Hansard Regulatory News (HSD)

23 September 2015

Hansard Global plc

Results for the year ended 30 June 2015

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its results for the year ended 30 June 2015 ("FY 2015").

Summary

* subject to approval at the AGM

Strategy IMPLEMENTATION

Much has been achieved in rolling-out our revised strategy. We have refreshed our entire product range, making it more competitive, and launched it over the course of the year to our distribution networks. We have established many new relationships with Independent Financial Advisors ("IFAs") who we anticipate will develop and build sustainable business levels for the future. We have made changes to our top executive team and its structure. We have continued to invest in and improve our market leading technology, Hansard OnLine.

We are confident that our newly-introduced products are well-tailored to the requirements of our target clients and believe that these products, together with a strengthened sales team and an increasing pool of distribution relationships will provide a platform for sustainable diversified new business flows going forward.

TRADING RESULTS

The Group has traded profitably during FY 2015, generated strong positive cash flows and, in line with guidance, paid a progressive dividend.

The IFRS profit after tax for the year was £14.9m (2013: £8.3m). These numbers are significantly affected by a number of exceptional items in FY 2015 and FY 2014.

Prior to exceptional items, the underlying IFRS profit was £12.0m compared with £14.7m in FY 2014. Lower new business and the continued run-off of Hansard Europe have resulted in lower levels of fees and commissions being earned. These were £56.3m for FY 2015 compared to £59.5m for FY 2014.

The most significant exceptional item affecting profit in FY 2015 was the full and final settlement with HMRC for the weaknesses in issuing Chargeable Events Certificates (as previously announced on 5 June 2015) at a level significantly below that provided for in FY 2014. This resulted in a net benefit, after all professional fees, of £3.0m in FY 2015 (charge of £5.0m in FY 2014).

A European Embedded Value ("EEV") operating loss of £6.3m was incurred in the year (FY 2014: loss of £6.6m). This result is driven largely by reduced new business levels and a smaller overall book of business to cover the Group's expense base. Positive investment return experience and economic assumptions contributed £9.2m to an overall EEV profit of £2.9m (FY 2014: loss of £10.7m).

The Group Embedded Value of £195m has reduced from £204m last year primarily as a result of dividends paid to shareholders of £11.7m.

NEW BUSINESS

On a full year basis the suspension of activities by a large distributor in Japan during FY 2014 continues to account for the year-on-year reduction in business flows.

However we have started to see business levels increase during Q4 of FY 2015 with new business streams in North Asia, the Middle East and Africa. This together with our ongoing proactive marketing activity provides us with a springboard for future growth.

policyholder complaints AND LITIGATION

The Group continues to manage carefully its litigation and other exposures in order to protect regulatory capital holdings and reduce uncertainty. While a number of matters have been settled over the past two years, there remains a number of large, complex cases to which Hansard Europe is a party (generally in conjunction with other defendants).

A new writ was received in June 2015, and added to in July, pertaining to a group of Belgian contract holders, which total approximately £4.5m on a net exposure basis. In aggregate, there are writs of approximately £9.4m outstanding against the Group at the date of this report (30 June 2014: £5.2m).

These amounts are considered to be contingent liabilities in the Group's financial statements. The Group believes it has strong defences and will robustly defend its positions, other than in certain limited circumstances where early settlement may be in the interests of the Group and its shareholders.

DIVIDENDS

The Board has proposed a final dividend of 5.25p per share (2014: 5.0p) which, if approved by the shareholders, represents an increased total dividend of 8.75p (2014: 8.4p) per share in respect of the financial year.

CURRENT TRADING

We are seeing encouraging growth in Q1 FY 2016 compared to Q1 FY 2015 across most of our regions as new IFAs come on stream. This growth continues the encouraging trend established in Q4 FY 2015.

INTERIM MANAGEMENT STATEMENT

The first Interim Management Statement in respect of the year ending 30 June 2016 is expected to be published on 13 November 2015.

Gordon Marr, Group Chief Executive Officer, commented:

"With the strategic enhancements to our product range and distribution networks now complete, we have started to see signs of recovery after a challenging two years. Q4 of FY 2015 saw an encouraging improvement in new sales and we see this continuing into FY 2016. We are continuing to develop our presence in targeted locations which we believe offer significant opportunities in the future. The Group is profitable, well capitalised and poised to take advantage of the significant new business opportunities that we have identified."

For further information:

Notes to editors:

· Hansard Global plc is the holding company of the Hansard Group of companies. The Company was listed on the London Stock Exchange in December 2006. The Group is a specialist long-term savings provider, based in the Isle of Man.

· The Group offers a range of flexible and tax-efficient investment products within a life assurance policy wrapper, designed to appeal to affluent, international investors.

· The Group utilises a controlled cost distribution model by selling policies exclusively through a network of independent financial advisors, and the retail operations of certain financial institutions who provide access to their clients in more than 170 countries. The Group's distribution model is supported by Hansard OnLine, a multi-language internet platform, and is scaleable.

· The principal geographic markets in which the Group currently services policyholders and financial advisors are the Far East, Latin America and the Middle East, in the case of Hansard International Limited, and Western Europe in the case of Hansard Europe Limited, the Group's two life assurance companies. Hansard Europe Limited closed to new business with effect from 30 June 2013. 

· The Group's objective is to grow by attracting new business and positioning itself to adapt rapidly to market trends and conditions. The scaleability and flexibility of the Group's operations allow it to enter or develop new geographic markets and exploit growth opportunities within existing markets without the need for significant further investment.

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

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.

Chairman's Statement

Strategy

Last year, I explained that the Group had undertaken a thorough strategic review to position itself for a successful future in a competitive and fast moving global investment market. We saw opportunity then and we continue to see that opportunity now.

Much has been achieved in rolling-out our revised strategy. We have refreshed our entire product range, making it more competitive, and launched it over the course of the year to our distribution networks. We have worked hard to establish many new relationships with Independent Financial Advisors ("IFAs") who we anticipate will develop and build sustainable business levels for the future. We have made changes to our top executive team and its structure. We have continued to invest in and improve our market leading technology, Hansard OnLine.

I said last year that the full benefits of what we're implementing will take several years to achieve and this remains the case. It takes time to attract and develop new IFAs in new countries and to secure the necessary regulatory licenses to be able to pursue the opportunities identified. We are confident that we have a clear view of what's required to deliver successful business levels and are starting to see increased levels of activity come through.

New business

New business during the year has been below our expectations and the level needed to cover our sales costs. Over the past two years, our two largest markets have been effectively closed by changing regulatory views. This has required us to open new markets and apply for new licences. Such fundamental change takes time, but we have started to see business levels increase during Q4 these levels have been sustained in Q1 2016.

Financial performance

The Group remains profitable and generated strong positive cash flows from its in-force business. Cash earned is allocated in a balanced manner between new business acquisition, long term strategic initiatives and dividends. During the year we continued to invest in our distribution network and in particular in pursuing opportunities to secure additional regulatory licenses in target jurisdictions.

During Q4 of our financial year, we made a full and final settlement with HMRC for the weaknesses in the Group's procedures in issuing Chargeable Events Certificates ("CECs") required by the UK tax authorities. The amount paid of £1.4m was significantly less than the original provision made of £5.0m. After taking into account advisory and professional fees, we have recorded a credit of £3.0m to profit before taxation under International Financial Reporting Standards ("IFRS"). Consequently the Group's IFRS profit has increased to £14.9m after tax (2014: £8.3m).

Our European Embedded Value ("EEV") operating loss after tax of £6.3m (2014: loss of £6.6m) reflects the fact that insufficient sales income is being generated to cover the fixed and variable costs of writing such business. The Board expect this position to be reversed over the coming financial year through additional sales volumes and tight management of costs.

The EEV of the Group, following the payment of dividends of £11.7m in the year is £195.0m (2014: £203.8m).

Dividends

In view of the Board's continuing confidence in the long-term future of the Group, it has resolved to pay an increased final dividend of 5.25p per share (2014: 5.0p). The dividend is subject to approval at the Annual General Meeting. If approved, this will represent total dividends for the financial year of 8.75p per share which is in line with our previous commitment to investors. The final dividend will be paid on 19 November 2015.

Capitalisation and solvency

The Group is well capitalised to meet the requirements of regulators, policyholders, intermediaries and other stakeholders. Aggregate minimum solvency margins continue to be covered 14 times by our capital resources. We have maintained our prudent investment policy for shareholder assets which minimises market risk and has provided a stable and resilient solvency position over recent years.

Concluding remarks

To secure the continued financial success of the Group, significantly greater sales levels are required in 2016 and beyond. This will require at least one new licence to be obtained. Given the groundwork undertaken and the initial positive signs of success, we are confident we are confident that the Group is well placed to deliver this increase in sales.

Philip Gregory

Chairman

22 September 2015

GROUP CHIEF EXECUTIVE OFFICER'S OVERVIEW

The past financial year has seen the Group continue the execution of our strategic plan. We have completed the refresh of our product range and pricing and have built many new distributor relationships as we seek to replace and diversify the significant distribution channel lost in Asia during the previous financial year. We have a business model that is highly scaleable and we expect to leverage upon that as we rebuild business levels back to a more sustainable level for the long term. We are developing our presence in targeted locations where we believe that new licences could offer significant opportunities in the future. The Group remains profitable and well capitalised to take advantage of these opportunities.

STRATEGY DEVELOPMENT

The Group's strategy is to direct its efforts "to be the preferred choice of distributors when recommending international savings and investment products to their clients".

Now that we have completed the refresh of our product range and pricing which aims to provide enhanced value for money for those customers looking to save and invest for the long term, our key priority is to leverage our distribution team, infrastructure and technology to drive greater levels of new business.

This has been reflected in encouraging new business levels in Q4 of the past financial year and we expect to see this trend continue and grow during 2016. We believe the key to significantly greater levels of new business lies in securing additional licenses to operate in a number of targeted locations. While the time frames for receiving regulatory approvals for these initiatives grow increasingly longer as many countries around the globe implement ever expanding regulations, we are confident of launching in at least one such jurisdiction during the second half of the coming financial year.

Behind the scenes we have continued to do a lot of positive things - making our back office more efficient and continuously looking to improve our customer service and turnaround times. We have also continued to invest in our governance, risk and compliance function with a number of additional appointments made during the year.

The business remains highly cash generative and we continue to reflect this in the dividend that we pay to our shareholders.

RESULTS FOR THE YEAR UNDER REVIEW

As referenced in previous years, we believe that the following areas are the fundamental factors for the success of the Group.

1. Sourcing significant flows of regular premium new business flows from diversified target markets;

2. Managing our exposure to business risk;

3. Leveraging Hansard OnLine developments and;

4. Generating positive cash flows to fund a progressive dividend stream.

I would draw your attention to the following. Additional information is contained in the Business and Financial Review.

1. New Business distribution

Following the closure of Hansard Europe Limited to new business with effect from 30 June 2013, new business performance commentary within this document will relate to Hansard International Limited alone, except where indicated.

The level of new business we earned during the financial year ("FY") of £60.6m (using the basis of Present Value of New Business Premiums ("PVNBP") metric) is some 27% below the £83.0m from FY 2014. This reduction was driven primarily by the fact that a significant introducer network in Japan suspended its new business activities in October 2013. This network introduced £10m PVNBP to us in FY 2014.

We have experienced positive growth in some areas: the Middle East and Africa for example has shown encouraging growth with PVNBP increasing from £3.4m in FY 2014 to £7.5m in FY 2015.

Under the guidance of our Chief Distribution Officer, we have initiatives planned for all regions during FY 2016 to increase sales and the Board is committed to maintaining the necessary development cost to do so. It is our view that to make cuts in this area at this point in time would be counterproductive and not allow for the fruits of the hard work performed over the past two years to be realised. We are of course very conscious of overall costs and have sought to contain or reduce costs in other areas of the business through operational efficiencies and automation.

2. Operational, Business and Financial Risks

Our business model involves the acceptance of a number of risks. We maintain an enterprise risk management framework to identify, assess, manage, monitor and control current and emerging risks. However the system of internal control can only provide reasonable and not absolute assurance against material misstatement or loss. The Group's internal control and risk management processes have operated satisfactorily throughout the year. There are a number of areas outlined below which are of significance for understanding the results and operating environment of the Group.

2.1 Resolution of Chargeable Event Certificates issue

Last year, we announced that we had discovered long-standing breaches in the processing and issue of Chargeable Events Certificates ("CECs") required by Her Majesty's Revenue and Customs ("HMRC") in relation to a limited number of contracts held by UK residents. We also confirmed that controls had since been enhanced and external advisors brought in to assist us with resolving the matter and in preventing a recurrence.

We are pleased to have reached a positive conclusion to this matter, having made a full and final settlement with HMRC of £1.4m on an estimate of tax lost basis. This was significantly below our initial prudent estimate of £5m made last year which, after taking into account professional advisory costs, has resulted in a write back to our profit and loss account of £3.0m.

2.2 Operating Model for Hansard Europe

Last year, we advised that plans to protect the interests of clients and other stakeholders of Hansard Europe and to achieve an orderly run-off have been implemented in full. We have continued to identify areas where we can make the run-off activities more efficient and cost effective. A number of additional activities have been outsourced and consolidated to Group's head office in the Isle of Man.

Hansard Europe remains strongly capitalised although the conditions agreed with the Central Bank of Ireland following approval of the run-off plans will defer dividend distributions from that company for the foreseeable future.

2.3 Complaints and potential litigation

We continue to deal with complaints in circumstances where a contract holder believes that the performance of an asset linked to a particular contract is not satisfactory. We do not give investment advice and are not party to the selection of the asset and therefore we feel that such claims have no merit. Sometimes these complaints progress to threatened litigation with the resulting increase in cost and resource to the Group. In many cases the threatened litigation relates to decisions taken by individuals during, or as a result of, the global financial crisis some 5 years or more ago.

At the beginning of this financial year Hansard Europe was facing litigation based on writs totalling €6.5m (approximately £5.2m) as a result of these and related complaints. As a result of further writs issued during the year and in the period to the date of this report, writs outstanding against Hansard Europe currently total €13.3m or approximately £9.4m. The primary driver of the increase is a claim for €6.3m (£4.5m) from a group of Belgian policyholders which challenges the right of Hansard Europe to have operated under the European Union's principle of Free Movement of Services. We believe this to be highly speculative and will robustly defend against it.

In general, each case is considered on its merits and where appropriate the Board will consider circumstances where it is in our best interests to reach a resolution with regard to certain of those claims (without any admission of liability). This approach can help avoid the expense and distraction of extended litigation and to allow management to focus fully on the execution of our strategy. Settlements typically are only a fraction of the original amounts claimed and as a result it is not possible to put a reliable estimate of the ultimate liability of such writs. Such writs continue to be treated as contingent liabilities within the Annual Report and Accounts.

3. Leverage Hansard OnLine

Hansard OnLine is a powerful sales and business administration tool that is used by IFAs and clients the world over. It is an integral part of the Group's operating model and allow us to better service IFAs and clients, embed process efficiencies and be flexible in operational deployment.

Hansard OnLine provides IFAs and clients with a reliable online self-service model which they can access 24/7 from anywhere around the world with an internet connection. It provides an important foundation to our strategic goal of delivery of excellent customer service.

We have continued to invest in the system over the last year, making it even easier to use and access, keeping it up-to-date with mobile technologies and extending its functionality and reporting capabilities.

Additional information concerning developments in Hansard OnLine is set out in the Business and Financial Review.

4. Positive operating cash flows and progressive dividend stream

The Group generates positive operating cash flows to fund investment in new business and support a progressive dividend payment stream. The Board remains committed to a progressive dividend policy.

Although new business flows (and therefore the investment in new business) are less than anticipated for the reasons discussed earlier in this report, the Business and Financial Review reflects that the Group generated a net £16.7m in cash flows to support dividend payments in respect of FY 2015 totalling £11.7m (2014: a net £21.8m to support dividend payments totalling £11.2m).

An interim dividend of 3.5p per share was declared on 25 February 2015. A final dividend of [5.3p per share] has been proposed by the Board and will be considered at the Annual General Meeting on 12 November 2015. When the final dividend is paid at this level, these dividends will [total 8.8p] per share in respect of this financial year, in line with our strategic commitment.

FINANCIAL PERFORMANCE

Results for the year

Financial performance is summarised as follows. A detailed review of performance is set out in the Business and Financial Review that follows this report.

IFRS results

Fees and commissions were £56.3m for FY 2015, down 5.4% or £3.2m from FY 2014. The decreased level of fee income is largely as a result of lower business volumes in recent years but also due to the strengthening of sterling against US dollars during FY 2015.

Administrative and other expenses were £22.8m for FY 2015, down from £30.2m in FY 2014. After eliminating the effect caused by the CEC provision in the 2015 and 2014 results, expenses were broadly consistent year on year. This is also reflective of the headcount of the Group which averaged 205 for FY 2015 compared to 204 in FY 2014.

The write-back of the CEC provision is also the key movement in IFRS profit after tax compared to the previous year, as the Group earned £14.9m profit after tax (2014: £8.3m). After eliminating exceptional items, the underlying profit after tax was £12.0m compared to £14.7m in FY 2014. This reduction is primarily driven by the lower fees and commissions of £3.2m noted above.

EEV results

During the year, the Group has continued to invest in the development and implementation of its strategic objectives, while at the same time managing the expenses of supporting its existing business. Cash flows have remained strongly positive.

With distribution levels being below the necessary level for new business income to cover new business expenses, New Business Contribution is a negative £3.7m for the year (2014: positive £3.3m). Other positive variances and experience has however offset this loss and produced an overall EEV Profit after Tax of £2.9m (2014: loss of £10.7m).

The key drivers of these variances were:

Following the payment of dividends of £11.7m (2014: £11.2m), the Group's EEV is £195.0m at 30 June 2015 (30 June 2014: £203.8m).

Capitalisation and solvency

Our key financial objective is to ensure that the Group's solvency is managed safely through the economic cycle to meet the requirements of regulators, contract holders, intermediaries and shareholders. The Group is well capitalised. The required minimum solvency margins are covered 14 times (2014: 12 times) by our capital resources, which are typically held in a wide range of deposit institutions and in highly-rated money market liquidity funds. This prudent investment policy for shareholder assets minimises market risk and has provided a stable and resilient solvency position over recent years.

We recognise that Hansard Europe's capital surplus is not available for distribution in the foreseeable future. It is therefore included within the total of Required Capital of £27.0m in the analysis of the Group's EEV balance sheet at 30 June 2015. Allowing for this, the EEV balance sheet reflects that the Group has a free surplus of £36.5m (2014: £28.3m) available for investment and distribution.

our people

The Group has a dedicated dynamic workforce across a number of locations around the world. During the year, there have been substantial changes to how we organise our administration and customer service teams which has delivered substantial efficiencies and improved further our top-class customer service and turnaround times. We have also refreshed the composition of our top management team and I'm confident that we are well positioned to meet the strategic challenges and deliver a successful future for the Group. I thank all of our employees for their continued commitment to Hansard.

G S Marr

Group Chief Executive Officer

22 September 2015

BUSINESS AND FINANCIAL REVIEW

Our Business Model and Strategy

Hansard is a specialist long-term savings provider that has been providing innovative financial solutions for international clients since 1987. We focus on helping financial advisors and institutions to provide their clients (individual and corporate investors) with savings and investment products in secure life assurance wrappers to meet long-term savings and investment objectives.

We administer assets in excess of $1 billion for over 500 financial advisor businesses with over 40,000 client accounts in as many as 155 countries.

Business

The Company's head office is in Douglas, Isle of Man, and its principal subsidiaries operate from the Isle of Man and the Republic of Ireland. Hansard International Limited is regulated by the Insurance and Pensions Authority of the Isle of Man Government and has a branch in Malaysia, regulated by the Labuan Financial Services Authority, to support business flows from Asian growth economies. Hansard Europe Limited is regulated by the Central Bank of Ireland. Hansard Europe ceased accepting new business with effect from 30 June 2013.

Our products are designed to appeal to affluent international investors, institutions and wealth-management groups. They are distributed exclusively through independent financial advisors ("IFAs") and the retail operations of financial institutions.

Our network of account executives provides local language-based support services to financial advisors in key territories around the world, supported by our multi-language online platform, Hansard OnLine.

Strategy

Our aim is to be the preferred choice of distributors when recommending international savings and investment products to their clients.  

We have developed attractive products and services and will continue to improve them. We recognise that clients are at the heart of our business and, consequently, we must work hard to build long-term positive relationships with them.

Our vision encompasses every part of our business. Beneath this, we have identified a range of strategic objectives to meet this target and continue to work towards them. Through careful execution of our plans in each of the following areas we intend to add increased scale to the business, on a diversified basis, at acceptable levels of risk and profitability.

· More long-term relationships with distributors;

· Better value for clients;

· A more visible profile in the market;

· Excellent client service;

· A motivated and engaged workforce;

· Market-leading OnLine systems and;

· Progressive dividend policy.

Products

The Group's products are unit-linked regular or single premium life assurance and investment contracts which offer access to a wide range of investment assets. The contracts are flexible, secure and held within "wrappers" allowing life assurance cover or other features depending upon the needs of the client. The contract benefits are directly linked to the value of those assets that are selected by, or on behalf of, the client and held within the wrapper. The Group does not offer investment advice. Contract holders bear the investment risk.

The Group's products do not include any contracts with financial options and/or guarantees regarding investment performance and, hence, unlike the situation faced by many other life assurers, the Group carries no guarantee risk that can cause capital strain. 

As a result of high levels of service, the nature of the Group's products, the functionality of Hansard OnLine, and the ability of the contract holder to reposition assets within a contract, we expect to retain the contract holder relationship over the long term.

Contract holder servicing and related activities are performed by Hansard Administration Services Limited, which is authorised by the Insurance and Pensions Authority of the Isle of Man Government to act as an Insurance Manager to both Hansard International and Hansard Europe.

During the past year we have completed a refresh of our product range and pricing, to the benefit of the client and distributor, and have entered into a number of new business arrangements with IFAs. We expect these actions to provide a solid base for future growth.

Revenues

The main sources of income for the Group are the fees earned from the administration of the insurance contracts. These fees are largely fixed in nature and amount. Approximately 30% of the Group's revenues, under IFRS, are based upon the value of assets under administration. The new business generated in a particular year is expected to earn income for an average period of 14 years. Accordingly, with careful expense management, this provides a healthy return on the capital invested in that business. Our business is therefore long term in nature both from a contract holder perspective and with regards to the income that is generated.

From this income we meet the overheads of the business, invest in our business, invest to acquire new insurance contracts and pay increasing dividends.

Managing Risk

While markets have substantially emerged from the recent financial crisis, there remains fragility to global economic and market growth, and we therefore continue to maintain a robust, low risk balance sheet. We believe this prudent approach to be appropriate to meet the requirements of regulators, contract holders, intermediaries and shareholders.

We are conscious that managing operational risk is critical to our business and we are continuously developing our enterprise risk management system and controls. During the past year, we invested further in our risk and compliance functions, making a number of new appointments. Further details of our approach to risk management and the principal risks facing the Group are outlined in the Risk Management and Internal Control Section.

The regulatory environment continues to evolve and our risk framework will have to respond to a number of developments in future, including:

· Solvency II, which is scheduled for implementation on 1 January 2016, will impose additional costs and reporting on Hansard Europe;

· The Insurance and Pensions Authority of the Isle of Man Government has outlined its timetable for significant changes to the regulatory framework, which will impact on Hansard International and;

· The roll-out of automatic information exchange programmes through regulations such as FATCA and Common Reporting Standards will impact on the entire business.

Hansard OnLine

Our vision is to develop a more intimate and rewarding online experience for our clients and IFAs. Hansard OnLine ("HOL") is key to that vision. HOL is the Group's online platform providing secure, 24/7 access for intermediaries anywhere around the world. Key content can be presented in a wide range of different languages - helping IFAs communicate more effectively with their clients.

We have continued to invest in the system over the last year, making it even easier to use and access, keeping it up-to-date with mobile technologies and extending its functionality and reporting capabilities.

New Business

Hansard OnLine is an important tool for our IFAs with the vast majority of new business applications, over 90%, being submitted online. Such submissions are validated online and arrive 'clean'. Supporting due diligence documentation can also be uploaded securely via Hansard OnLine, which means new business can be received and processed quickly and efficiently.

Online Dealing

Almost all fund switches and Personal Portfolio asset deals placed by IFAs are submitted online. IFAs can place fund switches at an individual client level or across various aggregations of their client base, with fund switches placed online being free of charge. IFAs can also place Personal Portfolio deals online straight-through to our stockbroker.

Smartphone-Friendly

Our client online offering has been significantly revamped to give it a fresher, smartphone-friendly and more modern feel. It has been extended to allow clients to place fund switches online, free of charge. Client can also now manage their address and other personal details online, and the system provides clients with extensive reporting of their fund choices and fund performance.

New Functionality

During the year, numerous new reports have been added and existing functionality enhanced.

For example, the Unit Fund Centre has been extended to provide IFAs with comprehensive reporting of various fund choices for both existing and prospective portfolios, together with sector analyses, benchmark comparisons and past performance graphs. The Unit Fund Centre was made available to clients during the year.

IFAs have been provided with an enhanced Illustrations facility, together with various reports which allow them to analyse and aggregate their client portfolios. Last year we provided IFAs with the ability to make payments online by credit or debit card, and we have since extended the premium payment reporting available to them in order to allow them to better view and manage their clients' payment status, activity and history.

Multi-lingual

Hansard OnLine presents key content to IFAs and clients in many different languages. We are constantly adding to the range of languages available, with our client proposition being extended during year to include Russian and Mandarin.

Showcase

A new version of our online proposition, called Hansard OnLine Lite, was launched during the year which provides prospective and new IFAs with easy access to a subset of the online system. Its purpose is to showcase our online proposition to prospective and new IFAs and to allow easy access to non-sensitive documents and functionality. Users can access our online document library, the Unit Fund Centre, company news and even submit new business online.

Proactive Training

We continually provide dedicated resource to proactively train IFAs and clients on how to get the most out of our online propositions. Training takes place through online Webinars, video-com, Skype, over the telephone and, in some cases, face-to-face with IFAs in their offices.

Electronic Post

Through our online systems, clients can view all documentation and communications relating to their contracts. The number of clients choosing to receive post electronically, rather than in hard-copy form, continues to show a steady increase. Indeed, 60% of client communications are now accessed exclusively online. This provides a more secure, faster and cost efficient means of communication with clients. IFAs can also view client correspondence electronically via Hansard OnLine.

Cost Efficient

As well as being a valuable sales tool, Hansard OnLine is an important administration tool for both IFAs and the Group. It allows both parties to provide better customer service and to reduce operational costs.

Reducing Operational Risk

The straight-through processing of investment instructions (whether received from IFAs or clients) reduces the Group's operational risk exposures, as does the ability of the Group to communicate electronically with IFAs and clients, irrespective of geographical boundaries and time zone limitations.

Key performance indicators

The Group's senior management team monitors a wide range of Key Performance Indicators, both financial and non-financial, that are designed to ensure that performance against targets and expectations across significant areas of activity are monitored and variances explained.

The following is a summary of the key indicators that were monitored during the financial year under review.

New business flows for the year ended 30 June 2015

Strategy DEVELOPMENT

After conducting a thorough review of the sales and marketing operations of the Group last year, we have now completed a product and pricing refresh that was an important part of making our product range more competitive and attractive to customers and advisors.

We have sought to build distribution relationships for the long term over a diversified geographical base and are working hard to pursue new licenses in a small number of targeted jurisdictions where we believe significantly increased levels of business can be obtained in the future.

We are conscious that the business levels of the 2015 financial year are not of the scale necessary for the long term and that the recovery from the loss of our largest distribution network has taken longer than expected. We have however started to see encouraging levels of growth in a number of areas in the last quarter of the 2015 financial year, particularly in East Asia, the Middle East and Africa, and expect this to continue in the 2016 financial year.

We are confident that our newly-introduced products are well-tailored to the requirements of our target clients and that these products, our augmented sales team and an increasing pool of distribution relationships will provide a platform for sustainable, diversified new business flows going forward.

STRATEGIC INITIATIVES

These initiatives impact upon the whole of the Group's business, its clients and other stakeholders.

· Policyholders and Product

The Group has developed a range of savings and investment products that are designed to allow us to access business more successfully in a number of target markets, having made a significant change to our pricing model, to the benefit of the consumer and distributor.

· Distribution

The Group has continued negotiations with a number of well-established distributors, including brokers, expatriate IFAs, insurers and private banks involved in both expatriate and local markets around the world. Our main aim is to build long-term relationships with our distributors in key markets with growing economies and high concentrations of wealth. During the course of the 2015 financial year, we have added 43 new quality terms of business adding well over 200 new brokers to our available distribution in target markets.

· Hansard OnLine

As reported in the section on Hansard OnLine above, we believe that Hansard OnLine is a very powerful resource and have committed to continually increase accessibility and functionality.

· Resources

The Group's proposition is to develop and enhance relationships with policyholders and intermediaries through the use of our people, products and technology in a way that meets shared objectives.

We have completed a restructure and refocus of our sales force and have recruited a number of new, highly experienced Account Executives in key regions around the world, primarily to focus on East Asia, the Middle East and the international expatriate market.

New Business Flows - year ended 30 june 2015

Following the closure of Hansard Europe to new business with effect from 30 June 2013, the new business performance reported below is that of Hansard International alone.

New business figures were lower than the prior year as the last remaining effects of the loss of the Group's largest distributor work their way through. We are actively seeking to replace this business, and have seen encouraging signs of growth towards the end of the 2015 financial year in North Asia, the Middle East and Africa.

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

New business flows for Hansard International on the basis of PVNBP are summarised as follows:

We continue to receive business from a diverse range of financial advisors around the world. Our focus on growth markets is reflected in the proportions of contractual premiums denominated in US dollars while the reduction in Japanese Yen flows in the table below demonstrates the effect of the loss of Japanese business.

· New business margins

Continued low volumes of new business impact directly on the Group's new business margins. Reduced volumes, coupled with the more competitive product design and continuing investment in channel development, have resulted in a negative new business margin of approximately 6.2% on the PVNBP basis for FY 2015. As business volumes recover to sustainable levels, the cost base is highly scaleable and we plan to target a blended margin at mid-single digit levels over the medium term. 

Presentation of financial results

Our business is long term in nature. For this reason we present the results on an EEV basis in addition to the statutory IFRS basis. We believe that EEV is a valid measure of profitability and shareholder value. Our embedded value is based on the EEV principles which were set out as an industry standard by the Chief Financial Officers (CFO) Forum in 2004 and extended in 2005.

The profit that the Group expects to earn from the issue of an insurance contract is the same, irrespective of the basis of measurement, however:

· The EEV result is a discounted cash flow valuation of the future profits expected to emerge from the current book of insurance contracts and provides a more complete recognition of management's activity throughout the financial year. It demonstrates the expected emergence of shareholder cash over the long term, by reflecting the net present value of the expected future cash flows.

· The IFRS methodology smoothes recognition of profit from new business by spreading the initial costs (and revenues) evenly over the life of the business. The IFRS result therefore, reflects neither the future shareholder value added, nor the cash impact of the new business in a particular year.

Results for the year

The following is a summary of key items to allow readers to better understand the results for the year. A small number of comparative figures have been restated in this section to ensure consistency of presentation. After recognising the exceptional items referred to below, IFRS profit after tax for the year is £14.9m (2014: £8.3m).

During the 2015 financial year the most significant one-off item affecting profit was the settlement of the CEC provision at a level significantly below that provided for in 2014. This resulted in a benefit of £3.0m in 2015 (charge of £5.0m in 2014). Cost of litigation settlements were £0.1m (2014: £0.7m). There was also a charge taken in 2014 of £0.7m in relation to the closure of Hansard Europe to new business.

Prior to those exceptional items totalling a benefit of £2.9m (2014: charge of £6.4m), the underlying IFRS profit was £12.0m before taxation, compared with £14.7m in FY 2014.

Abridged consolidated income statement

The consolidated income statement presented under IFRS reflects the financial results of the Group's activities during the year. This income statement however, as a result of its method of presentation, incorporates a number of features that might affect an understanding of the results of the Group's underlying transactions. This relates principally to:

· Investment income, gains and losses relating to the assets administered by the Group to back its liability to contract holders. These assets are selected by the contract holder or an authorised intermediary and the contract holder bears the investment risk. Investment gains during the year attributable to contract holder assets were £47.8m (2014: £7.3m).

· Fund management fees paid by the Group to third parties having a relationship with the underlying contract. While fund management fees paid are properly recorded in the consolidated income statement under IFRS, the disclosure distorts results compared with an understanding of the Group's own entitlement to fund management fees and any requirement to pay such fees for services rendered in respect of the Group's own assets. In the 2015 FY third party fund management fees attributable to contract holder assets were £3.8 (2014: £4.3m). These are reflected in both income and expenses under the IFRS consolidated statement of comprehensive income.

An abridged non-GAAP consolidated income statement in relation to the Group's own activities is presented below, excluding the items of income and expenditure indicated above.

Fees and commissions

Fees and commissions for the year attributable to Group activities are £52.5m, a decrease of 4.7% over the previous year.

Contract fee income totalled £38.7m for the year (2014: £41.1m). Elements of contract fee income are largely fixed in nature, representing both the smoothing of up-front income required under IFRS, and contract-servicing charges. The reduction in the year is largely due to the run off of the Dublin-based book since its closure to new business.

Fund management fees accruing to the Group and commissions receivable from third parties totalling £13.8m (2014: £14.1m) are related directly to the value of assets under administration and are therefore exposed to market movements, currency rates and valuation judgements. The level of this income, when compared with last year, reflects primarily that the reported level of assets under administration has fallen by approximately 4% over the course of this financial year.

A summary of fees and commissions is set out below:

Included in contract fee income is £21.9m (2014: £21.3m) representing the amortisation of fees prepaid in previous years, as can be seen in the analysis set out below. This increased level of amortised fees incorporates an element of deferred income on contracts that have lapsed during the year.

Investment and other income

Volatility in foreign exchange markets continued throughout the year. Having regard to the geographic spread of the Group's clients and the currencies in which their contracts are denominated, the fluctuations in sterling since 30 June 2014 has reduced investment and other income by £0.2m (2014: reduction of £0.8m).

A summary of Investment and other income is set out below:

Origination costs

Under IFRS, new business commissions paid, together with the directly attributable incremental costs incurred on the issue of a contract, are deferred and amortised over the life of that contract to match the longer-term income streams expected to accrue from the contracts issued this year. The life of a regular premium contract is deemed to be its agreed term. Typical terms range between 10 years and 25 years. The expected life of a typical single premium contract is 15 years. Other elements of the Group's new business costs, for example recruitment costs and initial payments to new Account Executives, which reflect investment in distribution resources in line with our strategy, are expensed as incurred.

The continued reduced new business volumes which the Group has experienced during the year are reflected in a fall in the direct costs of new business to £7.6m from £12.2m in the previous financial year.

Amounts totalling £18.0m (2014: £19.2m) have been expensed to match contract fee income earned this year from contracts issued in previous financial years, as can be seen in the analysis below. These amortised costs incorporate an element of deferred origination costs on those contracts that have lapsed during the year.

Origination costs in the year are:

Administrative and other expenses

We continue to robustly manage our expense base to control administrative expenses while supporting our strategic developments and other new business activities with targeted expenditure.

The largest impact to total administrative and other expenses this year is from the settlement of the CEC provision at a level significantly below that provided for in 2014. This resulted in a benefit of £3.0m in 2015 (charge of £5.0m in 2014). There were a number of other exceptional items in 2014 affecting 2014's administrative and other expenses, namely the cost of litigation settlements of £0.7m and a charge of £0.7m taken in relation to the closure of Hansard Europe to new business. These costs were modest in 2015 (£0.1m relating to litigation settlements).

An analysis of administrative and other expenses is set out in notes 8 and 9 to the consolidated financial statements under IFRS. The following summarises some of the expenses attributable to the Group's own activities.

Salaries and other employment costs have increased by £0.7m or 8% to £9.5m. This is primarily as a result of changes in the management structure, increased resources in the Legal, Compliance and Risk functions and low single digit salary inflation. The average Group headcount for the 2015 financial year was 206 people (2014: 205 people).

Management have sought to offset such increases by harnessing process efficiencies. A reorganisation of the Group's policy administration function was successfully implemented during the year, substantially reducing processing times and improving customer and broker service. It is expected that this will allow for lower levels of like-for-like headcount in this area going forward.

Other administrative expenses have increased by 10% to £6.7m. This increase is driven by a number of items including provisions against balances due from IFAs, increased death claims under policy contracts and various brand related sponsorships and events.

Growth investment spend represents internal and external costs to generate opportunities for growth. The Group continues to invest to build its business and to implement product and technological changes to support intermediaries, policyholders and other stakeholders. The amount of expenditure has increased from the previous year reflecting our commitment to pursue additional licences in target markets, including £0.3m in audit fees.

Professional fees including audit in the year include legal fees of £0.5m (2014: £0.9m) incurred to protect the Group's position against complaints; amounts totalling £0.6m paid to the Group's auditor (2014: £0.5m); £0.4m (2014: £0.3m) for administration, custody, dealing and other charges paid under the terms of the investment processing outsourcing arrangements; recruitment costs of £0.3m (2014: £0.1m) and costs of Investor Relations activities of £0.4m (2014: £0.4m).

Cash Flow ANALYSIS

Operating cash flows continue to be strongly positive. The operational cash surplus (fees deducted from contracts and commissions received, less operational expenses paid) is £24.3m (2014: £37.8m). This surplus was more than sufficient to fund investment in new business in the year of £8.6m (2014: £15.4m).

The Group believes that the best use of its capital resources is to invest in new business, recognising that continued investment in profitable regular premium contracts produces a short-term cash strain as a result of the commission and other costs incurred at inception of a contract.

To reduce the risk that the targeted return on investment in new business is jeopardised, the Group withholds a portion of initial commission from certain intermediaries pending completion of the initial period of particular contracts. At the balance sheet date, amounts totalling £1.2m (2014: £2.3m) had been withheld. These amounts are reflected within "Other payables" in note 19 to the consolidated balance sheet.

The following non-GAAP tables summarise the Group's own cash flows in the year. Group cash and deposits are presented as the total of cash and cash equivalents of £65.4m (2014: £58.4m) plus the shareholder portion of deposits of £15.5m (2014: £20.1m) contained within the total £93.3m (2014: £103.0m) of Deposits and money market funds on the Consolidated Balance Sheet of the Group. The remainder of the £93.3m Deposits and money market funds form part of contract holder unit linked funds.

This analysis demonstrates that the in-force contract book continues to generate the cash required to support the Group's main business objectives of investing in new business, enhancing distribution and other infrastructure and supporting dividend payments. Dividends of £11.7m (2014: £11.2m) paid during the year have been funded by the Group's own resources. Overall cash and deposits have increased from £78.5m at 30 June 2014 to £80.9m at 30 June 2015.

Bank deposits and money market funds

The Group holds its liquid assets in highly-rated money market liquidity funds and with a wide range of deposit institutions to minimise market risk. Deposits totalling £15.5m have original maturity dates greater than 3 months and are therefore excluded from the definition of "cash and cash equivalents" under IFRS as reflected in note 16 to the consolidated balance sheet (2014: £20.1m). The following table summarises the total shareholder cash and deposits at the balance sheet date.

The longer-term term deposits have maturity dates of between 4 months and 11 months from the balance sheet date.

Abridged consolidated balance sheet

The consolidated balance sheet presented under IFRS reflects the financial position of the Group at 30 June 2015. As a result of its method of presentation, the consolidated balance sheet incorporates the financial assets held to back the Group's liability to contract holders, and also incorporates the net liability to those contract holders of £907.1m (2014: £943.6m). Additionally, that portion of the Group's capital that is held in bank deposits is disclosed in "cash and cash equivalents" based on original maturity terms, as noted above. 

The abridged consolidated balance sheet presented below, adjusted for those differences in disclosure, allows a better understanding of the Group's own capital position.

Deferred origination costs

The deferral of origination costs reflects that the Group will earn fees over the long-term from contracts issued in a given financial year. These costs are recoverable out of future net income from the relevant contract and are charged to the income statement on a straight-line basis over the life of each contract.

The Group has continued to invest in new business during the year under review but the reduction in the rate of acquisition, as compared with recent years, is reflected in a net decrease in carrying value of deferred origination costs since 30 June 2014.

The movement in value over the financial year is summarised below.

The level of costs amortised during the year incorporates an element of deferred origination costs on policies that have lapsed during the year, in order to ensure that the carrying value of deferred origination costs is not impaired by contract holder activity.

Deferred income

The treatment of deferred income ensures that contract fees are taken to the consolidated income statement in equal installments over the longer-term, reflecting the services to be provided over the period of the contract. This is consistent with the treatment of deferred origination costs. Deferred income at the balance sheet date is the unamortised balance of accumulated initial amounts received on new business.

The proportion of income deferred in any one year is dependent upon the mix and volume of new business flows in previous years. The Group's focus on regular premium business means that these fees are received over the initial period of the contract, rather than being received up front, as is typically the case with single premium contracts.

The majority of initial fees collected during the year relates to charges taken from contracts issued in prior financial years demonstrating the cash generative nature of the business. Regular premium contracts issued in this financial year will generate the majority of their initial fees over the next 18 months on average.

The movement in value of deferred income over the financial year is summarised below.

The level of income recognised in contract fees during the year incorporates an element of deferred income on those contracts that have lapsed during the year, in order to ensure that the carrying value of deferred income is not impaired.

CONTRACT holder Assets under administration

In the following paragraphs, contract holder assets under administration ("AuA"), refers to net assets held to cover financial liabilities, as analysed in note 17 to the consolidated financial statements presented under IFRS.

The Group enjoys a stream of cash flows from the large number of regular premium contracts administered on behalf of clients around the world. The majority of premium contributions are designated in currencies other than sterling, reflecting the wide geographical spread of those policyholders. Premium contributions during the year includes additional contributions of approximately £5.4m (FY 2014: £7m) relating to single and regular premium contracts issued by Hansard Europe in prior years.

These flows are offset by charges and withdrawals, by premium holidays affecting regular premium policies and by market valuation movements. Certain assets held within contracts at the year-end remain impacted by the global financial crisis. While we have seen efforts in this financial year to resolve uncertainty over asset values, we have also seen a small number of funds held within contracts being affected by liquidity or other issues that hinder their sales or redemptions on normal terms. While the directors have exercised their judgement in relation to the fair value of these assets the cumulative impact on the balance sheet is immaterial. Accordingly, the value of AuA at 30 June 2015 is £907.1m, some 4% below the value at 30 June 2014.

AuA currency composition

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. The currency composition of AuA at the balance sheet date is similar to that as at 30 June 2014, with 59% of AuA designated in US dollar (2014: 54%) and 19% in euro (2014: 25%). The reduction in assets held in the euro has been caused in part by the closure of Hansard Europe to new business and the natural reduction of that book. 2015 saw £51.2m of market increases compared to relatively stable currency movements as reflected in the following table.

The analysis of AuA held by each Group subsidiary to cover financial liabilities is as follows:

complaints and potential litigation

In valuation issues such as those referred to above, financial services institutions are drawn into disputes in cases where the performance of assets selected directly by or on behalf of contract holders through their advisors fails to meet their expectations. This is particularly relevant in the case of more complex structured products distributed throughout Europe.

Even though the Group does not give any investment advice, as this is left to the contract holder directly or through an agent, advisor or an entity appointed at their request or preference, the Group has been subject to a number of complaints in relation to the performance of assets linked to contracts.

Some of these complaints escalate into litigation, particularly in Europe. At the beginning of this financial year the Group was facing litigation based on writs totalling €6.5m (£5.2m). As a result of further writs issued during the 2015 financial year and in the period to the date of this report, there remains outstanding writs served upon Hansard Europe totalling a net €13.3m or approximately £9.4m. The primary reason for the increase relates to a group of Belgian policyholders who have brought a net claim for €6.3m (£4.5m) which is based on a challenge to the European Union's principle of Free Movement of Services. We believe this to be highly speculative and intend to robustly defend.

While it is not possible to forecast or determine the final results of such litigation, based on the pleadings and advice received from the Group's legal representatives, we believe we have a strong chance of success in defending these claims. The writs have therefore been treated as contingent liabilities and are disclosed in note 27 to the consolidated financial statements.

Notwithstanding the above, there may be circumstances where in order to avoid the expense and distraction of extended litigation, the Group may consider it in the best interests of it and its shareholders to reach a settled resolution. Such settlements totalled £0.1m for 2015 (2014: £0.7).

Results for the year under European Embedded Value

Headline Results

During the course of the 2015 financial year, the Group made a European Embedded Value ("EEV") profit of £2.9m (2014: loss of £10.7m), analysed into an EEV operating loss of £6.3m (2014: loss of £6.6m) and gains from investment return variances and economic assumption changes of £9.2m (2014: losses of £4.1m).

The EEV operating loss is primarily driven by a negative new business contribution of £3.7m. The contribution is negative because levels of new business were not at sufficient levels to offset the costs of new business.

Headline results for the EEV are shown in the tables below:

The EEV at 30 June 2015 has fallen to £195.0m from the 30 June 2014 level of £203.8m following the payment of dividends of £11.7m for the year (2014: £11.2m).

Sales Metrics

New business comparatives are shown below:

The negative NBC reflects the reduction in new business volumes and the spreading of initial expenses over fewer policies sold and to a lesser extent lower charges on the newer products.

The EEV has reduced over the year: its high-level components are shown in the table below:

Net Worth has grown to £63.5m from £53.4m as profits are earned from the existing business. Free Surplus, which is available for investment and distribution, has grown by 29% to £36.5m from £28.3m reflecting the fact that less of the cash which continues to emerge from the existing policies was needed to invest in setting up new policies. At the balance sheet date, the Net Worth of the Group is represented by liquid cash balances. The Required Capital has increased: it currently includes around £12.5m of Hansard Europe capital, the use of which management estimates is constrained for three years.

The change in VFP reflects sterling exchange rates on 30 June 2015, new business levels, the conversion of VFP to Net Worth and the impact of policyholder behaviour and renewal expenses. Notably, lower new business means the stock of future profits has fallen.

The Other component of VFP is the reduction for non-market risk and frictional costs, neither of which have changed substantially over the year.

Change In Net Worth

The Net Worth is higher than projected by £2.2m (2014: lower by £5.4m): the primary reason for this is the favourable settlement of the Chargeable Event Certificate issue during the year. The Net Worth has grown by £36.0m (2014 £36.7m), of which £14.1m (2014: £16.8m) has been invested in new business (shown as New Business Strain) and £11.7m has been paid in dividends (2014: £11.2m).

EEV Profit / (Loss) after tax

The Group's EEV profit after tax is £2.9m (2014: (£10.7m)). Lower new business, operating assumption and model changes drive this result at an operating profit level. Thereafter, the impact of positive investment return variances and economic assumption changes more than offset the loss at an operating level.

Experience Variances

Experience variances arise when the behaviour of the existing book differs from that assumed. Major contributors to the experience variances this year include positive premium persistency and the release of the Chargeable Event Certificate overprovision partially offset by more encashments than projected.

Operating Assumption Changes

As a result of the fall in new business levels, management have strengthened the expense assumptions to reflect the fact that there are fewer policies to support on-going expenses.

Investment performance

Investment performance principally reflects the investment choices, by nature and currency, made by policyholders. It is therefore largely outside the Group's control.

Economic assumption changes

There was a positive variance of £4.9m (2014: £4.1m) from Economic Assumption Changes.

The Risk Discount Rate and Unit Growth variances arise from the application of the EEV Principles, which require that changes in government bond yields for the currencies in which policyholder assets are denominated are reflected. The other changes reflect changes in policyholder activity margins.

Net asset value per share

On an EEV basis, the net asset value per share at 30 June 2015 is 141.9p (2014: 148.6p) based on the EEV at the balance sheet date divided by the number of shares in issue at that date, being 137,388,669 ordinary shares (2014: 137,379,634 shares).

The net asset value per share at 30 June 2015 on an IFRS basis, is 29.2p (2014: 26.9p).

Risk management and internal control

As with all businesses, the Group is exposed to risk in pursuit of its objectives. The Board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving those objectives. The Board is also responsible for maintaining sound risk management and internal control systems and for reviewing their effectiveness. The Group maintains an enterprise risk management ("ERM") framework to identify, assess, manage, monitor and control current and emerging risks.

During the year the Group has continued to invest in risk management resources to promptly identify, measure, manage, report and monitor risks that affect the achievement of objectives. In particular, we have brought together our Governance, Risk and Compliance staff into one department and invested in additional resources.

The system of internal control is designed to manage rather than eliminate risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

Review of risk management and internal control systems

The identification and evaluation of risks to key business objectives is conducted on an ongoing and consistent basis as indicated below. These processes are managed and monitored by executive management.

In accordance with provision C.2.1 of the UK Corporate Governance Code, the Board (through the Audit Committee) has conducted a review of the effectiveness of the company's risk management and internal control systems including financial, operational and compliance controls There has been significant investment in the risk management and internal control systems in order to reduce the possibility of loss events such as that experienced last year with the Chargeable Event Certificates issue. We continue to develop our ERM Framework and to introduce further improvements as appropriate.

Risk management resources

The Board has established a Management Risk Committee ("MRC") covering the Group's subsidiaries and operations, to supplement the activities of the Audit and Risk Committees operated by the regulated entities within the Group. The members of the Committee comprise a number of the Group's executive and senior management. The Committee is chaired by the Group Chief Executive Officer.

The objective and role of the Management Risk Committee is to:

· report to the Board on all risk matters across the Group;

· assist the Audit Committee and the Board in ensuring an effective system of internal control and compliance, including its obligations under applicable laws and regulations and;

· assist the Board in ensuring the embedding of the Enterprise Risk Management framework across the Group.

The terms of reference of the Committee are published on the Company's website.

Risk management framework

The Group operates a Three Lines of Defence model of risk management, with clearly defined roles and responsibilities for committees and individuals:

First Line: Day-to-day risk management is delegated from the Board to the Group Chief Executive Officer and, through a system of delegated authorities and limits, to business managers.

Second Line: Risk oversight is provided by the Group Chief Risk Officer, who is now responsible for the new Governance, Risk and Compliance Department, and by the established risk management committees.

Third Line: Independent verification of the adequacy and effectiveness of the risk management and internal control systems is provided by the Group Internal Audit function.

In support of its accountabilities to operate a sound system of internal control the Board has implemented and maintains an enterprise risk management ("ERM") framework. To support the governance process the Group relies on documented policies and guidelines.

The ERM framework recognises the value to be achieved from ensuring that risk management and internal control are embedded as continuous and developing processes within strategy setting and day-to-day operating activities and are not treated as discrete activities, performed at certain points in time.

The key features of the systems of internal control which make up the ERM framework include:

· Terms of reference for the Board and each of its committees;

· A clear organisational structure, with documented delegation of authority from the Board to executive management, using the three lines of defence model

· Committees of senior managers responsible for reviewing the Group's financial and non-financial risks and;

· Risk management and internal control frameworks for the Group's operations. Each subsidiary company Board is required to attest to its adherence to these control frameworks on a quarterly basis. Additionally each department manager is required to confirm to the MRC that the risk and control framework is effective.

The overarching objectives of the ERM framework combine five interrelated elements, which enable the management of risk at strategic, programme and operational levels to be integrated, so that the levels of activity support each other.

These five elements are defined as:

· Establish business objectives;

· Risk identification and assessment;

· Risk response, including risk mitigation;

· Control monitoring and;

· Reporting.

The result is a risk management strategy, which is led from the top whilst being embedded in the Group's business systems, strategy and policy setting processes and the normal working routines and activities of the organisation. In this way risk management becomes an intrinsic part of the way business is conducted within the Group.

Risk appetite

The Board has established a formal Risk Appetite Statement which specifies the level of risk that may be assumed by the Group's operating subsidiary companies in order to achieve the Group's strategic, operational, financial and compliance objectives.

Risk identification and assessment

The ERM framework requires all business areas to identify and record risks to business objectives. These risks are rated according to the impact and likelihood of risk events, and these ratings are continuously re-assessed in response to changes in the business environment. This aspect of the configuration and integration of the ERM framework ensures that all staff are made aware of the relevance of risk management to the achievement of their individual objectives and accountabilities.

Risk monitoring and management

As well as operational management monitoring activities, the MRC meet on a regular basis to discuss emergent strategic and operational risks.

Risk reporting

The subsidiary company Boards are asked to attest to the effective functioning of the risk management and internal control framework and the ongoing identification and evaluation of risk within each subsidiary. These attestations are then presented to give assurance to the Group Board.

Financial reporting process

The Group maintains a process to assist the Board in understanding the risks to the Group of failing to meet its objectives. This incorporates a system of planning and sensitivity analysis incorporating Board approval of forecast financial and other information. The Board receives regular representations from the senior executives.

Performance against targets is reported to the Board quarterly through a review of the Group's and Company's results based on accounting policies that are applied consistently throughout the Group. Draft financial statements are prepared quarterly by the Chief Financial Officer ("CFO"). The members of the Audit Committee review the draft financial statements for the half year ended 31 December annually and for the full financial year, and meet with the CFO to discuss and challenge the presentation and disclosures therein. Once the draft document is approved by the Audit Committee, it is reviewed by the Board before final approval at a Board meeting.

Outsourcing

The majority of investment dealing and custody processes in relation to policyholder assets are outsourced to Capital International Limited ("CIL"), a company authorised by the Financial Supervision Commission of the Isle of Man Government and a member of the London Stock Exchange.

These processes are detailed in a formal contract that incorporates notice periods and a full exit management plan. Delivery of services under the contract is monitored by a dedicated relationship manager against a documented Service Level Agreement and Key Performance Indicators.

CIL is required to confirm monthly that no material control issues have been identified in their operations. Each year they are required to confirm and evidence the adequacy and effectiveness of their internal control framework through an Assurance report on their internal controls. The last such report was issued by CIL on 20 May 2015 and did not reveal any material control deficiencies in the period from 1 January 2014 to 31 December 2014. Every second year, an external independent review is performed. The next scheduled independent review will take place in early 2016 in relation to the year 1 January 2015 to 31 December 2015.

Risks relating to the Group's financial and other exposures

Hansard's business model involves the controlled acceptance and management of risk exposures. Under the terms of the unit-linked investment contracts issued by the Group, the policyholder bears the investment risk on the assets in the unit-linked funds, as the policy benefits are directly linked to the value of the assets in the funds. These assets are administered in a manner consistent with the expectations of the policyholders. By definition, there is a precise match between the investment assets and the policyholder liabilities, and so the market risk and credit risk lie with policyholders.

The Group's exposure on this unit-linked business is limited to the extent that income arising from asset management charges and commissions is generally based on the value of assets in the funds, and any sustained falls in value will reduce earnings. In addition, there are certain financial risks (credit, market and liquidity risks) in relation to the investment of shareholders' funds. The Group's exposure to financial risks is explained in note 3 to the consolidated financial statements.

The Board believes that the principal risks facing the Group's earnings and financial position are those risks which are inherent to the Group's business model and to the environment within which the Group operates. The Group's business model has served to minimise the principal risks facing the Group for a number of years but the regulatory environment continues to evolve and the risk framework will have to respond to a number of developments in future, including:

· Solvency II, which is scheduled for implementation on 1 January 2016, will impose additional costs and reporting on Hansard Europe;

· The Insurance and Pensions Authority of the Isle of Man Government ("IPA") has outlined its timetable for significant changes to the regulatory framework, which will impact on Hansard International and;

· The roll-out of automatic information exchange programmes through regulations such as FATCA and Common Reporting Standards will impact on the entire business.

The Board reviews and considers its principal risks on an annual basis. The following table provides examples of the principal inherent risks that may impact on the Group's strategic objectives, profitability or capital and how such risks are managed. Where necessary, the Group will implement controls to mitigate the risks and minimise the potential impact of the risks on the Group as far as possible.

Principal Risks

Other Key Risks

In addition to the principal risks identified above, there are other key risks that the Group is subject to that derive from the nature of the business it operates. These are outlined below, together with how they are managed.

Further detail around financial risks is outlined in Note 3 (Financial Risk Management) to the consolidated financial statements.

Consolidated Statement of Changes in Equity

for the year ended 30 June 2015

Consolidated Balance Sheet as at 30 June 2015

Notes to the consolidated financial statements

1 Principal accounting policies

Hansard Global plc ("the Company") is a limited liability company, incorporated in the Isle of Man, whose shares are publicly traded. The principal activity of the Company is to act as the holding company of the Hansard group of companies.

These consolidated financial statements incorporate the assets, liabilities and the results of the Company and its subsidiary undertakings ("the Group"). The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below or, in the case of accounting policies that relate to separately disclosed values in the primary statements, within the relevant note to these consolidated financial statements. These policies have been consistently applied, unless otherwise stated.

1.1 Basis of presentation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRSs"), International Financial Reporting Standards Interpretations Committee ("IFRSIC") interpretations, and with the Isle of Man Companies Acts 1931 to 2004. The financial statements have been prepared under the historical cost convention as modified by the revaluation of financial investments and financial liabilities at fair value through profit or loss. The Group has applied all International Financial Reporting Standards adopted by the European Union and effective at 30 June 2015.

The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

There has been no significant impact in the financial statements due to the mandatory application of new accounting standards for the year ended 30 June 2015. 

The following new standards and interpretations are in issue but not yet effective and have not been early adopted by the Group:

· Amendment to IAS 16 ,'Property, plant and equipment' and IAS 38,'Intangible assets', on depreciation and amortisation Amendments to IAS 27, 'Separate financial statements' on equity accounting IAS 39, 'Financial Instruments' - Recognition and measurement

· IFRS 10, 'Consolidated Financial Statements'

· IFRS 12, 'Disclosures of Interest in Other Entities'

· IFRS 15 Revenue from contracts with customers

· Annual improvements 2014

Amendments to IAS 1,'Presentation of financial statements' disclosure initiative The adoption of the above standards is not expected to have any material impact on the Group's results.

There are no other standards, amendments or interpretations to existing standards that are not yet effective, that would have a material impact on the Group's financial statements.

The financial statements are presented in pounds sterling rounded to the nearest one hundred thousand pounds.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting year. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 2.

1.2 Basis of consolidation

The consolidated financial statements incorporate the assets, liabilities and the results of the Company and of its subsidiary undertakings. Subsidiaries are those entities in which the Company directly or indirectly has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Where necessary, accounting policies applied by subsidiary companies have been adjusted to present consistent disclosures on a consolidated basis. Intra-group transactions, balances and unrealised gains and losses arising from intra-group transactions, are eliminated in preparing these consolidated financial statements.

2 Critical accounting estimates and judgements in applying accounting policies

Estimates, assumptions and judgements are used in the application of accounting policies in these financial statements. Critical accounting estimates are those which involve the most complex or subjective judgements or assessments. Estimates, assumptions and judgements are evaluated continually and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes may differ from assumptions and estimates made by management.

2.1 Accounting estimates and assumptions

The principal areas in which the Group applies accounting estimates and assumptions are in deciding the type of management expenses that are treated as origination costs and the period of amortisation of deferred origination costs and deferred income. Estimates are also applied in determining the recoverability of deferred origination costs.

2.1.1 Origination costs

Management expenses have been reviewed to determine the relationship of such expense to the issue of an investment contract. Certain expenses vary with the level of new business production and have been treated as origination costs. Other expenses are written off as incurred.

2.1.2 Amortisation of deferred origination costs and deferred income

Deferred origination costs and deferred income are amortised on a straight-line basis over the life of the underlying investment contract. For those contracts with a contractual policy term, this is the period used for amortisation, as there is a high persistency and the expected average life of these contracts approximates to the contract term. For the contracts that do not have a contractual policy term, deferred origination costs and deferred income are amortised over the expected life of the contract estimated to be 15 years. If a policyholder surrenders before the end of the policy term or expected life, the remaining balance of the deferred origination costs and deferred income attributable to that contract are written off immediately to crystallise the income and the related expense.

2.1.3 Recoverability of deferred origination costs

Formal reviews to assess the recoverability of deferred origination costs on investment contracts are carried out at each balance sheet date to determine whether there is any indication of impairment based on the estimated future income levels by product family level. If, based upon a review of the remaining contracts, there is any other indication of irrecoverability or impairment, the contract's recoverable amount is estimated. Impairment losses are reversed through the statement of comprehensive income if there is a change in the estimates used to determine the recoverable amount. Such losses are reversed only to the extent that the contract's carrying amount does not exceed the carrying amount that would have been determined, net of amortisation where applicable, if no impairment loss had been recognised.

2.2 Judgements

The primary areas in which the Group has applied judgement in applying accounting policies are as follows:

· the classification of contracts between insurance and investment business. All contracts are treated as investment contracts as they do not transfer significant insurance risk;

· the Group has elected to treat all assets backing its contracts as fair value through profit or loss although some of the assets in question may ultimately be held to maturity;

· the fair value of certain financial investments. Where the directors determine that there is no active market for a particular financial instrument, fair value is assessed using valuation techniques based on available relevant information and an appraisal of all associated risks. This process requires the exercise of significant judgement on the part of Directors, as is discussed further in note 3.5 to these consolidated financial statements and;

· to determine whether a provision is required in respect of any pending or threatened litigation, which is addressed in note 27.2.

 3 Financial risk management

Risk management objectives and risk policies

The Group's objective in the management of financial risk is to minimise, where practicable, its exposure to such risk, except when necessary to support other objectives. The Group seeks to manage risk through the operation of unit-linked business whereby the contract holder bears the financial risk. In addition, shareholder assets are invested in highly rated investments.

Overall responsibility for the management of the Group's exposure to risk is vested in the Board. To support it in this role, an enterprise risk management framework is in place comprising risk identification, risk assessment, control and reporting processes. Additionally, the Board and the Boards of subsidiary companies have established a number of Committees with defined terms of reference. These are the Actuarial Review, Audit, Executive, Investment and Risk Committees. Additional information concerning the operation of the Board Committees is contained in the Corporate Governance section of this Report and Accounts.

The more significant financial risks to which the Group is exposed are set out below. For each category of risk, the Group determines its risk appetite and sets its investment, treasury and associated policies accordingly.

3.1 Market risk

This is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices, analysed between price, interest rate and currency risk. The Group adopts a risk averse approach to market risk, with a stated policy of not actively pursuing or accepting market risk except where necessary to support other objectives. However, the Group accepts the risk that the fall in equity or other asset values, whether as a result of price falls or strengthening of sterling against the currencies in which contract holder assets are denominated, will reduce the level of annual management charge income derived from such contract holder assets and the risk of lower future profits.

Sensitivity analysis to market risk

The Group's business is unit-linked and the direct associated market risk is therefore borne by contract holders (although there is a secondary impact as shareholder income is dependent upon the markets, as mentioned above). Financial assets and liabilities to support Group capital resources held outside unitised funds primarily consist of units in money market funds, cash and cash equivalents, and other assets and liabilities. Cash held in unitised money market funds and at bank is valued at par and is unaffected by movement in interest rates. Other assets and liabilities are similarly unaffected by market movements.

As a result of these combined factors, the Group's financial assets and liabilities held outside unitised funds are not materially subject to market risk, and movements at the reporting date in interest rates and equity values have an immaterial impact on the Group's profit after tax and equity. Future revenues from annual management charges may be affected by movements in interest rates, foreign currencies and equity values.

(a) Price risk

Unit linked funds are exposed to securities price risk as the investments held are subject to prices in the future which are uncertain. The fair value of financial assets (designated at fair value through profit or loss) exposed to price risk at 30 June 2015 was £830.7m (2014: £862.1). In the event that investment income is affected by price risk then there will be an equal and opposite impact on the value of the changes in provisions for investment contract liabilities in the same accounting period. The impact on the profit or loss before taxation in a given financial year is negligible.

An overall change in the market value of the unit-linked funds would affect the annual management charges accruing to the Group since these charges, which are typically 1% per annum, are based on the market value of contract holder assets under administration. The approximate impact on the Group's profits and equity of a 10% change in fund values, either as a result of price, interest rate or currency fluctuations, is £1.4m (2014: £1.5m).

(b) Interest rate risk

Interest rate risk is the risk that the Group is exposed to lower returns or loss as a direct or indirect result of fluctuations in the value of, or income from, specific assets arising from changes in underlying interest rates.

The Group is primarily exposed to interest rate risk on the balances that it holds with credit institutions and in money market funds. A change of 1% p.a. in interest rates will result in an increase or decrease of approximately £0.8m (2014: £0.8m) in the Group's annual investment income and equity.

A summary of the Group's liquid assets at the balance sheet date is set out in note 3.2.

(c) Currency risk

Currency risk is the risk that the Group is exposed to higher or lower returns as a direct or indirect result of fluctuations in the value of, or income from, specific assets and liabilities arising from changes in underlying exchange rates.

(c)(i) Group foreign currency exposures

The Group is exposed to currency risk on the foreign currency denominated bank balances, contract fees receivable and other liquid assets that it holds to the extent that they do not match liabilities in those currencies. The impact of currency risk is minimised by frequent repatriation of excess foreign currency funds to sterling. The Group does not hedge foreign currency cash flows. At the balance sheet date the Group had exposures in the following currencies:

he approximate effect of a 5% change: in the value of US dollars to sterling is less than £0.1m (2014: £0.1m); in the value of the euro to sterling is £0.2m (2014: less than £0.1m); and in the value of the yen to sterling is less than £0.1m (2014: less than £0.1m).

(c)(ii) Financial investments by currency

Certain fees and commissions are earned in currencies other than sterling, based on the value of financial investments held in those currencies from time to time.

The sensitivity of the Group to the currency risk inherent in investments held to cover financial liabilities under investment contracts is incorporated within the analysis set out in (a) above.

At the balance sheet date the analysis of financial investments by currency denomination is as follows, US dollars: 59.4% (2014: 54.05); euro: 18.9% (2014: 25%); sterling: 16.3% (2014: 16.0%); other: 5.4% (2014: 5.0%).

3.2 Credit risk

Credit risk is the risk that the Group is exposed to lower returns or loss if another party fails to perform its financial obligations to the Group. The Group has adopted a risk averse approach to such risk and has a stated policy of not actively pursuing or accepting credit risk except when necessary to support other objectives.

The clearing and custody operations for the Group's security transactions are mainly concentrated with one broker, namely Capital International Limited, a member of the London Stock Exchange. At 30 June 2015, substantially all contract holder cash and cash equivalents, balances due from broker and financial investments are placed in custody with Capital International Limited. These operations are detailed in a formal contract that incorporates notice periods and a full exit management plan. Delivery of services under the contract is monitored by a dedicated relationship manager against a documented Service Level Agreement and Key Performance Indicators, and attested periodically by external advisors.

The Group has an exposure to credit risk in relation to its deposits with credit institutions and its investments in unitised money market funds. To manage these risks; deposits are made, in accordance with established policy, with credit institutions having a short-term rating of at least F1 and P1 from Fitch IBCA and Moody's respectively and a long-term rating of at least A and A3. Investments in unitised money market funds are made only where such fund is AAA rated. Additionally maximum counterparty exposure limits are set both at an individual subsidiary company level and on a Group-wide basis.

At the balance sheet date, an analysis of the Group's own cash and cash equivalent balances and liquid investments was as follows (an analysis by maturity date is provided in note 3.4):

3.3 Liquidity risk

Liquidity risk is the risk that the Group, though solvent, does not have sufficient financial resources to enable it to meet its obligations as they fall due, or can only secure them at excessive cost. The Group is averse to liquidity risk and seeks to minimise this risk by not actively pursuing it except where necessary to support other objectives.

The Group's objective is to ensure that it has sufficient liquidity over short- (up to one year) and medium-term time horizons to meet the needs of the business. This includes liquidity to cover, amongst other things, new business costs, planned strategic activities, servicing of equity capital as well as working capital to fund day-to-day cash flow requirements.

Liquidity risk is principally managed in the following ways:

· Assets of a suitable marketability are held to meet contract holder liabilities as they fall due.

· Forecasts are prepared regularly to predict required liquidity levels over both the short- and medium-term.

The Group's exposure to liquidity risk is considered to be low since it maintains a high level of liquid assets to meet its liabilities.

3.4 Undiscounted contractual maturity analysis

Set out below is a summary of the undiscounted contractual maturity profile of the Group's assets.

There is no significant difference between the value of the Group's assets on an undiscounted basis and the balance sheet values.

Assets held to cover financial liabilities under investment contracts are deemed to have a maturity of up to one year since the corresponding unit-linked liabilities are repayable and transferable on demand. In certain circumstances the contractual maturities of a portion of the assets may be longer than one year, but the majority of assets held within the unit-linked funds are highly liquid. The Group actively monitors fund liquidity.

The contractual maturity analyses of financial and other liabilities are included in notes 17 and 19 to the consolidated balance sheet.

3.5 Fair value estimation

The Group closely monitors the valuation of assets in markets that have become less liquid. Determining whether a market is active requires the exercise of judgement and is determined based upon the facts and circumstances of the market for the instrument being measured. Where the directors determine that there is no active market for a particular financial instrument, fair value is assessed using valuation techniques based on available, relevant, information and an appraisal of all associated risks. This process requires the exercise of significant judgement on the part of Directors.

IFRS 13 requires the Group to classify fair value measurements into a fair value hierarchy by reference to the observability and significance of the inputs used in measuring that fair value. The hierarchy is as follows:

· Level 1: fair value is determined as the unadjusted quoted price for an identical instrument in an active market.

· Level 2: fair value is determined using observable inputs other than unadjusted quoted prices for an identical instrument and that does not use significant unobservable inputs.

· Level 3: fair value is determined using significant unobservable inputs.

The following table analyses the Group's financial assets and liabilities at fair value through profit or loss, at 30 June 2015:

During this financial year, no assets were transferred from Level 2 to Level 1. Assets with a fair value of £31.4m were transferred from Level 1 to Level 2, due to the change in market for the related assets. No assets were reclassified from Level 1 to Level 3 during the year. No assets were reclassified from Level 3 to Level 1 or Level 2 during the financial year.

The following table analyses the Group's financial assets and liabilities at fair value through profit or loss, at 30 June 2014:

During the previous financial year, no assets were transferred from Level 2 to Level 1. Assets with a fair value of £8.4m were transferred from Level 1 to Level 2. Assets with a value of £0.3m were reclassified from Level 1 to Level 3 and subsequently valued at zero by the Directors, as they believe this reflects the fair value of these assets at the balance sheet date. No assets were reclassified from Level 3 to Level 1 or Level 2 during the previous financial year.

Due to the unit-linked nature of the contracts administered by the Group's insurance undertakings, any change in the value of financial assets held to cover financial liabilities under those contracts will result in an equal and opposite change in the value of contract liabilities. The separate effect on financial assets and financial liabilities is included in investment income and investment contract benefits, respectively, in the consolidated statement of comprehensive income.

4 Segmental information

Disclosure of operating segments in these financial statements is consistent with reports provided to the Chief Operating Decision Maker ("CODM") which, in the case of the Group, has been identified as the Executive Committee of Hansard Global plc.

In the opinion of the CODM, the Group operates in a single reportable segment, that of the distribution and servicing of long-term investment products. New business development, distribution and associated activities in relation to the Republic of Ireland ceased with effect from 30 June 2013. All other activities of the Group are continuing.

The Group's Executive Committee uses two principal measures when appraising the performance of the business: Net Issued Compensation Credit ("NICC") and expenses. NICC is a measure of the value of new in-force business and top-ups on existing single premium contracts. NICC is the amount of basic initial commission payable to intermediaries for business sold in a period and is calculated on each piece of new business. It excludes override commission paid to intermediaries over and above the basic level of commission. The Group maintains a close control over the margins realised on new business which are consistent across the Group's products and, hence, NICC is a reliable indicator of value.

The following table analyses NICC geographically and reconciles NICC to origination costs incurred during the year as set out in the Business and Operating Review section of this Report and Accounts.

The net issued compensation credit figure of £4.8m for the year all relates to continuing operations based in the Isle of Man (2014: £7.8m).

Revenues and expenses allocated to geographical locations contained in sections 4.1 to 4.4 below reflect the revenues and expenses generated in or incurred by the legal entities in those locations.

4.1 Geographical analysis of fees and commissions by origin

4.2 Geographical analysis of profit before taxation

4.3 Geographical analysis of gross assets

4.4 Geographical analysis of gross liabilities

5 Fees and commissions

Fees are charged to the contract holders of investment contracts for contract administration services, investment management services, payment of benefits and other services related to the administration of investment contracts. Fees are recognised as revenue as the services are provided. Initial fees that exceed the level of recurring fees and relate to the future provision of services are deferred in the balance sheet and amortised on a straight-line basis over the life of the relevant contract. These fees are accounted for on the issue of a contract and on receipt of incremental premiums on existing single premium contracts.

Regular fees charged to contracts are recognised on a straight-line basis over the period in which the service is provided. Transactional fees are recorded when the required action is complete.

Commissions receivable arise principally from fund houses with which investments are held. Commissions are recognised on an accruals basis in accordance with the relevant agreement.

6 Investment income

Investment income comprises dividends, interest and other income receivable, realised gains and losses on investments and unrealised gains and losses. Dividends are accrued on the date notified. Interest is accounted for on a time proportion basis using the effective interest method.

7 Origination costs

Origination costs include commissions, intermediary incentives and other distribution-related expenditure. Origination costs which vary with, and are directly related to, securing new contracts and incremental premiums on existing single premium contracts are deferred to the extent that they are recoverable out of future net income from the relevant contract. Deferred origination costs are amortised on a straight-line basis over the life of the relevant contracts. Origination costs that do not meet the criteria for deferral are expensed as incurred.

8 Administrative and other expenses

Included in administrative and other expenses is the following:

9 Employee costs

9.1 The aggregate remuneration in respect of employees (including sales staff and executive Directors) was as follows:

Total salary and other staff costs for the year are incorporated within the following classifications:

The above information includes Directors' remuneration. Details of the Directors' remuneration, share options, pension entitlements and interests in shares are disclosed in the Report of the Remuneration Committee.

Group companies contribute to employees' individual defined contribution pension plans. Contributions are charged to the income statement as they become payable under the terms of the relevant employment contract. The Group has no further payment obligations once pension contribution requirements have been met.

9.2 The average number of employees during the year was as follows:

10 Taxation

Taxation is based on profits and income for the period as determined with reference to the relevant tax legislation in the countries in which the Company and its subsidiaries operate. Tax payable is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Tax is recognised in the income statement except to the extent that it relates to items recognised in equity. Tax on items relating to equity is recognised in equity.

The Group's profits arising from its Isle of Man-based operations are taxable at zero percent. Profits in the Republic of Ireland are taxed at 12.5%.

There is no material difference between the current tax charge in the income statement and the current tax charge that would result from applying standard rates of tax to the profit before tax.

11 Earnings per share

The calculation for earnings per share is based on the profit for the year after taxation divided by the average number of shares in issue throughout the year.

The Directors believe that there is no material difference between the weighted average number of shares in issue for the purposes of calculating either basic or diluted earnings per share. Earnings under either measure is 10.9p per share (2014: 6.0p).

12 Dividends

Interim dividends payable to shareholders are recognised in the year in which the dividends are paid. Final dividends payable are recognised as liabilities when approved by the shareholders at the Annual General Meeting.

The following dividends have been paid by the Group during the year:

The Board has resolved to pay a final dividend of 5.25p per share on 19 November 2015, subject to approval at the Annual General Meeting, based on shareholders on the register on 2 October 2015.

13 Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation and any impairment. The historical cost of property, computer equipment and fixtures & fittings is the purchase cost, together with any incremental costs directly attributable to the acquisition. The historical cost of computer software is the purchase cost. Computer software is recognised as an intangible asset.

Depreciation is calculated so as to amortise the cost of tangible and intangible assets, less their estimated residual values, on a straight-line basis over the expected useful economic lives of the assets concerned and is included in administration and other expenses in the income statement.

The carrying amount, residual value and useful life of the Group's plant and equipment is reviewed annually to determine whether there is any indication of impairment, or a change in residual value or expected useful life. If there is any indication of impairment, the asset's carrying value is revised.