Results for the six months ended 31 December 2014

RNS Number : 8997F

Hansard Global plc

26 February 2015

Hansard Global plc

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its results for the six months ended 31 December 2014. All figures refer to the six months ended 31 December 2014 ("H1 2015"), except where indicated.

SUMMARY

· In line with our strategic plan we have successfully entered into business relationships with significant IFA networks and other institutions in our target markets which will provide a platform for sustainable and diversified new business flows;

· IFRS profits of £6.6m are in line with the comparative period and in line with expectations;

· EEV profit after tax of £6.6m (H1 2014: £2.2m loss) reflects improved market performance and the strengthening of the US dollar against sterling over the period. The low level of new business in the period resulted in a negative contribution from new business;

· The increased interim dividend of 3.5p per share is funded by positive operating cash flows;

· Our estimate of the Group's exposure, including professional costs, in relation to the issue of Chargeable Events Certificates announced in FY 2014, remains unchanged at £5.0m;

· There has been no material change in the litigation against Hansard Europe. Writs totalling approximately £5.4m remain outstanding (30 June 2014: £5.2m). We continue to defend these claims strenuously.

	H1 2015	H1 2014
New business sales - PVNBP IFRS profit after tax	£29.4m £6.6m	£55.2m £6.6m
EEV profit / (loss) after tax	£6.6m	(£2.2m)
IFRS basic earnings per share Interim dividend - to be paid on 2 April 2015	4.8p 3.5p	4.8p 3.4p

As at	31 December	30 June
	2014	2014
Assets under Administration	£924m	£944m
European Embedded Value	£204m	£204m

INTERIM MANAGEMENT STATEMENT

The second Interim Management Statement in respect of the year ending 30 June 2015 is expected to be published on 14 May 2015.

OUTLOOK

In the last 18 months the Group has undertaken considerable work on revising its strategy and putting that new strategy in place. We are confident that the changes being implemented will have a positive impact on new business flows and that the long-term outlook for the Group is strong.

Gordon Marr, Group Chief Executive Officer, commented:

"We believe that we now have appropriate resources to deliver our strategy and achieve our objectives of driving increased new business volumes. Since the launch of our strategic plan last year, we have entered into 53 new relationships with IFA networks. We anticipate that these new relationships will begin to deliver increased levels of profitable new business, and diversify our exposure across a range of distributors and countries, in the second half of the financial year and beyond."

For further information:

Hansard Global plc +44 (0) 1624 688000

Gordon Marr, Group Chief Executive Officer

Vince Watkins, Chief Financial Officer

Bell Pottinger +44 (0) 20 3772 2500

Daniel de Belder

Notes to editors:

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

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

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

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

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

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

Forward-looking statements:

This announcement may contain certain forward-looking statements with respect to certain of Hansard Global plc's plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward-looking statements involve risk and uncertainties because they relate to future events and circumstances which are beyond Hansard Global plc's control. As a result, Hansard Global plc's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in Hansard Global plc's forward-looking statements. Hansard Global plc does not undertake to update forward-looking statements contained in this announcement or any other forward-looking statement it may make. No statement in this announcement is intended to be a profit forecast or be relied upon as a guide for future performance.

CHAIRMAN'S STATEMENT

New business

In my first Chairman's Statement, in September last year, I noted that it would take time for the full benefits of the revision to our strategy to emerge in increased sales. The results for H1 2015 are consistent with those expectations. A consequence of targeting larger IFAs is that it is a longer sales process and that they take longer to come on stream.

In H1 2015 our new business was some 50% below the levels of H1 2014. As previously reported, this was due to a significant distributor in Japan suspending its operations in October 2013. During the period, there was an encouraging increase in sales in Q2 2015 compared to Q1 and in new business from the Middle East and Africa region.

Financial performance

The Group's profit after tax under International Financial Reporting Standards ("IFRS") of £6.6m is similar to the comparative period (H1 2014: £6.6m), as IFRS accounting policies spread income and acquisition expense recognition over multiple years. During the period nothing has occurred to require us to change our provision in relation to Chargeable Event Certificates. Similarly, there has been no material change in the status of litigation against Hansard Europe.

The European Embedded Value ("EEV") profit after tax of £6.6m (H1 2014: £2.2m loss) reflects improved market performance and the strengthening of the US dollar against sterling over the period; since a high proportion of our policyholder assets are denominated in US dollars. The low level of new business in the period resulted in a negative contribution from new business.

Dividends

The Board has resolved to pay an increased interim dividend of 3.5p per share (2014: 3.4p per share) reflecting the previous commitment to pay a progressive dividend.

Capitalisation and solvency

The Group is well capitalised to meet the requirements of regulators, policyholders, intermediaries and other stakeholders. Aggregate minimum solvency margins remain covered 12 times by our capital resources. Our prudent investment policy for shareholder assets has minimised much of the market risk and provided a stable and resilient solvency position over recent years.

Risk management

Following the breaches in relation to Chargeable Event Certificates that we discovered last year, we have reviewed our risk management approach and resources. As a result, we have brought together our Governance, Risk and Compliance staff into one department. This department will receive additional resources to monitor adherence to existing regulations as well as ensuring that the Group is well prepared for new regulations.

Outlook

In the last 18 months the Group has undertaken considerable work on revising its strategy and on working to implement that new strategy. Despite this hard work, the timing of the improvement in new business remains difficult to predict with certainty. However, we are confident that the long-term outlook for the Group is strong.

Philip Gregory

Chairman

25 February 2015

INTERIM MANAGEMENT REPORT

REPORT OF THE GROUP CHIEF EXECUTIVE OFFICER

Throughout the first half of this financial year we have made progress in increasing the scale of our business, better diversifying new business flows and have taken steps to increase our risk management capabilities.

Like our clients we are encountering economic uncertainty and currency volatility and face increased regulatory complexity. While these factors may adversely impact investment decisions in the short term we believe that there is a growing global demand for long-term savings plans and that we have the right strategy to meet that demand.

I can report that there has been increased interest in our products which we believe will provide a platform for sustainable diversified new business flows into the future; we have continued to generate positive cash flows to fund new business and increased dividends.

Strategy implementation

Following the launch of our revised strategy and new products in Q4 2014, market development activities have generated encouraging interest among Independent Financial Advisors and contract holders around the world. In particular we are pleased with progress in the Middle East and Africa region.

We have entered into business relationships with a number of significant IFA networks and other institutions in our target markets and, as a result, have added 53 new Terms of Business with networks. This will greatly increase our market penetration capability and support additional new business flows in the second half of this financial year and beyond.

We are confident that our newly-introduced products are well-tailored to the requirements of our target clients. We have recently extended our range of single premium products through the launch of a Personal Portfolio product.

To support the Group's strategic plans we are investigating the regulatory and licensing requirements in a number of jurisdictions and we have continued to identify and recruit skilled distribution resources.

New business distribution

Throughout H1 2015 the Group has continued to develop relationships with financial advisors in a number of target markets, including the Far East, Latin America and the Middle East and Africa.

The results of this activity, supported by the introduction of product-based incentive arrangements, new account executives and by enhancements to Hansard OnLine, have underpinned new business flows in H1 2015. In particular the level of new business in Q2 2015 was some 13% higher than Q1 2015. I would like to thank all financial advisors for the business they have introduced and for their guidance in the development of our strategy.

New business flows in H1 2015 of £29.4m PVNBP are, however, some 50% below the levels of H1 2014. As previously reported, this is as a result of a significant distributor in Japan suspending its operations in October 2013. We intend to rebuild and diversify our future new business flows.

Results for the period

Reductions in new business flows have a very limited impact on current earnings reported under IFRS, as fees from the accumulated contracts that we administer on behalf of policyholders around the world continue to meet the costs of that administration, underpin our longer-term objectives and pay a significant dividend. IFRS profit for the period is £6.6m after tax, which is in line with the comparative period.

Discussions with the UK Tax authorities continue in order to finalise the Group's liability arising from the breaches in the Chargeable Event Certificate regulations that we reported in May 2014. We continue to estimate the Group's final exposure, including professional costs, to be approximately £5.0m.

The shortfall in new business has however had a significant impact on results reported under EEV, which are primarily driven by the levels of new business received, and by investment returns. Reduced volumes of new policies in the period (and the subsequent spreading of acquisition expenses over fewer policies) gave rise to a negative contribution from new business. The weakness of sterling in the period against the currencies favoured by our policyholders has combined with market valuation gains related to assets under administration to produce an EEV profit of £6.6m which compares favourably to a loss of £2.2m in H1 2014.

The Group has continued to generate positive cash flows to fund new business and dividends. Following the payment of a dividend of £6.9m in November 2014, the Group's free surplus available for investment and distribution has increased by over 11% since 30 June 2014 to £31.5m.The EEV at 31 December 2014 is £204m.

The results for H1 2015 are as follows:

	H1 2015	H1 2014
IFRS profit after tax	£6.6m	£6.6m
EEV profit / (loss) after tax	£6.6m	(£2.2m)
IFRS basic earnings per share Interim dividend - to be paid on 2 April 2015	4.8p 3.5p	4.8p 3.4p

As at	31 December	30 June
	2014	2014
Assets under Administration	£924m	£944m
European Embedded Value	£204m	£204m

Details of the results for the period, under both IFRS and EEV reporting, are contained in the Business and Financial Review.

Hansard Europe Limited

Hansard Europe remains profitable and strongly capitalised. We continue to meet the requirements of the company's policyholders, regulators and stakeholders while gaining operational efficiencies through the use of Hansard OnLine. The servicing of policy contracts and other administrative operations is performed at the Group's head office on the Isle of Man. Regulatory control and litigation management continue to be exercised from the company's offices in Dublin.

We continue to deal with complaints in circumstances where a contract holder believes that the performance of an asset linked to a particular contract is not satisfactory. We do not give investment advice and are not party to the selection of the asset and therefore we feel that we are justified in robustly defending each complaint. Sometimes these complaints progress to threatened litigation with the resulting increase in cost and resource to the Group. In many cases the threatened litigation relates to decisions taken by individuals during, or as a result of, the global financial crisis over 5 years ago.

At the beginning of this financial year Hansard Europe was facing litigation based on writs totalling €6.5m (approximately £5.2m) as a result of these and related complaints. Each case is considered on its merits and during the half-year the Board considered it in our best interests to reach a resolution with regard to certain of the minor claims. Settlements totalling £0.1m (H1 2014: £0.7m) have been made, without any admission of liability, in order to avoid the expense and distraction of extended litigation and to allow management to focus fully on the execution of our strategy.

As a result of further writs issued during the half-year and in the period to the date of this report, writs outstanding against Hansard Europe total €6.9m or approximately £5.4m. We will continue to defend ourselves from all claims but will consider early settlement where there is a clear economic benefit.

Capitalisation and solvency

Our key financial objective is to ensure that the Group's solvency is managed safely through the economic cycle to meet the requirements of regulators, contract holders, intermediaries and shareholders. The Group is well capitalised. The required minimum solvency margins remain covered 12 times by our capital resources, which are typically held in a wide range of deposit institutions and in highly-rated money market liquidity funds.

We recognise that Hansard Europe's capital surplus is not available for distribution in the foreseeable future. Our agreement with the Central Bank of Ireland as a result of the implementation of the revised Operating Model for Hansard Europe has the effect of delaying dividends or other distributions from the company for an estimated three years. It is therefore included within the total of Required Capital of £26.4m in the analysis of the Group's EEV balance sheet at 31 December 2014. Allowing for this, the EEV balance sheet reflects that the Group has a free surplus of £31.5m available for investment and distribution, an increase of over 11% since 30 June 2014.

Hansard OnLine

We continue to develop increased functionality for Hansard OnLine to allow policyholders and intermediaries to transact with us more efficiently and to allow us to meet their expectations. We are pleased with the progress which further enhances the value of the insurance wrapper. We believe that Hansard OnLine will be even more widely used by policyholders and intermediaries as we continue to implement our strategic plans.

As is reported in the Business and Financial Review, over 95% of policy investment transactions in the last 12 months have been processed electronically by intermediaries using Hansard OnLine and around 90% of all new business applications were submitted via the platform during this period.

Risk management

As the pace, scale, and complexity of regulatory change continues to increase, it is vital for us to understand and manage the impact of these changes both on our clients and on ourselves as a business. This is a core objective of our strategic planning.

In order to respond to the changing regulatory environment, and following the breaches in relation to Chargeable Event Certificates that we discovered last year, we have refreshed our risk management approach and related resources. As a result, we have established a Governance, Risk and Compliance Department. This department will receive additional resources to monitor adherence to existing regulations as well as analysing new regulations to determine the impact on the Group and its plans.

Dividend

In line with previous guidance, the Board has resolved to pay an increased interim dividend of 3.5p per share (2014: 3.4p). This dividend will be paid on 2 April 2015.

Our people

The Group has a dedicated dynamic workforce. We have a commitment to service and quality at the highest level in relation to servicing contract holders and intermediaries, the development of successful products and Hansard OnLine. We also have a strong commitment to change in all areas of the business. I thank all our employees for their continued contribution to Hansard and I am sure that we will continue to rise to the strategic challenges facing the Group.

Gordon Marr

Chief Executive Officer

25 February 2015

BUSINESS AND FINANCIAL REVIEW

1. BUSINESS MODEL

Hansard is a specialist long-term savings provider that has been providing innovative financial solutions for international clients since 1987. We focus on helping financial advisors and institutions to provide their clients (individual and corporate investors) with savings and investment products in secure life assurance wrappers to meet long-term savings and investment objectives. We administer assets for 528 financial advisor businesses with over 40,000 client accounts in over 155 countries.

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

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

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

2. STRATEGY

Our aim is to bethe preferred choice of distributors when recommending international savings and investment products to their clients. We have developed attractive products and services and will continue to improve them. We recognise that clients are at the heart of our business and, consequently, we must work hard to build long-term positive relationships with them. We need to become even better at understanding, serving and rewarding our clients and shareholders.

We recognize that our vision encompasses every part of our business. With the support of our management and employees we have identified a range of strategic objectives to meet this target and are working towards them. Through careful execution of our plans we intend to add significant scale to the business, on a more diversified basis, at acceptable levels of risk and profitability.

We have made encouraging progress on the implementation of our strategic plans and are seeing initial benefits. Some of this activity, and the subsequent results, is summarised in section 4.

We are developing a range of key performance indicators ("KPIs") that will demonstrate progress toward our objectives. Since we have only limited baseline metrics for some of the objectives, we will provide additional appropriate reporting on those objectives in the Annual Report & Accounts for the year ending 30 June 2015.

3. HANSARD ONLINE

Hansard OnLine is the Group's internet platform, providing essential functionality and information for our policyholders and intermediaries around the world. Available 24/7, in multiple languages, Hansard OnLine provides users with the tools needed to better manage their objectives.

Already an invaluable sales and administration tool, Hansard OnLine continues to be developed to meet the evolving needs of its users. Functionality introduced recently aims to enhance the online servicing capability, enhance data access, increase security and reduce operational risks from transactions involving people in many parts of the world.

We believe that Hansard OnLine will be even more widely used by contract holders and intermediaries as we continue to implement our strategic plans.

Over 95% of investment transactions in the last 12 months have been processed electronically by intermediaries, on behalf of their clients, using Hansard OnLine and around 90% of all new business applications were submitted via the platform during this period.

Meeting policyholders' requirements

We appreciate that our policyholders' savings and investments are important to them, and that they want to monitor the performance of their Hansard contracts when and where it suits them. With this in mind we continue to improve the functionality available to them via their own personal, secure OnLine Account.

Through an OnLine Account policyholders can view the key documentation and investment information relating to their policy with content presented in 11 different languages.

Alongside a refreshed new-look site, policyholders now also have access to our new Unit Fund Centre which provides all of the information that they need in order to make informed investment decisions. The Unit Fund Centre can be used as a resource to research potential new unit funds, and also as a tool to monitor the performance of existing choices.

In addition, the various valuation reports (policy valuations, premium collection and investment performance information) that policyholders currently access via their OnLine Accounts have been improved and combined into one single easy-to-use report.

Certain policyholders now have the functionality to perform their own policy investment transactions, via their OnLine Accounts, to better meet their objectives.

Over 15,000 OnLine Accounts are used regularly. However, it remains a key objective of the Group to increase OnLine Account take up and we continue to look at new ways to keep policyholders informed of new online developments in order to achieve this.

Supporting intermediaries

Hansard OnLine allows intermediaries to perform key tasks seamlessly online. Pre-sale illustrations, new business proposals and policy investment transactions are handled electronically and a range of analytical tools such as the Personal Investment Review are available through the Unit Fund Centre.

Payment Card processing has been enhanced recently to further help intermediaries manage their client's regular contributions. A new report has been introduced that covers all transactions, both regular and those made online, giving a full history of payment card transactions affecting a client's investments.

Placing this functionality online means the intermediaries can access it when they need it, and allows for an improved user-centric experience compared to using paper forms. Data validation happens in real-time to ensure there are no delays to the investment of client funds.

Reducing Operational risk

The straight-through processing of policyholder instructions (whether received directly or through their appointed agents) reduces the Group's operational risk exposures, as does the ability of the Group to communicate electronically with policyholders and intermediaries, irrespective of geographical boundaries.

Hansard OnLine is a vital component of the revised Operating Model for Hansard Europe, meeting the needs of that company's regulators, policyholders and intermediaries while allowing more efficient management of operations from the Isle of Man.

4. New business

Strategy Implementation

We have implemented strategic initiatives to better diversify new business flows, further reduce risk and increase the scale of our business. This is demonstrated by the recent launch of a new Universal Personal Portfolio product which marks the conclusion of a year-long effort to upgrade our entire product range. We recognise though that this is not the end of our work.

The Group has access to an increasing portfolio of distributors who know that our combined efforts can meet the needs of policyholders around the world. The Group's proposition is to develop and enhance relationships with policyholders and intermediaries through the use of our people, products and technology in a way that meets shared objectives. We believe that the tightening regulatory environment will require the Group to establish locally licenced branches in more of our markets in order to achieve our longer-term objectives. We are investigating our options in a small number of jurisdictions.

The Group continues to invest in distribution resources, Hansard OnLine, and other infrastructure to support its strategic plans. There has been increased interest in our products from both existing and new intermediaries which we believe will provide a platform for sustainable diversified new business flows in the latter part of this financial year and beyond. This interest is reflected in increased new business levels and, as a result, new business in Q2 2015 was approximately 13% above the level of Q1 2015, on the basis of PVNBP. In particular we are pleased with progress in the Middle East and Africa region.

Policyholders and Product

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

Distribution

The Group has continued negotiations with a number of well-established distributors, including brokers, expatriate IFAs, insurers and HNW banks involved in both expatriate and local markets around the world. Our aim is to build long-term relationships with our distributors in key markets with growing economies and high concentrations of wealth.

Since we began building the base for our new distribution strategy, we have entered into business relationships with a number of significant IFA networks and other institutions in our target markets. As a result, we have added 53 new Terms of Business with networks which will add over 400 new individual brokers to our available distribution in target markets.

Resources

We have restructured our sales force and have recruited a number of highly experienced Account Executives, primarily to focus on the Far East, the Middle East and the international expatriate market. We believe that we now have appropriate resources to deliver our strategy.

To focus our resources we have reorganised our sales management structure into three regions, each headed by a Regional Director; Latin America, Middle East & Africa, and the Far East.

The results of activities in each region in H1 2015 are reported in the table below.

Hansard OnLine

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

Market awareness

Launch events that took place in the latter part of FY 2014 have been supported by local market development activities which have generated considerable interest among Independent Financial Advisors and contract holders around the world which we believe will provide a platform for sustainable diversified new business flows in the medium term. We have launched a series of promotional initiatives in trade journals in our target markets outlining our strengths and the value of our proposition to intermediaries and their clients.

New business performance for the six months ended 31 December 2014

Throughout H1 2015 the Group has continued to develop relationships with financial advisors in a number of target markets, including the Far East, Latin America and the Middle East and Africa.

We continue to explore new business opportunities and strategic initiatives in our target markets. These activities, supported by the introduction of product-based incentive arrangements, the launch of new products, and by enhancements to Hansard OnLine, have underpinned new business flows in H1 2015. As a result, new business in Q2 2015 is approximately 13% above the level of £13.8m PVNBP reported in Q1 2015. We have seen a particularly encouraging response in the Middle East and Africa region - which accounted for £4.0m PVNBP for the first half of the year.

New business flows for Hansard International for H1 2015 are summarised as follows. The comparison to H1 2014 is adversely affected by regular premium business totalling £10.9m PVNBP introduced by the Japanese distributor that suspended its operations in October 2013.

Comparisons against the corresponding periods are on an actual currency basis.

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Compensation Credit	2.7	5.7	9.3
Present value of New Business Premiums	29.4	55.2	83.0
Annualised Premium Equivalent	4.7	8.7	14.3

To allow comparison with results published by other companies, the following commentary relates to new business flows calculated on the basis of PVNBP.

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
By type of contract	£m	£m	£m
Regular premium	17.6	44.4	63.7
Single premium	11.8	10.8	19.3
	29.4	55.2	83.0

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
By geographical area	£m	£m	£m
Far East	7.1	26.4	35.9
Latin America Middle East and Africa	11.1 4.0	16.6 0.9	27.0 3.3
Rest of World	6.0	6.1	9.6
EU and EEA	1.2	5.2	7.2
	29.4	55.2	83.0

We continue to receive new business from a diverse range of financial advisors around the world. Our focus on growth markets is reflected in the proportions of contractual new business premiums denominated in US dollars (71%). Approximately 21% of new business premiums are denominated in sterling, and 5% in Euro. The suspension of Japanese business means that no new business premiums are denominated in Yen, whereas some 34% of premiums in H1 2014 were denominated in Yen.

5. IFRS RESULTS FOR THE SIX MONTHS ENDED

31 DECEMBER 2014

The design of the Group's products means that new business flows will contribute to income streams over many years. Continued investment in distribution resources and other strategic expenditure will however outweigh the initial growth in income reported under IFRS.

Results under IFRS

The Group continues to administer a large number of investment contracts for contract holders around the world. Fee and commission income received of £28.5m, although reduced by approximately 4% since H1 2014, underpins the expenditure necessary to support the Group's longer-term objectives and to pay a significant dividend.

The Group continues to invest for future growth in the business through targeted expenditure. Projects to improve Hansard OnLine; streamline administrative processes and reduce operational risk have continued in the period, while professional fees continue to be incurred in order to protect the Group's position in relation to potential litigation, and to finalise the Group's exposure to HMRC. This latter expenditure is charged against the provision established at 30 June 2014. We have no information at the date of this report to require us to change the level of the provision.

Consolidated profit after taxation for the period is £6.6m which is in line with the profit for H1 2014. Exceptional items, such as closure costs for Hansard Europe and significant litigation settlements incurred in H1 2014, have not recurred.

Volatility in foreign exchange markets continued throughout the period. Sterling has appreciated against Euro but weakened against US Dollar. Having regard to the composition of net assets of Hansard Europe, the geographic spread of the Group's policyholders, and the range of currencies in which Assets under Administration are denominated, the weakening of sterling against the dollar since 30 June 2014 increased IFRS earnings by £0.1m (H1 2014: £0.5m reduction).

The following is a summary of key items to allow readers to better understand the results of strategy implementation, as represented under accounting disclosures affecting the income statement, an analysis of cash flows and the consolidated balance sheet.

Abridged income STATEMENT

The condensed consolidated statement of comprehensive income which is presented within these half-year results reflects the financial results of the Group's activities during the period under IFRS. This statement however, as a result of its method of presentation, incorporates a number of features that might affect a clearer understanding of the results of the Group's underlying transactions. This relates principally to:

· Investment income, gains and losses relating to the assets administered by the Group to back its liability to contract holders. These assets are selected by the contract holder or an authorised intermediary and the contract holder bears the investment risk. Net valuation gains attributable to contract holder assets were £33.2m (H1 2014: £2.0m).

· Fund management fees paid on behalf of the contract holder by the Group to third parties having a relationship with the underlying contract. Under the IFRS presentation these fees are reflected in expenses and in income, as they are recovered from the contract holder funds. While fund management fees paid are properly recorded in the Group's income statement under IFRS, this disclosure distorts results compared with an understanding of the Group's own entitlement to fund management fees and any requirement to pay such fees for services rendered in respect of the Group's own assets. Third party fund management fees in H1 2015 were £1.8m (H1 2014: £2.2m).

An abridged consolidated income statement is presented below, excluding the items of income and expenditure indicated above.

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Fees and commissions	26.7	27.9	55.2
Investment and other income	1.0	0.1	0.2
	27.7	28.0	55.4
Origination costs	(10.5)	(10.6)	(21.2)
Administrative and other expenses attributable to the Group
before compensation, litigation settlements and discontinued
activities	(10.6)	(9.6)	(19.5)
Operating profit for the period before compensation, litigation
settlements and discontinued activities	6.6	7.8	14.7
Compensation, litigation settlements and discontinued
activities	-	(1.1)	(6.4)
Profit for the period before taxation	6.6	6.7	8.3
Taxation	-	(0.1)	-
Profit for the period after taxation	6.6	6.6	8.3

Fees and commissions

Fees and commissions attributable to Group operations for the half-year are £26.7m, a decrease of approximately 4% compared with £27.9m in H1 2014. A summary of fees and commissions attributable to Group activities is set out below:

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Contract fee income	19.8	20.5	41.1
Fund management fees	4.8	5.2	9.9
Commissions receivable	2.1	2.2	4.2
	26.7	27.9	55.2

Elements of contract fee income are largely fixed in nature, representing both the smoothing of up-front (or deferred) income required under IFRS and contract servicing charges. Included in contract fee income is £10.3m (H1 2014: £10.6m) representing the amounts prepaid in previous years and amortised to the income statement, as can be seen below in the reconciliation of deferred income. This demonstrates the strength of the regular premium book of business. The reduction in contract fee income for the period, when compared with H1 2014, is largely as a result of reduced servicing income received by Hansard Europe. This is driven by surrenders of single premium contracts during the period, with a consequent outflow of Assets under Administration, as a result of that company ceasing to accept new business with effect from 30 June 2013.

Fund management fees, together with commissions receivable, totalling £6.9m (H1 2014: £7.4m), are related directly to the value of contract holder Assets under Administration ("AuA") and are therefore exposed to market movements, currency rates and valuation judgements. The level of this income, when compared with the period ended 31 December 2013, reflects primarily that the level of AuA has fallen by approximately 6% since that date, driven largely by outflows of AuA from Hansard Europe as referred to above.

Investment and other income

	Six months ended			Year ended
	31 December			30 June
		2014	2013	2014
		£m	£m	£m
Bank interest and other income receivable		0.9	0.7	1.0
Foreign exchange gains / (losses) on revaluation
of net operating assets		0.1	(0.6)	(0.8)
		1.0	0.1	0.2

The Group's own liquid assets are held predominantly in sterling and invested in highly rated money market funds and bank deposits.

Volatility in foreign exchange markets continued throughout the period. Having regard to the geographic spread of the Group's contract holders, the range of currencies in which AuA are denominated, and the composition of the net assets of Hansard Europe, the strengthening of currencies, principally US Dollar, against sterling since 30 June 2014 has increased investment and other income by £0.1m (H1 2014: loss of £0.6m).

Further information about the Group's foreign currency exposures is disclosed in note 4.1 to these condensed consolidated financial statements.

Origination costs

Under IFRS, new business commissions paid, together with the directly attributable incremental costs incurred on the issue of a contract, are deferred and amortised over the life of that contract to match the longer-term income streams expected to accrue from it.The life of a regular premium contract is its term, which is typically between 10 years and 25 years. The life of a typical single premium contract is 15 years.This accounting policy reflects that the Group will continue to earn income over the long-term from contracts issued in a given financial year. The impact on current year fee income of contracts issued in H1 2015 is minimal.

Reflecting the long-term nature of the Group's income streams, amounts totalling £9.4m (H1 2014: £9.5m) have been expensed to match contract fee income of £10.3m (H1 2014: £10.6m) earned this year from contracts issued in previous financial years. This reflects the profitability of the existing book.

Summarised origination costs in the period are:

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Amortisation of deferred origination costs	9.4	9.5	19.2
Other origination costs incurred during the period	1.1	1.1	2.0
	10.5	10.6	21.2

The Group's new business levels in H1 2015 are some 50% below those of H1 2014, as reported above. This is reflected in the reduced investment in new business and contributes to the reduced level of origination costs, as compared to those in H1 2014.

Since the launch of its new business strategy in Q4 2014, the Group has recruited a number of new Account Executives and other resources to implement market development activities in support of the strategy. Recruitment, remuneration and related costs incurred in the period totalling £1.1m are expensed as incurred and incorporated below. As a result of the restructure of the Group's sales force, future remuneration will be largely fixed in nature and the proportion of such expenditure that will be deferred under IFRS against future contract fee income will be less than in previous years.

Origination costs in the period are:

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Origination costs - deferred to match
future income streams	3.8	7.8	12.2
Origination costs - expensed as incurred	1.1	1.1	1.9
Investment in new business in period	4.9	8.9	14.1
Net amortisation of deferred origination
costs	5.6	1.7	7.1
	10.5	10.6	21.2

Administrative and other expenses

The Group continues to invest for future growth in the business through targeted expenditure. Projects to improve Hansard OnLine, streamline administrative processes and reduce operational risk have continued in the period, together with other expenditure of approximately £0.3m to drive forward the Group's strategic plans. In this regard the Group has plans to increase compliance, governance and developmental headcount in the remainder of the financial year. Headcount at 31 December 2014 is 200 people, a reduction from the 206 people employed at 30 June 2014.

Professional fees continue to be incurred in order to protect the Group's position in relation to potential litigation, and to finalise the Group's exposure to HMRC. All the necessary documentation has been submitted to HMRC and we await the conclusion of their review. We will then be in a position to agree the liability. These latter costs, together with settlements of £0.1m for litigation in Germany, have been charged against the provisions established at 30 June 2014. Hence they are not reflected in the analysis below.

A summary of administrative and other expenses attributable to the Group is set out below:

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Salaries and other employment costs	4.7	4.6	8.8
Other administrative expenses	3.2	2.6	6.1
Growth investment spend	1.1	1.0	1.6
Professional fees	1.6	1.4	3.0
Estimated cost of HMRC settlement	10.6 -	9.6 -	19.5 5.0
Costs of closure of Hansard Europe to new business	-	0.6	0.7
Litigation settlements	-	0.5	0.7
	10.6	10.7	25.9

6. CASH FLOW ANALYSIS

Capital invested in the acquisition of new business contracts has been recouped, on average, within two years of issue. The capital efficiency of those products has underpinned the generation of strongly positive cash flows to support the Group's main business objectives of investing in new business, enhancing distribution and other infrastructure, and paying dividends.

Throughout H1 2015 the policy book has behaved as expected and capital invested in prior years has been speedily recouped. This capital has however not been reinvested in new business at the rates of prior periods since Q1 2014 and, as a result of the reduction in the stock of capital invested, gross cash flows from the policy book are reduced significantly. Accordingly the net operational surplus of £13.4m in H1 2015 has decreased by £5.6m since the comparative period.

As can be seen below, the Group invested £3.8m (H1 2014: £9.0m) in new business during the period which was funded by the existing policy book.Continued investment in regular premium contracts produces a short-term cash strain as a result of the commission and other costs incurred at inception of a contract.

The following summarises the Group's own cash flows in the period:

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Net cash surplus from operating activities	13.8	19.0	37.8
Interest received	0.4	0.5	1.0
Net cash inflow from operations	14.2	19.5	38.8
Net cash investment in new business	(3.8)	(9.0)	(15.4)
Purchase of computer equipment and property	(0.1)	(0.7)	(1.4)
Corporation tax paid	-	(0.2)	(0.2)
Net cash inflow before dividends	10.3	9.6	21.8
Dividends paid	(6.9)	(6.5)	(11.2)
Net cash inflow after dividends	3.4	3.1	10.6

The impact of strongly positive cash flows and reduced investment in new business (this represents the direct cash investment in acquiring new contracts). is an increase of £3.4m in the Group's own cash resources since 1 July 2014, despite the payment of a dividend of £6.9m during the period. This supports the increased shareholder cash and deposits of £81.1m (H1 2014: £69.1m) and further reflects the Group's cash generative capability.

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Net cash inflow after dividends	3.4	3.1	10.6
(Decrease) / increase in amounts due
to contract holders	(1.4)	(1.2)	2.9
Net Group cash movements	2.0	1.9	13.5
Group cash - opening position	78.5	67.2	67.2
Effect of exchange rate movements	0.6	-	(2.2)
Group cash - closing position	81.1	69.1	78.5

Bank deposits and money market funds

The Group's liquid assets at the balance sheet date are held in highly-rated money market liquidity funds and with a wide range of deposit institutions, predominantly in sterling. This approach immunises the Group's capital base from stock market falls.

Deposits totalling £26.1m (H1 2014: £18.9m) have original maturity dates greater than 3 months and are therefore excluded from the definition of "cash and cash equivalents" under IFRS. The following table summarises the total shareholder cash and deposits at the balance sheet date.

		31 December		30 June
	2014		2013	2014
	£m		£m	£m
Money market funds	51.6		44.7	45.1
Short-term deposits with credit institutions	3.4		5.5	13.3
Cash and cash equivalents under IFRS	55.0		50.2	58.4
Longer-term deposits with credit institutions	26.1		18.9	20.1
Group cash and deposits	81.1		69.1	78.5

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

7. Abridged consolidated balance sheet

The condensed consolidated balance sheet presented under IFRS reflects the financial position of the Group at 31 December 2014. As a result of its method of presentation, the consolidated balance sheet incorporates the financial assets held to back the Group's liability to contract holders, and also incorporates the net liability to those contract holders of £0.92bn (H1 2014: £0.98bn). Additionally, that portion of the Group's capital that is held in bank deposits is disclosed in "cash and cash equivalents" based on original maturity terms, as noted above.

The abridged consolidated balance sheet presented below, adjusted for those differences in disclosure, allows a better understanding of the Group's own capital position. Additional factors impacting upon the Group's capital position at the balance sheet date are summarised in section 10 of this Review.

As at	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Assets
Deferred origination costs	118.3	129.3	123.9
Other assets	7.1	7.0	7.3
Bank deposits and money market funds	81.1	69.1	78.5
	206.5	205.4	209.7
Liabilities
Deferred income	140.4	140.9	141.2
Other payables	29.5	24.6	31.6
	169.9	165.5	172.8
Net assets	36.6	39.9	36.9
Shareholders' equity
Share capital and reserves	36.6	39.9	36.9

Deferred origination costs

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

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

The movement in value of DOC over the period is summarized below:

		31 December		30 June
	2014		2013	2014
	£m		£m	£m
At beginning of financial year	123.9		131.0	131.0
Origination costs deferred during the period	3.8		7.8	12.1
Origination costs amortised during the period	(9.4)		(9.5)	(19.2)
	118.3		129.3	123.9

Deferred income

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

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

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

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

	31 December		30 June
	2014	2013	2014
	£m	£m	£m
At beginning of financial year	141.2	137.6	137.6
Initial fees collected in the period and deferred	9.5	13.9	24.9
Income amortised during the period to fee income	(10.3)	(10.6)	(21.3)
	140.4	140.9	141.2

8. Embedded Value Results

Our business is long term in nature and therefore we present our results on a European Embedded Value ("EEV") basis as well as a statutory IFRS basis. Our EEV is determined on the EEV principles published by the Chief Financial Officers ("CFO") Forum in 2004 and subsequently updated. The EEV is a discounted valuation of the future profits expected on best estimate assumptions, with proper allowance for the timing of receipt of those profits.

EEV and IFRS are different approaches to recognising the (same) ultimate profit from an insurance contract:

· The EEV approach recognises profit from new insurance contracts as a lump sum addition to the Value of In-force ("VIF") equal to the discounted value of future profits (called the New Business Contribution or "NBC"). The VIF is converted to cash (then included in "Net Worth") as the business progresses. The NBC reflects the shareholder value added from new business at point of sale: the change in EEV reflects the cash impact of writing new business as well as other changes within the business and its environment.

· The IFRS approach smoothes the recognition of profit from new insurance contracts by spreading the initial revenues and corresponding costs evenly over their expected lives. The IFRS new business result therefore reflects neither the shareholder value added from writing new business, nor its cash impact.

Results for H1 2015 under European Embedded Value

The Group's EEV results primarily reflect the earnings forecast from value of policyholder assets at 31 December 2014 and dividends paid since 30 June 2014. The reduced new business level has had a significant impact on results reported under EEV, which areprimarily driven by the levels of new business received, and by investment returns.Reduced volumes of new policies in the period (and the subsequent spreading of acquisition expenses over fewer policies) gave rise to a negative contribution from new business. The weakness of sterling in the period against the currencies favoured by our policyholders has combined with market valuation gains related to assets under administration to produce an EEV profit of £6.6m which compares favourably to a loss of £2.2m in H1 2014.

The EEV Operating Loss, at £(0.4)m (H1 2014: £5.5m profit) reflects lower new business volumes as our revised strategy and new products are being rolled out to Independent Financial Advisors and contract holders around the world. We are confident that our newly introduced products are well tailored to the requirements of our target market. We have recently extended our range of single premium products through the launch of a new Universal Personal Portfolio product and believe that the product developments will contribute to additional new business in the latter part of this financial year and beyond.

To support the Group's strategic plans we have continued to identify and recruit skilled distribution capacity. We believe that we now have appropriate resources to deliver our strategy.

Headline results for the EEV performance are shown in the table below:

Six-Month Period ended 31 December	H1 2015	H1 2014
	£m	£m
Opening Embedded Value	203.8	225.7
EEV Operating (Loss) / Profit after tax	(0.4)	5.5
Investment Return Variances & Economic Assumption Changes	7.0	(7.7)
EEV Profit / (Loss) after tax	6.6	(2.2)
EEV before dividends	210.4	223.5
Dividends paid during the financial year	(6.9)	(6.5)
Closing Embedded Value	203.5	217.0

There was an Operating Loss of £0.4m (H1 2014: £5.5m profit), reflecting a negative new business contribution of (£1.1m) (H1 2014: £4.1m), expected return of £0.9m (H1 2014: £0.6m) and experience variances of (£0.2m) (H1 2014: £nil). The table shows a 'below the line' impact of £7.0m (H1 2014: (£7.7m)) which is comprised of positive investment return and economic assumption variance.

The EEV is £203.5m which is fractionally below the EEV at 30 June 2014 of £203.8m having paid dividends of £6.9m (H1 2014: £217.0m after dividends of £6.5m). This demonstrates the resilience of the Group's EEV.

Sales Metrics

New business comparatives are shown below:

Six-Month Period ended 31 December	H1 2015	H1 2014
New business sales (PVNBP basis)	£29.4m	£55.2m
New Business Contribution ("NBC")	(£1.1m)	£4.1m
New Business Margin ("NBM")	(3.9)%	7.5%

Sales volumes for Hansard International (in PVNBP terms) have fallen to £29.4m from £55.2m in H1 2014 as reported earlier in this Review. The NBC has reduced to (£1.1m) (H1 2014: £4.1m) having allowed for a new business expense overrun of £2.2m.

Regular premium business is 60% (H1 2014: 80%) of total PVNBP.

EEV balance sheet

The EEV of £203.5m at the balance sheet date is fractionally below the EEV at 30 June 2014 of £203.8m having paid dividends of £6.9m (H1 2014: £217.0m after dividends of £6.5m). This demonstrates the resilience of the Group's EEV.

That said, the composition of the EEV has changed compared to the previous half year. Through careful product design the Value of Future Profits converts speedily to cash, or Net Worth, to repay the capital invested in prior periods. At the balance sheet date almost 28% of EEV is represented by the Net Worth (H1 2014: 23%).

This demonstrates that the conversion to Net Worth from existing business is progressing as expected. The Net Worth of the Group, which underpins solvency capital requirements and future investment, has increased by 15% to £57.9m as shown below.

Net Worth is typically held in a wide range of deposit institutions and in highly-rated money market liquidity funds. This prudent investment policy has removed much of the market risk and provided a stable and resilient solvency position over recent years.

The high-level components of EEV are shown in the table below:

	H1 2015	H1 2014
	£m	£m
Free surplus	31.5	24.4
Required Capital	26.4	25.9
Net Worth	57.9	50.3
VIF	152.7	173.8
Other	(7.1)	(7.1)
Value of Future Profits	145.6	166.7
EEV	203.5	217.0

The change in the VFP reflects sterling exchange rates on 31 December 2014, new business, the conversion of VFP to Net Worth and the impact of policyholder behaviour.

Net Worth has grown from £50.3m to £57.9m after dividend payments of £6.9m (H1 2014: £6.5m) as profits are earned from the existing business. Free Surplus has grown by almost 30% to £31.5m from £24.4m.

The Required Capital has increased marginally: it includes around £11.6m (H1 2014: £10.8m) of Hansard Europe capital. Management estimates that the use of this is constrained for three years and so this amount is treated as Required Capital in the analysis above, as distinct from Free Surplus.

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

Change in Net Worth

The change in the Net Worth over the year shows the cash-generative capacity of the Group's operations and its use of cash in the period. The business has generated net cash of £18.4m (H1 2014: £23.0m), of which £7.0m (H1 2014: £10.8m) relates to costs involved in acquiring new business in the period shown as New Business Strain below.

Six Month Period ended 31 December	H1 2015	H1 2014
	£m	£m
Opening Net Worth	53.4	44.6
Expected conversion to Net Worth from existing business	18.6	24.2
Time value	0.5	0.1
Net Worth Variance	(0.7)	(1.3)
Cash Generated	18.4	23.0
Dividends paid	(6.9)	(6.5)
New Business Strain	(7.0)	(10.8)
Closing Net Worth	57.9	50.3

The conversion to Net Worth from existing business is progressing as expected: this conversion has two aspects: the receipt of charges to meet initial expenses and the receipt of charges to meet continuing expenses.

EEV Profit / (Loss) after tax

Notwithstanding the low EEV Operating Profit, the Group's EEV Profit after tax is higher than last year at £6.6m (H1 2014: (£2.2m)). This primarily reflects the positive Exchange Rate Variance of £3.4m (H1 2014 (£(14.5m)). The components are shown in the table below:

	H1 2015	H1 2014
	£m	£m
New Business Contribution	(1.1)	4.1
Expected Return on new and existing business	0.7	0.5
Expected Return on Net Worth	0.2	0.1
Model Changes	0.0	0.8
Experience Variances	(0.2)	0.0
EEV Operating Profit after tax	(0.4)	5.5
Investment Performance	4.6	(8.1)
Economic Assumption Changes	2.4	0.4
EEV (loss) / profit after tax	6.6	(2.2)

Experience Variances

	H1 2015	H1 2014
	£m	£m
Ongoing expenses	(0.7)	0.6
Premium reductions & underpayments	0.4	0.3
Policies made paid up	0.3	(0.1)
Partial encashments	0.1	0.2
Full encashments	(0.9)	(1.2)
One-off expenses	(0.3)	(0.1)
Other	0.9	0.3
Experience Variances	(0.2)	0.0

Experience variances arise when the behaviour of the existing book differs from that assumed. The experience variance at (£0.2m) is small and shows that the existing book is behaving overall as assumed. The ongoing expense variance is negative at (£0.7m) (H1 2014: £0.6m) this reflects ongoing expenses picking up a larger share of group overheads in the period due to lower than expected new business volumes, partly offset by the deferral of some one-off strategic and IT expenditure.

Operating Assumption Changes

There have been no operating assumption changes in the period: management has the view that the experience variances do not indicate a need for assumptions to change at this time. A review of operating assumptions is conducted annually towards the year-end.

Investment Performance

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

	H1 2015	H1 2014
	£m	£m
Investment performance of policyholder funds	1.1	6.6
Exchange rate movements	3.4	(14.5)
Other	0.1	(0.2)
Investment Performance	4.6	(8.1)

The exchange rate movements arise because most premiums are paid, and the greater proportion of policyholder-selected assets are denominated, in currencies other than sterling, yet the reporting is in sterling, based on exchange rates on the last day of the financial period.

Economic Assumption Changes

There was a positive variance of £2.4m (H1 2014: £0.4m) from Economic Assumption Changes reflecting changes in government bond yields for the currencies in which policyholder assets are denominated.

9. Assets under administration

In the following paragraphs, assets under administration ("AuA") refers to net assets held to cover financial liabilities as analysed in note 12 to the condensed consolidated financial statements presented under IFRS.

The Group enjoys a stream of cash flows from the large number of regular premium contracts administered on behalf of clients around the world. The majority of premium contributions are designated in currencies other than sterling, reflecting the wide geographical spread of those policyholders.

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

The following table summarises Group AuA performance for H1 2015. Deposits to investment contracts includes additional contributions of approximately £2.9m (H1 2014: £4m) relating to single and regular premium contracts issued by Hansard Europe in prior years, while deductions from investment contracts reflects surrenders of contracts during the period, as a result of that company ceasing to accept new business with effect from 30 June 2013.

	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Deposits to investment contracts - regular premiums	39.3	46.9	85.4
Deposits to investment contracts - single premiums	11.8	10.8	19.3
Deductions from investment contracts	(104.2)	(101.9)	(196.5)
Effect of market movements	8.6	30.5	87.7
Effect of currency movements	24.6	(28.5)	(80.4)
Decrease in period	(19.9)	(42.2)	(84.5)
Opening balance	943.6	1,028.1	1,028.1
Closing balance	923.7	985.9	943.6

Taken with the effects of limited net valuation gains in H1 2015, AuA of £0.92bn as at 31 December 2014 is some 2% below the position at 30 June 2014. An analysis by company indicates that the AuA of Hansard International is resilient, underpinned by regular premium flows and a strengthening of US Dollar. Conversely, the impact of surrenders and the weakening Euro on the AuA of Hansard Europe has caused reduced sterling values when compared to prior balance sheet dates. The Euro has weakened further against sterling since the balance sheet date.

	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Hansard International	701.0	725.7	704.6
Hansard Europe	222.7	260.2	239.0
	923.7	985.9	943.6

The value of AuA is based upon the assets selected by or on behalf of policyholders to meet their needs from time to time. Reflecting the wide geographical spread of the Group's policyholders, the majority of AuA are designated in currencies other than sterling. The currency denomination of AuA is similar to that of H1 2014. At the balance sheet date 58% of AuA is denominated in US Dollars, with a further 22% denominated in Euro and 16% in sterling, as reflected in note 4 to the condensed consolidated financial statements.

10. CAPITALISATION AND SOLVENCY

The Group's authorised life insurance subsidiaries continue to be well capitalised with free assets well in excess of the regulatory requirements in each relevant jurisdiction. There has been no material change in the Group's management of capital during the period.

Solvency capital is a combination of future margins, where permitted by regulation, and capital. Where future margins are denominated in non-sterling currencies, it is vulnerable to the weakening of those currencies relative to sterling. All of the Group's excess capital is invested in a wide range of deposit institutions and highly-rated money market liquidity funds, predominantly in sterling. This approach immunises the Group's capital base from stock market falls.

The in-force portfolio has no material investment options or guarantees that could cause capital strain and retains very little of the mortality risk that it has accepted (the balance being reinsured with premium reinsurers). There is no longevity risk exposure.

Policy on capital maintenance

It is the Group's policy to maintain a strong capital base in order to:

· satisfy the requirements of its contract holders, creditors and regulators;

· maintain financial strength to support new business growth and create shareholder value;

· match the profile of its assets and liabilities, taking account of the risks inherent in the business and;

· generate operating cash flows to meet dividend requirements.

Within the Group each subsidiary company manages its own capital. Capital generated in excess of planned requirements is returned to the Company by way of dividends. Group capital requirements are monitored by the Board.

Capital position at the balance sheet date

The Group is strongly capitalised to meet the requirements of contract holders, intermediaries, regulators and other stakeholders. The aggregate required minimum margin of the regulated entities at each balance sheet date remains covered 12 times by surplus net assets.

Except in relation to Deferred Acquisition Cost ("DAC") assets held by Hansard Europe Limited of £0.2m (H1 2014: £1.0m), the capital, defined as total shareholders' funds, is available to meet the regulatory capital requirements without any restrictions. The Group's other assets are largely cash and cash equivalents, deposits with credit institutions and money market funds.

	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Consolidated shareholders' funds	36.6	39.9	36.9
Adjustment from change in GAAP basis (*)	21.9	24.0	22.7
Total shareholders' funds	58.5	63.9	59.6

*The condensed consolidated financial statements have been prepared in accordance with the requirements of IFRS whilst the regulatory capital of the life assurance subsidiaries is calculated based on local regulatory requirements under applicable GAAP. The financial statements of these subsidiary undertakings are prepared under the insurance accounting requirements of the relevant jurisdiction. The adjustment referred to arises out of the treatment of initial fees and costs relating to new business under the different accounting codes. Under IFRS these fees and costs are amortised to the income statement over the life of the relevant contracts, whereas under the GAAP applicable to the subsidiary undertakings, fees are recognised when received and the relevant costs of new business are deferred, where applicable, to match these income streams.

Required regulatory capital

Our agreement with the Central Bank of Ireland as a result of the implementation of the revised Operating Model for Hansard Europe Limited has the effect of delaying dividends or other distributions from that company until such time as the Operating Model is fully embedded and the legal cases referred to in note 17 are concluded. That company's total shareholders' funds at 31 December 2014, which are incorporated within the table above, is £15.0m (H1 2014: £15.4m).

Solvency II

The introduction of Solvency II from January 2016 will see a fundamental change in the way EU-based insurers assess their capital requirements and risk management standards. Based on current guidance we do not expect additional capital requirements as a result of these legislative changes.

11. DIVIDENDS

A final dividend of 5.0p per share in relation to the previous financial year was paid in November 2014. This amounted to £6.9m.

The Board has considered the results for H1 2015, the Group's continued cash flow generation and its future expectations and has resolved to pay an increased interim dividend of 3.50p per share (2014: 3.40p). This dividend will be paid on 2 April 2015.

12. complaints and potential litigation

The Group continues to deal with policyholder complaints, principally in relation to asset performance issues arising from policyholders resident in Europe. Even though the Group does not give any investment advice, as this is left to the contract holder directly or through an agent, advisor or an entity appointed at their request or preference, the Group has been subject to a number of complaints in relation to the performance of assets linked to contracts.

Some of these complaints escalate into litigation. At the beginning of this financial year the Group was facing litigation based on writs totalling €6.5m (approximately £5.2m) served upon Hansard Europe as a result of these and related complaints. The majority of these writs remain outstanding at the date of this report.

As a result of further writs issued during the half-year and in the period to the date of this report, writs totalling €6.9m or approximately £5.4m (based on exchange rates at 31 December 2014) remain outstanding against Hansard Europe. Given the merits of each case we believe that any court proceedings under these writs is unlikely to take place in the remainder of this financial year.

It is not possible to forecast or determine the final results of pending or threatened legal proceedings and the Board therefore considered it in the best interests of the Group to reach a resolution with regard to certain of minor claims. Settlements totalling £0.1m (H1 2014: £0.7m) have been made during the period, without any admission of liability, in order to avoid the expense and distraction of extended litigation and to allow management to focus fully on the execution of our strategy.

These settlements are at a discount of approximately 30% to the underlying claims which demonstrates the disparity between amounts claimed (and therefore reported as contingent liabilities in the Report and Accounts) and amounts subsequently settled following disclosure of the facts of each case.

We will continue to defend ourselves from all claims but will consider early settlement where there is a clear economic benefit. Accordingly provisions of £0.2m were established during the year ended 30 June 2014 against a number of minor claims.

13. Net asset value per shaRE

On an EEV basis, the net asset value per share at 31 December 2014 is 148.2p (H1 2014: 158.0p) based on the EEV at the balance sheet date divided by the number of shares in issue at that date, being 137,383,850 ordinary shares (H1 2014: 137,379,634).

The net asset value per share at 31 December 2014 on an IFRS basis is 26.6p (H1 2014: 29.1p).

14. Risk Management

As with all businesses, the Group is exposed to risk in pursuit of its objectives. The Board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving those objectives. The Board is also responsible for maintaining sound risk management and internal control systems and for reviewing their effectiveness. The system of internal control is designed to manage rather than eliminate risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Group maintains an enterprise risk management ("ERM") framework to identify, assess, manage, monitor and control current and emerging risks. As the pace, scale, and complexity of regulatory change continues to increase, it is vital for us as a business to understand and manage the impact of these changes both on our clients and on us as a business.

During the year the Group has continued to invest in risk management resources with the establishment of a Governance, Risk and Compliance Department to promptly identify, measure, manage, report and monitor risks that affect the achievement of objectives.

Risks relating to the Group's financial and other exposures

The Group's business model involves the controlled acceptance and management of risk exposures. The steps taken to minimise those exposures include the operation of unit-linked insurance business. Under the terms of the unit-linked investment contracts issued by the Group, the contract holder bears the investment risk on the assets in the unit-linked funds, as the benefits of the contract are directly linked to the value of the assets in the funds. These assets are administered in a manner consistent with the expectations of the contract holders. By definition, there is a precise match between the investment assets and the contract holder liabilities, and so the market risk and credit risk lie with contract holders.

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

A comprehensive review of the principal risks and uncertainties facing the business, and the Group's approach to managing these risks and uncertainties, are outlined on pages 28 to 33 of the 2014 Annual Report. These principal risks and uncertainties have not changed materially since the 2014 Annual Report was published.

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

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

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

· The implementation of FATCA, Common Reporting Standard and related regulations which will impact on the entire business.

In order to respond to the changing regulatory environment we have decided to establish a Governance, Risk and Compliance ("GRC") Department. This department will receive additional resources so that new regulations can be analysed to determine the impact on the Group, as well as monitoring adherence to existing regulations. For example, in the strategy being implemented by the Board, we have outlined the objective of expanding into new territories - the GRC department will be involved in understanding the regulations in these territories and ensuring that the risks are identified and included within the ERM framework.

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

Risk event examples	Risk factors and management
Profitability affected by financial market and economic conditions	The Group's earnings and profitability are influenced by a broad range of factors including the performance and liquidity of investment markets, interest rate movements and inflation. Extreme market conditions can influence the purchase of financial services products and the period over which business is retained. How we manage the risk ---These risks are inherent in the provision of financial services internationally. We model our business plans across a broad range of economic scenarios and take account of alternative economic outlooks within our overall business strategy.
Distribution strategy compromised as a result of market changes or competitor activity	New business may be adversely affected in the short-term if distribution channels are too concentrated and circumstances change in those markets. How we manage the risk ---We closely monitor marketplaces and competitor activity for signs of threats to forecast new business levels. Revised strategies have been designed to add significant scale to the business, on a more diversified basis, through organic growth at acceptable levels of risk and profitability.
Non-compliance with regulations	The Group maintains dialogue with the IPA and other regulatory and legislative authorities. In addition to this, we have continual discussions with our advisors in relation to developments in the regulatory environment in which we operate. However, sudden changes in legislation without prior consultation, or the differing interpretation and application of regulations over time, may have a detrimental effect on the Group's strategy, profitability and risk profile and may incur the possibility of litigation risk. How we manage the risk ---We have enhanced the processes in place to identify emerging risks from regulatory and legislative change (such as those mentioned above) and to monitor the timely implementation of new requirements.
Infrastructure failure	A material failure in our business processes may result in unanticipated financial loss or reputational damage. How we manage the risk --- Business Continuity Plans, including full data replication at an independent recovery centre, can be invoked when required. Testing is conducted frequently.
Cyber crime	As we and our business partners increasingly digitalise our businesses, the Group is inherently exposed to the risk that third parties may seek to disrupt our OnLine business operations, steal customer data or perpetrate acts of fraud. A significant cyber event could result in reputational damage and financial loss. How we manage the risk --- We are focused on maintaining a robust and secure IT environment that protects our customer and corporate data. We deploy control techniques to evaluate the security of our systems and proactively address emerging threats.
Hansard OnLine development and availability	Any prolonged failure in internet capacity preventing the Group from delivering Hansard OnLine might impact on the Group's reputation and strategic objectives. How we manage the risk --- We closely monitor technological developments in relation to the functioning of the internet and we will develop alternative strategies to minimise the impact of any changes.
Counterparty and third party risks	In dealing with financial institutions, banking, money market and settlement, custody and other counterparties the Group is exposed to the risk of financial loss and operational disruption of our business processes. How we manage the risk ---We seek to limit exposure to loss from counterparty and third party failure through selection criteria, pre-defined risk based limits on concentrations of exposures and monitoring positions.
Outsourcing	The Group's dependence on outsourced activities comes under threat should any of its key investment management or administration business partners decide to revise strategy or fail. How we manage the risk --- We maintain close working relationships with our outsourcing partners who are central to our business model. This provides early warning of any material change that could significantly impact our business. Our principal outsourcing relationships are governed by formal agreements with notice periods and full exit management plans.

Statement of Directors' responsibilities

The Directors, whose names are reflected on the Company's website, www.hansard.com, 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 includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

· An indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

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.

By order of the Board

P P C Gregory G S Marr

Non-executive Chairman Chief Executive Officer

25 February 2015

Condensed Consolidated Statement of Comprehensive Income
					Year
	Six months ended				ended
	31 December			31 December		30 June
			2014	2013		2014
		Notes	£m	£m		£m
Fees and commissions		6	28.5	30.1		59.5

Investment and other income			34.2	2.1		7.5

			62.7	32.2		67.0
Change in provisions for investment contract liabilities
			(33.2)	(2.0)		(7.3)

Origination costs			(10.5)	(10.6)		(21.2)

Administrative and other expenses		7	(12.4)	(12.9)		(30.2)
			(56.1)	(25.5)		(58.7)
Profit on ordinary activities before taxation			6.6	6.7		8.3
Taxation on profit on ordinary activities		8	-	(0.1)		-
Profit and total comprehensive income for
the period after taxation			6.6	6.6		8.3

Earnings Per Share
					Year
			Six months ended		ended
	31 December			31 December		30 June
			2014	2013		2014
		Note	(p)	(p)		(p)

Basic		9	4.8	4.8		6.0

Diluted		9	4.8	4.8		6.0

Condensed Consolidated Statement of Changes in Equity

		Share	Other	Retained
		Capital	reserves	earnings	Total
	Note	£m	£m	£m	£m

Shareholders' equity at 1 July 2013		68.7	(48.3)	19.4	39.8

Profit and total comprehensive income for the period after taxation		-	-	6.6	6.6

Transactions with owners
Dividends	10	-	-	(6.5)	(6.5)
Shareholders' equity at 31 December 2013		68.7	(48.3)	19.5	39.9

		Share	Other	Retained
		Capital	reserves	earnings	Total
	Note	£m	£m	£m	£m

Shareholders' equity at 1 July 2014		68.7	(48.3)	16.5	36.9

Profit and total comprehensive income for the period after taxation		-	-	6.6	6.6

Transactions with owners
Dividends	10	-	-	(6.9)	(6.9)
Shareholders' equity at 31 December 2014		68.7	(48.3)	16.2	36.6

Condensed Consolidated Balance Sheet
		31 December	31 December	30 June
		2014	2013	2014
	Notes	£m	£m	£m
Assets

Property, plant and equipment		1.5	1.4	1.8

Deferred origination costs	11	118.3	129.3	123.9

Financial investments
Equity securities		15.9	26.9	35.3
Collective investment schemes		795.7	831.0	802.7
Fixed income securities		23.2	28.2	24.1
Deposits and money market funds		117.1	119.0	103.0

Other receivables		4.4	5.2	4.1

Cash and cash equivalents		55.0	50.2	58.4
Total assets		1,131.1	1,191.2	1,153.3
Liabilities

Financial liabilities under investment contracts	12	923.7	985.9	943.6

Deferred income	13	140.4	140.9	141.2

Amounts due to investment contract holders		19.2	15.6	19.7

Other payables	14	11.2	8.9	11.9
Total liabilities		1,094.5	1,151.3	1,116.4
Net assets		36.6	39.9	36.9


Shareholders' equity
Called up share capital	15	68.7	68.7	68.7
Other reserves		(48.3)	(48.3)	(48.3)
Retained earnings		16.2	19.5	16.5
Total shareholders' equity		36.6	39.9	36.9

Condensed Consolidated Cash Flow Statement

	Six months ended			Year ended
		31 December	31 December		30 June
		2014	2013		2014
		£m	£m		£m

Cash flow from operating activities
Profit before tax for the period		6.6	6.7		8.3
Adjustments for:
Depreciation		0.3	0.3		0.6
Dividends receivable		(2.2)	(2.8)		(4.4)
Interest receivable		(0.5)	(0.4)		(0.7)
Foreign exchange (gain) / loss		(0.5)	1.7		2.2

Changes in operating assets and liabilities
(Increase) / decrease in receivables		(0.1)	-		0.9
Dividends received		2.2	2.8		4.4
Interest received		0.4	0.3		1.0
Decrease in deferred origination costs		5.6	1.7		7.1
(Decrease) / increase in deferred income		(0.8)	3.3		3.6
(Decrease) / increase in payables		(1.2)	(3.8)		3.1
Decrease in financial investments		13.2	45.0		85.2
Decrease in financial liabilities		(20.0)	(42.3)		(84.5)
Cash generated by operations		3.0	12.5		26.8
Corporation tax paid		-	(0.2)		(0.2)
Net cash generated by operations		3.0	12.3		26.6
Cash flows from investing activities
Purchase of property, plant and equipment		(0.1)	(0.7)		(1.4)
Proceeds from sale of investments		-	-		0.1
Purchase of investments		-	-		(0.3)
Net cash flows from investing activities		2.9	(0.7)		(1.6)
Cash flows from financing activities

Dividends paid		(6.9)	(6.5)		(11.2)
Net (decrease) / increase in cash and cash
equivalents		(4.0)	5.1		13.8
Cash and cash equivalents at beginning of period		58.4	46.8		46.8
Effect of exchange rate changes		0.6	(1.7)		(2.2)
Cash and cash equivalents at period end		55.0	50.2		58.4

Notes to the Condensed Consolidated Financial Statements

1 General information

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 Company has its primary listing on the London Stock Exchange.

These condensed consolidated half-yearly financial statements are unaudited and do not comprise statutory financial statements. The condensed consolidated half-yearly financial statements were approved by the board of directors on 25 February 2015.

The board of directors approved the Group's statutory financial statements for the year ended 30 June 2014 on 24 September 2014. The report of the independent auditor on those financial statements 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 2014 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority ("DTR") and with IAS 34 "Interim Financial Reporting" as adopted by the European Union ("EU"). The condensed consolidated half-yearly financial statements should be read in conjunction with the annual financial statements for the year ended 30 June 2014, which were prepared in accordance with International Financial Reporting Standards as adopted by the EU.

Except where otherwise stated, all figures included in the condensed 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 amended standards, which the Group have adopted as of 1 July 2014, have not had any material impact on the Group's reported results:

· IAS 32 Amendment - Financial Instruments: Presentation

· IAS 36 Amendment - Impairment of Assets

· IFRS 39 Amendment - Financial Instruments Recognition and Measurement

As at 31 December 2014, the following new and amended standards are in issue but not yet effective, and have not been early adopted by the Group. The adoption of these new and amended standards is not expected to have any material impact on the Group's results.

· IAS 16 and IAS 38 Amendments

· IFRS 9 Financial Instruments - Classification and Measurement

· IFRS 9 Amendment - Hedge Accounting

· IFRS 15 Revenue from Contracts with Customers

· Annual Improvements to IFRSs 2011 - 2013

Going Concern

As shown within the Business and Financial Review, the Group's capital position is strong and well in excess of regulatory requirements. The long-term nature of the Group's business results in considerable positive cash flows arising from existing business. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

The Directors are satisfied that the Company and the Group have adequate resources to continue to operate as a going concern for the foreseeable future and have prepared the condensed consolidated financial statements on that basis.

3 Principal accounting policies

As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, this condensed set of consolidated financial statements has been prepared applying the accounting policies and standards that were applied, and the critical accounting estimates and judgements in applying them, in the preparation of the Group's published consolidated financial statements for the year ended 30 June 2014. The published consolidated financial statements for the year ended 30 June 2014 can be accessed on the Company's website: www.hansard.com.

4 Financial risk management

Risk management objectives and risk policies

The Group's operations expose it to a variety of financial risks. The Group's objective in the management of financial risk is to minimise, where practicable, its exposure to such risk, except when necessary to support other objectives. The Group seeks to manage risk through the operation of unit-linked business whereby the contract holder bears the financial risk. The Group's exposure is limited to the extent that certain fees and commission income are based on the value of assets in the unit-linked funds. In addition, shareholder assets are invested in highly rated investments.

Overall responsibility for the management of the Group's exposure to risk is vested in the Board. To support it in this role, an enterprise risk management ("ERM") framework is in place comprising risk identification, risk assessment, control and reporting processes. Information concerning the operation of the Enterprise Risk Management framework to manage financial and other risks is contained within the Report and Accounts for the year ended 30 June 2014, and particularly in note 3 thereto, "Financial risk management".

The more significant financial risks to which the Group is exposed, and an estimate of the potential financial impact of each on the Group's IFRS earnings, are set out below. For each category of risk, the Group determines its riskappetite and sets its investment, treasury and associated policies accordingly.

4.1 Market risk

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

Sensitivity analysis to market risk

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

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

(a) Price risk

An overall change in the market value of the unit-linked funds would affect the annual management charges accruing to the Group since these charges, which are typically 1% p.a., are based on the market value of assets under administration. Similarly, due to the fact that some of these charges are deducted from policies in contract currency, a change in foreign exchange rates relative to sterling can result in fluctuations in fee income and expenses. The approximate impact on the Group's profits and equity of a 10% change in unit-linked fund values, either as a result of price or currency fluctuations, is £1.4m (H1 2014: £1.4m) in a financial year.

(b) Interest rate risk

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

The Group is primarily exposed to interest rate risk on the balances that it holds with credit institutions and in money market funds. The Group has mitigated its exposure to cash flow interest rate risk by placing a proportion of its cash holdings on longer-term, fixed-rate deposits.

Taking into account the proportion of Group funds held on longer-term, fixed-rate deposits, a change of 1% p.a. in interest rates will result in an increase or decrease of approximately £0.6m (H1 2014: £0.6m) in the Group's annual investment income and equity.

A summary of the Group's liquid assets at the balance sheet date is set out in note 4.2.

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

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

At the balance sheet date the Group had exposures in the following currencies:

	31 December
	2014	2014	2014	2013	2013	2013
	US$m	€m	¥m	US$m	€m	¥m
Gross assets	14.0	8.4	438.5	15.4	4.0	733.7
Matching currency liabilities	(13.5)	(4.0)	(286.0)	(11.4)	(3.3)	(590.3)
Uncovered currency
exposures	0.5	4.4	152.5	4.0	0.7	143.4
Sterling equivalent of
exposures (£m)	0.3	3.5	0.8	2.4	0.6	0.8

The approximate effect of a 5% change in the value of US dollars to sterling is less than £0.3m (2013: £0.1m); in the value of the euro to sterling is less than £0.2m (2013: less than £0.1m); and in the value of the yen to sterling is less than £0.1m (2013: less than £0.1m).

Certain fees and commissions are earned in currencies other than sterling, based on the value of financial investments held in those currencies from time to time. The sensitivity of the Group to the currency risk inherent in investments held to cover financial liabilities under investment contracts is incorporated within the analysis set out in (a) above.

At the balance sheet date the analysis of financial investments by currency denomination is as follows:

	31 December		30 June
	2014	2013	2014
Currency	%	%	%
US Dollars	58	54	54
Euro	22	26	25
Sterling	16	16	16
Others	4	4	5
	100	100	100

4.2 Credit risk

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

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

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

At the balance sheet date, an analysis of the Group's own cash and cash equivalent balances and liquid investments was as follows.

	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Deposits with credit institutions	29.5	24.4	33.4
Money market funds	51.6	44.7	45.1
	81.1	69.1	78.5

Maximum counterparty exposure limits are set both at an individual subsidiary company level and on a Group wide basis.

4.3 Liquidity risk

Liquidity risk is the risk that the Group, though solvent, does not have sufficient financial resources to enable it to meet its obligations as they fall due, or can only secure them at excessive cost.

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

Liquidity risk is principally managed in the following ways:

• Assets of a suitable marketability are held to meet policyholder liabilities as they fall due.

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

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

4.4 Fair value of financial assets and liabilities

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

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

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

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

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

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

The following tables analyse the Group's financial assets and liabilities at fair value through profit or loss, at 31 December 2014:

	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss	£m	£m	£m	£m
Equity securities	15.9	-	-	15.9
Collective investment schemes	745.5	50.2	-	795.7
Fixed income securities	23.2	-	-	23.2
Deposits and money market funds	117.1	-	-	117.1
	901.7	50.2	-	951.9

During the period under review assets with a fair value of £27.4m were transferred from Level 1 to Level 2 as the Directors are of the opinion that this reflects the valuation process applied to these assets. There were no other reclassifications of assets between the different Levels in the fair value hierarchy in the period.

	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m
Financial liabilities at fair value
through profit or loss	-	923.7	-	923.7

The following tables analyse the Group's financial assets and liabilities at fair value through profit or loss, at 31 December 2013:

	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss	£m	£m	£m	£m
Equity securities	26.9	-	-	26.9
Collective investment schemes	808.2	22.8	-	831.0
Fixed income securities	28.2	-	-	28.2
Deposits and money market funds	119.0	-	-	119.0
	982.3	22.8	-	1,005.1

There were no reclassifications of assets between the different Levels in the fair value hierarchy in the comparative period.

	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m
Financial liabilities at fair value
through profit or loss	-	985.9	-	985.9

5 Segmental information

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

In the opinion of the CODM, the Group operates in a single reportable segment, that of the distribution and servicing of long-term investment products.

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

The following table analyses NICC geographically and reconciles NICC to direct origination costs during the period as set out in section 5 of the Business and Financial Review.

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Latin America	1.2	1.7	3.2
Far East	0.4	2.5	3.0
Middle East and Africa	0.3	0.1	0.2
Rest of World	0.1	0.6	1.0
EU and EEA	0.4	0.3	0.4
Net issued compensation credit	2.4	5.2	7.8
Other commission costs paid to third parties	1.1	2.0	3.5
Enhanced unit allocations	0.3	0.6	0.9
Direct origination costs during the period	3.8	7.8	12.2

Hansard Europe ceased accepting new business with effect from 30 June 2013. As a result, NICC for the six months ended 31 December 2014 and the comparative periods disclosed in this note relates to the Group's continuing operations in the Isle of Man.

Revenues and expenses allocated to geographical locations contained in sections 5.1 to 5.4 below, reflect the revenues and expenses generated in or incurred by the legal entities in those locations.

5.1 Geographical analysis of fees and commissions by origin

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Isle of Man	23.7	23.6	47.6
Republic of Ireland	4.8	6.5	11.9
	28.5	30.1	59.5

5.2 Geographical analysis of profit before taxation

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Isle of Man	5.5	6.3	9.3
Republic of Ireland	1.0	0.4	(1.0)
	6.6	6.7	8.3

5.3 Geographical analysis of gross assets

	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Isle of Man	870.1	892.0	876.5
Republic of Ireland	261.0	299.2	276.8
	1,131.1	1,191.2	1,153.3

5.4 Geographical analysis of gross liabilities

	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Isle of Man	852.1	871.0	856.5
Republic of Ireland	242.4	280.3	259.9
	1,094.5	1,151.3	1,116.4

6 Fees and commissions

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Contract fee income	19.8	20.5	41.1
Fund management charges	6.6	7.4	14.2
Commission receivable	2.1	2.2	4.2
	28.5	30.1	59.5

7 Administrative and other expenses

Included in Administrative and other expenses are the following:
	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
	£m	£m	£m
Auditors' remuneration
- Fees payable to the Company's auditor for the audit of the Company's annual accounts	-	-	0.1
- Fees payable for the audit of the Company's subsidiaries pursuant to legislation	0.2	0.2	0.3
- Other services provided to the Group	-	-	0.1
Employee costs	5.3	5.8	10.8
Directors' fees Estimated cost of HMRC settlement, including related professional fees	0.2 -	0.1 -	0.3 5.0
Fund management fees	1.8	2.2	4.3
Renewal and other commission	0.5	0.5	1.2
Professional and other fees	1.4	1.2	2.2
Litigation fees and settlements	0.2	0.7	1.1
Operating lease rentals	0.3	0.3	0.6
Licences and maintenance fees	0.5	0.4	0.9
Insurance costs	0.4	0.3	0.9
Depreciation of property, plant and equipment	0.3	0.3	0.6
Communications	0.2	0.2	0.4

8 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 taxable profits for the period.

	Six months ended		Year ended
	31 December		30 June
	2014	2013	2014
Profit after tax (£m)	6.6	6.6	8.3
Weighted average number of shares in issue (millions)	137.4	137.4	137.4
Earnings per share in pence	4.8p	4.8p	6.0p

9 Earnings per share

The Directors believe that there is no material difference between the weighted average number of shares in issue for the purposes of calculating either basic or diluted earnings per share. Earnings under either measure is 4.8p pence per share.

10 Dividends

Interim dividends payable to shareholders are recognised in the year in which the dividends are paid. Final dividends payable are recognised as liabilities when approved by the shareholders at the annual general meeting.

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

	Six months ended 31 December				Year ended 30 June
	2014		2013		2014
	Per share	Total	Per share	Total	Per share	Total
	p	£m	p	£m	p	£m
Final dividend paid	5.0	6.9	4.75	6.5	4.75	6.5
Interim dividend paid	-	-	-	-	3.40	4.7
	5.0	6.9	4.75	6.5	8.15	11.2

The Board have resolved to pay an increased interim dividend of 3.5p per share. This amounts to £4.8m and will be paid on 2 April 2015 to shareholders on the register at 6 March 2015.

11 Deferred origination costs


			31 December		30 June
	2014			2013	2014
	£m			£m	£m
Expected to be amortised within 1 year		17.9		19.9	18.8
Expected to be amortised after 1 year	100.4			109.4	105.1
	118.3			129.3	123.9

12 Financial investments held to cover liabilities under investment contracts

The following investments, other assets and liabilities are held to cover financial liabilities under investment contracts. They are included within the relevant headings on the condensed consolidated balance sheet.

		31 December		30 June
	2014		2013	2014
	£m		£m	£m
Equity securities	15.9		26.9	35.2
Investment in collective investment schemes	795.4		831.0	802.4
Fixed income securities	23.2		28.2	24.1
Deposits and money market funds	90.9		100.0	82.9
Other receivables	-		1.0	-
Total assets	925.4		987.1	944.6
Other payables	(1.7)		(1.2)	(1.0)
Financial investments held to cover
liabilities	923.7		985.9	943.6

13 Deferred income

		31 December		30 June
	2014 £m		2013 £m	2014 £m
Expected to be amortised within 1 year	19.6		20.7	20.4
Expected to be amortised after 1 year	120.8		120.2	120.8
	140.4		140.9	141.2

14 Other payables

		31 December		30 June
	2014		2013	2014
	£m		£m	£m
Provisions for settlements	4.6		0.2	5.0
Creditors and accruals	6.6		8.7	6.9
	11.2		8.9	11.9

Included within other payables are provisions totalling £4.6m. Provisions totalling £4.4m have been established to settle potential liabilities to HMRC in relation to Chargeable Event Certificates, together with related professional costs. The provision has been calculated on the basis of a prudent "estimate of tax lost" by HMRC, net of professional costs incurred to date. This provision represents the Directors' best estimate, however it is subject to uncertainty regarding both amount and timing of settlement as it will depend on the final agreement with HMRC.

Additionally, provisions totalling £0.2m have been established in relation to a small number of legal cases brought against a Group company following a decision to pursue settlement.

15 Called up share capital

		31 December		30 June
	2014		2013	2014
	£m		£m	£m
Authorised:
200,000,000 ordinary shares of 50p	100.0		100.0	100.0
Issued and fully paid:
137,383,850 ordinary shares of 50p (30 June 2014: 137,379,634 ordinary
shares)	68.7		68.7	68.7

16 Related party transactions

Intra-group transactions are eliminated on consolidation and are not disclosed separately here.

There have been no significant related party transactions in the period nor changes to related parties. 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 2014.

There have been no significant awards during the period under the Save As You Earn (SAYE) share-save programme for employees. The estimated fair value of the schemes and the imputed cost for the period under review is not material to these financial statements.

16.1 Transactions with controlling shareholder

Dr L S Polonsky is regarded as the controlling shareholder of the Group, as defined by the Listing Rules of the Financial Conduct Authority.

Dr Polonsky's letter of appointment reflects his position as a non-executive Director and President. It incorporates the requirements of the Listing Rules of the Financial Conduct Authority in relation to Dr Polonsky as controlling shareholder of the Group in order to maintain effective corporate governance.

There were no significant transactions between the Group and Dr Polonsky during the period under review, except as noted below.

* Dr Polonsky has an investment contract issued by the Group on terms available to employees in general. At 31 December 2014 this contract had a fair value of £7.3m (H1 2014: £6.6m).

* The Group established an Employee Benefit Trust in November 2011 with the transfer to it of 400,000 shares in Hansard Global plc by Dr Polonsky. Dr Polonsky made a further donation of 250,000 shares to the Trust in September 2014. The Trust holds 699,910 shares (30 June 2014: 434,500) at the balance sheet date.

17 Contingent liabilities

The Group does not give any investment advice and this is left to the contract holder directly or through an agent, advisor or an entity appointed at the contract holder's request or preference. Contract holders bear the financial risk relating to the investments underpinning their contracts, as the contract benefits are linked to the value of the assets.

Notwithstanding the above, financial services institutions are frequently drawn into disputes in cases where the value and performance of assets selected by or on behalf of contract holders fails to meet their expectations. This is particularly true of more complex structured products distributed throughout Europe that have been selected for inclusion in contracts by contract holders and / or their advisors. At the balance sheet date a number of those fund structures remain affected by liquidity or other issues that hinder their sales or redemptions on normal terms with a consequent adverse impact on transactions.

As reported previously, the Group has been subject to a number of complaints in relation to the selection and performance of assets linked to contracts. Some of these complaints escalate into litigation. At the beginning of this financial year the Group faced litigation based on writs totalling €6.5m (approximately £5.2m) served upon Hansard Europe as a result of these and related complaints. The majority of those writs remain outstanding at the date of this report and, at the date of this report outstanding writs served upon Hansard Europe Limited total €6.9m or approximately £5.4m.

While it is not possible to forecast or determine the final results of pending or threatened legal proceedings, based on the pleadings and advice received from the Group's legal representatives, the Directors believe that the Group will be successful in its defence of these claims.

The Group is however prepared to settle claims where there is a clear economic benefit to do so and provisions totalling £0.2m (30 June 2014: £0.3m) have been established in relation to a small number of those writs following a decision to pursue settlement as referred to in 14 above.

18 Foreign exchange rates

The closing exchange rates used by the Group for the translation of balance sheet items to sterling were as follows:

	31 December		30 June
	2014	2013	2014
US Dollar	1.56	1.66	1.72
Japanese Yen	186.57	174.36	173.32
Euro	1.29	1.20	1.25

These are consistent with the rates used for the translation of EEV future currency cash flows.

Independent review report to Hansard Global plc

Introduction

We have been engaged by the company to review the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 31 December 2014, which comprises the condensed consolidated income statement, the condensed consolidated statement of changes in equity, the condensed consolidated balance sheet, the condensed 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 consolidated set of 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 Conduct Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated set of 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 consolidated set of 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 Conduct 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 consolidated set of financial statements in the half-yearly financial report for the six months ended 31 December 2014 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 Conduct Authority.

PricewaterhouseCoopers LLC
Chartered Accountants

Douglas, Isle of Man

25 February 2015

EUROPEAN EMBEDDED VALUE INFORMATION

1 INTRODUCTION

The European Embedded Value ("EEV") measure is an estimate of the value of the shareholders' interest in the Group. The EEV covers the entire business of the Group, including its life assurance companies and subsidiaries providing administration, distribution and other services.

The EEV comprises Net Worth and the Value of Future Profits ("VFP") from business in-force at the valuation date, 31 December 2014. It excludes the value of any future new business that the Group may write after the valuation date. All results are calculated net of corporation tax.

The Group's EEV methodology complies with the EEV Principles published by the CFO Forum in May 2004 and extended in October 2005. It has been calculated using market-consistent economic assumptions and best estimate operating assumptions having regard for the Group's experience and its assessment of future experience. A description of the EEV methodology is set out in the Notes to the EEV Information. There have been no significant changes in the EEV methodology from that used in the previous financial year.

2 EEV PROFIT PERFORMANCE FOR THE PERIOD

2.1 EEV Profit

EEV Profit is a measure of the performance over the period.. It is derived as follows:

	H1 2015	H1 2014
	£m	£m
New Business Contribution	(1.1)	4.1
Expected Return on business (new and existing)	0.7	0.5
Expected Return on Net Worth	0.2	0.1
Operating Assumption and Model Changes	0.0	0.8
Experience Variances	(0.2)	0.0
EEV Operating Profit after tax	(0.4)	5.5
Investment Return Variances	4.6	(8.1)
Economic Assumption Changes	2.4	0.4
EEV Profit after tax	6.6	(2.2)

2.1.1 New Business Contribution ("NBC")

New Business Contribution is the value of new business written in the period. It is calculated at point of sale. NBC for the half year is (£1.1)m (H1 2014: £4.1m).

2.1.2 Expected Return on In Force (new and existing business)

Under EEV methodology, it is a convention to assume that the value of the business grows at 'start of period' assumptions. The Expected Return is therefore based on assumptions determined at 30 June 2014. These assumptions are applied to give the expected conversion from VFP to Net Worth in the year, and the time value of both existing business and non-market risk.

No assumptions are made about new business, so the New Business Strain is that incurred in the half year from new sales, using end of period operating and start of period economic assumptions (i.e. assumptions determined at 31 December 2014).

	H1 2015				H1 2014
	EEV		Net	VFP*	EEV	Net	VFP*
			Worth			worth
		£m	£m	£m	£m	£m	£m
Cash generated from VFP		0.0	18.6	(18.6)	0.0	24.2	(24.2)
New Business Strain		0.0	(7.0)	7.0	0.0	(10.8)	10.8
Time value of existing business		0.7	0.5	0.2	0.4	0.1	0.3
Time value of new business		0.0	0.0	0.0	0.0	0.0	0.0
		0.7	12.1	(11.4)	0.4	13.5	(13.1)

*this includes frictional costs and non-market risk, including its time value

The expected value of cash generated from existing business of £18.6m is lower than last year's (H1 2014: £24.2m). The cash generated is lower than the previous period as cash used to acquire new business in previous periods has been repaid. The lower New Business Strain of £7.0m (H1 2014: £10.8m) reflects lower new business over the period.

The time value figures reflect the economic assumptions at 31 December 2014 and 2013.

2.1.3 Experience Variances

Experience Variances arise where experience differs from that assumed in the prior year's EEV.

	H1 2015	H1 2014
	£m	£m
Ongoing expenses	(0.7)	0.6
Premium reductions & underpayments	0.4	0.3
Policies made paid up	0.3	(0.1)
Partial encashments	0.1	0.2
Full encashments	(0.9)	(1.2)
One-off expenses	(0.3)	(0.1)
Other	0.9	0.3
	(0.2)	0.0

The sum of experience variances is (£0.2m) (H1 2014: £nil), comprising a number of small positive and negative variances. The ongoing expense variance is negative at (£0.7m) (H1 2014: £0.6m) this reflects ongoing expenses picking up a larger share of group overheads in the period due to lower than expected new business volumes, partly offset by the deferral of some one-off strategic and IT expenditure.

2.1.4 Operating Assumption Changes

2.1.5 Expected Return on Net Worth

The Expected Return on Net Worth of £0.2m (H1 2014: £0.1m) reflects the anticipated increase in shareholder assets over the period due to the time value of money. In line with EEV convention, its calculation is based on the 30 June 2014 year one sterling risk discount rate of 0.9%.

2.1.6 Model Changes

The model is an approximation of the financial impact of the expected business performance. The Group continues to develop its modelling functionality, seeking to improve its accuracy over time. Model changes made during the period had no impact on the EEV (H1 2014: £0.8m).

2.1.7 Investment Return Variances

The combined impact of market and economic conditions led to EEV Investment Return Variances of £4.6m (H1 2014: (£8.1m)).

	H1 2015	H1 2014
	£m	£m
Investment performance of policyholder funds	1.1	6.6
Exchange rate movements	3.4	(14.5)
Shareholder return	0.0	0.1
Other	0.1	(0.3)
	4.6	(8.1)

2.1.8 Economic Assumption Changes

Economic Assumption Changes resulted in an EEV gain of £2.4m (H1 2014: £0.4m). This reflects changes in government bond yields for the currencies in which the Group is exposed.

2.2 ANALYSIS OF EEV PROFIT BY EEV COMPONENT

The table below shows a detailed analysis of EEV profit after tax for the half year ended 31 December 2014.


	H1 2015			H1 2014
	Movement In			Movement In
	EEV	Net Worth	VIF	EEV	Net Worth	VIF
	£m	£m	£m	£m	£m	£m
New Business Contribution	(1.1)	0.0	(1.1)	4.1	0.0	4.1
Expected Return on new and existing business	0.7	12.1	(11.4)	0.5	13.5	(13.0)
Experience Variances	(0.2)	(0.6)	0.4	0.0	(0.9)	0.9
Expected Return on Net Worth	0.2	0.2	0.0	0.1	0.1	0.0
Model Changes	0.0	0.0	0.0	0.8	0.0	0.8
EEV Operating Profit after tax	(0.4)	11.7	(12.1)	5.5	12.7	(7.2)
Investment Return Variances	4.6	(0.4)	5.0	(8.1)	(0.5)	(7.6)
Economic Assumption Changes	2.4	0.0	2.4	0.4	0.0	0.4
EEV Profit after tax	6.6	11.3	(4.7)	(2.2)	12.2	(14.4)

3 EMBEDDED VALUE AT 31 DECEMBER 2014

3.1 EEV BALANCE SHEET

Following the payment of dividends of £6.9m (H1 2014: £6.5m), the Group's EEV has decreased by £0.3m since 30 June 2014 to £203.5m (30 June 2014: £203.8m, H1 2014: £217.0m). The EEV balance sheet is presented below.

	H1 2015	H1 2014
	£m	£m
Free surplus	31.5	24.4
Required Capital	26.4	25.9
Net Worth	57.9	50.3
VIF	152.7	173.8
Reduction for non-market risk Frictional costs	(6.1) (1.0)	(6.0) (1.1)
Value of Future Profits ("VFP")	145.6	166.7
EEV	203.5	217.0

Net Worth is the market value of shareholder funds on an IFRS basis with adjustments to exclude certain accounting assets and liabilities. At the balance sheet date, the Net Worth of the Group is largely represented by liquid cash balances. The Required Capital has increased marginally due to an increase in Hansard Europe capital. The frictional costs have reduced marginally due to the lower risk discount rate. The Group has given undertakings not to release capital from that business until its new operating model has stabilised and other regulatory requirements have been satisfied. Currently, the Group estimates that this additional Required Capital will be constrained for three years.

The Value of Future Profits is the capitalised value of expected future profit allowing for best estimate policyholder behaviour and market consistent economic assumptions (VIF) with adjustments for non-market risk and frictional costs. VIF is based on the value of policyholder funds under administration at 31 December 2014. The Reduction for non-market risk represents the capitalised cost of operational risk. Frictional costs are the costs associated with holding Required Capital.

4 NEW BUSINESS PROFITABILITY

The Group has a negative New Business Contribution ("NBC") for the period. As a result of lower sales, the fixed sales expenses are spread over fewer policies, thus reducing the new business margin. The following metrics illustrate the profitability of the new business written in the period. Reductions from the comparative period reflect lower than expected sales and the subsequent cost over-run.

4.1 NEW BUSINESS MARGIN

New Business Margin is the New Business Contribution divided by the Present Value of New Business Premiums ("PVNBP"). It is a measure of profitability (not profit), comparing the expected profit with the value of expected premiums.

	H1 2015	H1 2014
New business sales (PVNBP)	£29.4m	£55.2m
New business contribution (NBC)	(£1.1m)	£4.1m
New business margin (NBM)	(3.9)%	7.5%

The New Business Margin for the year is (3.9)% (H1 2014: 7.5%). This is primarily due to reduction in new business sales volumes over the period and the consequent new business expense overrun.

NBC and PVNBP have, by convention, been calculated using 30 June 2014 economic assumptions and 31 December 2014 operating assumptions (which are unchanged from those at 30 June). As for the VIF, the NBC does not take credit for possible investment returns in excess of the projected risk-free return. NBC is shown after allowing for the cost of required capital, calculated on the same basis as for in-force business.

5 EEV SENSITIVITY ANALYSIS

Sensitivities provide an indication of the impact of changes in particular assumptions on the EEV at 31 December 2014 and the NBC for the half-year then ended.

The sensitivities will be affected by the change in the Group's business mix: different product types are sensitive to different assumptions in particular. Unless otherwise indicated, the sensitivities are broadly symmetrical.

The sensitivity analysis indicates that the Group's exposure to operating factors is limited, largely as a result of product design. A change in the level of expenses is the main operating exposure of the Group. The largest sensitivities for the Group are related to economic factors. In particular, as a result of the diversified portfolio of assets under administration, it is exposed to movements in exchange rates and asset values through the impact on the level of future fund-based management income.

Impact on: EEV NBC

£m £m

Central assumptions 203.5 (1.1)

Operating sensitivities

10% decrease in expenses 6.1 0.3

1% decrease in expense inflation 4.1 0.1

1% increase in charge inflation 4.0 0.1

1% decrease in charge inflation (3.1) (0.1)

1% increase in expense & charge inflation (0.4) 0.0

1% decrease in expense & charge inflation 1.0 0.0

10% decrease in full encashment rates 1.9 0.1

Economic sensitivities

1% decrease in risk discount rate 6.7 0.2

1% increase in risk discount rate (7.4) (0.2)

1% increase in investment return rate 6.4 0.1

1% decrease in investment return rate (5.9) (0.1)

1% increase in risk discount rate & investment return rate (1.5) (0.1)

1% decrease in risk discount rate & investment return rate 0.3 0.0

10% increase in the value of equities and property 8.8 0.0

10% appreciation of sterling against all other currencies 13.3 0.2

In each sensitivity calculation, all other assumptions remain unchanged, except where indicated. There is a natural correlation between many of the sensitivity scenarios tested, so the impact of two occurring together is likely to be different from the sum of the individual sensitivities.

Where only one side of a sensitivity is shown, the results are broadly symmetric.

No changes to statutory valuation bases, pricing bases and Required Capital have been allowed for. No future management action has been modelled in reaction to the changing assumptions. For new business, the sensitivities reflect the impact of a change from inception of the policy.

NOTES TO THE EUROPEAN EMBEDDED VALUE INFORMATION

1 ECONOMIC ASSUMPTIONS

The principal economic assumptions used in the EEV calculations are actively reviewed at each valuation date and are internally consistent.

1.1 Risk-free rate

In line with EEV Principles, the risk-free rate is based on the bid swap yield curve appropriate to the currency and timing of the cash flows. This resulting risk-free rate curve by currency is then used to derive the sterling risk discount rate and investment return assumptions.

Risk-free rate	31 December 2014	31 December 2013
Aggregate weighted discount rate	1.75%	2.4%
Aggregate weighted one-year discount rate	0.4%	0.4%

1.2 Risk discount rate

The risk discount rates are set to the risk-free rates for the applicable currency and term. The EEV calculation uses the risk-free rates at the end of the year (i.e. at the valuation date), while the calculation of NBC and PVNBP uses the risk-free rate at the start of the year (i.e. at the previous year-end date).

Risk discount rate	Half Year ended 31 December 2014		Half Year ended 31 December 2013
	EEV	NBC	EEV	NBC
Aggregate weighted risk discount rate
per annum	1.75%	1.9%	2.4%	2.2%

1.3 Inflation rates

In setting the expense inflation assumption, consideration is given to price and salary inflation rates in both the Isle of Man and the Republic of Ireland, and to the Group's own expense experience and expectations. For service companies, expense inflation relates to the underlying expenses rather than the fees charged to the life assurance companies.

By design, contractual monetary charge inflation is broadly matched to expense inflation: in Hansard Europe Limited, the charge inflation is subject to a minimum increase of 5% per annum. The correlation between expense inflation and charge inflation dampens the impact of inflation on the embedded value results.

Inflation assumptions are as follows:

Inflation rates	H1 2015	H1 2014
Expense inflation per annum	3.0%	3.0%
Charge inflation per annum - Hansard Europe	5.0%	5.0%
Charge inflation per annum - Hansard International - Year 1	2.4%	2.4%
Charge inflation per annum - Hansard International - Year 2	2.7%	2.7%
Charge inflation per annum - Hansard International - Year 3+	3.0%	3.0%
The 5% charge inflation rate for Hansard Europe reflects the terms of the products. The three-year stepped approach to charge inflation for Hansard International reflects the terms of the products, trending towards a long-term inflation rate of 3% per annum.

Review of the European Embedded Value ("EEV") of Hansard Global plc for the six-month period ended 31 December 2014

Our role

Deloitte MCS Limited 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 six-month period ended 31 December 2014.

Responsibilities

Deloitte MCS Limited has been engaged by Hansard Global plc to act as Reviewing Actuaries in connection with results on an EEV basis published in sections "Results for the year under European Embedded Value" (pages 17 to 21) and "European Embedded Value Information" (pages 47 to 53) within Hansard Global plc's Results for the six-month period ended 31 December 2014.

Our limited 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.

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 to suggest that:

• the methodology and assumptions used to prepare the EEV Information do not 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"); and

• the EEV Information has not been compiled on the basis of the methodology and assumptions 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 competitive forces on the assumptions.

Deloitte MCS Limited

25 February 2015

Deloitte MCS Limited. Registered office: Hill House, 1 Little New Street, London EC4A 3TR, United Kingdom. Registered in England & Wales with registered number 3311052.

Deloitte MCS Limited is a subsidiary of Deloitte LLP, the United Kingdom member firm of Deloitte Touche Tohmatsu Limited ("DTTL"), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

Member of Deloitte Touche Tohmatsu Limited

Contacts and Advisors

Registered Office

Harbour Court

Lord Street

Box 192

Douglas

Isle of Man

IM99 1QL

Tel: +44 (0)1624 688000

Fax: +44 (0)1624 688008

www.hansard.com

Media Enquiries

Bell Pottinger LLP
6^th Floor, Holborn Gate

330 High Holborn

London

WC1V 7QD
Tel: +44 (0)20 3772 2500

President

Dr L S Polonsky, CBE

Dr.polonsky@hansard.com

Non-executive Chairman

PPC Gregory

Philip.Gregory@hansard.com

Broker

Panmure Gordon (UK) Limited

One New Change

London
EC4M 9AF

Tel. +44 (0)20 7886 2500

Financial Advisor

Lazard & Co. Limited

50 Stratton Street

London

W1J 8LL

Tel. +44 (0)20 7187 2000

Broker

Macquarie Capital (Europe) Limited

28 Ropemaker Street

London

EC2Y 9HD

Tel: +44 (0)20 3037 2000

Auditor

PricewaterhouseCoopers LLC

Sixty Circular Road

Douglas

Isle of Man

IM1 1SA

Tel: +44 (0)1624 689689

Registrar

Capital Registrars (Isle of Man) Limited

Clinch's House

Lord Street

Douglas

Isle of Man

IM99 1RZ

Tel (UK): 0871 664 0300*

Tel: +44 (0)20 8639 3399

Reviewing Actuaries

Deloitte MCS Limited

Hill House

1 Little New Street

London

EC4A 3TR

Tel: +44 (0)20 7936 3000

UK Transfer Agent

Capita IRG Limited

The Registry

34 Beckenham Road

Beckenham

Kent

BR3 4TU

Tel (UK): 0871 664 0300*

Tel: +44 (0)20 8639 3399

* Nb: 0871 Number - calls cost 10p per minute plus network extras.

Financial Calendar

Ex-dividend date for interim dividend

Record date for interim dividend

Payment date for interim dividend

Interim Management Statement

Announcement of 4^th quarter new business

results

Announcement of full year results

5 March 2015

6 March 2015

2 April 2015

14 May 2015

30 July 2015

23 September 2015

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR GMGZZRKFGKZM

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