WELCOME H A L F Y E A R R E S U L T S 2 0 1 6 / 1 7 This - - PowerPoint PPT Presentation

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WELCOME H A L F Y E A R R E S U L T S 2 0 1 6 / 1 7 This - - PowerPoint PPT Presentation

WELCOME H A L F Y E A R R E S U L T S 2 0 1 6 / 1 7 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


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WELCOME

H A L F Y E A R R E S U L T S 2 0 1 6 / 1 7

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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.

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Introduction & Overview Our Business Strategy Results H1 2017 New Business Summary Questions

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Graham Morrall

Global Sales & Marketing Director

Gordon Marr

Chief Executive Officer

Tim Davies

Chief Financial Officer

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Overview – H1 2017

IFRS profit

  • f £4.4m

(H1 2016: £4.9m) Key strategic alliance launched in the UAE New Business

  • f £74.9m (PVNBP)

(H1 2016: £56.4m) Interim dividend

  • f 3.6p per

share (H1 2016: 3.6p)

Hig Highlig ights

Value of future profits increased 12% to £145.9m (H1 2016: £130.3m) Assets Under Administration up 8% to £1 billion

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Introduction & Overview Our Business Strategy Results H1 2017 New Business Plans Summary Questions

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Our business strategy

To add significant sc scal ale to the business, on a more di diversified basis, through or

  • rganic growth at

acceptable levels of risk & pr profitability To be the preferred choice of distributors when recommending international savings and investment products to their clients

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Strategic objectives

More long-term rela latio ionship ips with distributors A more vis isib ible le profile in the market Better valu alue for Customers Ex Excelle llent customer service Market lead adin ing online systems Motivated & eng ngaged workforce

     

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Responding to change from a position of strength

Next phase of growth focussed around delivering sustainable access to attractive markets We remain alert to changes within our operating environment

  • Industry changes
  • Converging global approach to regulation
  • Regulatory developments in the Isle of Man being

implemented in 2018 and beyond Internal structures being reorganised to better position for change Leveraging our strengths of agility and technology

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Sustainable access to attractive markets Case study: UAE

  • Opportunity: scalable distribution in a £2 billion market
  • Strategic alliance in place with Union Insurance Company
  • Hansard provides:

̶ 3rd party administration ̶ technology ̶ reinsurance

  • Union provides:

̶ regulatory license ̶ local market expertise and distribution capabilities ̶ product underwriting

  • Expect modest amount of new business in FY 2017 and positive future

contribution for FY 2018 and beyond

  • Opportunity for JV structure to be replicated in other jurisdictions, leveraging
  • ur knowledge and platform
  • We continue to explore attractive target markets for the right partners

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Future opportunities

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Hansard Europe Operating model

  • Activities outsourced to head office in Isle of Man
  • Fee income and policy count running-off broadly in line with expectations
  • Assessing strategic options

Capital

  • Solvency II embedded into Company with first year-end reporting cycle completed
  • Restriction on dividend distributions linked to litigation resolution

Litigation

  • Outstanding writs totalling €15.9m (£13.6m), up €0.2m from full-year
  • Increase driven by a number of minor new cases in Italy and Germany

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Introduction & Overview Our Business Strategy Results H1 2017 New Business Plans Summary Questions

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H1 2017 H1 2016 New business sales – PVNBP £74.9m £56.4m New business margin 1.3% (0.4)% Operating cash surplus £9.3m £8.8m IFRS profit after tax £4.4m £4.9m EEV operating loss after tax (£2.4m) (£0.6m) EEV profit after tax £8.5m £1.2m Interim dividend per share 3.6p 3.6p H1 2017 H1 2016 European Embedded Value £197m £189m Assets Under Administration £1,001m £856m

Results – H1 2017

Su Summary Res Results 13

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H1 2017 H1 2016 Present Value of New Business Premiums £m £m Regular premiums 42.6 29.9 Single premium 32.3 26.5 PVNBP 74.9 56.4 Annual Premium Equivalent (“APE”) 11.7 8.4 New Business Margin (PVNBP basis) 1.3% (0.4)%

Results – H1 2017

New ew Bus Busin iness

RP and SP sales both increased substantially Improved new business margin with increasing scale

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Asse ssets ts un under Adm dministr tratio ion Dev Development

Results – H1 2017

743 726 701 682 827 303 260 223 174 174 100 200 300 400 500 600 700 800 900 2013 2014 2015 2016 2017

AuA £M Year

Hansard International and Hansard Europe 5 year trend

HI HE

HI: AuA reflecting increased new business and positive stock market / fx gains HE: Flattening AuA after declines experienced post closure to new business in 2013

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H1 2017 H1 2016

£m £m Operating cash surplus 9.3 8.8 Interest and other income 0.4 0.5 Cash inflow 9.7 9.3 Investment in new business (8.7) (7.1) Capital expenditure (0.3) (0.2) Net Cash inflow before dividends 0.7 2.0 Dividends paid (7.3) (7.2) Net Cash outflow for the year (6.6) (5.2)

Results – H1 2017

Increased investment in new business in the financial year. Continued net cash flow outflow not sustainable – while healthy cash reserves exist, we intend to rebalance dividend levels in next financial year.

Cas Cash Fl Flows

9.3

5 10 15 20 Operating cash surplus in period to 31 Dec (£m) 71.8 10 20 30 40 50 60 70 80 90 Shareholder cash at 31 December (£m)

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H1 2017 H1 2016 £m £m Total Group cash + deposit balances 71.8 79.6 Net shareholder payables (1.4) (1.9) Policyholder claims payable (21.8) (20.2) Regulatory reserves (4.5) (4.5) Minimum regulatory capital * (7.0) (6.2) 37.1 46.8 Net assets restricted within Hansard Europe (19.5) (19.2) “Free” Group cash + deposit balances 17.6 27.6

Results – H1 2017

Free Free Cas Cash

* Includes capital requirements in Isle of Man and Labuan. Minimum regulatory capital taken as 200% of amount needed to continue in operation. Until greater scale of fee income reached, cash is being depleted by approx. £8-9m p.a. Headline cash balance is allocated to a number of constituents before true free cash can be identified

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Future Change in Dividend Policy

  • Board has reviewed the future cash flows of the Group based on its current

business plan

  • Key dynamics include:
  • Continuing positive growth in new business which has an upfront cash

strain (projecting in excess of £200m PVNBP in FY 2018)

  • Significant amount of incremental new business opportunity in Middle East

via Union Insurance channel

  • Investment necessary to develop additional markets and business
  • pportunities to comply with emerging Isle of Man and global regulatory

developments

  • Board has concluded that the prudent action to take is to reduce the level of

future dividends to free up cash flow for investment in new business

  • pportunities

In light of projected cash flows and anticipated growth, a change in dividend policy will be necessary from 2018

Guiding a 50% dividend reduction in the 2018 Financial Year (i.e. commencing with the March 2018 interim dividend)

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Future Change in Dividend Policy

  • A contingency reinsurance financing facility is in the process of being secured

which will ensure there are no cash constraints should the Union Insurance relationship grow by multiples of what we currently project

  • While wider use of reinsurance financing was considered for regular business,

borrowing to fund a dividend was not considered by the Board to be the optimum use of cash resources and would dilute future IFRS and EEV profits

  • There remains future cash upside from Hansard Europe which could provide

additional dividend or investment capacity at some point in the future

Attractive and sustainable returns can be made by investing further in new business

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H1 2017 H1 2016 £m £m Fees and commissions

  • Hansard International

21.3 21.7

  • Hansard Europe

3.1 3.6 24.4 25.3 Investment and other income 0.9 1.0 25.3 26.3 Origination costs (9.5) (10.5) Administrative and other expenses (9.7) (9.7) Strategic spend (1.0) (1.2) 5.1 4.9 Provision for bad debts (0.7)

  • Profit for the period

4.4 4.9

Results – H1 2017

IFRS IFRS - Abr brid idged income st statement

Fee income declining as HE book reduces and lower initial fees in HI Close control on administrative expenses, despite significant increase in new business

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H1 2017 H1 2016 £m £m Deferred origination costs 111.3 111.2 Other assets 8.6 6.0 Shareholder cash and bank deposits 71.8 79.6 Total assets 191.7 196.8 Deferred income 129.3 132.7 Other payables 29.1 26.3 158.4 159.0 Net assets 33.3 37.8 Shareholders’ Equity 33.3 37.8

Results – H1 2017

IFRS IFRS - Abr brid idged ba bala lance she sheet

111.3

100 105 110 115 120 125 130 135

Deferred Origination Costs at 31 December (£m)

129.3

120 125 130 135 140 145

Deferred Income at 31 December (£m)

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H1 2017 H1 2016

£m £m Free surplus 23.2 31.4 Required capital 28.0 27.2 Net worth 51.2 58.7 Value of future profits 145.9 130.3 European embedded value 197.1 189.0

Results – H1 2017

New business was added in the year at a higher rate than future profits were converted to cash. Change in EEV from H1 2016 includes pay out of £12.2m dividends.

EE EEV – ba bala lance she sheet

50 100 150 200 250

EEV balance sheet as at 31 December

VIF Net Worth EEV per share = 143p (H1 2016: 138p)

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H1 2017 H1 2016 £m £m New business contribution 1.0 (0.2) Expected return 0.4 0.7 Experience variances (1.8) (1.5) Assumptions and other changes (2.0) 0.4 EEV operating profit (2.4) (0.6) Investment return variances 12.1 1.3 Economic assumption variances (1.2) 0.5 EEV profit for the year 8.5 1.2

Results – H1 2017

EE EEV retu return af afte ter taxa axatio ion

Positive new business contribution reflecting increased volumes of new business Experience variances and assumption changes reflect lower than assumed policy count and adjusted persistency assumptions Positive investment return variances driven by stock market and foreign exchange gains

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Introduction & Overview Our Business Strategy Results FY 2016 New Business Plans Summary Questions

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Union Insurance Project 8 Funds added to Savings Plans Continuation in work to increase Market Awareness Consolidating Production - Reduced Concentration Risk PVNBP up 32.8%

  • n last year

Activity H1 2017

The last 6 months

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Top 20 Distributors accounted for 74% of H1 2017 Production, of which… New Business received from all Distributors worldwide, of which…

Asia 23% 21% Lat Am 13% 10% RoW 27% 28% Middle East 37% 40%

More long-term relationships

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Regional new business growth H1 2017

RoW

+ 54% + 35%

Latin America

  • 13%

North Asia SE Asia

+ 75% + 64%

Middle East & Africa

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Improved proposition

Events ts

Prod

  • ducts
  • Vantage Platinum II continues to receive positive feedback and

provide improved customer value

  • Day 1 Charged Portfolio Bond Z1 launched in August 2016
  • Nil initial commission non-contractual savings plan launched for

corporate and affinity group savings customers

  • Further new products in plan for 2017
  • 8 new internal unit funds added including 3 Indian equity funds to

support Indian investors

  • Additional Discretionary Fund Managers (DFMs) now added providing

personal portfolio bond investors with access to over 30 DFMs globally

  • International Platform capability added and review underway to enable

access to further providers

  • Further investment solutions in plan for 2017
  • QROPS Lite solution now in place with four leading trust providers,

accessing discounted trust fees for investments into Capital Builder II

  • Strategic alliance with Union Insurance launched delivering Infinity, a

choice of two flexible saving and investment products – called Infinity Wealth and Infinity Access

Investments Add Addit itio ional l So Solut utio ions

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Union launch activity

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Introduction & Overview Our Business Strategy Results FY 2016 New Business Plans Summary Questions

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IFRS profit

  • f £4.4m

(H1 2016: £4.9m) Key strategic alliance launched in the UAE New Business

  • f £74.9m (PVNBP)

(H1 2016: £56.4m) Interim dividend

  • f 3.6p per

share (H1 2016: 3.6p)

Hig Highlig ights

Value of future profits increased 12% to £145.9m (H1 2016: £130.3m) Assets Under Administration up 8% to £1 billion

We remain confident on the future outlook for the Group

Summary

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Introduction & Overview Our Business Strategy Results FY 2016 New Business Plans Summary Questions

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