Hansard Global plc (HSD) - Interim Management Statement
RNS Number : 7123Q
Hansard Global plc
09 November 2012
9 November 2012
Hansard Global plc
Interim Management Statement
Hansard Global plc ("Hansard" or "the Group"), the specialist long-term
savings provider, issues its Interim Management Statement for the period from
1 July 2012 to date. All figures refer to the three months ended 30 September
2012 ("Q1 2013"), except where indicated.
·Overall new business margin of 10.7% (Q1 2012: 9.7%) reflects the
continued increase in the proportion of regular premium business, in line with
the Group's stated strategy;
·Regular premium new business flows remain resilient: £30.3m PVNBP in the
quarter (Q1 2012: £33.9m), arising primarily from the growth market of the Far
·Single premium flows of £8.8m have reduced from £10.6m received in Q1
2012. This reflects the impact of volatile markets, which are affecting the
timing of investment decisions and the Group's strategy of focussing on more
profitable regular premium new business;
·Through profitable new business and improved market conditions, EEV at 30
September 2012 has increased marginally from £224.3m at 30 June 2012;
·The value of Assets under Administration as at 30 September 2012 has
increased to £1.05bn (30 June 2012: £1.03bn);
·From 1 January 2013 Gordon Marr will assume the position of Group CEO,
whilst the Group's founder, Dr Leonard Polonsky, will take the role of
Leonard Polonsky, Chairman of Hansard Global plc, commented:
"Whilst new business levels are below those of the comparative period, the
investment in distribution relationships means that the Group is well placed
for continued growth in new business for the remainder of the year and over
the longer term, despite current economic uncertainties.
I congratulate Gordon on his forthcoming appointment as Group Chief Executive
Officer. For some time I have been considering separating the roles of
Chairman and Chief Executive. I see this as important for achieving Hansard's
ambitions in the future. This development will enable Gordon to focus on the
execution of Hansard's strategy during the next phase of our growth, and I
remain committed to supporting Gordon and the Board in my new capacity of
For further information:
+44 (0) 1624 688000
Leonard Polonsky, Chairman
Gordon Marr, Managing Director
Vince Watkins, Chief Financial Officer
+44 (0) 20 7861 3232
Daniel de Belder
Hansard Global plc
INTERIM MANAGEMENT STATEMENT
Despite continued volatility in global markets in the quarter ended 30
September 2012 (Q1 2013), new business levels remain resilient. Hansard's
strategy to acquire more profitable regular premium new business continues to
be rewarded. Whilst overall new business levels of £39.1m PVNBP are 12.1%
lower than a very strong comparative quarter last year (Q1 2012), regular
premium flows of £30.3m are buoyant and represent a 78% increase over Q1 2011.
New business flows since 30 September 2012 have been higher than those of the
same period last year on the Group's internal metric.
New business margins on the PVNBP basis have risen to approximately 10.7% (30
June 2012: 9.6%), primarily as a result of an increased proportion of regular
premium new business.
We believe that our strategic decision to focus on non-EU markets, and the Far
East and Latin America in particular, has been vindicated given the continuing
instability in the eurozone.
Increases in capital market values in the quarter have been reflected in the
increases in value of policyholder Assets under Administration and in the
Group's embedded value at 30 September 2012, when compared with 30 June 2012.
The Board has agreed that Gordon Marr will assume the role of Group Chief
Executive Officer with effect from 1 January 2013. Dr Polonsky will remain as
Chairman of the Board, with his role becoming non-executive. Mr Marr will
chair the Group's Executive Committee from 1 January 2013.
As previously reported, Philip Gregory, an Independent Non-Executive Director,
took over the roles of Senior Independent Director, Chairman of the
Remuneration Committee and Chairman of the Nominations Committee from Bernard
Asher with effect from 24 September 2012.
FINANCIAL PERFORMANCE AND POSITION - 3 MONTHS TO 30 SEPTEMBER 2012
· International Financial Reporting Standards ("IFRS")
During the period, the Group has continued to invest in distribution and other
infrastructure and to generate IFRS profits backed by strong positive cash
flows. Income streams remain stable and are in line with Q1 2012. Profit after
tax for Q1 2013 is marginally above Q1 2012 which reflects a reduction in
unrealized foreign exchange losses from those incurred in the comparative
· European Embedded Value ("EEV")
EEV operating profit continues to be generated through profitable new business
written during the period, the persistency of cash flows and the lack of
option instruments, guarantees or other such features within the products
issued by the Group. The effect of the increases in major capital market
levels in Q1 2013 has been to increase our expectations of future asset-based
income streams and therefore to contribute to a marginal improvement in EEV at
30 September 2012, when compared with 30 June 2012.
· Capitalisation and Solvency
The Group continues to be strongly capitalised enabling it to satisfy
operational, regulatory, intermediary and policyholder expectations. At 30
September 2012 the aggregate minimum regulatory margin remains covered
approximately 14 times by the Group's capital resources.
The Group's solvency position is well insulated against the current
challenging capital market conditions. At the date of this report, the Group's
liquid assets are held with a wide range of deposit institutions and in
highly-rated money market liquidity funds.
New Business Flows - THREE months ended 30 September 2012
New business flows for Q1 2013 are summarisedas follows (comparisons to Q1
2012 are on actual currency basis):
Q1 2013 Q1 2012 %
Basis £m £m change
Compensation Credit 3.9 4.3 (9.3)%
Present Value of New Business Premiums 39.1 44.5 (12.1)%
Annualised Premium Equivalent 6.0 6.7 (10.4)%
· Present Value of New Business Premiums ("PVNBP")
In line with the Group's strategy to acquire regular premium new business from
the growth markets of the Far East and Latin America, regular premium new
business levels in the quarter of £30.3m constitute some 78% of total new
business (Q1 2012: 76%). This has been achieved despite the volatile market
conditions during the quarter which, among other factors, has restrained
single premium investments.
This increased proportion of regular premium new business has contributed to
an increase in new business margins to 10.7% (Q1 2012: 9.7%).
Reflecting the strategic focus on regular premium business, volatile market
conditions and deferred investor appetite for lump-sum investing, single
premium new business levels of £8.8m remain lower than the levels of the last
few quarters and are 17% below Q1 2012.
Q1 2013 Q1 2012 %
PVNBP by Premium type £m £m change
Regular premium 30.3 33.9 (10.6)%
Single premium 8.8 10.6 (17.0)%
39.1 44.5 (12.1)%
Q1 2013 Q1 2012 %
PVNBP by residence of policyholder £m £m change
Far East 19.6 16.4 19.5%
Latin America 7.0 13.1 (46.6)%
EU and EEA 8.6 9.9 (13.1)%
Rest of world 3.9 5.1 (23.5)%
39.1 44.5 (12.1)%
Despite recent economic weaknesses in Latin America, over 68% of new business
in the period is sourced from the Far East and Latin America regions (Q1 2012:
66%). We launched a new regular premium product in Latin America in early
October with a view to recapturing interest from selected intermediaries in
that region. We remain confident that we can build on existing relationships
to enhance new business flows.
· New business margins
The Group's strategy is to focus on generating new single and regular premium
business on terms that meet target returns and contribute to profit. The new
business margin is sensitive to the product mix. As a result of the higher
regular premium component of new business issued in the period, which is more
profitable to the Group than single premium business, the overall new business
margin is approximately 10.7% (Q1 2012: 9.7%).
The Group is continuing to develop Hansard OnLine in order to implement new
business initiatives. In particular, over 4,500 regular premium new business
cases have been processed online by the Group since piloting commenced in
November 2009, and approximately 70% of investment dealing transactions are
currently processed OnLine (an increase from 60% in June this year).
Assets under Administration
A continued flow of regular premiums underpins Assets under Administration
("AuA") and are reflected in an increase of 1.3% in AuA since 30 June 2012 to
The overall movement in AuA before market and currency effects illustrates the
group's focus on higher margin, regular premium new business. Future
withdrawals from matured existing single premium contracts are expected to
continue, with new regular premium contracts replenishing AuA at a slower
rate. We believe that moving the balance of new business towards regular
premium contracts will be value enhancing in the longer term.
Q1 2013 Q1 2012
Deposits to investment contracts 29.0 33.7
Withdrawals from contracts and charges (42.8) (48.4)
Effect of market and currency movements 27.6 (151.1)
Increase in period 13.8 (165.8)
At 1 July 1,033.8 1,229.6
Assets under Administration 1,047.6 1,063.8
There have been no significant changes since the year end in the volumes of
illiquid assets or impaired fund structures held in AuA, nor in the currency
composition of AuA.
LITIGATION AND POLICYHOLDER COMPLAINTS
Even though the Group does not give any investment advice, we havebeen subject
to a number of policyholder complaints in relation to the selection and
performance of assets linked to policies. Writs totalling €4.3m (approximately
£3.5m) were served on Hansard Europe Limited during the period since the
balance sheet date and to the date of this report. At time of writing, writs
totalling approximately £11.5m have been served on that company. We estimate
that current complaints may result in an additional £9m of legal actions in
We remain confident that we will be successful following our appeal against
the initial ruling in the Norwegian litigation and we anticipate continuing
additional expenditure to address this and other cases.
Based on the pleadings and advice received to date from legal counsel the
Group has not made any provision in respect of any complaints. The Group
intends to defend itself against all claims strenuously.
Results for the half-year ENDING 31 December 2012
New business results for the half-year ending 31 December 2012 are expected to
be announced on 29 January 2013. Trading results for the half-year are
expected to be announced on 28 February 2013.
We are optimistic that the Group's focus on non-EU markets including the Far
East and Latin America and our continuing investment in distribution
infrastructure, systems and Hansard OnLine, will position us for further
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
· The Group offers a range of flexible and tax-efficient investment
products within a life assurance policy wrapper, designed to appeal to
affluent, international investors.
· The Group utilises a low-cost distribution model by selling policies
exclusively through a network of 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
· The principal geographic markets in which the Group currently services
financial advisors and policyholders are the Far East, Latin America and the
Middle East, in the case of Hansard International Limited, and Western Europe
in the case of Hansard Europe Limited, the Group's two life assurance
· The Group's objective is to grow its business by attracting new business
and positioning itself to adapt rapidly to market trends and conditions. The
scaleability and flexibility of the Group's operations allow it to enter or
develop new geographic markets and exploit growth opportunities within
existing markets without the need for significant further investment.
This announcement may contain certain forward-looking statements with respect
to certain of Hansard Global plc's plans and its current goals and
expectations relating to future financial condition, performance and results.
By their nature forward-looking statements involve risk and uncertainties
because they relate to future events and circumstances which are beyond
Hansard Global plc's control. As a result, Hansard Global plc's actual future
condition, performance and results may differ materially from the plans, goals
and expectations set out in Hansard Global plc's forward-looking statements.
Hansard Global plc does not undertake to update forward-looking statements
contained in this announcement or any other forward-looking statement it may
make. No statement in this announcement is intended to be a profit forecast or
be relied upon as a guide for future performance.
This information is provided by RNS
The company news service from the London Stock Exchange
IMSBRBDBRDGBGDI -0- Nov/09/2012 07:00 GMT
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