Interim Results

Hansard Global plc 29 March 2007 Hansard Global PLC ('Hansard Global' or the 'Company') Interim results for the six months ended 31 December 2006 Hansard Global plc, the specialist long-term savings provider, today announces its results for the six months ended 31 December 2006. Financial highlights â€¢ Profit after tax was Â£10.6 million, an increase of 28% (H1 05/06: Â£8.3 million) â€¢ EEV of the Group has risen to Â£193.2 million, up 8% compared to the value at 30 June 2006 â€¢ New business premiums on an APE basis were Â£17.3 million, up 9% (H1 05/06: Â£15.9 million) â€¢ Assets under administration at 31 December, at Â£1,035 million, up 9% compared with 30 June 2006 â€¢ The Board is recommending an interim dividend of 4 pence per share â€¢ Successful IPO in December 2006 Operational highlights â€¢ Stable New Business Margins of 8.0% â€¢ Excellent ongoing operational platform â€¢ New business initiatives providing growth â€¢ Enhanced ability to attract and compete for new business from a wider range of Intermediaries â€¢ Four new non-executive directors added to the Board â€¢ Hansard Online continues to differentiate Dr Leonard Polonsky, Hansard Global's Chairman, commented: 'I am pleased to report that the strong performance in profitability and new business achieved over the last two years has continued in the first half of the financial year and that new business margins have been maintained. 'Hansard Global's objective remains 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 Hansard Global to enter or develop new geographic markets and exploit growth opportunities within our existing markets, without the need for significant further investment. 'The Board is confident that the Group operates in a growing marketplace. The long-term trends in all our chosen markets will allow Intermediaries, with whom Hansard works, to capitalise on these opportunities.' < ends > For further information, please contact Hansard Global Plc Dr Leonard Polonsky, Executive Chairman Tel: 01624 688 000 Bell Pottinger Corporate and Financial Dan de Belder/ Mike Davies Tel: 020 7861 3232 Hansard Global plc Half-yearly report For the six months ended 31 December 2006 HANSARD GLOBAL plc HALF-YEARLY REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Contents 1. Summary of results and highlights 2. Chairman's statement 3. Financial commentary on the results for the six months ended 31 December 2006 4. Half-yearly financial statements 5. Independent review report on the half-yearly financial statements 6. European Embedded Value Information 7. Notes to European Embedded Value Information 8. Reviewing actuaries' report on the European Embedded Value Information 9. Contacts, advisors and Financial calendar HANSARD GLOBAL PLC SUMMARY OF RESULTS AND HIGHLIGHTS Half-year ended Half-year ended % 31 December 2006 31 December 2005 change UK GAAP highlights Profit after tax (Â£millions) 10.6 8.3 27.7% Earnings per share (pence) 7.7 6.0 28.3% Dividend per share (pence) 4.0 N/a N/a At 31 December At 31 December % 2006 (Â£m) 2005 (Â£m) change European Embedded Value highlights EEV 193.2 162.8 18.7% Half-year ended Half-year ended % 31 December 2006 31 December 2005 change (Â£m) (Â£m) New Business Contribution 10.3 9.8 5.1% Other highlights Annualised Premium Equivalent 17.3 15.9 8.8% At 31 December At 31 December % 2006 (Â£m) 2005 (Â£m) change Assets under Administration 1,034.6 886.3 16.7% CHAIRMAN'S STATEMENT This is Hansard Global's first interim results announcement as a listed Company. It covers the six months to 31 December 2006 and incorporates five and a half months as a privately held Company and half a month as a public Company. I am pleased to report that the strong performance in profits and new business achieved over the last two years has continued in the first half of the financial year ending on 30 June 2007. We have started to see some early benefits of the IPO, primarily in terms of providing the Group with access to a wider range of intermediaries. The listing of the Company, coupled with continued growth in new business and profits, could not have been achieved without the on-going commitment and dedication of our employees. The progress that we have made is a reflection of their skill and enthusiasm. On behalf of the Board and shareholders I thank them all. FINANCIAL PERFORMANCE The financial results have been presented in accordance with UK GAAP. Additionally certain information relating to embedded value is presented, using the European Embedded Value ('EEV') methodology. The Board believes that the EEV information, read in conjunction with the other financial information produced by the Group, provides a helpful insight into the financial performance of the Group, year on year. The Group has delivered strong performance in all the measures discussed within this report, as can be seen on the summarised table of results. The profit after tax for the period was Â£10.6 million, an increase of 27.7% over the profit of Â£8.3m earned in the corresponding period of the previous financial year. Earnings per share are 7.7p, an increase of 28.3% over the earnings per share of the corresponding period. All the costs of listing Hansard Global were met by the holding Company, Polar Cap Limited ('Polar Cap'). The Company recovered Â£1.47m from Polar Cap for services rendered in connection with the listing. This amount is included in the profit for the current period referred to above. The EEV of the Group has risen to Â£193.2m, an increase of 8.2% from the value at 30 June 2006. This represents an after-tax EEV operating profit of Â£14.6m. DIVIDEND The strong performance in the first six months of this financial year is encouraging and in line with management's expectations. The Board has therefore resolved to pay an interim dividend of 4 pence per share. This is the first dividend to be paid by the Company and will be paid on 4 May 2007 to those shareholders on the Register at the close of business on 10 April 2007. NEW BUSINESS I am pleased to report continued growth in new business during the six months to 31 December 2006. New business premiums on an Annualised Premium Equivalent ('APE') basis in sterling terms were Â£17.3 million during the period, compared with Â£15.9m in the corresponding period of the previous financial year, an increase of 8.8%. This reflects continued strong new business flows, particularly in Scandinavia, Latin America and the Far East, that offset some weakness that was experienced in European markets during the latter part of the period. Throughout the period under review new business has been written by the Group on profitable terms and at consistent new business margins. These factors have contributed to significant growth in the Group's EEV. Variations in the timing of large single premium cases mean that contributions from new business in any period can be impacted by the relative weight of single premium new business, compared with regular premium flows. ASSETS UNDER ADMINISTRATION Assets under administration at 31 December 2006, at Â£1,034.6 million, have risen by 9.2% since 30 June 2006 and by 16.7% compared with 31 December 2005. The main drivers for these increases have been new business single premium flows and movements in capital markets. BOARD CHANGES During the period under review, there were a number of changes in the composition of the Board. In preparation for the IPO, Joe Kanarek and Vince Watkins stepped down from the Board in November 2006 and four non-executive directors joined the Board prior to the IPO to allow the Company to comply with good corporate governance practice. I would like to reiterate my welcome to Bernard Asher, Maurice Dyson, Uwe Eymer and Harvey Krueger. There have been no changes to the composition of the Management Board. SIGNIFICANT SHAREHOLDINGS At the date of this report I have the largest beneficial shareholding in the Company, as a result of my holdings in Polar Cap. Polar Cap is currently the registered holder of 57.6% of the Company's issued share capital. Polar Cap intends to complete the reorganisation referred to in our prospectus by 31 December 2007. As a result of that reorganisation, I will hold a direct interest of 43% in the Company and there may be other shareholders with notifiable interests in the Company at that date. The reorganisation will not affect the number of the Company's shares in issue. Lloyds TSB Group Plc have advised us that they have an interest in 4,191,580 shares or 3.05% of the Company's share capital at the date of this report. OUTLOOK The Group's objective is to grow by attracting new business and positioning itself to adapt rapidly to market trends and conditions. The scalability and flexibility of the Group's operations allow us to enter or develop new geographic markets and exploit growth opportunities within our existing markets, without the need for significant further investment. The Board is confident that the Group operates in a growing marketplace. The long-term trends in all our chosen markets will allow intermediaries with whom we work to capitalise on these opportunities. Dr L S Polonsky Chairman 28 March 2007 FINANCIAL COMMENTARY Introduction The Group offers long-term savings products packaged as single and regular premium unit-linked life assurance policies, providing exposure to the performance of a wide range of underlying investments. Whilst the Group's products are packaged as life assurance products, they do not transfer significant life assurance risk and therefore are characterised under UK GAAP in accordance with FRS 26 as investment contracts and are accounted for using deposit accounting principles. Accordingly, premiums received on such contracts are treated as deposits rather than revenue and recognised in the balance sheet and not in the income statement. Similarly, benefits paid are treated as repayments of deposits and are not reflected in the income statement. The classification of the Group's products as investment contracts results in the Group not disclosing premium income as income in the UK GAAP financial information; instead, the fees and costs deemed to be associated with the provision of services to policyholders are recognised in the consolidated income statement. In addition to UK GAAP reporting, the Group prepares embedded value information in accordance with the European Embedded Value (''EEV'') methodology. In the Directors' opinion, the EEV information, read in conjunction with the other financial information produced by the Group, provides a helpful insight into the financial performance of the Group year on year. Commentary on the Group's business during the periods under review, reported on the EEV basis, is set out later in this section. I am pleased to report that the Group has delivered strong performance in all the measures discussed within this report, as can be seen on the summarised table of results. 1. Results for the six month period ended 31 December 2006 The profit for the period under UK GAAP is Â£10.6 million, compared with a profit for the corresponding period of the previous financial year of Â£8.3m. This represents an increase of 27.7%. Earnings per share are 7.7p, an increase of 28.3% over the earnings per share of the corresponding period. All the costs of listing the Company were met by the holding Company, Polar Cap Limited. This has had the impact of the Company recovering some Â£1.47m from its holding Company for services rendered in connection with the listing. This amount is included in the profit for the current period referred to above. Net of the impact of all amounts received from Polar Cap in the periods under review, the Group's underlying profit for the period reflects growth of 13.9% over the profit of the corresponding period. 1.1 Revenues Fees and commissions for the period are Â£24.2 million, compared with revenues for the corresponding period of the previous financial year of Â£21.2m. This represents an increase of 14.2%, caused principally by the timing of new business flows in the current period and the impact of fees received from investment contracts that were being administered by the Group at the beginning of the period. The geographical analysis of fees and commissions reflects the growth in revenue attributable to new business issued in the Republic of Ireland over the period. This is principally single premium business that has contributed to a growth in assets under administration by Hansard Europe Limited of more than 50% since 31 December 2005. 1.2 Expenses New business commissions, together with the directly attributable incremental costs incurred on the issue of a policy by the Group, are included within Origination costs in the consolidated income statement in the relevant period and are deferred as an explicit deferred origination cost asset in the consolidated balance sheet. All other costs are reflected within Administration and other expenses. Investment management expenses and administration costs payable by the Group are met from charges deducted from the relevant investment contracts administered. A summary of Administrative and other expenses in each of the reporting periods is set out below: Half-year ended Half-year ended Year ended 31 December 2006 31 December 2005 30 June 2006 Â£m Â£m Â£m Investment management and other fees 1.6 1.4 2.6 New business related costs 1.1 0.9 2.8 Administrative expenses 6.0 5.7 10.9 Â£8.7m Â£8.0m Â£16.3m 1.3 Assets Under Administration Assets under administration at 31 December 2006, at Â£1,034.6 million, have risen by 9.2% since 30 June 2006 and by 16.7% compared with 31 December 2005. The main drivers for these increases have been new business single premium flows and movements in capital markets. A significant proportion of new business premiums is denominated in currencies other than sterling (principally in US$ and â‚¬) and, as a result, the value of assets under administration is sensitive to movements in exchange rates. Using the exchange rates in force at 31 December 2005, the value of assets would have been increased by a further Â£50m at 31 December 2006. 1.4 Cash Flows Cash flows in the period were strongly positive, allowing the Group to fund its growth in new business from its own resources and providing sufficient funds to meet the proposed interim dividend. Cash and cash equivalent balances at 31 December 2006 stood at Â£64.4 million, an increase of almost Â£20m since 31 December 2005. 2. EEV Information The methodology used to derive the European Embedded Values at 31 December 2006 and 31 December 2005 is consistent with the methodology used in relation to the consolidated audited financial statements in respect of the year ended 30 June 2006, and in relation to the EEV information published in the Company's prospectus document. 2.1 Analysis of Embedded Value The EEV as at 31 December 2006 was Â£193.2 million, representing an increase of 8.2% or Â£14.6m over the value at 30 June 2006. Throughout the period under review new business has been written by the Group on profitable terms and at consistent New Business Margins. These factors have contributed to the growth in the Group's EEV. A significant proportion of new business premiums is denominated in currencies other than sterling (principally in US$ and â‚¬) and, as a result, the EEV is sensitive to movements in exchange rates. The fall in foreign exchange rates against sterling over the last six months has reduced EEV by Â£3.4m at 31 December 2006. Net worth is the market value of shareholders' funds, adjusted to exclude certain assets such as deferred origination costs and liabilities such as deferred income reserve. At the balance sheet date the net worth of the Group is represented by liquid cash balances. The table below provides a summarised breakdown of the EEV at the reporting dates. 31 December 2006 31 December 2005 30 June 2006 Â£m Â£m Â£m Net worth 52.9 35.8 43.3 Value of future profits 140.3 127.0 135.3 European Embedded Value 193.2 162.8 178.6 2.2 EEV Return The EEV Return after tax provides a measure of the Group's performance over the period. It is defined as the change in EEV over a period, adjusted for any amounts such as dividends or capital movements released from or invested in the Group. The EEV Return in a particular period comprises the new business contribution and return from existing business. The EEV Return remains strongly positive, notwithstanding the impact of significant items impacting on this period and the corresponding period. The EEV Return for the period is Â£14.6 million, compared with Â£20.3m in the half year ended 31 December 2005. This represents a return of 8.2% on opening embedded value generated principally by profitable new business. The New Business Contribution ('NBC') for the period was Â£10.3m (Â£9.8m in the half year ended 31 December 2005), and the expected return on existing business was Â£3.2m (Â£2.6m). During the period improvements were introduced to the modelling of single premium cases with a premium above Â£1m. This has led to a one-off negative adjustment of Â£3.9m that is reflected within the return for the period. 3. New Business 3.1 New Business Volumes New business sales volumes are expressed on two bases: Annualised Premium Equivalent ('APE') and the Present Value of Future New Business Premiums (''PVNBP''). The calculation of APE is in accordance with the life assurance industry convention of adding together new regular premiums and one tenth of single premiums. New business premiums on an APE basis in sterling terms were up 8.8% to Â£17.3 million during the first six months of the year (compared with Â£15.9m for the corresponding period). This reflects continued strong new business flows, particularly in Scandinavia, Latin America and the Far East. A significant proportion of new business premiums is denominated in currencies other than sterling (principally in US$ and â‚¬). The continued growth in APE despite the adverse currency movements throughout the period shows the benefits of having a well-diversified portfolio of new business. The tables below provide a summarised breakdown of New Business APE for each of the periods reported, analysed between single and regular premium cases, and also by residence of policyholder. Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Annualised regular premiums 8.7 8.3 16.7 Single premiums 8.6 7.6 18.5 -------------------------------------------------------------------------------- Annualised premium equivalent 17.3 15.9 35.2 -------------------------------------------------------------------------------- Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- EU and EEA 6.9 7.4 11.1 Rest of world 10.4 8.5 24.1 -------------------------------------------------------------------------------- Annualised premium equivalent 17.3 15.9 35.2 -------------------------------------------------------------------------------- 3.2 New business profitability and margin New Business Margin is defined as NBC divided by PVNBP. The calculation of PVNBP is equal to total single premium sales in the period plus the discounted value of regular premiums expected to be received over the term of new regular premium policies, and is calculated at the point of sale. New Business premiums on a PVNBP basis were Â£129.5m during the first six months of the year (compared with Â£121.8m for the corresponding period of the previous financial year), an increase of 6.3%. Throughout the period under review new business has been written by the Group on profitable terms and has contributed to significant growth in the Group's EEV. The New Business Margin, in sterling terms, has been maintained at 8.0% for the period ended 31 December 2006 as compared to the period ended 31 December 2005 and the year ended 30 June 2006. The change in the mix of new business compared with the corresponding period resulted in increased amounts of regular premium business which had the impact of increasing NBC by Â£0.3m. The combined impacts of changes in the level of the Risk Discount Rate and the impact of currency movements has been to reduce the NBC by Â£0.2m. 4. Net Asset Value The net asset value per share at 31 December 2006, on a UK GAAP basis, is 34.6p. This represents an increase of 72.7% or 14.6p from the net asset value at 31 December 2005. The net asset value per share is based upon the consolidated shareholders' funds at the balance sheet date divided by the number of shares in issue at that date, being 137,281,202 ordinary shares. On the EEV basis, the net asset value per share at 31 December 2006 is 141p. This represents an increase of 18.1% or 22p from the net asset value at 31 December 2005. 5. Financial Reporting It is our intention to deliver, whenever practicable, interim and final reporting to shareholders through electronic media. This is in line with our objectives to maintain an appropriate level of operational expenditure, reduce the impact on the environment of our activities, and facilitate wider distribution of information. In due course shareholders will be requested to provide an indication of their preferences in this regard. V P Watkins Chief Financial Officer 28 March 2007 Consolidated income statement Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Notes Â£m Â£m Â£m ----------------------------------------------------------------------------------------------- Fees and commissions 2 24.2 21.2 44.5 Investment income 51.1 85.1 102.6 Other income 3 1.8 0.7 0.8 ----------------------------------------------------------------------------------------------- 77.1 107.0 147.9 ----------------------------------------------------------------------------------------------- Investment contract benefits (49.9) (84.0) (99.3) Origination costs (7.9) (6.7) (14.6) Administrative and other expenses (8.7) (8.0) (16.3) ----------------------------------------------------------------------------------------------- (66.5) (98.7) (130.2) ----------------------------------------------------------------------------------------------- Profit on ordinary activities before taxation 10.6 8.3 17.7 Taxation on profit on ordinary activities 4 - - - ----------------------------------------------------------------------------------------------- Profit for the period after taxation 10.6 8.3 17.7 ----------------------------------------------------------------------------------------------- All of the activities of the Group are continuing. The Group has no recognised gains or losses other than those included in the profits above and therefore no separate statement of total recognised gains and losses has been prepared. Earnings per share expressed in pence per share Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 -------------------------------------------------------------------------------- Basic 5 7.7 6.0 12.9 Diluted 5 7.7 6.0 12.9 Reconciliation of movement in consolidated shareholders' funds Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Notes Â£m Â£m Â£m --------------------------------------------------------------------------------------- Profit for the period after taxation 10.6 8.3 17.7 Opening consolidated shareholders' funds 36.9 19.2 19.2 --------------------------------------------------------------------------------------- Closing consolidated shareholders' funds 47.5 27.5 36.9 --------------------------------------------------------------------------------------- Consolidated balance sheet As at As at As at 31 December 31 December 30 June 2006 2005 2006 Notes Â£m Â£m Â£m -------------------------------------------------------------------------------- Assets Tangible assets 0.6 0.6 0.6 Financial investments 6 1,034.6 886.3 947.3 Deferred origination costs 90.1 81.6 86.6 Other receivables 12.0 11.9 11.7 Cash and cash equivalents 64.4 44.5 57.9 -------------------------------------------------------------------------------- Total assets 1,201.7 1,024.9 1,104.1 -------------------------------------------------------------------------------- Liabilities Financial liabilities under investment contracts 7 1,034.4 886.1 947.2 Amounts due to investment contract holders 8.7 9.0 10.2 Deferred income reserve 105.7 98.6 103.0 Other payables 5.4 3.7 6.8 -------------------------------------------------------------------------------- Total liabilities 1,154.2 997.4 1,067.2 -------------------------------------------------------------------------------- Net assets 47.5 27.5 36.9 -------------------------------------------------------------------------------- Shareholders' equity Called up share capital 8 68.6 68.6 68.6 Other reserves 9 (48.5) (48.5) (48.5) Profit and loss account 27.4 7.4 16.8 -------------------------------------------------------------------------------- Total shareholders' equity 47.5 27.5 36.9 -------------------------------------------------------------------------------- Consolidated cash flow statement Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Notes Â£m Â£m Â£m -------------------------------------------------------------------------------- Net cash inflow from operating activities 10 4.7 2.4 14.4 Returns on investments and servicing of finance Interest on investments 1.8 1.1 2.6 Capital expenditure Purchase of tangible assets (0.1) - (0.2) Taxation Taxation paid - - - -------------------------------------------------------------------------------- Net cash inflow 6.4 3.5 16.8 -------------------------------------------------------------------------------- Cash flows were invested as follows: -------------------------------------------------------------------------------- Increase in cash holdings 6.3 3.6 16.9 Net portfolio investments 0.1 (0.1) (0.1) -------------------------------------------------------------------------------- 6.4 3.5 16.8 -------------------------------------------------------------------------------- In accordance with Financial Reporting Standard No.1 the cash flow statement excludes cash flows relating to the long-term assurance business of the Group. Notes to the consolidated half-yearly financial statements 1 Basis of preparation The consolidated half-yearly financial statements for the six months ended 31 December 2006 comprise the half-yearly financial statements of Hansard Global plc (the 'Company') and its subsidiaries (together referred to as the 'Group'). The consolidated half-yearly financial statements have been prepared in accordance with the Listing Rules of the UK Financial Services Authority. The accounting policies applied by the Group in the preparation of these consolidated half-yearly financial statements are consistent with those applied by the Group in the preparation of the audited consolidated financial statements for the year ended 30 June 2006. The audited consolidated financial statements for the year ended 30 June 2006 are available at www.hansard.com. 2 Segmental information In the opinion of the directors, the Group operates in a single business segment, that of the distribution and servicing of long-term investment products through the Company's life assurance subsidiaries. i) Fees and commissions analysed by type Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Contract fee income 17.2 15.2 31.5 Fund management charges 5.2 4.1 9.1 Commission receivable 1.8 1.9 3.9 -------------------------------------------------------------------------------- 24.2 21.2 44.5 -------------------------------------------------------------------------------- ii) Geographical analysis of fees and commissions by origin Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Isle of Man 20.0 18.3 37.6 Republic of Ireland 4.2 2.9 6.9 -------------------------------------------------------------------------------- 24.2 21.2 44.5 -------------------------------------------------------------------------------- iii) Geographical analysis of profit before taxation Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Isle of Man 10.3 8.6 16.8 Republic of Ireland 0.3 (0.3) 0.9 -------------------------------------------------------------------------------- 10.6 8.3 17.7 -------------------------------------------------------------------------------- Notes to the consolidated half-yearly financial statements (continued) 2 Segmental information (continued) iv) Geographical analysis of financial investments 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Isle of Man 726.7 682.3 698.8 Republic of Ireland 307.9 204.0 248.5 -------------------------------------------------------------------------------- 1,034.6 886.3 947.3 -------------------------------------------------------------------------------- The geographical analysis of financial liabilities under investment contracts is consistent with the analysis of financial investments 3 Other operating income Included within other operating income are amounts totalling Â£1.57 million received from Polar Cap Limited for services rendered by the Group in relation to the listing of the Company on the London Stock Exchange on 18 December 2006 and other services. Amounts totalling Â£0.38m received from Polar Cap Limited for software development services are reflected within other operating income in respect of both the period ended 31 December 2005 and the year ended 30 June 2006. 4 Taxation The Group's profits arising from its Isle of Man-based operations are taxable at zero percent. No corporation tax liabilities have attached to the Ireland-based operations due to tax losses incurred in prior periods. Charges for taxation reflected in the income statements of a number of minor subsidiary companies are immaterial to an understanding of the Group's taxation position for the periods under review. 5 Earnings per share Earnings per share expressed in pence per share Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 -------------------------------------------------------------------------------- Basic 7.7 6.0 12.9 Diluted 7.7 6.0 12.9 The earnings per share for each period is based upon the profit for the period after taxation divided by the average number of shares in issue throughout that period. The average number of shares in issue throughout each period is 137,281,202 ordinary shares. The earnings per share for the year ended 30 June 2006 reflected within the prospectus issued by the Company on 13 December 2006 in relation to the listing of the Company on the London Stock Exchange was 13.3p. The difference between that amount and the amount reflected above relates to different timing of recognition of certain expenses in the audited consolidated financial statements, compared with the treatment in the figures published in the prospectus. Notes to the consolidated half-yearly financial statements (continued) 6 Financial investments 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Equity securities 106.8 96.3 106.8 Investment in collective investment schemes 820.5 713.6 737.0 Fixed income securities 43.0 9.7 28.6 Outstanding trades 8.2 12.0 12.8 Accrued investment income 0.4 0.4 0.2 Cash and cash equivalents 55.7 54.3 61.9 -------------------------------------------------------------------------------- 1,034.6 886.3 947.3 -------------------------------------------------------------------------------- Included above are shareholders' assets of: .02 .02 0.1 -------------------------------------------------------------------------------- 7 Financial liabilities under investment contracts 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- At 1 July 947.2 771.2 771.2 Deposits to investment contracts 96.0 87.6 196.1 Benefits paid (58.7) (56.7) (119.4) Investment contract benefits 49.9 84.0 99.3 -------------------------------------------------------------------------------- At the balance sheet date 1,034.4 886.1 947.2 -------------------------------------------------------------------------------- The value of these financial liabilities is determined by the fair value of the linked assets at the balance sheet date. 8 Share capital 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Authorised: 200,000,000 ordinary shares of 50p 100 100 100 -------------------------------------------------------------------------------- Issued and fully paid: 137,281,202 ordinary shares of 50p 68.6 68.6 68.6 -------------------------------------------------------------------------------- On 1 July 2005 the Company issued 68,640,600 shares of Â£1 each at par in consideration for the acquisition of the subsidiary companies referred to in note 9 below. The authorised and issued share capital was sub-divided into ordinary shares of 50p each by resolution passed on 13 September 2006. Notes to the consolidated half-yearly financial statements (continued) 9 Other reserves Other reserves comprise the merger reserve arising on the acquisition by the Company of its subsidiary companies on 1 July 2005. The merger reserve represents the difference between the par value of shares issued by the Company for the acquisition of the former subsidiaries of Polar Cap Limited, compared to the par value of the share capital and the share premium of those companies at the date of acquisition. 10 Notes to the consolidated cash-flow statement (i) Reconciliation of profit before tax to net cash inflow from operating activities Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Profit before taxation 10.6 8.3 17.7 Depreciation 0.2 0.2 0.4 Interest received (1.8) (1.1) (2.6) Foreign exchange differences (0.3) (0.1) (0.2) Increase in debtors (0.3) (4.7) (4.5) Increase in deferred origination costs (3.5) (4.8) (9.8) Increase in deferred income reserve 2.7 4.0 8.5 (Decrease) /increase in creditors (2.9) 0.6 4.9 -------------------------------------------------------------------------------- Net cash inflow from operating activities 4.7 2.4 14.4 -------------------------------------------------------------------------------- (ii) Movement in opening and closing portfolio investments Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Cash at bank At 1 July 57.9 40.8 40.8 Foreign exchange differences 0.3 0.1 0.2 Cash flow 6.2 3.6 16.9 -------------------------------------------------------------------------------- At the balance sheet date 64.4 44.5 57.9 -------------------------------------------------------------------------------- Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m --------------------------------------------------------------------------------- Shareholder investments At 1 July 0.1 0.2 0.2 Purchases 0.1 - 0.1 Sales (0.1) (0.1) (0.2) Changes to market values and currencies 0.1 - - --------------------------------------------------------------------------------- At the balance sheet date 0.2 0.1 0.1 --------------------------------------------------------------------------------- Notes to the consolidated half-yearly financial statements (continued) 11 Ultimate controlling party The ultimate controlling party of the Company is Dr L S Polonsky, a director of the Company. 12 Statutory financial statements The financial information contained within this report is unaudited and does not constitute statutory financial statements. The comparative figures for the year ended 30 June 2006 have been extracted from the Company's audited consolidated financial statements for the financial year then ended. Certain items have been restated to provide comparability with current period figures. The consolidated financial statements for the financial year ended 30 June 2006 were reported on by the Company's auditors without qualification of opinion. 13 Approval of half-yearly report The half-yearly report was approved by the Board of Directors on 28 March 2007. Independent review report to Hansard Global plc Introduction We have been instructed by the Company to review the financial information for the six months ended 31 December 2006 which comprises the consolidated balance sheet as at 31 December 2006 and the related consolidated half-yearly income statement, cash flow statement and reconciliation of movement in shareholders' funds for the six months then ended and related notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This other information comprises the summary results and highlights, the Chairman's statement, the financial commentary, the European Embedded Value information and the notes to the European Embedded Value information. Directors' responsibilities The half-yearly report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the half-yearly figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. This half-yearly report has been prepared in accordance with the basis set out in Note 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the disclosed accounting policies have been applied. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 December 2006. PricewaterhouseCoopers Douglas Isle of Man 28 March 2007 Notes: (a) The maintenance and integrity of the Hansard Global plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the half-yearly report since it was initially presented on the web site. (b) Legislation in the Isle of Man governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions. EUROPEAN EMBEDDED VALUE ('EEV') Information 1. Group EEV Balance Sheet 31 December 2006 31 December 2005 30 June 2006 Â£m Â£m Â£m Free Surplus 47.8 30.9 38.3 Required capital 5.1 4.9 5.0 Net worth 52.9 35.8 43.3 Value of in-force business 145.6 132.3 140.6 Cost of required capital (0.3) (0.3) (0.3) Reduction for operational risk (5.0) (5.0) (5.0) Value of future profits 140.3 127.0 135.3 Embedded Value 193.2 162.8 178.6 The EEV as at 31 December 2006 was Â£193.2 million, representing an increase of Â£14.6m or 8.2% over the value at 30 June 2006. Throughout the period under review new business has been written by the Group on profitable terms and has contributed to the growth in the Group's EEV. A significant proportion of new business premiums is denominated in currencies other than sterling (principally US dollars ('US$') and euros ('â‚¬')) and, as a result, the EEV is sensitive to movements in exchange rates. The aggregate fall in the foreign currency exchange rates against sterling over the last six months has reduced EEV by Â£3.4m at 31 December 2006. 2. New business profitability and margin Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- PVNBP 129.5 121.8 270.2 New Business Contribution 10.3 9.8 21.6 -------------------------------------------------------------------------------- New Business Margin 8.0% 8.0% 8.0% -------------------------------------------------------------------------------- New Business Margin is defined as NBC divided by PVNBP. The calculation of PVNBP is equal to total single premium sales in the period plus the discounted value of regular premiums expected to be received over the term of new regular premium policies, and is calculated at the point of sale. The NBC during the period is the present value of the expected stream of shareholder cash flows after tax from new business written in that period. The Group's NBC has been calculated using the same economic assumptions as those used to determine the EEV as at the start of the financial year and the same operating assumptions used to determine the EEV as at the end of the period under review (as described in the Notes to the EEV information), and is rolled forward to the end of the financial period. NBC is shown after allowing for the cost of required capital, calculated on the same basis as for in-force business. Throughout the period under review new business has been written by the Group on profitable terms and at new business margins consistent with prior periods. These factors have contributed to significant growth in the Group's EEV. The increased amounts of regular premium business sold during the period had the impact of increasing NBC by Â£0.3m but the combined impacts of changes in the level of the Risk Discount Rate and the impact of currency movements has been to reduce the NBC by Â£0.2m. The New Business Margin, in sterling terms, was 8.0% and maintains the level of margins earned for the periods ended 31 December 2005 and 30 June 2006. 3. EEV Return The EEV Return after tax provides a measure of the Group's performance over the period. It is defined as the change in EEV over a period, adjusted for any amounts such as dividends or capital movements released from or invested in the Group. The EEV Return in a particular period comprises the new business contribution and Return from existing business. The components of the return for the period under review are: Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- New business contribution 10.3 9.8 21.6 Expected return on existing business 3.2 2.6 5.2 Experience variances 1.2 1.9 4.0 Operating assumption / modelling changes (3.9) 0.0 (0.4) Expected return on net worth 1.0 0.6 1.2 Investment return variances 2.3 5.4 5.2 Economic assumption changes 0.5 0.0 (0.7) Movement in capital invested 0.0 0.0 0.0 EEV Return 14.6 20.3 36.1 The EEV Return for the period is Â£14.6 million, compared with Â£20.3m in the half year ended 31 December 2005. This represents a return of 8.2% on opening embedded value largely as a result of profitable new business. The expected return on existing business was Â£3.2m (Â£2.6m) and represents the time value of money. Experience variances include the amounts received from Polar Cap during the period and a number of smaller negative items relating to lapse and persistency experience that offset higher than expected fees and commissions. The strongly positive experience in the corresponding period relates primarily to lighter than anticipated mortality experience and margins earned from policyholder activity that were greater than expected in that period. Investment return variances totalled Â£2.3m (Â£5.4m) driven largely by better than expected returns on policyholders' funds of Â£4.9m and increases in marketing allowances totalling Â£1.2m. These gains were offset by a reduction of Â£3.4m relating to currency movements on funds denominated in US$ and â‚¬ as discussed above. During the period improvements were introduced to the modelling of single premium cases with a premium above Â£1m. This has led to a one-off negative adjustment to EEV of Â£3.9m that is reflected under operating assumptions. Shareholders are aware that no dividend has been paid during the period ended on 31 December 2006. The rate of growth of embedded value in the remainder of the financial year will be impacted by the interim dividend which will be paid on 4 May 2007. NOTES TO THE EUROPEAN EMBEDDED VALUE INFORMATION 1. BASIS OF PREPARATION The half-yearly supplementary information shows certain of the Group's results for the six months ended 31 December 2006 as measured on the European Embedded Value (EEV) basis. In preparing this EEV information, the Directors considered the EEV Principles published by the CFO Forum, a group comprising the Chief Financial Officers of certain major listed and unlisted European assurance companies, in May 2004 and extended by additional guidance published in October 2005. The EEV information has been prepared using a ''market consistent'' basis in respect of the economic assumptions, in line with the EEV Principles. Under the EEV methodology, profit is recognised as margins are released from policy related balances over the lifetime of each policy within the Group's in-force business. The total profit recognised over the lifetime of a policy under EEV methodology is the same as under the UK GAAP basis of reporting, but the timing of recognition is different. The Group's EEV calculations only consider claims by policyholders in the normal course of business under the terms of the policies issued. They also assume the continuation of current policy terms and conditions, and the Group's interpretation thereof. 2. METHODOLOGY AND ASSUMPTIONS The methodology used to derive the European Embedded Values at 31 December 2006 and 31 December 2005 is consistent with the methodology used in relation to the consolidated audited financial statements in respect of the year ended 30 June 2006, and in relation to the EEV information published in the Company's prospectus document. Apart from the assumptions set out below, there have been no changes to assumptions from those used in the documents referred to above. The principal economic assumptions used in the EEV calculations are based on risk free rates, being the market yields of government backed fixed interest securities of comparable term to the policy cash flows at the end of each reporting period. A proportion of the Group's income and expenditure is contracted in currencies other than sterling, in particular US$ and â‚¬. In practice the risk free rate used in the valuation is based on a weighted average of the yields on fixed interest securities issued within the UK, US and Europe. Any components of the EEV and other balance sheet items denominated in foreign currencies have been translated to sterling using the appropriate closing exchange rate. The closing exchange rates used by the Group for the conversion of EEV components and other balance sheet items from US$ and â‚¬ to sterling were US$1.72 and â‚¬1.46, respectively at 31 December 2005 and US$1.96 and â‚¬1.48, respectively, at 31 December 2006. The risk discount rate used to value future expected shareholder cash flows is assumed to be the risk free rate plus a margin for any risks that are not allowed for elsewhere in the valuation. Since non-market risk is allowed for separately, the risk margin is nil. All investments are assumed to provide a return equal to the same risk free rate. Principal economic and tax assumptions The principal economic assumptions used are set out below: Half year ended Year ended 31 December 31 December 30 June 2006 2005 2006 % p.a % p.a % p.a -------------------------------------------------------------------------------- Weighted average pre-tax investment return on fixed interest securities 4.4% 4.2% 4.8% Risk discount rate 4.4% 4.2% 4.8% Future expense inflation 5% 5% 5% Current tax legislation and rates have been assumed to continue unaltered, except where changes in future tax rates have been announced. A zero rate of corporation tax in the Isle of Man and a 12.5 per cent. rate in Ireland have been assumed. 3. SENSITIVITIES Sensitivities provide an indication of the impact of changes in particular assumptions on the EEV at 31 December 2006 and the New Business Contribution for the period then ended. The impact on both measures of various sensitivities is shown below. The sensitivities shown should not be considered as exhaustive, nor should they be regarded as representing the boundaries of possible outcomes or variations. The combined effect of two sensitivities may not equal the sum of the separate parts. In each sensitivity calculation, all other assumptions remain unchanged except where they are directly affected by the revised economic conditions. No management actions or changes in policyholder behaviour are modelled in response to the changed assumption. Impact on EEV (Â£m) New business Contribution (Â£m) As reported at 31 December 2006 193.2 10.3 1 per cent. increase in risk discount rate (6.7) (0.7) 1 per cent. decrease in risk discount rate 7.3 0.8 1 per cent. increase in interest rates Not material Not material 1 per cent. increase in investment return 5.3 0.4 1 per cent. decrease in investment return (5.0) (0.4) 10 per cent. increase in the value of equities and property 8.5 Nil 10 per cent. decrease in the value of equities and property (8.6) Nil 10 per cent. increase in sterling exchange rates (11.3) (0.8) 10 per cent. decrease in sterling exchange rates 11.2 0.8 10 per cent. increase in expenses (3.3) (0.3) 10 per cent. decrease in expenses 3.2 0.3 10 per cent. increase in maintenance expenses (2.8) (0.2) 10 per cent. decrease in maintenance expenses 2.7 0.2 10 per cent. increase in lapse rates (3.6) (0.4) 10 per cent. decrease in lapse rates 4.0 0.4 10 per cent. increase in mortality rates (0.8) (0.1) 10 per cent. decrease in mortality rates 0.7 0.1 10 per cent. increase in marketing allowances 2.5 0.1 10 per cent. decrease in marketing allowances (2.6) (0.1) The sensitivity analysis indicates that the Group's EEV and NBC are relatively insensitive to a number of external factors. However, the Group is exposed, through the impact on the level of future fund-based management income, to movements in equity, property and currency values. Further, it indicates the exposure to movements in the expense base and lapse rates, with the latter having a particular effect on the ability of the Group to sustain levels of policy- and fund-based income. The Directors Hansard Global plc Harbour Court Lord Street Box 192 DOUGLAS Isle of Man, IM99 1QL 28 March 2007 Dear Sirs Review of the European Embedded Value ('EEV') of Hansard Global plc for the six months ended 31 December 2006. Our role Deloitte & Touche LLP has been engaged by Hansard Global plc to act as Reviewing Actuaries in connection with results on an EEV basis published in Hansard Global plc's half-yearly results for the six months ended 31 December 2006. Responsibilities The EEV Information (and the methodology and assumptions underlying it) is the sole responsibility of the Directors of Hansard Global plc. It has been prepared by the Directors of Hansard Global plc, and the calculations underlying the EEV Statements have been performed by Hansard Global plc. Our review was conducted in accordance with generally accepted actuarial practices and processes. It comprised a combination of such reasonableness checks, analytical reviews and checks of clerical accuracy as we considered necessary to provide reasonable assurance that the EEV Information has been compiled free of material error. 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 In our opinion, on the basis of our review: â€¢ the methodology and assumptions used to prepare the EEV Information comply in all material respects with the European Embedded Values Principles set out by the CFO Forum in May 2004, and additional guidance released in October 2005 (the 'CFO Forum Principles'); â€¢ the EEV Information has been compiled on the basis of the methodology and assumptions chosen by the Directors of Hansard Global plc, and complies in all material respects with the CFO Forum Principles. Reliances and Limitations A half-yearly review excludes procedures such as tests of controls and verification of models and historical information relevant to assumptions about future cash flows. It is substantially less in scope than a full review and therefore provides a lower level of assurance. 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. We have relied on the reported mathematical reserves, the adequacy of those reserves, and the methods and assumptions used to determine them. We have assumed that all provisions made in the UK GAAP statements for any other liabilities (whether actual, contingent or potential) of whatever nature, are appropriate. We have 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. We have relied on the terms of the contracts, as they have been reported to us, being enforceable. We have not attempted to predict the impact of potential future changes in the competitive forces in markets on the assumptions. Yours faithfully Deloitte & Touche LLP Deloitte & Touche LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at Stonecutter Court, 1 Stonecutter street, London EC4A 4TR. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu ('DTT'), a Swiss Verein whose member firms are separate and independent legal entities. Neither DTT nor any of its member firms has any liability for each other's acts or omissions. Services are provided by member firms or their subsidiaries and not by DTT. Contacts and Advisors Registered Office Media Enquiries Harbour Court Bell Pottinger Corporate & Financial Lord Street 6th Floor, Holborn Gate Box 192 330 High Holborn Douglas London Isle of Man WC1V 7QD IM99 1QL Tel: +44 (0)1624 688000 Tel: +44 (0)20 7861 3881 Fax: +44 (0)1624 688008 Fax: +44 (0)20 7861 3233 www.hansard.com Chairman & Chief Executive Broker Dr L S Polonsky Panmure Gordon (UK) Limited Dr.polonsky@hansard.com Moorgate Hall 155 Moorgate London EC2M 6XB Tel. +44 (0)20 7459 3600 Fax. +44 (0)20 7459 3609 Financial Advisor Lazard & Co. Limited 50 Stratton Street London W1J 8LL Tel. +44 (0)20 7187 2000 Auditor Registrar PricewaterhouseCoopers Chamberlain Fund Services Limited Sixty Circular Road 3rd Floor Exchange House Douglas 54-62 Athol Street Isle of Man Douglas IM1 1SA Isle of Man Tel: +44 (0)1624 689689 IM1 1JD Fax: +44 (0)1624 689690 Tel: + 44 (0)1624 641560 Fax: +44 (0)1624 641561 Reviewing Actuaries UK Transfer Agent Deloitte & Touche LLP Capita IRG Limited Stonecutter Court The Registry 1 Stonecutter Street 34 Beckenham Road London Beckenham EC4A 4TR Kent Tel: +44 (0)20 7936 3000 BR3 4TU Fax: +44 (0)20 7583 1198 Tel: +44 (0)20 8639 2236 Fax: +44 (0)20 8639 2279 Financial Calendar Ex-dividend date for interim dividend 4 April 2007 Record date for interim dividend 10 April 2007 Payment date for interim dividend 4 May 2007 Announcement of 3rd quarter new business 30 April 2007 figures Announcement of 4th quarter new business 30 July 2007 figures Preliminary announcement of results 27 September 2007 This information is provided by RNS The company news service from the London Stock Exchange

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