Interim Results

Hansard Global plc 28 February 2008 Hansard Global plc Results for the half-year ended 31 December 2007 Financial highlights â€¢ Statutory profit after tax up 18.9% to Â£12.6m (31 December 2006: Â£10.6m) â€¢ Statutory earnings per share up 19.5% to 9.2 pence (2006: 7.7 pence) â€¢ Interim dividend per share up 25% to 5.0 pence (US$ equivalent: 9.9c) (2006: 4.0 pence) â€¢ Assets under Administration up 18.4% to Â£1.22bn (31 December 2006: Â£1.03bn) European Embedded Value (EEV) highlights â€¢ EEV operating profit up 46.6% to Â£17.3m (2006: Â£11.8m) â€¢ New business contribution up 1.9% to Â£10.5m (2006: Â£10.3m) â€¢ EEV up 19.8% to Â£231.5m (2006: Â£193.2m) Operating highlights â€¢Sustained new business despite financial market volatility â€¢Stable new business margins of 8% Leonard Polonsky, Chief Executive of Hansard Global, commented: 'Performance in the six months to 31 December 2007 underlined the robustness of our business model. Against the backdrop of volatile financial markets, we increased pre-tax statutory profits by 20% to Â£12.7m, we generated Â£24.2m in operating cash flow and we have increased our interim dividend by 25% to 5p per share. We have retained our focus on profitability and positive cash flow generation. Whilst new business APE was broadly flat, due principally to the impact of challenging financial markets, we maintained our new business margins at 8%. The increase in our EEV operating profit, up 46.6% to Â£17.3m and the increase of 18.4% in assets under administration is testimony to the efficiency of our low cost operating model and the high retention of policyholders, which helps to maintain the high proportion of income that is derived from in-force policies. In the near term, we expect continuing uncertainty in the financial markets to impact single premium business, notably in Europe. Therefore, in spite of the growth in our regular premium business, we anticipate that new business on an APE basis for the year to 30 June 2008 will be broadly in line with performance in the prior year. However, given our emphasis on profitability, we would expect our new business margin to remain consistently high at around 8%. The Board remains confident that the longer term structural growth in our target marketplace, together with our margin-focused business model, will continue to deliver value to our shareholders.' For further information Hansard Global 01624 688000 Leonard Polonsky, Chief Executive Gordon Marr, Director Bell Pottinger 020 7861 3232 Ben Woodford Daniel de Belder Chairman's Statement I am pleased to report that the strong performance achieved over the last few years has continued in the first half of the financial year ending on 30 June 2008. It has been a challenging period, which has seen many participants in the financial services sector suffer from the global credit crisis. However the Hansard business model has been robust in withstanding turbulent market conditions and we have registered a resilient performance across the business. I would like to thank all our employees for their dedication throughout this period. FINANCIAL PERFORMANCE FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 The Group has implemented International Financial Reporting Standards ('IFRS'), as adopted by the European Union, in respect of the year ending 30 June 2008. Prior to this, the consolidated financial statements of the Group were prepared in accordance with UK Generally Accepted Accounting Practice ('UK GAAP'). There are no differences between profits and retained earnings as at 31 December 2007 calculated on the basis of IFRS and those calculated on the basis of UK GAAP. Additionally certain information relating to embedded value is presented, using the European Embedded Value ('EEV') methodology. The Board believes that the EEV information, read in conjunction with the other financial information produced by the Group, provides additional insight into the financial performance of the Group, year on year. The Group has delivered strong performance in all the measures discussed within this report. The profit after tax for the period was Â£12.6 million, an increase of 18.9 % over the profit of Â£10.6m earned in the corresponding period of the previous financial year. This is especially pleasing, given increased investments in infrastructure, contract servicing and ancillary activities in the period. Earnings per share are 9.2 pence, an increase of 19.5% over the corresponding period Throughout the period under review the Group has written new business on profitable terms and has maintained new business margins that meet the Group's return requirements. These factors have contributed to significant growth in the Group's EEV. The after-tax EEV operating profit of Â£17.3 m represents an increase of 46.6% over the EEV operating profit of Â£11.8m in the corresponding period. The EEV of the Group, following the payment of dividends totalling Â£15.1m in November 2007, has risen to Â£231.5m, an increase of 6.2% from the value at 30 June 2007. NEW BUSINESS The Group has achieved solid new business flows, benefitting from the geographical spread of the intermediaries with whom we deal, and the diversity of their client base. Strong growth in regular premium flows has been achieved, particularly in the Far East and Latin America, while turbulent market conditions over the last quarter, particularly in Europe and Scandinavia have had the impact of reducing the flow of single premium cases. Recruitment and other activity continues to provide new distribution capability for the Group in new markets, strengthen existing relationships and expand the range of investment opportunities for Policyholders. New business flows using the Group's internal metric, Compensation Credit ('CC'), totalled Â£9.0m for the six months to 31 December 2007 compared with Â£8.2m (on an actual currency basis) in the corresponding period of the last financial year, an increase of 9.8%. New business premiums on an Annualised Premium Equivalent ('APE') basis in sterling terms during the six months to 31 December 2007 totalled Â£17.1m. This represents a decrease of 0.6% over the Â£17.2m APE in the corresponding period in the previous financial year, calculated on a constant currency basis. Strong growth of 11.9% in regular premium flows has been achieved, particularly in the Far East and Latin America. New business margins were 8.0% on the Present Value of Future New Business Premiums ('PVNBP') basis, consistent with the corresponding period and with levels maintained historically. These margins are well above industry average, principally due to the Group's continued focus on value and on the maintenance of the margin. These factors have contributed to significant growth in the Group's EEV. FINANCIAL INVESTMENTS The value of financial investments to cover liabilities under investment contracts as at 31 December 2007, at Â£1.22 billion, has risen by 18.4% since 31 December 2006. Despite the declines in capital markets over the six months to 31 December 2007, the value has continued to grow. This reflects positive cash flows and the flexible nature of our products which allows Policyholders the ability to determine the investment mix held within policy contracts, which has reduced the level of withdrawals relative to those experienced by a number of retail funds in the last few months. The diverse nature of these investments, our strong growth in emerging markets and lack of exposure to the UK and US markets have helped to protect the Group from the current market uncertainties. 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 (31 December 2006: Â£Nil). SIGNIFICANT SHAREHOLDINGS The shareholder base of the Company has been broadened during the half-year as a result of donations by the Polonsky Foundation and a placing of shares in November 2007 held by the Foundation. As a result the Company now has a free float of 47%. At the date of this report I have the largest beneficial shareholding in the Company, being 42% of the issued share capital and the Polonsky Foundation has 5.4%. Other significant shareholdings notified to us at the date of this report are F&C Asset Management with 5.3% and Lloyds TSB Group Plc with 5.0%. Readers may be aware that Polar Cap Limited was the holding company of the Hansard Group at the time of the listing. As a result of the reorganisation referred to in our prospectus, Polar Cap has distributed its shareholding to its members and is now in voluntary liquidation. The reorganisation did not affect the number of the Company's shares in issue. FTSE INDEX CONSTITUENT The Company is pleased to have been included in the UK Series of the FTSE ALL-SHARE index with effect from 24 December 2007. The company is also a constituent of the following indices: FTSE All-Share ex Investment Trusts; FTSE Small Cap; and FTSE Small Cap Ex Investment Trusts. As a result of the acceptance of the Company's shares as a constituent of the FTSE All-Share index, we believe that a number of index-tracker funds have acquired holdings in the company. DIVIDENDS Statutory profit performance in the first six months of this financial year is encouraging and in line with management's expectations. The Board has therefore resolved to pay an interim dividend of 5 p per share (2007: 4 p). This will be paid on 3 April 2008 to those shareholders on the Register at the close of business on 7 March 2008. Shareholders will be aware that on 23 November 2007 the Company paid a final dividend of 6p per share and a special dividend of 5p per share, together totalling Â£15.1m. Including the proposed dividend referred to above, this results in amounts totalling 16p per share or Â£22m being paid to investors during this financial year. This has been paid out of the Group's operating cash flows. We have made arrangements to allow investors to receive the proposed dividend in US Dollars, if they require. OUTLOOK 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 us to enter or develop new geographic markets and exploit growth opportunities within our existing markets, without the need for significant further investment. The long-term trends in our chosen markets will allow intermediaries with whom we work to capitalise on these opportunities. In the near term, we expect continuing uncertainty in the financial markets to impact single premium business, notably in Europe. Therefore, in spite of the growth in our regular premium business, we anticipate that new business on an APE basis for the year to 30 June 2008 will be broadly in line with performance in the prior year. However, given our emphasis on profitability, we would expect our new business margin to remain consistently high at around 8%. The Board remains confident that the longer term structural growth in our target marketplace, together with our margin-focused business model, will continue to see Hansard deliver value to our shareholders. Dr L S Polonsky Chairman 27 February 2008 Interim Management Report Business Review Business The Group is a specialist long-term savings provider based in the Isle of Man (since 1986) and in the Republic of Ireland (since 1995). It offers a range of flexible, tax-efficient investment products allowing accumulation and administration of financial investments within a life assurance policy wrapper. This appeals to affluent international investors. The Group has designed its products, distribution methods and cost base with a view to reducing operational and financial risks. The Group's products are distributed utilising its low-cost distribution model, exclusively through financial services intermediaries, independent financial advisers or the retail operations of financial institutions (together, ''Intermediaries''), supported by its award winning, multi-language internet platform, Hansard OnLine. The Group has established a network of Account Executives providing local language and other support services to Intermediaries in a number of areas around the world. The Company's principal office is in Douglas, Isle of Man, and its regulated life assurance subsidiaries operate out of the Isle of Man, and Dublin, Republic of Ireland. Its location on the Isle of Man allows the Group freedom to flourish within a highly regarded regulatory framework, with a zero rate of corporation tax, and with access to an educated workforce and a robust telecommunications infrastructure. The Policyholder Protection legislation enacted by the Isle of Man Government provides security of up to 90% of the liability to policyholders. Our operations in Dublin allow the Group's products access to the European Union marketplace under the 'freedom of services' provisions of the EU Life Directives. Strategy The Group continues to operate its existing business model, which is designed to reduce operational and financial risk, and to grow its business through: â€¢ a target of doubling the number of Account Executives by December 2012; â€¢ developing and enhancing profitable relationships with Intermediaries, institutions and other wealth management groups; and â€¢ increasing the functionality of Hansard OnLine to continue to meet the needs of Intermediaries and Policyholders. Key Performance Indicators The Group has established a range of financial and non-financial Key Performance Indicators, that are designed to ensure that performance against targets is monitored and variances explained. â€¢ Cash Bank balances and significant cash movements are reported weekly to senior management. The strategy of the Group remains the financing of capital and business development requirements through cash flows generated from trading activities. A more detailed analysis of the Group's cash and cash equivalent position is set out later in this report. â€¢ Expenses The Group maintains a rigorous focus on expense levels; the objective being to limit increases in Administrative expenses to inflation, whilst meeting the requirements of our sales strategy. â€¢ New business The Group has developed a metric for measuring new business production that is designed to indicate the relative value of each piece of new business to allow the Group to maintain margins and protect capital. This measure is called Compensation Credit ('CC'). The Directors consider CC to be a more meaningful measure of new business value than Annualised Premium Equivalent ('APE'), which has limited correlation with the profitability of new business. The Group's objective is to grow new business at a rate of 10%-15% per annum over the medium term on this measure. NEW BUSINESS FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 The Group has achieved solid new business flows, benefitting from the geographical spread of the intermediaries with whom we deal, and the diversity of their client base. Strong growth in regular premium flows has been achieved, particularly in the Far East and Latin America, while turbulent capital market conditions over the second quarter and increased competitor activity in Europe have had the impact of reducing the flow of single premium cases relative to the first quarter of this financial year. We continue to develop institutional relationships with a view to building our distribution and expanding the range of investment opportunities for Policyholders. The strengthening of sterling against the US Dollar in the first 4 months of the period has had the effect of depressing a proportion of our new business figures, as approximately 50% of new business in the period was received in US Dollars. Recruitment of Account Executives Three new Account Executives took up positions in Russia, Latin America and Central America with effect from 4 January 2008 to provide distribution capability for the Group in new markets, and to strengthen existing relationships. This recruitment is in accordance with the Group's strategy of doubling the number of Account Executives by December 2012. New Business Volumes New business sales volumes are expressed in terms of the Group's internal metric, CC and two bases generally made available to the market, APE and the Present Value of Future New Business Premiums (''PVNBP''). 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. â€¢ New Business CC New business flows totalled Â£9.0m CC for the half-year, compared with Â£8.2m in the corresponding period of the previous financial year, an increase of 9.8% on an actual currency basis. â€¢ New Business APE New business premiums during the half-year were Â£17.1m APE (2006: Â£17.3m) on an actual currency basis. The calculation of APE is in accordance with the life assurance industry convention of adding new annualised regular premiums and one tenth of single premiums. A significant proportion of the Group's new business premiums is denominated in currencies other than sterling. Approximately 50% of new business on an APE basis in the period was received in US dollars (2006: 50%), with new business premium flows in Euros and Norwegian Krone providing 25% (2006: 23%) and 9% (2006: 15%) respectively. Maintaining consistent levels of new business on the APE basis despite the adverse currency and other market movements throughout the period shows the benefits of having a well-diversified distributor network. The table below provides a summarised breakdown of New Business APE, analysed between single and regular premium cases, and also by residence of policyholder: Half year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m By type of product Annualised regular premiums 9.4 8.7 18.8 Single premiums 7.7 8.6 16.7 17.1 17.3 35.5 By geographical area EU and EEA 6.0 6.9 13.2 Far East 6.0 4.6 10.3 Latin America 2.6 2.3 5.0 Rest of world 2.5 3.5 7.0 17.1 17.3 35.5 â€¢New business PVNBP New Business premiums on a PVNBP basis were Â£130.5m during the period (compared with Â£129.5m for the corresponding period), an increase of 0.8%. The calculation of PVNBP is equal to total single premium sales in the period plus the discounted value of premiums expected to be received over the term of new regular premium policies, and is calculated at the point of sale. The New Business Margin, being the contribution from new business expressed as a percentage of PVNBP, in sterling terms, has been maintained at 8.0% for the period, identical to the margin earned in the corresponding period. This margin is well above industry average, principally due to the Group's continued focus on value and on the maintenance of the margin. NEW BUSINESS DEVELOPMENTS Product developments are underway to maintain growth of new business. In addition to the continuous success in the areas referred to above, the incremental production from the additional presence on the ground and other developments in Europe, should, despite the difficult market conditions, allow us to deliver new business production for this financial year, broadly in line with new business levels delivered in the last financial year. FINANCIAL INVESTMENTS The value of financial investments is linked directly to Policyholder investment choices, new business flows and prevailing market conditions. The value of Assets under Administration to support Policyholder liabilities ('AUA') as at 31 December 2007, at Â£1.22bn, has risen by 7.8% since 30 June 2007. Despite the uncertainty in capital markets over the period the value of AUA has continued to grow. This reflects positive cash flows and the ability of Policyholders to rotate assets held within policy contracts, which has reduced the level of withdrawals relative to those experienced by a number of retail funds in the last few months. Since 31 December 2006, the value of AUA has grown by 18.4%. The ability to manage financial investments is illustrated by the fact that 19% of the Group's AUA at the balance sheet date (2006: 16%) were held in funds offering downside protection in volatile capital markets. The increase in holdings of assets of this nature further reflects Policyholder investment choices and the ability of the Policyholder to reposition assets within portfolios. As an international business, we hold a diversified currency portfolio of investments. At the balance sheet date approximately 39% of the Group's financial investments were held in dollar-denominated assets; 31% in euro-denominated, and 19% in sterling assets. 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 (31 December 2006: Â£Nil). FINANCIAL PERFORMANCE FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 Introduction The Group has implemented International Financial Reporting Standards ('IFRS'), as adopted by the European Union, in respect of the year ending 30 June 2008. In addition to IFRS reporting, the Group prepares embedded value information in accordance with the European Embedded Value (''EEV'') methodology. In the Directors' opinion, the EEV information, read in conjunction with the other financial information produced by the Group, provides a helpful insight into the financial performance of the Group year on year. Commentary on the Group's results for the period under review, reported on the EEV basis, is set out later in this section. The Group has delivered strong performance in all the measures discussed below. Throughout the period under review the Group has written new business on profitable terms and at new business margins that meet the Group's return requirements. 1. Results for the half-year ended 31 December 2007 These condensed consolidated financial statements for the half-year ended 31 December 2007 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. There are no differences between profits and retained earnings as at 31 December 2007 calculated on the basis of IFRS and those calculated on the basis of UK GAAP. The adoption of IFRS has however resulted in the reclassification of certain assets disclosed under UK GAAP as financial investments. A reconciliation of the balance sheet as at 30 June 2007 as presented in the Group's UK GAAP consolidated financial statements to that prepared under IFRS is included in these half-yearly financial statements. The profit for the period before tax under IFRS is Â£12.7m, compared with the profit for the corresponding period of the previous financial year of Â£10.6m. This represents an increase of 19.8%. Taxation for the period, attributable largely to the operations of Hansard Europe Limited, is Â£0.1m (2006: Â£Nil). Profit after taxation for the period is Â£12.6m, compared with Â£10.6m, an increase of 18.9%. Earnings per share are 9.2p, compared with 7.7p in the corresponding period. 1.1 Income Fees and commissions for the period are Â£26.9m, compared with revenues for the corresponding period of Â£24.2m. This represents an increase of 11.2%, caused principally by the impact of fees received from investment contracts that were being administered by the Group at the beginning of the period and the timing of new business flows in the current period. Changes in the relative levels of Sterling against the US Dollar and Euro have resulted in significant holding gains on foreign currency balances held, compared with the results of comparative periods. All the costs of listing the Company in December 2006 were met by its then holding company, Polar Cap Limited. The Company received some Â£1.47m from Polar Cap for services rendered in connection with the listing, which is included in other operating income in the half-year ended 31 December 2006. No amounts were received from Polar Cap during the half-year ended 31 December 2007. 1.2 Expenses New business commissions, together with the directly attributable incremental costs incurred on the issue of a policy by the Group, are included within Origination costs in the consolidated income statement in the relevant period and are deferred as an explicit deferred origination cost asset in the consolidated balance sheet. All other costs are reflected within Administration and other expenses. Investment management expenses and administration costs payable by the Group are met from charges deducted from the relevant investment contracts administered. A summary of Administrative and other expenses is set out below: Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Investment management and other fees 2.0 1.6 3.2 New business related costs 2.0 1.7 3.4 Administrative expenses 6.6 5.4 11.4 10.6 8.7 18.0 Investment management expenses and other fees payable by the Group are met from charges deducted from the contracts administered, and do not impact on profit. The increase over the corresponding period reflects continued growth in assets subject to investment management arrangements. New business related costs include all costs of operation of Account Executives, Intermediary incentives and related expenditure. The increase over the corresponding period reflects the expansion of new business support initiatives. The increase in administrative expenses for the period reflects continued investment in infrastructure, contract servicing and ancillary activities, together with amounts totalling Â£0.5m for the additional professional fees, insurance and other expenses of operating in a listed company environment. 1.3 Taxation Profitable trading by Hansard Europe Limited has resulted in the utilisation of tax losses incurred in prior years. A provision of Â£0.1m for Corporation Tax has been included in these financial statements, based on the tax rate of 12.5% levied in the Republic of Ireland on the taxable income for the period. 1.4 Cash Flows Operating cash flows in the period were strongly positive, allowing the Group to fund its growth in new business from its own resources and pay in November 2007 the dividends referred to below. Cash and cash equivalent balances, excluding those held to cover liabilities under investment contracts, at 31 December 2007 stood at Â£56.0m. This represents a decrease of Â£14.8m compared to the balances at 30 June 2007, reflecting in part the payment of the dividends and the investment by a subsidiary company of Â£10m in short-term UK Treasury Bonds to mitigate credit risk. Under IFRS reporting, financial investments held to cover contract liabilities are analysed separately on the Group's balance sheet by category. The result is that cash and cash equivalents disclosed on the consolidated balance sheet now include amounts previously reported under UK GAAP within financial investments. The following table analyses cash and cash equivalents in the consolidated balance sheet prepared under IFRS between those balances previously reported under financial investments and those under cash and cash equivalents. 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Shareholder cash and cash equivalents 56.0 64.3 70.8 Financial investments reclassified as cash and cash equivalents 88.6 55.7 70.1 Cash and cash equivalents reflected in IFRS balance sheet 144.6 120.0 140.9 Cash and cash equivalents reflected in the consolidated IFRS balance sheet have increased as a result of Policyholder investment activity to reduce capital market exposures offset by the payment of dividends of Â£15.1m by the Group and an investment of Â£10m in UK Treasury stock. The Group had no borrowings during the period or at the period end (2006: Â£Nil). 1.5 Dividends The Board has resolved to pay an interim dividend of 5 p per share (2007: 4 p). This will be paid on 3 April 2008 to those shareholders on the Register at the close of business on 7 March 2008. Shareholders who elect, prior to the record date, to receive the proposed dividend in US Dollars, will be paid at an exchange rate published on 28 February 2008. Shareholders will be aware that on 23 November 2007 the Company paid a final dividend of 6p per share and a special dividend of 5p per share, together totalling Â£15.1m. Including the proposed dividend referred to above, this results in amounts totalling 16p per share or Â£22m being paid to investors during this financial year, out of the Group's operating cash flows. 2. EEV Information The EEV is an estimate of the value of the shareholders' interest in the life and related businesses of the Group, represented by the total of the Net Worth of the Group and the value of future profits from business written by the Group as at the relevant valuation date (in-force business). The EEV information covers the entire business of the Group, including its life assurance companies and subsidiaries providing administration, distribution and other services. EEV excludes the value of any future new business that the Group's life assurance companies may write after the valuation date, and it is calculated net of corporation tax. The methodology used to derive the EEV at 31 December 2007 and at 31 December 2006 is consistent with the methodology used in the consolidated financial statements in respect of the year ended 30 June 2007. 2.1 EEV Profit The EEV Profit after tax provides a measure of the Group's performance over the period. It is defined as the change in EEV over a period, adjusted for any amounts such as dividends released from the Group. The EEV Operating Profit for the period is Â£17.3m, compared with Â£11.8m in the period ended 31 December 2006, an increase of 46.6%. This represents a half-yearly return of 7.9% (2006: 6.6%) on opening embedded value generated principally by profitable new business. The New Business Contribution ('NBC') for the period was Â£10.5m (2006: Â£10.3m), and the expected return on existing business was Â£4.3m (2006: Â£3.2m). Readers may recall that improvements were introduced in the corresponding prior period to the modelling of single premium cases with a premium above Â£1m. This led to a one-off negative adjustment of Â£3.9m that is reflected within the EEV Operating Profit for that period. The EEV Profit for the period is Â£28.6m, compared with Â£14.6m in the period ended 31 December 2006. This represents a half-yearly return of 13.1% (2006: 8.2%) on opening embedded value of Â£218.0m. Movements in exchange rates have contributed Â£6.8m to the EEV Profit (2006: Â£3.4m loss). After dividend payments of Â£15.1m in November 2007 (2006: Â£Nil), the total increase in EEV over the period was Â£13.5m (2006: Â£14.6m). 2.2 Analysis of Embedded Value The EEV as at 31 December 2007 was Â£231.5m, representing an increase of 6.2% over the value at 30 June 2007. Throughout the period, the Group has written new business on profitable terms and at consistent New Business Margins. These factors have contributed to the growth in the Group's EEV. Net worth is the market value of shareholders' funds adjusted to exclude certain accounting items such as deferred origination costs and deferred income reserve. At the balance sheet date, cash and cash equivalents and short-term UK Treasury Bonds represent the net worth of the Group. The table below provides a summarised breakdown of the EEV at the reporting dates. 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Net worth 53.0 52.9 56.5 Value of future profits 178.5 140.3 161.5 European Embedded Value 231.5 193.2 218.0 The calculation of EEV is sensitive to interest rates, foreign exchange rates, asset values and a number of other factors. A summary of the effect of these factors is contained within the EEV information set out later in these condensed consolidated half-yearly financial statements. 3. Net Asset Value The net asset value per share at 31 December 2007, on an IFRS basis, is 35.4p. Following the payment of interim, final and special dividends, this represents an increase of 2.3% from the net asset value at 31 December 2006. The net asset value per share is based upon the consolidated shareholders' funds at the balance sheet date divided by the number of shares in issue at that date, being 137,281,202 ordinary shares. EEV per share at 31 December 2007 is 169p. This represents an increase of 19.8% or 28p from 31 December 2006. 4. Capitalisation and Solvency The Group continues to be substantially capitalised to satisfy operational, regulatory and Policyholder expectations. At the balance sheet date the Group's capital position in relation to the regulatory requirements of subsidiary companies is as set out below. 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Total capital available to meet regulatory capital requirements 68.7 68.4 72.0 Aggregate minimum regulatory margin 4.4 4.0 4.1 The table reflects the fact that the regulatory capital of the life assurance subsidiaries is calculated based on local regulation and financial statements presented under GAAP applicable to that jurisdiction. OPERATIONAL AND FINANCIAL RISKS 1. Risk profile The factors affecting the Group's risk profile are kept under continual review. During the period the Group continued with the implementation and reporting arising from its Enterprise-wide Risk Management framework. 2. Risks relating to the Group There is in place an ongoing process for managing the significant risks faced by the Group. The Board believes that the principal risks facing the Group are those relating to the operation of the Group's business model and to the environment within which the Group operates. The principal risks facing the Group are those identified in the Annual Report & Accounts for the year ended 30 June 2007. The Group has designed its products, distribution methods and cost base with a view to reducing operational and financial risks. There have been no significant changes in the Group's risk profile during the period. The adverse economic, political and market factors existing at the date of this report, however, could lead to a reduction in the Group's ability to issue new business in the short term. RELATED PARTY TRANSACTIONS There have been no significant changes to related parties or related party transactions in the period. Related party transactions affecting the results of previous periods and an understanding of the Group's financial position at previous balance sheet dates are as disclosed in the Annual Report & Accounts for the year ended 30 June 2007 and in section 1.1 above. 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. The scheme was implemented with effect from 25 February 2008. FORWARD-LOOKING STATEMENTS Certain statements in this half-yearly report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements involve risk and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. Half-yearly results for the period ended 31 December 2007 +----------------------------------------------------------------------------+ |Consolidated Income Statement | +----------------------------------------------------------------------------+ | | +---------------------------------+---+-----+---------------------+----------+ | | | | Half-year ended |Year ended| +---------------------------------+---+-----+----------+----------+----------+ | | | | 31| 31| 30 June| | | | | December| December| | +---------------------------------+---+-----+----------+----------+----------+ | | | | 2007| 2006| 2007| +------------------------+--------+---+-----+----------+----------+----------+ | | | |Notes| Â£m| Â£m| Â£m| +------------------------+--------+---+-----+----------+----------+----------+ | | | | | | | | +------------------------+--------+---+-----+----------+----------+----------+ | | | | | | | | +------------------------+--------+---+-----+----------+----------+----------+ |Fees and commissions | | 4 | 26.9| 24.2| 49.2| +------------------------+--------+---+-----+----------+----------+----------+ | | | | | | | | +------------------------+--------+---+-----+----------+----------+----------+ |Investment income | | | | 78.8| 51.1| 130.8| +------------------------+--------+---+-----+----------+----------+----------+ | | | | | | | | +------------------------+--------+---+-----+----------+----------+----------+ |Other operating income | | | 5 | 0.3| 1.8| 2.2| +------------------------+--------+---+-----+----------+----------+----------+ | | | | | | | | +------------------------+--------+---+-----+----------+----------+----------+ | | | | | 106.0| 77.1| 182.2| +------------------------+--------+---+-----+----------+----------+----------+ | | | | | | | | +------------------------+--------+---+-----+----------+----------+----------+ |Investment contract benefits | 11 | (74.7)| (49.9)| (128.2)| +------------------------+--------+---+-----+----------+----------+----------+ | | | | | | | | +------------------------+--------+---+-----+----------+----------+----------+ |Origination costs | | | | (8.0)| (7.9)| (16.3)| +------------------------+--------+---+-----+----------+----------+----------+ | | | | | | | | +------------------------+--------+---+-----+----------+----------+----------+ |Administrative and other expenses | | (10.6)| (8.7)| (18.0)| +------------------------+--------+---+-----+----------+----------+----------+ | | | | | (93.3)| (66.5)| (162.5)| +------------------------+--------+---+-----+----------+----------+----------+ | | | | | | +-------------------------------------+-----+----------+----------+----------+ |Profit on ordinary activities before | 5 | 12.7| 10.6| 19.7| |taxation | | | | | +-------------------------------------+-----+----------+----------+----------+ | | | | | | +-------------------------------------+-----+----------+----------+----------+ |Taxation on profit on ordinary | 6 | (0.1)| -| -| |activities | | | | | +-------------------------------------+-----+----------+----------+----------+ | | | | | | +-------------------------------+-----+-----+----------+----------+----------+ |Profit for the period after | | | 12.6| 10.6| 19.7| |taxation | | | | | | +------------------------+------+-----+-----+----------+----------+----------+ | | | | | | | | +------------------------+------+-+---+-----+----------+----------+----------+ +------------------------+------+-+---+-----+----------+----------+----------+ +---------------------------------------------------------------------------+ |Earnings Per Share | +-----------------------+--+-------+-----+-----------------------+----------+ | | | | | Half-year ended |Year ended| +-----------------------+--+-------+-----+-----------+-----------+----------+ | | | | |31 December|31 December| 30 June| +-----------------------+--+-------+-----+-----------+-----------+----------+ | | | | | 2007| 2006| 2007| +-----------------------+--+-------+-----+-----------+-----------+----------+ | | | |Note | (pence)| (pence)| (pence)| +-----------------------+--+-------+-----+-----------+-----------+----------+ | | | | | | | | +-----------------------+--+-------+-----+-----------+-----------+----------+ |Basic | | | 7 | 9.2| 7.7| 14.4| +-----------------------+--+-------+-----+-----------+-----------+----------+ | | | | | | | | +-----------------------+--+-------+-----+-----------+-----------+----------+ |Diluted | | | 7 | 9.2| 7.7| 14.4| +-----------------------+--+-------+-----+-----------+-----------+----------+ | | | | | | | | +-----------------------+--+-------+-----+-----------+-----------+----------+ +-----------------------------------------------------------------------------+ |Consolidated Statement of Changes in Equity | +--------------------------------+---------------------+-----------+----------+ | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | Half-year ended |Year ended| +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | |31 December|31 December| 30 June| +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | 2007| 2006| 2007| +---------------------------+----+---+-----+-----------+-----------+----------+ | | | |Notes| Â£m| Â£m| Â£m| +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ |Opening consolidated | | | 51.1| 36.9| 36.9| |shareholders' funds | | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | | | | | | | | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | | | | | | | | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | | | | | | | | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ |Profit for the financial period,| | | | | | |being total recognised income | | | | | | |for the period | | | 12.6| 10.6| 19.7| +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | | | | | | | | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | 63.7| 47.5| 56.6| | | | | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | | | | | | | | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ |Less dividends paid | 8 | (15.1)| -| (5.5)| +---------------------------+----+---+-----+-----------+-----------+----------+ | | | | | | | | +---------------------------+----+---+-----+-----------+-----------+----------+ |Closing consolidated shareholders' | | 48.6| 47.5| 51.1| |funds | | | | | +------------------------+-------+---+-----+-----------+-----------+----------+ | | | | | | | | +------------------------+--+----+---+-----+-----------+-----------+----------+ +------------------------+--+----+---+-----+-----------+-----------+----------+ +----------------------------------------------------------------------------+ |Consolidated Balance Sheet | +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ | | | | | 31| 31| 30 June| | | | | | December| December| | +------------------------+------+----+-------+----------+----------+---------+ | | | | | 2007| 2006| 2007| +------------------------+------+----+-------+----------+----------+---------+ | | | | Notes | Â£m| Â£m| Â£m| +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Assets | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Deferred origination | | | | 98.9| 90.1| 94.6| |costs | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Property, plant and | | | 9 | 1.0| 0.6| 0.8| |equipment | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Financial investments | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Equity securities | | | | 100.8| 106.8| 73.8| +------------------------+------+----+-------+----------+----------+---------+ |Investments in collective investment| | 970.7| 820.5| 947.2| |schemes | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Fixed income securities | | | | 58.7| 43.0| 32.0| +------------------------+------+----+-------+----------+----------+---------+ |Total financial | | | | 1,130.2| 970.3| 1,053.0| |investments | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Other receivables | | | | 25.7| 22.0| 20.9| +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Cash and cash | | | | 144.6| 120.0| 140.9| |equivalents | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Total assets | | | | 1,400.4| 1,203.0| 1,310.2| +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Liabilities | | | | | +------------------------------------+-------+----------+----------+---------+ | | | | | | +------------------------------------+-------+----------+----------+---------+ |Financial liabilities under | 11 | 1,217.4| 1,034.4| 1,130.2| |investment contracts | | | | | +------------------------------------+-------+----------+----------+---------+ | | | | | | +------------------------------------+-------+----------+----------+---------+ |Deferred income reserve | | 113.8| 105.7| 109.9| +------------------------------------+-------+----------+----------+---------+ | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Amounts due to | | | | | | | |investment contract | | | | | | | |holders | | | | 12.9| 8.7| 12.4| +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Other payables | | 7.7| 6.7| 6.6| +------------------------+------+----+-------+----------+----------+---------+ |Total liabilities | | | | 1,351.8| 1,155.5| 1,259.1| +------------------------+------+----+-------+----------+----------+---------+ |Net assets | | | | 48.6| 47.5| 51.1| +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Shareholders' equity | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Called up share capital | | | 12 | 68.6| 68.6| 68.6| +------------------------+------+----+-------+----------+----------+---------+ |Other reserves | | | | (48.5)| (48.5)| (48.5)| +------------------------+------+----+-------+----------+----------+---------+ |Retained earnings | | | | 28.5| 27.4| 31.0| +------------------------+------+----+-------+----------+----------+---------+ | | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ |Total shareholders' | | | | 48.6| 47.5| 51.1| |equity | | | | | | | +------------------------+------+----+-------+----------+----------+---------+ The notes to the financial statements form an integral part of these condensed consolidated half-yearly financial statements. +-------------------------------------------------------------------------------+ |Consolidated Cash Flow Statement | +-------------------------+-------+----------------------+----------------------+ | | | | | +-------------------------+-------+--+-------+-----------+-----------+----------+ | | | | | Half-year ended |Year ended| +-------------------------+-------+--+-------+-----------+-----------+----------+ | | | | |31 December|31 December| 30 June| +-------------------------+-------+--+-------+-----------+-----------+----------+ | | | | 2007| 2006| 2007| +-------------------------+-------+--+-------+-----------+-----------+----------+ | | | | | Â£m| Â£m| Â£m| +-------------------------+-------+--+-------+-----------+-----------+----------+ | | | | | | | | +-------------------------+-------+--+-------+-----------+-----------+----------+ |Cash flow from operating | | | | | | |activities | | | | | | +---------------------------------+--+-------+-----------+-----------+----------+ |Profit before tax for the period | | 12.7| 10.6| 19.7| +------------------------------------+-------+-----------+-----------+----------+ |Adjustments for: | | | | | +------------------------------------+-------+-----------+-----------+----------+ |Depreciation | | 0.2| 0.2| 0.4| +------------------------------------+-------+-----------+-----------+----------+ |Foreign exchange (gains)/losses | | (1.4)| 0.3| 1.3| +------------------------------------+-------+-----------+-----------+----------+ | | | | | | +------------------------------------+-------+-----------+-----------+----------+ |Changes in operating assets and | | | | | |liabilities | | | | | +------------------------------------+-------+-----------+-----------+----------+ |(Increase)/decrease in debtors | | (4.6)| 5.4| 5.4| +------------------------------------+-------+-----------+-----------+----------+ |Increase in deferred origination | | (4.3)| (3.5)| (8.0)| |costs | | | | | +------------------------------------+-------+-----------+-----------+----------+ |Increase in deferred income reserve | | 3.9| 2.7| 6.9| +------------------------------------+-------+-----------+-----------+----------+ |Increase/(decrease) in creditors | | 1.6| (2.9)| 0.7| +------------------------------------+-------+-----------+-----------+----------+ |Increase in financial investments | | (67.4)| (97.8)| (180.4)| +------------------------------------+-------+-----------+-----------+----------+ |Increase in financial liabilities | | 83.5| 87.8| 183.6| +------------------------------------+-------+-----------+-----------+----------+ |Cash generated from operations | | 24.2| 2.8| 29.6| +------------------------------------+-------+-----------+-----------+----------+ | | | | | | +------------------------------------+-------+-----------+-----------+----------+ |Cash flows from investing activities| | | | | +-----------------------------+---+--+-------+-----------+-----------+----------+ |Purchase of tangible assets | | | | (0.4)| (0.2)| (0.6)| +-----------------------------+---+--+-------+-----------+-----------+----------+ |Acquisition of investments | | | | (9.9)| (0.1)| (0.1)| +-----------------------------+---+--+-------+-----------+-----------+----------+ |Net cash flows from investing activities | (10.3)| (0.3)| (0.7)| +-----------------------------+---+--+-------+-----------+-----------+----------+ | | | | | | | | +-----------------------------+---+--+-------+-----------+-----------+----------+ |Cash flows from financing | | | | | | |activities | | | | | | +-----------------------------+---+--+-------+-----------+-----------+----------+ |Dividends paid | | | | (15.1)| -| (5.5)| +-----------------------------+---+--+-------+-----------+-----------+----------+ | | | | | | | | +-----------------------------+---+--+-------+-----------+-----------+----------+ |Net (decrease)/increase in cash and cash | (1.2)| 2.5| 23.4| |equivalents | | | | +--------------------------------------------+-----------+-----------+----------+ |Cash and cash equivalents at beginning of | 140.9| 119.9| 119.9| |period as previously reported | | | | +------------------------------------+-------+-----------+-----------+----------+ |Effect of exchange rate changes | | 4.9| (2.4)| (2.4)| +------------------------------------+-------+-----------+-----------+----------+ |Cash and cash equivalents at period | | 144.6| 120.0| 140.9| |end | | | | | +-----------------------------+---+--+-------+-----------+-----------+----------+ | | | | | | | | +-----------------------------+---+--+-------+-----------+-----------+----------+ | | | | | | | | +-------------------------+---+---+--+-------+-----------+-----------+----------+ +-------------------------+---+---+--+-------+-----------+-----------+----------+ In accordance with IAS 7, Cash Flow Statements, the cash flow statement includes cash flows relating to the long-term assurance business of the Group. Notes to the Condensed Consolidated Financial Statements 1 General information The Company is a limited liability company incorporated and domiciled in the Isle of Man. The address of its registered office is Harbour Court, Lord Street, Box 192, Douglas, Isle of Man, IM99 1QL. The Company has its primary listing on the London Stock Exchange. The principal activity of the Company is to act as the holding company of the Hansard Group of companies. The activities of the principal operating subsidiaries include the transaction of life assurance business and related activities. The Group offers long-term savings products packaged as single and regular premium unit-linked life assurance policies, providing exposure to the performance of a wide range of underlying investments. These condensed consolidated half-yearly financial statements were approved for issue on 27 February 2008. These condensed consolidated half-yearly financial statements do not comprise statutory accounts. The board of directors approved statutory accounts for the year ended 30 June 2007 on 26 September 2007. The report of the auditor on those accounts was unqualified and did not contain an emphasis of matter paragraph. 2 Basis of presentation These condensed consolidated half-yearly financial statements for the half-year ended 31 December 2007 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority ('DTR') and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The condensed consolidated half-yearly financial statements should be read in conjunction with the annual financial statements for the year ended 30 June 2007, which were prepared in accordance with United Kingdom Generally Accepted Accounting Practice ('UK GAAP'). Except where otherwise stated, all figures included in the consolidated half-yearly financial statements are stated in pounds sterling, which is also the functional currency of the Company, rounded to the nearest hundred thousand pounds. The following standards, amendments and interpretations to existing standards are not yet effective and have not been early adopted by the Group: â€¢ IFRS 8, 'Operating Segments' (effective from 1 January 2009). This standard will require explanation of the basis on which segment information is prepared and a reconciliation to the amount recognized in the consolidated financial statements. The Group will apply IFRS 8 from 1 July 2009. â€¢ IAS 23 (Amendment), 'Borrowing Costs' (effective 1 January 2009). This amendment will not have any impact on the Group's financial statements. â€¢ IAS 1 (Revised), 'Presentation of Financial Statements' (effective from 1 January 2009). This revision will not have any impact on the Group's financial statements. â€¢ IFRIC 11, 'Group and Treasury Share Transactions' (effective for annual periods beginning on or after 1 March 2007). This IFRIC deals with the application of two particular issues relating to the application of IFRS 2, 'Share-based payments'. The Group will apply IFRIC 11 for the year ended 30 June 2008, where applicable. â€¢ IFRIC 14 - IAS 19, 'The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction' (effective for annual periods beginning on or after 1 January 2008). This IFRIC will not have any impact on the Group's financial statements. 3 Adoption of International Financial Reporting Standards The financial results for the half-year ended 31 December 2007 have been presented in accordance with International Accounting Standard 34, Interim financial reporting, as adopted by the European Union and the DTR. In accordance with DTR requirements, the Group has adopted International Financial Reporting Standards ('IFRS'), as adopted by the European Union, in respect of the year ending 30 June 2008. Prior to this, the consolidated financial statements of the Group were prepared in accordance with applicable UK standards and the Statement of Recommended Practice issued by the Association of British Insurers in December 2005. Following the adoption of IFRS, the directors have reviewed the Group's accounting policies. In the opinion of the directors, the basis for recognising and measuring assets and liabilities is the same as the previous UK GAAP. However, under IFRS, a more detailed description and analysis of accounting policies is required and this will be provided in the financial statements for the year ended 30 June 2008. In addition, the terminology used under IFRS differs from UK GAAP. The directors confirm that there is no impact on the Group's reported financial position or performance as a result of adopting IFRS as at the required dates. Under IFRS, certain assets and liabilities accounted for as financial investments under UK GAAP, such as policyholder cash and cash equivalents and unsettled trades, are now classified according to the nature of those assets and liabilities. The UK GAAP consolidated balance sheets as at 30 June 2007 and 31 December 2006, as restated to comply with IFRS classification are set out in notes 17 and 18 to these condensed consolidated half-yearly financial statements. The condensed consolidated cash flow statement has been restated to reflect the reclassification of certain assets and liabilities in the balance sheet comparatives. The significant accounting policies applied in the preparation of the audited financial statements for the year ended 30 June 2007 can be accessed on the Company's website: www.hansard.com. 4 Segmental information In the opinion of the directors, the Group operates in a single business segment, that of the distribution and servicing of long-term investment products through the Group's life assurance subsidiaries. 4.1) Fees and commissions analysed by type Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Contract fee income 17.9 17.2 34.5 Fund management charges 6.7 5.2 10.5 Commission receivable 2.3 1.8 4.2 26.9 24.2 49.2 4.2) Geographical analysis of fees and commissions by origin Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Isle of Man 20.9 20.0 39.9 Republic of Ireland 6.0 4.2 9.3 26.9 24.2 49.2 4.3) Geographical analysis of profit before taxation Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Isle of Man 9.8 10.3 18.1 Republic of Ireland 2.9 0.3 1.6 12.7 10.6 19.7 4.4) Geographical analysis of financial investments 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Isle of Man 762.5 693.2 703.5 Republic of Ireland 367.7 277.1 349.5 1,130.2 970.3 1,053.0 4.5) Geographical analysis of net assets 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Isle of Man 36.2 39.8 41.6 Republic of Ireland 12.4 7.7 9.5 48.6 47.5 51.1 The following information is provided in relation to new business premiums received on investment contracts. The application of the Group's accounting policies require that premiums received on investment contracts are not included in the consolidated income statement but are reported as deposits to investment contract liabilities in the consolidated balance sheet. 4.6) New business premiums on an APE basis by residence of policyholder Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m EU and EEA 6.0 6.9 13.2 Rest of world 11.1 10.4 22.3 17.1 17.3 35.5 5 Operating profit Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Fees received from holding company - 1.5 1.6 Foreign exchange gains/(losses) 1.4 (0.3) (1.3) Profit on ordinary activities before taxation is after the following: The Company received Â£1.47m from its then holding company, Polar Cap Limited, in the half-year ended 31 December 2006 for services in relation to the Company's listing on 18 December 2006. This amount is included in other operating income in the comparative period. No amounts were received from Polar Cap Limited in the half-year ended 31 December 2007. The Group holds significant operating net assets in currencies other than sterling, which gives rise to exchange gains or losses reflected in the consolidated income statement. Included in investment income are exchange gains and losses on operating net assets as set out above. 6 Taxation The Group's profits arising from its Isle of Man-based operations are taxable at zero percent. Corporation tax for the Republic of Ireland-based operations is based on the effective annual rate for taxable income of 12.5%, applied to the expected profits for the period. Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Corporation tax 0.1 - - 7 Earnings per share Earnings per share is based upon the profit for the period after taxation divided by the average number of shares in issue throughout the period. There is no difference between basic and diluted earnings per share. Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Profit after tax (Â£m) 12.6 10.6 19.7 Weighted average number of shares in issue 137,281,202 137,281,202 137,281,202 Earnings per share in pence 9.2 7.7 14.4 8 Dividends Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Interim dividend of 4p per share paid on 4 May 2007 - - 5.5 Final dividend of 6p per share paid on 23 November 2007 8.3 - - Special dividend of 5p per share paid on 23 November 2007 6.8 - - Total 15.1 - 5.5 9 Property, plant and equipment 31 31 December 30 June December 2007 2006 2007 Â£m Â£m Â£m Net book value at start of period 0.8 0.6 0.6 Additions 0.4 0.2 0.6 Depreciation (0.2) (0.2) (0.4) Net book value at end of period 1.0 0.6 0.8 10 Financial investments held to cover liabilities The following investments (including cash and cash equivalents), other assets and liabilities are held to cover financial liabilities under investment contracts. They are included within the relevant headings on the consolidated balance sheet. 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Assets Equity securities 100.8 106.8 73.8 Investment in collective investment schemes 970.6 820.5 946.9 Fixed income securities 48.8 43.0 32.0 Cash and cash equivalents 88.6 55.7 70.1 Other receivables 10.4 9.8 9.0 Total 1,219.2 1,035.8 1,131.8 Other payables (1.8) (1.4) (1.6) Financial investments held to cover liabilities 1,217.4 1,034.4 1,130.2 11 Financial liabilities under investment contracts +-----------------------------------+---+----------+------------+----------+ | | | 31| 31 December| 30 June| | | | December| | | +-----------------------------------+---+----------+------------+----------+ | | | 2007| 2006| 2007| +-----------------------------------+---+----------+------------+----------+ | | | Â£m| Â£m| Â£m| +-----------------------------------+---+----------+------------+----------+ |At 1 July | | 1,130.2| 947.2| 947.2| +-----------------------------------+---+----------+------------+----------+ |Deposits to investment contracts | 84.7| 96.0| 185.4| +---------------------------------------+----------+------------+----------+ |Benefits paid | (72.2)| (58.7)| (130.6)| +---------------------------------------+----------+------------+----------+ |Investment contract benefits | 74.7| 49.9| 128.2| +-----------------------------------+---+----------+------------+----------+ |Closing balance | | 1,217.4| 1,034.4| 1,130.2| +-----------------------------------+---+----------+------------+----------+ The value of these financial liabilities is determined by the fair value of financial investments held to cover liabilities at the balance sheet date. 12 Called up share capital +-------------------------------------+----------+----------+----------+ | | 31| 31| 30 June| | | December| December| | +-------------------------------------+----------+----------+----------+ | | 2007| 2006| 2007| +-------------------------------------+----------+----------+----------+ | | Â£m| Â£m| Â£m| +-------------------------------------+----------+----------+----------+ |Authorised: | | | | +-------------------------------------+----------+----------+----------+ |200,000,000 ordinary shares of 50p | 100| 100| 100| +-------------------------------------+----------+----------+----------+ |Issued and fully paid: | | | | +-------------------------------------+----------+----------+----------+ |137,281,202 ordinary shares of 50p | 68.6| 68.6| 68.6| +-------------------------------------+----------+----------+----------+ 13 Exchange rates The closing exchange rates used by the Group for the translation of balance sheet items from US$ and â‚¬ to sterling were US$2.0 and â‚¬1.36, respectively, at 31 December 2007 and US$1.96 and â‚¬1.48, respectively, at 31 December 2006. 14 Related party transactions The financial results of intra-Group transactions are eliminated on consolidation and are not disclosed separately here. Fees received in the previous financial year in relation to services provided to the Company's then holding company are disclosed elsewhere within these condensed consolidated financial statements. There have been no significant changes to related parties or related party transactions in the period. Related party transactions affecting the results of previous periods and an understanding of the Group's financial position at previous balance sheet dates are as disclosed in note 5 above and in the Annual Report & Accounts for the year ended 30 June 2007. 15 Ultimate controlling party Until 31 October 2007 the ultimate controlling party of the Group was Dr Leonard Polonsky, a director of the company. At the balance sheet date Dr Polonsky retains direct and indirect beneficial interests in 47.4% of the Company's issued share capital. 16 Statement of directors' responsibilities The directors of Hansard Global plc are as listed in the Hansard Global plc Annual Report & Accounts for the year ended 30 June 2007. A list of current directors is maintained on the Group's website: www.hansard.com. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the Isle of Man governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The directors confirm that, to the best of their knowledge, this condensed set of consolidated half-yearly financial statements has been prepared in accordance with IAS 34, as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8. By order of the Board R E G Hall Chief Operating Officer G S Marr Group Counsel 27 February 2008 17 Reconciliation of UK GAAP to IFRS balance sheet +--------------------------------------------------------------------------+ |As at 30 June 2007 | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | UK GAAP|Reclassification| IFRS| +--------------------+------+----+------+--------+----------------+--------+ | | | | | Â£m| Â£m| Â£m| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Assets | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Deferred origination| | | | 94.6| -| 94.6| |costs | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Tangible assets | | | | 0.8| -| 0.8| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Total financial | | | | 1,130.4| (77.4)| 1,053.0| |investments | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Other receivables | | | | 11.9| 9.0| 20.9| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Cash and cash | | | | 70.8| 70.1| 140.9| |equivalents | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Total assets | | | | 1,308.5| 1.7| 1,310.2| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Liabilities | | | | | +--------------------------------+------+--------+----------------+--------+ | | | | | | +--------------------------------+------+--------+----------------+--------+ |Financial liabilities under investment | 1,130.2| -| 1,130.2| |contracts | | | | +--------------------------------+------+--------+----------------+--------+ | | | | | | +--------------------------------+------+--------+----------------+--------+ |Other liabilities and reserves | | 127.2| 1.7| 128.9| +--------------------+------+----+------+--------+----------------+--------+ |Total liabilities | | | | 1,257.4| 1.7| 1,259.1| +--------------------+------+----+------+--------+----------------+--------+ |Net assets | | | | 51.1| -| 51.1| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Shareholders' equity| | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Called up share | | | | 68.6| -| 68.6| |capital | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Other reserves | | | | (48.5)| -| (48.5)| +--------------------+------+----+------+--------+----------------+--------+ |Retained earnings | | | | 31.0| -| 31.0| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Total shareholders' | | | | 51.1| -| 51.1| |equity | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ See note 3 to these condensed consolidated half-yearly financial statements. 18 Reconciliation of UK GAAP to IFRS balance sheet +--------------------------------------------------------------------------+ |As at 31 December 2006 | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | UK GAAP|Reclassification| IFRS| +--------------------+------+----+------+--------+----------------+--------+ | | | | | Â£m| Â£m| Â£m| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Assets | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Deferred origination| | | | 90.1| -| 90.1| |costs | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Tangible assets | | | | 0.6| -| 0.6| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Total financial | | | | 1,034.6| (64.3)| 970.3| |investments | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Other receivables | | | | 12.0| 10.0| 22.0| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Cash and cash | | | | 64.4| 55.6| 120.0| |equivalents | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Total assets | | | | 1,201.7| 1.3| 1,203.0| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Liabilities | | | | | +--------------------------------+------+--------+----------------+--------+ | | | | | | +--------------------------------+------+--------+----------------+--------+ |Financial liabilities under investment | 1,034.4| -| 1,034.4| |contracts | | | | +--------------------------------+------+--------+----------------+--------+ | | | | | | +--------------------------------+------+--------+----------------+--------+ |Other liabilities and reserves | | 119.8| 1.3| 121.1| +--------------------+------+----+------+--------+----------------+--------+ |Total liabilities | | | | 1,154.2| 1.3| 1,155.5| +--------------------+------+----+------+--------+----------------+--------+ |Net assets | | | | 47.5| -| 47.5| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Shareholders' equity| | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Called up share | | | | 68.6| -| 68.6| |capital | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Other reserves | | | | (48.5)| -| (48.5)| +--------------------+------+----+------+--------+----------------+--------+ |Retained earnings | | | | 27.4| -| 27.4| +--------------------+------+----+------+--------+----------------+--------+ | | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ |Total shareholders' | | | | 47.5| -| 47.5| |equity | | | | | | | +--------------------+------+----+------+--------+----------------+--------+ See note 3 to these condensed consolidated half-yearly financial statements. Independent review report to Hansard Global plc Introduction We have been engaged by the company to review the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 31 December 2007, which comprises the consolidated income statement, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated cash flow statement, and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. This interim report has been prepared in accordance with the basis set out in note 1. As disclosed in note 1, the next annual financial statements of the company will be prepared in accordance with IFRSs as adopted by the European Union. The accounting policies are consistent with those that the directors intend to use in the next annual financial statements. The condensed set of consolidated financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. Our responsibility Our responsibility is to express to the company a conclusion on the condensed set of consolidated financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the International Auditing and Assurance Standards Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 31 December 2007 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. PricewaterhouseCoopers Chartered Accountants Douglas Isle of Man 27 February 2008 Results on the European Embedded Value Basis for the half-year ended 31 December 2007 1. COMPONENTS OF EEV PROFIT EEV Profit is defined as the change in EEV after tax but before dividends. EEV Profit was Â£28.6m in the half-year ended 31 December 2007, an increase of 95.9% over the profit of Â£14.6m in the corresponding period of the previous financial year. This is equivalent to a half-yearly return of 13.1% (2006: 8.2%) on the opening EEV. EEV Operating Profit is defined as the change in EEV after tax but before allowance for dividends, investment return variances and economic assumption changes. EEV Operating Profit was Â£17.3m in the period, an increase of 46.6% over the profit of Â£11.8m in the corresponding period, and equivalent to a half-yearly return of 7.9% (2006: 6.6%) on the opening EEV. Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m New business contribution 10.5 10.3 22.9 Expected return on existing business 4.3 3.2 7.1 Experience variances 1.1 1.2 (0.8) Operating assumption & model changes 0.0 (3.9) 6.7 Expected return on Net Worth 1.4 1.0 2.1 EEV OPERATING PROFIT 17.3 11.8 38.0 Investment return variances 10.0 2.3 6.9 Economic assumption changes 1.3 0.5 0.0 EEV PROFIT 28.6 14.6 44.9 The main components of the EEV profit were as follows: 1.1 New Business Contribution The largest component of EEV profit is the contribution from new business written during the half-year, amounting to Â£10.5m. This is an increase of Â£0.2m from Â£10.3m in the corresponding period, which represents 4.8% of the opening EEV and 36.7% of the Group's EEV Profit. 1.2 Expected Return on Existing Business The expected return of Â£4.3m (2006: Â£3.2m) is the increase in the value of future profits over the period, together with the increase in new business from the point of sale to the end of the period, due to the time value of money. The calculation is based on the risk discount rate at the start of the period. 1.3 Experience Variances Experience variances arise where the Group's actual experience in areas such as expenses, policy persistency, mortality and fees from policyholder activity differ during the period from the assumptions used to calculate the EEV at the previous year-end. Experience variances gave rise to an EEV profit of Â£1.1m in the period (2006: Â£1.2m). Improvements in persistency experience contributed to a gain of Â£1.0m, while investment in the Group's infrastructure gave rise to an expense overrun of Â£0.5m. A number of other factors contributed to a gain of Â£0.6m. Experience variances in the corresponding period include Â£1.57m received from Polar Cap during that period. 1.4 Operating Assumption & Model Changes There were no changes to operating assumptions or model changes in the period. During the corresponding period improvements introduced to the modelling of single premium cases with a premium above Â£1m led to a one-off negative adjustment to EEV of Â£3.9m. The analysis and revision of EEV assumptions at 30 June 2007 gave rise to a gain of Â£6.7m (after adjusting for the impact of the modelling change). 1.5 Expected Return on Net Worth The expected return on Net Worth of Â£1.4m (2006: Â£1.0m) reflects the anticipated increase to shareholder assets over the period due to the time value of money and its calculation is based on the risk discount rate at the start of the period. 1.6 Investment Return Variances Investment return variances contributed to a gain of Â£10.0m in the period (2006: Â£2.3m gain). The main elements contributing to these variances are as follows: â€¢The weakening of sterling against various currencies resulted in a gain of Â£6.8m, compared with a loss of Â£3.4m from movements in currency rates in the corresponding period. â€¢Investment performance of policyholder funds was higher than expected, contributing to a gain of Â£2.5m (2006: Â£4.9m gain). â€¢The return achieved on shareholder assets was Â£0.5m higher (2006: Â£0.4m lower) than expected. â€¢Marketing allowances received from external fund managers were Â£0.2m higher (2006: Â£1.2m higher) than expected. 1.7 Economic Assumption Changes Changes to yields in fixed interest markets caused the risk discount rate to reduce from 5.0% at 30 June 2007 to 4.1% at 31 December 2007, with a corresponding reduction to the projected unit growth rate from 2.2% to 1.2%. Reducing the risk discount rate increases the EEV, while reducing the unit growth rate reduces the EEV. The net effect of these two changes was to increase the EEV by Â£1.3m (2006: Â£0.5m gain), which illustrates the EEV's limited exposure to interest rate risk. 2. DETAILED ANALYSIS OF CHANGE IN EEV The EEV comprises the value of in-force business ('VIF') and the Net Worth of the Group as at the relevant valuation date, and is calculated net of corporation tax. This analysis shows the source of change in VIF and Net Worth over the period. It helps to demonstrate the realisation of projected future profits into Net Worth during the period. As in prior periods, the major sources of EEV profit are from new business and investment performance. Half-year ended 31 December 2007 31 December 2006 DETAILED ANALYSIS OF EEV VIF Net EEV VIF Net CHANGE IN EEV Worth Worth Â£m Â£m Â£m Â£m Â£m Â£m New business contribution 10.5 10.5 0.0 10.3 10.3 0.0 Expected return on existing business 4.3 (5.4) 9.7 3.2 (5.6) 8.8 Experience variances 1.1 2.7 (1.6) 1.2 1.0 0.2 Operating assumption & model changes 0.0 0.0 0.0 (3.9) (3.9) 0.0 Expected return on Net Worth 1.4 0.0 1.4 1.0 0.0 1.0 EEV OPERATING PROFIT 17.3 7.8 9.5 11.8 1.8 10.0 Investment return variances 10.0 7.9 2.1 2.3 2.7 (0.4) Economic assumption changes 1.3 1.3 0.0 0.5 0.5 0.0 EEV PROFIT 28.6 17.0 11.6 14.6 5.0 9.6 Dividends paid (15.1) 0.0 (15.1) 0.0 0.0 0.0 CHANGE IN EEV 13.5 17.0 (3.5) 14.6 5.0 9.6 Opening EEV 218.0 161.5 56.5 178.6 135.3 43.3 Closing EEV 231.5 178.5 53.0 193.2 140.3 52.9 3. EEV BALANCE SHEET The EEV has grown to Â£231.5m at 31 December 2007 from Â£218.0m at 30 June 2007, an increase of 6.2%. The EEV balance sheet is presented below. 31 December 31 December 30 June 2007 2006 2007 Â£m Â£m Â£m Free Surplus 47.3 47.8 51.2 Required Capital 5.7 5.1 5.3 Net Worth 53.0 52.9 56.5 Value of In-Force Business 183.8 145.6 166.8 Cost of Required Capital (0.3) (0.3) (0.3) Reduction for Operational Risk (5.0) (5.0) (5.0) Value of Future Profits 178.5 140.3 161.5 EEV 231.5 193.2 218.0 4. NEW BUSINESS PROFITABILITY AND MARGIN New Business Margin is defined as New Business Contribution ('NBC') divided by Present Value of New Business Premiums ('PVNBP'). The calculation of PVNBP is equal to total single premium sales in the period under review plus the discounted value of regular premiums expected to be received over the term of new regular premium policies, and is calculated at the point of sale. The PVNBP of Â£130.5m represents an increase of Â£1.0m or 0.8% on the corresponding period. The NBC during the period is the present value of the expected stream of shareholder cash flows after tax from new business written in that period. The Group's NBC has been calculated using the same economic assumptions as those used to determine the EEV as at the start of the period and the same operating assumptions used to determine the EEV as at the end of the period. NBC is shown after allowing for the cost of required capital, calculated on the same basis as for in-force business. The contribution of Â£10.5m from new business has contributed to significant growth in the Group's EEV and represents an increase of Â£0.2m on the new business contribution of the corresponding period. During the period, the Group has written new business on profitable terms, which resulted in a new business margin (on a PVNBP basis) of 8.0%, consistent with the margin in the corresponding six-month period, and marginally lower than the 8.3% margin on business written during the last full financial year. Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 NEW BUSINESS MARGIN (PVNBP basis) Present Value of New Business Premiums Â£130.5m Â£129.5m Â£277.1m New Business Contribution Â£10.5m Â£10.3m Â£22.9m NEW BUSINESS MARGIN 8.0% 8.0% 8.3% The increased amounts of regular premium business relative to the corresponding period had the impact of increasing NBC by Â£0.2m. 5. EEV SENSITIVITY ANALYSIS Sensitivities provide an indication of the impact of changes in particular assumptions on the EEV at 31 December 2007 and the NBC for the six-month period then ended. In each sensitivity calculation, all other assumptions remain unchanged except where they are directly affected by the revised economic conditions. Impact on EEV NBC Â£m Â£m At 31 December 2007 231.5 10.5 100bp decrease in risk discount rate 8.7 0.8 100bp increase in investment return 6.7 0.4 10% increase in the value of equities and property 10.9 0.0 10% decrease in sterling exchange rates 14.3 0.8 10% decrease in expenses 4.5 0.5 10% decrease in lapse rates 5.0 0.4 10% decrease in mortality rates 0.7 0.0 10% increase in marketing allowances 3.3 0.2 The EEV and NBC are relatively insensitive to the level of Required Capital. The sensitivity analysis indicates that the Group is exposed, through the impact on the level of future fund-based management income, primarily to movements in equity, property and currency values. NOTES TO THE EUROPEAN EMBEDDED VALUE INFORMATION 1. BASIS OF PREPARATION The half-yearly supplementary information shows certain of the Group's results for the half-year ended 31 December 2007 as measured on the EEV basis. In preparing this EEV information, the board considered the EEV Principles published by the CFO Forum, a group comprising the Chief Financial Officers of certain major listed and unlisted European assurance companies, in May 2004 and extended by additional guidance published in October 2005. The EEV information has been prepared using a ''market consistent'' basis in respect of the economic assumptions, in line with the EEV Principles. Under the EEV methodology, profit is recognised as margins are released from policy related balances over the lifetime of each policy within the Group's in-force business. The total profit recognised over the lifetime of a policy under EEV methodology is the same as reported under IFRS, but the timing of recognition is different. The EEV calculations only consider claims by policyholders in the normal course of business under the terms of the policies issued. They also assume the continuation of current policy terms and conditions, and the Group's interpretation thereof. 2. METHODOLOGY AND ASSUMPTIONS The methodology used to derive the EEV at the valuation date is consistent with the methodology used in relation to the consolidated financial statements in respect of the year ended 30 June 2007. Operational assumptions remained unchanged from those used to calculate the EEV at 30 June 2007. Certain economic assumptions have changed, as set out below. The principal economic assumptions used in the EEV calculations are based on risk free rates, being the market yields of government backed fixed interest securities of comparable term to the policy cash flows at the end of the reporting period. A proportion of the Group's income and expenditure is contracted in currencies other than sterling, in particular US$ and â‚¬. In practice, the risk free rate used in the valuation is based on a weighted average of the yields on fixed interest securities issued within the UK, US and Europe. Any components of the EEV and other balance sheet items denominated in foreign currencies have been translated to sterling using the appropriate closing exchange rate. The risk discount rate used to value future expected shareholder cash flows is assumed to be the risk free rate plus a margin for any risks that are not allowed for elsewhere in the valuation. Since non-market risk is allowed for separately through a reduction to the EEV of Â£5m, the risk margin is nil. The principal economic assumptions used are set out below: Half-year ended Year ended 31 December 31 December 30 June 2007 2006 2007 Risk-free yields 4.1% p.a. 4.4% p.a. 5.0% p.a. Risk discount rate 4.1% p.a. 4.4% p.a. 5.0% p.a. Future expense inflation 5.0% p.a. 5.0% p.a. 5.0% p.a. Corporation Tax - Isle of Man 0% 0% 0% Corporation Tax - Republic of Ireland 12.5% 12.5% 12.5% Review of the European Embedded Value ('EEV') of Hansard Global plc for the six months ended 31 December 2007. Our role Deloitte & Touche LLP has been engaged by Hansard Global plc to act as Reviewing Actuaries in connection with results on an EEV basis published in sections within Hansard Global plc's Results for the half-year ended 31 December 2007. Responsibilities The EEV Information and the methodology and assumptions underlying it is the sole responsibility of the Directors of Hansard Global plc. It has been prepared by the Directors of Hansard Global plc, and the calculations underlying the EEV Statements have been performed by Hansard Global plc. Our review was conducted in accordance with generally accepted actuarial practices and processes. It comprised a combination of such reasonableness checks, analytical reviews and checks of clerical accuracy as we considered necessary to provide reasonable assurance that the EEV Information has been compiled free of material error. Our review of half yearly EEV information considered the changes since 30 June 2007 and is substantially less in scope than an annual review and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an annual review. The EEV Information necessarily makes numerous assumptions with respect to economic conditions, operating conditions, taxes, and other matters, many of which are beyond the Group's control. Although the assumptions used represent estimates which the Directors believe are together reasonable, actual experience in future may vary from that assumed in the preparation of the EEV Information, and any such variations may be material. Deviations from assumed experience are normal, and are to be expected. The EEV does not purport to be a market valuation of the Group and should not be interpreted in that manner since it does not encompass all of the many factors that may bear upon a market value. For example, it makes no allowance for the value of future new business. Opinion On the basis of our limited review, nothing has come to our attention that causes us to retract our opinion that: â€¢the methodology and assumptions used to prepare the EEV Information comply in all material respects with the European Embedded Values Principles set out by the CFO Forum in May 2004, and additional guidance released in October 2005 (the 'CFO Forum Principles'); â€¢the EEV Information has been compiled on the basis of the methodology and assumptions chosen by the Directors of Hansard Global plc, and complies in all material respects with the CFO Forum Principles. Reliances and Limitations We have relied on data and information, including the value of net assets, management accounting data and solvency information supplied to us by the Group. Further, we have relied on the terms of the contracts, as they have been reported to us, being enforceable. We have relied on the reported mathematical reserves, the adequacy of those reserves, and of the methods and assumptions used to determine them. We have assumed that all provisions made in the audited financial statements for any other liabilities (whether actual, contingent or potential) of whatever nature, are appropriate. We have also relied on information relating to the current and historical operating experience of the Group's life insurance business, including the results of experience investigations relating to policy persistency, and expense analysis. In forming our opinion, we have considered the assumptions used in the EEV Information in the context of the reported results of those investigations although we have not attempted to predict the impact of potential future changes in the competitive forces in markets on the assumptions. Yours faithfully Deloitte & Touche LLP Deloitte & Touche LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at Stonecutter Court, 1 Stonecutter street, London EC4A 4TR. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu ('DTT'), a Swiss Verein whose member firms are separate and independent legal entities. Neither DTT nor any of its member firms has any liability for each other's acts or omissions. Services are provided by member firms or their subsidiaries and not by DTT. Contacts and Advisors +---------------------------------------+----------------------------------+ |Registered Office |Media Enquiries | | | | |Harbour Court |Bell Pottinger Corporate & | | |Financial | |Lord Street |6th Floor, Holborn Gate | | |330 High Holborn | |Box 192 | | | |London | |Douglas | | | |WC1V 7QD | |Isle of Man | | | |Tel: +44 (0)20 7861 3881 | |IM99 1QL |Fax: +44 (0)20 7861 3233 | | | | | | | | | | |Tel: +44 (0)1624 688000 | | | | | |Fax: +44 (0)1624 688008 | | | | | |www.hansard.com | | +---------------------------------------+----------------------------------+ |Chairman & Chief Executive |Broker | | | | |Dr L S Polonsky |Panmure Gordon (UK) Limited | | | | |Dr.polonsky@hansard.com |Moorgate Hall | | |155 Moorgate | | |London | | |EC2M 6XB | | | | | | | | |Tel. +44 (0)20 7459 3600 | | | | | |Fax. +44 (0)20 7459 3609 | +---------------------------------------+----------------------------------+ |Financial Advisor | | | | | |Lazard & Co. Limited | | | | | |50 Stratton Street | | | | | |London | | | | | |W1J 8LL | | | | | | | | |Tel. +44 (0)20 7187 2000 | | +---------------------------------------+----------------------------------+ |Auditor |Registrar | | | | |PricewaterhouseCoopers |Chamberlain Fund Services Limited | | | | |Sixty Circular Road |3rd Floor Exchange House | | | | |Douglas |54-62 Athol Street | | | | |Isle of Man |Douglas | | | | |IM1 1SA |Isle of Man | | | | | |IM1 1JD | | | | |Tel: +44 (0)1624 689689 | | | | | |Fax: +44 (0)1624 689690 |Tel: + 44 (0)1624 641560 | | | | | |Fax: +44 (0)1624 641561 | +---------------------------------------+----------------------------------+ |Reviewing Actuaries |UK Transfer Agent | | | | |Deloitte & Touche LLP |Capita IRG Limited | | | | |Hill House |The Registry | | | | |1 Little New Street |34 Beckenham Road | | | | |London |Beckenham | | | | |EC4A 3TR |Kent | | | | | |BR3 4TU | | | | |Tel: +44 (0)20 7936 3000 | | |Fax: +44 (0)20 7583 1198 | | | |Tel: +44 (0)20 8639 2236 | | |Fax: +44 (0)20 8639 2279 | +---------------------------------------+----------------------------------+ +---------------------------------------+----------------------------------+ |Financial Calendar | | +---------------------------------------+----------------------------------+ |Ex-dividend date for interim dividend |5 March 2008 | | | | |Record date for interim dividend |7 March 2008 | | | | |Payment date for interim dividend |3 April 2008 | | | | |Interim Management Statement and |16 May 2008 | | | | |announcement of 3rd quarter new | | |business figures | | | |30 July 2008 | |Announcement of 4th quarter new | | |business figures |30 September 2008 | | | | |Preliminary announcement of results | | +---------------------------------------+----------------------------------+ This information is provided by RNS The company news service from the London Stock Exchange

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