Delivering on Strategy February 2016
Disclaimer This presentation does not constitute an invitation to subscribe for or otherwise to acquire or dispose of shares in Hansard Global plc. This presentation may contain forward-looking statements with respect to certain of the plans and current goals and expectations relating to the future financial conditions, business performance and results of Hansard Global plc. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of Hansard Global plc, including amongst other things, Hansard Global’s future profitability, competition with the markets in which the Company operates and its ability to retain existing intermediary clients and win new intermediary clients, changes in economic conditions generally or in the life assurance, savings and investment products sectors, terrorist and geopolitical events, changes in legal and regulatory regimes and practice, the ability of its owned and licensed technology to continue to service developing demands, changes in taxation regimes, exchange rate fluctuations, and volatility in the Company’s share price. As a result, Hansard Global’s actual future financial condition, business performance and results may differ materially from the plans, goals and expectations expressed or implied in these forward-looking statements. Hansard Global undertakes no obligation to publicly update or revise forward-looking statements, except as may be required by applicable law and regulation (including the Listing Rules). No statement in this presentation is intended to be a profit forecast or be relied upon as a guide to future performance. In particular, past performance is no guide to future performance.
Introduction & Overview Our Business Strategy Results – H1 2016 New Business Summary Questions 3
Meet the team Gordon Marr Tim Davies Les Wong Chief Executive Officer Chief Financial Officer Director of Marketing 4
Overview – H1 2016 New Business of £56.4m (PVNBP) for the year (H1 2015: £29.4m) IFRS profit Interim dividend of £4.9m of 3.6p per Highlights (H1 2015: £6.6m) share (H1 2015: 3.5p) Success of Middle East & Africa being replicated in Asia and Rest of World regions 5
Introduction & Overview Our Business Strategy Results – H1 2016 New Business Summary Questions 6
Strategic objective To add significant scale to the business, on a more diversified basis, through organic growth at acceptable levels of risk & profitability To be the preferred choice of distributors when recommending international savings and investment products to their clients 7
Strategic objectives Better value More long-term For Customers relationships with distributors A more visible Excellent profile in the market customer service Market leading online Motivated & engaged systems workforce 8
Hansard Europe & Japan Hansard Europe Operating Model • Dublin based subsidiary which wrote European business. In run-off since 30 June 2013. • Outsourcing of administration, legal function and finance activities to head office in Isle of Man operating successfully and efficiently. Capital • Regulatory assets at 31 December 2015: £15.6m (30 June 2015: £15.4m). • On-going restriction on dividend distributions linked to litigation resolution. Litigation • Outstanding writs have increased by a net £1m since the date of release of our full year 2015 results, primarily due to additional complainants adding to what we believe is a highly speculative group action in Belgium. • We have however had some important successes which establish some legal precedent: two cases in Belgium and one case in Italy were ruled fully in our favour (reducing total writs by £1m). Japan • Licence application status • Registered office • Sales plan 9
Introduction & Overview Our Business Strategy Results – H1 2016 New Business Summary Questions 10
Summary Results – H1 2016 Results – H1 2016 H1 2016 H1 2015 New business sales – PVNBP £56.4m * £29.4m New business margin (0.4)% (3.9)% Operating cash surplus £8.8m £13.8m IFRS profit after tax £4.9m £6.6m EEV operating profit after tax £1.2m £6.6m Interim dividend per share 3.6p 3.5p H1 2016 H1 2015 European Embedded Value £189m £204m Assets Under Administration £856m £924m * Includes £8.3m invested by Hansard’s President on arm’s length terms 11
New Business Statistics Results – H1 2016 H1 2016 H1 2015 £m £m Present Value of New Business Premiums New business Regular premiums 29.9 17.6 increasing across Single premium 26.5 * 11.8 the board. PVNBP 56.4 29.4 Annual Premium Equivalent (“APE”) 8.4 * 4.7 Margin on new business close to recovering to break-even level New Business Margin (PVNBP basis, after (0.4)% (3.9)% and was positive tax) in Q2. * Included within these figures is a transaction which took place during Q2 FY 2016 whereby the Group President invested the Sterling equivalent of £8.3m as a lump sum top- up to a Hansard savings product on arm’s -length terms. The transaction resulted in £8.3m PVNBP and £0.8m APE being included in the figures above. 12
Cash Flows Results – H1 2016 Cash flows support investment in new H1 2016 H1 2015 business, strategic £m £m development and dividends. Operating cash surplus 8.8 13.8 Interest and other income 0.5 0.4 Operating Cash Surplus lower as Cash inflow 9.3 14.2 initial period fees Investment in new business (7.1) (3.8) have come to an end for years where sales Capital expenditure (0.2) (0.1) were higher than present. Net Cash inflow before dividends 2.0 10.3 Dividends paid (7.2) (6.9) Overall outflow expected in our Net Cash flow for the year (5.2) 3.4 projections – over £27m free cash to cover transition period. 13
Free Cash Results – H1 2016 H1 2016 H1 2015 £m £m Total Group cash + deposit balances 79.6 81.2 Headline cash Net shareholder payables (1.9) (6.8) balance is allocated to a Policyholder claims payable (20.2) (19.2) number of Regulatory reserves (9.0) (9.0) constituents before true free Minimum regulatory capital * (10.8) (11.4) cash can be identified. 37.7 34.8 Increase this Regulatory capital currently restricted period is within HEL (10.0) (9.0) primarily due to “Free” Group cash + deposit release of 2015 27.7 25.8 CEC provision. balances * Minimum regulatory capital taken as 200% of amount needed to continue in operation. Includes capital requirements in Isle of Man, Ireland and Labuan. 14
Hansard Int’l & Hansard Europe AuA Development Results – H1 2016 Hansard Int’l and Hansard Europe AuA 5 year trend 800 HI: AuA relatively 700 742 steady although 719 705 700 683 600 affected by recent H1 market turmoil. 500 AuA £M 400 HE: Expected 300 314 decline after being 286 200 239 placed in run-off in 207 174 100 2013. 0 2012 2013 2014 2015 HY 2016 Year HI HE 15
Abridged IFRS Income Statement Results – H1 2016 H1 2016 H1 2015 £m £m Fee income Fees and commissions declining as HE book runs-off. HI - Hansard International 21.7 22.1 slightly down due - Hansard Europe 3.6 4.6 to new products earning fees over 25.3 26.7 longer term. Investment and other income 1.0 1.0 26.3 27.7 Costs being kept Origination costs (10.5) (10.5) in line with budgets, adding to Administrative expenses (9.7) (9.5) distribution capabilities Strategic spend (1.2) (1.1) prudently. Profit for the period 4.9 6.6 16
Abridged IFRS Balance Sheet Results – H1 2016 H1 2016 H1 2015 £m £m Deferred origination costs 111.2 118.3 Other assets 6.0 7.1 Shareholder cash and bank deposits 79.6 81.1 Total assets 196.8 206.5 Strong level of shareholders’ funds maintained post Deferred income 132.7 140.4 dividend payments Other payables 26.3 29.5 159.0 169.9 Net assets 37.8 36.6 Shareholders’ Equity 37.8 36.6 17
EEV Balance Sheet Results – H1 2016 While new business H1 2016 H1 2015 levels are still recovering, the Value of Future £m £m Profits will convert to Free surplus 31.4 31.5 cash at a higher rate Required Capital 27.2 26.4 than new VoFP is being added. Net Worth 58.7 57.9 Value of Future Profits 130.3 145.6 Required capital includes capital European Embedded Value 189.0 203.5 currently locked in Hansard Europe. Dividends are paid EEV per share = 138p (H1 2015: 148p). out of Free Surplus. The change essentially reflecting the dividends paid out (£12m since 31 Dec 2015). 18
EEV Profit Results – H1 2016 H1 2016 H1 2015 £m £m (0.2) (1.1) New business contribution New business contribution has recovered to close to 0.7 0.9 Expected return breakeven level. (1.5) (0.2) Experience variances Experience variances reflect 0.4 - Assumption and other changes an accumulation of a number of small items, including (0.6) (0.4) EEV operating loss after tax persistency. 1.3 4.6 Investment return variances Investment return and economic assumptions reflect 0.5 2.4 Economic assumption changes foreign exchange and 1.2 6.6 EEV profit after tax government bond yield favourable movements. 19
Introduction & Overview Our Business Strategy Results – H1 2016 New Business Summary Questions 20
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