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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. 2
Introduction & Overview Our Business Strategy Results H1 2017 New Business Summary Questions 3
Graham Morrall Gordon Marr Tim Davies Global Sales & Chief Executive Officer Chief Financial Officer Marketing Director 4
Overview – H1 2017 New Business Assets Under of £74.9m (PVNBP) Administration up 8% (H1 2016: £56.4m) to £1 billion Value of future IFRS profit profits increased 12% of £4.4m Hig Highlig ights to £145.9m (H1 2016: £4.9m) (H1 2016: £130.3m) Interim dividend Key strategic of 3.6p per alliance launched share in the UAE (H1 2016: 3.6p) 5
Introduction & Overview Our Business Strategy Results H1 2017 New Business Plans Summary Questions 6
Our business strategy To add significant sc scal ale to the business, on a more di diversified basis, through or organic 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 7
Strategic objectives More long-term rela latio ionship ips Better valu alue for Customers with distributors A more vis isib ible le profile in the Excelle Ex llent customer service market Motivated & eng ngaged Market lead adin ing online systems workforce 8
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 9
̶ ̶ ̶ ̶ ̶ ̶ 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 Future opportunities • Opportunity for JV structure to be replicated in other jurisdictions, leveraging our knowledge and platform • We continue to explore attractive target markets for the right partners 10
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 11
Introduction & Overview Our Business Strategy Results H1 2017 New Business Plans Summary Questions 12
Results – H1 2017 Su Summary Res Results 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 13
Results – H1 2017 New ew Bus Busin iness H1 2017 H1 2016 Present Value of New Business Premiums £m £m Regular premiums 42.6 29.9 RP and SP sales both Single premium 32.3 26.5 increased substantially PVNBP 74.9 56.4 Improved new Annual Premium Equivalent (“APE”) 11.7 8.4 business margin with increasing scale New Business Margin (PVNBP basis) 1.3% (0.4)% 14
Results – H1 2017 Asse ssets ts un under Adm dministr tratio ion Dev Development Hansard International and Hansard Europe 5 year trend HI: AuA reflecting HI HE increased new business and positive stock market / fx gains 900 800 827 700 743 726 701 682 600 AuA £M 500 400 300 HE: Flattening AuA after 303 200 260 declines experienced post 223 100 closure to new business 174 174 in 2013 0 2013 2014 2015 2016 2017 Year 15
Results – H1 2017 Cas Cash Fl Flows H1 2017 H1 2016 Operating cash surplus in period to 31 Dec (£m) £m £m 20 Operating cash surplus 9.3 8.8 15 Interest and other income 0.4 0.5 9.3 10 Cash inflow 9.7 9.3 Investment in new business (8.7) (7.1) 5 Capital expenditure (0.3) (0.2) 0 Net Cash inflow before dividends 0.7 2.0 Dividends paid (7.3) (7.2) Shareholder cash at 31 December (£m) Net Cash outflow for the year (6.6) (5.2) 90 80 71.8 70 60 50 40 30 Increased investment in new business in the financial year. 20 Continued net cash flow outflow not sustainable – while healthy cash reserves exist, we intend to 10 0 rebalance dividend levels in next financial year. 16
Results – H1 2017 Free Free Cas Cash H1 2017 H1 2016 £m £m Headline cash balance is allocated to a number of Total Group cash + deposit balances 71.8 79.6 constituents before true free cash can be identified 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 Until greater scale of fee income reached, Net assets restricted within Hansard Europe (19.5) (19.2) cash is being depleted by approx. £8-9m p.a. “Free” Group cash + deposit balances 17.6 27.6 * Includes capital requirements in Isle of Man and Labuan. Minimum regulatory capital taken as 200% of amount needed to continue in operation. 17
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 In light of projected strain (projecting in excess of £200m PVNBP in FY 2018) cash flows and anticipated growth, a • Significant amount of incremental new business opportunity in Middle East change in dividend via Union Insurance channel policy will be necessary from 2018 • Investment necessary to develop additional markets and business opportunities 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 opportunities Guiding a 50% dividend reduction in the 2018 Financial Year (i.e. commencing with the March 2018 interim dividend) 18
Future Change in Dividend Policy Attractive and • A contingency reinsurance financing facility is in the process of being secured sustainable returns can be made by which will ensure there are no cash constraints should the Union Insurance investing further in relationship grow by multiples of what we currently project new business • 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 19
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