REG - Hansard Global plc - Results for the year ended 30 June 2024
26/09/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240926:nRSZ7127Fa&default-theme=true
RNS Number : 7127F Hansard Global plc 26 September 2024
26 September 2024
Hansard Global plc
Results for the year ended 30 June 2024
Underlying profit up, dividend maintained and positioned for future growth
Hansard Global plc ("Hansard" or "the Group"), the specialist long-term
savings provider, issues its full-year results for the year ended 30 June 2024
("FY 2024").
Summary
FY 2024 FY 2023
New business sales - PVNBP (1) basis £77.8m £85.7m
IFRS profit before tax £5.3m £5.9m
Underlying profit £8.5m £7.4m
Recommended final dividend per share (2) 2.65p 2.65p
IFRS earnings per share 3.80p 4.10p
As at 30 June 30 June
2024 2023
Assets under Administration £1.15bn £1.10bn
Value of In-Force £110.8m £124.4m
(1) Present Value of New Business Premiums
(2) Subject to approval at the AGM
Thomas Morfett, Group Chief Executive Officer and Chief Financial Officer,
commented:
"The 2024 financial year delivered solid profits for the group despite
targeted investment for future growth, as transactional fee income increased,
and the Group continued to pursue opportunities to generate investment
revenue.
Although 2024 saw a continuation of the challenging trends for new business,
encouragingly we saw an increase in new business over the second half of the
year compared to the first half following the launch of our new portfolio bond
in January.
We have delivered a key strategic initiative with the implementation of our
new policy administration system. In addition, the signing of the distribution
agreement with Guardian is an important initial step in the realisation of our
long-term strategy associated with our
Japanese investment management licence.
The board recommends maintaining the dividend in line with last year."
NEW BUSINESS
As previously announced, our new business levels were £77.8m on a Present
Value of New Business Premiums ("PVNBP") basis, down 9.2% from £85.7m in FY
2023.
Despite the year-on-year reduction in new business, the level of PVNBP for the
second half of the year was greater than the first half of the year, up 14.9%
from £36.2m to £41.6m, reflecting increased sales of single premium business
following the launch of the new portfolio bond in January. This is the first
half-year on half-year increase in PVNBP since the second half of 2021. We
continue to pursue opportunities to improve levels of new business.
Earlier this year we launched our new portfolio bond through Hansard Worldwide
and announced the signing of a distribution agreement with Guardian Japan
Kabushiki Kaisha ("Guardian") to distribute our two regulated products for the
Japanese market, two initiatives that will position the Group for future
growth.
TRADING RESULTS
IFRS profit before tax for the year was £5.3m, down from £5.9m in FY 2023.
Excluding litigation defence costs and other non-recurring provisions,
underlying profit was £8.5m compared with £7.4m in FY 2023.
Fee and commission income was £48.8m for the year (FY 2023: £45.7m) with
increased transaction-based income in Hansard International and Hansard
Worldwide.
Income on shareholder investments was £4.7m for the year (FY 2023: £3.5m),
with a continued focus on leveraging Group cash balances to maximise returns.
Administrative and other expenses were £33.3m for the year (FY 2023:
£29.0m). The Group maintained tight control over general operational
overheads and expenses despite inflationary pressures, with targeted
investment to generate opportunities for future growth and the commencement of
depreciation following the implementation the new policy administration
system.
Value in Force ("VIF") is a measure of the future profits expected to be
generated from the business. It discounts future expected shareholder profits
reduced for the cost of holding the capital required to support the business.
VIF totaled £110.8m as at 30 June 2024 compared to £124.4m at 30 June
2023. This reduction has primarily arisen because the profits earned during
the year are higher than the expected future profits on new business written
during the year. We have also revised some assumptions with regards to future
policyholder behaviour and expenses which have negatively impacted the VIF.
Assets under administration were £1.15bn as at 30 June 2024, up from £1.10bn
at 30 June 2023.
policyholder LITIGATION
The Group continues to manage carefully its litigation exposures relating to
the legacy operations. We continue to believe we have strong defences
against the claims being made.
Contingent liabilities arising out of outstanding writs were £20.2m as at 30
June 2024 compared to £22.4m as at 30 June 2023.
During the year the Group successfully defended eight cases with net exposures
of approximately £1.3m, five of which may be appealed by the plaintiffs.
These successes continue to affirm confidence in the Group's legal arguments.
Our policy is to maintain contingent liabilities even where we win cases in
the court of first instance if such cases have been subsequently appealed.
OUTLOOK
Although the external environment remains challenging, we have progressed
strategic and tactical initiatives. The launch of the new portfolio bond, the
new Japanese proposition, and other products currently in development, present
significant new opportunities for sales. We expect the recent trend of
increasing PVNBP to continue as our new propositions gain momentum, noting
that it takes a significant period of time for sales to generate a material
change in IFRS profits given the long-term nature of our business, where
profits are recognised over the life of a contract, so new sales contribute
positively to profitability over a number of years.
The implementation of the new policy administration system has given the Group
the platform required for expansion in the coming years and will facilitate a
simpler approach to product development in future.
Following the implementation of the system, we have commenced the depreciation
charges in the income statement. 2025 will be the first financial year where
we will see a full year's depreciation charge, which will amount to a cost of
£1.6m. Although this will reduce the published IFRS profit, the system
development is no longer a cash cost to the Group.
We expect to be able to take actions in the next financial year to deliver
costs savings from efficiencies arising from the new system, with the benefit
to IFRS profit realised from the following financial year onwards.
The business continues to make targeted investments in new product offerings,
to build on the product developments already delivered, and to ensure the
Group is well positioned for the future. In financial year 2025, the Group
expects to incur modest development costs, which are expected to be expensed
as incurred.
Considering the above factors, we expect a short-term decline in the
profitability of the Group measured using IFRS in financial year 2025, before
recovering in 2026.
However, the Group has no external debt and the Group's regulatory solvency
cover, a key measure used to assess dividend-paying capability, is calculated
primarily on the basis of non-IFRS measures and is expected to remain strong.
We look forward to reporting further progress in due course.
DIVIDENDS
The Board has proposed a final dividend of 2.65p per share, the same level as
last year.
This dividend, if approved by the shareholders at the Annual General Meeting
on 13 November 2024, represents a total dividend of 4.45p (2023: 4.45p) per
share in respect of the financial year. Upon approval, the dividend will be
paid on 14 November 2024 to shareholders on the register on 4 October 2024.
The associated ex-dividend date is 3 October 2024.
HALF-YEARLY RESULTS
The results for the half-year are expected to be published on 6 March 2025.
For further information:
Hansard Global plc
+44 (0) 1624 688 000
Thomas Morfett, Group Chief Executive Officer
& Chief Financial Officer
Email: investor-relations@hansard.com
Camarco
+44 (0) 7990 653 341
Ben Woodford, Hugo Liddy
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 often 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
Chairman's Statement
Introduction
I am pleased to present the Group's annual report for the financial year ended
30 June 2024.
Whilst the external environment for new business remains challenging, we have
continued to invest and position our business for the long-term and have
successfully progressed key strategic and tactical initiatives during the
year. These include the launch of our new portfolio bond through Hansard
Worldwide in January, and the signing of the distribution agreement with
Guardian Japan Kabushiki Kaisha ("Guardian") in June, two initiatives that
will position the Group for future growth. In addition, the implementation of
our new policy administration system was completed during March, representing
the culmination of a major strategic initiative that we expect to benefit our
policyholders, distribution partners, and Group performance through enhanced
operational efficiency, increased scalability, and cost savings.
We have developed two new regulated products for the Japanese domestic market,
available to Japan resident investors looking to access a wide range of
international funds via our award-winning online platform. The Board and I
remain confident in the future opportunities for the business.
Graham Sheward retired from the Board with effect from 2 August. I thank
Graham for his time with the Group, during which significant progress was made
with the achievement of long-standing strategic objectives, and I wish him the
very best for the future. Thomas Morfett has accepted the role of Chief
Executive Officer, and the Board is in advanced discussions with a strong
candidate for the role of Chief Financial Officer. Christine Theodorovics
stepped down from the Board on 29 February following her appointment as CEO of
Baloise Luxembourg, and I would like to thank Christine for her advice and
candour during her tenure.
The Company is committed to increasing diversity at board level. Supported
by an independent executive search firm we are in the process of appointing
two experienced female Independent Non-executive Directors to the Board. The
first appointment is Noel Harwerth OBE, who was appointed to the Board on 23
September, and we expect to announce the second appointment later in the
calendar year.
Financial performance
Our IFRS profit before tax for the year was £5.3m, down from £5.9m in
2023.
Fees and commissions increased by £3.1m to £48.8m for the year (2023:
£45.7m), with improved transactional income in Hansard International and
Hansard Worldwide.
Returns on group investments improved to £4.7m for the year (2023: £3.5m) as
a result of the Group increasing its focus on cash and liquidity management.
Administrative and other expenses were £33.3m for the year, compared to
£29.0m in 2023, as the Group positions itself for future growth and
development.
Further detail and analysis are contained in the Business and Financial Review
on pages 11 to 21.
New business
New business for the 2024 financial year was £77.8m (using the PVNBP metric),
down 9.2% from £85.7m in 2023. Going forwards, our refreshed product
portfolio will present new opportunities for the business to increase sales.
We are continuing to pursue further opportunities to improve new business
levels as outlined in the Business and Financial Review.
Capitalisation and solvency
The Group remains well capitalised to meet the requirements of regulators,
contract holders, intermediaries, and other stakeholders.
On a risk-based capital basis, total Group Free Assets in excess of the
Solvency Capital Requirements of the Group were £39.4m (2023: £44.6m), a
coverage of 149% (2023: 156%). We have maintained our prudent investment
policy for shareholder assets, which minimises market risk and has provided a
stable and resilient solvency position over many years and economic cycles.
Dividends
The Board has resolved to pay a final dividend of 2.65p per share (2023:
2.65p). In making this decision, the Board has carefully considered its
current and future cash flows, the risks and potential impact of the global
economic situation, the outlook for future growth and profitability and the
views of key stakeholders, including shareholders and regulators.
The dividend is subject to approval at the Annual General Meeting. If
approved, this will represent total dividends for the financial year of 4.45p
per share (2023: 4.45p). Upon approval, the final dividend will be paid on
14 November 2024. The ex-dividend date will be 3 October 2024 and the record
date will be 4 October 2024.
Looking forward
The Company's investment in new systems and products, which are focused on
satisfying customer needs, delivered higher sales in the second half of the
financial year ended 30 June 2024, and we expect to see a continuation of this
increased demand for our products in the year to 30 June 2025. This will
position the Group well for the future. While we will maintain our focus on
targeted cost savings to offset the impact of inflation and increased
depreciation, we expect to see a short-term decline in the Group's IFRS profit
next year. The Company's solvency, however, is forecast to remain strong.
Further detail is contained in the Future Prospects section on page 16.
Philip Kay
Chair
25 September 2024
GROUP CEO REVIEW
I am delighted to present my first report as Group CEO. We have delivered
stable financial results for the year despite continued economic headwinds and
challenges with our target markets. We have continued to maximise returns on
Group cash and have positioned the business for future growth through
controlled expenditure on strategic initiatives.
In March we successfully completed the implementation of our policy
administration system which we expect to deliver efficiency gains and costs
savings in future.
We announced in June that Hansard International has signed a distribution
agreement with Guardian in Japan. This represents an important initial step in
the realisation of our long-term strategy associated with our
Japanese investment management licenceand is testament to the dedication and
perseverance of our staff and colleagues around the world. Guardian is led by
a management team with a wealth of experience in Japan and will promote and
distribute our two new Japanese-regulated products to the domestic market via
our award-winning online platform. We will continue to focus on revitalising
our product pipeline following the launch of our new portfolio bond through
Hansard Worldwide earlier this year.
The company has maintained tight control of operational costs during the
period, while targeting spending on future strategic initiatives. Cost savings
are expected to be achieved from the efficiencies introduced by the new system
during the upcoming financial year, although these will be partially offset by
the amortisation of costs associated with the development of the system. We
have been able to maintain the quantum of the dividend we pay to shareholders,
whilst building the foundations for future growth in our business.
At the October 2023 International Investment awards, we received further
recognition for the level of service provided to our clients and advisers with
the Excellence in Client Service (Africa region) and Excellence in Fintech
awards.
I would like to thank the Executive Committee and Hansard Group colleagues,
who have demonstrated a high level of determination and purpose to progress
and deliver on our key strategic and tactical initiatives this year. During
this challenging period our employee engagement results have remained broadly
consistent which is testament to our people and their resilience. Whilst we
are beginning to see the fruit of our work there remains much to do, and I am
committed to continuing the journey with my colleagues throughout the Group.
RESULTS FOR THE YEAR UNDER REVIEW
I draw your attention to the following items below. Additional information is
contained in the Business and Financial Review on pages 11 to 21.
1. New business distribution
New business for the 2024 financial year was £77.8m (using the PVNBP metric),
down 9.2% from £85.7m in FY 2023. Despite the year-on-year reduction in new
business, more PVNBP was sold during the second half of the year than the
first, up 14.9% from £36.2m to £41.6m, reflecting increased sales of single
premium business following the launch of the new portfolio bond in January.
This is the first half-year on half-year increase in PVNBP since the second
half of 2021. We continue to pursue opportunities to improve levels of new
business as outlined in the Business and Financial Review.
2. Operational, Business and Financial Risks
Our business model involves the acceptance of risk on a managed and controlled
basis. The Group's Enterprise Risk Management ("ERM") Framework continues to
provide for the identification, assessment, management, control and reporting
of current and emerging risks, recognising that systems of internal control
can only provide reasonable and not absolute assurance against material
misstatement or loss. The Group's internal control and risk management
processes have operated satisfactorily throughout the year under review, with
the benefit of iterative enhancements as we continue to embed our approach and
benefit from the relative maturity of the ERM Framework.
2.1 Litigation Risk
As explained more fully in the Business and Financial Review, we continue to
manage complaints and litigation arising from our closed book, Hansard Europe
dac, where the assets linked to contracts written before 2014 have fallen in
value or become illiquid. Hansard does not and did not give investment advice
and was not therefore party to the selection of policy assets, and we maintain
that such claims have no merit against Hansard.
As at 30 June 2024, the Group had been served with writs with a cumulative net
exposure totalling €24.3m, or £20.6m in sterling terms (30 June 2023:
€26.1m / £22.4m) arising from contract holder complaints and other asset
performance-related issues.
3. Hansard OnLine
Our award-winning technology 'Hansard OnLine' (used by independent financial
advisers ("IFAs")) and 'Online Accounts' (used by clients) are key aspects of
our proposition and an integral part of the Group's operating model that
allows us to better service IFAs and clients, embed process efficiencies and
be flexible in operational deployment.
In March 2024, Hansard OnLine and Online Accounts were successfully migrated
to a new system environment, marking the culmination of a major strategic
objective that enables us to build on an already award-winning, online
proposition. In addition, the new platform will be central to the development
and quick deployment of new products going forwards. Further information
concerning Hansard OnLine is set out in the Business and Financial Review on
pages 11 to 21.
4. Operating cash flows and dividends
The Group generates operating cash flows to fund investment in the business,
new business origination and to support dividend payments.
As outlined in the Cash Flow analysis section of the Business and Financial
Review, the Group generated £3.0m in overall net cash inflows before
dividends (2023: outflows of £1.6m), after commission and other new business
acquisition costs of £8.1m (2023: £8.5m) and the investment of £3.9m (2023:
£6.6m) in IT software and equipment expenditure. Dividends of £6.1m were
paid in the financial year (2023: £5.9m).
A final dividend of 2.65p per share has been proposed by the Board and will be
considered at the Annual General Meeting on 13 November 2024. If approved,
this will represent total dividends for the financial year of 4.45p per share
(2023: 4.45p).
FINANCIAL PERFORMANCE
Results for the year
Financial performance is summarised as follows. A detailed review of
performance is set out in the Business and Financial Review that follows this
report.
FY 2024 FY 2023
£m £m
New business sales - PVNBP 77.8 85.7
IFRS profit before tax 5.3 5.9
Underlying IFRS profit 8.5 7.4
Assets under Administration 1,150.9 1,101.5
Value of In-Force (regulatory basis) 110.8 124.4
IFRS results
IFRS profit before tax for the year was £5.3m, compared with £5.9m in 2023.
After eliminating litigation and non-recurring items, as shown on page 13,
the underlying IFRS profit (a non-GAAP metric) was £8.5m, up from £7.4m in
2023.
Fees and commissions were £48.8m for the year (2023: £45.7m). Fees from
Hansard International and Hansard Worldwide were up £2.9m to £46.5m from
2023, reflecting an increase in activity-based fees. Income from our closed
book, Hansard Europe dac, increased marginally prior year.
Returns on group investments increased to £4.7m (2023: £3.5m) as the Group
took advantage of continued higher yields on bank deposits.
Administrative and other expenses were £33.3m for the year, compared to
£29.0m in 2023, as we have targeted additional investment to provide capacity
and capability for growth.
Origination costs to acquire new business of £16.1m is marginally down on the
2023 result (£16.2m). Origination costs incurred in the year in respect of
new business decreased to £10.3m (2023: £11.5m). Net amortisation of
deferred origination costs increased to £5.8m (2023: £4.7m).
Further details and analysis are contained in the Business and Financial
Review on pages 11 to 21.
Capitalisation and solvency
Our key financial objective is to ensure that the Group's solvency is managed
safely through the economic cycle to meet the requirements of regulators,
contract holders, intermediaries, and shareholders. The Group continues to be
well capitalised.
Under risk-based capital methodologies, total Group Free Assets in excess of
the Solvency Capital Requirements of the Group were £39.4m (2023: £44.6m), a
coverage of 149% (2023: 156%). Shareholder assets are typically held in a
wide range of deposit institutions, investment grade corporate bonds, and
highly rated money market liquidity funds. This prudent investment policy for
shareholder assets minimises market risk and has provided a stable and
resilient position over recent years.
our people
Our people remain critical to our success, and I would like to recognise and
reiterate my thanks to each of my colleagues for their continued commitment,
flexibility, and resilience in managing both our on-going day-to-day
operations and our key strategic projects.
I have been delighted by the consistent level of engagement seen within our
programme of cultural change and look forward to continuing in our goals of
fostering an engaged and innovative workforce to meet our ambitions and the
expectations of our stakeholders.
THE YEAR AHEAD
The global economic situation remains challenging, with residual pressures
from high inflation and economic uncertainty continuing to cause hesitancy
amongst our target clients and with declining interest rates expected to
reduce opportunities for returns on group investments in the coming year. We
will continue to target cost savings to help mitigate the impact of inflation
in previous years, along with the impact of increased depreciation costs. Our
investment in new products and systems has delivered higher sales in the
second half of the year, and we expect to see increased demand for our
products focused on satisfying customer needs, positioning us well for the
future.
Thomas Morfett
Group Chief Executive Officer
25 September 2024
OUR BUSINESS MODEL AND STRATEGY
Our Business Model and Strategy
Hansard is a specialist long-term savings provider that has been providing
innovative financial solutions for international clients since 1987. We focus
on helping our customers with savings and investment products in secure life
assurance wrappers to meet their long-term savings and investment objectives.
We administer assets in excess of £1 billion for just under 40,000 client
accounts around the world.
We believe that the following areas are fundamental for the continued success
of the Group:
· Proposition enhancement, product improvement and diversification of
our distribution channels to enable generation of significant flows of new
business from identified target markets.
· Leveraging our policy administration system to drive business
efficiency.
· Proactively managing our cash flows through the cycle to fund the
appropriate balance of investment in new business and dividends.
· Managing and mitigating our exposure to business risks.
· Positioning ourselves to incorporate increasing levels of
regulation into our business model.
Business Model
The Company's head office is in Douglas, Isle of Man, and its principal
subsidiaries operate from the Isle of Man, The Bahamas and the Republic of
Ireland.
Hansard International is authorised by the Isle of Man Financial Services
Authority and has a branch in Malaysia, authorised by the Labuan Financial
Services Authority, to support business flows from Asian growth economies. The
Company also has a branch in Japan to support its Japanese proposition, which
is authorised by the Japanese Financial Services Agency. Through its
relationship with a local insurer in the UAE, Hansard International reinsures
business written in the UAE.
Hansard Worldwide underwrites international and expatriate business around the
world. It is authorised by the Insurance Commission of The Bahamas.
Hansard Europe is authorised by the Central Bank of Ireland. Hansard Europe
ceased accepting new business with effect from 30 June 2013.
Our products are designed to appeal to affluent international investors,
institutions, and wealth-management groups. They are distributed exclusively
through independent financial advisers (IFAs) and the retail operations of
financial institutions.
Our network of Regional Sales Managers provides local language-based support
services to independent financial advisors in key territories around the
world, supported by our multi-language online platform, Hansard OnLine.
Vision and Strategy
Our vision for the Hansard Group is:
"to share success with our clients by providing simple, understandable and
innovative financial solutions".
To deliver this vision, client outcomes will be the central focus within our
business and, consequently, we will seek to evolve all aspects of our
products, processes, and distribution in order to constantly improve.
Our talented people are the foundation of our business. We have created an
empowering culture, which values innovation, quality, integrity, and respect.
Our strategy to improve, grow and future-proof our business will be delivered
through three key areas of strategic focus:
i. Improve our business: We will improve customer outcomes
through the introduction of new and innovative next generation products and
services to improve our competitiveness, focusing on the quality of the IFAs
with whom we work and continuing to drive the engagement of our people within
our business.
ii. Grow our business: In recent years we established a new life
company in The Bahamas, and we have recently signed a distribution agreement
with Guardian to access the Japanese domestic market. We will continue to seek
out opportunities for additional distribution channels in other targeted
jurisdictions in future.
iii. Future-proof our business: We actively consider new and
innovative technologies, propositions, and business models. It remains
critical to support the online and digital needs of our clients alongside
improving organisational efficiency and scalability.
Products
The Group's products are unit-linked regular or single premium life assurance
and investment contracts which offer access to a wide range of investment
assets. The contracts are flexible, secure and allow life assurance cover or
other features depending upon the needs of the client. The contract benefits
are directly linked to the value of assets that are selected by, or on behalf
of, the client. The Group does not offer investment advice. Contract holders
bear the investment risk.
The Group's products do not currently include any contracts with financial
options and/or guarantees regarding investment performance and hence the Group
carries no investment guarantee risk that can cause capital strain.
As a result of high levels of service, the nature of the Group's products, the
functionality of Hansard OnLine, and the ability of the contract holder to
reposition assets within a contract, we aim to retain the contract holder
relationship over the long term.
Contract holder servicing and related activities are performed by Hansard
Administration Services Limited, which is authorised by the Financial Services
Authority of the Isle of Man Government to act as an Insurance Manager to
insurance subsidiaries of the Group.
Revenues
The main sources of income for the Group are the fees earned from the
administration of insurance contracts. These fees are largely fixed in nature
and amount to £43.7m (2023: £40.5m). Approximately 30% of the Group's
revenues, under IFRS are based upon the value of assets under administration.
From this income we meet the overheads of the business, invest in our
business, remunerate our distribution network, and pay dividends.
Managing Risk
Risk can arise from a combination of macro events and company-specific
matters. In the external environment the ongoing geopolitical position and
active hostilities, combined with continued economic uncertainties, cost of
living pressures, accelerating technological change, climate adaptation
efforts and broader societal vulnerabilities have the potential to cause
significant volatility to stock markets, foreign exchange markets, interest
rates and expense inflation and the capacity to impact our strategic
initiatives, business plans and operating resilience. We therefore continue
to maintain a robust, low risk balance sheet and remain committed to iterative
development and enhancement of our enterprise risk management system and
controls. We believe this prudent approach to our governance, risk management
and internal arrangements remains appropriate to meet the requirements of
regulators, contract holders, intermediaries, and shareholders.
Further details of our approach to risk management, and the principal risks
facing the Group, are outlined in the Risk Management and Internal Control
Section at pages 22 to 30.
Hansard OnLine
Hansard is a regular recipient of numerous awards that recognise our
reputation for innovation, via the provision of market-leading online
platforms that are used daily by thousands of IFAs ('Hansard OnLine) and their
clients ('Online Accounts) around the globe. In March 2024, Hansard OnLine and
Online Accounts were successfully migrated to a new system environment,
marking the culmination of a major strategic objective that enables us to
build on an already award-winning, online proposition. In addition, the new
platform will be central to the development and quick deployment of new,
future products.
Online Accounts
Thousands of existing Hansard clients access their own personal, secure online
account every year. Online accounts are mobile friendly and have the
capability to provide these clients with a wealth of policy information, 24/7.
In addition to other functionality and benefits, clients can:
· Track the performance of their policy online, with policy
valuations and contribution details at the touch of a button.
· Access their online account with our new-look mobile and tablet
friendly platform, enabling access on the go, wherever they are in the world.
· Access their online account 24/7, safe in the knowledge that their
details are secure and protected.
· Access a wealth of fund performance information, facilitating better
informed investment decisions in the future; and
· Stay informed in a language that they understand, with Online
Accounts being available in over 13 different languages.
Excellent Customer Service
We strive to provide excellent customer service to our clients and their IFAs.
We have won several external awards over the years, most recently in October
2023 when we won 'Excellence in Client Service - Industry (Africa region)' and
'Excellence in Fintech' awards from International Investment. We also
maintained our five-star rating for Customer Service by AKG Financial
Analytics, in their 2023 review.
Cyber Security
Hansard has continued to invest in its cyber security infrastructure with the
implementation of a Security Operations Centre, operating at an ISO27001
(Information Technology Security Standard) standard, to provide further
enhanced surveillance of our systems and external threats.
Strategy DEVELOPMENT
Our current strategy has three main aims:
i) To capitalise on near term strategic opportunities.
ii) To ensure the Group is well positioned to respond and adapt
to regulatory change and development; and
iii) To consider and plan for longer term industry and
technological evolution.
During the past financial year, we have progressed our two most significant
near-term strategic initiatives:
· implementation of our policy administration system, and upgrading and
streamlining our systems and IT infrastructure; and
· signing a distribution agreement with Guardian enabling us to bring to
market our locally licensed investment products in Japan.
We continue to make progress with further development to refresh our suite of
products.
Regulatory change
The Isle of Man Financial Services Authority (the Authority) has continued to
focus on its programme of transformational change and commitment to driving
regulatory effectiveness, maintaining a robust regulatory environment, and
keeping pace with international standards. The Island's reputation as a
well-regulated and internationally responsible jurisdiction remains of vital
importance to its competitive positioning in the global marketplace and
maintaining consumer confidence in the Island's financial services sector. The
Authority's strategic priorities are also closely aligned with the Isle of Man
Government's vision to build a secure, vibrant, and sustainable Manx economy.
The Authority's revised Supervisory Methodology Framework actively supports
the achievement of its core regulatory objectives namely the protection of
customers, reducing financial crime and maintaining confidence in the
financial services sector. Supervisory emphasis remains focused on the
delivery of outcomes that enhance the Island's status and reputation and a
high level of compliance with international standards. Major milestones have
been enacted in recent years with the implementation of new risk-based
capital, conduct and governance regimes. The Authority's transition to a risk
and impact-led supervisory model is testament to its continued drive for
better outcomes via consistent, proactive and value-adding programmes of
engagement, which deploy regulatory resources in the most appropriate and
efficient way.
Throughout the reporting period the Hansard Group has continued its work to
adapt to and embrace the intent and objectives of regulatory change and
development, working transparently with all the Group's regulatory bodies to
shape our responses and embed associated changes in strategy, policy, practice
and culture.
Key performance indicators
The Group's senior management team monitors a wide range of Key Performance
Indicators, both financial and non-financial, that are designed to ensure that
performance against targets and expectations across significant areas of
activity are monitored and variances explained.
The following is a summary of the key indicators that were monitored during
the financial year under review.
New Business - The Group's internal indicator of calculating new business
production, Net Issued Compensation Credit ("NICC") reflects the amount of
base commission payable to intermediaries, excluding override commission.
Incentive arrangements for intermediaries and the Group's Regional Sales
Managers incorporate targets based on NICC (weighted where appropriate).
New business levels are reported daily and monitored weekly against target
levels. Net Issued Compensation Credit was £5.6m for the year, down £0.1m
on 2023, reflective of lower new business levels.
Administrative Expenses (excl. litigation and non-recurring items) - The Group
maintains a rigorous focus on expense levels and the value gained from such
expenditure. The objective is to develop processes to restrain increases in
administrative expenses to the rates of inflation assumed in the charging
structure of the Group's policies.
The Group's administrative and other expenses for the year (excl. litigation
and non-recurring items) were £25.0m compared to £22.3m in 2023. Further
detail is contained in the section on Administrative and other expenses on
page 15.
Cash - Bank balances and significant movements on balances are reported
monthly. The Group's cash and deposits at the balance sheet date were £65.0m
(2023: £65.4m). Movements are reflective of cash earned from new and existing
business, commissions and expenses paid, investments in new systems, the level
of inflight transactions, and the dividends paid to shareholders.
Operational Resilience - Maintenance of continual access to data is critical
to the Group's operations. This has been achieved throughout the year through
a robust infrastructure. The Group is pro-active in its consideration of
threats to data, data security and data integrity. Business continuity and
penetration testing is carried out regularly by internal and external parties.
Operational Resilience is further evidenced by ongoing remote working as a
normal business practice.
Risk profile - The factors impacting on the Group's risk profile are kept
under continuous review. Senior management review actual and emerging risks at
least monthly. The principal risks faced by the Group are summarised in the
Principal Risks section below.
Solvency - The Solvency Capital Requirement ("SCR") of the Group and its'
subsidiaries is monitored frequently and reported to the Board. The SCR as at
30 June 2024 is reported in Other Information on page 143.
business AND FINANCIAL REVIEW
NEW BUSINESS PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2024
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.
New business performance for the year is summarised in the table below:
2024 2023 %
Basis £m £m change
Present Value of New Business Premiums 77.8 85.7 (9.2%)
Annualised Premium Equivalent 10.4 12.7 (18.1%)
In Present Value of New Business Premiums ("PVNBP") terms, new business for
the year to 30 June 2024 was £77.8m, 9.2% down on the prior year. Despite the
year-on-year reduction in new business, more PVNBP was generated during the
second half of the year than the first, up 14.9% from £36.2m to £41.6m,
reflecting increased sales of single premium business following the launch of
the new portfolio bond in January. This is the first half-year on half-year
increase in sales measured with PVNBP since H2 2021. New business PVNBP in the
second half of 2023 was £42.3m.
The Annualised Premium Equivalent ("APE") measure shows a decline of 18.1%
from 2023 to £10.4m.
Present Value of New Business Premiums
New business flows on the PVNBP basis for the Group are further analysed as
follows:
2024 2023 %
PVNBP by product type £m £m change
Regular premium 44.2 55.7 (20.7%)
Single premium 33.6 30.0 11.9%
Total 77.8 85.7 (9.2%)
2024 2023 %
PVNBP by region £m £m change
Middle East and Africa 32.4 42.4 (23.6%)
Rest of World 24.3 25.7 (5.8%)
Latin America 16.4 12.1 35.6%
Far East 4.7 5.5 (14.8%)
Total 77.8 85.7 (9.2%)
The launch of our new single premium proposition was well received, and we saw
an increase in business for this product over the second half of the year that
we expect to continue in future. We expect the launch of new regular premium
products through our new distribution agreement with Guardian in Japan to lead
to improvements in regular premium sales in the current business year. A
refresh of our regular premium product range for the wider distribution
channels is also expected in the next financial year which will further
support and underpin our production for the year ahead.
Activities around new business generation remain high as we work with key IFAs
around both existing and new opportunities. Several new IFA relationships have
already started producing business and this work will continue in the current
business year to expand further our networks of distributors.
Our sales team is well positioned to drive IFA and product initiatives to
increase new business in future. This includes the development and launch of
new products for key target markets, updates and improvements to existing
products and continuation of system developments to support our service and
overall proposition.
Premium currencies remained relatively consistent year on year, with the
predominant currency being US Dollars:
2024 2023
Currency denominations (as a percentage of PVNBP) % %
US dollar 85 87
Sterling 10 8
Euro 4 4
Other 1 1
100 100
Presentation of financial results
Our business is long term in nature. The nature of the Group's products means
that new business flows have a limited immediate impact on current earnings
reported under UK adopted international accounting standards ("IFRS"), as
initial fees and acquisition costs from the contracts sold are mostly deferred
and amortised over the life of the contract. The benefit of sales to fee
income levels are felt in future financial periods, noting also that our newer
products have a longer earning period than our older products.
Results for the year
The following is a summary of key items to allow readers to better understand
the results for the year.
IFRS profit before tax for the year was £5.3m, compared with £5.9m in 2023.
Increased fee income and higher investment returns have been offset by an
increase in administration expenses.
Operating profit prior to litigation and non-recurring items was £8.5m in
2024, up from £7.4m in 2023.
Abridged consolidated income statement
The consolidated statement of comprehensive income presented under IFRS
reflects the financial results of the Group's activities during the year. This
income statement however, as a result of its method of presentation,
incorporates a number of features that might affect an understanding of the
results of the Group's underlying transactions. These relate principally to:
· Investment gains attributable to contract holder assets were
£114.4m (2023: £40.6m). These assets are selected by the contract holder or
an authorised intermediary, and the contract holder bears the investment risk.
They are also reflected within 'Change in provisions for investment contract
liabilities' and together have no net impact on IFRS profit.
· Fund management fees are collected and paid onwards by the Group to
third parties having a relationship with the underlying contract. In 2024
these were £5.1m (2023: £5.2m). These are reflected on a gross basis in both
income and expenses under the IFRS presentation on page 94. Deducting the
£5.1m from £48.8m for fees and commissions and £33.3m for administrative
and other expenses in the consolidated statement of comprehensive income
results in the figures of £43.7m and £28.2m presented below.
2024 2023
£m £m
Fees and commissions attributable to Group activities 43.7 40.5
Investment and other income 5.9 5.4
49.6 45.9
Origination costs (16.1) (16.2)
Administrative and other expenses attributable to the Group, before
litigation and non-recurring items (25.0) (22.3)
Operating profit for the year before litigation and non-recurring items 8.5 7.4
Litigation and non-recurring expense items (3.2) (1.5)
Profit for the year before taxation 5.3 5.9
Taxation (0.1) (0.2)
Profit for the year after taxation 5.2 5.7
An abridged non-GAAP consolidated income statement in relation to the Group's
own activities is presented below, adjusted for the items of income and
expenditure indicated above.
Fees and commissions
Fees and commissions for the year attributable to Group activities were
£43.7m, 7.9% higher than the 2023 total of £40.5m.
Contract fee income totalled £30.6m for the year, up £2.5m on the 2023
comparative of £28.1m. Contract fee income includes the amortised element
of up-front income deferred under IFRS and contract-servicing charges.
Amortisation of deferred income in Hansard International increased to
£17.4m, whilst transactional charges related to policyholder activity have
increased to £13.2m compared to last year. Immediately recognised fees,
including surrender charges from redemptions, decreased compared to the prior
year. This was reflective of lower levels of redemptions compared to the
prior year. Hansard Europe dac, which closed to new business in 2013, saw a
marginal increase in contract fee income to £2.2m (2023: £2.1m) as a result
of higher transactional income and fund management fees.
Fund management fees accruing to the Group and commissions receivable from
third parties totalled £13.1m (2023: £12.4m). Such fees are related directly
to the value of assets under administration and are affected by market
movements, currency rates and valuation judgements.
A summary of fees and commissions is set out below:
2024 2023
£m £m
Contract fee income 30.6 28.1
Fund management fees accruing to the Group 8.3 7.7
Commissions receivable 4.8 4.7
43.7 40.5
Included in contract fee income is £17.4m (2023: £16.8m) representing the
amortisation of fees prepaid in previous years, as can be seen in the analysis
set out below:
2024 2023
£m £m
Amortisation of deferred income 17.4 16.8
Income earned during the year 13.2 11.3
Contract fee income 30.6 28.1
Investment and other income
Investment income has improved to £5.9m as a result of the Group ensuring
that Group investments benefited from the higher interest rates during the
year, offset by lower foreign exchange profits on revaluation of net operating
assets.
2024 2023
£m £m
Bank interest and other income receivable 5.5 4.5
Foreign exchange profits on revaluation of net operating assets 0.4 0.9
5.9 5.4
Origination costs
Under IFRS, new business commissions paid, together with the directly
attributable incremental costs incurred on the issue of a contract, are
deferred and amortised over the anticipated life of that contract to match the
longer-term income streams expected to accrue from the contracts issued this
year. Typical terms range between 6 years and 16 years, depending on the
nature of the product. Other elements of the Group's new business costs, for
example, salaries of sales staff, are expensed as incurred.
Origination costs incurred in 2024 have decreased by £1.2m to £10.3m from
the prior year. Origination costs were lower in line with lower new business
levels but offset by increased amortisation of prior year balances.
2024 2023
£m £m
Origination costs - deferred to match future income streams 8.2 8.8
Origination costs - expensed as incurred 2.1 2.7
Investment in new business in year 10.3 11.5
Amortisation of deferred origination costs net of new deferrals 5.8 4.7
16.1 16.2
Amounts totaling £13.9m (2023: £13.5m) have been expensed to match contract
fee income earned this year from contracts issued in previous financial years,
as can be seen in the analysis below.
Summarised origination costs for the year were:
2024 2023
£m £m
Amortisation of deferred origination costs 13.9 13.5
Other origination costs incurred during the year 2.2 2.7
16.1 16.2
Administrative and other expenses
We continue to manage our expense base robustly to control administrative
expenses while supporting our strategic developments and other new business
growth activities with targeted expenditure.
An analysis of administrative and other expenses is set out in notes 8 and 9
to the consolidated financial statements under IFRS. The following summarises
some of the expenses attributable to the Group's own activities, excluding the
third-party fund management fees collected and paid onwards by the Group to
third parties having a relationship with the underlying contract of £5.1m
(2023: £5.2m).
2024 2023
£m £m
Salaries and other employment costs 11.3 10.6
Other administrative expenses 7.8 7.7
Professional fees, including audit 3.2 3.1
Recurring administrative and other expenses 22.3 21.5
Growth investment spend 2.7 0.8
Administrative and other expenses, excl. litigation and non-recurring expense 25.0 22.3
items
Litigation defence and settlement costs 2.5 1.4
Provision for doubtful debts 0.7 0.1
Total administrative and other expenses 28.2 23.8
Salaries and other employment costs have increased by £0.7m or 6.6% to
£11.3m. Although average Group headcount decreased to 182 people (2023: 187
people), following the implementation of our new policy administration system
we have continued to develop the platform to position our business for future
growth, leading to some previously deferred salary costs being recognised as
expenses as incurred, accounting for £0.6m of the increase. We also
temporarily strengthened our Client Services team following migration.
Other administrative expenses saw an increase of £0.1m to £7.8m as a result
of the amortisation of the new policy administration system commencing with
effect from 1 March (£0.5m), offset by efficiency savings in underlying
administrative expenses despite persistent inflationary pressure.
Professional fees including audit increased by £0.1m to £3.2m against the
prior year. These costs include amounts totalling £0.9m paid to the Group's
auditor (2023: £0.8m), £0.6m (2023: £0.5m) for administration, custody,
dealing, and other charges paid under the terms of the investment processing
outsourcing arrangements; recruitment costs of £0.2m (2023: £0.2m), and
costs of investor relations activities of £0.2m (2023: £0.2m).
Growth investment spend increased to £2.7m and represents internal and
external costs to generate strategic opportunities for further growth as we
look to leverage the capability of our new policy administration system.
Following the implementation of the system, smaller incremental developments
are no longer deferred and are recognised as expenses as incurred. The amount
also includes expenditure associated with developing and delivery of our
Japanese proposition and other new products.
Litigation defence and settlement costs represent those costs (net of
insurance recoveries) incurred in defending Hansard Europe against writs taken
against it, as described more fully in note 26 to the consolidated financial
statements. Legal costs recovered from insurers were £0.7m (2023: £0.1m).
A litigation provision of £0.4m has been recognised in the year, with the
total balance of the provision as at 30 June 2024 being £0.5m (2023: £0.1m).
Provision for doubtful debts relate to the provision in full of fees and other
balances likely to be irrecoverable from a set of primarily Hansard Europe
legacy funds which are in the process of liquidation.
Future Prospects
During 2025 the Group's strategic priority will be to build on the significant
projects delivered in 2024. The launch of the new portfolio bond in January
and new Japanese proposition announced in June, along with other products
currently in development, present significant new opportunities for sales. The
second half of financial year 2024 showed increased PVNBP compared to the
first half of the year for the first time since 2021, and we expect this trend
to continue as our new propositions gain momentum. It takes a significant
period of time for sales to generate a material change in IFRS profits given
the long-term nature of our business. Profits are recognised over the life of
the contracts, so new sales contribute positively to profitability over a
number of years.
The implementation of the new policy administration system was a significant
milestone for Hansard and has given the Group the platform required for
expansion in the coming years and will facilitate a simpler approach to
product development in future. Following implementation of the system, we have
commenced the depreciation charges in the income statement. 2025 will be the
first financial year where we will see a full year's depreciation charge,
which will amount to a cost of £1.6m. Although this will reduce the published
IFRS profit, the system development is no longer a cash cost to the company,
the investment already having been made. We expect to be able to take actions
over the course of financial year 2025 to deliver cost savings as a result of
efficiencies arising from the new system, with the impact on IFRS profit being
realised mainly from financial year 2026 onwards.
The business continues to make targeted investments in new product offerings,
to build on the product developments already delivered, and to ensure the
Group is well positioned for the future. In financial year 2025, the Company
expects to incur modest development costs, which are expected to be expensed
as incurred.
In recent years the Group has benefited from higher interest rates, leading to
increased return on shareholder investments; however, declining interest rates
in future may reduce these returns going forward.
Considering the above factors, we expect a short-term decline in the
profitability of the Group measured using IFRS in financial year 2025;
however, the Group's regulatory solvency cover, a key measure used to assess
dividend-paying capability, is calculated primarily on the basis of non-IFRS
measures and is expected to remain strong.
Cash Flow ANALYSIS
The operational cash surplus (fees deducted from contracts and commissions
received, less operational expenses paid) for the year was £10.9m (2023:
£15.9m) as a result of increased operational expenditure to position the
business for future growth.
Writing new business, particularly regular premium business, produces a
short-term cash strain as a result of the commission and other costs incurred
at the inception of a contract. Annual management charges offset this strain
and produce a positive return over time.
Future increases in new business levels can be funded where necessary by the
Group's significant cash resources, but over time as the level of contract
holder assets is built up, the annual management charges that are earned from
the Group's newer products will become sufficient to sustain new business
growth and dividends.
During 2024, the Group invested £3.9m (2023: £6.6m) as part of a project to
replace its policy administration system. These costs were capitalised as
Intangible Assets on the Group's consolidated balance sheet as set out in note
13.
Net cash inflows before dividends were £3.0m (2023: outflows of £1.6m),
benefitting largely from £2.7m lower outflows during the year as we completed
the replacement of our policy administration system. The prior year also
includes an outflow of £5m into a bond portfolio.
Overall Group cash and deposits have decreased from £65.4m to £65.0m as at
30 June 2024, primarily driven by lower new business as noted above.
The following non-GAAP tables summarise the Group's own cash flows in the
year:
2024 2023
£m £m
Net cash surplus from operating activities 10.9 15.9
Interest received 4.2 3.0
Net cash inflow from operations 15.1 18.9
Net cash investment in new business (8.1) (8.5)
Purchase of property and computer equipment (3.9) (6.6)
Net cash investment in bond portfolio - (5.0)
Corporation tax paid (0.1) (0.4)
Net cash inflow / (outflow) before dividends 3.0 (1.6)
Dividends paid (6.1) (5.9)
Net cash outflow after dividends (3.1) (7.5)
2024 2023
£m £m
Net cash outflow after dividends (3.1) (7.5)
Increase / (decrease) in amounts due to contract holders 2.7 (0.6)
Net Group cash movements (0.4) (8.1)
Group cash and deposits - opening position 65.4 74.5
Effect of exchange rate movements - (1.0)
Group cash and deposits - closing position 65.0 65.4
The below table reconciles the key lines for this year in the above non-GAAP
cash flow to the key lines in the consolidated cash flow shown on page 97.
Non-GAAP Consolidated Cash Flow Statement
Cash Flow
£m £m
Net cash flow from operations before tax 15.1 6.2
Adjust for net movement in policyholder financial assets and liabilities
- 4.8
15.1 11.0
Purchase of property and computer equipment (tangible and intangible) (3.9) (3.9)
Corporation tax paid (0.1) (0.1)
Dividends paid (6.1) (6.1)
Net cash investment in business (8.1) -
Increase in amounts due to contract holders 2.7 -
Net movement in assets and liabilities relating to contract holders - (1.3)
(5.4) (1.3)
Net Group cash movements (0.4) (0.4)
Group bank deposits and money market funds
The Group holds its liquid assets in highly rated money market liquidity funds
and with a wide range of deposit institutions to diversify counterparty risk.
Deposits totalling £17.1m (2023: £13.2m) have original maturity dates
typically greater than 3 months and are therefore excluded from the definition
of "cash and cash equivalents" under IFRS and are instead included within
'Deposits and money market funds' in the consolidated balance sheet. The
following table summarises the total cash and deposits at the balance sheet
date.
2024 2023
£m £m
Money market funds and immediately available cash 47.3 41.2
Short-term deposits with credit institutions 0.6 11.0
Cash and cash equivalents under IFRS 47.9 52.2
Deposits and money market funds 17.1 13.2
Group cash and deposits 65.0 65.4
Abridged consolidated balance sheet
The consolidated balance sheet on page 96 presented under IFRS reflects the
financial position of the Group at 30 June 2024. As a result of its method of
presentation, the consolidated balance sheet incorporates the financial assets
held to back the Group's liability to contract holders and incorporates the
net liability to those contract holders of £1,150.9m (2023: £1,101.5m).
Additionally, that portion of the Group's capital that is held in bank
deposits is disclosed in "cash and cash equivalents" based on original
maturity terms, as noted above.
The abridged consolidated balance sheet presented below, adjusted for those
differences in disclosure, allows a better understanding of the Group's own
capital position.
2024 2023
£m £m
Assets
Deferred origination costs 112.1 117.8
Other assets 38.7 27.6
Bank deposits and money market funds 65.0 65.4
215.8 210.8
Liabilities
Deferred income 140.2 144.8
Other payables 54.7 44.2
195.0 189.0
Net assets 20.8 21.8
Shareholders' equity
Share capital and reserves 20.8 21.8
Other assets include intangible assets, property, plant and equipment and
other receivables. Other payables include amounts due to investment contract
holders and other payables.
Deferred origination costs
The deferral of origination costs reflects that the Group will earn fees over
the long-term from contracts issued in a given financial year. These costs are
recoverable out of future net income from the relevant contract and are
charged to the consolidated statement of comprehensive income on a
straight-line basis over the life of each contract.
The movement in value over the financial year is summarised below.
2024 2023
Carrying value £m £m
At beginning of financial year 117.8 122.5
Origination costs deferred during the year 8.2 8.7
Origination costs amortised during the year (13.9) (13.4)
112.1 117.8
Deferred income
The treatment of deferred income ensures that contract fees are taken to the
consolidated statement of comprehensive income in equal instalments over the
longer-term, reflecting the services to be provided over the period of the
contract. This is consistent with the treatment of deferred origination costs.
Deferred income at the balance sheet date is the unamortised balance of
accumulated initial amounts received on new business.
The proportion of income deferred in any one year is dependent upon the mix
and volume of new business flows in previous years. The Group's focus on
regular premium business means that these fees are received over the initial
period of the contract, rather than being received up front, as is often the
case with single premium contracts.
The majority of initial fees collected during the year relates to charges
taken from contracts issued in prior financial years demonstrating the cash
generative nature of the business. Regular premium contracts issued in this
financial year will generate the majority of their initial fees over the next
18 months on average.
The movement in value of deferred income over the financial year is summarised
below.
2024 2023
Carrying value £m £m
At beginning of financial year 144.8 145.1
Initial fees collected in the year and deferred 12.7 16.5
Income amortised during the year to fees income (17.4) (16.8)
140.1 144.8
CONTRACT HOLDER Assets under administration
In the following paragraphs, contract holder assets under administration
("AuA") refers to net assets held to cover financial liabilities, as analysed
in note 17 to the consolidated financial statements presented under IFRS.
Such assets are selected by or on behalf of contract holders to meet their
investment needs.
The Group receives investment inflows to its AuA from single and regular
premium contracts which are offset by withdrawals, charges, premium holidays
affecting regular premium policies, and by market valuation movements.
The majority of premium contributions are designated in currencies other than
sterling, reflecting the wide geographical spread of those contact holders.
The currency composition of AuA at the balance sheet date is similar to the
prior year, with 73% of AuA designated in US dollar (2023: 71%) and 7% in euro
(2023: 8%).
Certain collective investment schemes linked to customers' contracts can from
time to time become illiquid, suspended or be put into liquidation. In such
cases, the Directors are required to exercise their judgement in relation to
the fair value of these assets. The cumulative impact on the balance sheet
is not material.
The value of AuA at 30 June 2024 was £1,150.9m, 4.5% higher than 30 June
2023. Lower regular premiums and increased withdrawals were offset by higher
single premiums, and market and currency movements as global stock markets
rallied in the second half of the year.
The following table summarises the movements in the year:
2024 2023
£m £m
Deposits to investment contracts - regular premiums 74.4 86.1
Deposits to investment contracts - single premiums 33.9 30.2
Withdrawals from contracts and charges (173.3) (147.7)
Effect of market and currency movements 114.4 40.6
Movement in year 49.4 9.2
Opening balance 1,101.5 1,092.3
Closing balance 1,150.9 1,101.5
The analysis of AuA held by each Group subsidiary to cover financial
liabilities is as follows:
2024 2023
Fair value of AuA at 30 June £m £m
Hansard International 1,091.6 1,037.7
Hansard Europe 59.3 63.8
1,150.9 1,101.5
Assets to cover the financial liabilities of Hansard Worldwide are held by
Hansard International and therefore are included within Hansard
International's total AuA.
Since it closed to new business in 2013, Hansard Europe's AuA has been
declining broadly in line with expectations as contracts are surrendered or
mature.
DIVIDENDS
An interim dividend of 1.8p per share was paid in April 2024. This amounted to
£2.5m.
The Board has resolved to recommend a final dividend of 2.65p per share (2023:
2.65p) for shareholder approval at the AGM. Subject to approval at the AGM,
this dividend will be paid on 14 November 2024 and will bring the total
dividends in respect of the year ended 30 June 2024 to 4.45p per share (2023:
4.45p per share).
complaints and potential litigation
Financial services institutions can be drawn into disputes in cases where the
performance of assets selected directly by or on behalf of contract holders
through their advisors fails to meet their expectations. This is particularly
relevant in the case of more complex products distributed throughout Europe
prior to 2014.
Even though the Group have never given any investment advice, as this is left
to the contract holder directly or through an agent, advisor or an entity
appointed at their request or preference, the Group has been subject to a
number of complaints in relation to the performance of assets linked to
contracts. Most of the cases have arisen in Italy, with a smaller number in
Belgium and Germany.
As at 30 June 2024, the Group had been served with writs with a net cumulative
exposure totalling €23.8m, or £20.2m in sterling terms (30 June 2023:
€26.1m / £22.4m) arising from contract holder complaints and other asset
performance-related issues. These are disclosed as contingent liabilities in
note 26 to the consolidated financial statements. The decrease in contingent
liabilities is primarily due to a case with a potential exposure of
approximately £1.4m now being considered to be remote and thus outside the
scope of a contingent liability; there has also been a reduction in the number
of German cases.
During the year, the Group successfully defended eight cases with net
exposures of approximately £1.3m, five of which may be appealed by the
plaintiffs (2023: successfully defended fifteen cases with net exposures of
£1.9m). These successes continue to affirm confidence in the Group's legal
arguments.
Our policy is to maintain contingent liabilities even where we win cases in
the court of first instance if such cases have been subsequently appealed.
This includes our largest single case in Belgium.
We have previously noted that we expect a number of our claims to ultimately
be covered by our Group insurance cover. During the year we recorded £0.7m
in insurance recoveries in relation to litigation expenses (2023: £0.1m).
We expect such reimbursement to continue during the course of those
claims.
While it is not possible to forecast or determine the final result of such
litigation, based on the pleadings and advice received from the Group's legal
representatives and experience with cases previously successfully defended, we
believe we have a strong chance of success in defending these claims. Other
than smaller cases where, based on past experience, it is expected a
settlement might be reached, the writs have therefore been treated as
contingent liabilities and are disclosed in note 26 to the consolidated
financial statements. Where there is an established pattern of settlement
for a grouping of claims, a provision has been made for the remaining
exposures and included in note 20 'Provisions', to the extent that they can be
reliably estimated.
Net asset value per shaRE
The net asset value per share on an IFRS basis as at 30 June 2024 is 15.1p
(2023: 15.9p) based on the net assets in the Consolidated Balance Sheet
divided by the number of shares in issue, being 137,557,079 ordinary shares
(2023: 137,557,079).
Risk management and internal control
The Group continues to operate a comprehensive Enterprise Risk Management
Framework, reflective of the Board's focus on effective risk management as an
integral element of corporate success. The ERM Framework sets out the
governance arrangements, principles, guidelines, practices and standards for
risk management and internal control, which cumulatively ensure that the
business is robustly prepared to identify, understand, and navigate the
uncertainties and risks which it may encounter, and which can either pose
threats or offer opportunities. The ERM Framework ensures that all such
threats and opportunities, whether actual or emerging, are identified,
assessed, monitored, managed, and reported using structured, consistent, and
comprehensive methodologies, which seek to embed risk management within
strategic decision-making and business planning activities and continuously
shape organisational values and culture. The maturity of the ERM Framework and
its capacity to respond quickly to emerging risks and adapt to changes arising
via the internal or external environment, ensure that risk management and
internal control remain central to the Board's oversight, direction and
control of the Group, compelling informed decision making and sound business
practices.
Approach
Having regard to the Financial Reporting Council's 'Guidance on Risk
Management, Internal Control and Related Financial and Business Reporting',
the ERM Framework encompasses the policies, processes, tasks, cultural
attributes, behaviours, reporting conventions, and other aspects of the
Group's environment, which cumulatively:
· Support the Board's determination of the nature and extent of the
Group's principal risks and the boundaries of risk appetite governing the
pursuit and achievement of strategic objectives.
· Inform the Board's understanding and assessment of existing, evolving,
and emerging risks, together with combinations of those risks in the form of
plausible stresses and scenarios, which have the potential to threaten the
Company's business model, future performance, solvency, liquidity, operational
resilience, regulatory standing, or reputation. This includes analysis of the
likelihood, impact, and time horizon over which such risks, or combinations of
risks, might emerge or crystallise and determining how such risks should be
managed or mitigated to reduce their likelihood or impact.
· Facilitate the effective and efficient operation of the Group and
its subsidiary entities by enabling a consolidated and comprehensive approach
to the management of risks across the Group, with specific attention to
aggregate impacts and effects, enabling appropriate responses to significant
business, operational, financial, compliance and other risks to business
objectives, so safeguarding the assets of the Group.
· Help to ensure the quality of internal and external reporting. This
requires the maintenance of proper records and processes that generate a flow
of timely, relevant, and reliable information from within and outside the
Group, enabling the Board to form their own view on the effectiveness of risk
management and internal control arrangements through the regular provision of
relevant information and assurances.
· Seek to ensure continuous compliance with applicable laws and
regulations as well as with internal policies governing the conduct of
business.
· Drive the cultural tone and expectations of the Board in respect of
governance, risk management and internal control arrangements and the
delegation of associated authorities and accountabilities.
The ERM Framework has been designed to be appropriate to the nature, scale,
and complexity of the Group's business at both corporate and subsidiary level.
The ERM Framework components are reviewed on at least an annual basis and
refined, if necessary, to ensure they remain fit for purpose in substance and
form and continue to support the Directors' assessment of the adequacy and
effectiveness of the Group's risk management and internal control systems.
Such assessment depends upon the Board maintaining a thorough understanding of
the Group's risk profile, including the types, characteristics,
interdependencies, sources, and potential impact of both existing and emerging
risks on an individual and aggregate basis.
Risk governance arrangements
The Board retains ultimate responsibility for the ERM Framework and its
effective operation, and the Directors are responsible for determining,
evaluating, and controlling the nature and extent of the risks which the Board
is willing to accept across the spectrum of risk disciplines. The Board has
formally delegated certain responsibilities in respect of internal controls
and risk management to the Audit and Risk Committee. These responsibilities
are defined within the Committee's terms of reference and provide for a range
of important oversight and scrutiny protocols including:
· Continuous review of the Group's internal financial controls (being
the systems established to identify, assess, manage, and monitor financial
risks) and other internal control and risk management systems relating to
financial reporting.
· Robust assessment of the emerging and principal risks facing the Group,
identified, and reported via established ERM Framework components, and the
provision of comfort to the Board that risks are being managed and controlled
within the Board's overall risk appetite.
· Independent evaluation of the ERM Framework to confirm that it remains
adequate, effective, and proportionate to the nature, scale and complexity of
the risks inherent in the business.
During the year ended 30 June 2024 the Group Risk Forum ("GRF") has continued
to champion the embedding of risk ownership, ensuring responsibilities and
accountabilities for risk management and risk-based decision making are
transparent and proactively owned at all business levels. The value of
effective, dynamic interfaces between the governance, risk management and
internal control conventions of the ERM Framework and those constituting the
Group and subsidiary Own Risk and Solvency Assessment ("ORSA") cycles remains
a core focus for the GRF.
The Group ORSA report reflects the cycle of ongoing activities and
arrangements which enable the Board and the Executive Committee to properly
assess and understand at a practical level the short and long-term risks
facing the Group and the capital required to cover those risks, under both
normal and stressed conditions. The ORSA considers the major sources of risk
that the Group, or a subsidiary entity, may face under the principal and
subordinate risk designations of the ERM Framework. Both internal and external
risks are considered, together with emerging risks and any risks associated
with the Group's systems of governance. The ORSA includes capital, performance
and strategic information and provides management with key information for
decision making.
The disciplines of the ERM Framework seek to coordinate risk management in
respect of the Group as a whole, including for the purpose of ensuring
compliance with capital adequacy requirements, liquidity adequacy requirements
and regulatory capital requirements, in line with the Isle of Man Financial
Services Authority Risk-Based Capital Regime.
Governance, risk management and internal control protocols remain structured
upon a 'three lines' model, which determines how specific duties and
responsibilities are assigned and coordinated. First line management are
responsible for identifying risks, executing effective controls, and
escalating risk issues and events to the Group's Control Functions. The Group
Risk and Compliance Functions (Second line) oversee and work in collaboration
with the First Line, ensuring that the business is conducted in a manner
consistent with rules, limits, and risk appetite constraints. The Group
Internal Audit Department (Third line) provides independent assurance services
to the Board and the Executive Committee on the adequacy and effectiveness of
the Group's governance, risk management and internal control arrangements.
The ERM Framework seeks to add value through embedding risk management and
effective internal control systems as continuous and developing processes
within strategy setting, programme level functions and day-to-day operating
activities. The ERM Framework also acknowledges the significance of
organisational culture and values in relation to risk management and their
impact on the overall effectiveness of the internal control framework.
Emerging Risks
The ERM Framework promotes the pursuit of its overarching performance,
information, and compliance objectives through focus on five interrelated
elements, which enable the management of risk at strategic, programme and
operational level to be integrated, so that layers of activity support each
other. The five interrelated elements are defined as:
· Management oversight and the control culture.
· Risk recognition and assessment.
· Control activities and segregation of duties.
· Information and communication.
· Monitoring activities and correcting deficiencies.
In addition to existing risks the ERM conventions, which support delivery of
the elements listed above, target emerging and evolving risks using both
top-down and bottom-up bases. The top-down aspect involves the Board regularly
analysing and evaluating the nature and extent of the risks to which the Group
is or may be exposed, even where these may be difficult to assess and
quantify. The bottom-up approach involves the identification, review and
continuous monitoring of risk issues and emerging risks at functional and
divisional levels, with analysis and formal reporting to the Group Risk Forum
on a quarterly basis. This allows actions to be developed or adapted on a
timely basis and enables onward analytical reporting to the Board. These
arrangements ensure that the Board remains aware of potential changes in risk
profile on a forward-looking basis and sensitive to the materiality of
potential impacts.
Stress and scenario testing is used to explore, assess, and quantify emerging
risks as well as to analyse and assess any changes in existing aspects of the
'Risk Universe', which are monitored via the ERM Framework. Such assessment
and analyses use both quantitative tests and qualitative assessments to
consider reasonably plausible risk events, including those stresses and
scenarios that could lead to failure of the business, approximated to the
range of impact types which can be envisaged. The results of the stress and
scenario testing are considered and explored by the Group Risk Forum, the
Audit and Risk Committee and the Board, as necessary and appropriate.
The system of internal control is designed to understand, mitigate, and
manage, rather than eliminate risk of failure to achieve business objectives,
and seeks to provide reasonable, rather than absolute, assurance against
material misstatement or loss.
Review of Risk Management and Internal Control Systems
The results of the risk management processes combine to facilitate
identification of the principal business, financial, operational and
compliance risks and any associated key risks at a subordinate level.
Established reporting cycles enable the Board to maintain oversight of the
quality and value of risk management and internal control activities
throughout the year and ensure that the entirety of the governance, risk
management and internal control frameworks, which constitute the ERM
Framework, are operating effectively and as intended. These processes have
been in place throughout the year under review and up to the date of this
report.
Independently of its quarterly and ad hoc risk reporting arrangements the
Board has conducted its annual review of the effectiveness of the Company's
risk management and internal control systems including financial, operational
and compliance controls. This review is undertaken in collaboration with the
Audit and Risk Committee and is based upon analysis and evaluation of:
· Attestation reporting from the key subsidiary companies of the
Group as to the effective functioning of the risk management and internal
control frameworks and the ongoing identification and evaluation of risk
within each subsidiary.
· Formal declarations from Executive Managers, via quarterly risk and
control self-assessments, that risks falling under their respective span of
control are being managed and assessed appropriately and key controls are
working effectively and as intended. Reporting must include progress updates
on the timely and effective delivery of Management Actions to address any
identified control weaknesses, in accordance with the commitments recorded in
the Group Risk Management Platform. The cumulative results of cyclical risk
reporting by senior and executive management via the GRF, having regard to the
'five pillar' structure of the ERM Framework, which drives analytical
reporting to the Audit and Risk Committee. Independent assurance work by the
Group Internal Audit Department to identify any areas for enhancements to
internal controls and work with management to define associated action plans
to deliver them.
The Board has determined that there were no areas for enhancement which
constituted a significant weakness for the year under review and the Directors
are satisfied that the Group's governance, risk management and internal
control systems are operating effectively and as intended.
Financial Reporting Process
Integral to ERM monitoring and reporting arrangements are the conventions
which ensure that the Board maintains a continuous understanding of the
financial impacts of the Group failing to meet its objectives, due to
crystallisation of an actual or emerging risk, or via the stress and scenario
events, which the Board considers to be reasonably plausible. This includes
those stresses and scenarios that could lead to a failure of the business.
Planning and sensitivity analyses incorporate Board approval of forecast
financial and other information. The Board receives regular representations
from Senior Executives in this regard.
Performance against targets is reported to the Board quarterly through a
review of Group and subsidiary companies' results based on accounting policies
that are applied consistently throughout the Group. Financial and management
information is prepared quarterly by the Chief Financial Officer ("CFO") and
presented to the Board and the Audit and Risk Committee. The members of the
Audit and Risk Committee review the interim financial statements for the half
year ending 31 December and the full financial year and engage with the CFO to
discuss and challenge the presentation and disclosures therein. Once the draft
document is approved by the Audit and Risk Committee, it is reviewed by the
Board before final approval by the Board.
Outsourcing
The majority of investment dealing and custody processes in relation to
contract holder assets are outsourced under a formal contract to Capital
International Limited (CIL, https://www.capital-iom.com/), a company
authorised by the Isle of Man Financial Services Authority and a member of the
London Stock Exchange. The contract is managed by a dedicated Relationship
Manager against a documented Service Level Agreement, which includes Key
Performance Indicators. CIL is required to confirm quarterly that no material
control weaknesses have been identified in their operations; this is overseen
via service delivery monitoring performed by the Relationship Manager. Each
year CIL are required to confirm and evidence the adequacy and effectiveness
of their internal control framework through a formal Assurance Report on
Internal Controls, with an external independent review performed in in 2023
and 2024.
Our core policy administration platform is provided as a Software As A Service
solution by Majesco (www.majesco.com). This covers all policy and advisor
administration as well as the provision of the Hansard Client and Advisor
online portals which support self-service administration. Monthly service
meetings are held with Majesco with a formal annual review undertaken.
Majesco also participates in scheduled security tests and simulations. The
Majesco system code is held in escrow with the NCC Group, which supports
contingency planning in the event of a failure of a provider.
Manx Telecom (wwww.m (https://www.manxtelecom.com/) anxtelecom
(https://www.manxtelecom.com/) .com) provides our hosting services and core
internet connectivity, which supports several core infrastructure elements
such as our virtual desktops and servers. Manx Telecom data centres operate
to Tier 3 standard and are ISO 27001 accredited. Monthly service meetings are
held with Manx Telecom with a formal annual review undertaken. Manx Telecom
is an active participant in scheduled security tests and simulations.
Risks Relating to the Group's Financial and Other Exposures
Hansard's business model involves the controlled acceptance and management of
risk exposures. Under the terms of the unit-linked investment contracts issued
by the Group, the contract holder bears the investment risk on the assets in
the unit-linked funds, as the policy benefits are directly linked to the value
of the assets in the funds. These assets are administered in a manner
consistent with the expectations of the contract holders. The Group maintains
a precise match between the investment assets held and the contract holder
liabilities, and so the market risk and credit risk lie with contract holders.
The Group's exposure on this unit-linked business is limited to the extent
that income arising from asset management charges and commissions is generally
based on the value of assets in the funds, and any sustained falls in value
will reduce earnings. In addition, there are certain financial risks (credit,
market, and liquidity risks) in relation to the investment of shareholders'
funds. The Group's exposure to financial risks is explained in note 3 to the
consolidated financial statements.
The Board believes that the principal risks facing the Group's earnings and
financial position are those risks which are inherent to the Group's business
model and operating environment. The regulatory landscape continues to evolve
at both a local and international level and the risk management and internal
control frameworks of the Group must remain responsive to developments which
may change the nature, impact or likelihood of such risks, or the time horizon
within which they might crystallise.
Principal Risks
The following table sets out the principal inherent risks that may impact the
Group's strategic objectives, profitability, capital position or resilience
and provides an overview of how such risks are managed or mitigated. The Board
robustly reviews and considers its principal risks on at least a quarterly
basis and for the year ended 30 June 2024 has continued to consider
specifically the likelihood, impacts and timescales within which such risks
might crystallise, together with assessment of contingent uncertainties and
any emerging risks. No emerging risks have been identified during the
reporting period, which require disclosure additional to the principal risks
described below.
Risk Risk Factors and Management
Distribution Risk: The business environment in which the international insurance industry
operates is subject to continuous change and development as new market and
competitor forces come into effect, regulatory landscapes evolve, and
technological advancements are realised. Any failure by the Group to ensure
Arising from poor planning, execution or governance of distribution strategy, that distribution strategy is well planned, governed and executed can be
or the emergence of events or conditions which obstruct the achievement of expected to undermine competitive advantage in commercially significant
business plan targets, including market changes, technological advancement, jurisdictions, or market segments, or the Group's efforts to build and sustain
loss of key intermediary relationships or competitor activity. successful distribution relationships.
How we manage the risk:
· Robust governance, risk management and internal control practices
underpin the development and formalisation of distribution strategy. Strategy
revisions are designed to add additional scale to the business, on a more
diversified basis, through organic growth at acceptable levels of risk and
profitability.
· Key Risk Indicators provide for continuous monitoring of
marketplaces, competitor activity and consumer sentiment by the Group Risk
Forum and the early identification of emerging risks or threats. Reporting
protocols enable the rapid escalation of any adverse trends to the Audit and
Risk Committee.
· Stress and scenario modelling considers the consequences of
production falling materially above or below forecast new business levels.
This allows the Board to ensure that forecasting and planning activities are
sufficiently robust and well targeted.
· Continuous investment in and development of technology. During the
reporting period we have continued to maintain close contact with our
distribution partners as new technological solutions were deployed.
· Investment in new markets and expansion of existing markets,
developing new key distributor relationships and new product development for
specific markets and globally.
Market Risk: Market risk remains an inherent element of the Group's unit linked business
and is continuously assessed and monitored via the ERM Framework. This
monitoring recognises the international nature of the Group's operations and
the challenges which might emerge from a significant adverse currency movement
Arising from major market stresses or fluctuations in market variables, over a sustained period. Key risk indicators also assess the potential for
resulting in a fall in equity or other asset values, currency volatilities or balance sheet and profit reduction impacts to emerge from a drop in equities,
a combined scenario manifesting. and the potential contagion effects for the broader risk portfolio. Such
contagion might include deferred impacts to profit through reduced sales
activity, concentration risks on fund holdings/underlying assets, and reduced
incomes through increased lapse rates.
Simultaneously the Board recognises that socioeconomic vulnerabilities and
prevailing uncertainties associated with economic volatility might curb
consumer appetite for the selection and purchase of financial services
products and the period over which business is retained. In addition, the
Group operates internationally and earns income in a range of different
currencies, with the majority of premiums denominated in USD, whilst the vast
majority of its operational cost base is denominated in GBP. A significant
adverse currency movement over a sustained period remains a principal risk to
the Group.
How we manage the risk:
· The Board recognises that market volatilities and currency
movements are unpredictable and driven by a diverse range of factors and these
risks are inherent in the provision of investment-linked products. KRIs are
established to monitor evolving and emerging indicators of adverse experience
to enable the triggering of management actions at the earliest opportunity.
· The currencies of assets and liabilities are matched within set
tolerances and certain expenses are invoiced in US Dollars to match against US
Dollar income streams.
· Business plans are modelled across a broad range of market and
economic scenarios and take account of alternative commercial outlooks within
overall business strategy. This promotes a greater understanding of market and
currency risk, the limits of the Group's resilience and the range of possible
mitigating options.
· Stress testing performed during the year ended 30 June 2024
assessed the impacts of reasonably plausible market risk events and scenarios,
including those resulting from macroeconomic challenges driven by geopolitical
instabilities, inflationary outlooks, uncertainties in commodity price and
currency volatilities.
· The long-term nature of the Group's products serves to smooth short
term currency fluctuations. However, longer term trends are monitored and
considered in pricing models.
Credit Risk: In dealing with third party financial institutions, including banking, money
market and settlement, custody, reinsurers and other counterparties, the Group
is exposed to the risk of financial loss and potential disruption of core
business functional and operational processes.
Arising from the failure or default of a counterparty such that the Group does
not receive cash flows or assets to which it is entitled. Financial loss can also arise when the funds in which contract holders are
invested become illiquid, resulting in past and future fee income not being
received. The failure of Independent Financial Advisors ("IFAs") can also
result in loss where unearned commissions can be due back to the Group.
How we manage the risk:
· The Group seeks to limit exposure to loss or detriment via
counterparty failure through robust selection criteria, minimum rating agency
limits, pre-defined risk-based limits on concentrations of exposures and
continuous review of positions to identify, evaluate, restrict, and monitor
various forms of exposure on an individual and aggregate basis. These include
robust selection criteria in respect of intermediaries with whom we establish
Terms of Business and ongoing monitoring in accordance with key risk
indicators and appetite tolerance limits.
· During the reporting period we have continued to closely monitor
geopolitical developments and potential disruptions to international payment
systems and capital markets arising from the extensive sanctions in force in
the context of the Russia-Ukraine conflict.
Liquidity and Cashflow Risk: If the Group does not have sufficient levels of liquid assets and cashflow to
support business activities or settle its obligations as they fall due, the
Group may be in default of its obligations and may incur significant sanction,
loss, or cost to rectify the position.
Arising from a failure to maintain adequate levels of liquidity and cashflow
to meet financial obligations under both planned and stressed conditions. How we manage the risk:
· Shareholder and policyholder cash assets are invested in a prudent
manner, in accordance with set criteria, designed to mitigate liquidity and
cashflow risk, including high quality Money Market Funds, Fixed Deposits and
Corporate Bonds.
· The Treasury Working Group, which reports to the Investment
Committee, oversees the day-to-day investment of balances. The Investment
Committee and Audit and Risk Committee are responsible for setting the
criteria used.
Legal and Regulatory Risk: The scale and pace of change in regulatory and supervisory environments and
expectations continue to require efficient and effective ways to evidence and
demonstrate how legal and regulatory obligations are met, whilst compliance
analytics and high-quality data driven insights are becoming increasingly
Arising from changes in the regulatory landscape, which adversely impact the important.
Group's business model, or from a failure by the Group, or one of its
subsidiary entities, to meet its legal, regulatory or contractual obligations, The direction of regulatory travel demands continued investment in the
resulting in the risk of loss or the imposition of penalties, damages or fines capacity, competence, and capability of resourcing across all business areas,
having regard to the extent of risk interdependencies and the embedding of
personal accountability regimes. The impacts associated with crystallisation
of a significant legal or compliance failing, including sanctions or judgments
against Hansard entities, financial penalties, public disclosures,
reputational damage, restrictions on activities and other forms of
intervention, have been escalated by sea-changes in political landscapes and
shifting supervisory attitudes to regulatory effectiveness.
The interpretation or application of regulation over time may impact market
accessibility, broker relationships and / or competitive viability. If the
Group fails to monitor the legal and regulatory environment or adequately
integrate the management of associated obligations within strategic, business
model or business planning processes there may be material risk to the
achievement of strategic objectives both in the short and longer term.
How we manage the risk:
· Robust strategic planning processes informed by analytical review
of the external environment and consideration of associated risk in the short
and longer term.
· Continuous monitoring and review of developments in international
law and regulation and proactive management of how such developments might
shape jurisdictional specific reaction.
· Active and transparent engagement with regulatory authorities and
industry bodies on a multi-jurisdictional basis, including active engagement
in and responding to regulatory consultation exercises.
· Maintenance of robust governance, risk management and internal
control arrangements to ensure that legal and regulatory obligations are
substantively met on a continuing basis.
· Active engagement with professional advisors to address specific
risks and issues that arise.
Financial Crime Risk: The Board recognises that financial crime takes on many forms, allowing
criminal actors and organised crime gangs alike to infiltrate economic and
financial systems, with additional challenges presented by geoeconomic
uncertainties and geopolitical instabilities. The breadth of financial crime
affirms the ubiquity of this risk with inherent links to violent crime and the
ability to significantly undermine jurisdictional social and economic
Arising from any failure to evidence and demonstrate the establishment, structures. The rapid innovation of digital technologies is increasingly
implementation and maintenance of effective governance, risk management and enabling financial crimes to be carried out remotely, presenting additional
internal control arrangements for the prevention and detection of illicit complexities to prevention and detection and highlighting its transnational
economic activity, including money laundering, terrorist financing, impacts.
proliferation financing, sanctions evasion, bribery, corruption, and fraud, or
to ensure the arrangements are operating effectively and as intended on a Within this context regulators are taking, and expecting from firms, an
continuing basis. increasingly holistic approach to mitigating financial crime risks with robust
and effective systems and controls established to detect and prevent all forms
of illicit economic activity. It is imperative that these arrangements are fit
for purpose in terms of both design and implementation and are capable of
adapting to emerging and evolving financial crime risks.
How we manage the risk:
· Rigorous governance, risk management and internal control
arrangements to prevent and detect illicit economic activity with the
capability to identify and respond to any emerging risks or threats.
· Rapid, scalable, and effective sanctions screening mechanisms to
ensure robust, effective, and compliant understanding of the landscape on a
continuing basis.
· Implementation of scrutiny and oversight controls across all three
lines of defence to ensure governance layers proactively target both the
design and effective operation of the risk management and internal control
frameworks.
· Highly experienced technical resource dedicated to respective
compliance deliveries.
Culture and Conduct Risk: Organisational culture remains under scrutiny by the Board as a fundamental
driver of corporate success, prudential soundness, and compliant conduct. Any
Arising from any failure of governance, risk management and internal control failure to adequately assess, monitor, manage and mitigate risks to the
arrangements, via corporate or individual actions. delivery of fair customer outcomes, or to market integrity, can be expected to
result in material detriment to the achievement of strategic objectives and
incur regulatory censure, financial penalty, contract holder litigation and /
or material reputational damage.
Clear and heightened regulatory expectations of individual and corporate
accountability continue to connect governance, risk, and compliance
obligations directly to cultural imperatives and the responsibilities assigned
to individual Senior Managers.
How we manage the risk:
· Programme level initiatives to address and support cultural change
and development have remained in active progress during the reporting period
with the results of investment in culture diagnostics informing business
decision-making and tactical solutions to drive cultural change, where needed.
· Iterative enhancements to the Group's ERM Framework continue to
drive and deliver the integration of conduct risk management at both a
cultural and practical level.
· Business activities designed to manage the volume and velocity of
regulatory change include a core focus on ensuring compliance with conduct
risk obligations, managing conflicts of interest, preventing market abuse, and
building robust governance arrangements around new product development and
product suitability processes.
· Forward looking risk indicators and executive leadership in respect
of understanding and addressing the drivers of conduct risk focus on all core
areas with assessment at strategic, functional, and operational levels.
· The Group maintains regular dialogue with its regulatory
authorities and with its external advisors in relation to developments in the
regulatory environments in which we operate.
Operational Resilience Risk: The ability to maintain critical services or operations during periods of
disruption is receiving increasing levels of regulatory scrutiny with
Arising from any exposure to risk events with the capacity to cause concurrent growth in the formalisation of regulatory expectation. 'Resilience
operational failures or wide scale disruptions in financial markets, whether Principles' build on the real-world tests presented by the Covid-19 pandemic
directly or via a third party. and the near-term threat of disruption of key global infrastructure in the
context of the ongoing Russia-Ukraine conflict. Resilience risk and associated
regulatory expectations directly extend to threats originating via third
parties, including external providers, supply chains networks and outsourcing
architectures intended to leverage economies of scale, gain access to
specialist expertise, or deliver advanced technologies supporting innovative
services.
Global supervisory attention is focussed on regulating for resilience by
ensuring that strategies such as grounding resilience analyses in key delivery
requirements, appreciating the potential for systemic vulnerabilities and
embracing a diversity of approaches combine to strengthen the ability of
financial services firms to withstand operational risk related events.
How we manage the risk:
· ERM conventions guide the identification and assessment of events
or scenarios presenting risk to operational resilience - typically pandemics,
cyber incidents, technology failures or natural disasters - as well as supply
chain disruption impacts to critical processes, business continuity and good
governance.
· Impact tolerances, together with mapping and testing allow the
identification of services which could cause harm, if disrupted and identify
any areas of vulnerability.
· Stress testing, continuity planning, and recovery and resolution
strategies provide for continuous review of the adequacy and effectiveness
with which the business can respond to and recover from disruptions.
Cyber and Information Security Risk: The nature and complexity of cyber threats and cyber risk present the single
most significant risk to financial services firms. The mounting sophistication
Arising from the increased digitalisation of business activities and growing and persistence of cybercrime and the growing adoption of highly advanced,
dependence upon technology in the context of exposure to elevated and more nation-state type tools by cyber criminals, underscore the challenges in
pernicious forms of digital and cyber risk. understanding and anticipating the nature of cyber threats and cyber risks.
Over the longer-term, technological advances, including advances in generative
AI, can be expected to enable a wide range of state and non-state agents to
access information which will allow new tools of disruption to be
conceptualised and developed.
Organised crime continues to exploit weaknesses in cyber defences whilst new
technological capabilities and use of third-party platforms add to the
complexity of understanding the complete reach of cyber and information
security exposures. Geopolitical tensions and the rapid escalation of conflict
combined with technological advances in generative AI and the leveraging of
misinformation and disinformation will continue to provoke unprecedented cyber
risks for Western governments and corporations.
Building resilience to continuously evolving cyber risk remains a priority for
all stakeholders focussed on three core areas - cyber risk identification,
cyber risk governance and cyber risk resilience In the event of any material
failure in core business systems, or business processes, or if the Group fails
to take adequate and appropriate measures to protect its systems and data from
the inherent risk of attack, disruption and/or unauthorised access by internal
or external parties, this could result in confidential data being exposed
and/or systems interruption. A significant cybercrime event could result in
reputational damage, regulatory censure, and financial loss.
How we manage the risk:
· Continuous focus on the maintenance of a robust, secure, and
resilient IT environment that protects customer and corporate data as a core
element of our operational resilience mapping.
· Control techniques deployed to evaluate the security of systems and
proactively address emerging threats both internally within the organisation
and externally, through regular engagement with internet and technology
providers and through industry forums.
· Maintenance of detailed and robust Business Continuity and Disaster
Recovery Plans, including full data replication at an independent recovery
centre, which can be invoked when required.
· Frequent and robust testing of business continuity and disaster
recovery arrangements.
· Periodic independent third-party systems penetration testing and
review of controls.
· Horizon scanning to identify and assess supervisory initiatives
advocating and promoting good practice in cyber resilience and associated
industry developments.
Corporate Sustainability Risk: The importance of integration of sustainability issues into the Group's core
strategies and business plans is recognised by the Board, requiring
Arising from the risk of failing to integrate environmental, social and value-driven, adaptive practices. These practices must continuously enhance
governance considerations into the Group's strategic and business planning the Group's corporate governance arrangements, as sustainability related
activities, or to proactively review, understand and act on the challenges and issues evolve, and demonstrate to clients, investors, regulators, and wider
opportunities presented. stakeholder groups that sustainability and resilience risks and opportunities
are understood.
How we manage the risk:
· Actively building sustainability considerations into strategy
development and business planning processes through structured analysis,
formal assessment mechanisms and cross-functional collaboration.
· Factoring emerging sustainability risk issues into key
decision-making and understanding the impacts for the tools and methodologies
currently used to manage risk, including governance structures, risk
ownership, risk and control self-assessment principles, regulatory
developments, third party service provisions and effective reporting.
· Development of adaptation plans, which embrace forward-looking
analysis and support strategic decision-making, with consideration of relevant
business planning, operations, underwriting and investment activities to
contribute to a sustainable transition to net-zero targets and provide
effective mitigation of climate change related risks.
· Detailed analysis of climate and other ESG risks, which could cause
macroeconomic stresses in future, including impacts to markets, interest
rates, inflation and exchange rates.
· Developing and updating relevant components in relation to the
sustainability risk domain, including policies, procedures, risk indicators,
management data and stress testing.
· 'In flight' initiatives addressing cultural alignment and
structural resilience encompass core ESG considerations.
Employee Engagement and Talent Risk: 'Talent risk' continues to grow in prominence on the operational risk agenda
at industry level with persistent challenges linked to attracting and
Arising from any failure to drive and support the right corporate culture and retaining employees across all financial services sectors. The Group's
attract, develop, engage and retain key personnel. strategy has core dependencies on attracting and retaining experienced and
high-performing management and employees and building a strong and sustainable
culture, driven by our purpose, our leadership, our performance management
regime and our governance principles and objectives. The knowledge, skills,
attitudes and behaviours of our employees, and the success with which these
attributes shape and define our culture, are central to our success.
How we manage the risk:
· Significant investment in initiatives to address and support
cultural change and development, shape strategy and inform tactical solutions.
· Continuation of our 'Culture Programme' with clearly defined areas
of focus under three core pillars, those being:
- High Performance Culture
- Learning Culture
- Environment & Wellbeing
These remain in active progress led by the Executive Committee with oversight
by the Board.
Further details around financial risks are outlined in note 3 of the
consolidated financial statements.
Philip Kay
Chair
25 September 2024
CONTENTS
Board of Directors
Page 32
Directors' Report
Page 34
Directors' Responsibilities
Page 39
Corporate Governance Report
Page 40
Report of the Audit and Risk Committee
Page 69
Report of the Nominations Committee
Page 73
Report of the Remuneration Committee
Page 76
BOARD OF DIRECTORS
The Directors serving at the date of approval of this Annual Report and
Accounts are as follows:
Philip Kay
Non-executive Chair
Chair of the Nominations Committee. Member of the Remuneration Committee.
Philip was appointed as Non-executive Chair with effect from 1 May 2022. He
was previously appointed as an Independent Non-executive Director with effect
from 3 March 2020. Philip has had a long career in investment banking and
investment management. He is Chair of Schroder Japan Trust PLC and a fellow of
Wolfson College, Oxford. He is a former Managing Director and Senior Advisor
of Credit Suisse First Boston where he ran the firm's global Japanese cash
equity business. He is also a former Director of Fidelity Japan Trust PLC, of
Schroder Securities Limited and of Smith New Court PLC.
Thomas Morfett
Group Chief Executive Officer & Group Chief Financial Officer
Tom was appointed as Chief Financial Officer and executive Director with
effect from 17 April 2023 and as Chief Executive Officer with effect from
2(nd) August 2024. He is a Fellow of the Institute of Chartered Accountants
in England and Wales, a Fellow of the Institute and Faculty of Actuaries, and
holds an MA in Mathematics from Oxford University.
Prior to joining the group, Tom was Financial Controller and Head of Actuarial
for the Utmost Isle of Man group of companies, having previously held the same
positions for the Quilter International group of companies. He has extensive
experience within the Isle of Man life insurance sector including as Appointed
Actuary for Canada Life's Isle of Man companies, and roles at Zurich Isle of
Man and Royal London Isle of Man. He trained as a Chartered Accountant with
Deloitte.
Jose Ribeiro
Senior Independent Non-executive Director
Chair of the Remuneration Committee. Member of the Audit and Risk and
Nominations Committees.
Jose was appointed as an Independent Non-executive Director with effect from 2
December 2019. He has over 30 years of experience in the financial
services industry globally having been a board member in several
jurisdictions around the world. Jose is a certified EU actuary with an MBA
degree. Jose is the Chair and Independent Non-executive Director of Starr
Insurance Companies, Chairman at Yurtle, an MGA and Insurtech operating in the
Employee Benefit space and regulated by the FCA in the UK, and Insurance Lead
and Guest Lecturer at Imperial College Business School, where he lectures in
Risk Management.
Jose started his insurance career with American International Group (ALICO) in
1986 as a Life and Pensions actuary and spent the first 16 years of his career
working with subsidiaries of AIG and Munich Re, performing a variety of senior
roles (including CEO, Chief Actuary, Pension Fund manager, Regional Director
for Employee Benefits) in Europe, the US and Latin America. Since 2002 Jose
has had a variety of roles including CEO for Latin America and the Caribbean
at Willis, Director for International Markets at Lloyd's of London where he
was responsible for overseeing the Lloyd's trading platforms in China, Japan
and Singapore, and Managing Director and Board Member for Asia-Pacific at A.M.
Best (Credit Rating Agency).
David Peach
Independent Non-executive Director
Chair of the Audit and Risk Committee. Member of Remuneration and Nominations
Committees.
David was appointed as an Independent Non-executive Director with effect from
31 December 2020. David is a Fellow of the Institute of Chartered
Accountants in England and Wales and a Fellow of the Association of Corporate
Treasurers. He has a degree in Economics from the University of Warwick. He
is a Non-executive Director of IntegraLife International Ltd, IntegraLife UK
Ltd, Group Risk Mutual Limited and Manx Development Corporation Limited.
After training as an accountant with KPMG, David has had more than 25 years'
experience in financial services. He has held board level roles in insurance,
banking, trust, and fund management companies across a number of different
jurisdictions.
Marc Polonsky
Non-executive Director
Marc was appointed as a Non-executive Director on 26 September 2018, having
previously served as an alternate Director to Dr Leonard Polonsky since 26
September 2013. He is managing trustee of The Polonsky Foundation, a
UK-registered charity supporting cultural heritage, the arts and humanities
education. He is a Retired Partner from international law firm White &
Case.
Noel Harwerth OBE
Independent Non-executive Director
Noel was appointed as Independent Non-executive Director on 23 September 2024.
Noel is a highly experienced non-executive director who has sat on a number of
boards in a variety of different sectors, including mining and finance
industry companies and will bring with her a wealth of knowledge. She
currently serves on the boards of One Savings Bank (as Senior Independent
Director) and Crown Agents Bank. Prior roles include Chair of the UK Export
Finance Agency (until February 2024) and member of the Boards of the UK
Department of Business and Trade, Scotia Bank Europe, Standard Life, London
Metals Exchange, and Bank of England RTGS/CHAPS Board. From 1998 Noel served
as Chairman of Sumitomo Mitsui Bank (Europe, Middle East and Africa) from 2004
to June 2015. From 1998 to 2004, Noel was Chief Operating Officer of Citibank
International PLC in London. She was responsible for infrastructure and
governance of Europe's first truly pan European bank with branches in 18
countries. Noel was educated at the University of Texas in Austin and holds a
Juris Doctor Degree from the University of Texas Law School. She has both US
and British citizenship.
Directors' Report
Financial statements
The Directors have pleasure in submitting their Annual Report on the affairs
of the Company and the Group together with the financial statements and the
auditor's report for the year ended 30 June 2024. Where the context requires
"the Group" means Hansard Global plc and its wholly owned subsidiaries.
Hansard Global plc is the holding company of the Group and has a Premium
Listing on the London Stock Exchange. The Company is a limited liability
company incorporated and domiciled in the Isle of Man.
Activities
The principal activity of the Company is to act as the holding company of the
Hansard Group of companies. The activities of the principal operating
subsidiaries include the transaction of life assurance business and related
activities.
Principal operating subsidiaries
The following companies are wholly owned subsidiaries of the Company and
represent its principal operating subsidiaries at the balance sheet date and
at the date of this report. All companies are incorporated in the Isle of Man
with the exception of Hansard Europe and Hansard Worldwide. Hansard Europe is
incorporated in the Republic of Ireland. Hansard Europe was closed to new
business with effect from 30 June 2013. Hansard Worldwide is incorporated in
The Bahamas.
Company Business
Hansard International Limited* Life Assurance
Hansard Europe Designated Activity Company Life Assurance
Hansard Worldwide Limited Life Assurance
Hansard Administration Services Limited** Administration services
Hansard Development Services Limited Marketing and development services
* Hansard International Limited has two overseas branches in Labuan and
Japan.
** Hansard Administration Services Limited has a branch in Ireland.
Results and dividends
The results of trading of the Group for the year under IFRS are set out in the
consolidated statement of comprehensive income on page 94. The consolidated
financial statements have been prepared under IFRS. The financial statements
of the parent company have been prepared under UK Generally Accepted
Accounting Practice ("UK GAAP"), comprising Financial Reporting Standard 102.
Additionally, certain information relating to Own Funds and Risk Based Capital
is presented in the "Other Information" section of this report on pages 143 to
145. The Board believes that such information provides additional meaningful
information on the financial position and performance of the Group in a
particular financial year than that provided by IFRS reporting alone.
Results under IFRS
Profit before tax for the year was £5.3m, compared with a profit for the
prior year of £5.9m.
Dividends totalling £6.1m were paid during the year (2023: £5.9m).
Proposed final dividend
The Board has resolved to pay a final dividend of 2.65p per share on 15
November 2024, subject to approval at the Annual General Meeting ("AGM"), to
shareholders on the register on 13 November 2024 (with the ex-dividend date
being 3 October 2024). If approved, this would bring the total dividends in
respect of the year ended 30 June 2024 to 4.45p per share (2023: 4.45p per
share).
In making this decision, the Board has carefully considered its current and
future cash flows, the risks and potential impacts introduced by the on-going
geopolitical position, global economic conditions, the outlook for future
growth and profitability and the views of key stakeholders, including
shareholders and regulators.
Business review and future developments
A full review of the Group's activities during the year, recent events and
future developments is contained in the Chair's Statement on pages 1 and 2,
the Chief Executive Officer's Review on pages 3 to 5, and the Business and
Financial Review on pages 11 to 21.
Risk management and internal controls
Details of the Group's risk management and internal control processes can be
found on pages 22 to 25. A summary of the principal risks and uncertainties
can be found on pages 25 to 30.
Corporate governance and corporate social responsibility
The Corporate Governance Report on pages 40 to 68 provides full details on the
efforts made by the Group in the areas of corporate governance and corporate
social responsibility within the business, including the information required
under Rule 7.2.6 of the FCA's Disclosure Guidance and Transparency Rules and
is incorporated into the Directors' Report by reference.
Audit and Risk committee
The Audit and Risk Committee Report on pages 69 to 72 outline how the
integrity of the financial reporting and audit process is overseen and the
maintenance of sound internal controls and risk management systems.
Directors' remuneration
Details of Directors' remuneration for the year can be found in the Report of
the Remuneration Committee on pages 76 to 82.
Directors
Details of Board members at the date of this report, together with their
biographical details, are set out on pages 32 to 33. Except where otherwise
noted, all Board members served throughout the financial year and to the date
of this report. Dr Leonard Polonsky maintains the honorary title of
President to reflect his role having founded the Group in 1970.
In accordance with the Articles of Association all the Directors will retire
at the AGM and, where applicable and eligible, shall seek election or
re-election.
Share capital
At 30 June 2024 the Company's issued share capital comprised 137,557,079
ordinary shares of 50 pence each. As at 30 June 2024 the total voting rights
of the Company were 137,557,079. There have been no changes to the issued
share capital and total voting rights during the period from 30 June 2024
until the date of this report.
Further details of the issued share capital together with details of
authorised share capital and movements during the year are included in note 22
to the consolidated financial statements. The Company has one class of share
in issue, ordinary shares of 50 pence each, all of which are fully paid.
Each ordinary share in issue carries equal rights including one vote per share
on a poll at general meetings of the Company, subject to the terms of the
Company's Articles of Association and applicable laws. Votes may be exercised
by shareholders attending or otherwise duly represented at general meetings.
Deadlines for the exercise of voting rights by proxy on a poll at a general
meeting are detailed in the notice of meeting and proxy cards issued in
connection with the relevant meeting. There are no restrictions on voting
rights or on the transfer of shares.
Substantial shareholdings
At 30 June 2024 the Company had been notified of the following holdings in its
share capital.
Name Shares (millions) % holding
Dr L S Polonsky CBE * 50.8 37.0
Aberforth Partners LLP 20.0 14.6
The Polonsky Foundation 9.9 7.2
Mr M A L Polonsky * 7.8 5.7
Premier Miton Group plc 6.8 5.0
* Including holdings of spouse
There have been no significant changes in these holdings between the balance
sheet date and the date of this report.
Employee Benefit Trust
An Employee Benefit Trust ("EBT") was established in February 2018 for the
purpose of providing share-based reward.
During the year, net share awards totalling 463,823 shares were granted to
Directors and Executive Committee members, with the awards vesting after 3
years, subject to the rules of the Deferred Bonus Plan. 700,000 shares were
purchased during the year and transferred into the EBT, to give a total of
1,257,000 shares held as at 30 June 2024.
Share incentive schemes
Save As You Earn programme
A Save As You Earn share save programme allows eligible employees to have the
opportunity of acquiring an equity interest in the Company. The Save As You
Earn programme was renewed for a further ten years at the 2017 AGM.
At the balance sheet date there were no options outstanding (2023: 29,031
options), details of which can be found in the Report of the Remuneration
Committee.
Research and development
The Group's development activities focus on bringing new products to market to
leverage distribution opportunities.
Information about securities carrying voting rights
The following information is disclosed in accordance with DTR 7.2.6 of the
FCA's Disclosure Guidance and Transparency Rules:
· the Company's capital structure and voting rights are summarised on
page 35.
· details of the Company's substantial shareholders are set out on
page 35.
· an amendment to the Company's Articles of Association and the
giving of powers to issue or buy back the Company's shares requires an
appropriate resolution to be passed by shareholders.
· the Company may alter its Articles of Association by special
resolution at a general meeting of the Company.
· the appointment and replacement of Directors is governed by the
Company's Articles of Association. The Articles of Association provide that
the Directors may be appointed by ordinary resolution of the shareholders or
by the Board. The Company must have not less than two, and not more than 12
Directors. Where Directors are appointed by the Board, they may only hold
office until the next AGM of the Company where they will be eligible for
election. Each Director must then retire from office at each AGM. The Company
may remove a Director by ordinary resolution.
Powers of Directors
Subject to the Articles of Association, the Isle of Man Companies Acts 1931 to
2004 and related legislation and any directions given by resolution of
shareholders, the business of the Company will be managed by the Board which
may exercise all the powers of the Company.
Directors' interests
Directors' interests in shares in the Company and in options granted under the
Save As You Earn programme are disclosed in the Report of the Remuneration
Committee on pages 76 to 82 together with details of their contractual
arrangements with the Group.
Controlling Shareholder
Dr Leonard Polonsky is the controlling shareholder of the Group. To ensure
compliance with independence provisions set out in Listing Rule 6.5.4 a
summary of the most recent written and legally binding agreement, dated 22
September 2014, governing his relationship with the Group (the "Agreement") is
set out in the Report of the Remuneration Committee on pages 76 to 82.
There were no significant transactions between the Group and Dr Polonsky
during the year.
In accordance with Listing Rule 9.8.4 R (14), since entering into the
Agreement, the Company has fully complied with the independence provisions
included within this Agreement, and, so far as the Company is aware, the
controlling shareholder and its associates have also complied with the
independence and procurement provisions set out in Listing Rule 6.5.4 during
the period under review.
Company Secretary
The Company Secretary at 30 June 2024 was Hazel Stewart.
Forward-looking statements
The Chair's statement, the Group Chief Executive Officer's overview, the
Business and Financial Review and other sections of this Annual Report and
Accounts may contain forward-looking statements about the Group's current
plans, goals and expectations on future financial conditions, performance,
results, strategy, and objectives. Statements containing the words:
'believes', 'intends', 'expects', 'plans', 'seeks', 'anticipates' and other
words of similar meaning are forward-looking. All forward-looking statements
involve risk and uncertainty. This is because they relate to future events and
circumstances that are beyond the Group's control.
As a result, the Group's future financial condition, performance and results
may differ materially from the plans, goals and expectations set out in the
forward-looking statements. The Company will not undertake any obligation to
update any of the forward-looking statements in this Annual Report and
Accounts.
Annual General Meeting (AGM)
The AGM of the Company will be held on 13 November 2024 at the Company's
registered office.
A copy of the notice of the AGM will be available to shareholders on
www.hansard.com
(https://hansardglobalplc.sharepoint.com/sites/finance/Accounts%20Library/HG%20June%202023/www.hansard.com)
together with this Annual Report and Accounts. As well as the business
normally conducted at such a meeting, shareholders will be asked to elect or
re-elect all Directors. The Directors consider that all the resolutions to be
put to the AGM are in the best interests of the Company and its shareholders
as a whole and will be voting in favour of them. The Board undertakes to apply
the Listing Rules in relation to the re-appointment of the Independent
Non-executive Directors. This requires that re-election is by majority of
votes cast by independent shareholders as well as by majority of all
shareholders.
The Company further confirms that, as required by the Listing Rules, it has an
agreement in place with Dr Polonsky as the controlling shareholder and that
the Company has complied with the requirements of the agreement throughout the
year to 30 June 2024.
Copies of the Letter of Appointment for the Non-executive Directors will be
available for inspection at the Company's registered office during normal
business hours and the AGM venue 15 minutes prior to the AGM until the
conclusion of the AGM.
In accordance with the Group's normal practice, the total number of proxy
votes lodged at the meeting on each resolution (categorised as for; against;
and votes withheld) will be made available both at the meeting and
subsequently on the Company's website.
Political donations
The Group did not make any political donations during the year (2023: £nil).
Adequacy of the information supplied to the auditor
The Directors who held office at the date of approval of this Directors'
Report confirm that, so far as each is aware, there is no relevant audit
information of which the Company's auditor is unaware, and each Director has
taken all steps that he ought to have taken as a Director to make himself
aware of any relevant audit information and to establish that the Company's
auditor is aware of that information.
Auditor
The Company's auditor, KPMG Audit LLC ("KPMG"), has indicated its willingness
to continue in office. The Audit and Risk Committee has recommended that KPMG
be reappointed as the Company's auditor. Accordingly, a resolution to
reappoint KPMG as auditor to the Company, and to authorise the Directors to
determine its remuneration, will be proposed at the 2024 AGM.
Going concern
The Directors have at the date of approving the financial statements, a
reasonable expectation that the Company and the Group have adequate resources
to operate as a going concern for the foreseeable future, being a period of 12
months from the approval of the financial statements and have prepared the
financial statements on that basis.
In making this statement, the Directors have considered the impact on the
business of the ongoing geopolitical position and global economic conditions.
They have reviewed financial forecasts that include plausible downside
scenarios such as reduced levels of new business and higher expenses arising
from increased inflation. These show the Group continuing to generate profit
over at least the required 12 months from the date of approval of the
financial statements and that the Group has sufficient cash reserves to enable
it to meet its obligations as they fall due.
The Directors expect that the acquisition of new business will continue to be
challenging in the current climate. The impact of this however is not
immediate to the Group's profit and cash flows and therefore allows for longer
term adjustments to operations and the cost base. Long periods of lower new
business or lower AuA would be addressed by reducing the cost base and, where
necessary, the dividend paid.
The following factors are considered as supportive to the Group's resilience
to external market and economic challenges:
· The Group's business model focuses on long term savings products, a
majority of which are regular premium paying products which continue to
receive cash inflows regardless of the amount of new business sold.
· The Group earns approximately a third of its revenues from asset-based
income which is not immediately dependent on sourcing new business.
· New business channels are geographically dispersed and therefore less
exposed to specific regional factors.
· The largest cash outflow associated with new business is commission
expenditure which reduces directly in line with reduced sales.
· The Group has and continues to the date of this report to have, a
strong capital position with significant levels of liquidity and cash (as
outlined in the Business and Financial Review).
· The Group places the majority of its shareholder assets into
conservative, highly-liquid, highly rated bank deposits and money market
funds. These are typically not subject to price fluctuation and protect the
Group's assets against potential market volatility.
· The Group has no borrowings.
Post balance sheet events
There have been no material post-balance sheet events, which would require
disclosure in, or adjustment to, these consolidated financial statements.
Longer-term viability statement
In accordance with provision 31 of the UK Corporate Governance Code and
Listing Rule 9.8.6, the Directors have assessed the prospects of the Group
over a five-year period and have a reasonable expectation that the Group will
be able to continue in operation and meet its liabilities as they fall due
over the period of assessment.
The Group and its insurance subsidiaries are required to maintain minimum
regulatory solvency capital levels based on the size and nature of business
written.
The assessment of prospects is considered over a five-year period as this
matches the period over which business plans are considered by the Board.
The Board also considers it a reasonable period in light of rapidly changing
regulation, competitive landscape and technology advances and developments.
The Group's business plan and associated scenario modelling includes
projections of the Group's profit, capital, liquidity, and solvency. Scenario
and stress testing consider the Group's capacity to absorb or respond to
potential economic, contract holder activity or operational stresses. These
include material investment market declines, interest rate movements, mass
surrenders by contract-holders and operational losses. Reverse stress tests
are also considered to provide insight into the level of stress needed to
breach regulatory solvency requirements.
The assessment also considered simultaneous multiple adverse impacts that
could plausibly occur. This included a 50% reduction to new business, a 25%
reduction in AuA due to market declines and a 15% strengthening of sterling
all arising at the same time. While these stresses produce lower levels of
profit, cash, and dividends, none of them produce an immediate risk to the
viability of the business. This allows therefore for compensatory management
actions to be taken to secure longer-term viability through for example
expense and dividend reductions.
In making its overall assessment, the Board has also considered the principal
and emerging risks and associated mitigating strategies which it has
identified and outlined on page 25 to 30. The Directors confirm that they
have undertaken a robust assessment of the principal and emerging risks facing
the Group.
Statement of Directors' responsibilities in respect of the Annual Report and
the financial statements
The Directors are responsible for preparing the Annual Report and financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company
financial statements for each financial year. Under that law they are
required to prepare the Group financial statements in accordance with
international accounting standards in conformity with the requirements of the
Companies Acts 1931 to 2004 and applicable law and have elected to prepare the
Parent Company financial statements in accordance with United Kingdom
Accounting Standards, comprising Financial Reporting Standard 102 'The
Financial Reporting Standard Applicable in the UK and Republic of Ireland'
("FRS 102").
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Parent Company and of the Group's profit or loss for
that period. In preparing each of the Group and Parent Company financial
statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently.
· make judgements and estimates that are reasonable, relevant, and
reliable.
· state whether they have been prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Acts 1931 to 2004 and as regards the group financial statements, UK
adopted International Accounting Standards.
· assess the Group and Parent Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern.
· use the going concern basis of accounting unless they intend either
to liquidate the Group or the Parent Company or to cease operations or have no
realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the parent
Company and to enable them to ensure that its financial statements comply with
the Companies Acts 1931 to 2004. They are responsible for such internal
control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error, and have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations, the Directors are responsible for
preparing a Directors' Report, Directors' Remuneration Report and Corporate
Governance Statement that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual financial
report
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole; and
· the Directors' Report includes a fair review of the development and
performance of the business and the position of the issuer, and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
By Order of the Board
Hazel Stewart
Company Secretary
25 September 2024
Corporate Governance Report
Compliance with Companies Acts
As an Isle of Man incorporated company, the Company's primary obligation is to
comply with the Isle of Man Companies Acts 1931 to 2004. The Board confirms
that the Company is compliant with the relevant provisions of the Companies
Acts.
Compliance with the UK Corporate Governance Code 2018 ("the Code")
The Board believes high standards of corporate governance are integral to the
delivery of the Group strategy and so the Board maintains a strong commitment
to achieving the highest standards of corporate governance. During the year
under review, the Group applied the principles and provisions of the UK
Corporate Governance Code 2018 ("the Code"). A copy of the Code is available
on the Financial Reporting Council website at www.frc.org.uk
(http://www.frc.org.uk) .
The following specific information required in the Directors' Report is
included in other sections of this Annual Report and is incorporated by
reference:
Board leadership and Company purpose.
A Effective and entrepreneurial Board Page 45
The Board's overarching role is to promote the Company's long-term sustainable
success, to generate value for shareholders and improve customer outcomes by
providing simple, understandable and innovative financial solutions. B Purpose, values, strategy and culture Page 5
C Resources and controls Pages 13-20, 22-30
Pages 41-45, 68
D Stakeholder engagement
Division of responsibilities
The Board has a clear division of responsibilities between the leadership of
the Board and executive leadership of the business.
F Role of the Chair Page 46
Committee terms of reference determine the authority of each of the Board's
Committees. G Independence and division of responsibilities Pages 46-47
Governance arrangements are in place to ensure that the Board and Directors H Non-Executive Directors Page 46
can meet their obligations under the Code.
I How the Board operate Pages 48-49
Composition, succession and evaluation
J Appointments and succession planning Page 74
The Board, with the support of the Nominations Committee, conducts regular
reviews of its composition (and that of its Committees) and leads the process
for appointments to ensure plans are in place for orderly succession to both K Composition of the Board Page 45-46
the Board and the Executive Committee.
L Board evaluation Page 48
The Board undertakes an annual review of its effectiveness and that of its
Committees to ensure that the Board and its members continue to contribute
effectively.
Audit, risk and internal control M Effective internal and external audit functions Page 71
The Board, supported by the Audit and Risk Committee, is responsible for N Fair, balanced and understandable assessment Page 84
establishing appropriate risk management and internal control procedures to
ensure that the Group is appropriately managed and that risks are
appropriately identified and mitigated in the context of the business as a
whole. O Internal controls and risk management Page 22-30
Remuneration
The Board, supported by the Remuneration Committee, ensures that the P Alignment of remuneration with strategy, purpose and values Page 76
remuneration policies and practices are designed to support strategy and
promote long-term sustainable success.
Q Remuneration policy Page 77
R Independent judgment, discretion and Page 78
performance outcomes
There are no disclosures to be made under Listing Rule 9.8.4.
Other statutory disclosures
Directors of the Group Pages 32-33
Dividends Page 21
Environmental, social and governance risks Pages 57-65
TCFD Reporting Pages 52-68
Future Developments Page 16
Going concern Statement Page 37
Post balance sheet events Page 38
Reporting under Section 172 of the (UK) Companies Act 2006 and engagement with Page 42
stakeholders
Risk Management and Internal Controls Pages 22-25
Details on how we have applied the provisions and principles of the Code to
our activities throughout the financial year and to the date of this report
are set out in this Corporate Governance Report and in the following reports:
the Directors' Report on pages 33 to 38, the Report of the Remuneration
Committee on pages 76 to 82, the Report of the Nominations Committee on pages
73 to 75 and/or in the Report of the Audit and Risk Committee on pages 69 to
72.
For the year ended 30 June 2024, the Board considers that it has complied in
full with the provisions of the Code, other than in respect of provision 36 as
further outlined in the Remuneration Report, and provision 11 following the
resignation of Christine Theodorovics on 29 February as less than half of the
board, excluding the chair, were Independent Non-executive Directors.
Stakeholders
Stakeholders are critical to the Company's long-term, sustainable success.
They are our shareholders, employees, regulators, distribution partners,
service providers, and the communities in which we operate. This section
explains why and how the Company interacts with these stakeholders, as well as
the steps it takes to ensure that their interests are considered in the
Board's decision making.
As the Company is listed on the Main Market of the London Stock Exchange, it
reports on its compliance with the UK Corporate Governance Code on a comply or
explain basis. Provision 5 of the UK Corporate Governance Code recommends that
the Company report on how the interests of its key stakeholders were
considered in board discussions and decision-making, including those matters
outlined in Section 172 of the UK Companies Act 2006 (the "UK Act"). While the
Company is not domiciled in the United Kingdom, we have chosen to voluntarily
report in accordance with Section 172 of the UK Act to demonstrate our
commitment to best practice governance and thorough application of the UK
Corporate Governance Code.
The tables on the following pages show how the Company and its Board interact
with its stakeholders. We recognise that these relationships are the
foundation for the Company's long-term viability, which benefits all parties.
The Board recognises the significance of upholding a high standard of business
conduct and stakeholder engagement, as well as having a positive impact on the
environment in which we operate.
We actively engage with our key stakeholders to understand their perspectives
and build effective relationships, and our engagement strategy for each
stakeholder group is outlined in the tables on the following pages. Aside from
stakeholder considerations, the Board recognises its responsibility to
consider long-term impacts and the Company's impact on and from wider society
and the environment.
The Board monitors performance against strategy and appropriate
decision-making by receiving regular updates, both in Board and Committee
meetings and through regular Board reports from the CEO, CFO, Executive
Committee members, and other senior managers, all of which enable it to make
well-informed principal decisions for the Company's and its various
stakeholders' long-term success. We define principal decisions as those that
are both material to the Group and significant to any of our key stakeholder
groups. In making principal decisions, the Board has considered the outcome
from its stakeholder engagement as well as the need to maintain a reputation
for high standards of business conduct and the need to act fairly between the
members of the Company. The Board believes that the Group's decision-making is
balanced, and that Hansard's policies and actions meet the Group's
obligations.
Section 172: Promoting the success of the Company
The Directors recognise that their overarching duty, both individually and
collectively, is to act in good faith and in a manner most likely to promote
the success of the Company, as defined in Section 172 of the UK Act, for the
benefit of shareholders as a whole, taking into account, among other things:
The likely consequences of any decision in the long term
The Board's focus is on ensuring that the Company generates and preserves
value over the long term for all its shareholders. The Board's aim is to make
sure that decisions are consistent with the strategic objectives of the
Company and the long-term success of the Company.
The interests of the Company's employees
The Board engages with employees via a variety of mechanisms and forums to
ensure that employees interests are considered.
The need to foster the Company's business relationships with suppliers,
customers, and others
The Board considers customers, suppliers, and other stakeholders, factoring in
their needs, feedback, and concerns to make informed decisions that seek to
benefit all parties. This ensures a balanced and sustainable business
relationship.
The impact of the Company's operations on the community and the environment
The Board's corporate social responsibility ("CSR") strategy focuses on
minimising the Group's environmental impact, making a positive contribution to
society and supporting our people to make a difference to the environment.
The desirability of the Company maintaining a reputation for high standards of
business conduct
The Company has four core values that are the foundation of the Company's
culture: Integrity, Respect, Quality, and Innovation. These values ensure that
the Company maintains a reputation for high standards in all areas of the
business it conducts.
The need to act fairly between shareholders of the Company
The Board actively engages with shareholders and considers their interests
when setting the Company's strategy.
Shareholders
Shareholders
Our shareholders include institutional investors, retail investors, and
management, among others.
Why we engage
The Board recognises the importance of regularly engaging with shareholders in
order to maintain a high level of transparency and accountability, to act
fairly, and to inform the Company's decision making and future strategy. The
Board is accountable to the shareholders for creating and delivering value
through effective business governance.
How we engage
The Group places considerable importance on developing its relationships with
our shareholders and it aims to achieve this by way of the following regular
communication activities:
§ regular dialogue with major institutional shareholders, both directly and
through the Company's advisers.
§ Annual General Meetings.
§ market announcements, corporate presentations, Annual Report and Accounts
and other Company information which are available on our website at
www.hansard.com
(https://hansardglobalplc.sharepoint.com/sites/finance/Accounts%20Library/HG%20June%202023/www.hansard.com)
The Chair, the CEO, the CFO, and Committee Chairs are available to meet or
correspond with major shareholders to discuss any areas of concern not
resolved through normal channels of investor communication.
Arrangements can be made through the CFO, the Company Secretary, or the
Company's corporate brokers.
The Board is equally interested in communications with private shareholders
and the CFO oversees communication with these investors. All information
reported to the regulatory information services is simultaneously published on
the Company's website, affording the widest possible access to Company
announcements.
The Board receives regular feedback on the views of shareholders on the
Company from the Executive Directors after meetings with those shareholders,
as well as from reports from the Company's corporate brokers, the Chair and
the Senior Independent Director.
There were no significant areas of concern raised during the 2024 financial
year.
Employees
Employees
We recognise that to meet our Company goals, we need to retain, attract and
develop our talent pool, by providing a supportive and safe workplace where
our employees can develop and thrive.
Why we engage
We understand the importance of engaging with our employees and recognise that
the Company culture and our overall remuneration and benefits package can have
significant effect on employees. Communication therefore continues to be a key
part of our Culture programme. We want our employees to have a voice, feel
appreciated for their contribution and to understand their roles within the
Company. It's important that our employees are made aware of key business
updates and that they can provide feedback on what's important to them. We
work hard to meet our employees' needs and to maintain strong relationships
that foster a positive workplace culture.
How we engage
We actively and regularly communicate with our employees via various
mechanisms covering matters such as strategic updates, business performance
and culture or any other matters which are relevant to employees. Our
employees are also offered opportunities to provide feedback in different ways
such as engagement and culture surveys and in team and individual settings. We
provide regular training and development opportunities for our employees and
make sure they receive regular feedback and recognition, supported via the
performance management framework. We strive to provide a supportive and safe
and comfortable working environment, as well as competitive wages and
benefits. We encourage all our employees to provide feedback to the Board and
provide open channels of communication for them to do so. David Peach is the
designated Independent Non-executive Director for employee engagement.
Regulators
Regulators
These are the governmental or regulatory bodies in charge of overseeing the
Company's operations and ensuring compliance with applicable laws and
regulations. Each of our regulators is in charge of overseeing various aspects
of the Company's operations, including financial reporting and consumer
protection.
Why we engage
We work with our regulators to ensure that we are compliant with all policies,
laws, and regulations. Regular communication with our regulators assists us in
identifying potential risks and obtaining guidance on how to mitigate them.
How we engage
The Company meets with its regulators proactively to address any concerns, and
it establishes regular meetings to ensure that the Company is up to date on
any proposed changes. We make every effort to respond to any queries or
requests for information from our regulators in a timely manner.
Distribution Partners
Distribution partners
Those who assist the Company in distributing our products to our
policyholders. Distribution partners are subject to a rigorous selection
process prior to onboarding, and regular monitoring throughout the course of
the business relationship.
Why we engage
We understand the importance of maintaining positive relationships with our
distribution partners in order to ensure that our products reach customers on
time and accurately represent our brand.
How we engage
All our distribution partners are supported by our regional sales managers,
who provide regular training updates on our product range and any relevant
regulation changes, as well as discussing new business development
opportunities. This is further supported by regular daily contact around sales
opportunities or operational queries to ensure that they receive the best
service and to ensure they are knowledgeable about all the Company's products
and processes.
Service Providers
Service Providers
Those upon whose services the Company relies on to provide its products and
services, both domestically and internationally.
Why we engage
To ensure that the services on which the Company places reliance are delivered
to the Company's required standards and timelines.
How we engage
We receive regular attestations from service providers and meet frequently to
review the performance of services.
Communities
Communities
The locations in which the Group maintains its operations, and in which our
employees live.
Why we engage
We appreciate that we have a responsibility to support our local communities.
How we engage
As noted in Corporate Social Responsibility, we encourage our employees to
support local causes. We provide funding for a wide range of initiatives via
the Green Team, and we provide our employees with dedicated time allowing them
to participate in community engagement activities. We partner with local
organisations directly where appropriate.
Compliance with the Market Abuse Regulation
To ensure compliance with the Market Abuse Regulation ("MAR"), the Company
maintains internal policies, procedures, and controls in respect of market
abuse, market manipulation and insider dealing. A Share Dealing Code is in
place which all employees must adhere to. The Company has complied with this
Share Dealing Code and MAR throughout the period.
Role of the Board of Directors and its principal Committees
The primary role of the Board is to provide leadership of the Company. The
Company is directed and controlled both by its Board of Directors and through
systems of delegation and escalation, to achieve its business objectives in
accordance with high standards of transparency, probity, and accountability.
It achieves these goals by making decisions relating to key areas for the
business, by overseeing the activities of the executive team, and by
delegating certain matters for resolution through the principal Board
Committees, namely the Audit and Risk Committee, the Executive Committee, the
Remuneration Committee and the Nominations Committee.
The specific duties of the Board are clearly set out in a Schedule of Reserved
Powers that addresses a wide range of corporate governance issues and lists
those items that are specifically reserved for decision by the Board.
The primary responsibilities of the Board include, but are not limited to:
· formulation of medium- and long-term direction and strategy for the
Group.
· establishment of capital structure and dividend policy.
· ensuring the Group's operations are well managed and proper
succession plans are in place.
· review of major transactions or initiatives proposed by management.
· implementation of policy and procedures to support the governance
framework of the Group.
· regular review of the results and operations of the Group.
· ensuring that proper accounting records are maintained, and
adequate controls are in place to safeguard the assets of the Group from fraud
and other significant risks.
· regular evaluation of Board performance.
· oversight of the Group's ERM Framework; and
· decisions regarding the Group's policy on political donations.
The duties of the principal Board Committees are detailed in the relevant
terms of reference, which are reviewed annually and are available on the
Company's website, www.hansard.com (http://www.hansard.com) .
Board composition and key roles
At the date of this report the Board comprises the Non-executive Chair, two
Independent Non-executive Directors, one Non-executive Director and the Group
Chief Executive Officer (who is also the Group Chief Financial Officer).
As required by the Articles of Association, all Board members will offer
themselves for election or re-election at the forthcoming AGM.
The Board supports greater transparency regarding the election and re-election
of Independent Non-executive Directors. In compliance with the Listing Rules,
the Company operates a dual voting structure for any resolutions on the
election and re-election of the Independent Non-executive Directors. The
results from the AGM votes on any such resolutions, together with other
information normally circulated following the conclusion of the meeting, will
be disclosed through the Regulatory Information Services following the
conclusion of the Meeting. In the event that the majority of independent
shareholders are shown to have voted against these resolutions, a further vote
will be called after 90 days.
Chair
Philip Kay was appointed the Company's Non-executive Chair with effect from 1
May 2022., As required by the Code, Philip was considered independent upon
appointment. The Chair leads the Board within a solid governance framework and
ensures that the Board provides effective leadership for the Group including
strategy and direction.
Group Chief Executive Officer
Graham Sheward was appointed the Group Chief Executive Officer with effect
from 10 May 2021 until 1 August 2024, and was succeeded by Thomas Morfett.
As Chief Executive Officer, Thomas leads the senior executive team in the
day-to-day running of the Group's business, including execution of the Group's
business plans and objectives and communicating its decisions and
recommendations to the Board.
The division of responsibilities between the Chair and the Chief Executive
Officer is clearly defined and has been approved by the Board. The Chair has
no day-to-day involvement in the management of the Group. The Chief
Executive Officer has direct charge of the Group on a day-to-day basis and is
accountable to the Board for the financial and operational performance of the
Group.
Group Chief Financial Officer
Thomas Morfett was appointed the Chief Financial Officer with effect from 17
April 2023. As Chief Financial Officer, he is responsible for the Group's
Finance, Actuarial and Investments functions, and is as a key member of the
Chief Executive Officer's Executive Committee.
Senior Independent Director
Jose Ribeiro is the Company's Senior Independent Director. The Senior
Independent Director provides a sounding board for the Chair and serves as an
intermediary for the other Directors. He is also available to shareholders
should they have any concerns that they are unable to resolve through other
channels, or when such channels would be inappropriate.
The responsibilities of the Chair, Group Chief Executive Officer and Senior
Independent Director are available on the Company's website, www.hansard.com
(http://www.hansard.com) .
Non-executive Directors
Jose Ribeiro, David Peach and Noel Harwerth are considered by the Board to be
Independent Non-executive Directors in accordance with the Code definition.
Philip Kay, as Non-executive Chair, was considered independent on
appointment. Marc Polonsky, a Non-executive Director, is not considered to
be independent for the purposes of the Code due to close family ties with Dr
Leonard Polonsky and representing the Polonsky family shareholding.
The Non-executive Directors fulfil a critical role to constructively challenge
all recommendations presented to the Board for approval and to provide the
benefit of their experience and expertise to manage risk within the Group and
enhance delivery of the overall strategy.
Board independence
The Board's policy is to appoint and retain Independent Non-executive
Directors who can apply their wider knowledge and experiences to their
understanding of the Group. The process for appointing new Directors is
conducted by the Nominations Committee.
It is the Board's view that an Independent Non-executive Director also needs
to be able to present an objective, rigorous and constructive challenge to
management. To be effective, an Independent Non-executive Director needs to
acquire a sound understanding of the industry and the Company to be able to
evaluate properly the information provided.
Each Independent Non-executive Director serves for a fixed term not exceeding
three years that may be renewed by mutual agreement and subject to shareholder
approval at the AGM. Subject to the Board being satisfied with a Director's
performance, independence and commitment, an Independent Non-executive
Director may have their terms renewed for up to nine years. Beyond that
period, a Director would typically be considered to no longer be fully
independent.
A review of the arrangements affecting all Non-executive Directors who served
during the year covering the current term of appointment and review of their
independence (where relevant) was undertaken by the Nominations Committee.
The Committee was satisfied that, based on their performance during their time
on the Board, Jose Ribeiro, David Peach, and Christine Theodorovics (until 29
February 2024) were, and in respect of Jose Ribeiro and David Peach, remain
independent.
Philip Kay, as Chair, was considered independent upon appointment.
Board meeting attendance
The Board meets regularly to determine the Company's strategic direction, to
review the Company's operating and financial performance and to provide
oversight that the Company is adequately resourced and effectively controlled.
The Company requires Directors to devote sufficient time to the Company in
order to perform their duties. If Directors are not able to attend a meeting,
they have the opportunity to submit their comments in advance to the Chair or
the Company Secretary. If necessary, they can follow up with the Chair of the
meeting.
The attendance of the Directors at scheduled Board and Committee meetings of
which they were a member held during the year (and the maximum number of
meetings that each Director could have attended) were as follows:
Board Audit and Risk Nominations Remuneration
Number of meetings 10 4 4 5
Philip Kay 9/10 n/a 4/4 5/5
Jose Ribeiro 9/10 4/4 4/4 5/5
Marc Polonsky 9/10 n/a n/a n/a
David Peach 10/10 4/4 4/4 5/5
Graham Sheward 9/10 n/a n/a n/a
Christine Theodorovics* 4/7 0/2 2/3 2/3
Thomas Morfett 10/10 n/a n/a n/a
( )
(*Resigned with effect from 29 February 2024)
( )
The Chair of the relevant Board or Committee invited other Non-executive
Directors to attend meetings of which they were not a member whenever
considered appropriate. The CEO/CFO have standing invitations to Audit and
Risk Committee meetings and Marc Polonsky attended or partially attended 4
Audit and Risk Committee Meetings, 4 Nominations Committee Meetings and 4
Remuneration Committee meetings.
Board committees
The Board has established standing committees to oversee important issues of
policy and maintain such oversight outside the main Board meetings. Each
committee operates within defined terms of reference, which can be accessed on
the Company's website. The committee positions held by the Directors as at the
date of this report are summarised below:
· Audit and Risk Committee - Chair: David Peach. Members: Jose
Ribeiro, Noel Harwerth.
· Executive Committee - Chair: Thomas Morfett.
· Nominations Committee - Chair: Philip Kay. Members: David Peach,
Jose Ribeiro, Noel Harwerth.
· Remuneration Committee - Chair: Jose Ribeiro. Members: David Peach,
Philip Kay, Noel Harwerth.
The Chairs of the relevant Board Committees are available to engage with
shareholders on any significant matters related to their areas of
responsibility.
Reports from the Audit and Risk, Nominations and Remuneration Committees are
set out in this Annual Report and Accounts, together with a summary of their
activities during the year.
The Executive Committee is chaired by the Group Chief Executive Officer and
currently meets fortnightly. The Executive Committee has responsibility for
the day-to-day management of the Group, and other items as delegated from
time-to-time by the Board. In addition to Thomas Morfett, the Executive
Committee is currently comprised of Ollie Byrne (Commercial Director), Karen
Corran (Head of People and Culture), Angela McCraith (Chief Risk Officer),
Alan Canny (replacing Ailish Sherlin from 14 June 2024) (Chief Actuary), Hazel
Stewart (Company Secretary), Keith Brown (Head of Sales) and John Whitehouse
(Chief Operating Officer).
Board processes
The agenda for each Board and Committee meeting is considered by the Chair or
Committee Chair and the papers for each meeting are distributed by the Company
Secretary to the Board or Committee members beforehand. As a standard agenda
item during the scheduled Board meetings, the Chair and Non-executive
Directors meet without the executive Directors present. The Chair maintains
regular contact with the Chief Executive Officer and with the Non-executive
Directors, outside of Board meetings or calls, in order to discuss specific
issues.
Board performance review and effectiveness
The effectiveness of the Board is vital to the success of the Group. The
Company undertakes a performance review each year to assess the performance of
the Board, its Committees, the Directors, and the Chair. The Board engaged
Boston Limited to conduct a board performance review in the year. The
performance review took the form of a questionnaire, where Directors were
required to rate certain aspects of the Board's and Committees' performance.
The questionnaire also gave Directors the opportunity to provide comments on
areas of focus, which included the structure of the Board, effectiveness of
the Board, and committee-specific questions.
The responses to the performance review of the Board and the Committees were
collated and analysed by the Chair and the Senior Independent Director. The
results indicated that the Board continues to work well and there were no
significant concerns among the Directors about the Board's effectiveness.
Additional focus will be given to succession planning and initiatives such as
diversity and ESG.
As part of the Chair's performance review the Independent Non-executive
Directors meet separately under the leadership of the Senior Independent
Director who, in turn, engages in reviews with the Chair.
Following these reviews, the Directors have concluded that the Board and its
Committees operate effectively. Additionally, the Chair and the Senior
Independent Director have concluded that each Director contributes effectively
and demonstrates full commitment to his duties.
Remuneration of Directors
The principles and details of Directors' remuneration, as well as the
composition and activities of the Remuneration Committee, are contained in the
Report of the Remuneration Committee on pages 76 to 82.
Insurance
The Company maintains insurance cover with respect to the liabilities of
Directors and Officers within the Group. In addition, qualifying third party
indemnity arrangements are in force for the benefit of the Directors within
the Group and were in force for the benefit of former Directors of the Group
during the year under review.
Board support
Directors are fully briefed in advance of Board and Committee meetings on all
matters to be discussed. The Company Secretary is responsible for following
Board procedures and advising the Board, through the Chair, on governance
matters. All Directors have access to her advice and services.
The Board has adopted a procedure whereby Directors may, in the performance of
their duties, seek independent professional advice at the Company's expense if
considered appropriate.
Directors of the life companies are required to complete several mandatory
training sessions during each year, for example on Anti-Money Laundering
responsibilities (provided by the Money Laundering Reporting Officer or an
external supplier). Training and support is also provided on any other key
topics that the Board feel appropriate in addition to their individual
Continuing Professional Development requirements.
Risk management and internal controls
The Board has overall responsibility for the Group's systems of risk
management and internal control, and for reviewing their effectiveness. The
Board recognises that the governance risk management and internal control
arrangements which constitute the ERM Framework are intended to reduce,
although cannot eliminate, the range of possibilities which might cause
detriment to the Group. Similarly, the ERM Framework cannot provide protection
with certainty against any failure of the Group to meet its business
objectives, or guard against material errors, losses, fraud, or breaches of
laws and regulations. Taking all of these factors into account the ERM
Framework is intended to provide reasonable, but not absolute, assurance
against material misstatement or losses and / or the breach of any laws or
regulations.
The primary responsibility for developing and implementing internal control
and risk management procedures covering all aspects of the business lies with
the Executive Committee. As part of the reporting processes from the ERM
Framework, the Board regularly receives written reports covering all such
aspects in addition to overseeing controls and risk management procedures via
the Audit and Risk Committee.
Individual managers have primary responsibility for ensuring compliance with
Group policies, principles, and compliance obligations within their respective
span of control. This includes the identification, evaluation, monitoring,
management, and reporting of risks within their areas of responsibility. The
substance and form of risk management activities and the quality of their
application are regularly reviewed by the Group Risk Forum and objectively
analysed and evaluated by the Group's Internal Audit function, with oversight
by and reporting to the Audit and Risk Committee, which is ultimately
responsible for reporting on the same to the Board.
Processes for identifying, evaluating, and managing the risks faced by the
Group have been in place throughout the year under review and up to the date
of this report. They are regularly reviewed by the Board, with the assistance
of the Audit and Risk Committee.
The Board, through the Audit and Risk Committee, has reviewed the
effectiveness of the Company's risk management and internal control systems
including financial, operational and compliance controls.
The Board has further undertaken a robust assessment of the principal risks
facing the Group, including those that would threaten its business model,
future performance, solvency, or liquidity, in accordance with provision 28 of
the UK Corporate Governance Code. Additional information on the principal
risks and uncertainties faced by the Group, together with steps taken to
manage them, can be found within the Principal Risk Report on pages 25 to 30.
Whistleblowing arrangements
The Group has an established Whistleblowing Policy, which is accessible to all
employees, with new starters introduced to the Policy and its objectives
during induction training. The Policy is designed to ensure the principles of,
responsibilities for, and the approach to effective management of
whistleblowing are clearly explained and that staff feel empowered and
supported to raise concerns, in confidence, where they have a reasonable
belief of actual or potential wrongdoing. The Policy recognises that for some
individuals raising a concern under the Group's Whistleblowing arrangements
may be a daunting or difficult experience and so provides for such concerns to
be raised anonymously and/or outside the Management reporting line if
preferable, providing for direct access to the Chief Risk Officer or the Chair
of the Audit and Risk Committee.
Financial reporting process
The Group maintains a process to assist the Board in understanding the risks
to the Group failing to meet its objectives. This incorporates a system of
planning and sensitivity analysis incorporating Board approval of forecast
financial and other information. Operational management reports monthly to the
Executive Committee and Group Risk Forum on a wide range of key performance
indicators and other significant matters. The Board receives regular
representations from the senior executives. Performance against targets is
reported to the Board quarterly through a review of the Group's and Company's
results based on accounting policies that are applied consistently throughout
the Group. Draft management financial statements are prepared quarterly by the
CFO.
The members of the Audit and Risk Committee review the draft financial
statements for the half year ending 31 December and for the full financial
year and engage with the CFO to discuss and challenge the presentation and
disclosures therein. Once the draft document is approved by the Audit and Risk
Committee, it is reviewed by the Board before final approval by the Board.
Financial reporting
The statement on the responsibilities of the Directors in relation to the
preparation of the accounts and the Directors' evaluation of the business as a
going concern is contained in the Directors' Report on pages 34 to 38.
The Directors as at the date of this report consider that the Annual Report
and Accounts, taken as a whole, are fair, balanced, and understandable and
provide the information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
Culture
The Board believes that strong corporate governance underpinned by a sound
culture is fundamental to the success of the Group. It has sought to create an
empowering culture, which values innovation, quality, integrity, and respect.
The Board helps to ensure appropriate behaviours and culture are instilled
throughout the Group, with the tone and expectations continuing to be set from
the top. In its decision making, the Board aims to reinforce the Group's
values and reflect the culture it wishes to foster.
Our Culture Programme continues with an agenda which aligns and supports the
delivery of our corporate objectives with areas that are important to our
people. We regularly measure employee engagement via an anonymous inhouse
survey. The results of which are then discussed in open workshops to
understand the key areas which are impacting employee experience which then
help share our people initiatives.
As previously reported, our Culture Programme has three core pillars of focus,
those being
· High Performance Culture
· Learning Culture
· Environment and Wellbeing
We have continued with our commitment to supporting development opportunities
for our people, via learning events, professional qualifications, internal
promotion, and secondment opportunities. Learning events focussed on high
performing teams, resilience and the importance of trust have featured in our
learning culture initiatives this year in addition to workshops to further
support our population of people managers.
Our Wellbeing team continue to play a vital role in terms of providing support
and initiatives to our people around three key areas, Mental, Physical and
Financial Wellbeing. Our Employee Assistance Programme provides additional
support to our people and their families and friends through various life
events. Through a range of Group schemes, which underpin the Mental,
Physical and Financial pillars, we stand by our commitment to support the
health and wellbeing of our people.
We have a very active Sports and Social team who arrange a wide mix of
activities and social events, bringing our people together outside of the
workplace.
People and gender reporting
We recognise our people are key to our success in delivering the strategic
objectives of the business. Our core values of Innovation, Quality,
Integrity, and Respect were defined by our people and underpin our working
environment and practices. We believe all our people can make a difference
and we continually work to ensure that they are appropriately developed,
engaged, rewarded and retained. The Culture Programme is designed to further
enhance the employee experience.
The Group's principal administrative operations are performed in the Isle of
Man on behalf of the wider Group. Management of Hansard Europe with certain
support functions located in the Republic of Ireland. Employees of our
Malaysian and Japanese branches are included in "Other" below. Regional Sales
Managers and related market development resources are principally based in
local markets to support IFAs and other intermediaries that introduce business
to the Group.
As at 30 June the number of the Group's employees (excluding Non-executive
Directors) by location was as follows:
Location 2024 2023
Isle of Man 146 145
Republic of Ireland 16 20
Other 15 20
177 185
The gender profile of the Group at 30 June 2024 is split with a total of 86
male and 91 female employees (2023: 94 male and 91 female). Within the
Executive Committee, there were 5 male executives and 3 female executives.
Employees reporting directly to members of the Executive Committee comprised
14 male employees and 16 female employees. As at 30 June 2024 the Board
comprised 6 male Directors and no female Directors, and the board of the
Company's principal operating subsidiary, Hansard International Limited,
comprised 6 male Directors and one female Director.
Dr Christine Theodorovics, who was appointed as an Independent Non-executive
Director with effect from 23 January 2023, resigned from the Board with effect
from 29 February 2024. She had been appointed as CEO of Baloise Luxembourg in
the previous year and decided to step down from the Board to focus on this
commitment. Noel Harwerth OBE has been appointed as a replacement. The
gender profile across the Group is evenly balanced, with a number of senior
executive positions being held by female employees, including Chief Risk
Officer, General Counsel and Company Secretary, and Head of People and
Culture. Although the current composition of the Board is not in compliance
with the Listing Rules requirements on diversity and inclusion, the intention
is to appoint a further female Independent Non-executive Director later in the
financial year. Following the changes in our leadership team, the primary
focus will be on ensuring stability and continuity in our operations;
thereafter, the Company will be able to take further steps in relation to
compliance with these Listing Rules requirements.
Corporate Social Responsibility
Hansard has a long-standing commitment to operating in accordance with
principles and policies which seek to deliver positives impacts, wherever
possible, through its Corporate Social Responsibility (CSR) programs and
initiatives. These encompass environmental. social and governance (ESG)
perspectives and continue to evolve as the Board anticipates future
developments driven by a broader perspective of sustainability.
For the year ended 30 June 2024 our focus has remained on the creation of
value for our stakeholders over the long term whilst making a positive impact
on the world. To support our continuing efforts and future focus a Group
Sustainability Officer was appointed during April 2024 to review our
approaches and internal practices in respect of all components of ESG and to
progress a review of our pre-existing CSR Strategy, building on the progress
we have made to date, to deliver a holistic view of our forward-looking
ambitions. This will help to drive continued refinement of our sustainability
goals and the associated governance, risk management and internal control
arrangements.
In line with these developments our 'Green Team' has continued to promote and
actively contribute to ESG-related initiatives throughout the reporting
period, with colleagues from across the Group dedicating more than 500 hours
of their time to internal and external events, either giving up their own time
or utilising Company approved time for volunteering and supporting activities
including:
· Sponsorship of the 2023 'LoveTech' summer event, which aims to
encourage girls to enter into STEM careers.
· Introduction of plastics, cans, and glass recycling bins within our
offices to expand our existing recycling activities.
· Partnering with the Manx Wildlife Trust (MWT), to actively support
a number of initiatives, including:
· Primary donation to Hospice Isle of Man to help fund a solar array
to aid with their sustainability transition and reduction in operating costs.
· Participation in a volunteering day at The Children's Centre,
helping with the construction of a Roundhouse and pathway to the Roundhouse.
· Sponsorship of the annual Shennaghys Jiu Festival, which provides a
unique and inclusive platform for the Island's gifted young musicians and
dancers and the opportunity for developing local talent to flourish. The
Festival also helps to build unique and collaborative relations with talented
young people of our Celtic Nation neighbours, extending the Island's cultural
reach and reputation beyond our own shores.
· Volunteering by employees around the business with Junior
Achievement Isle of Man, visiting local primary and secondary schools and
helping with the delivery of their programmes.
· Donating to Junior Achievement Isle of Man to support the 'It's All
About Money' Programme.
· Gifting desk plants to employees, promoting the benefits of plants
and bringing nature into the office.
· Sponsorship of tables at a number of local events supporting
various charities, including Manx Mencap and Cruse Bereavement Support, Isle
of Man.
Concurrently the 'Wellbeing Team' has continued its valuable work, with a
dedicated Executive Committee member and a clear mandate that recognises the
vital role a positive culture and physical environment, which encourages
healthy lifestyle choices, plays in the long-term sustainability of Hansard.
The Wellbeing Team strives to promote and support the physical, financial, and
mental wellbeing of all staff members across the Group through the Workplace
Wellbeing Plan (WWP) and associated initiatives.
Initiatives run by the Wellbeing team, to support employees throughout the
year and their endeavours to create a supportive and successful working
environment, have included: -
· Facilitation of a Resilience Code Workshop and 28-day Habit
Formation challenge for Isle of Man based employees.
· Supporting Mental Health Awareness week through:
· Ice bath session held with InnerAlchemy to promote the benefits of
the Wim Hof Method and cold-water swimming.
· Collaboration with the Green Team in respect of the Summer Food
Bank donation.
· Attendance at the 'Sound Sanctuary' session held at the Santander
Work Café.
Climate-Related Financial Disclosures
During the year ended 30 June 2024 we have continued to invest in initiatives
supporting the development and expansion of our climate-related financial
disclosures. This section explains the Group's ongoing activities to embed
climate-related risks and opportunities into our risk management, strategic
planning, and decision-making processes.
Our reporting seeks to provide both investors and wider stakeholder groups
with a clear understanding of our progress during the reporting period in
identifying, understanding, and disclosing our exposures to climate related
risks and strengthening strategic resilience to these exposures, whilst also
seeking out opportunities in the mid to longer term.
Whilst we have continued to focus our efforts on climate-related disclosures,
we are increasingly conscious of the benefits and value inherent within
holistic sustainability perspectives and reporting practices, and the
importance of an integrated strategy to achieve our overall goals and
ambitions. Aligning our strategic and tactical thinking with the objectives
and intent of the Task Force on Climate-Related Financial Disclosure ("TCFD")
recommendations is helping to drive an inclusive approach to addressing our
social responsibilities as well as our environmental impact and our governance
practices.
The Group recognises that its work to adopt and embed TCFD recommendations, as
well as broader disclosure requirements, remains an iterative process of
learning and refinement as we adapt and optimise our plans and tackle the
challenges inherent within our journey towards establishing, expanding, and
embedding our ESG targets.
Introduction and TCFD Report Overview
Our TCFD Journey
In addition to its obligations associated with TCFD a range of other important
factors continue to contribute to the Group's TCFD journey and drive positive
progress towards our TCFD-related goals and objectives. The Hansard Group is
proud to call the Isle of Man home, and we remain proactively committed to
supporting the Isle of Man Government's initiatives associated with the
sustainability of the Island's future. This includes support for 'Finance Isle
of Man' as they progress their work to develop a three-year Roadmap to create
a more sustainable economy on the Island, scheduled for launch during November
2024. The Island continues to be designated as a UNESCO Biosphere in
recognition of its special environment, culture, heritage, and economy and is
the only Biosphere that encompasses an entire nation, which includes all the
Island's land and territorial sea, and Hansard remains a UNESCO Biosphere Isle
of Man Business Partner, with the pledges made used as drivers in our decision
making. As a responsible island nation, the Isle of Man is particularly aware
of the local and global impact of climate change and of the social and
environmental imperative for action, with the Island committed to reaching
carbon neutrality by 2050.
It is against this backdrop that the Group has progressed its work during the
2024 financial year to enhance and embed its approach to the management of
climate-related and broader ESG risks under the four pillars of the TCFD
recommendations. The Group remains committed to iterative improvements in its
disclosures and subsequent reporting arrangements, across short-, mid- and
longer-term time horizons for the benefit of the Group's investors and wider
stakeholder cohorts. Achieving maturity of both qualitative and quantitative
metrics and broadening their scope from carbon-related to climate-sensitive
exposures, risks, and opportunities, remains a priority in the near term.
Our Approach
Climate-related risks and opportunities are an intrinsic element of the
Group's broader strategic perspectives. ESG-related risks are defined, at the
highest level, as those risks arising from a failure to anticipate and respond
to actual or emerging environmental, social and governance threats, challenges
or opportunities, or to successfully integrate ESG into the Group's strategic
and business planning activities.
Risk mitigations include:
· Actively building ESG considerations into strategy development and
business planning processes through structured analysis, formal assessment
mechanisms and cross-functional collaboration.
· Factoring emerging ESG risk issues into key decision-making and
understanding the impacts for the tools and methodologies currently used to
manage risk, including governance structures, risk ownerships, risk and
control self-assessment principles, regulatory developments, third party
service provisions and effective reporting.
· Developing and updating relevant components in relation to the ESG
risk domain - including policies, procedures, risk indicators, management data
and stress testing; and
· Initiatives addressing cultural alignment and structural
resilience, which encompass core sustainability considerations.
Relevant details of the Group's work during the reporting period are organised
under the four pillars of the TCFD disclosure framework, below. Areas
prioritised for attention in terms of enhancing the quality and substantive
nature of the Group's disclosures, targeted at achieving full compliance with
the framework, include disclosures relevant to the environmental impact of our
assets under administration, iterative enhancement of the understanding of
climate-related risks within our regularly assessed range of risks to the
business and the resilience of our Group strategy to various scenarios. A
summary of our disclosure report is presented at figure 1 below.
Pillar 1 - Governance
The Board retains overall responsibility for the effective functioning of the
Group's governance, risk management and internal control arrangements
associated with sustainability-related risks and opportunities. This includes
responsibility for determining, evaluating and controlling the nature and
extent of these risks and opportunities, taking account of the varying levels
of strategic, financial and operational stresses, potential risk scenarios and
emerging as well as existing climate risk exposures over short, mid and
long-term time horizons. These activities are governed by the protocols of the
established ERM Framework, defined and described in more detail under 'Pillar
3 - Risk Management', below, which include both top-down and bottom-up risk
assessment bases.
During the year ended 30 June 2024 the conventions of the ERM Framework have
enabled the Board to continue to develop its oversight of ESG-related risks
and opportunities, via quarterly and annual risk reporting to the Group Audit
and Risk Committee, which has included analysis and challenge of results from
the formal cycle of relevant stress and scenario testing. The Board has also
sought opportunities for development of the pre-existing CSR Strategy, and
enhanced, effective integration of climate-related risks and opportunities
into the Group's structure and decision-making processes, with clear
accountability and ownership for risk management allocated to members of the
Executive Committee. The Green Team has continued to support this work,
driving corporate focus on the collation and analysis of climate and emissions
data and initiatives together with broader sustainability priorities,
promoting measurable and achievable targets and metrics.
ESG reporting is included as a standing agenda item at each quarterly Board
meeting with the specific aim of ensuring that progress towards objectives and
targets can be closely monitored. Board oversight also ensures that
climate-related risks, opportunities, and associated issues become an integral
and embedded element of decision-making in respect of overall Group strategy,
policies, and actions. The Group's sustainability goals are considered within
the context of wider industry experience and stakeholder perspectives, having
regard to the aggregate levels and types of risk the Board is prepared to
accept within risk capacity, in pursuit of strategic and business plan
objectives. The governance structures which support the Board's oversight of
ESG-related risks include the Executive Committee, the Group and subsidiary
entity Audit and Risk Committees, the Group Risk Forum and the Investment
Committees of both Hansard International Ltd (HIL) and Hansard Europe,
Designated Activity Company (HE dac). The Investment Committees and the Group
Risk Forum also consider ESG-related reporting as a standing agenda item,
ensuring that priorities and considerations remain aligned with those of the
Group Board and there is a structured approach to the identification of
climate-related risks. Protocols remain in place to enable ESG-related
decisions made by the Investment Committees to be communicated via the
respective Boards to the Hansard Global Plc Board. A summary view of the
Group's governance structures supporting the Board's oversight of risks and
opportunities is presented at figure 2 below.
Figure 2: Group governance structures
During the year ended 30 June 2024 the Board has continued to delegate
activities to the Executive Committee, with two members of the Committee,
supported by the Sustainability Officer, having specific accountability for
oversight of deliveries and progress reporting. The 'Green Team' and the
'Wellbeing Team' have actively progressed a range of important initiatives
across the ESG spectrum, including in relation to climate-related ambitions
and data-collation improvements.
Pillar 2 - Strategy
The Group's strategic goals in terms of climate-related risks and
opportunities are focused on the creation of long-term value for our
stakeholders whilst making a positive impact on the world. The Group aims to
deliver its strategic objectives in this regard and build a sustainable future
through focus on three key elements.
The Group's approach to the management and mitigation of climate-related and
broader ESG risks and opportunities is built within the context of its
overarching corporate strategy and business plans. The Group's products are
unit-linked regular or single premium life assurance and investment contracts,
which offer access to a wide range of investment assets. The contracts are
flexible, secure, and held within wrappers, allowing life assurance cover, or
other features, depending upon the needs of the client. The contract benefits
are directly linked to the value of those assets that are selected by, or on
behalf of, the client and held within the wrapper. The Group's products do not
currently include any contracts with financial options and/or guarantees
regarding investment performance, which can require additional capital to be
held. Levels of service and the delivery of fair client outcomes, the nature
of the Group's products, the use of technology, and the ability of the
contract holder to reposition assets within a contract are all designed to
achieve retention of the contract holder relationship over the long-term.
The main source of income for the Group continues to be the fees earned from
the administration of insurance contracts. These fees are largely fixed in
nature and amount. Approximately 30% of the Group's revenues, under IFRS, are
based upon the value of assets under administration. The new business
generated in a particular year is expected to earn income for an average
period of 15 years. Business is therefore long-term in nature both from a
contract holder perspective and with regards to the income that is generated,
which supports business overheads, business investment, remuneration of the
distribution network and payment of dividends, whilst contractual obligations
can range from 5 years to over 25 years.
All of these business model aspects are contributing factors to the Board's
determination of relevant short-, medium-, and long-term time horizons,
respectively classified as 0-5 years, 6-10 years and >10 years. These time
frames support analysis and assessment of climate-related risks and
opportunities, together with broader sustainability considerations, which have
the capacity to impact the Group's strategy, business plans and financial
performance. The Board's perspectives on these aspects of the risk portfolio
are value-driven in terms of improving resilience and demonstrating to
clients, investors, regulators, and wider stakeholder groups that ESG-related
risks and opportunities, including those having a climate-related nexus, are
properly understood. This is achieved through forward-looking analysis and
evaluation, with concurrent consideration of tactical business planning,
operations, and underwriting and investment activities, in order to contribute
to a sustainable transition to a low-carbon economy.
The Group's risk management arrangements, described in more detail at 'Pillar
3 - Risk Management' below, operate on a cyclical basis to enable the Group
Board and the Executive Committee to properly assess and understand, at a
practical level, the major sources of risk facing the Group, on short-, mid-,
and long-term time horizons, and the capital required to cover those risks,
under both normal and stressed conditions. Internal and external risks are
considered, together with emerging risks and any risks associated with the
Group's systems of governance, having regard to capital, performance, and
strategic information, which ultimately provides the Board and Executive
Committee with substantiated bases relevant to decision making.
Forward-looking business plan and solvency projections use a range of stress
and scenario testing and analyses to evaluate the adequacy of the Group's
overall financial resources, including capital and liquidity resources. The
stress and scenario tests are derived from analytical review of the Group's
risk universe, enabling distinguishable patterns of impact to be considered
and allowing plausible risk scenarios to be approximated into impact types,
with attention given to both single test and multi-factor scenarios.
During the year ended 30 June 2024 ERM protocols and work to support
climate-related financial disclosures have considered the plausibility of
environmental and climate-risk stresses emerging over the duration of the
forecast period. Associated analyses have focussed on the impact of the
Group's business on the environment as well as the capacity for future
environmental disruption to the Group's strategic and business plan objectives
and targets, taking account of both physical and transition risks.
Physical risk analysis has included the likelihood and impact of extreme
weather events occurring over the duration of the business plan period and
their capacity to provoke any combination of the following events: -
· Operational resilience failure due to technological disruption,
utility failure, power outage, loss of use of premises and/or significant
reduction in the number of available personnel, which may impact the Group
directly, or via an outsourced service provider.
· Damage to critical national infrastructure in one or more
jurisdictions of material importance to the Group's strategic plans, impacting
existing customers, intermediaries and/or new distribution initiatives and
targets.
· Macroeconomic disruptions causing adverse market movements with the
potential to impact asset values and revenues to material levels.
Analysis of transition risks has considered the disruptions and shifts
associated with advancement towards a low-carbon economy and the potential for
these to impact the value of assets, erode important revenue streams and/or
increase the costs of doing business. Transition risks may emerge through
changes in policyholder, or other stakeholder expectations, market dynamics,
technological innovation, and/or reputational factors. Key examples of
transition risks include policy changes and regulatory reforms, which affect
specific classes of financial assets relevant for available investments,
whilst social movements and civil society activism may pose a risk of
reputational damage, if appropriate risk mitigation strategies and
communication actions are not implemented appropriately. Associated risks may
emerge more readily in the event that the Group fails to adequately prepare
for, or substantively comply with, mandated climate-risk disclosure
obligations and/or its disclosures are found to be deficient. Stress and
scenario test modelling during the year ended 30 June 2024 has explored the
balance sheet impacts of physical and transition risks crystallising as a
combination of expense, market and production stresses.
A summary of the underlying analysis is presented below.
Whilst climate-related issues have not presented a material impact to the
Group's financial performance or position to the date of reporting, scenario
testing during the year ended 30 June 2024 was calibrated to consider extreme
but plausible stresses, reasonably foreseeable within the forecast period,
arising via the physical and transition events described above. Scenario
testing combined market stresses with lower production and a recurring
increase in expenses. The results of testing confirmed that, in the absence of
mitigating measures, a multi-factor scenario could have the potential to
disrupt key financial metrics, compared to base plan targets, due to reduced
sales volumes and compromise of planned expense savings, with a deteriorating
trajectory. Overall modelling provided a compelling view of the value
attaching to the Group's climate and broader sustainability risk management
and mitigation measures. On this basis, whilst the transition to a low-carbon
economy is not expected to generate critical impacts for our business model or
financial performance the Group's work in anticipation of and preparation for
broader sustainability reporting, including non-climate related sustainability
disclosures, will strengthen analysis of reasonably foreseeable risks and
impacts on a broader ESG spectrum. The results of this work will enhance the
resilience of the Group's management and mitigation strategies, ensuring that
both short- and long-term financial planning and strategic decision-making
take account of the growing significance of sustainability risks and
opportunities under five key risk dimensions, which include economic risks,
environmental risks, geopolitical risks, societal risks and technological
risks.
Further maturity of data and analytics will remain a priority for the 2025
financial year and will continue to deliver more substantive understanding of
the range and plausibility of subordinate risks and opportunities within the
main exposure categories and their capacity to impact specific areas of the
Group's business, over the identified short-, medium- and long-term time
horizons. Consideration will then be given to the extent to which these issues
might crystallise as a material financial impact for the Group and its
stakeholders. This will include further analysis of climate-related issues
that affect the geographical regions in which we generate revenues - on a
current and forward-looking basis, to enable more geographically specific
disclosures, where these prove to be useful and value adding.
The Group is continuing its work towards achieving its aims of reductions in
gross GHG emissions, which have been established and approved by the Board via
work undertaken during the 2024 reporting period. These are intended to create
a solid foundation for the shaping of our initiatives and the actions needed
to mitigate the Group's environmental impact through the gross reduction of
Scope 1, 2 and 3 emissions on a long-term, sustainable basis, recognising that
their effectiveness and integrity are as significant as the pace of their
achievement. Whilst we have reduced emissions over the reporting period (as
described in Pillar 4 below) and it remains the aim of the Group to continue
to reduce emissions, in the interim investing in carbon offsets has been
important. This is further described in Pillar 4 below
Simultaneously the Board have recognised that there are clear strategic and
commercial opportunities and benefits associated with embracing a strategic
response to sustainability issues:
Pillar 3 - Risk Management
As with all businesses, the Group is exposed to risk in respect of its
strategic and business plan objectives. The Board has overall responsibility
for the Group's system of risk management and internal control and for
reviewing their effectiveness, supported by the governance structures, and
reporting arrangements of the ERM Framework. These have been adapted to assist
with the identification and management of sustainability related risks,
enabling the Group to readily apply its well-established and embedded risk
management conventions and processes to identify, understand and assess
relevant risks and opportunities in a manner consistent with the approach for
all other risks to which the Group is or may be exposed. The 'Schedule of
Powers Reserved to the Board' ensures that the Directors are responsible for
determining, evaluating, and controlling the nature and extent of such risks
and opportunities, including both quantifiable and non-quantifiable risks, and
for assessing the effectiveness of the Group's ERM Framework. An overview of
the associated protocols is set out below.
The overall scope of, responsibilities for, and approach to risk management,
through which the Group's risk management activities, processes and procedures
are to be directed and controlled, are set out within the ERM Policy, which
governs the consistent identification, measurement, assessment, management,
monitoring and reporting of all risks. The Board recognises the need to ensure
that the risk management system is effective and well-integrated into the
Group's structure and decision-making processes, with clear accountability and
ownership for risk management. On this basis the ERM Framework seeks to add
value through embedding risk management and effective internal control systems
as continuous and developing processes within strategy setting, programme
level functions and day-to-day operating activities. The ERM Framework also
acknowledges the significance of operating culture and values in relation to
risk management and their impact on the overall effectiveness of the internal
control framework.
The Policy objectives and conventions of the ERM Framework, which are mature
and well embedded, guide and govern the identification, assessment,
management, monitoring and reporting of risks. These conventions are actively
supporting the work to accommodate and integrate focus on and quantification
of sustainability related risks and exposures at strategic, programme and
operational level such that layers of core activity support each other and the
relative significance of climate-related risks, within the context of the
broader risk portfolio, can be determined. This is enabled by the application
of risk appetite metrics, tolerance thresholds and ultimate boundaries, which
are used to quantify risk issues and emerging risks with outputs reported to
the Board on at least a quarterly basis.
Within this context, and consistent with the Group's ERM protocols, risk
management processes are undertaken on both a top-down and bottom-up basis.
The top-down aspect involves the Board assessing, analysing, and evaluating
what it believes to be the principal risks facing the Group. The bottom-up
approach involves the identification, review, and monitoring of current and
forward-looking risks, including climate-related and broader sustainability
risks on a continuing basis at functional and divisional levels, with analysis
and formal reporting to the quarterly Group Risk Forum, and onward analytical
reporting to the Audit and Risk Committee. The Audit and Risk Committee
receives regular reporting from the Group's Chief Risk Officer in relation to
the outcome of periodic risk assessments undertaken by management in line with
the governing principles and practices of the ERM Framework.
The 'Risk Universe' captures the range of material inherent risks, which are
identified as having the capacity to prevent or limit the achievement of
business objectives, taking into account the recommendations of the Group Risk
Forum, the Audit and Risk Committees and the Chief Risk Officer. The 'Risk
Universe' supports the structure and functioning of both the ERM Framework and
the Board Approved Risk Appetite Statement. Effective maintenance of the Risk
Universe is dependent upon strategic and business objectives over appropriate
time horizons being actively maintained.
The Group's material inherent risks are classified into five main risk
categories and then grouped into categories of subordinate risk, with the Risk
Appetite Framework sharing the same structure. This taxonomy of risks
strengthens the monitoring of risk appetite as it is reflective of the nature
of the risks to which the Group is or could be exposed in the pursuit of its
business objectives and corporate strategies. Risk identification,
measurement, monitoring, managing, and reporting under the Group's ERM
Framework are based on this taxonomy and the approach enables a holistic and
integrated view of climate-related risks and those with a broader
sustainability nexus.
Risk Appetite is the aggregate level and types of risk the Board is prepared
to accept, within risk capacity, before action is deemed necessary to reduce
the risk. Risk Appetite represents the balance between the potential benefits
and rewards of commercial decision-making and innovation versus the threats
that change, and development inevitably bring. Risk Capacity is the maximum
level of risk at which the Group can operate, whilst remaining within
constraints implied by capital, funding needs and the expectation of
shareholders.
The Board has an agreed Risk Appetite Statement, structured according to the
taxonomies described above, which is comprehensive and clear to all
stakeholders. Where the Board sets its Risk Appetite at principal risk
category level, such Risk Appetite is applicable to the aggregate of the
sub-risks within the specific Risk Category. The Group's Risk Appetite over
the short-, medium-, and long-term time horizons is reviewed annually.
For some risks within the Group's risk universe, such as strategic,
reputational, group and some aspects of climate risks, the holding of capital
by itself is considered by the Board to be an inappropriate mitigating
measure. The governance, risk management and internal control mechanisms,
which constitute the ERM Programme, promote the capture and analysis of
non-quantifiable risks with assessment against the respective risk appetite
metrics approved by the Board. This approach, driven by ERM protocols,
ensures that all risks within the risk universe (quantifiable and
non-quantifiable) are treated with equivalence and reporting on risks is not
limited to those which only support calculation of solvency requirements. This
methodology allows the nature of the Group's principal and subordinate risks,
relative to strategic and business objectives, to be considered via stress and
scenario testing and movements in Hansard's risk profile, relative to risk
appetite, to be identified, managed, monitored and reported on a continuing
basis. Additional details of stress and scenario testing relating to climate
risks are described above as part of Pillar 2 - Strategy.
To demonstrate whether the Group is being managed in accordance with the
Board's approved Risk Appetite, periodic risk appetite tolerance assessments
are carried out and reported to the Audit and Risk Committee.
Further details on the Company's overall ERM Framework can be found in the
Risk Management and Internal Control section on pages 22 to 25 and in the
Principal Risks section on pages 25 to 30.
Pillar 4 - Metrics and Targets
The Group aims to promote sustainable business practices on a holistic basis,
including controlling and reducing environmental impacts. In order to be
meaningful this requires an informed understanding of climate-related
considerations, such as physical and transition risks, climate resilience and
GHG targets, and a substantive assessment of the Group's generated emissions,
together with recognition of the value for all stakeholders in the use of
clear, meaningful metrics to measure and manage climate-related risks and
opportunities. The Group's metrics and targets are intended to evidence and
demonstrate how the Group is working to achieve reductions in its energy use
(measured in tCO(2)e), consequent emissions and environmental impacts and
establish sustainable business practices. To calculate our emissions, we
follow the Greenhouse Gas Protocol (GHGP) Corporate Standard. Under this
Protocol we categorise emissions on the following basis: -
· Scope 1: Direct emissions from gas, refrigerants, and owned
vehicles.
· Scope 2: Indirect emissions from the generation of acquired and
consumed electricity, which are a consequence of our activities, but originate
at sources owned or controlled by another organisation; and
· Scope 3: Value-chain emissions, having regard to both upstream
activities - typically business travel, employee commuting, waste generation,
purchased goods and services and capital goods, and the downstream impacts of
our business - typically linked to investments made or enabled by the Life
Companies of the Group.
Benefitting from the relationship established over the last two years, we have
again worked with the Environmental Sustainability Index (ESI) Monitor,
utilising their online application FutureTracker, to upload and record our
environmental footprint data, across Scopes 1, 2 and 3 and provide useful
industry benchmarking. The subsequent 2024 Environmental Footprint Report is
then used to inform our Metric and Target Pillar disclosures and enable
refinement of our sustainability goals and associated policy objectives. Data
for the financial year ended 30 June 2024 is set out in figure 9 below,
representing the most relevant and applicable data in respect of emissions for
which Hansard is responsible via its energy use, measured in tCO(2)e. This
does not currently include measurement of other GHG's identified under GHGP or
incorporate CO(2) equivalent measurements.
Figure 9: 2024 Carbon Footprint Results
Our Scope 1 and 2 reporting total includes data from our Isle of Man, Ireland,
and Japan offices. Our largest emissions impact in relation to Scope 1 and 2
continues to be our electricity usage, although this has decreased by 49%
compared to the last reporting period. The reduction in our Scope 2 emissions
is due to the sale of our warehouse. This, in turn, has also reduced our Scope
1 mobile combustion emissions as we were able to reduce the usage of our
company vehicle. More significantly, our data centre provider switched their
electricity tariff to the Guaranteed Green Tariff. The Guaranteed Green Tariff
is a verified local tariff that ensures renewable energy is fed into the Isle
of Man national grid to cover the number of units consumed by our data centre.
We continue to engage with the landlord of our head office to investigate
options to utilise the Guaranteed Green Tariff. We already purchase
renewable energy for our Ireland based office and will investigate options for
our office in Japan in the coming financial period.
In addition to our total emissions in tCO(2)e, we have calculated our average
emissions per fulltime employee for Scope 1 and 2 to be 0.26 tCO(2)e, a 50%
decrease from 0.52 tCO(2)e in 2023. The emissions per fulltime employee differ
across our office locations due to the electricity usage in each location.
In relation to our Scope 3 emissions, we have maintained our disclosure
position by calculating and disclosing our more readily measurable emissions,
under GHGP Categorisations, including Business Travel (Category 6) and
Employee Commuting and Working from Home (Category 7) emissions. We are
targeting continued improvements in the capture and measurement of all
relevant and applicable upstream and downstream Scope 3 emissions during the
2025 financial year, which will require collaboration with external
stakeholders.
Emissions relating to hotel stays has been omitted from current Category 6
reporting, as we continue to compile complete and accurate data to enable us
to capture, record and mitigate associated emissions. As such, 2024 metrics
will not be considered a gross Scope 3 baseline, with baselines instead being
applied to each activity as reliable data becomes more readily available and
measurable. The Group's 2023 reported Scope 3 metrics are therefore considered
the baselines for Category 6 and 7 emissions respectively, subject to any
adjustments that may be required once the accommodation element of business
travel becomes more readily quantifiable.
For Scope 3, the primary contributor to our measured Carbon Footprint
continues to be business travel, at 53% of our total measurable Scope 3
emissions, and 44% of the Group's total emissions. However, there has been a
significant reduction in the distances travelled for business travel, and
therefore associated carbon emissions have reduced. Emissions associated with
employee commuting increased marginally, whilst emissions associated with
employee working from home decreased. The Group continues to explore ways in
which international travel can be further reduced, exploiting the value of
advances in digital transformation solutions for engaging with clients,
business partners and remote working. Initiatives to support the reduction of
emissions relating to employee commuting are also being investigated.
Our decision to purchase carbon offsets as a way of mitigating our net impact
has led to the Company determining revised strategic parameters for emission
reductions gross of offset. These will be refined and formalised via the
2025 cycle of risk appetite metric calibrations, seeking absolute based
targets, referenced to respective baselines, framed around the following
ambitions: -
· We will aim to reduce Scope 1 and Scope 2 emissions by 50% by 2030,
and by 100% by 2050.
· We will aim to reduce Scope 3 emissions excluding those relating to
our AuA* by 50% by 2035 and 100% by 2050*.
For clarity, Scopes 1 and 2 will continue to use 2022 as the baseline, while
our Scope 3 metrics will inform future reporting. Baseliner metrics we
disclose in future annual reports will be set at the time.
The Group continues to investigate ways in which we can capture further data
to be able to provide additional metrics in future, such as those relating to
waste management, water usage, and any other areas that will help to manage
our overall environmental impact.
There are no current material financial exposures arising out of our carbon
emission levels in terms of specified regulatory caps or direct taxes. At
present, our Executive Directors' remuneration packages are not tied to
performance against ESG metrics. We also do not produce any internal carbon
pricing, as we do not consider it to be applicable to our current business
model.
* We have not set an ambition at this stage for emissions relating to AuA.
These investments are chosen by our clients or by their advisors. However, we
will look for opportunities to assist clients and financial advisers in
addressing climate-related data challenges relating to their investments. We
will aim to define target reductions for our guided architecture AuA during
the 2025 reporting period, recognising that this will involve establishing a
substantive understanding of the emission measures for our existing investment
portfolio and the Group's capacity to influence more environmentally
considerate investment decision making. As we progress this work, we will
continue to make reference to the driving principles and objectives of new and
emerging regulatory developments in this area, such as the FCA's
Sustainability Disclosure Requirements. This approach ensures we are aware of
industry and regulatory progress, even where these may not be directly
applicable to the Group.
Stakeholder engagement and Board decision making
We recognise our obligations to adopt a responsible attitude towards our
stakeholders in operating our business. As well as shareholders, key
stakeholders include employees, contract holders, distribution partners,
service providers and the communities in which we operate. The Board seeks
to understand the views of such stakeholders in making any key decisions in
accordance with the Code. The Board considers that the Group demonstrates a
balanced approach in its decision making and that Hansard's policies and
actions fulfil the Group's obligations.
The Board is accountable to the shareholders for creating and delivering value
through the effective governance of the business. The Group places
considerable importance on developing its relationships with our shareholders
and it aims to achieve this by way of the following regular communication
activities:
The CEO and Chair typically meet with the investor community, major
shareholders, and analysts at various points throughout the year.
In addition, the Chair of each Committee is available to meet or correspond
with major shareholders to discuss any areas of concern not resolved through
normal channels of investor communication. There were no significant areas of
concern raised during the 2024 financial year. Arrangements can be made to
meet with the Chair through the CFO or Company Secretary.
The Board is equally interested in communications with private shareholders
and the CFO oversees communication with these investors. All information
reported to the regulatory information services is simultaneously published on
the Company's website, affording the widest possible access to Company
announcements.
The Board receives regular feedback on the views of shareholders on the
Company from its executive team after meetings with those shareholders, as
well as from reports from the Company's corporate brokers, the Chair, and the
Senior Independent Director.
By Order of the Board
Hazel Stewart
Company Secretary
25 September 2024
Report OF THE Audit AND RISK Committee
Purpose and terms of reference
This report provides details of the role of the Group Audit and Risk Committee
and the work it has undertaken during the year. The primary function of the
Audit and Risk Committee is to assist the Board in fulfilling its
responsibilities to protect the interests of shareholders with regard to the
integrity of financial reporting, risk management and internal controls and
overseeing the relationship with the external auditor. The role,
responsibilities and work of the Committee can best be understood by reference
to its written terms of reference. These are published on the Company's
website, www.hansard.com (http://www.hansard.com) .
Key responsibilities include:
· monitoring the integrity of the financial statements of the Group,
including its annual and interim reports and other formal announcements
relating to its financial performance.
· reviewing and reporting to the Board on significant financial reporting
issues, accounting policies and judgements.
· reviewing summary financial statements, significant financial returns
to regulators and any other financial information contained in certain other
documents.
· recommending to the Board the appointment, re-appointment and removal
of the external auditor and approving the terms of engagement and
remuneration.
· monitoring the independence of the external auditor and the
provision of non-audit services.
· monitoring the effectiveness and objectivity of the internal and
external auditors.
· reviewing the Group's systems and controls for the prevention of
bribery and procedures for detection of fraud.
· reviewing the effectiveness of internal financial controls and risk
management systems relating to financial reporting; and
· reviewing annually the Group's internal audit requirements and
budget.
Composition and structure
At the date of this report, the members of the Committee were the Group's
Independent Non-executive Directors being David Peach, Jose Ribeiro and Noel
Harwerth. David Peach is the Chair of the Committee. The Board is satisfied
that during the year, and at the date of this report, at least one member of
the Committee has competence in accounting and all members of the Committee
have considerable recent and relevant financial experience and competence
relevant to the sector in which the Company operates.
The Company Secretary acts as the secretary to the Committee. The Chair of the
Committee reports to each subsequent meeting of the Board on the Committee's
work and the Board receives a copy of the minutes of each meeting of the
Committee.
Meetings and frequency
The Committee met on four occasions during the financial year. The members'
attendance record is set out in the Corporate Governance Report.
During the year, the Chair invited the CFO, the other Non-executive Directors,
the Head of Internal Audit and KPMG Audit LLC ("KPMG") (the external auditor)
to attend all meetings of the Committee. Other members of senior management,
including the Group Chief Executive Officer, the Group Chief Actuary and the
Head of Group Risk and Compliance were also invited to attend as appropriate.
It is the Committee's practice to meet separately, at least once a year, with
both the Internal Audit function and with the engagement partner of the
external auditor, without any members of management being present. In
addition, outside the structure of formal meetings, David Peach has had
separate meetings throughout the year directly with the external auditor and
the Internal Audit function. David also meets and has regular contact with the
Chief Executive Officer, the Chief Financial Officer, the Chief Actuary and
the Chief Risk Officer.
In performing its duties, the Committee has access to the services of the
Internal Audit Function, the Company Secretary and, if required, external
professional advisers.
Subsidiary company audit and risk committees
Each of the Group's life assurance subsidiaries has established an audit and
risk committee that provides an oversight role for its own business. The chair
of each of those committees is an Independent Non-executive Director of the
relevant company. Each committee operated throughout the financial year and
considered specifically the reporting of outsourced services and the valuation
of contract holder liabilities, having regard to the opinion of the Chief
Actuary.
The minutes of the meetings of those committees are available to the Group
Audit and Risk Committee which monitors in particular the adherence of the
subsidiaries to regulatory requirements.
Committee activities during the financial year
1. Review of accounting and reporting
During the financial year the Committee:
· agreed the annual audit plan with the external auditor, considered
the auditor's reports and monitored management actions in response to the
issues raised.
· reviewed the annual and half-yearly report and accounts, including
the external auditor's reports, and associated announcements.
· reviewed the reports and projections of the head of actuarial
function and considered any implications for disclosures.
· monitored the submission of key regulatory returns.
· monitored compliance with the relevant parts of the UK Corporate
Governance Code, the effectiveness of internal controls and reporting
procedures for risk management processes.
· continued to monitor the application of the Group's policy on
whistleblowing, reporting where relevant to the Board; and
· reviewed other Stock Exchange reporting prior to publication of
each announcement.
Whilst reviewing the annual and half-yearly report and accounts, the Committee
focussed on the following areas where significant financial judgements were
required:
· the accounting principles, policies, assumptions, and practices
adopted.
· judgements exercised in the production of the financial results
including the valuation of certain financial investments, deferred origination
costs and deferred income, and the appropriateness of key actuarial
assumptions within financial and regulatory reporting.
· the impact of the ongoing geopolitical position with respect to
valuation and provisioning issues, longer term actuarial assumptions of
contract holder behaviour and going concern disclosures.
· the status of known or potential litigation claims against the
Group including accounting treatment in the financial statements and
judgements made on whether to recognise a provision or contingent liability;
and
· the carrying amount of the investment in subsidiaries in the Parent
Company including an assessment of whether any impairment should be
recognised.
To assist the Committee's review of key judgements around the accounting for
litigation-related contingent liabilities, expert input was received from its
legal advisors.
2. Review of Internal Audit
The Head of Internal Audit reports to the Audit and Risk Committee on the
effectiveness of the Group's systems of risk management and internal control,
the adequacy of those systems to manage business risk and to safeguard the
Group's assets and resources. The Internal Audit Department provides objective
assurance on risks and controls to the Committee.
The plans, the level of resources and the budget of the Internal Audit
Department are reviewed at least annually by the Committee. During the
financial year the Committee monitored and reviewed the effectiveness and
independence of the Internal Audit Department, including consideration of the
plan of assurance and consulting activities (including changes thereof) and
results from completed audits and concluded that the Department was fit for
purpose.
3. Review of External Audit
KPMG Audit LLC (KPMG) was appointed as external auditor in 2020 following a
tender process held in 2019. The Committee does not consider a tender process
is required at present.,
KPMG was re-appointed as auditor for the year ended 30 June 2024 following
shareholder approval at the 2023 AGM.
The Group has in place a policy to ensure the independence and objectivity of
the external auditor. During the year, the Committee performed its annual
review of the independence, effectiveness, and objectivity of KPMG, assessing
the audit firm, the audit partner, and the audit teams. This is performed
through written documentation provided by KPMG which is discussed and
challenged where appropriate by the Committee.
The Committee was satisfied with its compliance with the Code and other
relevant legislation for the year ended 30 June 2024.
Based on the Committee's review and with input from Group management and
Internal Audit, the Committee concluded that the audit service of KPMG was fit
for purpose and provided a robust overall examination of the Group's business
and its associated financial reporting.
The Committee monitored compliance with the Group policy for the provision of
non-audit services by the external auditor. This policy aims to ensure that
external auditor objectivity and independence is safeguarded and sets out the
categories of non-audit services which the external auditor is allowed to
provide to the Group. Financial limits for non-audit related advice and
consultancy work by the external audit firm apply to each company in the Group
with a limit of £25,000 per company per year. Non-audit assignments exceeding
the agreed limits, either individually or cumulatively, must have the prior
approval of the Group Audit and Risk Committee. During the year, the Committee
approved audit related assurance services relating to Solvency II and the Isle
of Man's risk-based solvency regime.
Details of the amount paid to the external auditors during the year for audit
and non-audit related services are set out in note 8 to the consolidated
financial statements.
4. Review of internal controls
The Committee has reported to the Board regarding the review of the Group's
risk management and internal control systems. No material issues were noted.
The Committee considered events during the year and to the date of signing of
the Annual Report and Accounts, including internal reporting structures
together with reporting from Internal Audit, external audit and the Chief
Actuary.
The Committee is cognisant of the changes implemented in the UK Corporate
Governance Code 2024 that relate to internal controls.
5. Review of Committee performance
As part of the external Board performance review this year, the performance of
the Audit and Risk Committee was reviewed. There were no areas of significant
concern, and it was concluded that the Committee had effectively fulfilled its
role.
David Peach
Chair of the Audit and Risk Committee
25 September 2024
REPORT OF THE Nominations Committee
This report provides details of the role of the Nominations Committee and the
work it has undertaken during the year.
Purpose and terms of reference
The role, responsibilities and work of the Committee can best be understood by
reference to its written terms of reference. These are published on the
Company's website. A summary is set out below:
· to regularly review the structure, size and composition required of the
Board (including a review of the scope to further promote diversity of skills,
social and ethnic background, nationality, experience, cognitive and personal
strengths, knowledge, outlook, approach, and gender) and the membership of the
Committees and make recommendations to the Board with regard to any changes.
· to consider succession planning processes for Directors and executive
management positions and the opportunities available to the Company to further
promote diversity and inclusion; and
· to be responsible for identifying and nominating for the approval of
the Board, candidates to fill Board vacancies as and when they arise.
The Committee keeps under review the balance of skills on the Board and the
knowledge, experience, length of service and performance of the Directors. It
also reviews their external interests with a view to identifying any actual,
perceived, or potential conflicts of interests, including the time available
to commit to their duties to the Company. Prior to accepting any additional
external appointments Directors are required to seek the Board's approval.
The Committee regularly reviews the structure, size and composition of the
Board and Board Committees. This review considers the knowledge, skills and
experience of the Directors, and the diversity on the Board and each of its
Committees, to ensure they are effective in meeting current and future
challenges. The skills and experience of the Board are mapped against desired
skills using objective criteria to create a skills matrix.
The Group ensures that each of its companies is compliant with relevant
applicable legislation relating to health and safety, employment legislation
including sex, race, and other discrimination rules, in striving to be an
equal opportunity employer. The Group's recruitment process seeks to find
candidates most suited for the job.
The Group respects the dignity of individuals and their beliefs and does not
tolerate any sexual, racial, physical or any other form of harassment of
employees nor tolerate any discrimination in the workplace.
Membership
At the date of this report, the members of the Committee were the Independent
Non-executive Directors David Peach, Jose Ribeiro and Noel Harwerth, and the
Non-executive Group Chair, Philip Kay. Philip Kay is Chair of the
Committee.
The Company Secretary acts as the secretary to the Committee. The Chair of the
Committee reports to each subsequent meeting of the Board on the Committee's
work and the Board receives a copy of the minutes of each meeting of the
Committee.
Activities of the Committee during the year
The Committee met on four occasions during the year. The members' attendance
record is set out in the Corporate Governance Report.
During the year and to the date of this report the Committee considered the
following:
· considered and accepted the resignation of Christine Theodorovics as
Independent Non-executive Director and commenced the process for the
recruitment of a successor.
· considered and accepted the resignation of Ailish Sherlin as Chief
Actuary and the appointment of Alan Canny as successor.
· reviewed the structure, size, and composition of the Board.
· reviewed the skills, experience, and knowledge of each Board member
and of the Board as a whole.
· reviewed the time commitment required from the Chair and
Non-executive Directors to fulfil their roles.
· instructed Boston Limited to conduct a Board Performance Review by
way of a survey sent to all Directors plus the Company Secretary and Chief
Risk Officer.
· appointed Sapphire Partners, who have no connection to the Company or
individual Directors, to support the search for a replacement Independent
Non-executive Director.
· considered and accepted the resignation of Graham Sheward as Group
CEO and executive Director.
· considered and appointed Thomas Morfett as Group CEO.
· considered and appointed Noel Harwerth OBE as successor for Christine
Theodorovics as Independent Non-executive Director.
Directors' appointments and induction
The Board has a formal procedure in respect of the appointment of new
Directors, with the Nominations Committee leading the process and making
recommendations to the Board. The Company has in place an induction programme
for new Directors to provide them with a full, formal, and tailored induction
on joining the Board, which ensures that they attain sufficient knowledge of
the Company to discharge their duties and responsibilities effectively.
Diversity
The Committee and Board acknowledges the importance of diversity, including
gender diversity, for the Company. The Board acknowledges the FCA Policy
Statement on Diversity and Inclusion on company boards and executive
management, which sets out targets as follows:
· At least 40% of the board are women.
· At least one of the following senior board positions is held by a
woman - Chair, Chief Executive Officer (CEO), Senior Independent Director
(SID) or Chief Financial Officer (CFO); and
· At least one board member is from a minority ethnic background,
defined by reference to the categories recommended by the Office for National
Statistics, excluding those listed as coming from a White ethnic background.
For the purposes of making the disclosures set out below, data was collected
through self-reported submissions from the Board and Executive Committee.
Number of board members Percentage of the board Number of senior positions in the board (CEO, CFO, SID and Chair) Number in Executive Committee Percentage of Executive Committee
Men 5 80% 4 6 67%
Women 1 20% 0 3 33%
Not specified/prefer not to say
Number of board members Percentage of the board Number of senior positions in the board (CEO, CFO, SID and Chair) Number in Executive management Percentage of Executive management
White British 3 60% 3 9 100%
White other (including minority white groups) 2 20% 1
Mixed/
Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/ Black British
Other ethnic group, including Arab 1 20%
Not specified/ prefer not to say
The Company is committed to increasing diversity at board level. Supported by
an independent executive search firm we are in the process of appointing two
experienced female Independent Non-executive Directors to the Board. The
first appointment is Noel Harwerth OBE, who was appointed to the Board on 23
September, and we expect to announce the second appointment later in the
calendar year.
Review of Committee Performance
The Chair had regular meetings during the year with the Group Chief Executive
Officer, Group Chief Financial Officer, and the Non-executive Directors. In
addition, after each Board meeting, the Chair held informal sessions with the
full Board (without management being present) and with only the Independent
Non-executive and Non-executive Directors in attendance (without executive
Directors being present). A review of the performance of the Chair was
performed by the Non-executive Directors led by the Senior Independent
Director.
Philip Kay
Chair of the Nominations Committee
25 September 2024
REPORT OF THE Remuneration Committee
This report provides details of the role of the Committee and the work it has
undertaken during the year.
Purpose and terms of reference
The key responsibilities of the Committee are to:
· determine and make recommendations to the Board on the overall
remuneration policy and the remuneration packages of the executive Directors,
the Company Secretary, and such other members of the Executive Committee as it
considers appropriate.
· ensure that remuneration is designed to support strategy and
promote the long-term sustainable success of the Group.
· review the executive Directors' service contracts.
· review the design and operation of share incentive schemes; and
· oversee any changes in employee benefit structures throughout the
Group.
As such the remuneration policy is designed to:
· recognise the need to be competitive in an international market,
though taking account of the local knowledge and packages in the UK and the
Isle of Man.
· support key business strategies and create a strong,
performance-orientated environment.
· attract, motivate, and retain talent; and
· be aligned to proper risk management consistent with risk
tolerance set out by the Board as part of its strategy.
The role, responsibilities and work of the Committee can best be understood by
reference to its terms of reference. These are published on the Company's
website.
Membership
As at the date of this report, members of the Committee are the Independent
Non-executive Directors David Peach, Jose Ribeiro and Noel Harwerth and the
Non-executive Group Chair, Philip Kay. The Committee is chaired by Jose
Ribeiro.
The Company Secretary acts as the secretary to the Committee. The Chair of the
Committee reports to each subsequent meeting of the Board on the Committee's
work and the Board receives a copy of the minutes of each meeting of the
Committee.
Activities of the Committee during the year
During the year there were five meetings of the Committee. The members'
attendance record is set out in the Corporate Governance Report.
At the request of the Committee Chair, the CEO also attends meetings and makes
recommendations to the Committee regarding changes to particular remuneration
packages (excluding himself) or to policies generally. Such recommendations
are discussed by the Committee and adopted or amended as it sees fit. The Head
of People and Culture provides all necessary support to the Remuneration
Committee in executing their duties.
At the request of the Committee, the Head of People and Culture engaged with
Polymetrix Ltd to provide benchmarking data on remuneration. Polymetrix has no
connection with the Company.
During the year the Committee also received advice from FIT Remuneration
Consultants LLP ("FIT"). FIT was appointed to advise the Committee in 2022.
FIT has no other connection with the Company (or its Directors) and the
Committee is satisfied that the advice received from FIT in the 2024 financial
year was independent and objective.
During the year and to the date of this report, the Committee addressed issues
concerning remuneration and incentive schemes implemented by the Group, in
particular:
· agreed the weighting of the corporate performance objectives for
the bonus schemes for the year ended 30 June 2024 and assessed achievement of
these.
· agreed awards to be made under bonus schemes for the year ended 30
June 2024.
· agreed executive Director bonuses for the year ended 30 June 2024.
· reviewed Directors' fees for the Company and subsidiary
appointments for the year ending 30 June 2024.
· reviewed incentive provision.
· reviewed employee benefits.
· reviewed and approved the remuneration policy.
· agreed the continuation of enhanced annual bonus provision for 2025
for Executive Directors (CEO and CFO).
· agreed that share awards granted to date (393,300) under the terms of
the deferred bonus scheme for Graham Sheward would vest on 31(st) December
2024. These were awards of shares in respect of annual bonuses for 2022 and
2023.
· agreed the weighting of the corporate performance objectives for the
bonus schemes for the year ended 30 June 2025.
Summary of remuneration policy
As an Isle of Man registered company, the Company is not required to present a
remuneration policy in the format required by the UK Companies Act. However,
the following information is provided to summarise the remuneration policy.
Policy on salary of Executive Directors
It is the policy of the Committee to pay base salaries to the Executive
Directors at broadly market rates (taking account of the Isle of Man location
where relevant) compared with those of executives of companies of a similar
size and international scope, whilst also taking into account the executives'
personal performance and the performance of the Group. In addition, reliance
is placed on the People and Culture function to provide appropriate
benchmarking data.
The CEO salary was reviewed during 2023. After due care and consideration, the
Committee determined that the salary was appropriate for the size and scope of
the role on the basis of the decision made on appointment to reflect a lower
fixed base salary with a higher variable element and therefore was not
increased following the review.
Name Salary as at 30 June 2024 Salary as at 30 June 2023 Increase
Graham Sheward (CEO) £250,000 £250,000 N/A
Thomas Morfett (CFO) * £150,000 £150,000 N/A
* With effect from 2(nd) August 2024, Thomas Morfett was appointed CEO and
will receive a base salary of £250,000 per annum.
Cash-settled bonus scheme
The Committee approved the continuation of a bonus scheme for all employees.
The terms of the scheme that became effective from 1 July 2018 incorporate
targets for both company and individual performance. Bonuses earned will be
paid in the October following the end of the financial year.
Deferred Bonus Scheme
Our executive Directors participate in a bespoke version of the firm-wide
bonus scheme that is overseen by the Committee. Potential earnings under the
bonus scheme for the executive Directors range from nil to 100% of salary. On
appointment of a new CFO, an appropriate maximum annual bonus will be set, but
not exceeding 100% of basic salary.
50% of any bonus awarded is paid in cash and 50% in shares deferred for 3
years as governed by the shareholder-approved deferred bonus scheme.
The deferred bonus scheme was approved at the AGM on 8 November 2016 and has
been the only long-term element of incentive pay operated by the Company.
All annual bonus payments are made at the discretion of the Committee and the
Committee has full discretion to override the formulaic outcomes of any
performance conditions that apply to the annual bonus scheme should that be
considered appropriate in any case. Malus and clawback provisions may be
operated as appropriate in respect of cash amounts payable under the annual
bonus scheme or in respect of awards of deferred shares made under the
deferred bonus scheme. There was no operation of either malus or clawback in
the 2024 financial year.
Continuation of enhanced annual bonus provision for 2025
Prior to the 2024 financial year, the Committee undertook a review of
incentive provision for our executive Directors and other senior
executives. While consideration was given to introducing a forward-looking
share-based long-term incentive (beyond our existing deferred bonus plan) at
market-normal levels for a company of Hansard's scale and business type,
having considered the priorities of the business and our shareholders, the
Committee determined that it was more practical and of greater benefit to
shareholders to provide for enhanced annual bonus potential for our executive
Directors rather than establishing a new share plan. This is intended to
provide appropriate incentive opportunities and a retention mechanism for
participants. This enhanced annual bonus potential was first available for
2024 and will be available also for 2025.
Accordingly, for 2025, the maximum bonus potential available to the CEO will
be enhanced by a further 40% of base salary, to provide 140% of base salary as
the maximum annual bonus. This enhanced maximum annual bonus opportunity
may also be made available to the new CFO following appointment. The annual
bonus plan remains overseen by the Committee, and the Committee will ensure
that the element within the 2024/25 annual bonus relating to this enhanced
potential will be available only if demanding performance metrics (which may
include financial, shareholder value and strategic non-financial measures) are
achieved to the Committee's satisfaction. Any amounts payable under the
enhanced potential are payable in cash.
SAYE Share-save Programme
No options over shares were exercised under the Scheme rules during the year
(2023: nil).
At the date of this report, the following options remain outstanding under
each tranche:
2024 2023
No. of No. of
Scheme year options Options
2018 - 29,031
- 29,031
The scheme was renewed for a further 10 years at the AGM in 2017.
Employee Benefit Trust
An Employee Benefit Trust ("EBT") was established in February 2018 in order to
provide certain discretionary share-based awards as part of an overall
compensation and retention package. During the year 700,000 shares were
purchased and transferred into the EBT. As at 30 June 2024 the EBT held
1,257,000 shares (2023: 557,000).
Policy on fees for Non-executive Directors
It is our policy to set the fees for each Non-executive Director so that they
reflect the time commitment in preparing for and attending meetings, the
responsibility and duties of the position and the contribution that is
expected from them. Our policy is to pay a market rate which is set annually
by the Board.
President and controlling shareholder
Dr Leonard Polonsky was appointed President of the Group under a letter of
appointment effective from 22 September 2014. This letter incorporates the
requirements of the Listing Rules in relation to Dr Polonsky as controlling
shareholder of the Group.
A summary of the agreement, dated 22 September 2014, governing his
relationship with the Group is available for inspection at the Company's
registered office and will be made available to shareholders at the AGM. To
maintain effective corporate governance, the agreement contains the following
terms:
· all transactions between Dr Polonsky and the Group are to be conducted
at arm's length and on normal commercial terms.
· Dr Polonsky will take no actions which would prevent the Company from
complying with its obligations under the Listing Rules or propose a resolution
to circumvent the proper application of the Listing Rules.
· Dr Polonsky will exercise his voting rights to ensure a requisite
number of Independent Non-executive Directors are appointed to and retained by
the Board; and
· Dr Polonsky will consult with Independent Non-executive Directors
where proposals have been made by the Board in relation to its composition.
There were no significant transactions between the Group and Dr Polonsky
during the year under review, per page 34 Director's Report.
Summary of Directors' employment terms and conditions
In accordance with the Articles of Association all Directors are subject to
annual re-election. All Directors subject to election/re-election on 8
November 2023 were re-elected at the AGM held at that date. None of the
Directors are engaged on a fixed term contract.
The key terms and benefits of the contractual arrangements between each
Director and the Company are as follows:
Thomas Morfett - Group Chief Executive Officer & Group Chief Financial
Officer. The Service Agreement in place sets out the contractual employment
arrangements, the key terms being Company contribution into personal pension
arrangements; private healthcare for himself and his spouse; permanent health
insurance; life assurance; full-pay sick leave for a maximum of eight weeks of
absence, whether or not consecutive, in any 12-month period due to illness or
injury and 30 days annual leave in addition to public holidays. Other than
the right to receive a payment in lieu of notice upon termination, his service
agreement dated 19 January 2023 does not provide for any benefits upon
termination of employment. The notice period (by either party) is six
months.
Thomas was appointed to the Board on 17 April 2023. Thomas is a member of the
deferred bonus scheme, which is based on corporate and individual performance,
as set out on page 78.
Non-executive Directors.
The appointment of each Non-executive Director has been confirmed by an
individual letter of appointment which includes a one month notice provision.
The Non-executive Directors do not have service contracts or any
benefits-in-kind arrangements and do not receive any performance-related
remuneration.
Stakeholder engagement
During the past year we have received feedback on remuneration from certain
key shareholders through Non-executive Board member engagement. There is
also an avenue for communication and feedback through our corporate broker
relationships.
During the year we undertook an employee engagement survey to understand the
key drivers of engagement for our people. Results from the survey, which
included feedback to defined and open questions, were then explored and
debated further during employee feedback sessions where we encouraged open and
honest debate. During these sessions, our approach to remuneration was
discussed in more detail. Feedback from those sessions was relayed to both
the Executive Committee and the Board and has informed priorities for our
action planning and Culture programme.
Directors' Remuneration for Financial Year 2023/24
The following information, including the table below, includes audited
information.
Name Salary Cash Deferred
and fees Pension Bonus Bonus(2) Other (3) Aggregate Aggregate
2024 2024 2024 2024 2024 2024 2023
£ £ £ £ £ £ £
Executive Directors
Graham Sheward (CEO) 250,000 25,000 - - 1,729 276,729 434,228
Thomas Morfett (CFO) 150,000 18,750 33,750 33,750 1,377 237,627 31,053
Non-executive Directors
Marc Polonsky 50,000 50,000
Jose Ribeiro 59,000 55,000
Philip Kay 105,000 77,500
David Peach 80,000 80,000
Christine Theodorovics (1) 27,115 22,180
Total 985,902
1 Christine Theodorovics - resigned 29(th) February 2024
2 The deferred bonus is awarded in shares and deferred for a period of 3 years
prior to vesting.
3 "Other" includes healthcare benefits.
Annual Bonus for Executive Directors for Financial Year 2023/24
For financial year 2023/24 the CEO's performance was not assessed due to his
decision to retire as disclosed on 2(nd) August 2024.
Share awards accrued to date under the deferred bonus scheme will vest on
31(st) December 2024.
The Committee conducted as assessment of the CFO's performance against his
objectives for 2023/24. Objectives related to the achievement of the
Company's principal strategic objectives with a focus on strategic projects,
leadership, expenses and IFRS profit. They determined that the formulaic
outcome of the assessment was 90% of the maximum and that this outcome was
justified. Accordingly, the Committee agreed to apply a figure of 45% of
base salary, 50% awarded in cash (£33,750) and 50% in shares deferred for 3
years under the deferred bonus scheme.
Executive management deferred bonus scheme awards
In addition to the Executive Directors, the remaining members of the Executive
Committee also participate in the deferred bonus scheme. This scheme
resulted in the award of £0.2m worth of shares which are deferred for a
period of 3 years.
Directors' interests in share capital
The following information, presented in the table below, includes audited
information.
There are currently no requirements for any Director to have a shareholding in
the Company. The Company also does not have a policy for post-employment
shareholding requirements.
The Polonsky Foundation (a UK Registered Charity of which Dr Polonsky and Marc
Polonsky are among the trustees) has a beneficial interest in 8,547,708 shares
in the Company's share capital, or 6.2% (2023: 6.2%).
The table set out below shows the beneficial interests of other Directors and
their spouses in the Company's share capital, at 30 June 2024 and at 30 June
2023.
Total Total
Number of shares Direct Indirect 2024 Direct Indirect 2023
Executive Directors
Graham Sheward 19,766 - 19,766 17,000 - 17,000
Thomas Morfett 74,899 - 74,899 - - -
Non-executive Directors
Philip Kay - - - - - -
Jose Ribeiro - - - - - -
Marc Polonsky(1) 7,800,000 - 7,800,00 7,800,000 - 7,800,000
David Peach - - - - - -
Christine Theodorovics - - - - - -
( )
(1) Direct holdings include shares held by spouse.
There have been no other significant changes in these holdings between the
balance sheet date and the date of this report.
The Committee will continue to consider whether it may be appropriate to
introduce guidelines for executive Directors' shareholdings in the future and
will do so in connection with the introduction of any new long-term incentive
plan operating over the Company's shares. This will include consideration of
a policy for post-employment shareholding requirements.
Directors' salaries and fees for the financial year ending 30 June 2025
The following table sets out the salary and fee levels approved by the
Remuneration Committee for the year ending 30 June 2025 for each Director, as
agreed by the Board. There have been no changes in relation to non-salary
benefits applicable to any Director.
Name Salary and Fees 2025
£
Executive Directors
Thomas Morfett (CEO & CFO) 250,000
Non-executive Directors
Marc Polonsky 50,000
Jose Ribeiro(1) 63,000
Philip Kay(2) 120,000
David Peach(3) 80,000
Noel Harwerth(4) 50,000
Total
1 The amount for Jose Ribeiro includes additional fees in relation to his
position as Chair of the Remuneration Committee and as SID.
2 The amount for Philip Kay includes additional fees in relation to his
position as Chair of the Board and Chair of Hansard Europe dac.
3 The amount for David Peach includes additional fees in relation to his
position as Chair of the Audit and Risk Committee and Directorship (and Chair
of the Audit Committee) of Hansard Europe dac. He is also a Director of
Hansard Administration Services Limited.
4 The amount for Noel Harwerth will be pro-rated from her appointment
date of 23 September 2024.
Bonus and incentive arrangements for 2025 for Thomas Morfett are outlined in
the Review of Incentive Provision 2024 earlier in this report.
Compliance with Code
As mentioned above, the Company has not fully complied with provision 36 of
the Code in the following respect:
· The Company does not currently have a policy for post-employment
shareholding requirements.
Jose Ribeiro
Chair of the Remuneration Committee
25 September 2024
Requirements of Rule 9.8.4R of the Listing Rules
The following table provides references to where the information required by
Listing Rule 9.8.4R is disclosed.
Listing Rule requirement Location in annual report
A statement of the amount of interest capitalised during the period under Not applicable
review and details of any related tax relief.
Information required in relation to the publication of unaudited financial Not applicable
information.
Details of any long-term incentive schemes. Report of the Remuneration Committee, pages 76 to 82
Details of any arrangements under which a Director has waived emoluments, or Report of the Remuneration Committee, pages 76 to 82
agreed to waive any future emoluments, from the company.
Details of any non-pre-emptive issues of equity for cash. No such share allotments
Details of any non-pre-emptive issues of equity for cash by any unlisted major Not applicable
subsidiary undertaking.
Details of any contract of significance in which a Director is or was Not applicable
materially interested.
Details of any contract of significance between the company (or one of its Directors' Report, pages 34 to 38
subsidiaries) and a controlling shareholder.
Details of waiver of dividends by a shareholder. Not applicable
Board statement in respect of relationship agreement with the controlling Report of the Remuneration Committee, pages 76 to 82
shareholder.
Details of any contract for the provision of services to the Company or any of Not applicable
its subsidiary undertakings by a controlling shareholder, subsisting during
the period under review.
Independent Auditor's Report to the Members of Hansard Global plc
Our opinion is unmodified
We have audited the financial statements of Hansard Global plc ("the
Company") and its subsidiaries (together, the 'Group') which comprise the
consolidated balance sheet and parent company balance sheet as at 30 June
2024, the consolidated statements of comprehensive income, changes in equity
and cash flows and parent company statements of changes in equity and cash
flows for the year then ended, and related notes, comprising material
accounting policies and other explanatory information.
In our opinion,
· the financial statements give a true and fair view of the financial
position of the Group's and of the Company's affairs as at 30 June 2024, and
of the Group's profit for the year then ended;
· the Group financial statements have been properly prepared in
accordance with UK- Adopted International Accounting Standards;
· the Company financial statements have been properly prepared in
accordance with UK Accounting Standards including FRS 102 The Financial
Reporting Standard applicable in the UK and Republic of Ireland; and
· the financial statements have been properly prepared in accordance
with the requirements of the Companies Acts 1931 to 2004.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities are described
below. We have fulfilled our ethical responsibilities under, and are
independent of, the Company and Group in accordance with UK ethical
requirements including the FRC Ethical Standard as required by the Crown
Dependencies' Audit Rules and Guidance. We believe that the audit evidence we
have obtained is a sufficient and appropriate basis for our opinion.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these
matters. In arriving at our audit opinion above, the key audit matters, in
decreasing order of significance for the financial statements were as follows:
Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at £297K
(2023: £300K), determined with reference to a benchmark of Group profit
before tax. Materiality for the Company financial statements as a whole was
set at £178K (2023: £150K), determined with reference to the allocated Group
materiality as above, of which it represents 60% (2023: 50%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that individually
immaterial misstatements in individual account balances add up to a material
amount across the financial statements as a whole. Performance materiality was
set at 75% (2023: 75%) of materiality for the financial statements as a whole,
which equates to £222K (2023: £225K) for the Group and £134K (2023: £112K)
for the Company.
In addition, we have set a higher materiality at £10,200K (2023: £10,000K)
solely for the purpose of identifying and evaluating the effect of
misstatements that lead to a reclassification between line items within the
policyholder assets and liabilities and associated income statement line items
in the Group financial statements, to the extent that any such balances offset
and have no net impact on the shareholder's equity and reserves. This has been
determined in reference to 0.75% (2023: 0.75%) of total assets.
We reported to the Audit Committee any corrected or uncorrected identified
misstatements exceeding £14.85K (2023: £15K) for the Group and £8.9K (2023:
£7.4K) for the Company, in addition to other identified misstatements that
warranted reporting on qualitative grounds. For certain financial statement
captions, as referred to above, any corrected or uncorrected identified
misstatements exceeding £510K (2023: £500K) have been reported to the Audit
Committee.
Our audit of the Group was undertaken to the materiality level specified
above, which has informed our identification of significant risks of material
misstatement and the associated audit procedures performed in those areas as
detailed above.
The group team performed the audit of the Group as if it was a single
aggregated set of financial information. The audit was performed using the
materiality level set out above and covered 100% of total Group revenue, total
Group profit before tax, and total Group assets and liabilities.
Going concern
The directors have prepared the financial statements on the going concern
basis as they do not intend to liquidate the Group or the Company or to cease
their operations, and as they have concluded that the Group and the Company's
financial position means that this is realistic. They have also concluded that
there are no material uncertainties that could have cast significant doubt
over their ability to continue as a going concern for at least a year from the
date of approval of the financial statements (the "going concern period").
In our evaluation of the directors' conclusions, we considered the inherent
risks to the Group and the Company's business model and analysed how those
risks might affect the Group and the Company's financial resources or ability
to continue operations over the going concern period. The risks that we
considered most likely to affect the Group and the Company's financial
resources or ability to continue operations over this period were:
· Availability of capital to meet operating costs and other
financial commitments; and
· Availability of capital to meet regulatory and solvency
requirements.
We considered whether these risks could plausibly affect the liquidity in the
going concern period by comparing severe, but plausible downside scenarios
that could arise from these risks individually and collectively against the
level of available financial resources indicated by the Group's and Company's
financial forecasts.
We considered whether the going concern disclosure in note 1.4 to the Group
financial statements gives a full and accurate description of the directors'
assessment of going concern.
Our conclusions based on this work:
· we consider that the directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate;
· we have not identified, and concur with the directors' assessment
that there is not, a material uncertainty related to events or conditions
that, individually or collectively, may cast significant doubt on the Group
and the Company's ability to continue as a going concern for the going concern
period; and
· we have nothing material to add or draw attention to in relation
to the directors' statement in the notes to the financial statements on the
use of the going concern basis of accounting with no material uncertainties
that may cast significant doubt over the Group and the Company's use of that
basis for the going concern period, and that statement is materially
consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the above conclusions are not
a guarantee that the Group and the Company will continue in operation.
Fraud and breaches of laws and regulations - ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud ("fraud risks") we
assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
· enquiring of management as to the Group's policies and procedures to
prevent and detect fraud as well as enquiring whether management have
knowledge of any actual, suspected or alleged fraud;
· reading minutes of meetings of those charged with governance; and
· using analytical procedures to identify any unusual or unexpected
relationships.
As required by auditing standards and taking into account possible incentives
or pressures to misstate performance and our overall knowledge of the control
environment, we perform procedures to address the risk of management override
of controls and the risk of fraudulent revenue recognition, and the risk that
management may be in a position to make inappropriate accounting entries. We
did not identify any additional fraud risks.
We performed procedures including:
· identifying journal entries and other adjustments to test based on
risk criteria and comparing any identified entries to supporting
documentation;
· incorporating an element of unpredictability in our audit procedures
and;
· those set out in the revenue recognition key audit matter.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected
to have a material effect on the financial statements from our sector
experience and through discussion with management (as required by auditing
standards), and from inspection of the Group's regulatory and legal
correspondence, if any, and discussed with management the policies and
procedures regarding compliance with laws and regulations. As the Group is
regulated, our assessment of risks involved gaining an understanding of the
control environment including the entity's procedures for complying with
regulatory requirements.
The Group and Company are subject to laws and regulations that directly affect
the financial statements including financial reporting legislation and
taxation legislation and we assessed the extent of compliance with these laws
and regulations as part of our procedures on the related financial statement
items.
The Group and Company are subject to other laws and regulations where the
consequences of non-compliance could have a material effect on amounts or
disclosures in the financial statements, for instance through the imposition
of fines or litigation or impacts on the Group and the Company's ability to
operate. We identified financial services regulation as being the area most
likely to have such an effect, recognising the regulated nature of the Group's
activities and its legal form. Auditing standards limit the required audit
procedures to identify non-compliance with these laws and regulations to
enquiry of management and inspection of regulatory and legal correspondence,
if any. Therefore, if a breach of operational regulations is not disclosed to
us or evident from relevant correspondence, an audit will not detect that
breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
that we may not have detected some material misstatements in the financial
statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the inherently limited
procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection
of fraud, as this may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures
are designed to detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a material
inconsistency between the directors' disclosures in respect of emerging and
principal risks and the viability statement, and the Group financial
statements and our audit knowledge. We have nothing material to add or draw
attention to in relation to:
· the directors' confirmation within the longer-term viability
statement (page 38) that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those that would
threaten its business model, future performance, solvency or liquidity;
· the emerging and principal risks disclosures describing these
risks and explaining how they are being managed or mitigated; and
· the directors' explanation in the longer-term viability statement
(page 38) as to how they have assessed the prospects of the Group, over what
period they have done so and why they consider that period to be appropriate,
and their statement as to whether they have a reasonable expectation that the
Group will be able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to review the longer-term viability statement, set out on
page 38 under the Listing Rules. Based on the above procedures, we have
concluded that the above disclosures are materially consistent with the Group
financial statements and our audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material
inconsistency between the directors' corporate governance disclosures and the
Group financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is
materially consistent with the Group financial statements and our audit
knowledge:
• the directors' statement that they consider that the annual report
and Group financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for shareholders to
assess the Group's position and performance, business model and strategy;
• the section of the annual report describing the work of the Audit
Committee, including the significant issues that the Audit Committee
considered in relation to the financial statements, and how these issues were
addressed; and
• the section of the annual report that describes the review of the
effectiveness of the Group's risk management and internal control systems.
We are required to review the part of Corporate Governance Statement relating
to the Company's compliance with the provisions of the UK Corporate Governance
Code specified by the Listing Rules for our review. We have nothing to report
in this respect.
We have nothing to report on other matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Acts 1931 to 2004 require us to report to you if, in our opinion:
· proper books of account have not been kept by the Company and proper
returns adequate for our audit have not been received from branches not
visited by us; or
· the Company financial statements are not in agreement with the books
of account and returns; or
· certain disclosures of Directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we require
for our audit.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 39, the directors
are responsible for: the preparation of the financial statements including
being satisfied that they give a true and fair view; such internal control as
they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error; assessing the Group and Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either intend to
liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue our opinion in an auditor's report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC's website
at www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) .
The purpose of this report and restrictions on its use by persons other than the Company's members as a body
This report is made solely to the Company's members, as a body, in accordance
with section 15 of the Companies Act 1982. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Nicholas Quayle
Responsible Individual
For and on behalf of KPMG Audit LLC
Chartered Accountants and Recognised Auditors
Heritage Court
41 Athol Street
Douglas
Isle of Man IM1 1LA
25 September 2024
Financial results under
UK Adopted International Accounting Standards
For the year ended
30 June 2024
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2024
Year ended Year ended
30 June 30 June
2024 2023
Notes £m £m
Fees and commissions 5 48.8 45.7
Investment income 6 119.5 44.5
Other operating income 0.8 1.5
169.1 91.7
Change in provisions for investment contract liabilities 17 (114.4) (40.6)
Origination costs 7 (16.1) (16.2)
Administrative and other expenses 8 (33.3) (29.0)
(163.8) (85.8)
Profit before taxation 5.3 5.9
Taxation 10 (0.1) (0.2)
Profit and total comprehensive income for the year
after taxation 5.2 5.7
Earnings per share
2024 2023
Note (p) (p)
Basic 11 3.8 4.1
Diluted 11 3.8 4.1
The notes on pages 98 to 132 form an integral part of these financial
statements.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2024
Share Other Retained
capital reserves earnings Total
£m £m £m £m
At 1 July 2022 68.8 (48.3) 1.7 22.2
Profit and total comprehensive income for the - - 5.7 5.7
year after taxation
Share based payment reserve - (0.2) - (0.2)
Transactions with owners
Dividends paid - - (5.9) (5.9)
At 30 June 2023 68.8 (48.5) 1.5 21.8
Share Other Retained
capital reserves earnings Total
£m £m £m £m
At 1 July 2023 68.8 (48.5) 1.5 21.8
Profit and total comprehensive income for the - - 5.2 5.2
year after taxation
Share based payment reserve - (0.1) - (0.1)
Transactions with owners
Dividends paid - - (6.1) (6.1)
At 30 June 2024 68.8 (48.6) 0.6 20.8
The notes on pages 98 to 132 form an integral part of these financial
statements.
Consolidated Balance Sheet
As at 30 June 2024
30 June 2024 30 June 2023
Notes £m £m
Assets
Intangible assets 13 23.2 19.9
Property, plant and equipment 13 2.6 2.8
Deferred origination costs 14 112.1 117.8
Financial investments
Measured at fair value:
Equity securities 3 78.9 52.0
Investments in collective investment schemes 3 937.5 915.5
Fixed income securities, bonds and structured notes 3 70.6 63.3
1,087.0 1,030.8
Measured at amortised cost:
Deposits and money market funds 3 88.2 90.2
Other receivables 15 6.3 4.9
Cash and cash equivalents 16 47.9 52.2
Total assets 1,367.3 1,318.6
Liabilities
Financial liabilities under investment contracts 17 1,150.9 1,101.5
Deferred income 18 140.2 144.8
Amounts due to investment contract holders 17 39.3 36.6
Other payables 19 15.6 13.8
Provisions 20 0.5 0.1
Total liabilities 1,346.5 1,296.8
Net assets 20.8 21.8
Shareholders' equity
Called up share capital 22 68.8 68.8
Other reserves 23 (48.6) (48.5)
Retained earnings 0.6 1.5
Total shareholders' equity 20.8 21.8
The notes on pages 98 to 132 form an integral part of these financial
statements.
The financial statements on pages 94 to 97 were approved by the Board on 25
September 2024 and signed on its behalf by:
Thomas
Morfett
David Peach
Director
Director
Consolidated Cash Flow Statement
for the year ended 30 June 2024
2024 2023
£m £m
Cash flow from operating activities
Profit before tax for the year 5.3 5.9
Adjustments for:
Depreciation 1.0 1.1
Dividends (5.4) (4.7)
receivable
Dividends received 5.4 4.7
Interest receivable (4.7) (3.0)
Interest received 4.2 3.0
Foreign exchange losses - 1.0
Changes in operating assets and liabilities
Increase in other receivables (0.9) (0.6)
Decrease in deferred origination costs 5.8 4.7
(Decrease) in deferred income (4.5) (0.4)
Increase / (decrease) in creditors 4.9 (1.7)
(Increase) in financial investments (54.2) (11.7)
Increase in financial liabilities 49.4 9.1
Cash flow from operations 6.3 7.4
Corporation tax paid (0.1) (0.4)
Cash flow from operations after taxation 6.2 7.0
Cash flows from investing activities
Investment in intangible assets (3.7) (6.6)
Investment in property, plant and equipment (0.2) -
Proceeds from sale of property, plant and equipment - 0.4
Purchase of investments (0.2) (0.1)
Cash flows used in investing activities (4.1) (6.3)
Cash flows from financing activities
Dividends paid (6.1) (5.9)
Principal elements of leased liabilities (0.2) (0.4)
Cash flows used in financing activities (6.3) (6.3)
Net (decrease) in cash and cash equivalents (4.2) (5.6)
Cash and cash equivalents at beginning of year 52.2 58.9
Effect of exchange rate movements (0.1) (1.1)
Cash and cash equivalents at year end 47.9 52.2
Notes to the consolidated financial statements
1 General Information
Hansard Global plc ("the Company") is a limited liability company,
incorporated in the Isle of Man under the Isle of Man Companies 1931 to 2004,
whose shares are publicly traded. The principal activity of the Company is to
act as the holding company of the Hansard group of companies. The activities
of the principal operating wholly owned subsidiaries include the transaction
of life assurance business and related activities. Hansard Europe was closed
to new business with effect from 30 June 2013. The principal subsidiaries of
the Company are as follows:
Company
name
Incorporated Activity
Hansard International
Limited Isle of
Man Life Assurance
Hansard Worldwide
Limited The
Bahamas Life Assurance
Hansard Europe Designated Activity Company
Ireland Life Assurance
Hansard Administration Services Limited Isle of
Man Administration Services
Hansard Development Services Limited Isle of
Man Marketing and
Development Services
The registered office of the Company is 55 Athol Street, Douglas, Isle of Man,
IM99 1QL.
The Company has its primary listing on the London Stock Exchange.
1.1 Principal accounting policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below or, in the case of
accounting policies that relate to separately disclosed values in the primary
statements, within the relevant note to these consolidated financial
statements. These policies have been consistently applied, unless otherwise
stated.
1.2 Basis of presentation
The consolidated financial statements have been prepared in accordance with UK
Adopted International Accounting Standards ("IFRSs"), International Financial
Reporting Standards Interpretations Committee ("IFRSIC") interpretations, the
Isle of Man Insurance Act 2008, and with the Isle of Man Companies Acts 1931
to 2004. The financial statements have been prepared under the historical cost
convention as modified by the revaluation of financial investments and
financial liabilities at fair value through profit or loss. The Group has
applied all International Financial Reporting Standards adopted by the United
Kingdom and effective at 30 June 2024.
The Group underwrites an immaterial amount of insurance business. Management
has undertaken an assessment of the impact of accounting for this business as
investment business rather than insurance business and concluded that this
would not have a material impact on the financial statements. This assessment
has been refreshed to consider the impact of IFRS 17, and management have not
changed their conclusion that accounting for the business as investment
business would not have a material impact on the financial statements.
Management will keep this assessment under review, and should the outcome
change in future the Group accounting treatment will be reassessed. As a
result, IFRS17 has not been applied to these financial statements.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the reporting year. The estimates and associated assumptions
are based on historical experience and various other factors that are believed
to be reasonable under the circumstances. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which the
estimate is revised if the revision affects only that year or in the year of
the revision and future years if the revision affects both current and future
years.
The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial
statements, are disclosed in note 2.
Except where otherwise stated, the financial statements are presented in
pounds sterling, the functional currency of the Company, rounded to the
nearest one hundred thousand pounds.
The following new standards, amendments and interpretations are in issue but
not yet effective. They have not been adopted early by the Group and the
impact on the financial statements is being assessed:
· Amendments to the classification and measurement of financial
instruments (amendments to IFRS 7 and IFRS 9) - effective from 1 January 2026
· Presentation and disclosure in financial statements (IFRS18) -
effective from 1 January 2027
· Subsidiaries without public accountability (IFRS 19) - effective
from 1 January 2027
There are no other standards, amendments or interpretations to existing
standards that are not yet effective, that would have a material impact on the
Group's reported results.
1.3 Basis of consolidation
The Group's financial statements consolidate those of the parent company and
all its subsidiaries as at 30 June 2024.
All transactions between Group companies are eliminated on consolidation
between Group companies. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
1.4 Going concern
Risk Based Solvency Capital, the Group's capital position is strong and well
in excess of regulatory requirements. The long-term nature of the Group's
business results in considerable recurring cash inflows arising from existing
business. The Directors believe that the Group is well placed to manage its
business risks successfully.
The Directors are satisfied that the Company and the Group have adequate
resources to continue to operate as a going concern for the foreseeable future
and have prepared the consolidated financial statements on that basis.
In making this statement, the Directors have reviewed financial forecasts that
include plausible downside scenarios as a result of the ongoing geopolitical
position and global economic conditions. These show the Group continuing to
generate profit over the next 12 months and that the Group has sufficient cash
reserves to enable it to meet its obligations as they fall due.
The Directors expect the acquisition of new business will continue to be
challenging. The impact of this however is not immediate to the Group's
profit and cash flows and therefore allows for longer term adjustments to
operations and the cost base. Long periods of lower new business, or indeed
lower AuA, would be addressed by reducing the cost base and, where necessary,
the dividend paid.
The following factors are considered as supportive to the Group's resilience
to external market and economic challenges:
· The Group's business model focuses on long term savings products,
a majority of which are regular premium paying products which continue to
receive cash inflows regardless of the amount of new business sold.
· The Group earns approximately a third of its revenues from
asset-based income which is not immediately dependent on sourcing new
business. Initial fees in respect of new business are broadly offset by
initial commissions, limiting the impact of any reduction in new business.
· New business channels are geographically dispersed and therefore
less exposed to specific regional challenges.
· The largest expense associated with new business is commission
expenditure which reduces directly in line with reduced sales.
· The Group has and continues to the date of this report to have, a
strong capital position with significant levels of liquidity and cash.
· The business has demonstrated operational resilience in being
able to operate remotely from its offices without any material impact to
processing and servicing levels. Its control environment continued to
operate effectively during this time.
· The Group places the majority of its shareholder assets into
conservative, highly-liquid, highly rated bank deposits and money market
funds. These are typically not subject to price fluctuation and protect the
Group's assets against potential market volatility; and
· The Group has no borrowings.
2 Critical accounting estimates and judgements in applying
accounting policies
Estimates, assumptions, and judgements are used in the application of
accounting policies in these financial statements. Critical accounting
estimates are those which involve the most complex or subjective judgements or
assessments. Estimates, assumptions, and judgements are evaluated continually
and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. Actual outcomes may differ from assumptions and estimates made
by management.
2.1 Accounting estimates and assumptions
The principal areas in which the Group applies accounting estimates are the
amortisation of deferred origination costs and deferred income, the
recoverability of deferred origination costs, the useful life of intangible
assets, and the fair value of investments.
2.1.1 Amortisation of deferred origination costs and deferred income
Deferred origination costs and deferred income are amortised on a
straight-line basis over the estimated life of the underlying investment
contract. Estimates are determined based on an analysis of recent experience.
The estimate life is between 7 and 15 years depending on the product type.
Certain contracts are amortised on actual life.
2.1.2 Recoverability of deferred origination costs
Formal reviews to assess the recoverability of deferred origination costs on
investment contracts are carried out at each balance sheet date to determine
whether there is any indication of impairment based on the estimated future
income levels.
If, based upon a review of the remaining contracts, there is any indication of
irrecoverability or impairment, the contract's recoverable amount is
re-estimated. Impairment losses are reversed through the consolidated
statement of comprehensive income if there is a change in the estimates used
to determine the recoverable amount. Such losses are reversed only to the
extent that the contract's carrying amount does not exceed the carrying amount
that would have been determined, net of amortisation where applicable, if no
impairment loss had been recognised.
2.1.3 Fair value of financial investments
Where the Directors determine that there is no active market for a particular
financial instrument, fair value is assessed using valuation techniques based
on available relevant information and an appraisal of all associated risks as
detailed in note 3.
2.1.4 Intangible assets
The carrying amount, residual value and useful economic life of the Group's
computer software is reviewed annually to determine whether there is any
indication of impairment, or a change in residual value or expected useful
life. If there is any indication of impairment, the asset's carrying value is
revised.
2.2 Judgements
The primary areas in which the Group has applied judgement in applying
accounting policies are as follows:
· to determine whether a provision or contingent liability is
required in respect of any pending or threatened litigation, which is
addressed in note 20 and note 26.
· to determine the type of expenses that are treated as
origination costs to be deferred. Any other expenses are expensed as
incurred.
3 Financial risk management
Risk management objectives and risk policies
The Group's objective in the management of financial risk is to minimise,
where practicable, its exposure to such risk, except when necessary to support
other objectives. The Group seeks to manage risk through the operation of
unit-linked business whereby the contract holder bears the financial risk. In
addition, shareholder assets are invested in highly rated investments.
Overall responsibility for the management of the Group's exposure to risk is
vested in the Board. To support it in this role, the Group ERM Framework is in
place comprising risk identification, risk assessment, control and reporting
processes. Additionally, the Board and the Boards of subsidiary companies have
established a number of Committees with defined terms of reference. These are
the Audit and Risk, Executive and Investment Committees. Additional
information concerning the operation of the Board Committees is contained in
the Corporate Governance section of this Annual Report.
The main significant financial risks to which the Group is exposed are set out
below. For each category of risk, the Group determines its risk appetite and
sets its investment, treasury and associated policies accordingly.
3.1 Market risk
This is the risk that the fair value of future cash flows of a financial
instrument will fluctuate because of changes in market prices, analysed
between price, interest rate and currency risk. The Group adopts a risk averse
approach to market risk, with a stated policy of not actively pursuing or
accepting market risk except where necessary to support other objectives.
However, the Group accepts the risk that the fall in equity or other asset
values, whether as a result of price falls or strengthening of sterling
against the currencies in which contract holder assets are denominated, will
reduce the level of annual management charge income derived from such contract
holder assets and the risk of lower future profits.
Sensitivity analysis to market risk
The Group's business is unit-linked, and the direct associated market risk is
therefore borne by contract holders (although there is a secondary impact as
shareholder income is dependent upon the fair value of contract holder
assets). Other financial assets and liabilities held outside of contract
holder unitised funds primarily consist of units in money market funds, cash
and cash equivalents, and other assets and liabilities. Cash held in unitised
money market funds and at bank is valued at par and is unaffected by movements
in interest rates. Other assets and liabilities are similarly unaffected by
market movements.
As a result of these combined factors, the Group's financial assets and
liabilities held outside unitised funds are not materially subject to market
risk, and movements at the reporting date in interest rates and equity values
have an immaterial impact on the Group's profit after tax and equity. Future
revenues from annual management charges may be affected by movements in
interest rates, foreign currencies and equity values. The Group does not
control the asset selection strategy as assets are chosen by the contract
holders.
(a) Price risk
Unit linked funds are exposed to securities price risk as the investments held
are subject to prices in the future which are uncertain. The fair value of
financial assets (designated at fair value through profit or loss) exposed to
price risk at 30 June 2024 was £1,087.0m (2023: £1,030.8m). In the event
that investment income is affected by price risk then there will be an equal
and opposite impact on the value of the changes in provisions for investment
contract liabilities in the same accounting period.
An overall change in the market value of the unit-linked funds would affect
the annual management charges accruing to the Group since these charges, which
are typically 1% per annum, are based on the market value of contract holder
assets under administration. The approximate impact on the Group's profits and
equity of a 10% change in fund values, either as a result of price, interest
rate or currency fluctuations, is £1.6m (2023: £1.6m).
(b) Interest rate risk
Interest rate risk is the risk that the Group is exposed to lower returns or
loss as a direct or indirect result of fluctuations in the value of, or income
from, specific assets arising from changes in underlying interest rates.
The Group is primarily exposed to interest rate risk on the balances that it
holds with credit institutions and in money market funds.
Taking into account the proportion of Group funds held on longer-term,
fixed-rate deposits, a change of 1% per annum in interest rates will result in
an increase or decrease of approximately £0.6m (2023: £0.6m) in the Group's
annual investment income and equity.
A summary of the Group's liquid assets at the balance sheet date is set out in
note 3.2.
(c) Currency risk
Currency risk is the risk that the Group is exposed to higher or lower returns
as a direct or indirect result of fluctuations in the value of, or income
from, specific assets and liabilities arising from changes in underlying
exchange rates.
(c) (i) Group foreign currency exposures
The Group is exposed to currency risk on the foreign currency denominated bank
balances, contract fees receivable and other liquid assets that it holds to
the extent that they do not match liabilities in those currencies. The Group
receives 85% (2023: 87%) of premiums in US Dollars and settles the majority of
expenses in Sterling. The impact of currency risk is minimised by regular
conversion of excess foreign currency funds to sterling. The Group does not
hedge foreign currency cash flows.
At the balance sheet date, the Group had exposures in the following
currencies:
2024 2024 2024 2023 2023 2023
US$m €m ¥m US$m €m ¥m
Gross assets 20.1 10.6 303.6 23.2 11.1 255.0
Matching currency liabilities (24.7) (12.7) (593.8) (20.5) (10.4) (285.0)
Uncovered currency exposures (4.6) (2.1) (290.2) 2.7 0.7 (30.3)
Sterling equivalent (£m) (3.6) (1.8) (1.4) 2.1 0.5 (0.2)
The approximate effect on profit before tax of a 5% change: in the value of US
dollars to sterling is £0.2m (2023: £0.1m); in the value of the euro to
sterling is less than £0.1m (2023: less than £0.1m); and in the value of the
yen to sterling is less than £0.1m (2023: less than £0.1m).
(c) (ii) Financial investments by currency
Certain fees and commissions are earned in currencies other than sterling,
based on the value of financial investments held in those currencies from time
to time.
The sensitivity of the Group to the currency risk inherent in investments held
to cover financial liabilities under investment contracts is incorporated
within the analysis set out in (a) above.
At the balance sheet date, the analysis of financial investments by currency
denomination is as follows, US dollars: 75% (2023: 71%); euro: 5% (2023: 8%);
sterling: 19% (2023: 20%); other: 1% (2023: 1%).
3.2 Credit risk
Credit risk is the risk that the Group is exposed to lower returns or loss if
another party fails to perform its financial obligations to the Group. The
Group has adopted a risk averse approach to such risk and has a stated policy
of not actively pursuing or accepting credit risk except when necessary to
support other objectives.
The clearing and custody operations for the Group's security transactions are
mainly concentrated with one broker, namely Capital International Limited, a
member of the London Stock Exchange. At 30 June 2024 and 2023, substantially
all contract holder cash and cash equivalents, balances due from investment
brokers and financial investments are placed in custody with Capital
International Limited. These operations are detailed in a formal contract that
incorporates notice periods and a full exit management plan. Delivery of
services under the contract is monitored by a dedicated relationship manager
against a documented Service Level Agreement and Key Performance Indicators.
The Group has an exposure to credit risk in relation to its deposits with
credit institutions, its investments in unitised money market funds and its
investment in a bond portfolio. To manage these risks, deposits and the bond
portfolio are placed in accordance with established policy, with credit
institutions having a short-term rating of at least F1 or P1 from Fitch IBCA
and Moody's respectively and a long-term rating of at least A or A3.
Investments in unitised money market funds are made only where such fund is
AAA rated. Additionally, maximum counterparty exposure limits are set both at
an individual subsidiary company level and on a Group-wide basis.
These assets are considered to have a high degree of credit worthiness and no
assets of a lower credit worthiness are held. The following table sets out
information about the credit quality of the Group's deposits with credit
institutions and its investments in unitised money market funds.
2024 2023
£m £m
Deposits and cash with credit institutions and investments in unitised money
market funds
(Based on Standards & Poor's ratings)
AAA 29.3 26.3
AA- to AA+ 1.6 6.0
A- to A+ 16.1 10.8
Total deposits 47.0 43.1
AA- to AA+ - 0.3
A- to A+ 18.0 22.0
Total cash at bank 18.0 22.3
Group cash and deposits 65.0 65.4
Credit risk for financial assets held at amortised cost is recognised using an
expected credit loss model. The model splits financial assets into those which
are performing, underperforming and non-performing based on changes in credit
quality since initial recognition. At initial recognition financial assets are
considered to be performing. They become underperforming where there has been
a significant increase in credit risk since initial recognition, and
non-performing when there is objective evidence of impairment. Twelve months
of expected credit losses are recognised in the statement of comprehensive
income and netted against the financial asset in the statement of financial
position for all performing financial assets, with lifetime expected credit
losses recognised for underperforming and non-performing financial assets.
Trade receivables are designated as having no significant financing
component. The Group applies the IFRS 9 simplified approach to measuring
expected credit losses for trade receivables by using a lifetime expected loss
allowance.
Expected credit losses are based on the historic levels of loss experienced
for the relevant financial assets, with consideration given to forward looking
information. The following table sets out the movement in expected credit
losses.
2024 2023
£m £m
At 1 July 1.9 1.8
Credit loss charges in the year 0.6 0.1
At 30 June 2.5 1.9
At the balance sheet date, an analysis of the Group's cash and deposit
balances was as follows:
2024 2023
£m £m
Longer term deposits with credit institutions 17.1 13.2
Cash and cash equivalents under IFRS 47.9 52.2
65.0 65.4
3.3 Liquidity risk
Liquidity risk is the risk that the Group, though solvent, does not have
sufficient financial resources to enable it to meet its obligations as they
fall due, or can only secure them at excessive cost.
The Group's objective is to ensure that it has sufficient liquidity over
short-term (up to one year) and medium-term time horizons to meet the needs of
the business. This includes liquidity to cover, amongst other things, new
business costs, planned strategic activities, servicing of equity capital as
well as working capital to fund day-to-day cash flow requirements.
Liquidity risk is principally managed in the following ways:
· Assets of a suitable marketability are held to meet contract
holder liabilities as they fall due.
· Forecasts are prepared regularly to predict required liquidity
levels over both the short-term and medium-term.
The Group's exposure to liquidity risk is considered to be low since it
maintains a high level of liquid assets to meet its liabilities.
3.3.1 Undiscounted contractual maturity analysis
Set out below is a summary of the undiscounted contractual maturity profile of
the Group's assets.
2024 2023
£m £m
Maturity within 1 year
Shareholder deposits and money market funds 65.0 65.4
Other shareholder assets 6.4 4.8
71.4 70.2
Maturity from 1 to 5 years
Other shareholder assets 2.1 -
2.1 -
Shareholder assets with maturity values within 5 years 73.5 70.2
Other shareholder assets (no defined maturity profile) 142.7 146.9
Total shareholder assets 216.2 217.1
Policyholder assets
Gross assets held to cover financial liabilities under investment contracts 1,150.9 1,101.5
Total assets 1,367.1 1,318.6
There is no significant difference between the value of the Group's assets on
an undiscounted basis and the balance sheet values.
Assets held to cover financial liabilities under investment contracts are
deemed to have no fixed maturity since the corresponding unit-linked
liabilities are repayable and transferable on demand. In certain circumstances
the contractual maturities of a portion of the assets may be longer than one
year, but the majority of assets held within the unit-linked funds are highly
liquid. The Group actively monitors fund liquidity.
Set out below is a summary of the undiscounted contractual maturity profile of
the Group's liabilities.
2024 2023
£m £m
Maturity within 1 year
Amounts due to investment contract holders 39.4 36.6
Other payables 13.0 11.1
Provisions 0.5 0.1
52.9 47.8
Maturity from 1 to 5 years
Other payables 2.5 2.7
2.5 2.7
Liabilities with maturity values within 5 years 55.4 50.5
Other liabilities (no defined maturity profile) 140.1 144.8
Shareholder liabilities 195.5 195.3
Maturity within 1 year
Financial liabilities under investment contracts 37.0 43.4
Maturity from 1 to 5 years
Financial liabilities under investment contracts 310.6 209.0
Maturity greater than 5 years
Financial liabilities under investment contracts 803.3 849.1
Financial liabilities under investment contracts 1,150.9 1,101.5
Total liabilities 1,346.4 1,296.8
There is no significant difference between the value of the Group's
liabilities on an undiscounted basis and the balance sheet values.
Financial liabilities under investment contracts with a contractual maturity
are deemed to repayable and transferable on demand and have not been
discounted in the balance sheet.
3.4 Insurance risk
Insurance risk is the risk of loss arising from actual experience being
different than that assumed when an insurance product was designed and priced.
For the Group, the key insurance risks are lapse risk, expense risk and
mortality risk. However, the size of insurance risk is not deemed to be
materially significant. From an accounting perspective all contracts have been
classified as investment contracts.
3.4.1 Lapse risk
A key risk for investment contracts is policyholder behaviour risk in
particular the risk that contracts are surrendered, or significant cash
withdrawals are made before sufficient fees have been collected to cover
up-front commissions paid by the Group. The risk is mitigated by charging
penalties on the early surrender of contracts.
3.5 Classification and subsequent measurement of financial assets and
liabilities
The Group recognises deposits with financial institutions and loans and
borrowings on the date on which they are originated. All other financial
instruments are recognised on the trade date, which is the date on which the
Group becomes a part to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value
plus, for a financial asset or financial liability not measured at 'fair value
through profit and loss' ("FVTPL"), transaction costs that are directly
attributable to its acquisition or issue.
On initial recognition, a financial asset is classified as measured at
amortised cost, 'fair value through other comprehensive income' ("FVOCI") or
FVTPL.
Financial assets are not reclassified subsequent to their initial recognition.
A financial asset is measured at amortised cost if it meets both of the
following conditions and is not designated as at FVTPL:
· It is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
· Its contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest.
A financial asset is measured at FVOCI if it meets both of the following
conditions and is not designated as at FVTPL:
· It is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets; and
· Its contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest.
All financial assets not classified as measured at amortised cost or FVOCI as
described above are measured at FVTPL. The classification of each financial
asset and liability is commented on within each respective financial statement
note. As at 30 June 2024 and 30 June 2023, only financial assets measured at
amortised cost and FVTPL are held.
The subsequent measurement of each class of financial assets is defined in the
below table:
Class of asset Subsequent measurement
Financial assets at FVTPL Measured at fair value. Net gains and losses, including any interest or
dividend income and foreign exchange gains and losses, are recognised in
profit or loss.
Financial assets at amortised cost Measured at amortised cost using the effective interest method. Interest
income, foreign exchange gains and losses and impairment are recognised in
profit or loss. Any gain or loss on derecognition is also recognised in profit
or loss.
On initial recognition, a financial liability is designated as amortised cost
or FVTPL. The criteria for classification and subsequent measurement mirrors
that of the financial assets, albeit the classification of 'FVOCI' does not
exist for financial liabilities. Therefore, any liabilities which do not meet
the amortised cost classification criteria, are designated as FVTPL.
3.6 Fair value of financial assets and liabilities
The Group closely monitors the valuation of assets in markets that have become
less liquid. Determining whether a market is active requires the exercise of
judgement and is determined based upon the facts and circumstances of the
market for the instrument being measured. Where the Directors determine that
there is no active market for a particular financial instrument, for example
where a particular collective investment scheme is suspended from trading,
fair value is assessed using valuation techniques based on available,
relevant, information and an appraisal of all associated risks. When a
collective investment scheme recommences regular trading, the value would be
transferred back to Level 1. This process requires the exercise of significant
judgement on the part of Directors.
Due to the linked nature of the contracts administered by the Group's
insurance undertakings, any change in the value of financial assets held to
cover financial liabilities under those contracts will result in an equal and
opposite change in the value of contract liabilities. The separate effect on
financial assets and financial liabilities is included in investment income
and investment contract benefits, respectively, in the consolidated statement
of comprehensive income.
IFRS 13 requires the Group to classify fair value measurements into a fair
value hierarchy by reference to the observability and significance of the
inputs used in measuring that fair value. The hierarchy is as follows:
· Level 1: fair value is determined using quoted prices
(unadjusted) in active markets for identical assets.
· Level 2: fair value is determined using inputs other than quoted
prices included within Level 1 that are observable for the asset either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
· Level 3: fair value is determined using inputs for the asset that
are not based on observable market data (unobservable inputs).
The following table analyses the Group's financial assets and liabilities at
fair value through profit or loss, at 30 June 2024:
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss £m £m £m £m
Equity securities 75.7 3.2 - 78.9
Collective investment schemes 917.8 16.7 3.0 937.5
Fixed income securities, bonds and structured notes 0.8 11.0 58.8 70.6
Total financial assets at fair value through profit or loss
994.3 30.9 61.8 1,087.0
All other financial assets and liabilities are designated as held at amortised
cost which approximates to fair value.
Level 1 Level 2 Level 3 Total
£m £m £m £m
Deposit and money market funds 88.2 - - 88.2
Total financial assets at fair value through profit or loss 1,082.5 10.6 70.5 1,175.2
Financial liabilities at fair value through profit or loss - 1,150.9 - 1,150.9
Financial liabilities at fair value through profit or loss are classified as
level 2 on the basis that they relate to policies investing in financial
assets at fair value through profit and loss.
The following tables analyse the Group's financial assets and liabilities at
fair value through profit or loss, at 30 June 2023:
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss £m £m £m £m
Equity securities 52.0 - - 52.0
Collective investment schemes 899.3 10.9 5.3 915.5
Fixed income securities, bonds and structured notes 1.2 10.0 52.1 63.3
Total financial assets at fair value through profit or loss
952.5 20.9 57.4 1,030.8
Level 1 Level 2 Level 3 Total
£m £m £m £m
Deposit and money market funds 90.2 - - 90.2
Total financial assets at fair value through profit or loss
1,042.7 20.9 57.4 1,121.0
Financial liabilities at fair value through profit or loss
- 1,101.5 - 1,101.5
During the year ended 30 June 2024, £0.4m of bond investments were
transferred from Level 1 to Level 2 following a review of their underlying
valuation inputs. A further £0.4m of similar assets were reclassified from
Level 3 to Level 2 as a result of the same classification review, reflecting
that the value of these assets were based on observable market data and
changes to the details of the security. All other notable movements between
investment levels have been detailed below in the reconciliation between
opening and closing balances of Level 3 assets.
Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 2
and Level 3 fair values for financial instruments in the statement of
financial position, as well as the significant unobservable inputs used.
Type Valuation technique Significant unobservable input Sensitivity to changes in unobservable inputs
Suspended assets £3.0m (2023: £5.3m) Latest available information including or such as net asset values (NAV) or Discount factor (5%) and NAV If the NAV was higher/lower, the fair value would be higher/lower.
other communication received
If the discount factor was higher/lower, the fair value would be lower/higher.
Bonds and structured notes Market comparison/ discounted cash flow: The fair value is estimated Level 2: Not applicable. Level 2: Not applicable.
considering:
Level 2: £11.0m (2023: £10.0m)
(i) current or recent quoted prices for identical securities in markets that
Level 3: £58.8m (2023: £52.0m) are not active; and Level 3: Level 3:
(ii) a net present value calculated using discount rates which are determined Underlying volatility Significant increases/ decreases in this input in isolation would result in a
with reference to observable market transactions in instruments with
higher or lower fair value
substantially the same terms and characteristics including credit quality, the
remaining term to repayments of the principal and the currency in which the
payments are made.
Level 3 sensitivity to changes in unobservable measurements
For financial assets assessed as Level 3, based on its review of the prices
used, the Company believes that any reasonable change to the unobservable
inputs used to measure fair value would not result in a significantly higher
or lower fair value measurement at year end, and therefore would not have a
material impact on its reported results.
Significant unobservable inputs are developed as follows:
Underlying Volatility
In the absence of implied volatility until the maturity and moneyness of the
instrument, the best estimate is the use of extrapolated implied volatility or
historical volatility. The inputs used are derived against other independent
valuation sources and the reasonableness of the assumptions is evaluated as
part of the process.
The reconciliation between opening and closing balances of Level 3 assets are
presented in the table below:
2024 2023
£m £m
Opening balance 57.4 50.6
Unrealised gains / (losses) (2.3) (6.5)
Transfers into level 3 1.1 1.6
Transfers out of level 3 - -
Purchases, sales, issues, and settlements 5.6 11.7
Closing balance 61.8 57.4
4 Segmental information
Disclosure of operating segments in these financial statements is consistent
with reports provided to the Chief Operating Decision Maker ("CODM") which, in
the case of the Group, has been identified as the Executive Committee of
Hansard Global plc.
In the opinion of the CODM, the Group operates in a single reportable segment,
that of the distribution and servicing of long-term investment products. New
business development, distribution, and associated activities in relation to
the Republic of Ireland ceased with effect from 30 June 2013. All other
activities of the Group are continuing.
The Group's Executive Committee uses two principal measures when appraising
the performance of the business: net issued compensation credit ("NICC")
(weighted where appropriate by product line) and expenses. NICC is a measure
of the value of new in-force business and top-ups on existing single premium
contracts. NICC is the total amount of basic initial commission payable to
intermediaries for business sold in a period and is calculated on each piece
of new business. It excludes override commission paid to intermediaries over
and above the basic level of commission.
The following table analyses NICC geographically and reconciles NICC to direct
origination costs incurred during the year as set out in the Business and
Operating Review section of this Annual Report and Accounts.
2024 2023
£m £m
Middle East and Africa 1.7 2.7
Latin America 2.1 2.4
Rest of World 1.7 0.5
Far East 0.1 0.1
Net Issued Compensation Credit 5.6 5.7
Other commission costs paid to third parties 3.2 3.4
Enhanced unit allocations 0.9 1.0
Direct origination costs incurred during the year 9.7 10.1
Revenues and expenses allocated to geographical locations contained in
sections 4.1 to 4.4 below reflect the revenues and expenses generated in or
incurred by the legal entities in those locations.
4.1 Geographical analysis of fees and commissions by origin
2024 2023
£m £m
Isle of Man 46.0 43.1
Republic of Ireland 2.2 2.1
The Bahamas* 0.6 0.5
48.8 45.7
* Hansard Worldwide, which is based in the Bahamas, fully reinsures its
business to Hansard International. All external fees and commissions for
Hansard Worldwide are therefore presented within the Isle of Man category.
These amounted to £3.8m in 2024 (2023: £3.2m). The fees shown in the table
above in respect of The Bahamas represent fees received by Hansard Worldwide
from Hansard International.
4.2 Geographical analysis of profit before taxation
2024 2023
£m £m
Isle of Man 6.5 6.5
Republic of Ireland (1.6) (1.0)
The Bahamas 0.4 0.4
5.3 5.9
4.3 Geographical analysis of gross assets
2024 2023
£m £m
Isle of Man* 1,283.1 1,229.8
Republic of Ireland 82.5 87.0
The Bahamas 1.7 1.8
1,367.3 1,318.6
* Includes assets held in the Isle of Man in connection with policies written
in The Bahamas. As at 30 June 2023 these amounted to £240.6m (30 June 2023:
£178.5m).
4.4 Geographical analysis of gross liabilities
2024 2023
£m £m
Isle of Man 1,033.8 1,043.8
Republic of Ireland 70.2 73.3
The Bahamas 242.5 179.7
1,346.5 1,296.8
5 Fees and commissions
Fees are charged to the contract holders of investment contracts for contract
administration services, investment management services, payment of benefits
and other services related to the administration of investment contracts. Fees
may be chargeable on either a fixed fee basis, a fee per transaction or as a
percentage of assets under administration. Fees are recognised as revenue as
the services are provided. Initial fees that exceed the level of recurring
fees and relate to the future provision of services are deferred in the
balance sheet and amortised on a straight-line basis over the life of the
relevant contract. These fees are accounted for on the issue of a contract and
on receipt of incremental premiums on existing single premium contracts.
Regular fees charged to contracts are recognised on a straight-line basis over
the period in which the service is provided. Transactional fees are recorded
when the required action is complete.
Commissions receivable arise principally from fund houses with which
investments are held. Commissions are recognised on an accruals basis in
accordance with the relevant agreement.
2024 2023
£m £m
Contract fee income 30.6 28.1
Fund management charges 13.4 12.9
Commissions receivable 4.8 4.7
48.8 45.7
Fund management charges and commissions receivable (37% of the total above
(2023: 39%)) are a function of the level of assets under administration.
6 Investment income
Investment income comprises dividends, interest, and other income receivable,
realised and unrealised gains and losses on investments. Movements are
recognised in the consolidated statement of comprehensive income in the period
in which they arise. Dividends are accrued on the date notified. Interest is
accounted for on a time proportion basis using the effective interest method.
2024 2023
£m £m
Interest income 4.7 3.5
Dividend income 5.4 4.7
Gains on realisation of investments 25.7 51.3
Movement in unrealised gains / (losses) 83.7 (15.0)
119.5 44.5
7 Origination costs
Origination costs include commissions, intermediary incentives, and other
distribution-related expenditure (note 2.2). Origination costs which vary
with, and are directly related to, securing new contracts and incremental
premiums on existing single premium contracts are deferred to the extent that
they are recoverable out of future net income from the relevant contract.
Deferred origination costs are amortised on a straight-line basis over the
life of the relevant contracts. Typical terms range between 6 years and 16
years. Origination costs that do not meet the criteria for deferral are
expensed as incurred.
2024 2023
£m £m
Amortisation of deferred origination costs 13.9 13.5
Other origination costs 2.2 2.7
16.1 16.2
8 Administrative and other expenses
Included in administrative and other expenses are the following:
2024 2023
£m £m
Auditors' remuneration:
- Fees payable for audit services
0.8 0.7
- Fees payable for audit related services
pursuant to legislation 0.1 0.1
- Fees payable for non -audit services - -
Employee costs (see note 9) 11.5 10.3
Directors' fees 0.4 0.4
Fund management fees 5.1 5.3
Renewal and other commission 0.9 0.9
Professional and other fees 4.8 4.2
Litigation fees and settlements 2.2 1.5
Credit loss allowance - 0.1
Licences and maintenance fees 4.1 2.4
Insurance costs 0.9 0.9
Depreciation of property, plant and equipment 1.0 1.1
Communications 0.2 0.2
9 Employee costs
The Group provides a range of benefits to employees, including annual bonus
arrangements, paid holiday arrangements and defined contribution pension
plans.
Short term benefits, including holiday pay and other similar non-monetary
benefits, are recognised as an expense in the period in which the service is
received.
The Group pays fixed pension contributions on behalf of its employees (defined
contribution plans). Once the contributions have been paid the Group has no
further payment obligations. The contributions are recognised as an expense
when they are due. Amounts not paid are shown in accruals in the balance
sheet. The assets of the plan are held separately from the Group in
independently administered funds.
The Group operates an annual bonus plan for employees. An expense is
recognised in the consolidated statement of comprehensive income when the
Group has a legal or constructive obligation to make payments under the plan
as a result of past events and a reliable estimate of the obligation can be
made.
9.1 The aggregate remuneration in respect of employees
(including sales employees and executive Directors) was as follows:
2024 2023
£m £m
Wages and salaries 10.3 9.7
Social security costs 1.0 0.8
Contributions to pension plans 1.0 1.0
12.3 11.5
Total salary and other employee costs for the year are incorporated within the
following classifications:
2024 2023
£m £m
Administrative and other expenses 11.5 10.3
Origination costs 0.8 1.2
12.3 11.5
The above information includes Directors' remuneration (excluding
Non-executive Directors' fees).
9.2 The average number of employees during the year
was as follows:
2024 2023
No. No.
Administration 124 119
Distribution and marketing 14 18
IT development 44 50
182 187
10 Taxation
Taxation is based on profits and income for the period as determined with
reference to the relevant tax legislation in the countries in which the
Company and its subsidiaries operate. Tax payable is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date. Tax is recognised in the consolidated statement of comprehensive income
except to the extent that it relates to items recognised in equity. Tax on
items relating to equity is recognised in equity.
The corporation tax expense for the Group for 2024 was £0.1m (2023:
£0.2m). Corporation tax is charged on any profits arising at the following
rates depending on location of the company or branch:
Isle of Man 0% (2023: 0%)
Republic of Ireland 12.5% (2023: 12.5%)
Japan branch 23.2% (2023: 23.2%)
Labuan 24% (2023: 24%)
The Bahamas 0% (2023: 0%)
2024 2023
£m £m
Current year tax provisions 0.1 0.2
Adjustment to prior year tax provisions - -
0.1 0.2
No deferred tax asset is currently being recorded in relation to losses
arising in Hansard Europe.
There is no material difference between the current tax charge in the
consolidated statement of comprehensive income and the current tax charge that
would result from applying standard rates of tax to the profit before tax.
The OECD's Pillar II global minimum tax, based on the Global Anti-Base Erosion
(GloBE) Model Rules, is not expected to have an impact on the Group, as the
Group's total revenue is less than €750m.
11 Earnings per share
2024 2023
Profit after tax (£m) 5.2 5.7
Weighted average number of shares in issue (millions) 137.6 137.6
Basic and diluted earnings per share in pence 3.8 4.1
The Directors believe that there is no material difference between the
weighted average number of shares in issue for the purposes of calculating
either basic or diluted earnings per share. Earnings under either measure is
3.8p per share (2023: 4.1p).
12 Dividends
Interim dividends payable to shareholders are recognised in the year in which
the dividends are paid. Final dividends payable are recognised as liabilities
when approved by the shareholders at the Annual General Meeting.
The following dividends have been paid by the Group during the year:
Per share Total Per share Total
2024 2024 2023 2023
p £m p £m
Final dividend in respect of previous
financial year 2.65 3.6 2.65 3.5
Interim dividend in respect of current
financial year 1.80 2.5 1.80 2.4
4.45 6.1 4.45 5.9
The Board has resolved to pay a final dividend of 2.65p per share on 14
November 2024, subject to approval at the Annual General Meeting, based on
shareholders on the register on 4 October 2024.
13 Intangible assets and property, plant and equipment
Intangible Assets
The historical cost of computer software is the purchase cost and the direct
cost of internal development. Computer software is recognised as an intangible
asset.
2024 2023
£m £m
Intangible assets 23.2 19.9
Amortisation is calculated so as to amortise the cost of intangible assets,
less their estimated residual values, on a straight-line basis over the
expected useful economic lives of the assets concerned and is included in
administration and other expenses in the consolidated statement of
comprehensive income.
The economic lives used for this purpose are:
Computer software 3 to 15 years
The increase in computer software relates to capitalised costs associated with
the development of a replacement policy administration system. Following the
migration of the Group's policyholder book to the new system, amortisation
commenced on 1(st) March 2024.The asset will be amortised over 15 years based
on management's assessment of the useful economic life of the asset.
2024 2023
Computer software £m £m
Costs as at 1 July 20.7 14.1
Capitalised additions 3.8 6.6
Cost as at 30 June 24.5 20.7
Accumulated amortisation at 1 July (0.8) (0.7)
Charge for the year (0.5) (0.1)
Accumulated amortisation as at 30 June (1.3) (0.8)
Net Book Value 23.2 19.9
The cost of computer software includes £13.3m of externally generated costs
(2023: £11.2m) and £9.8m of internally generated costs (2023: £8.7m).
£1.1m of amortisation currently relates to externally generated costs (2023:
£0.8m) and £0.2m relates to internally generated costs (2023: £Nil)
Property, plant and equipment
Property, plant and equipment includes both tangible fixed assets and 'right
of use assets' recognised in accordance with IFRS 16 'Leases'.
2024 2023
£m £m
Property, plant and equipment 0.5 0.4
Right of use assets 2.1 2.4
2.6 2.8
Property, plant and equipment is stated at historical cost less depreciation
and any impairment. The historical cost of property, plant and equipment is
the purchase cost, together with any incremental costs directly attributable
to the acquisition.
Depreciation is calculated so as to amortise the cost of tangible assets, less
their estimated residual values, on a straight-line basis over the expected
useful economic lives of the assets concerned and is included in
administration and other expenses in the consolidated statement of
comprehensive income.
The economic lives used for this purpose are:
Freehold property 50 years
Computer equipment 3 to 5 years
Fixtures & fittings 4 years
Right of use assets are depreciated over the useful life of the lease.
2024 2023
Property plant and equipment £m £m
Cost as at 1 July 10.3 10.7
Additions 0.2 -
Disposals (0.4)
Cost as at 30 June 10.5 10.3
Accumulated depreciation as at 1 July (9.9) (9.9)
Charge for the year (0.1) -
Accumulated depreciation as at 30 June (10.0) (9.9)
Net Book Value 0.5 0.4
IFRS 16 - Leases
The right-of-use assets for property leases are measured at an amount equal to
the lease liability adjusted by the amount of any prepaid or accrued lease
payments recognised immediately before the date of initial application, being
the commencement date. The liabilities are measured at the present value of
the remaining lease payments, discounted using an incremental borrowing rate.
The weighted average incremental borrowing rate applied to the lease
liabilities on 30 June 2024 was 7% (2023: 7%).
The Group leases various offices around the world to service its clients and
operations. Rental contracts are typically made for periods of 1 to 15 years,
incorporating break clauses where applicable. Lease terms are negotiated on an
individual basis and contain differing terms and conditions. The lease
agreements do not impose any covenants.
In determining the lease terms utilised in assessing the position under IFRS
16, management considers break clauses in leases, where appropriate. No
potential future outflows exist on leases beyond the break clause (2023:
£nil). During the prior year the Group made the decision to change their
position on the likelihood of exercising the break clause for the leases at
the Group's head office. The previous position assumed that these break
clauses would be exercised. The Group now believes that the terms of the
leases have become more favorable in the current high inflation environment,
as well as the amount spent on infrastructure at the property means it is
likely that the leases will continue past their break clause. As a result,
the company recognised additions of £0.9m in both the right-of-use asset and
lease liability as at 30 June 2023.
Leases (other than those classified as short-term leases or leases of
low-value assets) are recognised as a right-of-use asset and a corresponding
liability at the date at which the leased asset is available for use by the
Group. Each lease payment is allocated between the liability and a finance
cost. The finance cost is charged over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
Short-term leases (those with a lease term or useful life of less than 12
months at inception) and leases of low value assets (comprising IT-equipment
and small items of office furniture) are recognised on a straight-line basis
as an expense in administration and other expenses in the consolidated
statement of comprehensive income.
The recognition of the right-of-use asset represents an increase in the
property, plant and equipment figure of £2.1m (30 June 2023: £2.4m). Lease
liabilities relating to the right-of-use asset are included within other
payables. The interest recognised on the lease liabilities in respect of the
right of use asset was £0.1m (30 June 2023: £0.1m).
During the year ended 30 June 2021, the Group entered into a sub-lease for
part of a building that is reported as a right-of-use asset. The group has
classified the sub-lease as an operating lease, as it does not transfer
substantially all of the risks and rewards incidental to the ownership of the
sub-let asset. During the year ending 30 June 2024, the Group recognised
rental income of less than £0.1m (2023: less than £0.1m).
2024 2023
£m £m
Right of use asset recognised 1 July 2.4 1.9
Additions during the period - 0.9
Depreciation (0.3) (0.4)
Net book value of right of use asset as at 30 June 2.1 2.4
Lease liability recognised 1 July 2.9 2.3
Additions during the period - 0.9
Lease payments made during the period (0.4) (0.4)
Interest on leases 0.2 0.1
Lease liability recognised as at 30 June 2.7 2.9
Of which are:
Current lease liabilities 0.2 0.2
Non-current lease liabilities 2.5 2.7
14 Deferred origination costs
Amortisation of deferred origination costs is charged within the origination
costs line in the consolidated statement of comprehensive income.
Formal reviews to assess the recoverability of deferred origination costs on
investment contracts are carried out at each balance sheet date to determine
whether there is any indication of impairment. If there is any indication of
irrecoverability or impairment, the asset's recoverable amount is estimated.
Impairment losses are reversed through the consolidated statement of
comprehensive income if there is a change in the estimates used to determine
the recoverable amount. Such losses are reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that would have
been determined, net of amortisation where applicable, if no impairment loss
had been recognised.
The amount of deferred origination costs amortised each year is determined by
the estimated lives of the Group's products (note 2). Reducing the estimated
life of the total portfolio by 1 year would increase the annual amortisation
for the next financial year by £1.3m. Increasing the estimated life of the
total portfolio by 1 year would reduce the annual amortisation for the next
financial year by £1.1m. Offsetting movements would also arise in deferred
income as outlined in note 18.
The movement in value over the financial year is summarised below.
2024 2023
£m £m
At beginning of financial year 117.8 122.5
Origination costs incurred and deferred during the year 8.2 8.7
Origination costs amortised during the year (13.9) (13.4)
At end of financial year 112.1 117.8
2024 2023
Carrying value £m £m
Expected to be amortised within one year 11.6 11.9
Expected to be amortised after one year 100.5 105.9
112.1 117.8
15 Other receivables
Other receivables are initially recognised at fair value and subsequently
measured at amortised cost, less any provision for impairment.
2024 2023
£m £m
Commission receivable 1.4 1.4
Other debtors 3.7 2.3
Prepayments 1.2 1.2
6.3 4.9
Estimated to be settled within 12 months 6.3 4.9
Estimated to be settled after 12 months - -
6.3 4.9
Due to the short-term nature of these assets the carrying value is considered
to reflect fair value.
16 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, and other short-term highly liquid investments with a minimal cost to
be converted to cash, typically with original maturities of three months or
less, net of short-term overdraft positions where a right of set-off exists.
In the below table, Money market funds includes all immediately available
cash, other than specific short-term deposits.
2024 2023
£m £m
Money market funds and call bank deposits 47.3 46.8
Short-term deposits with credit institutions 0.6 5.4
47.9 52.2
Cash and cash equivalents are recognised on receipt prior to investment to
contract holder funds.
17 Financial liabilities under investment contracts
17.1 Investment contract liabilities, premiums and benefits paid
17.1.1 Investment contract liabilities
Investment contracts consist of unit-linked contracts written through
subsidiary companies in the Group. Unit-linked liabilities are measured at
fair value by reference to the underlying net asset value of the Group's
unitised investment funds, determined on a bid basis, at the balance sheet
date.
The decision by the Group to designate its unit-linked liabilities at fair
value through profit or loss is to eliminate a measurement inconsistency that
would otherwise arise from measuring the investments at FVTPL and the contract
liabilities at amortised cost.
17.1.2 Investment contract premiums
Investment contract premiums are not included in the consolidated statement of
comprehensive income but are reported as deposits to investment contracts and
are included in financial liabilities in the balance sheet. On existing
business, a liability is recognised at the point the premium falls due. The
liability for premiums received on new business is deemed to commence at the
acceptance of risk.
17.1.3 Benefits paid
Withdrawals from policy contracts and other benefits paid are not included in
the consolidated statement of comprehensive income but are deducted from
financial liabilities under investment contracts in the balance sheet.
Benefits are deducted from financial liabilities and transferred to amounts
due to investment contract holders based on notifications received, when the
benefit falls due for payment or, on the earlier of the date when paid or when
the contract ceases to be included within those liabilities.
17.2 Movement in financial liabilities under investment contracts
The following table summarises the movement in liabilities under investment
contracts during the year:
2024 2023
£m £m
Deposits to investment contracts 108.3 116.3
Withdrawals from contracts and charges (173.3) (147.7)
Change in provisions for investment contract liabilities 114.4 40.6
Movement in year 49.4 9.2
At beginning of year 1,101.5 1,092.3
1,150.9 1,101.5
2024 2023
£m £m
Contractually expected to be settled within 12 months 37.0 43.4
Contractually expected to be settled after 12 months 1,113.9 1,058.1
1,150.9 1,101.5
The change in provisions for investment contract liabilities includes dividend
and interest income and net realised and unrealised gains and losses on
financial investments held to cover financial liabilities. Dividend income,
interest income and gains and losses are accounted for in accordance with note
6.
17.3 Investments held to cover liabilities under investment contracts
The Group classifies its financial assets into the following categories:
financial investments and trade receivables. Financial investments consist of
units in collective investment schemes, equity securities, fixed income
securities and deposits with credit institutions. Collective investment
schemes, equity securities and fixed income securities are designated at fair
value through profit or loss. Deposits with credit institutions are designated
at amortised cost.
The decision by the Group to designate its financial investments at fair value
through profit or loss reflects the fact that the investment portfolio is
managed, and its performance evaluated, on a fair value basis.
The Group recognises purchases and sales of investments on trade date.
Investment transaction costs are written off in administration expenses as
incurred.
All gains and losses derived from financial investments, realised or
unrealised, are recognised within investment income in the consolidated
statement of comprehensive income in the period in which they arise.
The value of financial assets at fair value through profit or loss that are
traded in active markets (such as trading securities) is based on quoted
market prices at the balance sheet date. The quoted market price for financial
assets held by the Group is the current bid price. Investments in funds are
valued at the latest available net asset valuation provided by the
administrators or managers of the funds and companies, unless the Directors
are aware of good reasons why such valuations would not be the most
appropriate or indicative of fair value. Where necessary, the Group uses other
valuation methods to arrive at the stated fair value of its financial assets,
such as recent arms' length transactions or reference to similar listed
investments.
Loans and receivables are financial assets with fixed or determinable payments
that are not quoted on an active market. Loans and receivables consist,
primarily, of contract fees receivable, long-term cash deposits (i.e. with an
original maturity duration in excess of three months) and cash and cash
equivalents.
The following investments, other assets and liabilities are held to cover
financial liabilities under investment contracts. They are included within the
relevant headings on the condensed consolidated balance sheet.
2024 2023
£m £m
Equity securities 78.9 52.0
Investments in collective investment schemes 937.5 915.4
Fixed income securities, bonds and structured notes 70.6 58.7
Deposits and money market funds 64.3 77.4
Total assets 1,151.3 1,103.5
Other payables (0.4) (2.0)
Financial investments held to cover financial liabilities 1,150.9 1,101.5
The other receivables and other payables fair value approximates amortised
cost.
17.4 Amounts due to investment contract holders
Where financial liabilities under investment contracts mature or are redeemed
by contact holders, such amounts payable are recorded as amounts due to
investment contract holders.
18 Deferred income
Fees charged for services related to the management of investment contracts
are recognised as revenue as the services are provided. Initial fees which
exceed the level of recurring fees and relate to the future provision of
services are deferred. These are amortised over the anticipated period in
which services will be provided. The recognition of balances in the deferred
income reserve is based on actuarial assumptions regarding the estimated life
of each policy. These actuarial assumptions are complex in nature and are
subject to estimation uncertainty (note 2). The actuarial assumptions are
reviewed regularly by the Appointed Actuary.
The amount of deferred income amortised each year is determined by the
estimated lives of the Group's products. Reducing the estimated life of the
total portfolio by 1 year would increase the annual amortisation for the next
financial year by £1.6m. Increasing the estimated life of the total portfolio
by 1 year would reduce the annual amortisation for the next financial year by
£1.4m. Offsetting movements would also arise in deferred income as outlined
in note 14.
The movement in value of deferred income over the financial year is summarised
below.
2024 2023
£m £m
At beginning of financial year 144.8 145.1
Income received and deferred during the year 12.7 16.5
Income amortised and recognised in contract fees during the year
(17.3) (16.8)
At end of financial year 140.2 144.8
2024 2023
Carrying value £m £m
Expected to be amortised within one year 15.0 15.1
Expected to be amortised after one year 125.2 129.7
140.2 144.8
19 Other payables
Other payables are initially recognised at fair value and subsequently
measured at amortised cost. They are recognised at the point where service is
received but payment is due after the balance sheet date.
2024 2023
£m £m
Commission payable 1.2 1.4
Other creditors and accruals 11.7 9.5
Lease liabilities of which:
Current lease liabilities 0.2 0.2
Non-current lease liabilities 2.5 2.7
15.6 13.8
20 Provisions
Provisions represent amounts to settle a number of the claims referred to in
Note 26 'Contingent Liabilities' where it is economically beneficial to do so.
Such provisions are calculated where there is an established pattern of
settlement for that grouping of claims. The following table reflects the
movement in the provision during the period under review.
2024 2023
£m £m
Settlement provision as at 1 July 0.1 0.2
Additional provisions made in the period 0.4 -
Released from the provision for settlements - (0.1)
Settlement provision as at 30 June 0.5 0.1
Further information outlined within IAS 37.85 is not disclosed on the basis
that it may prejudice the Company's position.
With the exception of the lease liabilities shown in note 13, deferred income,
and the provisions referred to above, all other payable balances, including
amounts due to contract holders, are deemed to be current. Due to the
short-term nature of these payables the carrying value is considered to
reflect fair value.
21 Capital management
It is the Group's policy to maintain a strong capital base in order to:
· satisfy the requirements of its contract holders, creditors and
regulators.
· maintain financial strength to support new business growth and
create shareholder value.
· match the profile of its assets and liabilities, taking account
of the risks inherent in the business; and
· generate operating cash flows to meet dividend requirements.
Within the Group each subsidiary company manages its own capital. Capital
generated in excess of planned requirements is returned to the Company by way
of dividends. Group capital requirements are monitored by the Board.
The Company monitors capital on two bases:
· the total shareholder's equity, as per the balance sheet; and
· the capital requirement of the relevant supervisory bodies, where
subsidiaries are regulated.
The Group's policy is for each company to hold the higher
of:
· the Company's internal assessment of the capital required; or
· the capital requirement of the relevant supervisory body, where
applicable.
There has been no material change in the Group's management of capital during
the period. The Group continued to perform additional modelling around risks
arising from the current geopolitical position and global economic conditions,
and to give consideration to emerging market practice and regulatory
expectations around capital conservation. All regulated entities within the
Group exceed significantly the minimum solvency requirements at the balance
sheet date.
The Group's lead regulator, the Isle of Man FSA, monitors capital requirements
for the Group as a whole. The insurance subsidiaries are directly supervised
by their local regulators. The lead regulator's approach to the measurement of
capital adequacy is primarily based on monitoring the relationship of the
Solvency Capital Requirement ('SCR') to regulatory capital. All regulated
entities within the Group exceed the minimum solvency requirements at the
balance sheet date. The capital held within Hansard Europe is considered not
to be available for dividend to Hansard Global plc until such time as the
legal cases referred to in note 26 are substantially resolved.
22 Share
capital
2024 2023
£m £m
Authorised:
200,000,000 ordinary shares of 50p 100.0 100.0
Issued and fully paid:
137,557,079 (2023: 137,557,079) ordinary shares of 50p 68.8 68.8
No shares (2023: nil) were issued or bought back in the year.
23 Other reserves
Other reserves comprise the merger reserve arising on the
acquisition by the Company of its subsidiary companies on 1 July 2005, the
share premium account and the share save reserve. The merger reserve
represents the difference between the par value of shares issued by the
Company for the acquisition of those companies, compared to the par value of
the share capital and the share premium of those companies at the date of
acquisition.
2024 2023
£m £m
Merger reserve (48.5) (48.5)
Share premium 0.1 0.1
Share save reserve 0.1 0.1
Reserve for own shares held within EBT (0.3) (0.2)
(48.6) (48.5)
Included within other reserves is an amount representing 1,257,000 (2023:
557,000) ordinary shares held by the Group's employee benefit trust ('EBT')
which were acquired at a cost of £0.5m (see note 24). The ordinary shares
held by the trustee of the Group's employee benefit trust are treated as
treasury shares in the consolidated balance sheet in accordance with IAS 32
''Financial Instruments: Presentation''.
This reserve arose when the Group acquired equity share capital under its EBT,
which is held in trust by the trustee of the EBT. Treasury shares cease to be
accounted for as such when they are sold outside the Group, or the interest is
transferred in full to the employee pursuant to the terms of the incentive
plan.
24 Equity settled share-based payments
The Company has established a number of equity-based payment programmes for
eligible employees. The fair value of expected equity-settled share-based
payments under these programmes is calculated at date of grant using a
standard option-pricing model and is amortised over the vesting period on a
straight-line basis through the consolidated statement of comprehensive
income. A corresponding amount is credited to equity over the same period.
At each balance sheet date, the Group reviews its estimate of the number of
options expected to be exercised. The impact of any revision in the number of
such options is recognised in the consolidated statement of comprehensive
income so that the charge to the consolidated statement of comprehensive
income is based on the number of options that vest. A corresponding adjustment
is made to equity.
The estimated fair value of the schemes and the imputed cost for the period
under review is not material to these financial statements.
24.1 SAYE program
This is a standard scheme approved by the Revenue authorities in the Isle of
Man that is available to all employees where individuals may make monthly
contributions over three or five years to purchase shares at a price not less
than 80% of the market price at the date of the invitation to participate.
At the date of this report, the following options remain outstanding under
each tranche:
2024 2023
No. of No. of
Scheme year options Options
2018 - 29,031
A summary of the transactions in the existing SAYE programs during the year is
as follows:
2024 2023
Weighted Weighted
average Average
No. of exercise No. of Exercise
options price (p) options price (p)
Outstanding at the start of year 29,031 62 78,779 65
Granted - - - -
Exercised - - - -
Forfeited (29,031) 62 (49,748) 66
Outstanding at end of year - - 29,031 62
There were no new options granted during the current financial year.
24.2 Incentive Plan Employee Benefit Trust
An Employee Benefit Trust was established in February 2018 to hold shares
awarded to employees as an incentive on a deferred basis. Shares are granted
under the scheme at fair value, which is based on the market value of the
shares on that date. Shares granted under the scheme are purchased by the
Trust in the open market and held until vesting. Awards made under the scheme
would normally vest after three years.
2024 2023
No. of No. of
Share Awards Shares Shares
Outstanding at start of period 601,684 -
Granted 463,823 631,446
Forfeited (64,608) (29,762)
Vested (74,899) -
Outstanding at end of period 926,000 601,684
The Trust has been funded by way of a loan, and as at 30 June 2024 the
outstanding balance on the loan was £554,000 (30 June 2023: £199,000). As at
30 June 2024 the Trust held 1,257,000 shares (2023: 557,000). 74,899 shares
vested during the year ended 30 June 2024 (2023: none) and have not yet been
transferred.
2024 2023
No. of No. of
Shares Held by the Trust Shares Shares
Outstanding at start of period 557,000 12,000
Granted 700,000 545,000
Forfeited - -
Transferred following vesting - -
Outstanding at end of period 1,257,000 557,000
During the period the expense arising from share-based payment transactions
was £0.1m (2023: £0.05m).
25 Related party transactions
25.1 Intra-group transactions
Various subsidiary companies within the Group perform services for other Group
companies in the normal course of business. The financial results of these
activities are eliminated in the consolidated financial statements.
25.2 Key management personnel compensation
Key management consists of 21 individuals (2023: 20), being members of the
Group's Executive Committee, executive Directors of direct subsidiaries of the
Company and the Non-executive Directors of both the Group and subsidiary
companies.
The aggregate remuneration paid to key management during the year-ended 30
June was as follows:
2024 2023
£m £m
Short-term employee benefits 2.1 2.5
Post-employment benefits 0.3 0.2
Total 2.4 2.7
There were no outstanding amounts as at 30 June 2024 (2023: nil).
The total value of investment contracts issued by the Group and held by key
management is nil (2023: nil).
25.3 Transactions with controlling shareholder
Dr L S Polonsky is regarded as the controlling shareholder of the Group, as
defined by the Listing Rules of the Financial Conduct Authority. In the year
ending 30 June 2024 there were no transactions with Dr Polonsky (2023: nil).
25.4 Incentive Plan Employee Benefit Trust
An Employee Benefit Trust was established in February 2018 to hold shares
awarded to employees as an incentive on a deferred basis. The Trust has been
funded by way of a loan, and as at 30 June 2024 the outstanding balance on the
loan was £554,000 (30 June 2023: £199,000). As at 30 June 2024 the Trust
held 1,257,000 shares (2023: 557,000).
26 Contingent liabilities
26.1 Litigation
The Group does not and has never given any investment advice. Investment
decisions are taken either by the contract holder directly or through a
professional intermediary appointed by the contract holder. Contract holders
bear the financial risk relating to the investments underpinning their
contracts, as the policy benefits are linked to the value of the assets.
Notwithstanding the above, financial services institutions are frequently
drawn into disputes in cases where the value and performance of assets
selected by or on behalf of contract holders fails to meet their
expectations. At the balance sheet date, a number of fund structures remain
affected by liquidity or other issues that hinder their sales or redemptions
on normal terms with a consequent adverse impact on policy transactions.
As reported previously, the Group has been subject to a number of complaints
in relation to the selection and performance of assets linked to contracts.
The Group has been served with a number of writs arising from such complaints
and other asset-related issues. Most of the writs relate to historic business
written prior to the closure to new business of Hansard Europe in 2013, with a
minimal number relating to Hansard International Limited. Most of the cases
have arisen in Italy, with a smaller number in Belgium and Germany.
As at 30 June 2024, the Group had been served with cumulative writs with a net
exposure totalling €23.8m, or £20.2m in sterling terms (30 June 2023:
€26.1m / £22.4m) arising from contract holder complaints and other asset
performance-related issues. The primary reason for the decrease in contingent
liabilities is due to a case with a potential exposure of approximately £1.4m
now considered to be remote and thus outside the scope of a contingent
liability, as well as a reduction in the number of German cases.
During the year, the Group successfully defended eight cases with net
exposures of approximately £1.3m, five of which may be appealed by the
plaintiffs (2023: successfully defended fifteen cases with net exposures of
£1.9m). These successes continue to affirm confidence in the Group's legal
arguments.
Our policy is to maintain contingent liabilities even where we win cases in
the court of first instance if such cases have been subsequently appealed.
We have previously noted that we expect a number of our claims to ultimately
be covered by our Group insurance cover. During 2024 we recorded £0.7m (2023:
£0.1m) in total recoveries during the year in relation to costs paid by the
Group. We expect such reimbursement to continue during the course of that
litigation.
While it is not possible to forecast or determine the final results of pending
or threatened legal proceedings, based on the pleadings and advice received
from the Group's legal representatives, the Directors believe that the Group
has strong defences to such claims. Notwithstanding this, there may be
circumstances where in order to avoid the expense and distraction of
protracted litigation the Board may consider it in the best interests of the
Group and its shareholders to reach a commercial resolution with regard to
certain of these claims. Such cases totalled less than £0.4m (2023: less
than £0.1m) during the period. A provision of £0.5m (2023: £0.1m) has been
provided where based on past experience it is expected that future settlements
may be reached. Where an established pattern of settlement is established for
any grouping of claims, a provision for expected future settlements is made in
line with IAS 37. This is outlined in Note 20.
It is not possible at this time to make any further reliable estimates of
liability. Accordingly, no further provisions have been made beyond those
noted above.
Between 30 June 2024 and the date of this report, there have been no material
developments.
26.2 Isle of Man Policyholders' Compensation Scheme
The Group's principal subsidiary, Hansard International is a member of the
Isle of Man Policyholders' Compensation Scheme governed by the Life Assurance
(Compensation of Policyholders) Regulations 1991. The objective of the Scheme
is to provide compensation for policyholders should an authorised insurer be
unable to meet its liabilities to policyholders. In the event of a levy being
charged by the Scheme members, Hansard International would be obliged to meet
the liability arising at the time. The maximum levy payable in accordance with
the regulations of the Scheme in respect of the insolvency of the insurer is
2% of long-term business liabilities. Hansard International's products include
a clause in their terms and conditions permitting it to recover any monies
paid out under the Scheme from contract holders.
27 Foreign exchange rates
The Group's functional currency is pounds sterling, being the currency of the
primary economic environment in which the Group operates. The Group's
presentational currency is also pounds sterling.
Foreign currency transactions are translated into sterling using the
applicable exchange rate prevailing at the date of the transactions. Monetary
assets and liabilities denominated in foreign currencies are translated into
sterling at the rates of exchange prevailing at the balance sheet date, and
the gains or losses on translation are recognised in the consolidated
statement of comprehensive income.
Non-monetary assets and liabilities that are held at historical cost are
translated using exchange rates prevailing at the date of transaction; those
held at fair value are translated using exchange rates ruling at the date on
which the fair value was determined.
The closing exchange rates used by the Group for the conversion of significant
consolidated balance sheet items to sterling were as follows:
2024 2023
US Dollar 1.26 1.27
Japanese Yen 203 184
Euro 1.18 1.17
28 Events after the reporting period
This report for the year ended 30 June 2024 was approved for issue on 25
September 2024. No material events have occurred between the reporting date
and the issue date that require disclosure under IAS 10.
Hansard Global plc
Parent Company Statement of Changes in Equity
for the year ended 30 June 2024
Share Other Retained
capital reserves earnings Total
£m £m £m £m
At 1 July 2022 68.8 0.2 15.4 84.4
Profit and total comprehensive income for the
year after taxation - - 6.2 6.2
Transactions with owners
Dividends paid - - (5.9) (5.9)
At 30 June 2023 68.8 0.2 15.7 84.7
Share Other Retained
capital Reserves earnings Total
£m £m £m £m
At 1 July 2023 68.8 0.2 15.7 84.7
Profit and total comprehensive income for the - - 5.2 5.2
year after taxation
Transactions with owners
Dividends paid - - (6.1) (6.1)
At 30 June 2024 68.8 0.2 14.8 83.8
The notes on pages 136 to 142 form an integral part of these financial
statements.
Hansard Global plc
Parent Company Balance Sheet
As at 30 June 2024
2024 2023
Notes £m £m
Assets
Fixed assets
Intangible assets 6 23.2 19.9
Property, plant and equipment 7 0.3 0.4
Investment in subsidiary companies 4 72.5 72.5
Current assets
Cash and cash equivalents 2.4 0.1
Amounts due from subsidiary companies 5 - 1.4
Other receivables 0.4 0.7
Total assets 98.8 95.0
Liabilities
Other payables 2.0 1.7
Amounts due to subsidiary companies 5 13.0 8.6
Total liabilities 15.0 10.3
Net assets 83.8 84.7
Shareholders' equity
Called up share capital 8 68.8 68.8
Share premium 0.1 0.1
Retained earnings 14.8 15.7
Share based payments reserve 0.1 0.1
Total shareholders' equity 83.8 84.7
The notes on pages 136 to 142 form an integral part of these financial
statements.
The parent company financial statements on pages 133 to 135 were approved by
the Board on 25 September 2024 and signed on its behalf by:
Thomas Morfett
David
Peach
Director
Director
Hansard Global plc
Parent Company Cash Flow Statement
for the year ended 30 June 2024
2024 2023
£m £m
Cash flow from operating activities
Profit before tax for the year 5.2 6.2
Adjustments for:
Dividends received (14.3) (11.5)
Movement in share-based payments reserve - -
Changes in operating assets and liabilities
Increase in amounts due to subsidiaries 5.8 6.4
Decrease / (increase) in debtors 0.3 (0.2)
(Decrease) in creditors 0.3 (0.4)
Cash flow (used in) / generated from operations (2.7) 0.5
Cash flows from investing activities
Dividends received 14.3 11.5
Purchase of intangible assets (3.2) (6.1)
Cash flows from investing activities 11.1 5.4
Cash flows from financing activities
Dividends paid (6.1) (5.9)
Cash flows used in financing activities (6.1) (5.9)
Net increase in cash and cash equivalents 2.3 -
Cash and cash equivalents at beginning of year 0.1 0.1
Cash and cash equivalents at year end 2.4 0.1
The notes on pages 136 to 142 form an integral part of these financial
statements.
Notes to the parent company financial statements
1 General information
Hansard Global plc ("the Company") is a limited liability company, and is
incorporated and domiciled in the Isle of Man. The registered office of the
company is 55 Athol Street, Douglas, Isle of Man, IM99 1QL. The Company is
listed on the London Stock Exchange.
The principal activity of the Company is to act as the holding company of the
Hansard group of companies ("the Group").
The Company has its primary listing on the London Stock Exchange
2 Significant accounting policies
2.1 Basis of preparation
The individual financial statements of the Company have been prepared on a
going concern basis in compliance with United Kingdom Standards including
Financial Reporting Standard 102 'The Financial Reporting Standard applicable
in the United Kingdom and the Republic of Ireland' ("FRS 102") and the Isle of
Man Companies Acts 1931 to 2004. They are prepared under the historical cost
convention. In accordance with the provisions of the Isle of Man Companies Act
1982 the Company has not presented its own profit and loss account. The
Company's profit for the year ended 30 June 2024, including dividends received
from subsidiaries, was £5.2m (2023: £6.2m).
The preparation of financial statements in conformity with FRS 102 requires
the use of certain critical accounting estimates. It also requires
management to exercise judgement in the process of applying the accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements are disclosed in note 3.
2.2 Investment income
Investment income includes interest and dividends. Interest is accounted for
on an accruals basis. Dividends are accrued on an ex-dividend basis.
2.3 Dividends payable
Dividends payable to shareholders are recognised in the year in which the
dividends are approved. These amounts are recognised in the statement of
changes in equity.
2.4 Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents the amount receivable for services rendered net of
returns, discounts and rebates allowed by the Company, and value added taxes.
Where the consideration receivable in cash or cash equivalents is deferred,
and the arrangement constitutes a financing transaction, the fair value of the
consideration is measured as the present value of all future receipts using
the imputed rate of interest.
The Company recognises revenue when the services are rendered, the amount of
revenue can be measured reliably, and it is probable that future economic
benefits will flow to the Company.
2.5 Employee benefits
The Company provides a range of competitive benefits to employees in line with
local legislation for the jurisdiction in which they are based. Our Head
Office proposition includes private health insurance with the option to
include family members, permanent health insurance, death in service scheme,
annual bonus arrangements, and non-contributory pension plans which can be
further enhanced via salary sacrifice arrangements.
Short term benefits, including holiday pay and other similar non-monetary
benefits, are recognised as an expense in the period in which the service is
received.
A defined contribution plan is a pension plan under which the Company pays
fixed contributions into a separate entity. Once the contributions have been
paid the Company has no further payment obligations. The contributions are
recognised as an expense when they are due. Amounts not paid are shown in
accruals in the balance sheet. The assets of the plan are held separately from
the Company in independently administered funds.
The Company operates an annual bonus plan for employees. An expense is
recognised in the profit and loss account when the Company has a legal or
constructive obligation to make payments under the plan as a result of past
events and a reliable estimate of the obligation can be made.
2.6 Investments in subsidiaries
Investments in subsidiary companies are held at cost, adjusted for any
impairment.
2.7 Foreign currencies
The Company's presentational and functional currency is pounds sterling, being
the currency of the primary economic environment in which the Company
operates.
Foreign currency transactions are translated into sterling using the
approximate exchange rate prevailing at the date of the transactions. Monetary
assets and liabilities denominated in foreign currencies are translated into
sterling at the rates of exchange prevailing at the balance sheet date and the
gains or losses on translation are recognised in the profit and loss account.
2.8 Property, plant, and equipment
Property, plant and equipment is stated at historic purchase cost less
accumulated depreciation.
The cost of property, plant and equipment is their purchase cost, together
with any incidental costs of acquisition. Depreciation is calculated so as
to write off the cost of tangible assets, less their estimated residual
values, on a straight-line basis over the expected useful economic lives of
the assets concerned. The principal rates used for this purpose are:
Freehold property 50 years
Computer equipment 3 years
Fixtures and fittings 4 years
2.9 Intangible assets
Intangible fixed assets are stated at historic purchase cost less accumulated
amortisation. The cost of intangible assets is their purchase cost, together
with any incidental costs of acquisition. Amortisation is calculated so as
to write off the cost of intangible assets, less their estimated residual
values, on a straight-line basis over the expected useful economic lives of
the assets concerned. The intangible asset represents a new suite of IT
systems, brought into use on 1 March 2024. Amortisation commenced from that
date, with the cost being amortised over 15 years, which is deemed to be the
useful economic life of the asset.
2.10 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, and other short-term highly liquid investments with a minimal cost to
be converted to cash, typically with original maturities of three months or
less, net of short-term overdraft positions where a right of set-off exists.
2.11 Financial instruments
The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of
financial instruments.
(i) Financial assets
Basic financial assets, including trade and other receivables, (i.e., debtors
and amounts due from group undertakings) and cash at bank, are initially
recognised at transaction price, unless the arrangement constitutes a
financing transaction, where the transaction is measured at the present value
of the future receipts discounted at a market rate of interest. Such assets
are subsequently carried at amortised cost using the effective interest
method.
At the end of each reporting period financial assets measured at amortised
cost are assessed for objective evidence of impairment. If an asset is
impaired the impairment loss is the difference between the carrying amount and
the present value of the estimated cash flows discounted at the asset's
original effective interest rate. The impairment loss is recognised in profit
or loss.
If there is a decrease in the impairment loss arising from an event occurring
after the impairment was recognised the impairment is reversed. The reversal
is such that the current carrying amount does not exceed what the carrying
amount would have been had the impairment not previously been recognised. The
impairment reversal is recognised in profit or loss.
Financial assets are derecognised when (a) the contractual rights to the cash
flows from the asset expire or are settled, or (b) substantially all the risks
and rewards of ownership of the asset are transferred to another party or (c)
control of the asset has been transferred to another party who has the
practical ability to unilaterally sell the asset to an unrelated third party
without imposing additional restrictions.
(ii) Financial liabilities.
Basic financial liabilities, including accruals and other creditors, and
amounts due to group undertakings, are initially recognised at transaction
price, unless the arrangement constitutes a financing transaction, where the
debt instrument is measured at the present value of the future receipts
discounted at a market rate of interest.
Other creditors are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities. Trade payables
are recognised initially at transaction price and subsequently measured at
amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished,
that is when the contractual obligation is discharged, cancelled or expires.
2.12 Operating lease assets
Leases that do not transfer all of the risks of ownership are classified as
operating leases. Payments under operating leases are charged to the profit
and loss account on a straight-line basis over the period of the lease.
2.13 Share capital
Ordinary shares are classified as equity.
2.14 Related parties
The Company discloses transactions with related parties which are not wholly
owned by the same group. It does not disclose transactions with members of the
same group that are wholly owned.
3 Critical accounting estimates and judgements in applying
accounting polices
Estimates, assumptions and judgements are used in the application of
accounting policies in these financial statements. Critical accounting
estimates are those which involve the most complex or subjective judgements or
assessments. Estimates, assumptions and judgements are evaluated continually
and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. Actual outcomes may differ from assumptions and estimates made
by management.
There are no areas in which the Company applies significant accounting
estimates or assumptions.
4 Investment in subsidiary companies
The following schedule reflects the Company's subsidiary companies at the
balance sheet date and at the date of this report. All companies are wholly
owned and incorporated in the Isle of Man, except where indicated.
Subsidiary company
Hansard International Limited
Hansard Worldwide Limited (incorporated in The Bahamas)
Hansard Europe Designated Activity Company (incorporated in the Republic of
Ireland)
Hansard Development Services Limited
Hansard Administration Services Limited
The holding value of the Company's investment in its subsidiaries is assessed
annually for evidence of impairment. This assessment considers, among other
factors, the cost versus carrying value of the investment, future dividend
flows, going concern and the Value of In-Force of the Company's subsidiaries
in order to confirm there are no indicators of impairment identified.
5 Amounts due from / (due to) subsidiary companies
The Company and various subsidiary companies within the Group perform services
for other Group companies in the normal course of business. All balances are
unsecured, interest free and repayable on demand.
6 Intangible assets
The historical cost of computer software is the purchase cost and the direct
cost of internal development. Computer software is recognised as an intangible
asset.
2024 2023
£m £m
Cost as at 1 July 19.9 13.3
Additions 3.8 6.6
Amortisation (0.5) -
Cost as at 30 June 23.2 19.9
The asset was brought into use as at 1 March 2024 and will be amortised over
15 years based on management's assessment of the useful economic life of the
asset.
The cost of computer software includes £13.6m of externally generated costs
(2023: £11.2m) and £10.1m of internally generated costs (2023: £8.7m).
Amortisation includes £0.3m of externally generated costs (2023: £Nil) and
£0.2m of internally generated costs (2023: £Nil).
7 Property, plant and equipment
Depreciation is included in the profit and loss account and calculated in line
with the accounting policy published above.
2024 2023
Carrying Values £m £m
Property, plant and equipment 0.3 0.4
Property, plant and equipment is stated at historical cost less depreciation
and any impairment. The historical cost of property, computer equipment and
fixtures & fittings is the purchase cost, together with any incremental
costs directly attributable to the acquisition.
Depreciation is calculated so as to amortise the cost of tangible assets, less
their estimated residual values, on a straight-line basis over the expected
useful economic lives of the assets concerned and is included in
administration and other expenses in the statement of comprehensive income.
The carrying amount, residual value and useful life of the Company's plant and
equipment is reviewed annually to determine whether there is any indication of
impairment, or a change in residual value or expected useful life. If there is
any indication of impairment, the asset's carrying value is revised.
The economic lives used for this purpose are:
Fixtures & fittings 4-10 years
2024 2023
Fixtures and fittings £m £m
Cost as at 1 July 1.2 1.2
Additions - -
Cost as at 30 June 1.2 1.2
Accumulated Depreciation as at 1 July (0.8) (0.7)
Charge for the year (0.1) (0.1)
Accumulated depreciation as at 30 June (0.9) (0.8)
Net Book Value 0.3 0.4
8 Share capital
2024 2023
£m £m
Authorised:
200,000,000 ordinary shares of 50p 100.0 100.0
Issued and fully paid:
137,557,079 (2023: 137,557,079) ordinary shares of 50p 68.8 68.8
During the year no shares were issued or bought back (2023: nil).
The Company has previously received clearance from the London Stock Exchange
to list a maximum of 1,200,000 shares necessary to meet its obligations to
employees under the terms of the employee share save (SAYE) scheme. As at 30
June 2024 924,123 shares remained available for listing (2023: 924,123).
9 Related party transactions
The company has wholly owned subsidiaries as referred to in Note 4. Dr L S
Polonsky is regarded as the controlling shareholder of the Group, as defined
by the Listing Rules of the Financial Conduct Authority.
During the year fees totalling £0.3m (2023: £0.3m) were paid to
Non-executive Directors.
The aggregate remuneration paid to key management of the Company for the year
ended 30 June was as follows:
2024 2023
£m £m
Salaries, wages and bonuses 1.7 1.8
10 Equity settled share-based payments
10.1 SAYE program
Shareholders have approved a Save as You Earn ("SAYE") share save program for
employees. The scheme is a standard SAYE plan, approved by the Revenue
Authorities in the Isle of Man and is available to eligible employees. Under
the terms of the scheme, individuals can invest up to £500 per month for a
three or five-year period to purchase shares at a price not less than 80% of
the market price on the date of the invitation to participate.
The scheme can be operated annually, with the option price and awards criteria
normally being established in February. No scheme was issued during the years
ended 30 June 2021 to 30 June 2024. The estimated fair value of the schemes
and the imputed cost for the period under review is not material to these
financial statements.
Details are available in note 24 to the consolidated financial statements.
10.2 Incentive Plan Employee Benefit Trust
An Employee Benefit Trust was established in February 2018 to hold shares
awarded to employees as an incentive on a deferred basis. Shares awarded under
the scheme are purchased by the Trust in the open market and held until
vesting. Awards made under the scheme would normally vest after three years.
The shares are granted at fair value which is based on the market value of the
shares on that date.
2024 2023
No. of No. of
Share Awards Shares Shares
Outstanding at start of period 601,684 -
Granted 463,823 631,446
Forfeited (64,608) (29,762)
Vested (74,899) -
Outstanding at end of period 926,000 601,684
The Trust has been funded by way of a loan, and as at 30 June 2024 the
outstanding balance on the loan was £554,000 (30 June 2023: £223,000). As at
30 June 2024 the Trust held 1,257,000 shares (2023: 557,000). 74,899 shares
vested during the year ended 30 June 2024 (2023: none) and have not yet been
transferred.
2024 2023
No. of No. of
Shares Held by the Trust Shares Shares
Outstanding at start of period 557,000 12,000
Granted 700,000 545,000
Forfeited - -
Transferred following vesting - -
Outstanding at end of period 1,257,000 557,000
During the period the expense arising from share-based payment transactions
was £0.1m (2023: £0.05m).
11 Events after the reporting period
This report for the year ended 30 June 2024 was approved for issue on 25
September 2024. No material events have occurred between the reporting date
and the issue date that require disclosure under IAS 10.
OTHER INFORMATION
Risk Based Solvency Capital
A) Risk Based Solvency capital position
The Group is subject to the Isle of Man Insurance (Group Supervision)
Regulations 2019.
It has adopted the default consolidated accounts method ("Method 1") to
calculate the Group Solvency Capital Requirement ("SCR") and Own Funds as
required by these regulations. The solvency position as 30 June 2024 has been
reported below on this basis.
The Group shareholder Risk Based Solvency surplus at 30 June 2024 was £39.4m
(30 June 2023: £44.6m;), before allowing for payment of the 2024 final
ordinary dividend.
All Risk Based Solvency and related data presented in this section is subject
to change prior to submission to regulatory authorities.
30 June 30 June
Group Risk Based Solvency capital position 2024 2023
Total Total
£m £m
Own Funds 119.6 124.9
Solvency Capital Requirement 80.2 80.3
Free assets 39.4 44.6
Solvency ratio (%) 149% 156%
All Own Funds are considered Tier 1 capital.
The following compares Own Funds as at 30 June 2024 and 30 June 2023:
30 June 30 June
2024 2023
Own Funds Own Funds
£m £m
Value of In-Force 110.8 124.4
Risk Margin (12.6) (24.9)
Net Worth 21.4 25.4
Total 119.6 124.9
B) Analysis of movement in Group Solvency surplus
A summary of the movement in Group Solvency surplus from £44.6m at 30 June
2023 to £39.4m at 30 June 2024 is set out in the table below.
£m
Risk Based Solvency surplus at 30 June 2023 44.6
Operating experience (5.5)
Investment performance 5.3
Changes in assumptions 0.9
Impact of dividends paid (5.5)
Foreign exchange (0.4)
Risk Based Solvency surplus at 30 June 2024 39.4
The movement in Group Risk Based Solvency surplus the 2024 financial year was
the result of dividends paid, operating experience and negative exchange rate
movements, offset by changes in assumptions and positive investment market
performance. The change in assumptions captures the impact of the recent
change to the Risk Margin calculation methodology implemented by the IOMFSA.
New business written had a negative £4.4m impact on solvency surplus for the
period.
C) Analysis of Group Solvency Capital Requirement
The analysis of the Group's Solvency Capital Requirement ("SCR") by risk type
is as follows:
Split of the Group's Solvency Capital Requirement * 30 June 30 June
2024 2023
Risks % of SCR % of SCR
Market
Equity 46% 44%
Currency 12% 14%
Insurance
Lapse 48% 50%
Expense 19% 17%
Default 2% 2%
Operational 19% 18%
* Figures are the capital requirements prior to diversification benefits
expressed as a percentage of the final diversified SCR.
D) Reconciliation of IFRS equity to Group Risk Based Solvency
Shareholder Own Funds
30 June 30 June
2024 2023
£m £m
IFRS shareholders' equity 20.8 21.8
Elimination of DOC (112.1) (117.8)
Elimination of DIR 140.2 144.8
Value of In-Force 110.8 124.4
Liability valuation differences* (3.4) (3.5)
Impact of risk margin (12.6) (24.9)
Other** (24.1) (19.9)
Risk Based Solvency Shareholder Own Funds 119.6 124.9
* Liability valuation differences relate to additional provisions made for
risk-based capital purposes, notably for contingent liabilities.
** Other is related to Intangible Assets not recognised on the solvency
balance sheet.
E) Sensitivity analysis
The sensitivity of the Own Funds of the Group and of the Group's life
insurance subsidiaries to significant changes in market conditions is as
follows:
30 June 30 June
2024 2023
Group Group
£m £m
Own Funds 119.6 124.9
Impact of:
10% instantaneous fall in equity markets (8.3) (8.6)
100 basis points decrease in interest rates (0.4) (0.8)
10% increase in expenses (7.2) (7.4)
1% increase in expense inflation (4.6) (5.3)
10% strengthening of sterling (9.6) (11.5)
Glossary
Annualised premium equivalent ("APE")
An industry measure of insurance new business sales. It is calculated as the
sum of regular premiums and 10% of single premiums written in the year.
Assets under administration ("AUA")
A measure of the total assets that the Group administers on behalf of contract
holders, who have selected an external third-party investment manager.
Compensation Credit ("CC")
The Group's prime indicator of calculating new business production, weighted
where appropriate. This indicates the relative value of each piece of new
business and is used, therefore, in the calculation of commission payable.
Corporate Governance Code ("the Code")
The UK Corporate Governance Code sets out guidance in the form of principles
and provisions on how companies should be directed and controlled to follow
good governance practice. The Financial Reporting Council requires companies
listed in the UK to disclose how they have applied principles of the Code and
whether they have complied with its provisions throughout the accounting year.
Where the provisions have not been complied with, companies must provide an
explanation for this.
Covered business
The in-force business of the Group, including all contracts issued by the
Group's life insurance subsidiaries and subsidiaries providing administration,
distribution and other services, as at the valuation date. It excludes the
value of any future new business that the Group may write after the valuation
date.
Deferred origination costs ("DOC")
The method of accounting whereby origination costs of long-term business are
deferred in the balance sheet as an asset and amortised over the life of those
contracts. This leads to a smoothed recognition of up-front expenses instead
of the full cost in the year of sale.
Deferred income ("DIR")
The method of accounting whereby front-end fees that relate to services to be
provided in future periods are deferred in the balance sheet as a liability
and amortised over the life of those contracts. This leads to a smoothed
recognition of up-front income instead of the full income in the year of sale.
Discounting
The reduction to present value at a given date of a future cash transaction at
an assumed rate, using a discount factor reflecting the time value of money.
Earnings per share ("EPS")
EPS is a commonly used financial metric which can be used to measure the
profitability and strength of a company over time. EPS is calculated by
dividing profit by the number of ordinary shares. Basic EPS uses the weighted
average number of ordinary shares outstanding during the year. Diluted EPS
adjusts the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares, for example share awards
and share options awarded to employees.
Economic assumptions
Assumptions in relation to future interest rates, investment returns,
inflation, and tax.
Enterprise risk management ("ERM") programme.
The Framework of governance, risk management and internal control arrangements
implemented by the Group to promote identification, monitoring and management
of existing and emerging risks.
Group
Hansard Global plc and its subsidiaries.
Growth investment spend
Costs we incur investing in the future of our business, including technology
to support our growth.
Independent Financial Advisors ("IFAs")
A person or organisation authorised to give advice on financial matters and to
sell the products of financial service providers. Outside the UK IFAs may be
referred to by other names.
In-force
Long-term business which has been written before the period end and which has
not terminated before the period end.
International Financial Reporting Standards ("IFRS")
International Financial Reporting Standards are accounting standards issued by
the International Accounting Standards Board ("IASB"). The Group's
consolidated financial statements are required to be prepared in accordance
with IFRS as adopted by the United Kingdom to allow comparable reporting
between companies.
IFRS equity per share
Total IFRS equity divided by the diluted number of issued shares at the end of
the period.
Key performance indicator ("KPI")
This is one of a number of measures by reference to which the development,
performance or position of the business can be measured effectively.
Maintenance expenses
Expenses related to the servicing of the in-force book of business (including
investment and termination expenses and a share of overheads).
Net worth
The market value of the shareholders' funds, determined on an IFRS basis,
adjusted to exclude certain assets such as the deferred origination costs and
liabilities such as deferred income and to add back any non-admissible assets.
This has been adjusted for statutory reserves on the "Own Funds" basis.
New business contribution ("NBC")
The expected present value of all future cash flows attributable to
shareholders from new business. NBC is calculated after the effect of any
frictional costs. Unless otherwise stated, it is also quoted net of tax. It is
calculated at point of sale. NBC is shown after allowing for the cost of
required capital, calculated on the same basis as in-force business.
New business margin ("NBM")
NBC expressed as a percentage of PVNBP. This measures whether new business
written is adding value or eroding value. It is a measure of profitability
(not profit), comparing the expected profit (or losses) with the value of
expected premiums.
New business strain ("NBS")
Costs involved in acquiring new business (such as commission payments to
intermediaries, expenses, and reserves) affecting the insurance company's
financial position at that point and where all of the income from that new
business (including premiums and investment income) has not yet been received
and will not be received until a point in the future. To begin with,
therefore, a strain may be created where cash outflows exceed inflows.
Origination costs
Expenses related to the procurement and processing of new business written
including a share of overheads. Sometimes known as acquisition costs.
Own Funds
Those funds as defined under Solvency II, comprising Basic Own Funds and
Ancillary Own Funds. Basic Own Funds consist of the excess of assets over
liabilities as valued in accordance with Solvency II rules. Ancillary Own
Funds consist of items other than Basic Own Funds which can be called up to
absorb losses such as unpaid share capital or letters of credit and
guarantees. The Group does not have any such Ancillary Own Funds.
Present value of new business premiums ("PVNBP")
The industry measure of insurance new business sales under the European
Embedded Value methodology. It is calculated as 100% of single premiums plus
the expected present value of new regular premiums.
Regular premium
A regular premium contract (as opposed to a single premium contract), is one
where the contract holder agrees at inception to make regular payments
throughout the term of the contract.
Risk Based Solvency
Solvency calculated according to the Isle of Man Insurance (Long-term business
Valuation and Solvency) Regulations 2021. A solvency regime designed to be
capable of a positive Solvency II equivalence assessment.
Risk discount rate
The present value of a future cash amount depends on its currency and the time
until it will become available. The present value is determined using a
discount rate that reflects currency and timing. Discount rates are set based
on swap rates for the relevant currency determined at year-long intervals for
amounts in GBP, EUR, USD and JPY up to year 30, and the year 30 rate
thereafter. This covers over 95% of the future expected cash amounts by funds
under management: other currencies are assumed to be subject to the GBP rate.
Year 1 rates are used to unwind the existing business and are shown separately
in the disclosures.
Single premium
A single premium contract (as opposed to a regular premium contract (see
above)), involves the payment of one premium at inception with no obligation
for the contract holder to make subsequent additional payments.
Solvency II
The EU-wide regulatory regime which aims to more closely align solvency
capital to an insurer's risk profile. It came into force on 1 January 2016.
Unit-linked policy
A policy where the benefits are determined by reference to the investment
performance of a specified pool of assets referred to as the unit-linked fund.
Value of In-force ("VIF")
The present value of expected future shareholder profits less the present
value cost of holding capital required to support the in-force business.
Financial Calendar
Financial Calendar for the financial year ending 30 June 2025
Annual General Meeting 13 November 2024
Payment date for final dividend 14 November 2024
Publication of half-yearly results 6 March 2025
Declaration of interim dividend 6 March 2025
Ex-dividend date for interim dividend 13 March 2025
Record date for interim dividend 14 March 2025
Payment of interim dividend 24 April 2025
Announcement of results for the year ended 30 June 2024 25 September 2025
Declaration of final dividend 25 September 2025
Ex-dividend date for final dividend 2 October 2025
Record date for final dividend 3 October 2025
Annual General Meeting 5 November 2025
Payment date for final dividend 15 November 2025
Contacts and Advisors
Registered Office Media Enquiries
55 Athol Street Camarco
107 Cheapside
Douglas
London
Isle of Man
EC2V 6DN
IM99 1QL
Tel: +44 (0)20 3757 4980
Tel: +44 (0)1624 688000
Fax: +44 (0)1624 688008
www.hansard.com
President Broker
Dr Leonard S Polonsky, CBE Panmure Liberum Limited
Leonard.Polonsky@hansard.com Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Tel. +44 (0)20 7886 2500
Non-executive Chair Registrar
Philip Kay Link Market Services (Isle of Man) Limited
Philip.Kay@hansard.com PO Box 227
Peveril Buildings
Peveril Square
Douglas
Isle of Man
IM99 1RZ
Tel (UK): 0871 664 0300*
Tel: +44 (0)20 8639 3399
Financial Advisor
Rothschild & Co
New Court
St Swithin's Lane
London
EC4N 8AL
Tel: +44 (0)20 780 1966
Independent Auditor UK Transfer Agent
KPMG Audit LLC Link Market Services Trustees Limited
Heritage Court The Registry
41 Athol Street 34 Beckenham Road
Douglas Beckenham
Isle of Man Kent
IM1 1LA BR3 4TU
Tel: +44 (0)1624 681000 Tel (UK): 0871 664 0300 *
Tel: +44 (0)20 8639 3399
*NB: 0871 Number - calls cost 12p per minute plus network extras. If you are
outside the United Kingdom, please call +44 371 664 0300. Calls outside the
United Kingdom will be charged at the applicable international rate. The
helpline is open between 9.00 am - 5.30 pm, Monday to Friday excluding public
holidays in England and Wales.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR GZGZLZKKGDZZRecent news on Hansard Global
See all newsREG - Hansard Global plc - Dr Leonard Polonsky
AnnouncementREG - Hansard Global plc - Interim Result
AnnouncementREG - Hansard Global plc - Directorate Change
AnnouncementREG - Hansard Global plc - Directorate Change
AnnouncementREG - Hansard Global plc - Result of AGM
Announcement