RNS Number : 1857U
Hansard Global plc
12 May 2008
Replaces previous Interim Management Statement RNS number: 1546U
Amendment to table 1 New Business Premiums 2008 Hansard Global plc
Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider,
announces its second interim management
statement in the financial year ending 30 June 2008. Data are presented for the 10 months to 2
May 2008 or as at 2 May 2008 where applicable
and the comparative period or date in 2007 except where otherwise stated.
Summary
* Total new business flows lower by 9.9%(1) on an actual currency basis under APE,
reflecting maintained regular business flows and
significantly reduced single premium business as a result of weakness in the financial markets
* PVNBP of new business flows for the period is £197.9m, down 12.5%
* Sustained new business margins of approximately 8.0%(2) in difficult markets
* Assets under Administration rose 3.9% to £1.17 billion from 30 June 2007 to 2 May
2008, despite a reduction of 3.6% in the last
four months of that period as a result of declines in global capital markets
* Very strong financial position of the Group with liquid resources remaining high at
£59.9m (2007: £61.4m)
* Continued recruitment of Account Executives to develop and manage intermediary
relationships, with three recruited since 31
December 2007. * Outlook:
* * New business - lower new business in the second half of the financial year,
reflecting more challenging environment
* EEV Operating profit - broadly in line with consensus expectations
* IFRS profit for the full year is likely to be approximately 10% above current market
expectations, reflecting high policyholder
retention, continued strength of back book and the benefit of foreign exchange movements
* Strong operating cash flows to provide full cover for dividend in line with 70% payout
ratio policy
* Potential benefit to EEV operating profit fromdevelopments in modelling methodology,
subject to actuarial review Notes
* APE basis
* PVNBP basis
Leonard Polonsky, Chief Executive of Hansard Global, commented: "The new business performance of the Group in the ten months to 2 May 2008 reflects
continuing tough market conditions. Regular premium
flows, particularly in the Far East and Latin America, for the period have built on the
performance of the previous financial year. However,
the downturn in major markets caused by the global credit crisis has accelerated since
January, which has impacted single premium flows,
largely derived from Europe. Hansard expects continuing uncertainty in the financial markets
to have a similar ongoing effect in the near
term. "Assets under administration, however, rose 3.9% in the period from 30 June 2007 to 2 May
2008, reflecting high retention of
policyholders and positive premium flows despite the continued decline in capital markets over
the period since January.
"Forecast IFRS profits for the year to 30 June 2008 are likely to be ahead of market
expectations. The Board's policy is to pay
dividends based on 70% of IFRS profit. On this basis, the dividend for the current financial
year will be fully covered by this year's
operating cash flows. "Hansard receives business from a strong and well-diversified portfolio of intermediaries
around the world. This, together with the
Group's robust balance sheet, means that Hansard Global has the strength to withstand the
current economic and financial market conditions
and is well positioned for growth in volume and profit as the macro environment improves." For further information
Hansard Global 01624 688 000
Leonard Polonsky, Chief Executive
Gordon Marr, DirectorBell Pottinger 020 7861 3232
Ben Woodford
Daniel de Belder Overview Financial performance and position IFRS profit for the period under review was as expected based on the half-year results,
underpinned by high policyholder retention, the
strength of the book of existing policies, and the relative strength of the Euro against
Sterling. Based on this, forecast IFRS profits for
the year to 30 June 2008 are likely to be ahead of market expectations.
The Group continues to be substantially capitalised to satisfy operational, regulatory and
Policyholder expectations. The Group's liquid
assets are held with a wide range of deposit institutions, in AAA-rated money market liquidity
funds and in UK Government Stocks. The Group
had no borrowings during the period or at the period end (30 June 2007: £Nil).
At 30 June 2007 liquid assets stood at £70.8m. During the period to date we have paid
£22m in dividends. Despite this, liquid assets
at 2 May 2008 stood at £59.9m, reflecting the strong cash generative nature of our business
model. In the period under review, new business margins were maintained at approximately 8.0% on
the Present Value of New Business Premiums
basis. Despite continuing current adverse market conditions these margins are well above
industry average. The EEV of the Group's operations
continues to grow. New Business Flows The Group has achieved continued strong Regular Premium new business flows, particularly
from the Far East and Latin America. The
reduced flow of Single Premium business from Europe reflects continued investor uncertainty in
the direction of capital markets and
investment reticence in the target market. New business sales volumes are expressed in terms of the Group's internal metric,
Compensation Credit ("CC"), and two bases generally
made available to the market, Annualised Premium Equivalent ("APE") and the Present Value of
Future New Business Premiums (''PVNBP''). The
Group believes that CC is an appropriate measure of new business as it indicates the relative
value of each piece of new business to allow
the Group to maintain margins and protect capital, and it is a measure aligned to the
interests of the intermediaries that provide business
to the Group. New business premiums received in currencies other than sterling are translated at the
rate of exchange ruling on the transaction date. Comparisons against the corresponding period are on an actual currency basis.
New business flows for the ten months to 2 May 2008 (comparative period: ten months to 2
May 2007) are as follows:
Basis 2008 2007 % change
CC £13.9m £14.6m (4.8%)
APE £26.4m £29.3m (9.9%)
PVNBP £197.9m £226.3m (12.5%) Approximately 50% of new business in APE terms in the period was received in US dollars;
26% in Euros and 6% in Norwegian Krone. Assets under Administration ("AUA") Significant falls in global markets since 31 December 2007 have caused the value of AUA to
decline by 3.6% in the four months to 2 May
2008 (compared to double-digit falls in many markets) however the Group is still experiencing
net inflows of AUA. The value as at 2 May
2008, at £1.17bn, has risen by 7.5% since the same point in 2007, with a net growth of 3.9%
since 30 June 2007. The value of AUA is linked directly to Policyholder investment choices, new business flows
and prevailing market conditions. Despite the
uncertainty in capital markets over the period the value of AUA has continued to grow. This
reflects net positive cash flows and the ability
of Policyholders to rotate assets held within policy contracts, which contrasts favourably
with the levels of withdrawals experienced by a
number of retail funds in the last six months. 20% of the Group's AUA at 2 May 2008 was held in funds offering downside protection in
volatile capital markets (2 May 2007: 16%). This
reflects the ability of the Policyholder to reposition assets within portfolios to suit their
changing requirements.
At 2 May 2008 approximately 38% of the Group's financial investments were held in
dollar-denominated assets; 33% in euro-denominated,
and 18% in sterling assets.
Technological Developments In accordance with the Group's intentions to continually upgrade its technology platforms,
advances in the modelling of cash-flows are
being implemented before the end of this financial year. This is expected to result in the
identification and release of value within the
EEV operating cashflows, particularly in relation to partial withdrawals under policy
contracts. Management estimates that this would
increase EEV operating profit for this year, subject to review and testing by external
advisors before implementation.
Account Executive recruitment The Group's strategy of recruiting Account Executives to develop relationships with
Intermediaries is an important step in increasing
new business levels. Three experienced Account Executives have been recruited since 31
December 2007. We intend to recruit a further two
Executives within the next three months.
Sharesave Scheme At the Company's Annual General Meeting on 19 November 2007, the establishment of the
Hansard Sharesave scheme and the rules of the
scheme were approved. An initial allocation of 500,000 shares has taken place to accommodate
subscriptions under the scheme and such shares
were listed on the London Stock Exchange on 25 April 2008.
As a result of the listing of the shares under the scheme, the issued capital of the
Company is 137,781,202 shares of 50p each at the
date of this Interim Management Statement.
Outlook In the near term, the Hansard Board expects continuing uncertainty in the financial
markets to impact single premium business, notably
in Europe. Therefore, in spite of the sustained demand for regular premium business,
management anticipates that total new business on an
APE basis for the year to 30 June 2008 will be approximately 10-15% less than that achieved in
the prior year. New business premiums on a
PVNBP basis are expected to be some 15%-20% lower than the prior year. The timing of any
significant single premium flows prior to the year
end may give rise to distortions within forecasts. The effect of expense assumptions at current levels of new business and a relaxation of
margin in relation to recently introduced
European Single premium new business is expected to result in new business margins being
maintained at recently experienced levels. Management expects that the effect of currently experienced lower new business volumes on EEV
operating profit for the current year will be
offset by the impact of the technological developments referred to above. Forecast IFRS profits for the year to 30 June 2008 are likely to be ahead of market
expectations. The Board's policy is to pay dividends
based on 70% of IFRS profit. On this basis, the dividend for the current financial year will
be fully covered by this year's operating cash
flows. Hansard receives business from a strong and well-diversified portfolio of intermediaries
around the world. This, together with the
Group's robust balance sheet, means that Hansard Global has the strength to withstand the
current economic and financial market conditions
and is well positioned for growth in volume and profit as the macro environment improves.
The Board remains confident that the longer-term structural growth in the Group's target
marketplace, together with its margin-focused
business model, will continue to see Hansard deliver long-term value to shareholders. Preliminary Results for the year ending 30 June 2008 Preliminary Results for the year ending 30 June 2008 (presented under IFRS) will be
announced on 25 September 2008.
New business results for the year to 30 June 2008 will be reported on 28 July 2008.
HANSARD GLOBAL PLC NEW BUSINESS RESULTS FOR THE PERIOD ENDED 2 MAY 2008
1. APE on an Actual Exchange Rate basis Unaudited
Ten months ended 2
May 2008 2007 Change
£m £m %
New Business Premiums (APE)(1)
Single 11.2 13.9 (19.4)%
Regular 15.2 15.4 (1.3)%
26.4 29.3 (9.9)% New Business Premiums (APE)(1)(3)
Far East 9.5 8.4 13.1 %
EU and EEA 9.0 14.0 (35.7)%
Latin America 4.3 4.1 4.9 %
Rest of World 3.6 2.8 28.6%
26.4 29.3 (9.9)% 2. APE on a Constant Currency Basis Unaudited
Ten months ended 2
May 2008 2007 Change
£m £m %
New Business Premiums (APE)(1)(2)
Single 11.2 14.7 (23.8)%
Regular 15.2 15.1 0.7 %
26.4 29.8 (11.4)% New Business Premiums (APE)(1)(2)(3)
Far East 9.5 8.2 15.8 %
EU and EEA 9.0 14.9 (39.6)%
Latin America 4.3 4.0 7.5 %
Rest of World 3.6 2.7 33.3%
26.4 29.8 (11.4)%
3. Present Value of New Business Premiums Unaudited
Ten months ended 2 May 2008 2007 Change
£m £m %
Actual Exchange Rate Basis
(PVNBP)(4)(5) 197.9 226.3 (12.5%) Constant Currency Basis
(PVNBP)(4) 197.9 231.8 (14.6%) 4. ASSETS UNDER ADMINISTRATION AS AT 2 MAY 2008
Unaudited Unaudited As at % Audited
As at Change As at
2 May
2 May 2 May 2008 30 June
2008 2007 vs 2007
£m £m 2007 £m
Assets under Administration (5) 1,174 1,092 7.5% 1,130
* New business from long-term savings is calculated on an APE basis in table 1 above
in accordance with the life assurance industry
convention by adding new regular premiums and one tenth of single premiums. Premiums arising
in foreign currencies are translated to
sterling at the rates of exchange ruling at the transaction date. * APE in the period ended 2 May 2007 is presented in table 2 above on a constant
currency basis. Premiums arising in foreign
currencies in the period are translated to sterling at the average rates of exchange
applicable to the period ended 2 May 2008.
* The geographical split of new business premiums is based on the country of residence
of the policyholder. * The present value of new business premiums (PVNBP) in table 3 above is the present
value of new regular premiums plus 100% of
single premiums, calculated using assumptions consistent with those used to determine new
business contribution. Premiums arising in foreign
currencies are translated to sterling at the rates of exchange ruling at the transaction date. * PVNBP in the period ended 2 May 2007 is also presented in table 3 above on a
constant currency basis. Premiums arising in foreign
currencies in the period are translated to sterling at the average rates of exchange
applicable to the period ended 2 May 2008. * Assets under Administration are valued at market values at the relevant date, using
closing exchange rates against sterling.
* The principal exchange rates applied are as follows: U.S Dollar Euro
2 May 2008 £1 = $1.97 £1 = EUR1.28
30 June 2007 £1 = $2.01 £1 = EUR1.48
2 May 2007 £1 = $1.99 £1 = EUR1.47
Average to 2 May 2008 £1 = $2.01 £1 = EUR1.39
Notes to editors: * Hansard Global plc is the holding company of the Hansard Group of companies. The
Company was listed on the London Stock Exchange
on 18 December 2006. The Group is a specialist long-term savings provider, based in the Isle
of Man.
* The Group offers a range of flexible and tax-efficient investment products within a
life assurance policy wrapper, designed to
appeal to affluent, international investors.
* The Group utilises a low-cost distribution model by selling policies exclusively
through a network of financial services
intermediaries, independent financial advisers and the retail operations of certain financial
institutions (collectively "Intermediaries"),
who provide access to their clients in more than 170 countries. The Group's distribution model
is supported by an award-winning,
multi-language internet platform, Hansard Online, and is scaleable. * The principal geographic markets in which the Group currently services
Intermediaries and policyholders are the Far East, Latin
America, and the Middle East in the case of Hansard International Limited, and Western Europe
in the case of Hansard Europe Limited, the
Group's two life assurance companies. * The Group's objective is to grow its business by attracting new business and
positioning itself to adapt rapidly to market trends
and conditions. The scaleability and flexibility of the Group's operations allow it to enter
or develop new geographic markets and exploit
growth opportunities within existing markets without the need for significant further
investment.
Forward-looking statements: This announcement may contain certain forward-looking statements with respect to certain
of Hansard Global plc's plans and its current
goals and expectations relating to future financial condition, performance and results. By
their nature forward-looking statements involve
risk and uncertainties because they relate to future events and circumstances which are beyond
Hansard Global plc's control. As a result,
Hansard Global plc's actual future condition, performance and results may differ materially
from the plans, goals and expectations set out
in Hansard Global plc's forward-looking statements. Hansard Global plc does not undertake to
update forward-looking statements contained in
this announcement or any other forward-looking statement it may make. No statement in this
announcement is intended to be a profit forecast
or be relied upon as a guide for future performance.
This information is provided by RNS
The company news service from the London Stock Exchange
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