building - hansard global/media/files/h/hansard... · free cash. fy 2015 fy 2014 £m £m. total...

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September 2015

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 thefuture financial conditions, business performance and results of Hansard Global plc. By their nature, all forward-looking statements involve risk anduncertainty 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 clientsand win new intermediary clients, changes in economic conditions generally or in the life assurance, savings and investment products sectors, terroristand geopolitical events, changes in legal and regulatory regimes and practice, the ability of its owned and licensed technology to continue to servicedeveloping demands, changes in taxation regimes, exchange rate fluctuations, and volatility in the Company’s share price. As a result, HansardGlobal’s actual future financial condition, business performance and results may differ materially from the plans, goals and expectations expressed orimplied in these forward-looking statements. Hansard Global undertakes no obligation to publicly update or revise forward-looking statements, exceptas may be required by applicable law and regulation (including the Listing Rules). No statement in this presentation is intended to be a profit forecastor be relied upon as a guide to future performance. In particular, past performance is no guide to future performance.

Results – FY 2015Results – FY 2015

Our Business StrategyOur Business Strategy

New Business PlansNew Business Plans

SummarySummary

QuestionsQuestions

Introduction & OverviewIntroduction & Overview

Meet the teamIntroduction & Overview

Graham MorrallGlobal Sales & Marketing Director

Gordon MarrChief Executive Officer

Tim DaviesChief Financial Officer

Overview – FY 2015Introduction & Overview

Product and pricing refresh completed with number of new Account

Executives in place


Executives in place


Executives in place

Refresh of senior management team and

structures


structures


structures

HIL New Business of £60.6m (PVNBP) for the

year (2014: £83.0m)


year (2014: £83.0m)


year (2014: £83.0m)Underlying IFRS profit of £12.0m

(2014: £14.7m) i.e. excluding effects of chargeable event

certificates (“CEC”) issue

Underlying IFRS profit of £12.0m



Underlying IFRS profit of £12.0m



Highlights

Overview – FY 2015 - continuedIntroduction & Overview

Provision for CEC settled in full with

HMRC (£3m write back for FY 2015 vs £5m

provision)

Assets under Management (“AuA”) £907m (2014: £944m)

Strongly positive cash flows maintained by existing RP portfolio

Increased final dividend of 5.25p per share in line with

guidance

Highlights




SummarySummary

QuestionsQuestions


Our Business Strategy

Strategic objectiveOur Business Strategy

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

Better value For CustomersMore long-term

relationships withdistributors

A more visible profile in the marketExcellent

customer service

Market leading online systems

Motivated & engaged workforce

Strategic objectivesOur Business Strategy

Hansard Europe

• Regulatory assets at 30 June 2015: £15.4m (2014: £13.4m)

• Restriction on dividend distributions linked to litigation resolution

• Outstanding writs totalling £8.8m (2014: £5.2m) - Belgium, Italy and Madoff

• One large new case received at end of year considered speculative and will be robustly defended

• Tactical settlement in some instances where makes financial sense

Capital

Litigation

Update

Operating Model

• Dublin based subsidiary which wrote European business. In run-off since 30 June 2013

• Outsourcing of administration and finance activities to head office in Isle of Man operating successfully and efficiently

• Further cost savings achievable in future over time





SummarySummary

QuestionsQuestions

Results – Full Year 2015

FY 2015 FY 2014

New business sales – PVNBP £60.6m £83.0mNew business margin (6.2)% 4.0 %Operating cash surplus £24.3m £37.8mUnderlying IFRS profit after tax £12.0m £14.7mIFRS profit after tax £14.9m £8.3m

EEV Operating loss after tax (£6.3m) (£6.6m)

Final dividend per share 5.25p 5.00p

FY 2015 FY 2014European Embedded Value £195m £204mAssets Under Administration £907m £944m

Summary Results – FY 2015Results – FY2015

Profitable New Business

FY 2015 FY 2014

Present Value of New Business Premiums £m £m

Regular premiums 36.8 63.7

Single premium 23.8 19.3

PVNBP 60.6 83.0

Annual Premium Equivalent (“APE”) 9.7 14.3

New Business Margin (PVNBP basis, after tax)

(6.2)% 4.0 %

Results – FY 2015

Margin on new business negative in FY 2015 due to insufficient sales volumes in 2015

Margin on new business negative in FY 2015 due to insufficient sales volumes in 2015

RP comparisons continue to be impacted by loss of Japanese distribution.SP’s increasingthrough more competitive pricing.

RP comparisons continue to be impacted by loss of Japanese distribution.SP’s increasingthrough more competitive pricing.

FY 2015 FY 2014

£m £m

Operating cash surplus 24.3 37.8

Interest and other income 1.0 1.0

Cash inflow 25.3 38.8

Investment in new business (8.6) (15.4)

Corporation tax received / (paid) 0.2 (0.2)

Capital expenditure (0.2) (1.4)

Net Cash inflow before dividends 16.7 21.8

Dividends paid (11.7) (11.2)

Net Cash flow for the year 5.0 10.6

Cash flows support investment in new business, strategic development and dividends

Positive Operating Cash FlowsResults – FY 2015

24.3

0

10

20

30

40

50

2011 2012 2013 2014 2015

£M

Operating cash surplus in year ended 30 June

80.9

0

20

40

60

80

100

2011 2012 2013 2014 2015£M

Shareholder cash at 30 June

Free Cash

FY 2015 FY 2014

£m £m

Total Group cash + deposit balances 80.9 78.5

Net shareholder payables (2.1) (7.8)

Policyholder claims payable (17.3) (19.7)

Regulatory reserves (9.0) (9.0)

Minimum regulatory capital * (10.8) (11.5)

41.7 30.5

Regulatory capital currently restricted within HEL (10.2) (7.5)

“Free” Group cash + deposit balances 31.5 23.0

Results – FY 2015

Headline cash balance is allocated to a number of constituents before true free cash can be identified.

* Minimum regulatory capital taken as 200% of amount needed to continue in operation.Includes capital requirements in Isle of Man, Ireland and Labuan.

HIL & HEL AuA DevelopmentResults – FY 2015

HIL: Steady AuAafter effects of global financial crisis worked through.

HEL: Expected decline after being placed in run-off in 2013.

HIL: Steady AuAafter effects of global financial crisis worked through.

HEL: Expected decline after being placed in run-off in 2013.

700 705742 719

207239

286314

0

100

200

300

400

500

600

700

800

2015 2014 2013 2012

AuA

£M

Year

HIL and HEL AuA 5 year trend

HIL HEL

FY 2015 FY 2014

£m £m

Fees and commissions 52.6 55.2

Investment and other income 1.4 0.2

54.0 55.4

Origination costs (20.1) (21.2)

Administrative expenses before settlements and discontinued activities

(21.9) (19.5)

12.0 14.7

CEC settlement, litigation settlements and discontinued activities

2.9 (6.4)

Profit for the period before taxation 14.9 8.3

Tax - -

Profit for the period 14.9 8.3

Abridged Income Statement - IFRS

Fee income declining as HEL book reduces and lower initial fees in HIL.

Administrative expenses include strategic development costs, increased compliance costs and general inflation.

Exceptional items in 2015 consist of the £3m write-back on the CEC provision.

Fee income declining as HEL book reduces and lower initial fees in HIL.

Administrative expenses include strategic development costs, increased compliance costs and general inflation.

Exceptional items in 2015 consist of the £3m write-back on the CEC provision.

Results – FY 2015

FY 2015£m

FY 2014 £m

Deferred origination costs 113.5 123.9

Other assets 6.9 7.3

Shareholder cash and bank deposits 80.9 78.5

Total assets 201.3 209.7

Deferred income 137.6 141.2

Other payables 23.6 31.6

161.2 172.8

Net assets 40.1 36.9

Shareholders’ Equity 40.1 36.9

IFRS Balance Sheet

Strong level of shareholders’ funds post dividend payments

Results – FY 2015

113.5

100105110115120125130135

2011 2012 2013 2014 2015

£M

Deferred Origination Costs at 30 June

137.6

115120125130135140145

2011 2012 2013 2014 2015

£M

Deferred Income Reserve at 30 June

EEV Balance Sheet

Future profits are converting to cash at a higher rate than new business being added.Change in EEV year on year includes pay out of £11.7m dividends.

EEV per share = 143p (2014: 149p)

Future profits are converting to cash at a higher rate than new business being added.Change in EEV year on year includes pay out of £11.7m dividends.

EEV per share = 143p (2014: 149p)

FY 2015

FY 2014

£m £m Free surplus 36.5 28.3Required Capital 27.0 25.1Net Worth 63.5 53.4

Value of Future Profits 131.5 150.4

European Embedded Value 195.0 203.8

Results – FY 2015

131.5

63.5

0

100

200

300

2011 2012 2013 2014 2015

£m

EEV balance sheet as at 30 June

VIF Net Worth

FY 2015£m

FY 2014£m

New business contribution (3.7) 3.3

Expected return 1.8 1.5

Experience variances 2.6 (6.7)

Assumption and other changes (7.0) (4.7)

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)

Negative new business contribution is due to low volumes of new business.

Assumption changes reflect reduced numbers of policies available to cover future expenses.

Experience variances include £3m positive write-back of CEC provision.

EEV return impacted by new business shortfallResults – FY 2015



Progress in New Business StrategyProgress in New Business Strategy


SummarySummary

QuestionsQuestions

Progress on New Business Strategy

Rebuilt Sales Team

Refreshed All Products

Increased Market

Awareness

Rebuilding Distribution

Enhanced OnLine systems

Activity since launch of strategy

More long-term relationships with distributors

The Strategy requires a more organised, more closely managed & monitored sales team to ensure the entire business can anticipate where & when resources are required to support our growth

Sales Team may look different in the future dependent on how quickly the anticipated growth becomes real

Rebuilt sales team – key execution levers

2 Recruitment ü21 Sizing of target sales

structure & capacities ü1

3 Training & Development ü3

4 Remuneration ü45 Sales force

management ü5

Global Sales

Latin AmericaLes Wong

Rest of the World

Rebuilt sales team – Current structure

Account Executives

1 Account Executive

Account Executives

3 Account Executives

Middle East & Africa

Far East

Account Executives

6 AccountExecutives

Rest of the World

AccountExecutives

2 Account Executives

New business in 2013 (excluding Japan) was introduced by 71 active* brokers.

*Active brokers means all brokers that produced more than £10k NICC

New business in 2015 (excluding Japan) was introduced by 118 active* brokers.

Capturing strong market opportunitiesRebuilding distribution

Rebuilding Distribution (since July 1st 2013)

+ 12TOB

+ 5TOB

+ 32TOB

+ 10TOB

+ 19TOB

Rest of the World

Latin America

North Asia

S.E Asia

M.E & Africa

Events

NewProducts

NewProducts

NewProducts

• New Contractual and Non Contractual Savings Plans• New Portfolio Bond launched in February 2015

• Average number of applications per month up 92%• Average new premiums per month up 115%

• Completes initial refresh of all products

• 120 new funds added since March 2014 including a range of risk rated portfolios

• 9 new Shariah compliant funds• Continue to add funds that add value to the proposition of 180 funds

• QROPs Bureau now give technical support to Hansard and IFAs for QROPs / SIPPS business

• Agreements in place with 23 Trust Companies for QROPs / SIPPS business

NewFundsNew

FundsNew

Funds

NewServices

NewServices

NewServices

Better value for clientsProposition improvements over the last 12 months

Events

Brand• Refreshed Brand• Refreshed Corporate website – More changes to come• Refreshed Literature

• New Hansard OnLine Presentation• International Adviser – Advertisements and events• Local marketing – including IOM• New Corporate and Product presentations

Promotion

More Visible profile in the marketMarketing improvements over the last 12 months

More Visible profile in the marketNew corporate web site

QROPS launch/on-going promotion

Targeted email campaigns

Industry conference, launch presentation (Dubai & KL)

Trade publications, advertorials

Dedicated QROPS

Microsite

Advertising to an international audience

Raising local profile

On-going PR activity

Digital trade advertising

Promotional Microsites

Corporate LinkedIn page

• New languages

Market leading OnLine systemsSystem improvements over the last 12 months

• New Hansard OnLine Presentation

• New languages

• Refreshing Client and Broker Sites

• Hansard OnLine “Lite”

• Payment card processing

• Unit Fund Centre on client sites

• Fund switching for client sites

• Broker hierarchy

• New servers

• New web site in development

• Online Change of Personal and Tax Details


Rebuilt Sales Team

Refreshed All Products

Increased Market

Awareness

Rebuilding Distribution

Enhanced OnLine systems


Summary

Product refresh and internal reorganisations

complete

Indications from the past and current quarter that new

business levels have turned a corner

Infrastructure highly leverageable – needs

additional scale to reap the benefits

Several large closed-book litigation cases

will be tied up for some time but gross

claims levels generally seen as

speculative

Continued strong cash generation from

generally a stable, regular premium

portfolio

Underlying IFRS profit of £12.0m (2014:

£14.7m) excl. write back of CEC provision

of £3.0m

Increased final dividend of 5.25p per

share, in line with guidance

Summary

Appendices

2015 Regional Sales Activities – North AsiaCapturing strong market opportunities

Business Development


Terms of BusinessCommercial Deals

Successes


Successes



Successes

• 19 new TOB• 10 TOB in relation to China

business• Reinvigorating expatriate TOBs• Recruited 3 new Account

Executives

• Korea• Taiwan fly to buy• China based expatriate IFAs

2015 Regional Sales Activities – South East AsiaCapturing strong market opportunities

• 10 new TOB • New Malaysian HNW bank

distribution agreement• Reinvigorating existing expatriate

accounts around the region• Recruited new Account Executive

• Malaysian local bank Negara-licenced brokers

• South-East Asia expatriate brokers• A further retail bank distribution

agreement sought



Successes

2015 Regional Sales Activities – M.E & AfricaCapturing strong market opportunities




Successes


Successes



Successes

• 32 new TOB signed• Major NRI distributors signed• Reinvigoration of Expatriate TOBs• QROPs deals in place

• More Shariah compliant funds added to support target market

• Considering regulatory options• Developing Arabic speaking

distribution




Successes


Successes



Successes

2015 Regional Sales Activities – Latin AmericaCapturing strong market opportunities

• 5 new TOB• Many expatriate and local TOB

revived - new terms for the new products

• Recruited new Account Executive

• Uphold market-leading position through increased support

• Continue to develop local and expatriate brokers around the region

• Fund Portfolios developed for largest Latin America broker

2015 Regional Sales Activities – Rest of WorldCapturing strong market opportunities




Successes


Successes



Successes

• 12 new TOB• 4 TOBs in relation to Russia for

Expatriate Business• Recruited 2 Account Executives

• Reinvigorating expatriate broker connections

• Global expatriate broker relationships

• Existing Business Book

Appendix

BUSINESS MODEL

UNDERLYING INVESTMENTS

INTERNATIONAL NETWORK OF INTERMEDIARIES

Investment within a Hansard life assurance wrapper

Hansard reinsures the life insurance risk

Hansard OnLine

Hansard OnLine

INTERNATIONAL POLICYHOLDERS

ClientFunds

ClientFunds

Policy retention drives feesand commissions receivable

£907m AuA at FY 2015 (FY 2014: £944m)

IFAs / Private Banks / Other Financial Institutions

High net worth, mass affluent and expatriate segments

Hansard OnLine supports IFA / policyholder needs

Business Model

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