SU:RNSTESTZI:RA:12-05-08 06:00:03RB:20080512060003RY:YRC:Y..RH:Interim Management
StatementRD:Hansard Global
plcRI:IM00B1H1XF89RJ:IMRP:HSD RG: RT:RSI:
HR:1210572096-40a8a709-04918N1:N2:SN:RNS1546USQ:8411HS:ipxrns_2008-5-12_07:01:36_1_132~RNS
Number : 1546U
Hansard Global plc
11 May 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, down12.5% * 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 from developments 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.% 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
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