Delivering on
Strategy
February 2016
February 2016 Disclaimer This presentation does not constitute an - - PowerPoint PPT Presentation
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
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
3
Results – H1 2016 Our Business Strategy New Business Summary Questions Introduction & Overview
4
Les Wong
Director of Marketing
Gordon Marr
Chief Executive Officer
Tim Davies
Chief Financial Officer
5
Success of Middle East & Africa being replicated in Asia and Rest of World regions Interim dividend
share (H1 2015: 3.5p) New Business
for the year (H1 2015: £29.4m) IFRS profit
(H1 2015: £6.6m)
Highlights
6
Results – H1 2016 Our Business Strategy New Business Summary Questions Introduction & Overview
7
Strategic objective
To add significant scale to the business, on a more diversified basis, through
levels of risk & profitability To be the preferred choice of distributors when recommending international savings and investment products to their clients
8
Better value For Customers More long-term relationships with distributors A more visible profile in the market Excellent customer service Market leading online systems Motivated & engaged workforce
Strategic objectives
9
results, primarily due to additional complainants adding to what we believe is a highly speculative group action in Belgium.
in Belgium and one case in Italy were ruled fully in our favour (reducing total writs by £1m).
Capital Litigation Operating Model
Hansard Europe Japan
10
Results – H1 2016 Our Business Strategy New Business Introduction & Overview Summary Questions
11 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
Results – H1 2016
12
H1 2016 H1 2015 £m £m Present Value of New Business Premiums Regular premiums 29.9 17.6 Single premium 26.5 * 11.8 PVNBP 56.4 29.4 Annual Premium Equivalent (“APE”) 8.4 * 4.7 New Business Margin (PVNBP basis, after tax) (0.4)% (3.9)%
Margin on new business close to recovering to break-even level and was positive in Q2. New business increasing across the board.
* 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
Results – H1 2016
13
H1 2016 H1 2015 £m £m Operating cash surplus 8.8 13.8 Interest and other income 0.5 0.4 Cash inflow 9.3 14.2 Investment in new business (7.1) (3.8) Capital expenditure (0.2) (0.1) Net Cash inflow before dividends 2.0 10.3 Dividends paid (7.2) (6.9) Net Cash flow for the year (5.2) 3.4 Cash flows support investment in new business, strategic development and dividends. Operating Cash Surplus lower as initial period fees have come to an end for years where sales were higher than present. Overall outflow expected in our projections – over £27m free cash to cover transition period.
Cash Flows
Results – H1 2016
14
Free Cash
H1 2016 H1 2015 £m £m Total Group cash + deposit balances 79.6 81.2 Net shareholder payables (1.9) (6.8) Policyholder claims payable (20.2) (19.2) Regulatory reserves (9.0) (9.0) Minimum regulatory capital * (10.8) (11.4) 37.7 34.8 Regulatory capital currently restricted within HEL (10.0) (9.0) “Free” Group cash + deposit balances 27.7 25.8
Results – H1 2016
Headline cash balance is allocated to a number of constituents before true free cash can be identified. Increase this period is primarily due to release of 2015 CEC provision.
* Minimum regulatory capital taken as 200% of amount needed to continue in operation. Includes capital requirements in Isle of Man, Ireland and Labuan.
15
Hansard Int’l & Hansard Europe AuA Development
Results – H1 2016
HI: AuA relatively steady although affected by recent H1 market turmoil. HE: Expected decline after being placed in run-off in 2013.
719 742 705 700 683 314 286 239 207 174 100 200 300 400 500 600 700 800 2012 2013 2014 2015 HY 2016
AuA £M Year
Hansard Int’l and Hansard Europe AuA 5 year trend
HI HE
16 H1 2016 H1 2015 £m £m Fees and commissions
21.7 22.1
3.6 4.6 25.3 26.7 Investment and other income 1.0 1.0 26.3 27.7 Origination costs (10.5) (10.5) Administrative expenses (9.7) (9.5) Strategic spend (1.2) (1.1) Profit for the period 4.9 6.6
Fee income declining as HE book runs-off. HI slightly down due to new products earning fees over longer term. Costs being kept in line with budgets, adding to distribution capabilities prudently.
Results – H1 2016
17 H1 2016 £m H1 2015 £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 Deferred income 132.7 140.4 Other payables 26.3 29.5 159.0 169.9 Net assets 37.8 36.6 Shareholders’ Equity 37.8 36.6
Strong level of shareholders’ funds maintained post dividend payments
Results – H1 2016
18
EEV Balance Sheet
While new business levels are still recovering, the Value of Future Profits will convert to cash at a higher rate than new VoFP is being added. Required capital includes capital currently locked in Hansard Europe. Dividends are paid
H1 2016 H1 2015 £m £m Free surplus 31.4 31.5 Required Capital 27.2 26.4 Net Worth 58.7 57.9 Value of Future Profits 130.3 145.6 European Embedded Value 189.0 203.5
Results – H1 2016
EEV per share = 138p (H1 2015: 148p). The change essentially reflecting the dividends paid out (£12m since 31 Dec 2015).
19 H1 2016 £m H1 2015 £m New business contribution (0.2) (1.1) Expected return 0.7 0.9 Experience variances (1.5) (0.2) Assumption and other changes 0.4
(0.6) (0.4) Investment return variances 1.3 4.6 Economic assumption changes 0.5 2.4 EEV profit after tax 1.2 6.6
New business contribution has recovered to close to breakeven level. Experience variances reflect an accumulation of a number
persistency. Investment return and economic assumptions reflect foreign exchange and government bond yield favourable movements.
Results – H1 2016
20
Results – H1 2016 Our Business Strategy New Business Introduction & Overview Summary Questions
6 New Sales People 14 Funds added to Savings Plans to give 180 Funds Continuation in work to increase Market Awareness Consolidating Production - Reduced Concentration Risk Launched Hansard Online Lite
Activity since July 1st 2015
The last 6 months
21
Latin America Les Wong Rest of the World
More long-term relationships
Account Executives
2 Account Executives
Account Executives
3 Account Executives
Middle East & Africa Asia Account Executives
6 Account Executives
Rest of the World Account Executives
2 Account Executives
In Force Management Managers
2 In force Managers
22
Top 10 Distributors accounted for 60% of H1 Production, of which… New Business received from 114 Distributors worldwide, of which…
Asia 25% 27% Lat Am 4% 24% RoW 24% 15% Middle East 47% 34%
23
Rest of the World North Asia
New Terms of Business set up
RoW
(+ 4 H1 2016)
(+ 3 H1 2016) Lat Am
(+ 7 H1 2016) North Asia SE Asia
(+ 3 H1 2016)
(+ 10 H1 2016) Middle East
24
Events
New Products
is now complete.
proposition due Q4 (2015/16)
compliant plus a new Fund Group partner added in H1 2016
support to Hansard and IFAs for QROPs / SIPPS business worldwide
business
New Funds New Services
Improved proposition
25
financial advisers signed up to HOL Lite since launch in October 2015 Of which 100 in the past 2 months
26
More Visible…new arrivals
27
shops.com More Visible…trade publications
28
Example editorials
More Visible…trade publications
‘Below the line’ thought leadership & opinion forming content, in trade publications
29
LinkedIn has been chosen as our primary channel for digital promotion via social/professional media. Our corporate LinkedIn page was officially launched in Q2 2015. followers (318 in the last 12 months)
Example post
Senior Managers
Financial Services specialists Non- Hansard employees
30
Unique visitors to hansard.com in 12 months prior to October 2015 launch Mobile device visitors to hansard.com in 12 months prior to October 2015 launch
31
Improving motivated & engaged workforce
EMPLOYEE ENGAGEMENT
Hansard 2014 Hansard 2014 Hansard 2014
“I would recommend this company as a great place to work” “Overall, I am extremely satisfied with this company as a place to work”
32
Events
Customer Survey
Industry = -5%)
queries met 99.8% of the time
Operations Restructure Process Re-engineering Market leading customer service
Proposition improvements over the last 12 months
33
34
35
Results of strategic changes are now being strongly realised in increased new business Interim dividend
share (H1 2015: 3.5p) IFRS profit
due to European run
turbulence
Summary
European legacy issues starting to show positive development with three legal cases won Diversification of new business & new business relationships
36
Q&A