New business results for year ending 30 June 2017

RNS Number : 2563M

Hansard Global plc

27 July 2017

 

27 July 2017

Hansard Global plc

New business results for the year ended 30 June 2017

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its new business results for the financial year ended 30 June 2017 ("FY 2017").

Summary

·	We have continued to deliver significantly increased new business levels compared to the prior financial year.
·	New business for Hansard International Limited ("Hansard International") for Q4 2017 was £34.5m PVNBP ("Present Value of New Business Premiums"), 5.8% higher than Q4 2016.
·	New business for the full year to 30 June 2017 was £148.3m PVNBP, 24.3% higher than FY 2016.
·	We continue to see the benefits of our increased marketing and investment in developing broker relationships.  In particular, in Q4 2017, our Rest of World and Latin America regions grew substantially compared to Q4 2016.
·	Assets under Administration of £1 billion have increased marginally by £8m since the end of the last quarter and by £126m since the start of the financial year.
·	The Group traded profitably during the period and remains strongly capitalized

Gordon Marr, Group Chief Executive Officer, commented:

"Our annual results show the continued delivery of strong levels of new business growth across all the regions in which we operate. We expect to see this continuing into the current financial year."

For further information:

Gordon Marr, Group Chief Executive Officer Tim Davies, Chief Financial Officer	[phone]
Bell Pottinger Daniel de Belder Duncan Mayall	[phone]

Hansard Global plc

NEW BUSINESS RESULTS FOR THE YEAR ENDED 30 JUNE 2017

OVERVIEW

The Group continues to focus on the distribution of regular and single premium products in a range of jurisdictions around the world, achieving well diversified new business growth.

In Present Value of New Business Premiums ("PVNBP") terms, levels of new business in Q4 2017 were 5.8% ahead of the equivalent prior year quarter (Q4 2016) and 24.3% ahead for the full year.

Q4 2017 and FY 2017 PVNBP figures are net of year-end persistency assumption changes applicable to regular premiums which reduced PVNBP by £6.1m.  Excluding the assumption changes, Q4 2017 new business was up 24.5% on Q4 2016 and FY 2017 new business was up 29.4% on FY 2016.

Expatriate broker distribution continues to perform strongly and we have benefited from the groundwork we have done, revitalising old relationships and developing new ones.  Latin America in particular has continued its strong growth as new relationships have developed. 

Middle East & Africa experienced a dip in Q4 2017 as one of our larger broker's experienced financial difficulties and ceased writing new business and a number of other key brokers didn't repeat the large volumes achieved in Q4 2016.  PVNBP for the region was also impacted by the persistency assumption change noted above.  Growth on an annual basis remained up 10% and our outlook for that region remains positive.  We are seeing significant levels of pipeline activity through our previously announced alliance with Union Insurance, with new terms of business signed with all the main locally-licensed insurance brokers.

Q4 2017 saw a significant upswing in single premiums driven primarily by the continued success of our Universal Personal Portfolio product, especially for pensions business in the Rest of World region.  We also experienced success with a new sales campaign for our Capital Builder II product, particularly through our license in Labuan, Malaysia.

New Business Flows

New business flows for Hansard International for FY 2017 are summarised as follows:

	Three months ended				Year ended
	30 June				30 June
	2017	2016	%		2017	2016	%
Basis	£m	£m	change		£m	£m	change
Present Value of New Business Premiums	34.5	32.6	5.8 %		148.3	119.3	24.3 %
Annualised Premium Equivalent	5.7	5.6	1.8 %		23.2	18.7	24.1 %

Present Value of New Business Premiums ("PVNBP")

New business flows for Hansard International on the basis of PVNBP are broken down as follows:

	Three months ended				Year ended
	30 June				30 June
	2017	2016	%		2017	2016	%
PVNBP by product type	£m	£m	change		£m	£m	change
Regular premium	12.4	20.5	(39.5)%		75.3	65.6	14.8 %
Single premium	22.1	12.1	82.6 %		73.0	53.7	35.9 %
Total	34.5	32.6	5.8 %		148.3	119.3	24.3 %

	Three months ended				Year ended
	30 June				30 June
	2017	2016	% change		2017	2016	%
PVNBP by geographical area	£m	£m			£m	£m	change
Rest of World	15.3	6.8	125.0 %		53.4	44.6	19.7 %
Middle East and Africa	5.7	15.5	(63.2)%		40.6	36.8	10.3 %
Far East	9.2	7.8	17.9 %		35.4	25.7	37.7 %
Latin America	4.3	2.5	72.0 %		18.9	12.2	54.9 %
Total	34.5	32.6	5.8 %		148.3	119.3	24.3 %

The value of new business premiums is influenced, among other factors, by the Group's expectations of future premium collections on regular premium contracts issued during the year. Where these expectations at year end are different from the assumptions used in the calculation in prior quarters, the assumptions are amended in Q4 to better report the cumulative value of new business. As has been the case in previous years, this adjustment is reflected in the final quarter's reporting.

The impact of assumption changes (predominantly related to persistency, where certain retention initiatives can no longer be demonstrated to yield expected improvements) in the current year has been to decrease PVNBP for the year by £6.1m or 4%, compared with the assumptions used in the previous year.  Before that adjustment, cumulative new business flows for FY 2017 would have been reported as £154.4m and new business in Q4 2017 would have been reported as £40.6m.  The effect of assumption changes in FY 2016 was not material.

·    New business margins

New business margins (calculated on a PVNBP basis) are sensitive to sales levels and product mix (regular premium products typically having a higher margin).  During FY 2017, we experienced higher new business levels than FY 2016 which is positive for our margin because much of our cost base is fixed.  However this has been offset by an increasing percentage of single premium business as a proportion of PVNBP and increased volumes of our Vantage Platinum product which has a lower margin than its predecessor.  The margin has also reduced slightly due to the assumption change referenced in the section above.  Overall we expect our new business margin to be slightly below the 1.3% margin from our half year results when we release our full year results on 28 September 2017. 

Assets under Administration ("AUA")

The composition and value of AuA is based upon the assets selected by or on behalf of contract holders to meet their savings and investment needs.  Reflecting the wide geographical spread of the Group's customer base, the majority of premium contributions and of AuA are designated in currencies other than sterling.

The total of such assets is affected by the level of new premium contributions received from new and existing policy contracts, the amount of assets withdrawn by contract holders (including those withdrawn from Hansard Europe, which closed to new business in 2013), charges and the effect of investment market and currency movements. These factors ultimately affect the level of fund-based income earned by the Group.

During Q4 2017, AuA grew marginally by £8m as market and currency effects were largely neutral.  Over the course of the full financial year, £126m of AuA was added, driven primarily by significant stock market and currency gains earlier in the year.

	Three months ended			Year ended
	30 June			30 June
	2017	2016		2017	2016
	£m	£m		£m	£m
Deposits to investment contracts - regular premiums	22.6	18.3		84.5	71.8
Deposits to investment contracts - single premiums	18.0	12.1		66.4	52.0
Withdrawals from contracts and charges	(38.8)	(37.9)		(159.2)	(168.2)
Effect of market and currency movements	6.0	54.4		134.5	60.8
Increase in period	7.8	46.9		126.2	16.4
Opening balance	1,041.9	876.6		923.5	907.1
Assets under Administration at 30 June	1,049.7	923.5		1,049.7	923.5

The movement in AuA is split as follows between Hansard International and Hansard Europe:

	Three months ended			Year ended
	30 June			30 June
	2017	2016		2017	2016
	£m	£m		£m	£m
Hansard International	8.0	48.6		129.4	48.8
Hansard Europe	(0.2)	(1.7)		(3.2)	(32.4)
Increase (decrease) in period	7.8	46.9		126.2	16.4

RESULTS FOR YEAR ENDED 30 JUNE 2017

The Group has traded profitably during the period and generated positive net cash flows before dividends.  Full trading results for the year are scheduled to be announced on 28 September 2017.  The results for the year will take account of the following significant items:

i)	Further adverse development on the provision for bad debts reported in our financial results for the six months ended 31 December 2016.  The provision relates to amounts receivable from a broker in our Middle East & Africa region which has found itself in financial difficulty.  We currently estimate that we will need to strengthen this provision by a further £0.4m to £1.1m. This represents approximately 80% of all balances due from this broker.  We have agreed what we believe is an appropriate monthly repayment plan with the broker, but due to the length of that repayment period and the current level of liquid net assets available to the broker, we have taken a prudent view of aggregate ultimate recovery.
ii)	Increased litigation defense activity relating to Hansard Europe, resulting in increased legal and associated fees of £0.4m.
iii)	Brexit-driven foreign exchange gains earned in Q4 of FY 2016 have not been repeated in FY 2017 which we estimate will result in investment income for FY 2017 being £1.1m lower than FY 2016.

Litigation

The Group continues to carefully manage its litigation relating to the legacy operations of Hansard Europe.  There has been no significant change to our exposure other than for movements in foreign exchange rates.

Outlook

We look forward to a continuing positive trend in each of the regions in which we operate. Our previously announced alliance with Union Insurance is driving significant levels of activity in the UAE.   New terms of business have been signed with all the main locally-licensed insurance brokers and we expect to see pipeline activity translate into issued business in the coming period.

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 scalable.
·	The principal geographic markets in which the Group currently services contract holders and financial advisors are the Middle East, the Far East and Latin America, in the case of Hansard International Limited, and Western Europe in the case of Hansard Europe Designated Activity Company, the Group's two life assurance companies. Hansard Europe Designated Activity Company 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 scalability 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 Designated Activity Company 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 Limited and Hansard Europe Designated Activity Company.

Forward-looking statements:

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

This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation No 596/2014

 

END

 

 

FR MMGZNVNDGNZG