TIDMHSD
RNS Number : 6328G
Hansard Global plc
25 July 2019
25 July 2019
Hansard Global plc
New business results for the year ended 30 June 2019
Hansard Global plc ("Hansard" or "the Group"), the specialist
long-term savings provider, issues its new business results for the
financial year ended 30 June 2019 ("FY 2019").
Summary
-- New business for the year ended 30 June 2019 was GBP155.9m in
PVNBP ("Present Value of New Business Premiums") terms, up 6.3%
from the prior year (FY 2018: GBP146.6m);
-- New business for Q4 2019 was GBP47.6m, up from GBP36.8m in Q4
2018 and from GBP34.1m in Q3 2019;
-- The momentum with our locally licensed venture in the UAE has
continued and has delivered solid growth;
-- Assets under administration continued to rise in the quarter
in line with global stock markets and were GBP1.08 billion at 30
June 2019 (31 March 2019: GBP1.03 billion).
Results announcement
-- Hansard will announce its full results for the financial year
ended 30 June 2019 on Thursday 26 September 2019. We are guiding
that profits for the second half of FY 2019, while positive, will
be significantly lower than those reported for H1 2019. The reasons
for this include previously announced initiatives such as the
development costs for a new administration system and licensing and
development costs for our Japanese proposition, together with
increased litigation defence costs, lower surrender charge income
from contractholder withdrawals and lower fee income from Hansard
Europe.
Gordon Marr, Group Chief Executive Officer, commented:
"We are delighted to have achieved a 6% growth in sales in the
2019 financial year given the amount of regulatory change taking
place in our market. While we have incurred a number of costs for
the full year to support future growth and improve operational
efficiency, our implemented strategy in the UAE is proving a
significant success and we look forward to capitalising on our
recently announced licence in Japan during the course of the
current financial year."
For further information:
Hansard Global plc +44 (0) 1624 688 000
Gordon Marr, Group Chief Executive Officer
Tim Davies, Chief Financial Officer
Email: investor-relations@hansard.com
Camarco +44 (0) 203 757 4980
Ben Woodford, Kimberley Taylor, Rebecca
Noonan
Hansard Global plc
NEW BUSINESS RESULTS FOR THE YEARED 30 JUNE 2019
OVERVIEW
The Group continues to focus on the distribution of regular and
single premium products in a range of jurisdictions around the
world, achieving well diversified new business growth.
In Present Value of New Business Premiums ("PVNBP") terms, new
business for Q4 2019 grew to GBP47.6m, 29.3% ahead of the
equivalent prior year quarter (Q4 2018). After a challenging start
to the year, new business for the full year to 30 June 2019 was
GBP155.9m, 6.3% up on the prior year.
The primary driver of growth in 2019 was our strategic
relationship in the UAE.
New Business Flows
New business flows for Hansard International for FY 2019 are
summarised as follows:
Three months ended Year ended
30 June 30 June
2019 2018 % 2019 2018 %
Basis GBPm GBPm change GBPm GBPm change
------------------------------- ------ ------ ------- ------ ------ -------
Present Value of New Business
Premiums 47.6 36.8 29.3% 155.9 146.6 6.3%
Annualised Premium Equivalent 6.9 5.5 25.5% 24.7 22.4 10.3%
------------------------------- ------ ------ ------- ------ ------ -------
The present value of new business premiums is influenced, among
other factors, by the Group's expectations of future premium
collections on regular premium contracts issued during the year.
Where these expectations at year end are different from the
assumptions used in the calculation in prior quarters, the
assumptions are amended in Q4 to better report the cumulative value
of new business. This adjustment is reflected in the Q4 reported
new business figures.
The impact of assumption changes in the current year, the
largest of which relates to improved persistency rates, has been to
increase PVNBP for the year by GBP6.3m compared with the
assumptions used in the previous year. Before that adjustment,
cumulative new business flows for FY 2019 would have been reported
as GBP149.6m and new business in Q4 2019 would have been reported
as GBP41.3m.
In APE terms new business was up 10.3% for the year, which is
unaffected by the above assumption changes. APE shows a higher
growth rate than PVNBP as the increased level of regular premiums
written this year get a higher proportional credit under the APE
metric.
New business flows on the basis of PVNBP are broken down as
follows:
Three months ended Year ended
30 June 30 June
2019 2018 % 2019 2018 %
PVNBP by product type GBPm GBPm change GBPm GBPm change
----------------------- ------ ------ ------- ------ ------ -------
Regular premium 28.5 18.4 54.9% 85.5 70.2 21.8%
Single premium 19.1 18.4 3.8% 70.4 76.4 (7.9%)
----------------------- ------ ------ ------- ------ ------ -------
Total 47.6 36.8 29.3% 155.9 146.6 6.3%
----------------------- ------ ------ ------- ------ ------ -------
Three months ended Year ended
30 June 30 June
2019 2018 % 2019 2018 %
change
--------
PVNBP by geographical area GBPm GBPm GBPm GBPm change
---------------------------- ------ ------ -------- ------ ------ --------
Middle East and Africa 18.2 11.4 59.6% 57.4 40.5 41.7%
Rest of World 14.8 15.2 (2.6%) 52.7 55.8 (5.6%)
Latin America 8.4 6.2 35.5% 25.9 25.8 0.4%
Far East 6.2 4.0 55.0% 19.9 24.5 (18.8%)
Total 47.6 36.8 29.3% 155.9 146.6 6.3%
---------------------------- ------ ------ -------- ------ ------ --------
In general we have seen strong competition in the marketplace
this year with upward pressure on commission rates to win new
business. After a challenging first quarter, we finished the year
very strongly, up 29.3% year-on-year for Q4 and up 6.3% for the
full year.
Our Middle East and Africa region continues to outperform,
driven primarily by the continuing growth of our strategic
relationship in the UAE. New business was up 59.6% for the quarter
and 41.7% for the full year. This business is predominantly regular
premium, which can be seen in the overall regular premium growth of
54.9% for Q4 2019 compared to Q4 2018.
The Rest of World region was slightly lower than a strong prior
year comparative, primarily due to lower single premium business.
We have seen the market for single premiums become increasingly
competitive and have chosen not to pursue business where margins
are too low. During the past two quarters, we have successfully
transitioned clients in this region to our recently launched
insurer in the Bahamas, Hansard Worldwide Limited ("Hansard
Worldwide").
In Latin America, we noted last quarter that we expected a
stronger Q4 and this has been the case, with sales up 35.5% to
GBP8.4m. Overall sales for the full year were slightly up on the
prior year, at GBP25.9m. We have also successfully transitioned
this region to Hansard Worldwide.
As communicated in previous announcements, new business in our
Far East region is down this year while we re-position towards
locally licensed business in a similar manner to that successfully
implemented in the Middle East. Notwithstanding this, a recent
sales campaign has yielded an improvement in Q4 sales.
Assets under Administration ("AUA")
The composition and value of AuA is based upon the assets
selected by or on behalf of contract holders to meet their savings
and investment needs. Reflecting the wide geographical spread of
the Group's customer base, the majority of premium contributions
and of AuA are designated in currencies other than sterling. Over
60% of Group AuA are denominated in US dollars.
The total of such assets is affected by the level of new premium
contributions received from new and existing policy contracts, the
amount of assets withdrawn by contract holders, charges and the
effect of investment market and currency movements. These factors
ultimately affect the level of fund-based income earned by the
Group.
Net withdrawals are typically experienced in Hansard Europe dac
("Hansard Europe"), which closed to new business in 2013.
During Q4 2019 AuA increased by GBP53.6m or 5%, reflecting the
continuing improvement in global stock markets during the second
half of the financial year compared to the declines experienced in
H1 2019. Levels of withdrawals were also significantly lower in FY
2019 compared to FY 2018. This reflects improved persistency rates
and a large bulk redemption in the prior year. Total AuA at 30 June
2019 were GBP1,079.7m, of which GBP965.4m related to Hansard
International, its highest ever reported level.
Three months Year ended
ended
30 June 30 June
2019 2018 2019 2018
GBPm GBPm GBPm GBPm
----------------------------------------- -------- -------- -------- --------
Deposits to investment contracts
- regular premiums 20.2 16.7 79.8 74.0
Deposits to investment contracts
- single premiums 13.5 20.7 64.6 78.1
Withdrawals from contracts and
charges (31.0) (44.0) (147.9) (187.2)
Effect of market and currency movements 50.9 9.3 47.2 21.4
----------------------------------------- -------- -------- -------- --------
Increase in period 53.6 2.7 43.7 (13.7)
Opening balance 1,026.1 1,033.3 1,036.0 1,049.7
----------------------------------------- -------- -------- -------- --------
Assets under Administration at
30 June 1,079.7 1,036.0 1,079.7 1,036.0
----------------------------------------- -------- -------- -------- --------
The movement in AuA is split as follows between Hansard
International and Hansard Europe:
Year ended
30 June
2019 2018
GBPm GBPm
------------------------------- --- ------ -------
Hansard International 51.8 34.7
Hansard Europe (8.1) (48.4)
-------------------------------------- ------ -------
Increase (decrease) in period 43.7 (13.7)
-------------------------------------- ------ -------
RESULTS FOR YEAR ENDED 30 JUNE 2019
Full trading results for the year are scheduled to be announced
on 26 September 2019.
Based on information available at this time, we are guiding that
profits for the second half of FY 2019, while positive, will be
significantly lower than for H1 2019. Some of the key factors
driving this are as follows:
-- Increased IT-related costs as we continue to develop a
replacement policy administration system for launch in 2020. We
have incurred approximately GBP1.6m of development costs this year
which have been capitalised. Project and other cloud-related
initiatives expensed to the profit and loss account for the year
have been approximately GBP0.5m.
-- Development costs for our new proposition in Japan.
-- Legal costs have remained elevated as some of our larger
Hansard Europe cases progress through the court system. We remain
confident that ultimately our defences will be successful.
-- Improved persistency levels this year have had the effect of
reducing upfront surrender penalty income and the levels of
deferred income released compared to 2018. Income on in-force
contracts is instead earned over the lifetime of those contracts,
ultimately providing a higher cumulative profit.
-- Continued run-off of income from the Hansard Europe closed-book.
Outlook
With the announcement made on 21 June 2019 in relation to our
Japanese licence, the priority for financial year 2020 is to sign
up a number of key distribution partners and bring a product to
market. We expect this to happen in the second half of financial
year 2020.
The outlook for our licenced business in the Middle East and our
recently launched business in the Bahamas, Hansard Worldwide,
remain bright and trending upwards.
We also continue to focus on our cost base and have taken a
number of actions to implement over GBP1m in annualised cost
savings for the coming year. The most substantial single action
that we can take in the near term is to successfully implement a
significantly more cost-efficient policy administration system.
This is planned for launch in 2020 with net savings to be realised
by 2021.
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 via a
network of independent financial advisors, and the retail
operations of certain financial institutions who provide access to
their clients in more than 170 countries. The Group's distribution
model is supported by Hansard OnLine, a multi-language internet
platform, and is scalable.
-- The principal geographic markets in which the Group currently
services contract holders and financial advisors are the Middle
East & Africa, the Far East and Latin America. These markets
are served by Hansard International Limited and Hansard Worldwide
Limited.
-- Hansard Europe dac previously operated in Western Europe but
closed to new business with effect from 30 June 2013.
-- The Group's objective is to grow by attracting new business
and positioning itself to adapt rapidly to market trends and
conditions. The scalability and flexibility of the Group's
operations allow it to enter or develop new geographic markets and
exploit growth opportunities within existing markets without the
need for significant further investment.
Forward-looking statements:
This announcement may contain certain forward-looking statements
with respect to certain of Hansard Global plc's plans and its
current goals and expectations relating to future financial
condition, performance and results. By their nature forward-looking
statements involve risk and uncertainties because they relate to
future events and circumstances which are beyond Hansard Global
plc's control. As a result, Hansard Global plc's actual future
condition, performance and results may differ materially from the
plans, goals and expectations set out in Hansard Global plc's
forward-looking statements. Hansard Global plc does not undertake
to update forward-looking statements contained in this announcement
or any other forward-looking statement it may make. No statement in
this announcement is intended to be a profit forecast or be relied
upon as a guide for future performance.
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regime.
Legal Entity Identifier: 213800ZJ9F2EA3Q24K05
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END
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