Results for the year ended 30 June 2015

RNS Number : 8833Z

Hansard Global plc

23 September 2015

Hansard Global plc

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its results for the year ended 30 June 2015 ("FY 2015").

Summary

	FY 2015	FY 2014
New business sales - PVNBP	£60.6m	£83.0m
Operating cash surplus IFRS underlying profit after tax	£24.3m £12.0m	£37.8m £14.7m
IFRS profit after tax	£14.9m	£8.3m
EEV operating loss after tax	(£6.3m)	(£6.6m)
Recommended final dividend per share*	5.25p	5.00p
IFRS earnings per share	10.9p	6.0p

As at	30 June	30 June
	2015	2014
Assets under Administration	£907m	£944m
European Embedded Value	£195m	£204m

* subject to approval at the AGM

Strategy IMPLEMENTATION

Much has been achieved in rolling-out our revised strategy. We have refreshed our entire product range, making it more competitive, and launched it over the course of the year to our distribution networks. We have established many new relationships with Independent Financial Advisors ("IFAs") who we anticipate will develop and build sustainable business levels for the future. We have made changes to our top executive team and its structure. We have continued to invest in and improve our market leading technology, Hansard OnLine.

We are confident that our newly-introduced products are well-tailored to the requirements of our target clients and believe that these products, together with a strengthened sales team and an increasing pool of distribution relationships will provide a platform for sustainable diversified new business flows going forward.

TRADING RESULTS

The Group has traded profitably during FY 2015, generated strong positive cash flows and, in line with guidance, paid a progressive dividend.

The IFRS profit after tax for the year was £14.9m (2013: £8.3m). These numbers are significantly affected by a number of exceptional items in FY 2015 and FY 2014.

Prior to exceptional items, the underlying IFRS profit was £12.0m compared with £14.7m in FY 2014. Lower new business and the continued run-off of Hansard Europe have resulted in lower levels of fees and commissions being earned. These were £56.3m for FY 2015 compared to £59.5m for FY 2014.

The most significant exceptional item affecting profit in FY 2015 was the full and final settlement with HMRC for the weaknesses in issuing Chargeable Events Certificates (as previously announced on 5 June 2015) at a level significantly below that provided for in FY 2014. This resulted in a net benefit, after all professional fees, of £3.0m in FY 2015 (charge of £5.0m in FY 2014).

A European Embedded Value ("EEV") operating loss of £6.3m was incurred in the year (FY 2014: loss of £6.6m). This result is driven largely by reduced new business levels and a smaller overall book of business to cover the Group's expense base. Positive investment return experience and economic assumptions contributed £9.2m to an overall EEV profit of £2.9m (FY 2014: loss of £10.7m).

The Group Embedded Value of £195m has reduced from £204m last year primarily as a result of dividends paid to shareholders of £11.7m.

NEW BUSINESS

On a full year basis the suspension of activities by a large distributor in Japan during FY 2014 continues to account for the year-on-year reduction in business flows.

However we have started to see business levels increase during Q4 of FY 2015 with new business streams in North Asia, the Middle East and Africa. This together with our ongoing proactive marketing activity provides us with a springboard for future growth.

policyholder complaints AND LITIGATION

The Group continues to manage carefully its litigation and other exposures in order to protect regulatory capital holdings and reduce uncertainty. While a number of matters have been settled over the past two years, there remains a number of large, complex cases to which Hansard Europe is a party (generally in conjunction with other defendants).

A new writ was received in June 2015, and added to in July, pertaining to a group of Belgian contract holders, which total approximately £4.5m on a net exposure basis. In aggregate, there are writs of approximately £9.4m outstanding against the Group at the date of this report (30 June 2014: £5.2m).

These amounts are considered to be contingent liabilities in the Group's financial statements. The Group believes it has strong defences and will robustly defend its positions, other than in certain limited circumstances where early settlement may be in the interests of the Group and its shareholders.

DIVIDENDS

The Board has proposed a final dividend of 5.25p per share (2014: 5.0p) which, if approved by the shareholders, represents an increased total dividend of 8.75p (2014: 8.4p) per share in respect of the financial year.

CURRENT TRADING

We are seeing encouraging growth in Q1 FY 2016 compared to Q1 FY 2015 across most of our regions as new IFAs come on stream. This growth continues the encouraging trend established in Q4 FY 2015.

INTERIM MANAGEMENT STATEMENT

The first Interim Management Statement in respect of the year ending 30 June 2016 is expected to be published on 13 November 2015.

Gordon Marr, Group Chief Executive Officer, commented:

"With the strategic enhancements to our product range and distribution networks now complete, we have started to see signs of recovery after a challenging two years. Q4 of FY 2015 saw an encouraging improvement in new sales and we see this continuing into FY 2016. We are continuing to develop our presence in targeted locations which we believe offer significant opportunities in the future. The Group is profitable, well capitalised and poised to take advantage of the significant new business opportunities that we have identified."

For further information:

Hansard Global plc	+44 (0) 1624 688000
Gordon Marr, Group Chief Executive Officer Tim Davies, 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 within this document on Hansard International Limited alone. 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

Strategy

Last year, I explained that the Group had undertaken a thorough strategic review to position itself for a successful future in a competitive and fast moving global investment market. We saw opportunity then and we continue to see that opportunity now.

Much has been achieved in rolling-out our revised strategy. We have refreshed our entire product range, making it more competitive, and launched it over the course of the year to our distribution networks. We have worked hard to establish many new relationships with Independent Financial Advisors ("IFAs") who we anticipate will develop and build sustainable business levels for the future. We have made changes to our top executive team and its structure. We have continued to invest in and improve our market leading technology, Hansard OnLine.

I said last year that the full benefits of what we're implementing will take several years to achieve and this remains the case. It takes time to attract and develop new IFAs in new countries and to secure the necessary regulatory licenses to be able to pursue the opportunities identified. We are confident that we have a clear view of what's required to deliver successful business levels and are starting to see increased levels of activity come through.

New business

New business during the year has been below our expectations and the level needed to cover our sales costs. Over the past two years, our two largest markets have been effectively closed by changing regulatory views. This has required us to open new markets and apply for new licences. Such fundamental change takes time, but we have started to see business levels increase during Q4 these levels have been sustained in Q1 2016.

Financial performance

The Group remains profitable and generated strong positive cash flows from its in-force business. Cash earned is allocated in a balanced manner between new business acquisition, long term strategic initiatives and dividends. During the year we continued to invest in our distribution network and in particular in pursuing opportunities to secure additional regulatory licenses in target jurisdictions.

During Q4 of our financial year, we made a full and final settlement with HMRC for the weaknesses in the Group's procedures in issuing Chargeable Events Certificates ("CECs") required by the UK tax authorities. The amount paid of £1.4m was significantly less than the original provision made of £5.0m. After taking into account advisory and professional fees, we have recorded a credit of £3.0m to profit before taxation under International Financial Reporting Standards ("IFRS"). Consequently the Group's IFRS profit has increased to £14.9m after tax (2014: £8.3m).

Our European Embedded Value ("EEV") operating loss after tax of £6.3m (2014: loss of £6.6m) reflects the fact that insufficient sales income is being generated to cover the fixed and variable costs of writing such business. The Board expect this position to be reversed over the coming financial year through additional sales volumes and tight management of costs.

The EEV of the Group, following the payment of dividends of £11.7m in the year is £195.0m (2014: £203.8m).

Dividends

In view of the Board's continuing confidence in the long-term future of the Group, it has resolved to pay an increased final dividend of 5.25p per share (2014: 5.0p). The dividend is subject to approval at the Annual General Meeting. If approved, this will represent total dividends for the financial year of 8.75p per share which is in line with our previous commitment to investors. The final dividend will be paid on 19 November 2015.

Capitalisation and solvency

The Group is well capitalised to meet the requirements of regulators, policyholders, intermediaries and other stakeholders. Aggregate minimum solvency margins continue to be covered 14 times by our capital resources. We have maintained our prudent investment policy for shareholder assets which minimises market risk and has provided a stable and resilient solvency position over recent years.

Concluding remarks

To secure the continued financial success of the Group, significantly greater sales levels are required in 2016 and beyond. This will require at least one new licence to be obtained. Given the groundwork undertaken and the initial positive signs of success, we are confident we are confident that the Group is well placed to deliver this increase in sales.

Philip Gregory

Chairman

22 September 2015

GROUP CHIEF EXECUTIVE OFFICER'S OVERVIEW

The past financial year has seen the Group continue the execution of our strategic plan. We have completed the refresh of our product range and pricing and have built many new distributor relationships as we seek to replace and diversify the significant distribution channel lost in Asia during the previous financial year. We have a business model that is highly scaleable and we expect to leverage upon that as we rebuild business levels back to a more sustainable level for the long term. We are developing our presence in targeted locations where we believe that new licences could offer significant opportunities in the future. The Group remains profitable and well capitalised to take advantage of these opportunities.

STRATEGY DEVELOPMENT

The Group's strategy is to direct its efforts "to be the preferred choice of distributors when recommending international savings and investment products to their clients".

Now that we have completed the refresh of our product range and pricing which aims to provide enhanced value for money for those customers looking to save and invest for the long term, our key priority is to leverage our distribution team, infrastructure and technology to drive greater levels of new business.

This has been reflected in encouraging new business levels in Q4 of the past financial year and we expect to see this trend continue and grow during 2016. We believe the key to significantly greater levels of new business lies in securing additional licenses to operate in a number of targeted locations. While the time frames for receiving regulatory approvals for these initiatives grow increasingly longer as many countries around the globe implement ever expanding regulations, we are confident of launching in at least one such jurisdiction during the second half of the coming financial year.

Behind the scenes we have continued to do a lot of positive things - making our back office more efficient and continuously looking to improve our customer service and turnaround times. We have also continued to invest in our governance, risk and compliance function with a number of additional appointments made during the year.

The business remains highly cash generative and we continue to reflect this in the dividend that we pay to our shareholders.

RESULTS FOR THE YEAR UNDER REVIEW

As referenced in previous years, we believe that the following areas are the fundamental factors for the success of the Group.

1. Sourcing significant flows of regular premium new business flows from diversified target markets;

2. Managing our exposure to business risk;

3. Leveraging Hansard OnLine developments and;

4. Generating positive cash flows to fund a progressive dividend stream.

I would draw your attention to the following. Additional information is contained in the Business and Financial Review.

1. New Business distribution

Following the closure of Hansard Europe Limited to new business with effect from 30 June 2013, new business performance commentary within this document will relate to Hansard International Limited alone, except where indicated.

The level of new business we earned during the financial year ("FY") of £60.6m (using the basis of Present Value of New Business Premiums ("PVNBP") metric) is some 27% below the £83.0m from FY 2014. This reduction was driven primarily by the fact that a significant introducer network in Japan suspended its new business activities in October 2013. This network introduced £10m PVNBP to us in FY 2014.

We have experienced positive growth in some areas: the Middle East and Africa for example has shown encouraging growth with PVNBP increasing from £3.4m in FY 2014 to £7.5m in FY 2015.

Under the guidance of our Chief Distribution Officer, we have initiatives planned for all regions during FY 2016 to increase sales and the Board is committed to maintaining the necessary development cost to do so. It is our view that to make cuts in this area at this point in time would be counterproductive and not allow for the fruits of the hard work performed over the past two years to be realised. We are of course very conscious of overall costs and have sought to contain or reduce costs in other areas of the business through operational efficiencies and automation.

2. Operational, Business and Financial Risks

Our business model involves the acceptance of a number of risks. We maintain an enterprise risk management framework to identify, assess, manage, monitor and control current and emerging risks. However the system of internal control can only provide reasonable and not absolute assurance against material misstatement or loss. The Group's internal control and risk management processes have operated satisfactorily throughout the year. There are a number of areas outlined below which are of significance for understanding the results and operating environment of the Group.

2.1 Resolution of Chargeable Event Certificates issue

Last year, we announced that we had discovered long-standing breaches in the processing and issue of Chargeable Events Certificates ("CECs") required by Her Majesty's Revenue and Customs ("HMRC") in relation to a limited number of contracts held by UK residents. We also confirmed that controls had since been enhanced and external advisors brought in to assist us with resolving the matter and in preventing a recurrence.

We are pleased to have reached a positive conclusion to this matter, having made a full and final settlement with HMRC of £1.4m on an estimate of tax lost basis. This was significantly below our initial prudent estimate of £5m made last year which, after taking into account professional advisory costs, has resulted in a write back to our profit and loss account of £3.0m.

2.2 Operating Model for Hansard Europe

Last year, we advised that plans to protect the interests of clients and other stakeholders of Hansard Europe and to achieve an orderly run-off have been implemented in full. We have continued to identify areas where we can make the run-off activities more efficient and cost effective. A number of additional activities have been outsourced and consolidated to Group's head office in the Isle of Man.

Hansard Europe remains strongly capitalised although the conditions agreed with the Central Bank of Ireland following approval of the run-off plans will defer dividend distributions from that company for the foreseeable future.

2.3 Complaints and potential litigation

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 such claims have no merit. 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 some 5 years or more 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. As a result of further writs issued during the year and in the period to the date of this report, writs outstanding against Hansard Europe currently total €13.3m or approximately £9.4m. The primary driver of the increase is a claim for €6.3m (£4.5m) from a group of Belgian policyholders which challenges the right of Hansard Europe to have operated under the European Union's principle of Free Movement of Services. We believe this to be highly speculative and will robustly defend against it.

In general, each case is considered on its merits and where appropriate the Board will consider circumstances where it is in our best interests to reach a resolution with regard to certain of those claims (without any admission of liability). This approach can help avoid the expense and distraction of extended litigation and to allow management to focus fully on the execution of our strategy. Settlements typically are only a fraction of the original amounts claimed and as a result it is not possible to put a reliable estimate of the ultimate liability of such writs. Such writs continue to be treated as contingent liabilities within the Annual Report and Accounts.

3. Leverage Hansard OnLine

Hansard OnLine is a powerful sales and business administration tool that is used by IFAs and clients the world over. It is an integral part of the Group's operating model and allow us to better service IFAs and clients, embed process efficiencies and be flexible in operational deployment.

Hansard OnLine provides IFAs and clients with a reliable online self-service model which they can access 24/7 from anywhere around the world with an internet connection. It provides an important foundation to our strategic goal of delivery of excellent customer service.

We have continued to invest in the system over the last year, making it even easier to use and access, keeping it up-to-date with mobile technologies and extending its functionality and reporting capabilities.

Additional information concerning developments in Hansard OnLine is set out in the Business and Financial Review.

4. Positive operating cash flows and progressive dividend stream

The Group generates positive operating cash flows to fund investment in new business and support a progressive dividend payment stream. The Board remains committed to a progressive dividend policy.

Although new business flows (and therefore the investment in new business) are less than anticipated for the reasons discussed earlier in this report, the Business and Financial Review reflects that the Group generated a net £16.7m in cash flows to support dividend payments in respect of FY 2015 totalling £11.7m (2014: a net £21.8m to support dividend payments totalling £11.2m).

An interim dividend of 3.5p per share was declared on 25 February 2015. A final dividend of [5.3p per share] has been proposed by the Board and will be considered at the Annual General Meeting on 12 November 2015. When the final dividend is paid at this level, these dividends will [total 8.8p] per share in respect of this financial year, in line with our strategic commitment.

FINANCIAL PERFORMANCE

Results for the year

Financial performance is summarised as follows. A detailed review of performance is set out in the Business and Financial Review that follows this report.

	FY 2015	FY 2014
	£m	£m
New business sales - compensation credit	5.5	9.3
Underlying IFRS profit after tax	12.0	14.7
IFRS profit after tax	14.9	8.3
EEV operating loss after tax	(6.3)	(6.6)
EEV at 30 June	195.0	203.8

IFRS results

Fees and commissions were £56.3m for FY 2015, down 5.4% or £3.2m from FY 2014. The decreased level of fee income is largely as a result of lower business volumes in recent years but also due to the strengthening of sterling against US dollars during FY 2015.

Administrative and other expenses were £22.8m for FY 2015, down from £30.2m in FY 2014. After eliminating the effect caused by the CEC provision in the 2015 and 2014 results, expenses were broadly consistent year on year. This is also reflective of the headcount of the Group which averaged 205 for FY 2015 compared to 204 in FY 2014.

The write-back of the CEC provision is also the key movement in IFRS profit after tax compared to the previous year, as the Group earned £14.9m profit after tax (2014: £8.3m). After eliminating exceptional items, the underlying profit after tax was £12.0m compared to £14.7m in FY 2014. This reduction is primarily driven by the lower fees and commissions of £3.2m noted above.

EEV results

During the year, the Group has continued to invest in the development and implementation of its strategic objectives, while at the same time managing the expenses of supporting its existing business. Cash flows have remained strongly positive.

With distribution levels being below the necessary level for new business income to cover new business expenses, New Business Contribution is a negative £3.7m for the year (2014: positive £3.3m). Other positive variances and experience has however offset this loss and produced an overall EEV Profit after Tax of £2.9m (2014: loss of £10.7m).

The key drivers of these variances were:

	FY 2015	FY 2014
	£m	£m
Investment performance of policyholder funds	3.9	9.7
One-off items including the impact of the CEC provision	1.4	(4.5)
Improved premium persistency	2.4	0.8
Change in yields	3.8	3.5
Strengthening of expense assumptions to reflect a lower amount of policies
to spread expenses over	(11.2)	2.2

Following the payment of dividends of £11.7m (2014: £11.2m), the Group's EEV is £195.0m at 30 June 2015 (30 June 2014: £203.8m).

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 are covered 14 times (2014: 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. This prudent investment policy for shareholder assets minimises market risk and has provided a stable and resilient solvency position over recent years.

We recognise that Hansard Europe's capital surplus is not available for distribution in the foreseeable future. It is therefore included within the total of Required Capital of £27.0m in the analysis of the Group's EEV balance sheet at 30 June 2015. Allowing for this, the EEV balance sheet reflects that the Group has a free surplus of £36.5m (2014: £28.3m) available for investment and distribution.

our people

The Group has a dedicated dynamic workforce across a number of locations around the world. During the year, there have been substantial changes to how we organise our administration and customer service teams which has delivered substantial efficiencies and improved further our top-class customer service and turnaround times. We have also refreshed the composition of our top management team and I'm confident that we are well positioned to meet the strategic challenges and deliver a successful future for the Group. I thank all of our employees for their continued commitment to Hansard.

G S Marr

Group Chief Executive Officer

22 September 2015

BUSINESS AND FINANCIAL REVIEW

Our Business Model and Strategy

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 in excess of $1 billion for over 500 financial advisor businesses with over 40,000 client accounts in as many as 155 countries.

Business

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.

Strategy

Our aim is to be the 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.

Our vision encompasses every part of our business. Beneath this, we have identified a range of strategic objectives to meet this target and continue to work towards them. Through careful execution of our plans in each of the following areas we intend to add increased scale to the business, on a diversified basis, at acceptable levels of risk and profitability.

· More long-term relationships with distributors;

· Better value for clients;

· A more visible profile in the market;

· Excellent client service;

· A motivated and engaged workforce;

· Market-leading OnLine systems and;

· Progressive dividend policy.

Products

The Group's products are unit-linked regular or single premium life assurance and investment contracts which offer access to a wide range of investment assets. The contracts are flexible, secure and held within "wrappers" allowing life assurance cover or other features depending upon the needs of the client. The contract benefits are directly linked to the value of those assets that are selected by, or on behalf of, the client and held within the wrapper. The Group does not offer investment advice. Contract holders bear the investment risk.

The Group's products do not include any contracts with financial options and/or guarantees regarding investment performance and, hence, unlike the situation faced by many other life assurers, the Group carries no guarantee risk that can cause capital strain.

As a result of high levels of service, the nature of the Group's products, the functionality of Hansard OnLine, and the ability of the contract holder to reposition assets within a contract, we expect to retain the contract holder relationship over the long term.

Contract holder servicing and related activities are performed by Hansard Administration Services Limited, which is authorised by the Insurance and Pensions Authority of the Isle of Man Government to act as an Insurance Manager to both Hansard International and Hansard Europe.

During the past year we have completed a refresh of our product range and pricing, to the benefit of the client and distributor, and have entered into a number of new business arrangements with IFAs. We expect these actions to provide a solid base for future growth.

Revenues

The main sources of income for the Group are the fees earned from the administration of the insurance contracts. These fees are largely fixed in nature and amount. Approximately 30% of the Group's revenues, under IFRS, are based upon the value of assets under administration. The new business generated in a particular year is expected to earn income for an average period of 14 years. Accordingly, with careful expense management, this provides a healthy return on the capital invested in that business. Our business is therefore long term in nature both from a contract holder perspective and with regards to the income that is generated.

From this income we meet the overheads of the business, invest in our business, invest to acquire new insurance contracts and pay increasing dividends.

Managing Risk

While markets have substantially emerged from the recent financial crisis, there remains fragility to global economic and market growth, and we therefore continue to maintain a robust, low risk balance sheet. We believe this prudent approach to be appropriate to meet the requirements of regulators, contract holders, intermediaries and shareholders.

We are conscious that managing operational risk is critical to our business and we are continuously developing our enterprise risk management system and controls. During the past year, we invested further in our risk and compliance functions, making a number of new appointments. Further details of our approach to risk management and the principal risks facing the Group are outlined in the Risk Management and Internal Control Section.

The regulatory environment continues to evolve and our 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 has outlined its timetable for significant changes to the regulatory framework, which will impact on Hansard International and;

· The roll-out of automatic information exchange programmes through regulations such as FATCA and Common Reporting Standards will impact on the entire business.

Hansard OnLine

Our vision is to develop a more intimate and rewarding online experience for our clients and IFAs. Hansard OnLine ("HOL") is key to that vision. HOL is the Group's online platform providing secure, 24/7 access for intermediaries anywhere around the world. Key content can be presented in a wide range of different languages - helping IFAs communicate more effectively with their clients.

New Business

Hansard OnLine is an important tool for our IFAs with the vast majority of new business applications, over 90%, being submitted online. Such submissions are validated online and arrive 'clean'. Supporting due diligence documentation can also be uploaded securely via Hansard OnLine, which means new business can be received and processed quickly and efficiently.

Online Dealing

Almost all fund switches and Personal Portfolio asset deals placed by IFAs are submitted online. IFAs can place fund switches at an individual client level or across various aggregations of their client base, with fund switches placed online being free of charge. IFAs can also place Personal Portfolio deals online straight-through to our stockbroker.

Smartphone-Friendly

Our client online offering has been significantly revamped to give it a fresher, smartphone-friendly and more modern feel. It has been extended to allow clients to place fund switches online, free of charge. Client can also now manage their address and other personal details online, and the system provides clients with extensive reporting of their fund choices and fund performance.

New Functionality

During the year, numerous new reports have been added and existing functionality enhanced.

For example, the Unit Fund Centre has been extended to provide IFAs with comprehensive reporting of various fund choices for both existing and prospective portfolios, together with sector analyses, benchmark comparisons and past performance graphs. The Unit Fund Centre was made available to clients during the year.

IFAs have been provided with an enhanced Illustrations facility, together with various reports which allow them to analyse and aggregate their client portfolios. Last year we provided IFAs with the ability to make payments online by credit or debit card, and we have since extended the premium payment reporting available to them in order to allow them to better view and manage their clients' payment status, activity and history.

Multi-lingual

Hansard OnLine presents key content to IFAs and clients in many different languages. We are constantly adding to the range of languages available, with our client proposition being extended during year to include Russian and Mandarin.

Showcase

A new version of our online proposition, called Hansard OnLine Lite, was launched during the year which provides prospective and new IFAs with easy access to a subset of the online system. Its purpose is to showcase our online proposition to prospective and new IFAs and to allow easy access to non-sensitive documents and functionality. Users can access our online document library, the Unit Fund Centre, company news and even submit new business online.

Proactive Training

We continually provide dedicated resource to proactively train IFAs and clients on how to get the most out of our online propositions. Training takes place through online Webinars, video-com, Skype, over the telephone and, in some cases, face-to-face with IFAs in their offices.

Electronic Post

Through our online systems, clients can view all documentation and communications relating to their contracts. The number of clients choosing to receive post electronically, rather than in hard-copy form, continues to show a steady increase. Indeed, 60% of client communications are now accessed exclusively online. This provides a more secure, faster and cost efficient means of communication with clients. IFAs can also view client correspondence electronically via Hansard OnLine.

Cost Efficient

As well as being a valuable sales tool, Hansard OnLine is an important administration tool for both IFAs and the Group. It allows both parties to provide better customer service and to reduce operational costs.

Reducing Operational Risk

The straight-through processing of investment instructions (whether received from IFAs or clients) reduces the Group's operational risk exposures, as does the ability of the Group to communicate electronically with IFAs and clients, irrespective of geographical boundaries and time zone limitations.

Key performance indicators

The Group's senior management team monitors a wide range of Key Performance Indicators, both financial and non-financial, that are designed to ensure that performance against targets and expectations across significant areas of activity are monitored and variances explained.

The following is a summary of the key indicators that were monitored during the financial year under review.

New Business - The Group's prime indicator of calculating new business production, Compensation Credit ("CC"), indicates the relative value of each piece of new business and is used, therefore, in the calculation of commission payable to intermediaries. Incentive arrangements for intermediaries and the Group's Account Executives incorporate targets based on CC.

New business levels are reported daily. The Group's objective is to recover CC levels to a more sustainable level by the end of FY 2016 and to grow new business at a rate of 10% - 15% per annum on this measure over the medium term. As is reported elsewhere in this Report and Accounts, new business flows have fallen by approximately 40% since the prior year. Strategic plans implemented during the year are intended to support sales growth.

Administrative Expenses (excl. exceptional items) - The Group maintains a rigorous focus on expense levels and the value gained from such expenditure. The objective is to develop processes to restrain increases in administrative expenses to the rates of inflation assumed in the charging structure of the Group's policies. The Group's administrative and other expenses for the year (excl. exceptional items) were £21.9m compared to £19.5m in the previous year. The increased expenses are driven by increased levels of strategic spend to develop new business, changes to senior management and increased resources in the Group's legal, compliance and risk functions. Further detail is contained in the section on Administrative and other expenses.

Cash - Bank balances and significant movements on balances are reported weekly. The Group's liquid funds at the balance sheet date were £80.9m (2014: £78.5m). The change demonstrates predominantly that the Value of In-force Business ("VIF") continues to be recouped in cash, although reduced new business levels have prevented profitable investment of the surplus during the year.

Business continuity - Maintenance of continual access to data is critical to the Group's operations. This has been achieved throughout the year through a robust infrastructure. The Group is pro-active in its consideration of threats to data, data security and data integrity. Business continuity and penetration testing is carried out regularly by internal and external parties.

Risk profile - The factors impacting on the Group's risk profile are kept under continual review. Senior management review operational risk issues at least weekly. The significant risks faced by the Group are summarised later in this Strategic Report.

New business flows for the year ended 30 June 2015

Strategy DEVELOPMENT

After conducting a thorough review of the sales and marketing operations of the Group last year, we have now completed a product and pricing refresh that was an important part of making our product range more competitive and attractive to customers and advisors.

We have sought to build distribution relationships for the long term over a diversified geographical base and are working hard to pursue new licenses in a small number of targeted jurisdictions where we believe significantly increased levels of business can be obtained in the future.

We are conscious that the business levels of the 2015 financial year are not of the scale necessary for the long term and that the recovery from the loss of our largest distribution network has taken longer than expected. We have however started to see encouraging levels of growth in a number of areas in the last quarter of the 2015 financial year, particularly in East Asia, the Middle East and Africa, and expect this to continue in the 2016 financial year.

We are confident that our newly-introduced products are well-tailored to the requirements of our target clients and that these products, our augmented sales team and an increasing pool of distribution relationships will provide a platform for sustainable, diversified new business flows going forward.

STRATEGIC INITIATIVES

These initiatives impact upon the whole of the Group's business, its clients and other stakeholders.

· 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 private banks involved in both expatriate and local markets around the world. Our main aim is to build long-term relationships with our distributors in key markets with growing economies and high concentrations of wealth. During the course of the 2015 financial year, we have added 43 new quality terms of business adding well over 200 new brokers to our available distribution in target markets.

· Hansard OnLine

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

· Resources

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 have completed a restructure and refocus of our sales force and have recruited a number of new, highly experienced Account Executives in key regions around the world, primarily to focus on East Asia, the Middle East and the international expatriate market.

New Business Flows - year ended 30 june 2015

Following the closure of Hansard Europe to new business with effect from 30 June 2013, the new business performance reported below is that of Hansard International alone.

	2015	2014	%
Basis	£m	£m	change
Compensation Credit	5.5	9.3	(40.9)%
Present Value of New Business Premiums	60.6	83.0	(27.0)%
Annualised Premium Equivalent	9.7	14.3	(32.2)%

New business figures were lower than the prior year as the last remaining effects of the loss of the Group's largest distributor work their way through. We are actively seeking to replace this business, and have seen encouraging signs of growth towards the end of the 2015 financial year in North Asia, the Middle East and Africa.

· Present Value of New Business Premiums ("PVNBP")

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

	2015	2014	%
PVNBP by product type	£m	£m	change
Regular premium	36.8	63.7	(42.2)%
Single premium	23.8	19.3	23.3%
Total	60.6	83.0	(27.0)%

	2015	2014	%
PVNBP by region	£m	£m	change
Latin America	21.6	27.0	(20.0)%
East Asia	16.1	35.9	(55.2)%
Rest of World	12.2	9.5	28.4%
Middle East and Africa	7.5	3.4	120.6%
Europe	3.2	7.2	(55.6)%
Total	60.6	83.0	(27.0)%

We continue to receive business from a diverse range of financial advisors around the world. Our focus on growth markets is reflected in the proportions of contractual premiums denominated in US dollars while the reduction in Japanese Yen flows in the table below demonstrates the effect of the loss of Japanese business.

	2015	2014
Currency denominations (as a percentage of PVNBP)	%	%
US dollar	71.4	50.8
Sterling	22.4	13.3
Euro	3.3	9.1
Japanese Yen	0.2	25.2
Other	2.7	1.6
	100.0	100.0

· New business margins

Continued low volumes of new business impact directly on the Group's new business margins. Reduced volumes, coupled with the more competitive product design and continuing investment in channel development, have resulted in a negative new business margin of approximately 6.2% on the PVNBP basis for FY 2015. As business volumes recover to sustainable levels, the cost base is highly scaleable and we plan to target a blended margin at mid-single digit levels over the medium term.

Presentation of financial results

Our business is long term in nature. For this reason we present the results on an EEV basis in addition to the statutory IFRS basis. We believe that EEV is a valid measure of profitability and shareholder value. Our embedded value is based on the EEV principles which were set out as an industry standard by the Chief Financial Officers (CFO) Forum in 2004 and extended in 2005.

The profit that the Group expects to earn from the issue of an insurance contract is the same, irrespective of the basis of measurement, however:

· The EEV result is a discounted cash flow valuation of the future profits expected to emerge from the current book of insurance contracts and provides a more complete recognition of management's activity throughout the financial year. It demonstrates the expected emergence of shareholder cash over the long term, by reflecting the net present value of the expected future cash flows.

· The IFRS methodology smoothes recognition of profit from new business by spreading the initial costs (and revenues) evenly over the life of the business. The IFRS result therefore, reflects neither the future shareholder value added, nor the cash impact of the new business in a particular year.

Results for the year

The following is a summary of key items to allow readers to better understand the results for the year. A small number of comparative figures have been restated in this section to ensure consistency of presentation. After recognising the exceptional items referred to below, IFRS profit after tax for the year is £14.9m (2014: £8.3m).

During the 2015 financial year the most significant one-off item affecting profit was the settlement of the CEC provision at a level significantly below that provided for in 2014. This resulted in a benefit of £3.0m in 2015 (charge of £5.0m in 2014). Cost of litigation settlements were £0.1m (2014: £0.7m). There was also a charge taken in 2014 of £0.7m in relation to the closure of Hansard Europe to new business.

Prior to those exceptional items totalling a benefit of £2.9m (2014: charge of £6.4m), the underlying IFRS profit was £12.0m before taxation, compared with £14.7m in FY 2014.

Abridged consolidated income statement

The consolidated income statement presented under IFRS reflects the financial results of the Group's activities during the year. This income statement however, as a result of its method of presentation, incorporates a number of features that might affect an 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. Investment gains during the year attributable to contract holder assets were £47.8m (2014: £7.3m).

· Fund management fees paid by the Group to third parties having a relationship with the underlying contract. While fund management fees paid are properly recorded in the consolidated income statement under IFRS, the 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. In the 2015 FY third party fund management fees attributable to contract holder assets were £3.8 (2014: £4.3m). These are reflected in both income and expenses under the IFRS consolidated statement of comprehensive income.

An abridged non-GAAP consolidated income statement in relation to the Group's own activities is presented below, excluding the items of income and expenditure indicated above.

	2015	2014
	£m	£m
Fees and commissions attributable to Group activities	52.5	55.2
Investment and other income	1.4	0.2
	53.9	55.4
Origination costs	(20.1)	(21.2)
Administrative and other expenses attributable to the Group, before
compensation, litigation settlements and discontinued activities	(21.8)	(19.5)
Operating profit for the year before compensation, litigation settlements
and discontinued activities	12.0	14.7
Compensation, litigation settlements and discontinued activities	2.9	(6.4)
Profit for the year before taxation	14.9	8.3
Taxation	-	-
Profit for the year after taxation	14.9	8.3

Fees and commissions

Fees and commissions for the year attributable to Group activities are £52.5m, a decrease of 4.7% over the previous year.

Contract fee income totalled £38.7m for the year (2014: £41.1m). Elements of contract fee income are largely fixed in nature, representing both the smoothing of up-front income required under IFRS, and contract-servicing charges. The reduction in the year is largely due to the run off of the Dublin-based book since its closure to new business.

Fund management fees accruing to the Group and commissions receivable from third parties totalling £13.8m (2014: £14.1m) are related directly to the value of assets under administration and are therefore exposed to market movements, currency rates and valuation judgements. The level of this income, when compared with last year, reflects primarily that the reported level of assets under administration has fallen by approximately 4% over the course of this financial year.

A summary of fees and commissions is set out below:

	2015	2014
	£m	£m
Contract fee income	38.7	41.1
Fund management fees accruing to the Group	9.6	9.9
Commissions receivable	4.2	4.2
	52.5	55.2

Included in contract fee income is £21.9m (2014: £21.3m) representing the amortisation of fees prepaid in previous years, as can be seen in the analysis set out below. This increased level of amortised fees incorporates an element of deferred income on contracts that have lapsed during the year.

	2015	2014
	£m	£m
Amortisation of deferred income	21.9	21.3
Income earned during the year	16.8	19.8
Contract fee income	38.7	41.1

Investment and other income

Volatility in foreign exchange markets continued throughout the year. Having regard to the geographic spread of the Group's clients and the currencies in which their contracts are denominated, the fluctuations in sterling since 30 June 2014 has reduced investment and other income by £0.2m (2014: reduction of £0.8m).

	2015	2014
	£m	£m
Bank interest	1.0	0.9
Foreign exchange losses on revaluation of net operating assets	(0.2)	(0.8)
Other operating income	0.6	0.1
	1.4	0.2

A summary of Investment and other income is set out below:

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 the contracts issued this year. The life of a regular premium contract is deemed to be its agreed term. Typical terms range between 10 years and 25 years. The expected life of a typical single premium contract is 15 years. Other elements of the Group's new business costs, for example recruitment costs and initial payments to new Account Executives, which reflect investment in distribution resources in line with our strategy, are expensed as incurred.

The continued reduced new business volumes which the Group has experienced during the year are reflected in a fall in the direct costs of new business to £7.6m from £12.2m in the previous financial year.

	2015	2014
	£m	£m
Origination costs - deferred to match future income streams	7.6	12.2
Origination costs - expensed as incurred	2.1	1.9
Total origination costs incurred in the year	9.7	14.1
Net amortisation of deferred origination cost	10.4	7.1
	20.1	21.2

Amounts totalling £18.0m (2014: £19.2m) have been expensed to match contract fee income earned this year from contracts issued in previous financial years, as can be seen in the analysis below. These amortised costs incorporate an element of deferred origination costs on those contracts that have lapsed during the year.

Origination costs in the year are:

	2015	2014
	£m	£m
Amortisation of deferred origination costs	18.0	19.2
Other origination costs incurred during the year	2.1	2.0
	20.1	21.2

Administrative and other expenses

We continue to robustly manage our expense base to control administrative expenses while supporting our strategic developments and other new business activities with targeted expenditure.

The largest impact to total administrative and other expenses this year is from the settlement of the CEC provision at a level significantly below that provided for in 2014. This resulted in a benefit of £3.0m in 2015 (charge of £5.0m in 2014). There were a number of other exceptional items in 2014 affecting 2014's administrative and other expenses, namely the cost of litigation settlements of £0.7m and a charge of £0.7m taken in relation to the closure of Hansard Europe to new business. These costs were modest in 2015 (£0.1m relating to litigation settlements).

An analysis of administrative and other expenses is set out in notes 8 and 9 to the consolidated financial statements under IFRS. The following summarises some of the expenses attributable to the Group's own activities.

	2015	2014
	£m	£m
Salaries and other employment costs	9.5	8.8
Other administrative expenses	6.7	6.1
Professional fees, including audit	3.1	3.0
Recurring administrative and other expenses	19.3	17.9
Growth investment spend	2.6	1.6
Administrative and other expenses, excl. exceptional items	21.9	19.5
(Write back)/cost of CEC provision	(3.0)	5.0
Costs relating to the closure of Hansard Europe to new business	-	0.7
Litigation settlements	0.1	0.7
Total administrative and other expenses	19.0	25.9

Salaries and other employment costs have increased by £0.7m or 8% to £9.5m. This is primarily as a result of changes in the management structure, increased resources in the Legal, Compliance and Risk functions and low single digit salary inflation. The average Group headcount for the 2015 financial year was 206 people (2014: 205 people).

Management have sought to offset such increases by harnessing process efficiencies. A reorganisation of the Group's policy administration function was successfully implemented during the year, substantially reducing processing times and improving customer and broker service. It is expected that this will allow for lower levels of like-for-like headcount in this area going forward.

Other administrative expenses have increased by 10% to £6.7m. This increase is driven by a number of items including provisions against balances due from IFAs, increased death claims under policy contracts and various brand related sponsorships and events.

Growth investment spend represents internal and external costs to generate opportunities for growth. The Group continues to invest to build its business and to implement product and technological changes to support intermediaries, policyholders and other stakeholders. The amount of expenditure has increased from the previous year reflecting our commitment to pursue additional licences in target markets, including £0.3m in audit fees.

Professional fees including audit in the year include legal fees of £0.5m (2014: £0.9m) incurred to protect the Group's position against complaints; amounts totalling £0.6m paid to the Group's auditor (2014: £0.5m); £0.4m (2014: £0.3m) for administration, custody, dealing and other charges paid under the terms of the investment processing outsourcing arrangements; recruitment costs of £0.3m (2014: £0.1m) and costs of Investor Relations activities of £0.4m (2014: £0.4m).

Cash Flow ANALYSIS

Operating cash flows continue to be strongly positive. The operational cash surplus (fees deducted from contracts and commissions received, less operational expenses paid) is £24.3m (2014: £37.8m). This surplus was more than sufficient to fund investment in new business in the year of £8.6m (2014: £15.4m).

The Group believes that the best use of its capital resources is to invest in new business, recognising that continued investment in profitable regular premium contracts produces a short-term cash strain as a result of the commission and other costs incurred at inception of a contract.

To reduce the risk that the targeted return on investment in new business is jeopardised, the Group withholds a portion of initial commission from certain intermediaries pending completion of the initial period of particular contracts. At the balance sheet date, amounts totalling £1.2m (2014: £2.3m) had been withheld. These amounts are reflected within "Other payables" in note 19 to the consolidated balance sheet.

The following non-GAAP tables summarise the Group's own cash flows in the year. Group cash and deposits are presented as the total of cash and cash equivalents of £65.4m (2014: £58.4m) plus the shareholder portion of deposits of £15.5m (2014: £20.1m) contained within the total £93.3m (2014: £103.0m) of Deposits and money market funds on the Consolidated Balance Sheet of the Group. The remainder of the £93.3m Deposits and money market funds form part of contract holder unit linked funds.

This analysis demonstrates that the in-force contract book continues to generate the cash required to support the Group's main business objectives of investing in new business, enhancing distribution and other infrastructure and supporting dividend payments. Dividends of £11.7m (2014: £11.2m) paid during the year have been funded by the Group's own resources. Overall cash and deposits have increased from £78.5m at 30 June 2014 to £80.9m at 30 June 2015.

	2015	2014
	£m	£m
Net cash surplus from operating activities	24.3	37.8
Interest received on shareholder bank deposits	1.0	1.0
Net cash inflow from operations	25.3	38.8
Net cash investment in new business	(8.6)	(15.4)
Purchase of property and computer equipment	(0.2)	(1.4)
Corporation tax received / (paid)	0.2	(0.2)
Net cash inflow before dividends	16.7	21.8
Dividends paid	(11.7)	(11.2)
Net cash inflow	5.0	10.6


	2015	2014
	£m	£m
Net cash inflow	5.0	10.6
(Decrease) /I ncrease in amounts due to contract holders	(2.4)	2.9
Net Group cash movements	2.6	13.5
Group cash at beginning of year	78.5	67.2
Effect of exchange rate changes	(0.2)	(2.2)
Group cash and deposits at end of year	80.9	78.5

Bank deposits and money market funds

The Group holds its liquid assets in highly-rated money market liquidity funds and with a wide range of deposit institutions to minimise market risk. Deposits totalling £15.5m have original maturity dates greater than 3 months and are therefore excluded from the definition of "cash and cash equivalents" under IFRS as reflected in note 16 to the consolidated balance sheet (2014: £20.1m). The following table summarises the total shareholder cash and deposits at the balance sheet date.

	2015	2014
	£m	£m
Money market funds	56.5	45.1
Short-term deposits with credit institutions	8.9	13.3
Cash and cash equivalents under IFRS	65.4	58.4
Shareholders' longer-term deposits with credit institutions	15.5	20.1
Shareholder cash and deposits	80.9	78.5

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

Abridged consolidated balance sheet

The consolidated balance sheet presented under IFRS reflects the financial position of the Group at 30 June 2015. 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 £907.1m (2014: £943.6m). 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.

	2015	2014
	£m	£m
Assets
Deferred origination costs	113.5	123.9
Other assets	6.9	7.3
Bank deposits and money market funds	80.9	78.5
	201.3	209.7
Liabilities
Deferred income	137.6	141.2
Other payables	23.6	31.6
	161.2	172.8
Net assets	40.1	36.9
Shareholders' equity
Share capital and reserves	40.1	36.9

Deferred origination costs

The deferral of origination costs 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 income statement on a straight-line basis over the life of each contract.

The Group has continued to invest in new business 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 over the financial year is summarised below.

	2015	2014
Carrying value	£m	£m
At beginning of financial year	123.9	131.0
Origination costs incurred during the year	7.6	12.1
Origination costs amortised during the year	(18.0)	(19.2)
	113.5	123.9

The level of costs amortised during the year incorporates an element of deferred origination costs on policies that have lapsed during the year, in order to ensure that the carrying value of deferred origination costs is not impaired by contract holder activity.

Deferred income

The treatment of deferred income ensures that contract fees are taken to the consolidated income statement in equal installments 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. Deferred income at the balance sheet date is the unamortised balance of accumulated initial amounts received on new business.

The proportion of income deferred in any one year is dependent upon the mix and volume of new business flows in previous years. The Group's focus on 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 year 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 financial year is summarised below.

	2015	2015
Carrying value	£m	£m
At beginning of financial year	141.2	137.6
Income received and deferred during the year	18.3	24.9
Income recognised in contract fees during the year	(21.9)	(21.3)
	137.6	141.2

The level of income recognised in contract fees during the year incorporates an element of deferred income on those contracts that have lapsed during the year, in order to ensure that the carrying value of deferred income is not impaired.

CONTRACT holder Assets under administration

In the following paragraphs, contract holder assets under administration ("AuA"), refers to net assets held to cover financial liabilities, as analysed in note 17 to the 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. Premium contributions during the year includes additional contributions of approximately £5.4m (FY 2014: £7m) relating to single and regular premium contracts issued by Hansard Europe in prior years.

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 seen efforts 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. Accordingly, the value of AuA at 30 June 2015 is £907.1m, some 4% below the value at 30 June 2014.

AuA currency composition

The value of AuA is based upon the assets selected by or on behalf of contract holders to meet their needs from time to time. The currency composition of AuA at the balance sheet date is similar to that as at 30 June 2014, with 59% of AuA designated in US dollar (2014: 54%) and 19% in euro (2014: 25%). The reduction in assets held in the euro has been caused in part by the closure of Hansard Europe to new business and the natural reduction of that book. 2015 saw £51.2m of market increases compared to relatively stable currency movements as reflected in the following table.

	2015	2015
	£m	£m
Deposits to investment contracts - regular premiums	79.4	85.1
Deposits to investment contracts - single premiums	21.5	19.6
Withdrawals from contracts and charges	(185.2)	(196.5)
Effect of market movements	51.2	87.7
Effect of currency movements	(3.4)	(80.4)
Movement in year	(36.5)	(84.5)
At beginning of financial year	943.6	1,028.1
	907.1	943.6

The analysis of AuA held by each Group subsidiary to cover financial liabilities is as follows:

	2015	2014
Fair value of AuA at 30 June	£m	£m
Hansard International	700.3	704.6
Hansard Europe	206.8	239.0
	907.1	943.6

complaints and potential litigation

In valuation issues such as those referred to above, financial services institutions are drawn into disputes in cases where the performance of assets selected directly by or on behalf of contract holders through their advisors fails to meet their expectations. This is particularly relevant in the case of more complex structured products distributed throughout 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, particularly in Europe. At the beginning of this financial year the Group was facing litigation based on writs totalling €6.5m (£5.2m). As a result of further writs issued during the 2015 financial year and in the period to the date of this report, there remains outstanding writs served upon Hansard Europe totalling a net €13.3m or approximately £9.4m. The primary reason for the increase relates to a group of Belgian policyholders who have brought a net claim for €6.3m (£4.5m) which is based on a challenge to the European Union's principle of Free Movement of Services. We believe this to be highly speculative and intend to robustly defend.

While it is not possible to forecast or determine the final results of such litigation, based on the pleadings and advice received from the Group's legal representatives, we believe we have a strong chance of success in defending these claims. The writs have therefore been treated as contingent liabilities and are disclosed in note 27 to the consolidated financial statements.

Notwithstanding the above, there may be circumstances where in order to avoid the expense and distraction of extended litigation, the Group may consider it in the best interests of it and its shareholders to reach a settled resolution. Such settlements totalled £0.1m for 2015 (2014: £0.7).

Results for the year under European Embedded Value

Headline Results

During the course of the 2015 financial year, the Group made a European Embedded Value ("EEV") profit of £2.9m (2014: loss of £10.7m), analysed into an EEV operating loss of £6.3m (2014: loss of £6.6m) and gains from investment return variances and economic assumption changes of £9.2m (2014: losses of £4.1m).

The EEV operating loss is primarily driven by a negative new business contribution of £3.7m. The contribution is negative because levels of new business were not at sufficient levels to offset the costs of new business.

Headline results for the EEV are shown in the tables below:

	2015	2014
	£m	£m
EEV Operating loss after tax	(6.3)	(6.6)
Investment Return Variances & Economic Assumption Changes	9.2	(4.1)
EEV profit / (loss)	2.9	(10.7)

EEV before dividends	206.7	215.0
Dividends paid during the financial year	(11.7)	(11.2)
Closing Embedded Value	195.0	203.8

The EEV at 30 June 2015 has fallen to £195.0m from the 30 June 2014 level of £203.8m following the payment of dividends of £11.7m for the year (2014: £11.2m).

Sales Metrics

New business comparatives are shown below:

	2015	2014
New business sales ("PVNBP")	£60.6m	£83.0m
New Business Contribution ("NBC")	(£3.7m)	£3.3m
New Business Margin ("NBM")	(6.2%)	4.0%

The negative NBC reflects the reduction in new business volumes and the spreading of initial expenses over fewer policies sold and to a lesser extent lower charges on the newer products.

The EEV has reduced over the year: its high-level components are shown in the table below:

	2015	2014
	£m	£m
Free Surplus	36.5	28.3
Required Capital	27.0	25.1
Net Worth	63.5	53.4
VIF	138.6	157.5
Other	(7.1)	(7.1)
Value of Future Profits ("VFP")	131.5	150.4
EEV	195.0	203.8

Net Worth has grown to £63.5m from £53.4m as profits are earned from the existing business. Free Surplus, which is available for investment and distribution, has grown by 29% to £36.5m from £28.3m reflecting the fact that less of the cash which continues to emerge from the existing policies was needed to invest in setting up new policies. At the balance sheet date, the Net Worth of the Group is represented by liquid cash balances. The Required Capital has increased: it currently includes around £12.5m of Hansard Europe capital, the use of which management estimates is constrained for three years.

The change in VFP reflects sterling exchange rates on 30 June 2015, new business levels, the conversion of VFP to Net Worth and the impact of policyholder behaviour and renewal expenses. Notably, lower new business means the stock of future profits has fallen.

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

Change In Net Worth

	2015	2014
	£m	£m
Opening Net Worth	53.4	44.6

Expected new Net Worth from existing business	32.8	41.5
Time value	1.0	0.6
Net worth variance	2.2	(5.4)
Net Worth from Existing Business	36.0	36.7
New Business Strain	(14.1)	(16.8)
Dividends paid	(11.7)	(11.2)
Closing Net Worth	63.5	53.4

The Net Worth is higher than projected by £2.2m (2014: lower by £5.4m): the primary reason for this is the favourable settlement of the Chargeable Event Certificate issue during the year. The Net Worth has grown by £36.0m (2014 £36.7m), of which £14.1m (2014: £16.8m) has been invested in new business (shown as New Business Strain) and £11.7m has been paid in dividends (2014: £11.2m).

EEV Profit / (Loss) after tax

The Group's EEV profit after tax is £2.9m (2014: (£10.7m)). Lower new business, operating assumption and model changes drive this result at an operating profit level. Thereafter, the impact of positive investment return variances and economic assumption changes more than offset the loss at an operating level.

	2015	2014
	£m	£m
New Business Contribution	(3.7)	3.3
Experience Variances	2.6	(6.7)
Operating Assumption & Model Changes	(7.0)	(4.7)
Expected Return on new, existing business and Net Worth	1.8	1.5
EEV operating loss after tax	(6.3)	(6.6)
Investment Return Variances	4.3	(8.2)
Economic Assumption Changes	4.9	4.1
EEV profit/(loss) after tax	2.9	(10.7)

Experience Variances

	2015	2014
	£m	£m
Premium Persistency	2.4	0.8
One-off expenses	1.4	(4.5)
Full encashments	(1.6)	(3.5)
Other	0.4	0.5
Experience variances	2.6	(6.7)

Experience variances arise when the behaviour of the existing book differs from that assumed. Major contributors to the experience variances this year include positive premium persistency and the release of the Chargeable Event Certificate overprovision partially offset by more encashments than projected.

Operating Assumption Changes

	2015	2014
	£m	£m
Ongoing expenses	(11.2)	2.2
Premium Persistency	3.0	(4.6)
Full encashment	0.0	(6.2)
Other	2.1	2.6
Operating Assumption Changes	(6.1)	(6.0)

As a result of the fall in new business levels, management have strengthened the expense assumptions to reflect the fact that there are fewer policies to support on-going expenses.

Investment performance

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

	2015	2014
	£m	£m
Investment performance of policyholder funds	3.9	9.7
Exchange rate movements	0.4	(17.5)
Other	0.0	(0.4)
Investment performance	4.3	(8.2)

Economic assumption changes

There was a positive variance of £4.9m (2014: £4.1m) from Economic Assumption Changes.

	2015	2014
	£m	£m
Risk Discount Rates & Unit Growth	3.8	3.5
Marketing Allowances	0.5	1.5
Treasury Margin	0.6	(0.9)
Other	0.0	0.0
Economic Assumption Changes	4.9	4.1

The Risk Discount Rate and Unit Growth variances arise from the application of the EEV Principles, which require that changes in government bond yields for the currencies in which policyholder assets are denominated are reflected. The other changes reflect changes in policyholder activity margins.

Net asset value per share

On an EEV basis, the net asset value per share at 30 June 2015 is 141.9p (2014: 148.6p) based on the EEV at the balance sheet date divided by the number of shares in issue at that date, being 137,388,669 ordinary shares (2014: 137,379,634 shares).

The net asset value per share at 30 June 2015 on an IFRS basis, is 29.2p (2014: 26.9p).

Risk management and internal control

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 Group maintains an enterprise risk management ("ERM") framework to identify, assess, manage, monitor and control current and emerging risks.

During the year the Group has continued to invest in risk management resources to promptly identify, measure, manage, report and monitor risks that affect the achievement of objectives. In particular, we have brought together our Governance, Risk and Compliance staff into one department and invested in additional resources.

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.

Review of risk management and internal control systems

The identification and evaluation of risks to key business objectives is conducted on an ongoing and consistent basis as indicated below. These processes are managed and monitored by executive management.

In accordance with provision C.2.1 of the UK Corporate Governance Code, the Board (through the Audit Committee) has conducted a review of the effectiveness of the company's risk management and internal control systems including financial, operational and compliance controls There has been significant investment in the risk management and internal control systems in order to reduce the possibility of loss events such as that experienced last year with the Chargeable Event Certificates issue. We continue to develop our ERM Framework and to introduce further improvements as appropriate.

Risk management resources

The Board has established a Management Risk Committee ("MRC") covering the Group's subsidiaries and operations, to supplement the activities of the Audit and Risk Committees operated by the regulated entities within the Group. The members of the Committee comprise a number of the Group's executive and senior management. The Committee is chaired by the Group Chief Executive Officer.

The objective and role of the Management Risk Committee is to:

· report to the Board on all risk matters across the Group;

· assist the Audit Committee and the Board in ensuring an effective system of internal control and compliance, including its obligations under applicable laws and regulations and;

· assist the Board in ensuring the embedding of the Enterprise Risk Management framework across the Group.

The terms of reference of the Committee are published on the Company's website.

Risk management framework

The Group operates a Three Lines of Defence model of risk management, with clearly defined roles and responsibilities for committees and individuals:

First Line: Day-to-day risk management is delegated from the Board to the Group Chief Executive Officer and, through a system of delegated authorities and limits, to business managers.

Second Line: Risk oversight is provided by the Group Chief Risk Officer, who is now responsible for the new Governance, Risk and Compliance Department, and by the established risk management committees.

Third Line: Independent verification of the adequacy and effectiveness of the risk management and internal control systems is provided by the Group Internal Audit function.

In support of its accountabilities to operate a sound system of internal control the Board has implemented and maintains an enterprise risk management ("ERM") framework. To support the governance process the Group relies on documented policies and guidelines.

The ERM framework recognises the value to be achieved from ensuring that risk management and internal control are embedded as continuous and developing processes within strategy setting and day-to-day operating activities and are not treated as discrete activities, performed at certain points in time.

The key features of the systems of internal control which make up the ERM framework include:

· Terms of reference for the Board and each of its committees;

· A clear organisational structure, with documented delegation of authority from the Board to executive management, using the three lines of defence model

· Committees of senior managers responsible for reviewing the Group's financial and non-financial risks and;

· Risk management and internal control frameworks for the Group's operations. Each subsidiary company Board is required to attest to its adherence to these control frameworks on a quarterly basis. Additionally each department manager is required to confirm to the MRC that the risk and control framework is effective.

The overarching objectives of the ERM framework combine five interrelated elements, which enable the management of risk at strategic, programme and operational levels to be integrated, so that the levels of activity support each other.

These five elements are defined as:

· Establish business objectives;

· Risk identification and assessment;

· Risk response, including risk mitigation;

· Control monitoring and;

· Reporting.

The result is a risk management strategy, which is led from the top whilst being embedded in the Group's business systems, strategy and policy setting processes and the normal working routines and activities of the organisation. In this way risk management becomes an intrinsic part of the way business is conducted within the Group.

Risk appetite

The Board has established a formal Risk Appetite Statement which specifies the level of risk that may be assumed by the Group's operating subsidiary companies in order to achieve the Group's strategic, operational, financial and compliance objectives.

Risk identification and assessment

The ERM framework requires all business areas to identify and record risks to business objectives. These risks are rated according to the impact and likelihood of risk events, and these ratings are continuously re-assessed in response to changes in the business environment. This aspect of the configuration and integration of the ERM framework ensures that all staff are made aware of the relevance of risk management to the achievement of their individual objectives and accountabilities.

Risk monitoring and management

As well as operational management monitoring activities, the MRC meet on a regular basis to discuss emergent strategic and operational risks.

Risk reporting

The subsidiary company Boards are asked to attest to the effective functioning of the risk management and internal control framework and the ongoing identification and evaluation of risk within each subsidiary. These attestations are then presented to give assurance to the Group Board.

Financial reporting process

The Group maintains a process to assist the Board in understanding the risks to the Group of failing to meet its objectives. This incorporates a system of planning and sensitivity analysis incorporating Board approval of forecast financial and other information. The Board receives regular representations from the senior executives.

Performance against targets is reported to the Board quarterly through a review of the Group's and Company's results based on accounting policies that are applied consistently throughout the Group. Draft financial statements are prepared quarterly by the Chief Financial Officer ("CFO"). The members of the Audit Committee review the draft financial statements for the half year ended 31 December annually and for the full financial year, and meet with the CFO to discuss and challenge the presentation and disclosures therein. Once the draft document is approved by the Audit Committee, it is reviewed by the Board before final approval at a Board meeting.

Outsourcing

The majority of investment dealing and custody processes in relation to policyholder assets are outsourced to Capital International Limited ("CIL"), a company authorised by the Financial Supervision Commission of the Isle of Man Government and a member of the London Stock Exchange.

These processes 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.

CIL is required to confirm monthly that no material control issues have been identified in their operations. Each year they are required to confirm and evidence the adequacy and effectiveness of their internal control framework through an Assurance report on their internal controls. The last such report was issued by CIL on 20 May 2015 and did not reveal any material control deficiencies in the period from 1 January 2014 to 31 December 2014. Every second year, an external independent review is performed. The next scheduled independent review will take place in early 2016 in relation to the year 1 January 2015 to 31 December 2015.

Risks relating to the Group's financial and other exposures

Hansard's business model involves the controlled acceptance and management of risk exposures. Under the terms of the unit-linked investment contracts issued by the Group, the policyholder bears the investment risk on the assets in the unit-linked funds, as the policy benefits 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 policyholders. By definition, there is a precise match between the investment assets and the policyholder liabilities, and so the market risk and credit risk lie with policyholders.

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 consolidated financial statements.

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 roll-out of automatic information exchange programmes through regulations such as FATCA and Common Reporting Standards will impact on the entire business.

The Board reviews and considers its principal risks on an annual basis. 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.

Principal Risks

Risk	Risk factors and management
Distribution strategy compromised as a result of market changes or competitor activity	The business environment in which the international insurance industry operates in is subject to continuous change as new regulatory and market forces come into effect. These include commission models, broker regulation, licensing for specific markets and use of technology/ platforms. There is a risk the Group fails to refine and transition its business model to take account of these changes. Hansard may also fail to sufficiently differentiate itself from its competitors and global brands and as a result be unable to build successful relationships with targeted brokers and customers. How we manage the risk --- The Group closely monitors marketplaces and competitor activity for signs of threats to forecast new business levels. Revised strategies have been designed to add additional scale to the business, on a more diversified basis, through organic growth at acceptable levels of risk and profitability.
Compliance risks arising from regulation	A failure to adhere to existing regulations or to properly assess and implement new regulations could result in regulatory restrictions to the Group's business, censure or financial fines. 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, for example where responsibilities for independent advice on products and assets selected are attributed to the insurer. How we manage the risk --- The Group has dedicated resources and processes in place to identify emerging risks from regulatory and legislative change and to monitor the timely implementation of new requirements. 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.
Infrastructure failure	A material failure in our core business systems or business processes may result in significant, costly interruptions and customer dissatisfaction. 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, we are 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're 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 both internally within the organisation and externally, through regular engagement with our internet and technology providers and through industry forums.
Failure to drive the right corporate culture and attract and retain high performing employees	Delivery of the Group's strategy is dependent on attracting and retaining experienced and high-performing management and staff. Failure of the Board to emphasise the importance of the right corporate culture or to provide appropriate incentive schemes could lead to inappropriate behaviours, an unmotivated workforce and a higher turnover of employees. If the remuneration model for the salesforce is not attractive to the salesforce compared to competitors, key personnel may be lost and lead to sales levels below plan. How we manage the risk --- The Board has focussed significant resources in recent years in communicating its strategy and desired cultural behaviours to all employees. The Group has a number of forums for employees to provide feedback for continuous improvement and employee engagement is monitored through periodic employee surveys. Remuneration models and trends are monitored closely by the Group's human resources department and the Remuneration committee.

Other Key Risks

In addition to the principal risks identified above, there are other key risks that the Group is subject to that derive from the nature of the business it operates. These are outlined below, together with how they are managed.

Risk	Risk factors and management
Market risk	While the Group does not invest shareholder funds in assets subject to any significant market risk, the Group's earnings and profitability are influenced by the performance of policyholder assets and the fees derived from their value. Significant changes in equity markets and interest rates can adversely affect fee income earned. 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 investment-linked products. We model our business plans across a broad range of market and economic scenarios and take account of alternative economic outlooks within our overall business strategy.
Credit Risk	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 --- The Group seeks to limit exposure to loss from counterparty and third party failure through selection criteria, minimum rating agency limits, pre-defined risk based limits on concentrations of exposures and monitoring positions.
Liquidity risk	If the Group does not have sufficient liquid assets available to pay its creditors, the Group may fail to honour its obligations as they fall due, or may have to incur significant loss or cost to do so. How we manage the risk --- The Group maintains highly prudent positions in accordance with its risk appetite and investment policies which ensures a high level of liquidity is available in the short term at all times. Generally, shareholder assets are invested in cash or money market instruments with highly rated counterparties.
Currency risk	The Group operates internationally and earns income in a range of different currencies. The vast majority of its operational cost base is denominated in Sterling. The strengthening of Sterling against US Dollars is the most significant exposure to reported income levels. How we manage the risk --- We seek to match currency assets and liabilities to mitigate against currency movements to the extent possible. As the Group's products are long term products, over time currency movements tend to even out, reducing the need for active hedging policies. Long term trends are monitored however and considered in pricing models.

Further detail around financial risks is outlined in Note 3 (Financial Risk Management) to the consolidated financial statements.

Consolidated Statement of Comprehensive Income
		Year ended	Year ended
		30 June	30 June
		2015	2014
	Notes	£m	£m


Fees and commissions	5	56.3	59.5

Investment income	6	48.6	7.4

Other operating income		0.7	0.1

		105.6	67.0

Change in provisions for investment contract liabilities		(47.8)	(7.3)

Origination costs	7	(20.1)	(21.2)

Administrative and other expenses	8	(22.8)	(30.2)
		(90.7)	(58.7)
Profit before taxation		14.9	8.3

Taxation	10	-	-
Profit and total comprehensive income for the year
after taxation		14.9	8.3

Earnings per share

		2015	2014
	Note	(p)	(p)

Basic	11	10.9	6.0

Diluted	11	10.9	6.0

Consolidated Statement of Changes in Equity

for the year ended 30 June 2015

	Share	Other	Retained
	capital	reserves	earnings	Total
	£m	£m	£m	£m
At 1 July 2013	68.7	(48.3)	19.4	39.8

Profit and total comprehensive income for the
year after taxation	-	-	8.3	8.3

Transactions with owners
Dividends paid	-	-	(11.2)	(11.2)
At 30 June 2014	68.7	(48.3)	16.5	36.9

	Share	Other	Retained
	capital	reserves	earnings	Total
	£m	£m	£m	£m
At 1 July 2013	68.7	(48.3)	19.4	39.8

Profit and total comprehensive income for the
year after taxation	-	-	8.3	8.3

Transactions with owners
Dividends paid	-	-	(11.2)	(11.2)
At 30 June 2014	68.7	(48.3)	16.5	36.9

Consolidated Balance Sheet as at 30 June 2015

		2015	2014
	Notes	£m	£m

Assets
Property, plant and equipment	13	1.3	1.8

Deferred origination costs	14	113.5	123.9

Financial investments
Equity securities		27.5	35.3
Investments in collective investment schemes		784.9	802.7
Fixed income securities		18.3	24.1
Deposits and money market funds		93.3	103.0

Other receivables	15	4.2	4.1
Cash and cash equivalents	16	65.4	58.4
Total assets		1,108.4	1,153.3

Liabilities
Financial liabilities under investment contracts	17	907.1	943.6
Deferred income	18	137.6	141.2
Amounts due to investment contract holders		17.3	19.7
Other payables	19	6.3	11.9
Total liabilities		1,068.3	1,116.4
Net assets		40.1	36.9

Shareholders' equity
Called up share capital	21	68.7	68.7
Other reserves	22	(48.3)	(48.3)
Retained earnings		19.7	16.5
Total shareholders' equity		40.1	36.9

Consolidated Cash Flow Statement for the year ended 30 June 2015

	2015	2014
	£m	£m

Cash flow from operating activities
Profit before tax for the year	14.9	8.3
Adjustments for:
Depreciation	0.6	0.6
Dividends receivable	(3.9)	(4.4)
Interest receivable	(1.0)	(0.7)
Foreign exchange gains	0.2	2.2

Changes in operating assets and liabilities
(Increase)/decrease in debtors	(0.2)	0.9
Dividends received	3.9	4.4
Interest received	1.0	1.0
Decrease in deferred origination costs	10.4	7.1
(Decrease)/increase in deferred income	(3.6)	3.6
(Decrease)/increase in creditors	(8.0)	3.1
Decrease in financial investments	41.2	85.2
Decrease in financial liabilities	(36.6)	(84.5)
Cash flow from operations	19.0	26.8
Corporation tax received/(paid)	0.2	(0.2)
Cash flow from operations after taxation	19.2	26.6
Cash flows from investing activities
Purchase of plant and equipment	(0.2)	(1.4)
Proceeds from sale of investments	0.1	0.1
Purchase of investments	(0.2)	(0.3)
Cash flows from investing activities	(0.3)	(1.6)
Cash flows from financing activities
Dividends paid	(11.7)	(11.2)
Cash flows from financing activities	(11.7)	(11.2)
Net increase in cash and cash equivalents	7.2	13.8
Cash and cash equivalents at beginning of year	58.4	46.8
Effect of exchange rate changes	(0.2)	(2.2)
Cash and cash equivalents at year end	65.4	58.4

Notes to the consolidated financial statements

1 Principal accounting policies

Hansard Global plc ("the Company") is a limited liability company, incorporated in the Isle of Man, whose shares are publicly traded. The principal activity of the Company is to act as the holding company of the Hansard group of companies.

These consolidated financial statements incorporate the assets, liabilities and the results of the Company and its subsidiary undertakings ("the Group"). The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below or, in the case of accounting policies that relate to separately disclosed values in the primary statements, within the relevant note to these consolidated financial statements. These policies have been consistently applied, unless otherwise stated.

1.1 Basis of presentation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRSs"), International Financial Reporting Standards Interpretations Committee ("IFRSIC") interpretations, and with the Isle of Man Companies Acts 1931 to 2004. The financial statements have been prepared under the historical cost convention as modified by the revaluation of financial investments and financial liabilities at fair value through profit or loss. The Group has applied all International Financial Reporting Standards adopted by the European Union and effective at 30 June 2015.

The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

There has been no significant impact in the financial statements due to the mandatory application of new accounting standards for the year ended 30 June 2015.

The following new standards and interpretations are in issue but not yet effective and have not been early adopted by the Group:

· Amendment to IAS 16 ,'Property, plant and equipment' and IAS 38,'Intangible assets', on depreciation and amortisation Amendments to IAS 27, 'Separate financial statements' on equity accounting IAS 39, 'Financial Instruments' - Recognition and measurement

· IFRS 10, 'Consolidated Financial Statements'

· IFRS 12, 'Disclosures of Interest in Other Entities'

· IFRS 15 Revenue from contracts with customers

· Annual improvements 2014

Amendments to IAS 1,'Presentation of financial statements' disclosure initiative The adoption of the above standards is not expected to have any material impact on the Group's results.

There are no other standards, amendments or interpretations to existing standards that are not yet effective, that would have a material impact on the Group's financial statements.

The financial statements are presented in pounds sterling rounded to the nearest one hundred thousand pounds.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting year. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 2.

1.2 Basis of consolidation

The consolidated financial statements incorporate the assets, liabilities and the results of the Company and of its subsidiary undertakings. Subsidiaries are those entities in which the Company directly or indirectly has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Where necessary, accounting policies applied by subsidiary companies have been adjusted to present consistent disclosures on a consolidated basis. Intra-group transactions, balances and unrealised gains and losses arising from intra-group transactions, are eliminated in preparing these consolidated financial statements.

2 Critical accounting estimates and judgements in applying accounting policies

Estimates, assumptions and judgements are used in the application of accounting policies in these financial statements. Critical accounting estimates are those which involve the most complex or subjective judgements or assessments. Estimates, assumptions and judgements are evaluated continually and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes may differ from assumptions and estimates made by management.

2.1 Accounting estimates and assumptions

The principal areas in which the Group applies accounting estimates and assumptions are in deciding the type of management expenses that are treated as origination costs and the period of amortisation of deferred origination costs and deferred income. Estimates are also applied in determining the recoverability of deferred origination costs.

2.1.1 Origination costs

Management expenses have been reviewed to determine the relationship of such expense to the issue of an investment contract. Certain expenses vary with the level of new business production and have been treated as origination costs. Other expenses are written off as incurred.

2.1.2 Amortisation of deferred origination costs and deferred income

Deferred origination costs and deferred income are amortised on a straight-line basis over the life of the underlying investment contract. For those contracts with a contractual policy term, this is the period used for amortisation, as there is a high persistency and the expected average life of these contracts approximates to the contract term. For the contracts that do not have a contractual policy term, deferred origination costs and deferred income are amortised over the expected life of the contract estimated to be 15 years. If a policyholder surrenders before the end of the policy term or expected life, the remaining balance of the deferred origination costs and deferred income attributable to that contract are written off immediately to crystallise the income and the related expense.

2.1.3 Recoverability of deferred origination costs

Formal reviews to assess the recoverability of deferred origination costs on investment contracts are carried out at each balance sheet date to determine whether there is any indication of impairment based on the estimated future income levels by product family level. If, based upon a review of the remaining contracts, there is any other indication of irrecoverability or impairment, the contract's recoverable amount is estimated. Impairment losses are reversed through the statement of comprehensive income if there is a change in the estimates used to determine the recoverable amount. Such losses are reversed only to the extent that the contract's carrying amount does not exceed the carrying amount that would have been determined, net of amortisation where applicable, if no impairment loss had been recognised.

2.2 Judgements

The primary areas in which the Group has applied judgement in applying accounting policies are as follows:

· the classification of contracts between insurance and investment business. All contracts are treated as investment contracts as they do not transfer significant insurance risk;

· the Group has elected to treat all assets backing its contracts as fair value through profit or loss although some of the assets in question may ultimately be held to maturity;

· the fair value of certain financial investments. 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, as is discussed further in note 3.5 to these consolidated financial statements and;

· to determine whether a provision is required in respect of any pending or threatened litigation, which is addressed in note 27.2.

3 Financial risk management

Risk management objectives and risk policies

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. 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 framework is in place comprising risk identification, risk assessment, control and reporting processes. Additionally, the Board and the Boards of subsidiary companies have established a number of Committees with defined terms of reference. These are the Actuarial Review, Audit, Executive, Investment and Risk Committees. Additional information concerning the operation of the Board Committees is contained in the Corporate Governance section of this Report and Accounts.

The more significant financial risks to which the Group is exposed are set out below. For each category of risk, the Group determines its risk appetite and sets its investment, treasury and associated policies accordingly.

3.1 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

Unit linked funds are exposed to securities price risk as the investments held are subject to prices in the future which are uncertain. The fair value of financial assets (designated at fair value through profit or loss) exposed to price risk at 30 June 2015 was £830.7m (2014: £862.1). In the event that investment income is affected by price risk then there will be an equal and opposite impact on the value of the changes in provisions for investment contract liabilities in the same accounting period. The impact on the profit or loss before taxation in a given financial year is negligible.

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% per annum, are based on the market value of contract holder assets under administration. The approximate impact on the Group's profits and equity of a 10% change in fund values, either as a result of price, interest rate or currency fluctuations, is £1.4m (2014: £1.5m).

(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. A change of 1% p.a. in interest rates will result in an increase or decrease of approximately £0.8m (2014: £0.8m) 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 3.2.

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.

(c)(i) Group foreign currency exposures

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:

	2015	2015	2015	2014	2014	2014
	US$m	€m	¥m	US$m	€m	¥m
Gross assets	17.0	5.5	311.4	16.5	4.5	337.6
Matching currency liabilities	(12.0)	(4.4)	(154.7)	(13.9)	(3.9)	(288.2)
Uncovered currency exposures	5.0	1.1	156.7	2.6	0.6	49.4
Sterling equivalent (£m)	3.2	0.8	0.8	1.5	0.5	0.3

he approximate effect of a 5% change: in the value of US dollars to sterling is less than £0.1m (2014: £0.1m); in the value of the euro to sterling is £0.2m (2014: less than £0.1m); and in the value of the yen to sterling is less than £0.1m (2014: less than £0.1m).

(c)(ii) Financial investments by currency

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, US dollars: 59.4% (2014: 54.05); euro: 18.9% (2014: 25%); sterling: 16.3% (2014: 16.0%); other: 5.4% (2014: 5.0%).

3.2 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 30 June 2015, 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, and attested periodically by external advisors.

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 (an analysis by maturity date is provided in note 3.4):

	2015	2014
	£m	£m
Deposits with credit institutions	24.4	33.4
Investments in money market funds	56.5	45.1
	80.9	78.5

3.3 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 is averse to liquidity risk and seeks to minimise this risk by not actively pursuing it except where necessary to support other objectives.

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 contract holder 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.

3.4 Undiscounted contractual maturity analysis

Set out below is a summary of the undiscounted contractual maturity profile of the Group's assets.

	2015	2014
	£m	£m
Maturity within 1 year
Deposits and Money Market funds	80.9	78.5
Other assets	1.5	1.5
	82.4	80.0
Maturity from 1 to 5 years
Deposits with credit institutions	-	-
Other assets	0.3	0.3
	0.3	0.3
Assets with maturity values	82.7	80.3
Other shareholder assets	117.6	128.4
Shareholder assets	200.3	208.7
Gross assets held to cover financial liabilities under investment contracts	908.1	944.6
Total assets	1,108.4	1,153.3

There is no significant difference between the value of the Group's assets on an undiscounted basis and the balance sheet values.

Assets held to cover financial liabilities under investment contracts are deemed to have a maturity of up to one year since the corresponding unit-linked liabilities are repayable and transferable on demand. In certain circumstances the contractual maturities of a portion of the assets may be longer than one year, but the majority of assets held within the unit-linked funds are highly liquid. The Group actively monitors fund liquidity.

The contractual maturity analyses of financial and other liabilities are included in notes 17 and 19 to the consolidated balance sheet.

3.5 Fair value estimation

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.

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 table analyses the Group's financial assets and liabilities at fair value through profit or loss, at 30 June 2015:

	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss	£m	£m	£m	£m
Equity securities	27.5	-	-	27.5
Collective investment schemes	732.0	52.9	-	784.9
Fixed income securities	18.3	-	-	18.3
Deposits and money market funds	93.3	-	-	93.3
Total financial assets at fair value through profit or loss	871.1	52.9	-	924.0

During this financial year, no assets were transferred from Level 2 to Level 1. Assets with a fair value of £31.4m were transferred from Level 1 to Level 2, due to the change in market for the related assets. No assets were reclassified from Level 1 to Level 3 during the year. No assets were reclassified from Level 3 to Level 1 or Level 2 during the financial year.

	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m
Financial liabilities at fair value through profit or loss	-	907.1	-	907.1

The following table analyses the Group's financial assets and liabilities at fair value through profit or loss, at 30 June 2014:

	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss	£m	£m	£m	£m
Equity securities	35.3	-	-	35.3
Collective investment schemes	779.9	22.8	-	802.7
Fixed income securities	24.1	-	-	24.1
Deposits and money market funds	103.0	-	-	103.0
Total financial assets at fair value through profit or loss	942.3	22.8	-	965.1

During the previous financial year, no assets were transferred from Level 2 to Level 1. Assets with a fair value of £8.4m were transferred from Level 1 to Level 2. Assets with a value of £0.3m were reclassified from Level 1 to Level 3 and subsequently valued at zero by the Directors, as they believe this reflects the fair value of these assets at the balance sheet date. No assets were reclassified from Level 3 to Level 1 or Level 2 during the previous financial year.

	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m
Financial liabilities at fair value through profit or loss	-	943.6	-	943.6

Due to the unit-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 consolidated statement of comprehensive income.

4 Segmental information

Disclosure of operating segments in these 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. New business development, distribution and associated activities in relation to the Republic of Ireland ceased with effect from 30 June 2013. All other activities of the Group are continuing.

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 amount of basic initial commission payable 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 origination costs incurred during the year as set out in the Business and Operating Review section of this Report and Accounts.

	2015	2014
	£m	£m
Latin America	2.1	3.2
East Asia	0.9	3.0
Middle East and Africa	0.6	0.2
EU and EEA	0.2	0.4
Rest of World	1.0	1.0
Net Issued Compensation Credit	4.8	7.8
Other commission costs paid to third parties	2.2	3.5
Enhanced unit allocations	0.6	0.9
Origination costs incurred during the year	7.6	12.2

The net issued compensation credit figure of £4.8m for the year all relates to continuing operations based in the Isle of Man (2014: £7.8m).

Revenues and expenses allocated to geographical locations contained in sections 4.1 to 4.4 below reflect the revenues and expenses generated in or incurred by the legal entities in those locations.

4.1 Geographical analysis of fees and commissions by origin

	2015	2014
	£m	£m
Isle of Man	47.6	47.6
Republic of Ireland	8.7	11.9
	56.3	59.5

4.2 Geographical analysis of profit before taxation

	2015	2014
	£m	£m
Isle of Man	13.5	9.3
Republic of Ireland	1.4	(1.0)
	14.9	8.3

4.3 Geographical analysis of gross assets

	2015	2014
	£m	£m
Isle of Man	865.7	876.5
Republic of Ireland	242.7	276.8
	1,108.4	1,153.3

4.4 Geographical analysis of gross liabilities

	2015	2014
	£m	£m
Isle of Man	844.2	856.5
Republic of Ireland	224.1	259.9
	1,068.3	1,116.4

5 Fees and commissions

Fees are charged to the contract holders of investment contracts for contract administration services, investment management services, payment of benefits and other services related to the administration of investment contracts. Fees are recognised as revenue as the services are provided. Initial fees that exceed the level of recurring fees and relate to the future provision of services are deferred in the balance sheet and amortised on a straight-line basis over the life of the relevant contract. These fees are accounted for on the issue of a contract and on receipt of incremental premiums on existing single premium contracts.

Regular fees charged to contracts are recognised on a straight-line basis over the period in which the service is provided. Transactional fees are recorded when the required action is complete.

Commissions receivable arise principally from fund houses with which investments are held. Commissions are recognised on an accruals basis in accordance with the relevant agreement.

	2015	2014
	£m	£m
Contract fee income	38.7	41.1
Fund management charges	13.4	14.2
Commissions receivable	4.2	4.2
	56.3	59.5

6 Investment income

Investment income comprises dividends, interest and other income receivable, realised gains and losses on investments and unrealised gains and losses. Dividends are accrued on the date notified. Interest is accounted for on a time proportion basis using the effective interest method.

	2015	2014
	£m	£m
Interest income	0.8	0.8
Dividend income	3.9	4.4
Gains on realisation of investments	41.0	5.4
Movement in unrealised losses	2.9	(3.2)
	48.6	7.4

7 Origination costs

Origination costs include commissions, intermediary incentives and other distribution-related expenditure. Origination costs which vary with, and are directly related to, securing new contracts and incremental premiums on existing single premium contracts are deferred to the extent that they are recoverable out of future net income from the relevant contract. Deferred origination costs are amortised on a straight-line basis over the life of the relevant contracts. Origination costs that do not meet the criteria for deferral are expensed as incurred.

	2015	2014
	£m	£m
Amortisation of deferred origination costs	18.0	19.2
Other origination costs	2.1	2.0
	20.1	21.2

8 Administrative and other expenses

Included in administrative and other expenses is the following:

	2015	2014
	£m	£m

Auditors' remuneration:
- Fees payable to the Company's auditor for the audit of the
Company's annual accounts	0.1	0.1
- Fees payable for the audit of the Company's subsidiaries
pursuant to legislation	0.7	0.3
- Other services provided to the Group	0.1	0.1
Employee costs (see note 9)	10.9	10.8
Directors' fees	0.3	0.3
Estimated impact of HMRC settlement, including related
professional fees	(3.0)	5.0
Fund management fees	3.8	4.3
Renewal and other commission	1.2	1.2
Professional and other fees	2.6	2.2
Litigation fees and settlements	0.6	1.1
Operating lease rentals	0.6	0.6
Licences and maintenance fees	0.9	0.9
Insurance costs	0.9	0.9
Depreciation of property, plant and equipment	0.6	0.6
Communications	0.3	0.4

9 Employee costs

9.1 The aggregate remuneration in respect of employees (including sales staff and executive Directors) was as follows:

	2015	2014
	£m	£m
Wages and salaries	10.6	11.0
Social security costs	1.0	0.9
Contributions to pension plans	0.9	0.9
	12.5	12.8

Total salary and other staff costs for the year are incorporated within the following classifications:

	2015	2014
	£m	£m
Administrative salaries and other staff costs	10.9	10.8
Origination costs	1.6	2.0
	12.5	12.8

The above information includes Directors' remuneration. Details of the Directors' remuneration, share options, pension entitlements and interests in shares are disclosed in the Report of the Remuneration Committee.

Group companies contribute to employees' individual defined contribution pension plans. Contributions are charged to the income statement as they become payable under the terms of the relevant employment contract. The Group has no further payment obligations once pension contribution requirements have been met.

9.2 The average number of employees during the year was as follows:

	2015	2014
	No.	No.
Administration	144	145
Distribution and marketing	27	25
IT development	35	34
	206	204

10 Taxation

Taxation is based on profits and income for the period as determined with reference to the relevant tax legislation in the countries in which the Company and its subsidiaries operate. Tax payable is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Tax is recognised in the income statement except to the extent that it relates to items recognised in equity. Tax on items relating to equity is recognised in equity.

The Group's profits arising from its Isle of Man-based operations are taxable at zero percent. Profits in the Republic of Ireland are taxed at 12.5%.

There is no material difference between the current tax charge in the income statement and the current tax charge that would result from applying standard rates of tax to the profit before tax.

11 Earnings per share

The calculation for earnings per share is based on the profit for the year after taxation divided by the average number of shares in issue throughout the year.

	2015	2014
Profit after tax (£m)	14.9	8.3
Weighted average number of shares in issue (millions)	137.4	137.4
Basic earnings per share in pence	10.9	6.0

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 10.9p per share (2014: 6.0p).

12 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 year:

	Per share	Total	Per share	Total
	2015	2015	2014	2014
	p	£m	p	£m
Final dividend in respect of previous
financial year	5.0	6.9	4.75	6.5
Interim dividend in respect of current
financial year	3.5	4.8	3.4	4.7
	8.5	11.7	8.15	11.2

The Board has resolved to pay a final dividend of 5.25p per share on 19 November 2015, subject to approval at the Annual General Meeting, based on shareholders on the register on 2 October 2015.

13 Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation and any impairment. The historical cost of property, computer equipment and fixtures & fittings is the purchase cost, together with any incremental costs directly attributable to the acquisition. The historical cost of computer software is the purchase cost. Computer software is recognised as an intangible asset.

Depreciation is calculated so as to amortise the cost of tangible and intangible assets, less their estimated residual values, on a straight-line basis over the expected useful economic lives of the assets concerned and is included in administration and other expenses in the income statement.

The carrying amount, residual value and useful life of the Group's plant and equipment is reviewed annually to determine whether there is any indication of impairment, or a change in residual value or expected useful life. If there is any indication of impairment, the asset's carrying value is revised.

The economic lives used for this purpose are:

Freehold property	50 years
Computer equipment and software	3 to 5 years
Fixtures & fittings	4 years

The cost of property, computer equipment and fixtures & fittings at 30 June 2015 is £9.6m (2014: £9.4m), with a net book value of £1.1m (2014: £1.5m). The cost of computer software at 30 June 2015 is £0.6m (2014: £0.5m), with a net book value of £0.2m (2014: £0.3m).

Accumulated depreciation at 30 June 2015 is £8.3m (2014: £7.7m).

14 Deferred origination costs

Amortisation of deferred origination costs is charged within the origination costs line in the consolidated statement of comprehensive income.

Formal reviews to assess the recoverability of deferred origination costs on investment contracts are carried out at each balance sheet date to determine whether there is any indication of impairment. If there is any indication of irrecoverability or impairment, the asset's recoverable amount is estimated. Impairment losses are reversed through the income statement if there is a change in the estimates used to determine the recoverable amount. Such losses are reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of amortisation where applicable, if no impairment loss had been recognised.

The movement in value over the financial year is summarised below.

	2015	2014
Carrying value	£m	£m
At beginning of financial year	123.9	131.0
Origination costs incurred during the year	7.6	12.1
Origination costs amortised during the year	(18.0)	(19.2)
	113.5	123.9

	2015	2014
Carrying value	£m	£m
Current	11.3	12.8
Non-current	102.2	111.1
	113.5	123.9

15 Other receivables

Other receivables are initially recognised at fair value and subsequently measured at amortised cost.

	2015	2014
	£m	£m
Contract fees receivable	0.6	0.8
Commission receivable	1.0	1.0
Corporation tax recoverable	-	0.2
Other debtors	2.6	2.1
	4.2	4.1

Estimated to be settled within 12 months	3.9	3.8
Estimated to be settled after 12 months	0.3	0.3
	4.2	4.1

At the balance sheet date there are no receivables overdue but not impaired (2014: £nil) or impaired (2014: £nil). Due to the short-term nature of these assets the carrying value is considered to reflect fair value.

16 Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less, net of short-term overdraft positions where a right of set-off exists.

	2015	2014
	£m	£m
Money market funds	56.5	45.1
Short-term deposits with credit institutions	8.9	13.3
	65.4	58.4

17 Financial liabilities under investment contracts

17.1 Investment contract liabilities, premiums and benefits paid

17.1.1 Investment contract liabilities

Investment contracts consist of unit-linked contracts written through subsidiary companies in the Group. Unit-linked liabilities are measured at fair value by reference to the value of the underlying net asset value of the Group's unitised investment funds, determined on a bid basis, at the balance sheet date.

The decision by the Group to designate its unit-linked liabilities at fair value through profit or loss reflects the fact that the liabilities are calculated with reference to the value of the underlying assets.

17.1.2 Investment contract premiums

Investment contract premiums are not included in the income statement but are reported as deposits to investment contracts and are included in financial liabilities in the balance sheet. On existing business, a liability is recognised at the point the premium falls due. The liability for premiums received on new business is deemed to commence at the acceptance of risk.

17.1.3 Benefits paid

Withdrawals from policy contracts and other benefits paid are not included in the income statement but are deducted from financial liabilities under investment contracts in the balance sheet. Benefits are deducted from financial liabilities and transferred to amounts due to investment contract holders on the basis of notifications received, when the benefit falls due for payment or, on the earlier of the date when paid or when the contract ceases to be included within those liabilities.

17.2 Movement in financial liabilities under investment contracts

The following table summarises the movement in liabilities under investment contracts

during the year:

	2015	2014
	£m	£m
Deposits to investment contracts	100.9	104.7
Withdrawals from contracts and charges	(185.2)	(196.5)
Change in provisions for investment contract liabilities	47.8	7.3
Movement in year	(36.5)	(84.5)
At beginning of year	943.6	1,028.1
	907.1	943.6

	£m	£m
Expected to be settled within 12 months	26.7	25.8
Expected to be settled after 12 months	880.4	917.8
	907.1	943.6

The change in provisions for investment contract liabilities includes dividend and interest income and net realised and unrealised gains and losses on financial investments held to cover financial liabilities.

17.3 Investments held to cover liabilities under investment contracts

The Group classifies its financial assets into the following categories: financial investments and loans and receivables. Financial investments consist of units in collective investment schemes, equity securities, fixed income securities and deposits with credit institutions. All financial investments are designated at fair value through profit or loss.

The decision by the Group to designate its financial investments at fair value through profit or loss reflects the fact that the investment portfolio is managed, and its performance evaluated, on a fair value basis.

The Group recognises purchases and sales of investments on trade date. Investment transaction costs are written off in administration expenses as incurred.

All gains and losses derived from financial investments, realised or unrealised, are recognised within investment income in the income statement in the period in which they arise.

The value of financial assets at fair value through profit or loss that are traded in active markets (such as trading securities) is based on quoted market prices at the balance sheet date. The quoted market price for financial assets held by the Group is the current bid price. Investments in funds and certain other unquoted securities are valued at the latest available net asset valuation provided by the administrators or managers of the funds and companies, unless the directors are aware of good reasons why such valuations would not be the most appropriate or indicative of fair value. Where necessary, the Group uses other valuation methods to arrive at the stated fair value of its financial assets, such as recent arms' length transactions or reference to similar listed investments.

Loans and receivables are financial assets with fixed or determinable payments that are not quoted on an active market. Loans and receivables consist, primarily, of contract fees receivable, long-term cash deposits (i.e. with an original maturity duration in excess of three months) and cash and cash equivalents.

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

	2015	2014
	£m	£m
Equity securities	27.5	35.2
Investments in collective investment schemes	784.4	802.4
Fixed income securities	18.3	24.1
Deposits and money market funds	77.9	82.9
Total assets	908.1	944.6
Other payables	(1.0)	(1.0)
Net financial assets held to cover financial liabilities	907.1	943.6

18 Deferred income

Fees charged for services related to the management of investment contracts are recognised as revenue as the services are provided. Initial fees which exceed the level of recurring fees and relate to the future provision of services are deferred. These are amortised over the anticipated period in which services will be provided.

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

	2015	2015
Carrying value	£m	£m
At beginning of financial year	141.2	137.6
Income received and deferred during the year	18.3	24.9
Income recognised in contract fees during the year	(21.9)	(21.3)
	137.6	141.2

	2015	2014
Carrying value	£m	£m
Current	14.1	15.6
Non-current	123.5	125.6
	137.6	141.2

19 Other payables

Other payables are initially recognised at fair value and subsequently measured at amortised cost. They are recognised at the point where service is received but payment is due after the balance sheet date.

	2015	2014
	£m	£m
Commission payable	2.0	3.0
Provisions for HMRC settlement and related costs	-	4.8
Other creditors and accruals	4.3	3.9
Other provisions	-	0.2
	6.3	11.9

As noted elsewhere in these accounts, the Group reached a settlement with HMRC this year in connection with Chargeable Event Certificates liabilities, resulting in a write back of £3.0m of the provision held in the accounts at 30 June 2014.

All payable balances, including amounts due to contract holders, are deemed to be current. Due to the short-term nature of these payables the carrying value is considered to reflect fair value.

20 Capital management

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.

The Group's policy is for each company to hold the higher of:

· the company's internal assessment of the capital required; and

· the capital requirement of the relevant supervisory body plus a specified margin over this to absorb changes.

There has been no material change in the Group's management of capital during the period and all regulated entities exceed the minimum solvency requirements at the balance sheet date.

20.1 Capital position at the balance sheet date

The capital position statement sets out the financial strength of the businesses of the Group, measured on the basis of the presentation within the financial statements of the Company's regulated life assurance subsidiaries. These are located in the Isle of Man (Hansard International Limited) and the Republic of Ireland (Hansard Europe Limited). The Group and its individually regulated operations have complied with all externally and internally imposed capital requirements throughout the period.

Except in relation to Deferred Acquisition Cost ("DAC") assets held by Hansard Europe Limited, 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.

	2015	2014
	£m	£m
Consolidated shareholders' funds	40.1	36.9
Adjustment arising from change in GAAP basis (*)	21.7	22.7
Total shareholders' funds	61.8	59.6

Comprising shareholders' funds of:
Non-life assurance Group companies	18.6	19.0
Life assurance subsidiary companies	43.2	40.6
	61.8	59.6
Less: DAC asset inadmissible for solvency purposes	(0.1)	(0.6)
Total capital available to meet regulatory capital requirements	63.4	59.0

*These 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. IFRS smoothes these fees and costs 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.

20.2 Regulatory Minimum Solvency Margin

The aggregate required minimum margin of the regulated entities at each balance sheet date was as set out below.

	2015	2014
	£m	£m
Aggregate minimum margin	4.6	4.8

20.3 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 27 are concluded.

That company's capital available to meet regulatory capital requirements at 30 June 2015, which is incorporated within the table in note 20.1 above, is £15.4m (2014: £13.4m).

21 Called up share capital

	2015	2014
	£m	£m
Authorised:
200,000,000 ordinary shares of 50p	100.0	100.0
Issued and fully paid:
137,388,669 (2014: 137,379,634) ordinary shares of 50p	68.7	68.7

.22 Other reserves

Other reserves comprise the merger reserve arising on the acquisition by the Company of its subsidiary companies on 1 July 2005, the share premium account and the share save reserve. The merger reserve represents the difference between the par value of shares issued by the Company for the acquisition of those companies, compared to the par value of the share capital and the share premium of those companies at the date of acquisition.

	2015	2014
	£m	£m
Merger reserve	(48.5)	(48.5)
Share premium	0.1	0.1
Share save reserve	0.1	0.1
	(48.3)	(48.3)

23 Equity settled share-based payments

The Company has established a number of equity-based payment programmes for eligible employees. The fair value of expected equity-settled share-based payments under these programmes is calculated at date of grant using a standard option-pricing model and is amortised over the vesting period on a straight-line basis through the income statement. A corresponding amount is credited to equity over the same period.

At each balance sheet date, the Group reviews its estimate of the number of options expected to be exercised. The impact of any revision in the number of such options is recognised in the consolidated statement of comprehensive income so that the charge to the income statement is based on the number of options that actually vest. A corresponding adjustment is made to equity.

The estimated fair value of the schemes and the imputed cost for the period under review is not material to these financial statements.

23.1 SAYE programme

This is a standard HMRC approved scheme that is available to all employees where individuals may make monthly contributions over three or five years to purchase shares at a price not less than 80% of the market price at the date of the invitation to participate.

At the date of this report, the following options remain outstanding under each tranche:

	2015	2014
	No. of	No. of
Scheme year	options	options
2011	8,366	30,294
2013	266,538	266,538
2014	531,376	531,376
2015	823,919	-
	1,630,199	828,208

A summary of the transactions in the existing SAYE programmes during the year is as follows:

	2015		2014
		Weighted		Weighted
		average		average
	No. of	exercise	No. of	exercise
	options	price (p)	options	price (p)
Outstanding at the start of year	828,208	88	473,024	97
Granted	823,919	68	531,376	83
Exercised	(9,035)	88	-	-
Forfeited	(12,893)	88	(176,192)	127
Outstanding at end of year*	1,630,199	78	828,208	88

*66,098 of these options are exercisable as at 30 June 2015, with a weighted average price of 126p

Financial assumptions underlying the calculation of fair value

The fair value expense has been based on the fair value of the options granted, as calculated using the Black Scholes pricing model. Expected volatility is based on an analysis of the Group's share price volatility on the London Stock Exchange.

The fair value of the share options granted during the year has been calculated using the following assumptions:

2015 award assumptions	3-year	5-year
Date of grant	1 May 2015	1 May 2015
Fair value (pence)	16	15
Exercise price (pence)	68	68
Share price (pence)	88	88
Expected volatility	30 %	30 %
Expected dividend yield	7.9 %	7.9 %
Risk-free rate	1.3 %	1.6 %

2015 award details
Date of grant	1 May 2015
No. of shares awarded	823,919
Vesting conditions	3- or 5-year savings term
Exercise period - 3-year	1 May 2015 - 31 October 2018
Exercise period - 5-year	1 May 2015 - 31 October 2020

23.2 Long Term Incentive Plan ("LTIP")

The Company previously had an LTIP for the Executive and senior management based on EEV performance over the 3 years ended 30 June 2014. The minimum condition required under the plan was not achieved in the year ended 30 June 2014, therefore there was no charge in the Consolidated Statement of Comprehensive Income. There was no LTIP scheme in place for the current financial year.

24 Exceptional items

Items that are material either because of their size or their nature are presented within a relevant category in the consolidated statement of comprehensive income, but highlighted separately in the notes to the financial statements. The separate reporting of exceptional items helps provide a better picture of the Group's underlying performance.

Exceptional items affecting the results for the year were a credit of £2.9m (2014: a charge of £6.4m). An analysis of the nature of the relevant expenses is as follows:

24.1 Costs of settlement with HMRC - In the prior year, a provision of £5m was made for estimated liabilities arising from weaknesses in the Group's procedures in relation to the processing and issue of Chargeable Event Certificates. The Group concluded its work in this area during the year and agreed a full and final settlement with HMRC on an "estimate of tax lost" basis of £1.4m. After taking into account associated professional and advisory fees, we were ultimately able to write back £3.0m to the Consolidated Statement of Comprehensive Income.

24.2 Costs of closure of Hansard Europe Limited - In the prior year, we took a charge of £0.7m, representing accelerated redundancy costs, professional fees and other costs arising from the closure of Hansard Europe to new business and the restructure of the Group's contract servicing and related activities. With the successful implementation of the revised Operating Model, the costs for the current year are not significant.

24.3 Litigation settlements - 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 the Board considered it in our best interests to reach a resolution with regard to certain of those claims. Settlements totalling £0.2m have been agreed during the financial year (2014: £0.5m). Other claims are for the most part considered to be speculative and will be robustly defended.

25 Financial commitments

Operating leases are defined as leases in which the lessor retains a significant proportion of the risks and rewards. Costs in respect of operating leases, less any incentives received from the lessor, are charged to the income statement on a straight-line basis over the lease term.

The total of future minimum lease payments under non-cancellable operating leases for property rental is as follows:

	2015	2014
	£m	£m
Amounts due:
Within one year	0.6	0.6
Between two and five years	1.4	1.7
After five years	0.5	0.8
	2.5	3.1

26 Related party transactions

26.1 Intra-group transactions

Various subsidiary companies within the Group perform services for other Group companies in the normal course of business. The financial results of these activities are eliminated in the consolidated financial statements.

26.2 Key management personnel compensation

Key management consists of 10 individuals (2014: 10), being members of the Group's Executive Committee and executive Directors of direct subsidiaries of the Company.

The aggregate remuneration paid to key management as at 30 June 2015 is as follows:

	2015	2014
	£m	£m
Salaries, wages and bonuses	2.4	2.5

The total value of investment contracts issued by the Group and held by key management is zero (2014: less than £0.1m).

26.3 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. Except as reported below, there were no significant transactions between the Group and Dr Polonsky during the year under review.

· As reported in the Report of the Remuneration Committee, Dr Polonsky received fees of £50,000 (2014: £1) for services provided to the Group under the terms of his service agreement dated 22 September 2014. This fee represents the standard arm's length fee paid to each of the Group's non-executive directors.

· Dr Polonsky has an investment contract issued by the Group on terms available to employees in general. At 30 June 2015 this contract had a fair value of £7.2m (2014: £6.6m).

26.4 Employee Benefit Trust

An Employee Benefit Trust was established in November 2011 with the transfer to it of 400,000 ordinary shares in Hansard Global plc by Dr Polonsky. The purpose of the Trust is to use the income derived from dividends to reward longer serving staff, where sales targets are met. During the year under review Dr Polonsky donated a further 250,000 ordinary shares in Hansard Global plc to the Trust. At the date of this Report and Accounts, the Trust holds 699,910 shares (2014: 434,500 shares). There were no awards paid by the Trust during the year as the performance targets were not met (2014: £21,000).

26.5 Other related party transactions

The Company entered into a contract in July 2011 with Mr. Gordon Marr, the Group Chief Executive Officer, to purchase a residential property for the sum of £481,000, exercisable at his discretion. Mr. Marr purchased the property in July 2011 for £501,000. The contract has not been exercised at the date of this Report and Accounts.

27 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 agents. 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. The company has been served with a number of writs arising from such complaints and other asset-related issues.

As at 30 June 2015, there were outstanding writs served upon Hansard Europe Limited totalling €12.4m or £8.8m (2014: €6.5m or £5.2m). Several additional contract holders were since added to one writ which has increased the total outstanding writs to €13.3m (£9.4m) as at the date of this report. The increase from the previous year is primarily caused by one claim for €6.3m (£4.5m) from a group of Belgian policyholders which challenges the right of Hansard Europe to have operated under the European Union's principle of Free Movement of Services. We believe this to be highly speculative and will robustly defend against it.

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 has strong defences to such claims. Notwithstanding this, there may be circumstances where in order to avoid the expense and distraction or extended litigation, the Group may consider it to be in the best interests of the Group and its shareholders to reach a resolution with regard to certain of these claims. Provisions totalling £0.1m have been established in relation to a small number of those writs following a decision to pursue settlement. It is not possible at this time to make any further estimates of liability.

28 Foreign exchange rates

The Group's presentational and functional currency is pounds sterling, being the currency of the primary economic environment in which the Group operates.

Foreign currency transactions are translated into sterling using the applicable exchange rate prevailing at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange prevailing at the balance sheet date, and the gains or losses on translation are recognised in the income statement.

Non-monetary assets and liabilities that are held at historical cost are translated using exchange rates prevailing at the date of transaction; those held at fair value are translated using exchange rates ruling at the date on which the fair value was determined.

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


	2015	2014
US Dollar	1.57	1.72
Japanese Yen	192.49	173.32
Euro	1.41	1.25

29 Non statutory accounts

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 June 2015 or 2014, but is derived from those accounts. The auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report.

30 Annual report

The Company's annual report and accounts for the year ended 30 June 2015 is expected to be posted to shareholders by 12 October 2015. Copies of both this announcement and the annual report and accounts will be available to the public at the Company's registered office at Harbour Court, Lord Street, PO Box 192, Douglas, Isle of Man, IM99 1QL and through the Company's website at www.Hansard.com.

Responsibility statement of the directors in respect of the annual financial report

The Directors confirm to the best of their knowledge that:

· The financial statements have been prepared in accordance with International Reporting Financial Standards as adopted by the EU and give a true and fair view of the assets, liabilities, financial position and profit for the Company and the undertakings included in the consolidation as a whole;

· The EEV Information has been prepared in accordance with the EEV Principles; and

· Pursuant to Disclosure and Transparency Rules Chapter 4, the Directors' report of the Company's annual report and accounts includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties faced by the business.

On behalf of the Board

P P C Gregory	G S Marr
Director	Director
On behalf of the Board
22 September 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") i.e. future profits - from business in-force at the valuation date, 30 June 2015. 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 fully with the set of 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 YEAR

2.1 EEV Profit / (Loss)

EEV Profit / (Loss) is a measure of the performance over the year. It is derived as follows:

	2015	2014
	£m	£m
New Business Contribution	(3.7)	3.3
Experience Variances	2.6	(6.7)
Operating Assumption Changes	(6.1)	(6.0)
Model Changes	(0.9)	1.3
Expected Return on New and Existing Business	1.3	1.2
Expected Return on Net Worth	0.5	0.3
EEV Operating Loss after tax	(6.3)	(6.6)
Investment Return Variances	4.3	(8.2)
Economic Assumption Changes	4.9	4.1
EEV Profit / (Loss) after tax	2.9	(10.7)

2.1.1 New Business Contribution

New Business Contribution ("NBC") was (£3.7m) (2014: £3.3m). The negative NBC reflects the reduction in new business volumes and the spreading of initial expenses over fewer policies sold and to a lesser extent lower charges on the newer products.

2.1.2 Experience Variances

Experience Variances arise where actual experience differs from that assumed in the prior year's EEV. Major contributors to the experience variances this year include the reversal of one-off expense provisions (related to Chargeable Event Certificates), improved premium persistency, partially offset by more full encashments.

	2015	2014
	£m	£m
One-off expenses	1.4	(4.5)
Premium persistency	2.4	0.8
Full encashments	(1.6)	(3.5)
Partial encashments	0.7	0.4
Ongoing expenses	(0.7)	(0.1)
Charges	(0.6)	(1.1)
Policyholder activity margins	0.6	0.6
Other	0.4	0.7
	2.6	(6.7)

2.1.3 Operating Assumption Changes

The Operating Assumption Changes reflect changes in management's view of the behaviour of the existing business. The EEV changed by (£6.1m) (2014: (£6.0m)), as shown below.

Operating assumptions are generally management's best estimate, having regard to recent experience. Management has strengthened the expense assumptions to allow for the reduction in the number of policies due to the low volumes of new business.

	2015	2014
	£m	£m
Ongoing expenses	(11.2)	2.2
Premium persistency	3.0	(4.6)
Policyholder activity margins	1.3	1.9
Mortality	0.5	-
Partial encashment	0.2	0.7
Changes to charge & expense inflation	0.1	0.0
Full encashment	-	(6.2)
	(6.1)	(6.0)

2.1.4 Model Changes

The Group continues to develop its modelling functionality. In particular, this year, a revised approach to modelling policyholder activity margins was implemented. As a result of these model changes, the EEV changed by (£0.9m) (2014: £1.3m).

2.1.5 Expected Return on 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 the level of future new business, so the New Business Strain is that incurred in the year from new sales, using end of period assumptions (i.e. assumptions determined at 30 June 2015).

	2015			2014
	EEV	Net	VIF	EEV	Net	VIF
		worth			worth
	£m	£m	£m	£m	£m	£m
Cash generated from VFP	0.0	32.8	(32.8)	0.0	41.5	(41.5)
New Business Strain	0.0	(14.1)	14.1	0.0	(16.8)	16.8
Time value of existing business	1.3	1.0	0.3	1.2	0.6	0.6
Time value of new business	0.0	0.0	0.0	0.0	(0.1)	0.1
	1.3	19.7	(18.4)	1.2	25.2	(24.0)

The VIF time value of existing business includes an adjustment of (£0.1) for non-Market risk.

The expected value of cash generated was £32.8m (2014: £41.5m). The decrease reflects the lower levels of new business in 2013/14 and 2014/15 being capitalised in the year. The lower New Business Strain of £14.1m (2014: £16.8m) reflects lower new business. The time value figures use economic assumptions at 30 June 2014.

2.1.6 Expected Return on Net Worth

The Expected Return on Net Worth of £0.5m (2014: £0.3m) 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 risk discount for sterling which was 0.9% (30 June 2014: 0.7%).

2.1.7 Investment return variance

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

	2015	2014
	£m	£m
Investment performance of policyholder funds	3.9	9.7
Exchange rate movements	0.4	(17.5)
Shareholder return	(0.1)	(0.4)
Other	0.1	0.0
	4.3	(8.2)

2.1.8 Economic Assumption Changes

There was a positive variance of £4.9m (2014: £4.1m) from Economic Assumption Changes: this variance follows the application of the EEV Principles, and reflects changes to government bond yields for the currencies to which the Group is exposed

	2015	2014
	£m	£m
Risk Discount Rates & Unit Growth	3.8	3.5
Treasury Margin	0.6	(0.9)
Marketing Allowances	0.5	1.5
	4.9	4.1

2.2 Analysis of EEV profit / (loss) by component

The table below shows a detailed analysis of EEV profit after tax for the year ended 30 June 2015.

	2015			2014
	Movement in			Movement in
	EEV	Net Worth	VIF	EEV	Net Worth	VIF
	£m	£m	£m	£m	£m	£m
New Business Contribution	(3.7)	0.0	(3.7)	3.3	0.0	3.3
Experience Variances	2.6	1.3	1.3	(6.7)	(2.9)	(3.8)
Operating Assumption Changes	(6.1)	0.0	(6.1)	(6.0)	(0.3)	(5.7)
Model Changes	(0.9)	0.0	(0.9)	1.3	0.0	1.3
Expected Return on New and Existing Business	1.3	19.7	(18.4)	1.2	25.2	(24.0)
Expected Return on Net Worth	0.5	0.5	0.0	0.3	0.3	0.0
EEV Operating Profit / (Loss) after tax	(6.3)	21.5	(27.8)	(6.6)	22.4	(29.0)
Investment Return Variances	4.3	0.3	4.0	(8.2)	(2.4)	(5.8)
Economic Assumption Changes	4.9	0.0	4.9	4.1	0.0	4.1
EEV Profit / (Loss) after tax	2.9	21.8	(18.9)	(10.7)	20.0	(30.7)

The VIF Expected Return on new and existing business figure includes an adjustment of (£0.1) for non-Market risk.

3 EMBEDDED VALUE AT 30 JUNE 2015

Following the payment of dividends of £11.7m (2014: £11.2m), the Group's EEV has decreased to £195.0m (2014: £203.8m). The EEV balance sheet is presented below.

	2015	2014
	£m	£m
Free surplus	36.5	28.3
Required Capital	27.0	25.1
Net Worth	63.5	53.4
VIF	138.6	157.4
Frictional costs	(1.0)	(1.0)
Reduction for non-market risk	(6.1)	(6.1)
Value of Future Profits ("VFP")	131.5	150.4
EEV	195.0	203.8

At the balance sheet date, the Net Worth of the Group is represented by liquid cash balances. Following the decision to close Hansard Europe to new business, 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 of £12.5m (2014: £9.0m) will be constrained for three years.

The VFP is based on the value of policyholder funds under administration at 30 June 2015.

4 NEW BUSINESS PROFITABILITY

Levels of new business written in 2015 were not of sufficient quantity to cover the costs of writing such business. As a result the new business contribution and new business margin are negative. The following metrics illustrate the profitability of the Group's new business.

4.1 New business margin

	2015	2014
New business sales ("PVNBP")	£60.6m	£83.0m
New business contribution ("NBC")	(£3.7m)	£3.3m
New business margin ("NBM")	(6.2%)	4.0%

The New Business Margin for the year is (6.2%) (2014: 4.0%). The change is primarily due to the reduction in new business volumes over the period and the spreading of initial expenses over fewer policies sold and to a lesser extent lower charges on the newer products.

4.2 Internal rate of return ("IRR")

An IRR cannot be calculated where the return on new business is negative (2014: 6.7%).

4.3 Break even point ("BEP")

A BEP cannot be calculated where the return on new business is negative (2014: 9.1 years).

5 EEV SENSITIVITY ANALYSIS

Sensitivities provide an indication of the impact of changes in particular assumptions on the EEV at 30 June 2015 and the NBC for the 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, although the VIF has become proportionately less sensitive to the changes in expense assumptions as a result of Hansard Europe Limited being closed to new business. 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	195.0	(3.7)
Operating sensitivities
10% decrease in expenses	6.7	1.1
1% increase in expense inflation	(4.7)	(0.2)
1% increase in charge inflation	3.6	0.1
1% increase in expense & charge inflation	(0.9)	(0.1)
10% decrease in full encashment rates	1.6	0.1
5% decrease in mortality	0.1	0.0

Economic sensitivities
1% increase in risk discount rate	(6.6)	(0.4)
1% decrease in investment return rate	(5.8)	(0.2)
1% increase in risk discount rate & investment return rate	(1.0)	(0.2)
1% decrease in risk discount rate & investment return rate	(0.2)	0.1
10% decrease in the value of equities and property	(9.0)	0.0
10% strengthening of sterling	(13.1)	0.5

In each sensitivity calculation, all other assumptions remain unchanged, except those being tested. 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.

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 BASIS OF PREPARATION OF EEV

1.1 EEV Principles

1.2 Covered business

EEV covers the entire business of the Group.

1.3 New business premiums

The following premiums are included in the calculation of the NBC, PVNBP, IRR and BEP:

· Premiums arising from the sale of new policies during the period, including:

o Contractual premiums;

o Non-contractual recurrent single premiums where the level of premium and period of payment is pre-defined and reasonably predictable.

· Non-contractual top-up premiums received during the period on existing policies.

1.4 Timing of cash flows

The EEV has been calculated using economic and operating assumptions as at the end of the financial year (i.e. the valuation date). The NBC, PVNBP, IRR and BEP where applicable have been calculated using economic assumptions as at the start of the year and operating assumptions as at the end of the year.

1.5 Real world returns

No credit is taken in the calculation of EEV, NBC, PVNBP, IRR or BEP where applicable for returns in excess of risk-free returns. This approach may differ, particularly with regards to the calculation of IRR and BEP, from that used by some of our competitors, who include an asset risk premium.

2 METHODOLOGY

2.1 Overview

The methodology used to derive the EEV results at the valuation date is consistent with the EEV methodology used in relation to the consolidated financial statements for the year ended 30 June 2014. Under 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 projected profit recognised over the lifetime of a policy under EEV methodology is the same as reported under IFRS, but the timing of recognition is different.

2.2 European Embedded Value

The Group's European Embedded Value is calculated on its covered business and is shown net of corporation tax. The Group does not have any debt or financial reinsurance arrangements in place at the valuation date. The EEV comprises the Net Worth and the Value of Future Profits, which can be further categorised as shown in the table below:

Components Of The EEV
Component	Sub-component
Net Worth	Required Capital
	Free Surplus
Value Of Future Profits	Value of In-Force
	Reduction for Non-market Risk
	Frictional Cost of Required Capital
	Cost of Financial Options & Guarantees

Each component is determined separately, as follows:

2.2.1 Required Capital

Required Capital is determined by the Board, bearing in mind the requirements of regulators of the Group's life insurance subsidiaries and the working capital required by the Boards of Group's subsidiaries.

2.2.2 Free surplus

The Free Surplus is the difference between the Net Worth and the Required Capital.

2.2.3 Value of In-Force covered business ("VIF")

The VIF is determined by projecting, on a best estimate basis, the stream of future shareholder cash flows expected to arise from assets backing the liabilities of the covered business and then calculating the present value of the cash flows using an appropriate risk discount rate.

Future shareholder cash flows are deemed to arise when they are released from policyholder funds, following an actuarial valuation by the appointed actuary.

VIF is calculated on a 'look through' basis whereby it includes all net cash flows arising from the products supported by the subsidiary companies providing administration, distribution and other services. The projections are performed using a proprietary actuarial modelling tool called Prophet.

2.2.4 Reduction for non-market Risk

The directors make an annual assessment of the cost of non-market risks that are not covered in the VIF projections and determine an allowance to be deducted from VFP to meet these risks.

This year, the Directors have established an allowance of £6.1m (2014: £6.1m). This is equivalent to an increase of 0.9% in the risk discount rate assumption at the valuation date. The allowance has been assessed after considering past experience (including the Chargeable Event Certificate issue), the operational characteristics of the business and market information.

2.2.5 Frictional Cost of Required Capital

The cost of holding the Required Capital is, for the Group, the cost of tax on interest on the capital retained in Hansard Europe. The expected interest is projected, the tax calculated and then discounted to the valuation date.

2.2.6 Cost of financial options and guarantees

The Group's business does not include any policies with material options and/or guarantees regarding investment performance and, hence, unlike the situation faced by many other life assurers, the Group's cost of financial options and guarantees is zero.

3 OPERATING ASSUMPTIONS

The EEV is calculated using best estimate operating assumptions having regard for the Group's recent experience and management's best estimate of future behaviour, together with other relevant data.

The covered business is unit-linked: it comprises mainly investment-type products with minimal life cover and no financial options or guarantees. The three main product groups are regular premium, personal portfolio and recurrent single premium. Variations in experience between the product groups have been considered and, where appropriate, separate assumptions have been used.

The EEV assumptions are based on an assessment of the business as a going concern.

3.1 Expense assumptions

The allocation of expenses between acquisition and maintenance and the assumption setting process are generally consistent with prior years.

Development costs to enable future new business have been allocated to new business and are fully reflected in the calculation of the NBC. Other non-recurring development costs are generally charged as incurred, and hence will be reflected as a profit or loss in the year.

Exceptional items are generally charged as incurred and hence are reflected as a variance in the year. Their value in 2015 was a gain of £1.4m which includes a £3.0m release in the provision for Chargeable Event Certificates (2014: negative £4.5m).

3.2 Demographic & policyholder experience assumptions

The assumption setting process is consistent with prior years.

3.3 Taxation

Current and expected future tax legislation, regulation and the Group's own tax position were considered in setting the assumptions. The tax rate assumptions for this year have remained unaltered as follows:

Corporation tax rates	2015	2014
Isle of Man	0%	0%
Republic of Ireland	12.5%	12.5%

3.4 Other operating assumptions

The process for setting assumptions for the impact of policyholder activity, such as fund switching, is generally consistent with prior years.

4 ECONOMIC ASSUMPTIONS

Under EEV principles, the economic assumptions used in the EEV calculations are actively reviewed at each valuation date and are internally consistent. The assumption setting process is generally consistent with prior years.

4.1 Risk discount rate

The risk discount rates are set equal to the risk-free rates based on the bid-swap yield curve 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).

Aggregate weighted risk discount rate	Year ended 30 June 2015		Year ended 30 June 2014
	EEV	NBC	EEV	NBC
per annum	2.0%	1.9%	1.9%	2.2%

4.2 Investment returns

All investments are assumed to provide a return equal to the risk-free rate less external fund manager investment charges and any other investment expenses charged directly against policyholder funds. The rate is calculated based on the aggregate weighted discount rate.

4.3 Risk premium

No credit is taken in the calculation of EEV, NBC, PVNBP, IRR or BEP for returns in excess of risk-free returns i.e. a cautious approach is adopted by assuming an asset risk premium of zero.

4.4 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, 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	30 June 2015	30 June 2014
Expense inflation per annum	2.6%	3.0%
Charge inflation per annum - Hansard Europe	5.0%	5.0%
Charge inflation per annum - Hansard International - Year 1	1.9%	2.4%
Charge inflation per annum - Hansard International - Year 2	2.2%	2.7%
Charge inflation per annum - Hansard International - Year 3+	2.6%	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 2.6% per annum.

This information is provided by RNS

The company news service from the London Stock Exchange

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