europe Designated Activity Company.
Forward-looking statements:
This announcement may contain certain forward-looking statements with respect to certain of Hansard Global plc's plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward-looking statements involve risk and uncertainties because they relate to future events and circumstances which are beyond Hansard Global plc's control. As a result, Hansard Global plc's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in Hansard Global plc's forward-looking statements. Hansard Global plc does not undertake to update forward-looking statements contained in this announcement or any other forward-looking statement it may make. No statement in this announcement is intended to be a profit forecast or be relied upon as a guide for future performance.
This announcement contains inside information which is disclosed in accordance with the Market Abuse Regime.