TIDMCPP
RNS Number : 6806W
CPPGroup Plc
21 August 2015
CPPGROUP PLC
21 AUGUST 2015
HALF YEAR REPORT
FOR THE SIX MONTHS ENDED 30 JUNE 2015
ROBUST FIRST HALF PERFORMANCE
CLEAR AND FOCUSED APPROACH FOR THE FUTURE
CPPGroup Plc (CPP or the Group) is an international assistance
business operating in the UK and overseas. CPP primarily operates a
business-to-business-to-consumer (B2B2C) business model providing
products and services to customers through Business Partners and
direct to consumer. The Group's core assistance products help to
provide security and are designed to make everyday life easier to
manage.
Financial highlights
-- Group revenue from continuing operations of GBP45.2 million (H1 2014: GBP58.7 million)
-- The Group's annual renewal rate has improved to 73.2% (31
December 2014: 71.4%), reflecting the value customers continue to
place on our products
-- Underlying operating profit of GBP2.2 million (H1 2014:
breakeven) partly reflecting the on-going control of the cost
base
-- Stable financial platform and stronger liquidity, following
successful equity raise and debt restructuring together with
improved trading
Operational highlights
-- Commenced work with SSP Limited on implementation of a new
core platform IT system for the Group
-- Decision to cease providing airport lounge access services (Airport Angel)
-- Reorganisation of management to a more nimble structure with greater accountability
-- Strategic initiatives defined to drive growth, enhance
digital and IT capability and manage costs
-- New executive team; appointment of Stephen Callaghan as Chief
Executive Officer, 30 July 2015; proposed appointment of Michael
Corcoran as Chief Financial Officer, with effect from 1 September
2015
Stephen Callaghan, Chief Executive Officer, commented:
"CPP has made significant progress in the first half of 2015.
Securing new equity funding and restructuring of the Group's debt
has provided the business with a stable financial platform, and the
business has delivered an improved profit performance underpinned
by our on-going focus on costs. There is much work to do for the
Group to realise its growth ambitions, however we are seeing
encouraging progress from the actions we are taking to improve our
financial performance. We expect to make further progress during
the remainder of 2015 and, looking to next year, our current view
is that the Group's underlying operating profit will be materially
higher than the previous expectations set for 2016.
CPP is going through a significant transition. We are in the
early stages of the Group's transformation plan and the team at CPP
has clarity of purpose, a focused approach, and well-defined
accountability. As the Group looks to the future, we know what we
have to do and understand the importance of maintaining momentum in
the delivery of our plans to ensure we achieve a strong,
sustainable and profitable future."
Highlights - continuing operations Six months ended 30 June 2015 Six months ended 30 June 2014
(Unaudited) (Unaudited)
---------------------------------------------- ------------------------------ ------------------------------
Revenue (GBP millions) 45.2 58.7
Operating profit/(loss) (GBP millions)
- Reported 20.7 (0.3)
- Underlying1 2.2 -
Profit/(loss) for the period (GBP millions)2 17.1 (2.7)
Basic earnings/(loss) per share (pence) 2.50 (1.12)
Cash used in operations (GBP millions)3 (4.0) (23.0)
Net funds (GBP millions)4 36.9 21.6
Live policies (millions) 4.4 6.1
Annual renewal rate (%)(5) 73.2 69.5
1. Underlying operating profit/(loss) excludes an exceptional
credit of GBP18.9 million (H1 2014: GBP0.3 million charge) and
Matching Share Plan charges of GBP0.3 million (H1 2014: GBPnil).
Further detail of the exceptional credit is provided in note 4 to
the condensed consolidated interim financial statements.
2. Profit/(loss) for the period includes profit/(loss) after tax
from continuing and discontinued operations.
3. Includes cash flows from continuing and discontinued operations.
4. Net funds comprise cash and cash equivalents of GBP38.0
million (H1 2014: GBP53.6 million) partially offset by borrowings
of GBP1.1 million (H1 2014: GBP32.0 million). Cash and cash
equivalents includes cash held for regulatory purposes of GBP15.8
million (H1 2014: GBP20.4 million) and cash restricted by the terms
of the VVOP within the UK's regulated entities of GBP17.5 million
(H1 2014: GBP24.4 million). Whilst not available to the wider
Group, the restricted cash is available to the regulated entity in
which it exists including for operational and residual redress
purposes.
5. The annual renewal rate does not include cancellations that
have occurred during the UK Scheme as they are not considered
available to renew in the normal course of business. If UK Scheme
of Arrangement cancellations were included the annual renewal rate
would be 8.0 percentage points lower at approximately 65.2% (H1
2014: 1.3 percentage points lower at 68.2%).
Enquiries
CPPGroup Plc
Stephen Callaghan, Chief Executive Officer
Craig Parsons, Chief Financial Officer
Tel: +44 (0)1904 544500
Nominated Adviser and Broker
Numis Securities Limited: Robert Bruce; Stuart Skinner; Charles
Farquhar
Tel: +44 (0)20 7260 1000
Media
Martin Robinson, Tulchan Communications +44 (0)20 7353 4200
For more information on CPP visit www.cppgroupplc.com
REGISTERED OFFICE
CPPGroup Plc
Holgate Park
York
YO26 4GA
Registered number: 07151159
CHAIRMAN'S STATEMENT
Introduction and first impressions
I joined the Board of CPP in May 2015 and was appointed Chairman
in July. During my career I have worked across many different
industries, developing a track record for overseeing successful
business transformations, most recently as Non-Executive Chairman
of Hornby PLC, the international models and collectibles group, and
more broadly in my capacity as Chairman of Phoenix Asset Management
Partners.
In my first months at CPP I have spent time with the leadership
team and developed a more in-depth knowledge of the Group. CPP has
come through a very challenging few years and there is more work to
do if we are to achieve the more focused, sustainable and
profitable future that we want for this business.
The process to secure new equity funding at the start of this
year, together with the concurrent restructuring of the Group's
liabilities and refinancing of its debts, was a critical milestone.
The successful completion of this process provided the Group with a
stronger and more stable footing and signalled the start of a new
era for CPP upon which we will build.
My early engagement with the business has provided me with
confidence. The Group has continued to show resilience through
challenging times, and it is clear that it has potential. The
business has an extensive international footprint, real product
development ambition, and good customer service capabilities. At
the heart of all this is CPP's colleagues - they have the passion
to go the extra mile for end-customers, and they are committed to
making this business a success. Ensuring that we continue to
provide opportunity for our people by both developing existing
colleagues and attracting new talent to the business are key
priorities and by so doing the Group will be better placed to
capitalise on the opportunities that lie ahead. As Chairman I will
be providing my full support to the executive team in this regard.
It is only by having the right people, doing the right things by
customers, that we will deliver sustainable value to our
shareholders and other stakeholders.
Board changes
There have been a number of Board changes during the first half
of the year, not least my own appointment to the Board in May
before taking over the Chairmanship in July. The Board thanks Eric
Anstee, my predecessor, for his contribution to the Group and
wishes him well for the future.
CPP also has a new executive team. We were delighted to have
secured the services of Stephen Callaghan as Chief Executive
Officer (CEO). Stephen has a proven track record of driving
improved business performance on an international scale, with
extensive relevant experience in growing technology-enabled
customer service businesses. He is a highly experienced executive
and has already made a significant impact on the business. The
Board looks forward to supporting Stephen as he continues to lead
the Group forward.
At the end of June, Craig Parsons announced his decision to step
down from his role as Chief Financial Officer after 13 years with
the Group, which will take effect on 31 August 2015. Craig has
given a huge amount to CPP during his time with the business and
leaves with our very best wishes for continued career success.
Today we are pleased to announce the Board's intention to appoint
Michael Corcoran as CPP's new Chief Financial Officer (subject to
regulatory approval) with effect from 1 September 2015. Michael has
extensive international and regulated business experience and
expertise in managing strong financial, operational, governance and
compliance frameworks. On behalf of the Board I would like to
welcome Michael to CPP and we look forward to the new and valuable
perspective he brings.
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
An important priority for me and the leadership team will be to
ensure that an appropriate business culture exists in the Group
underpinned by the necessary governance structure to support the
business, and that CPP has effective leadership supported by a
strong Board. I believe the Group's new executive team will bring
considerable energy to CPP as we embark on the next stage of our
journey. We will also add depth to the Group Board this year and my
focus will be on ensuring that the appointments we make bring both
relevant experience and complementary skills.
Dividend
The Directors have decided not to recommend the payment of a
dividend and the Board continues to believe it is not appropriate
to pay a dividend until cash generated by operating activities is
more than adequate to cover the Group's future investment
plans.
Roger Canham
Chairman
CHIEF EXECUTIVE'S STATEMENT
Introduction and first impressions
On 17 March 2015, I was engaged to support the Executive
Chairman as a contractor to CPP and subsequently, in April 2015,
the Board announced its intention to appoint me as Interim CEO
subject to regulatory approval. On 30 July 2015, my position as the
permanent CEO was announced following completion of my Approved
Persons application and following a process that resulted in the
Board approving my permanent appointment. My appointment therefore
followed the completion of the equity raise and debt restructure in
February and my tenure as CEO commences as the business embarks on
a new beginning.
In the 150 or so days that have elapsed since my initial
appointment I have gained a thorough understanding of the business
and turned my attention to the activities required to best position
the Group for recovery and growth. This is an international
business with operations in established markets such as the UK,
Spain, Germany, Italy and Portugal as well as emerging markets in
India, Mexico, Malaysia, Turkey and China. I have spent time with
colleagues across the business to understand how our operations are
run and how they interact, what's working and what's not, and which
areas need improvement or to be stopped.
CPP is a business that has endured a number of challenging
years, particularly in the UK. It is clear to me that the Group has
many strengths and my role is to build upon these whilst
eliminating activities and behaviours that detract from our core
purpose. For CPP to succeed - to become the 'international
assistance business of choice' - then it must do so as a committed,
trusted organisation that provides a valuable service to its
customers.
In this regard CPP is going through a significant transition.
The business has been focused on resolving legacy issues which have
been so damaging to our reputation. The conduct and practices that
led to these issues in the past are entirely inconsistent with the
values we hold ourselves to today. As part of our culture change we
have been embedding our core values of Commit, Collaborate, and
Perform across the organisation through training courses and
through our management processes supported by regular internal
communications. We are committed to creating a values-driven
culture in CPP, which will enhance the customer experience. These
core values will also determine how we measure and reward
performance. We also continue to focus on governance and
leadership, controls (including enhanced resources in Risk and
Compliance), and ensuring that our product offerings are designed
to meet the needs of our customers. We have a lot of work to do,
however we now have a good financial basis on which to build, and
it is by rising to these challenges that we will create our own
opportunities. Our focus on culture change will continue through
2015 and beyond, will demonstrate our commitment to doing business
in the right way, and will support long-term, sustainable business
growth.
I wish to build an organisation designed to execute against both
tactical and strategic plans that position the Group to become a
sustainable, growing and profitable business. Clinical focus on key
activities designed to create both the cash runway and the
execution time required to deliver customer led product and
proposition developments are central to this plan. The reporting
and management structure has been reorganised to eradicate cost and
improve operational control, such as taking decisive action to
cease provision of the historically loss making airport lounge
access services marketed under the Airport Angel brand.
We have three clear priorities in the short term: revenue
generation, business transformation, and cost reduction. Internally
we refer to these as 'swim lanes' and each has an executive owner
with accountability and a reporting line directly to me. Included
within these deliverables will be our Regulatory Business Plan; a
pre-requisite for applying to remove the restrictions of the
Voluntary Variation of Permissions (VVOP) and recommencing 'new
business' commercial activities in the UK, which remains a key
strategic market for the Group. Concurrently with these initiatives
we will set a clear strategic direction for the business and this
will require a strong and committed team. We have the core of that
team in place now but by the close of this financial year I intend
to strengthen the executive team further, specifically in the areas
of technology and marketing.
Group performance - a stronger, profitable platform
During the first half of 2015 CPP secured new equity funding,
restructured the Group's liabilities and refinanced its debts. This
was an essential and significant step that has provided the Group
with a stable financial platform upon which to build.
Results for the first half of 2015 show the business returning
to profitability but they also continue to exhibit some of the
underlying challenges and trends faced by the business. Group
revenue has declined to GBP45.2 million (H1 2014: GBP58.7 million),
continuing to reflect the natural decline in the UK renewal book as
new business sales remain restricted. The underlying operating
profit in the first half of the year is GBP2.2 million (H1 2014:
breakeven). This improved underlying operating profit performance
is partly the result of the actions taken in 2014 to reduce the
cost base, alongside on-going cost control scrutiny and
initiatives. The Group's liquidity is stronger following the equity
raise and improved trading performance.
The Group's annual renewal rate has improved to 73.2% (31
December 2014: 71.4%), reflecting the value customers continue to
place on our products, albeit the live policy base has reduced to
4.4 million (31 December 2014: 5.1 million) principally due to an
expected decline in UK wholesale policies.
Group performance in the first half of 2015 is discussed further
in the operational and financial reviews below.
Revenue generation
The Chief Revenue Officer (CRO) owns the Group's growth agenda
which is underpinned by three drivers: products, channels and
geographies. Current products and propositions will continue to be
sold, reviewed and updated to become relevant for new geographies
and channels to market, including digital. New products will be
conceived and designed in response to consumer demand for
deployment on an international basis through new and existing sales
channels.
-- Maximising existing capability
Short-term revenue generation will be driven almost exclusively
by looking after our existing customers and by augmenting the
Group's existing capabilities by making relatively simple product
changes to facilitate geographic revenue growth in response to
consumer demand. This extends the reach of the Group's existing
product portfolio. Country Managers now report to the CRO and we
have created forums for the dissemination of product, channel and
marketing initiatives so that we can leverage activity across the
business.
-- Accelerating the development of new growth initiatives
Innovation is central to the Group's future plans, and this
applies to products, customer propositions and channels. Work is
underway to develop new products and propositions that will be
increasingly digital-led, enabled by the Group's transition to a
new core platform IT system and the appointment of a Chief
Technical Officer who will report directly to me and work alongside
the Product team. The development of new business channels to
market outside of CPP's traditional banking channels will create
growth potential.
Business transformation
This swim lane is the direct responsibility of the Group's Chief
Operating Officer and is focused on ensuring a successful migration
to a new Group-wide core IT operating infrastructure to deliver
cost, compliance and control benefits. This is a key activity to
support our Regulatory Business Plan focused initially around
relaunching the UK business to better serve customer needs, as well
as creating an international business enabler.
The new system will provide the core IT platform to support the
Group's increasing focus on digital technology whilst improving
operational efficiency and improving customer experience. During
the first half of the year we announced that SSP Limited, the
leading specialist in general insurance technology solutions, had
been selected as our systems partner. Work is well underway with
the implementation process, which will be rolled out in the UK
initially during 2016 and then be extended across the Group's
international operations. This is a significant focus for the
business and we are working to an intensive timetable, with a high
level of commitment and motivation to achieving a successful
Group-wide implementation but not before the end of 2016.
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
When fully embedded, the system will simplify and standardise
processes across the business; provide compliant, robust governance
controls and secure customer data storage; and support our
increasingly digital aspirations in new product development. By
adopting a proven platform chosen by leading insurers, CPP will
have a stronger competitive position in an increasingly digital
world.
Cost reduction
The cost control swim lane is owned by the Group's Chief
Financial Officer and tight control of costs remains a core focus
for CPP. Administrative costs have reduced by GBP4.6 million
compared to the same period last year and we have a clear line of
sight on additional savings within the existing cost base. During
the first half of the year we have taken some big steps, by
completing the closure of the underperforming Brazilian operation,
for example. In addition, effective cost control is becoming
embedded as a core part of CPP's culture and values. We are
challenging all aspects of the business to ensure we are maximising
the value we get from our expenditure.
Moving towards an efficient and effective organisation
The management structure has been reorganised to provide clarity
and greater accountability. The Regional Director management layer
has been removed to create a structure more appropriate for a
business of our size. This ensures a more effective structure,
brings the Group executive team closer to operations across the
Group's geographies and will allow me to have my hands more
directly on the levers and work closely with small teams to get
things done. This will allow us to gain pace with our initiatives
and accelerate the Group's progress.
By bringing the executive team closer to the Group's operations
we have been more readily able to recognise talent within the Group
and identify gaps, such as leadership roles in technology and
marketing that we are seeking to fill. The culture and values we
seek to adopt require us to have engaged, enthusiastic and
committed people from the front line to the very top of the
organisation. Confident and empowered colleagues are essential to
making a difference at CPP whilst we build their careers in the
process. This work has been initiated in the first half and
continues apace.
Operational review
During the period the Group operated internationally in three
regions; UK and Ireland which accounts for 63% of Group revenue,
Europe and Latin America which accounts for 29% of Group revenue
and Asia Pacific which accounts for 8% of Group revenue. Further
detail of regional financial performance is provided in note 3 to
the condensed consolidated interim financial statements. As part of
the Group's organisational restructure the intention is to shift
the focus of management away from the current regional basis to an
individual country level.
Group revenue has continued to decline, principally due to the
restrictions on new retail sales in the UK from the VVOP, and the
continued difficult economic conditions in southern Europe.
However, we are encouraged by the increase in the Group's annual
renewal rate, which is driven by an improving rate in the Group's
largest renewal markets, the UK and Spain. The loyalty of the
existing customer base is pleasing and demonstrates that customers
value our products. However we recognise there is more that can be
done to further enhance the customer experience and during the
period the Group has continued to develop its product and channel
propositions which have led to a number of new opportunities.
The key commercial operational developments during the period
include:
-- Spain - a contract to provide a new automotive insurance
product has been signed and sales will commence in H2 2015
-- India - positive progress has been made in the mobile phone
protection sector, with one major contract signed and sales have
now commenced. The Card Protection portfolio continues to grow with
new opportunities in several retail banks, some of which are linked
to new channel development
-- Turkey - new channel development has contributed to revenue growth in the period
-- Italy - there are a number of exciting pilot campaigns
planned which will help to drive new revenue in the country
-- China - we have worked hard with existing partners to develop
new sales channels that show potential, whilst at the same time
reviewing the financial viability of existing campaigns and making
closures where necessary
-- UK - detailed market analysis has been undertaken to
influence and inform our strategic product development
direction
The decision to cease providing airport lounge access services
(Airport Angel), as announced on 27 May 2015, is a further step
towards CPP becoming a more focused, sustainable and profitable
business. We are working towards Airport Angel being operationally
closed by the end of the year. The regional office closure in Hong
Kong is also complete and plans to exit the market are well
advanced. The market exit of Brazil has been completed in the first
half of the year.
We continue to work on enhancing our digital capability which
will enable more interactive, efficient ways of engaging with our
customers.
Financial review
Summary
The Group completed the equity raise and debt restructure in
February 2015 which represented an essential and significant
milestone in restoring the Group's financial stability and
providing a platform from which it can progress in its development.
The cost base remains a key priority and is an area of continued
focus across the Group.
On a constant currency basis, Group revenue has declined by 21%
for the half year to GBP45.2 million, continuing to reflect the
natural decline in the UK renewal book as new sales remain
restricted through the terms of the VVOP. The Group's annual
renewal rate has improved in the period to 73.2% from 71.4% at 31
December 2014. This improvement is largely driven by the UK,
reflecting the value the remaining book places in our products and
the approved change in late 2014, to revert to an industry standard
'cooling off' period for renewing policies.
The underlying operating profit in the first half of the year is
GBP2.2 million (H1 2014: breakeven). Underlying operating profit,
which excludes exceptional items and Matching Share Plan (MSP)
charges, has improved largely as a result of the actions taken in
2014 to reduce the cost base and one-off benefits relating to
Airport Angel, which offset the profit impact of declining revenue.
The underlying operating profit margin has therefore increased to
4.8% (H1 2014: breakeven).
Exceptional items are a credit of GBP18.9 million (H1 2014:
charge GBP0.3 million) which comprises; a gain from the compromise
of the commission deferral agreement, net of associated costs, of
GBP19.4 million; and restructuring activities, mainly in Spain, of
GBP0.5 million.
The exceptional items, along with the MSP charges of GBP0.3
million contribute to a reported operating profit of GBP20.7
million (H1 2014: loss GBP0.3 million).
Profit after tax from continuing operations is GBP17.1 million
(H1 2014: loss GBP1.9 million) and underlying profit after tax,
which excludes exceptional items and MSP charges, is GBP0.4 million
(H1 2014: loss GBP1.7 million).
There are no discontinued operations in the current period (H1
2014: loss GBP0.8 million). The Group's reported profit for the
period is therefore GBP17.1 million (H1 2014: loss GBP2.7 million).
In accordance with accounting standards, the results of Airport
Angel will be disclosed as discontinued when its closure is
complete.
Redress
The Group has a remaining customer redress and associated cost
provision at 30 June 2015 of GBP3.7 million, which reflects the
Group's current estimate of the cost to complete residual customer
redress activity. There has been no additional provision made in
the first half of the year. The provision does not include an
amount for the outstanding element of the regulatory fine of GBP8.5
million, which is disclosed within current and non-current
payables.
Balance sheet, financing and cash flow
The equity raise and debt restructure has had a fundamental
impact on the Group's balance sheet position, returning it to net
assets of GBP5.3 million at 30 June 2015 from net liabilities of
GBP30.9 million at 31 December 2014.
The Group's borrowing arrangements comprise a GBP5.0 million
debt facility which is available until February 2018, and a
commission deferral balance of GBP1.3 million which is due for
repayment in January 2017. These arrangements are much reduced,
following the debt restructure in February 2015, from the previous
GBP13.0 million debt facility and GBP20.9 million commission
deferral balance. The debt facility, whilst committed, is not
currently being utilised by the Group.
As expected, the Group's net funds position has increased to
GBP36.9 million at 30 June 2015 (31 December 2014: GBP7.9 million)
as a result of the equity raise and commission deferral compromise.
The working capital outflow of GBP6.2 million in the period
reflects continued cash settlement of residual redress and a
reduction in Airport Angel and southern European trading balances.
Capital expenditure in the period is GBP2.5 million (H1 2014:
GBP0.1 million) as the Group develops its new core policy IT
system, with planned implementation being H1 2016 in the UK. The
net funds figure includes GBP33.3 million cash held in the UK's
regulated entities. These cash balances cannot be distributed to
the wider Group as they are either held for regulatory purposes or
are restricted by the terms of the VVOP. The restricted cash is,
however, available to use in the regulated entity in which it
exists.
Summary and outlook
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
CPP has made significant progress in the first half of 2015.
Securing new equity funding and restructuring of the Group's debt
has provided the business with a stable financial platform, and the
initial focus on swim lanes will ensure that we generate the
necessary momentum and cash runway upon which to build a future.
This is a new beginning for CPP. Under a new and motivated
leadership team the business has started to take actions that will
shape the long-term future development of the Group.
Challenges remain and there is much work to do for the Group to
realise its growth ambitions. Consequently, there continues to be
uncertainty from strategic risk whilst the Group's plans are
developed. However, the team at CPP has clarity of purpose, a
focused approach, and well-defined accountability. Therefore, as
the Group looks to the future, we know what we have to do and
understand the importance of maintaining momentum in the delivery
of our plans.
Efforts to improve the Group's financial performance in the
short-term will continue and we are seeing encouraging progress
from the actions we are taking. Whilst we expect to make further
progress during the remainder of 2015, looking to next year,
following a strengthening of renewal rates, other commercial
initiatives and further cost control, our current view is that the
Group's underlying operating profit will be materially higher than
the previous expectations set for 2016, albeit 2016 revenue is
expected to be materially lower following the closure of Airport
Angel.
Stephen Callaghan
Chief Executive Officer
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
6 months ended 6 months ended Year ended
30 June 2015 30 June 2014 31 December 2014
GBP'000 GBP'000 GBP'000
Note (Unaudited) (Unaudited) (Audited)
Continuing operations
Revenue 45,185 58,667 108,806
Cost of sales (22,739) (33,746) (60,774)
Gross profit 22,446 24,921 48,032
Administrative expenses
--------------- --------------- ------------------
Exceptional items 4 18,902 (262) (6,323)
Matching Share Plan charges 13 (348) - -
Other administrative expenses (20,283) (24,924) (47,507)
Total administrative expenses (1,729) (25,186) (53,830)
Operating profit/(loss)
--------------- --------------- ------------------
Operating profit/(loss) before exceptional items and
Matching Share Plan charges 2,163 (3) 525
--------------- --------------- ------------------
Operating profit/(loss) after exceptional items and
Matching Share Plan charges 20,717 (265) (5,798)
Investment revenues 131 287 432
Finance costs (1,416) (1,164) (2,296)
Profit/(loss) before taxation 19,432 (1,142) (7,662)
Taxation 5 (2,351) (780) 1,698
Profit/(loss) for the period from continuing
operations 17,081 (1,922) (5,964)
Discontinued operations
Loss for the period from discontinued operations - (785) (785)
--------------- --------------- ------------------
Profit/(loss) for the period attributable to equity
holders of the Company 17,081 (2,707) (6,749)
--------------- --------------- ------------------
Basic earnings/(loss) per share:
Continuing operations 7 2.50 (1.12) (3.48)
Discontinued operations 7 - (0.46) (0.46)
--------------- --------------- ------------------
2.50 (1.58) (3.94)
--------------- --------------- ------------------
Diluted earnings/(loss) per share:
Continuing operations 7 2.48 (1.12) (3.48)
Discontinued operations 7 - (0.46) (0.46)
----- ------- -------
2.48 (1.58) (3.94)
----- ------- -------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
6 months ended 30 June 2015 6 months ended 30 June 2014 31 December 2014
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Profit/(loss) for the period 17,081 (2,707) (6,749)
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on
translation of foreign
operations 296 146 111
Other comprehensive income for
the period net of taxation 296 146 111
---------------------------- ---------------------------- ------------------
Total comprehensive
income/(expense) for the period
attributable to equity holders
of the
Company 17,377 (2,561) (6,638)
---------------------------- ---------------------------- ------------------
CONSOLIDATED BALANCE SHEET
30 June 2015 30 June 2014 31 December 2014
GBP'000 GBP'000 GBP'000
Note (Unaudited) (Unaudited) (Audited)
Non-current assets
Other intangible assets 8 2,810 1,915 808
Property, plant and equipment 8 3,657 4,621 3,820
Deferred tax asset 489 2 2,248
------------- ------------- -----------------
6,956 6,538 6,876
------------- ------------- -----------------
Current assets
Insurance assets 451 376 593
Inventories 89 121 93
Trade and other receivables 14,048 18,803 15,709
Cash and cash equivalents 9 38,019 53,613 40,599
------------- ------------- -----------------
52,607 72,913 56,994
Total assets 59,563 79,451 63,870
------------- ------------- -----------------
Current liabilities
Insurance liabilities (1,651) (2,612) (2,019)
Income tax liabilities (2,923) (2,983) (2,231)
Trade and other payables (41,398) (44,502) (40,631)
Provisions 11 (4,437) (14,034) (7,041)
------------- -----------------
(50,409) (64,131) (51,922)
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
------------- ------------- -----------------
Net current assets 2,198 8,782 5,072
------------- ------------- -----------------
Non-current liabilities
Borrowings 10 (1,130) (32,016) (32,733)
Deferred tax liabilities (13) (529) (126)
Trade and other payables (2,125) (9,505) (8,991)
Provisions 11 (606) - (973)
------------- ------------- -----------------
(3,874) (42,050) (42,823)
------------- ------------- -----------------
Total liabilities (54,283) (106,181) (94,745)
------------- ------------- -----------------
Net assets/(liabilities) 5,280 (26,730) (30,875)
============= ============= =================
Equity
Share capital 12 23,879 17,123 17,126
Share premium account 45,109 33,290 33,291
Merger reserve (100,399) (100,399) (100,399)
Translation reserve 1,016 755 720
Equalisation reserve 6,870 7,834 7,487
ESOP reserve 12,223 11,886 11,891
Retained earnings/(accumulated losses) 16,582 2,781 (991)
------------- ------------- -----------------
Total equity attributable to equity holders of the
Company 5,280 (26,730) (30,875)
============= ============= =================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Share premium Merger Translation Equalisation ESOP Retained earnings /
capital account reserve reserve reserve reserve (accumulated losses) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended
30 June 2015
(Unaudited)
At 1 January 2015 17,126 33,291 (100,399) 720 7,487 11,891 (991) (30,875)
Total
comprehensive
income - - - 296 - - 17,081 17,377
Movement on
equalisation
reserve - - - - (617) - 617 -
Current tax charge
on equalisation
reserve movement - - - - - - (125) (125)
Equity settled
share based
payment charge - - - - - 332 - 332
Other ordinary
share issues
(note 12) 6,753 11,818 - - - - - 18,571
At 30 June 2015 23,879 45,109 (100,399) 1,016 6,870 12,223 16,582 5,280
======== ======== ========== ============ ============= ======== ===================== =========
6 months ended
30 June 2014
(Unaudited)
At 1 January 2014 17,120 33,292 (100,399) 609 8,129 11,688 5,259 (24,302)
Total
comprehensive
expense - - - 146 - - (2,707) (2,561)
Movement on
equalisation
reserve - - - - (295) - 295 -
Current tax charge
on equalisation
reserve movement - - - - - - (63) (63)
Equity settled
share based
payment - - - - - 198 - 198
Exercise of share
options 3 (2) - - - - (3) (2)
At 30 June 2014 17,123 33,290 (100,399) 755 7,834 11,886 2,781 (26,730)
======== ======== ========== ============ ============= ======== ===================== =========
Year ended
31 December 2014
(Audited)
At 1 January 2014 17,120 33,292 (100,399) 609 8,129 11,688 5,259 (24,302)
Total
comprehensive
expense - - - 111 - - (6,749) (6,638)
Movement on
equalisation
reserve - - - - (642) - 642 -
Current tax charge
on equalisation
reserve movement - - - - - - (138) (138)
Equity settled
share based
payment charge - - - - - 203 - 203
Deferred tax on
share based
payment charge - - - - - - 1 1
Exercise of share
options 6 (1) - - - - (6) (1)
At 31 December
2014 17,126 33,291 (100,399) 720 7,487 11,891 (991) (30,875)
======== ======== ========== ============ ============= ======== ===================== =========
CONSOLIDATED CASH FLOW STATEMENT
6 months ended 6 months ended Year ended
Note 30 June 2015 30 June 2014 31 December 2014
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Net cash used in operating activities 14 (4,167) (21,125) (32,906)
Investing activities
Interest received 131 287 432
Purchases of property, plant and equipment (140) (37) (190)
Purchases of intangible assets (2,327) (58) (406)
Cash consideration in respect of sale of
discontinued operations - 275 275
Credit associated with disposal of discontinued
operations - 28 28
Investment in joint venture - (1,096) (1,000)
Net cash used in investing activities (2,336) (601) (861)
--------------- --------------- ------------------
Financing activities
Repayment of bank loans (13,000) - -
Repayment of borrowings (1,304) - -
Proceeds from new borrowings 1,304 8,831 8,831
Interest paid (882) (239) (514)
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
Cost of refinancing (220) - -
Cost of compromising the Commission Deferral
Agreement (743) - (193)
Issue of ordinary share capital and associated
costs 19,069 (2) (499)
Net cash generated by financing activities 4,224 8,590 7,625
--------------- --------------- ------------------
Net decrease in cash and cash equivalents (2,279) (13,136) (26,142)
Effect of foreign exchange rate changes (301) (151) (159)
Cash and cash equivalents at start of period 40,599 66,900 66,900
Cash and cash equivalents at end of period 38,019 53,613 40,599
=============== =============== ==================
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1 General information
The condensed consolidated interim financial statements for the
six months ended 30 June 2015 do not constitute statutory accounts
as defined under Section 434 of the Companies Act 2006. The
Financial Statements for the year ended 31 December 2014 were
approved by the Board on 30 March 2015 and have been delivered to
the Registrar of Companies. The Auditor, Deloitte LLP, reported on
these financial statements; their report was unqualified, did not
contain an emphasis of matter paragraph and did not contain
statements under s498 (2) or (3) of the Companies Act 2006.
2 Accounting policies
Basis of preparation
The unaudited condensed consolidated interim financial
statements for the six months ended 30 June 2015 have been prepared
in accordance with IAS 34 'Interim Financial Reporting' as adopted
by the European Union.
The condensed consolidated interim financial statements should
be read in conjunction with the Annual Report and Financial
Statements ("the Financial Statements") for the year ended 31
December 2014, which have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
The condensed consolidated interim financial statements were
approved for release on 20 August 2015.
New and amended standards and interpretations need to be adopted
in the interim financial statements issued after their effective
date (or date of early adoption). There are no new IFRSs or IFRICs
that are effective for the first time for the six months ended 30
June 2015 which have a material impact on the Group.
Going concern
The Group is in a stable financial position following the
completion of the UK Scheme of Arrangement and the successful
equity raise, restructure of liabilities and refinancing in
February 2015. Whilst there continues to be uncertainty from medium
term trading and strategic risk, the Group's forecasts show that
the Group should have the necessary resources to trade and operate
within the level of its borrowing facilities.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the
condensed consolidated interim financial statements.
3 Segmental analysis
Segment revenue and performance for the current and comparative
periods have been as follows:
Europe
UK and and Latin Asia
Ireland America Pacific Total
Six months ended 30 June 2015 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited)
Continuing operations
Revenue - external sales 28,436 12,926 3,823 45,185
--------- ------------ --------- --------
Regional operating profit/(loss)
before exceptional items and
Matching Share Plan charges 156 2,102 (95) 2,163
--------- ------------ ---------
Exceptional items (note 4) 18,902
Matching Share Plan charges (348)
Operating profit after exceptional
items and Matching Share Plan
charges 20,717
Investment revenues 131
Finance costs (1,416)
--------
Profit before taxation 19,432
Taxation (2,351)
--------
Profit for the period from
continuing operations 17,081
Discontinued operations
Loss for the period from discontinued -
operations
--------
Profit for the period 17,081
========
UK and Europe and Asia
Ireland Latin America Pacific Total
Six months ended 30 June 2014 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited)
Continuing operations
Revenue - external sales 38,490 17,034 3,143 58,667
--------- ---------------- --------- --------
Regional operating (loss)/profit
before exceptional items (3,298) 3,271 24 (3)
--------- ---------------- ---------
Exceptional items (note 4) (262)
Operating loss after exceptional
items (265)
Investment revenues 287
Finance costs (1,164)
--------
Loss before taxation (1,142)
Taxation (780)
--------
Loss for the period from continuing
operations (1,922)
Discontinued operations
Loss for the period from discontinued
operations (785)
--------
Loss for the period (2,707)
========
Europe
UK and and Latin Asia
Ireland America Pacific Total
Year ended 31 December 2014 GBP'000 GBP'000 GBP'000 GBP'000
(Audited)
Continuing operations
Revenue - external sales 69,690 32,463 6,653 108,806
--------- ------------ --------- --------
Regional operating (loss)/profit
before exceptional items (4,404) 5,162 (233) 525
--------- ------------ ---------
Exceptional items (note 4) (6,323)
Operating loss after exceptional
items (5,798)
Investment revenues 432
Finance costs (2,296)
Loss before taxation (7,662)
Taxation 1,698
--------
Loss for the year from continuing
operations (5,964)
Discontinued operations
Loss for the year from discontinued
operations (785)
--------
Loss for the year (6,749)
========
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
For the purposes of resource allocation and assessing
performance, operating costs and revenues are allocated to the
regions in which they are earned or incurred. The above does not
reflect additional annual net charges of central costs of
GBP1,845,000 presented within UK and Ireland in the tables above
which has been charged to other regions for statutory purposes.
Segmental assets
30 June 2015 30 June 2014 31 December 2014
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
UK and Ireland 50,525 68,254 51,673
Europe and Latin America 5,720 8,455 7,012
Asia Pacific 2,829 2,740 2,937
Total segment assets 59,074 79,449 61,622
Unallocated assets 489 2 2,248
Consolidated total assets 59,563 79,451 63,870
Deferred tax is not allocated to segments.
Revenue from major products
6 months ended 30 6 months ended 30 Year ended
June 2015 June 2014 31 December 2014
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Continuing operations
Retail assistance policies 34,229 43,546 82,652
Retail insurance policies 3,156 6,092 10,229
Packaged and wholesale policies 7,320 8,655 15,080
Non-policy revenue 480 374 845
-------------------- --------------------- ------------------
Revenue from continuing operations 45,185 58,667 108,806
==================== ===================== ==================
Major product streams are disclosed on the basis monitored by
the Board of Directors. For the purpose of this product analysis,
"retail assistance policies" are those which may be insurance
backed but contain a bundle of assistance and other benefits;
"retail insurance policies" are those which protect against a
single insurance risk; "packaged and wholesale policies" are those
which are provided by Business Partners to their customers in
relation to an on-going product or service which is provided for a
specified period of time; "non-policy revenue" is that which is not
in connection with providing an on-going service to policyholders
for a specified period of time.
Geographical information
The Group operates across a wide number of territories, of which
the UK and Spain are considered individually material. Revenue from
external customers and non-current assets (excluding deferred tax)
by geographical location are detailed below.
External revenues Non-current assets
----------------------------------------- ------------------------------------------
6 months 6 months
ended ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2015 2014 2014 2015 2014 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
Continuing
operations
UK 27,969 37,751 68,412 6,145 5,415 4,100
Spain 6,231 8,079 15,215 131 358 176
Other 10,985 12,837 25,179 191 763 352
Total continuing
operations 45,185 58,667 108,806 6,467 6,536 4,628
============ ============ ============= ============ ============ ============
4 Exceptional items
Year ended
6 months ended 30 June 2015 6 months ended 30 June 2014 31 December 2014
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Commission deferral compromise
and associated costs (19,388) - 744
Restructuring costs 486 262 2,579
Customer redress and associated
costs - - 3,000
Exceptional (credit)/charge
included in operating profit or
loss (18,902) 262 6,323
Tax on exceptional items 1,910 (54) (646)
---------------------------- ---------------------------- -------------------
Total exceptional
(credit)/charge after tax (16,992) 208 5,677
============================ ============================ ===================
The gain from the commission deferral compromise and associated
costs in the six month period of GBP19,388,000 (H1 2014: GBPnil,
year ended 31 December 2014: GBP744,000 charge) relates to the gain
from the settlement in full of the Commission Deferral Agreement
for a payment of GBP1,304,000, net of costs associated with
finalising the agreement to compromise.
The restructuring costs in the six month period of GBP486,000
(H1 2014: GBP262,000, year ended 31 December 2014: GBP2,579,000)
relate to redundancy programmes and associated costs across the
Group.
5 Taxation
The effective tax rate at the half year is 12.1% (H1 2014:
negative 68.3%, year ended 31 December 2014: 22.2%). The effective
rate is lower than the standard rate of corporation tax in the UK
due to capital allowances and other tax deductions, for which
deferred tax assets were not previously recognised, that are now
available for offset against UK taxable profits. The UK impact on
the effective rate is partly offset by higher rates of tax on
overseas profits. The 2015 full year rate may vary from this due to
the territory mix of future 2015 profits.
6 Dividends
The Directors have not proposed an interim dividend for
2015.
7 Earnings/(loss) per share
Basic and diluted earnings/(loss) per share have been calculated
in accordance with IAS 33 "Earnings per Share". Underlying
earnings/(loss) per share have also been presented in order to give
a better understanding of the performance of the business.
Six months ended 30 June 2015
(Unaudited) Continuing operations Discontinued operations Total
Earnings GBP'000 GBP'000 GBP'000
Profit for the purposes of basic and
diluted earnings per share 17,081 - 17,081
Exceptional items (net of tax) (16,992) - (16,992)
Matching Share Plan charges (net
of tax) 283 - 283
Earnings for the purposes of underlying
basic and diluted earnings per share 372 - 372
====================== ======================== =============
Number
Number of shares (thousands)
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 683,863
Effect of dilutive potential ordinary
shares: share options 4,228
-------------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 688,091
Earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic earnings per share 2.50 - 2.50
Diluted earnings per share 2.48 - 2.48
Basic and diluted underlying loss
per share 0.05 - 0.05
Six months ended 30 June 2014
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
(Unaudited) Continuing operations Discontinued operations Total
Loss GBP'000 GBP'000 GBP'000
Loss for the purposes of basic and
diluted loss per share (1,922) (785) (2,707)
Exceptional items (net of tax) 208 (311) (103)
Loss for the purposes of underlying
basic and diluted loss per share (1,714) (1,096) (2,810)
====================== ======================== =============
Number
Number of shares (thousands)
Weighted average number of ordinary
shares for the purposes of basic and
diluted loss per
share 171,605
Loss per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted loss per share (1.12) (0.46) (1.58)
Basic and diluted underlying loss
per share (1.00) (0.64) (1.64)
Continuing Discontinued
Year ended 31 December 2014 (Audited) operations operations Total
Loss GBP'000 GBP'000 GBP'000
Loss for the purposes of basic and diluted loss per share (5,964) (785) (6,749)
Exceptional items (net of tax) 5,677 (311) 5,366
Loss for the purposes of underlying basic and diluted loss per share (287) (1,096) (1,383)
Number of Number
shares (thousands)
Weighted average number of ordinary shares for the purposes of basic
and diluted loss per
share 171,622
Continuing Discontinued
Loss per share operations operations Total
Pence Pence Pence
Basic and diluted loss per share (3.48) (0.46) (3.94)
Basic and diluted underlying loss per share (0.17) (0.64) (0.81)
8 Tangible and intangible assets
Other intangible assets Property, plant and equipment Total
GBP'000 GBP'000 GBP'000
Six months ended 30 June 2015
(Unaudited)
Carrying amount at 1 January 2015 808 3,820 4,628
Additions 2,357 140 2,497
Disposals (1) (8) (9)
Amortisation/depreciation (325) (253) (578)
Exchange adjustments (8) (42) (50)
Impairment (21) - (21)
Carrying amount at 30 June 2015 2,810 3,657 6,467
Six months ended 30 June 2014
(Unaudited)
Carrying amount at 1 January 2014 3,299 5,061 8,360
Additions 58 37 95
Amortisation/depreciation (1,434) (442) (1,876)
Exchange adjustments (8) (35) (43)
Carrying amount at 30 June 2014 1,915 4,621 6,536
Year ended 31 December 2014
(Audited)
Carrying amount at 1 January 2014 3,299 5,061 8,360
Additions 406 190 596
Disposals (4) (39) (43)
Amortisation/depreciation (2,884) (1,271) (4,155)
Exchange adjustments (9) (35) (44)
Impairment - (86) (86)
Carrying amount at 31 December 2014 808 3,820 4,628
The carrying value of other intangible assets includes
GBP2,621,000 (H1 2014: GBPnil, 31 December 2014: GBP373,000)
relating to the development of the core IT policy platform, which
is an asset under construction and will not be amortised until it
becomes operational.
9 Cash and cash equivalents
Cash and cash equivalents of GBP38,019,000 (H1 2014:
GBP53,613,000; 31 December 2014: GBP40,599,000) comprises cash held
on demand by the Group and short term deposits.
Cash and cash equivalents includes the following:
i) GBP15,790,000 (H1 2014: GBP20,375,000; 31 December 2014:
GBP21,542,000) cash maintained by the Group's insurance business
for solvency purposes; and
ii) GBP17,475,000 (H1 2014: GBP24,441,000; 31 December 2014:
GBP13,380,000) cash held in the UK's regulated entities CPPL and
HIL which is restricted by the terms of the VVOP and cannot be
distributed to the wider Group without FCA approval. This
restricted cash whilst being unavailable to distribute to the wider
Group, is available to the regulated entity in which it exists
including for operational and residual customer redress
purposes.
10 Borrowings
30 June 2015 30 June 2014 31 December 2014
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Bank loans due outside of one year - 13,000 13,000
Less: unamortised issue costs (190) (1,333) (969)
Deferred commission 1,320 20,349 20,702
Borrowings due outside of one year 1,130 32,016 32,733
The Group's bank debt is in the form of a revolving credit
facility (RCF). The current RCF became effective on 11 February
2015 and has a commitment of GBP5,000,000. The Group is entitled to
roll over repayment of amounts drawn down, subject to all amounts
outstanding falling due for repayment on expiry of the facility on
28 February 2018.
On 11 February 2015, the Group also agreed to settle all the
liabilities of the Commission Deferral Agreement with certain
Business Partners for a compromise payment of GBP1,304,000 and
further deferral of commission of up to GBP1,304,000. On conclusion
of the deferral period, commission deferred within the Second
Commission Deferral Agreement has totalled GBP1,304,000, which has
a repayment date of 31 January 2017.
The borrowing facilities are secured by fixed and floating
charges on certain assets of the Group.
At 30 June 2015, the Group has undrawn committed borrowing
facilities of GBP5,000,000 (H1 2014: GBPnil; 31 December 2014:
GBPnil).
11 Provisions
Customer redress and associated
costs Onerous leases Total
GBP'000 GBP'000 GBP'000
Six months ended 30 June 2015
(Unaudited)
At 1 January 2015 6,356 1,658 8,014
Customer redress and associated costs
paid in the period (1,829) - (1,829)
Utilisation of onerous lease provision in
the period - (318) (318)
Transfer to trade and other payables (824) - (824)
At 30 June 2015 3,703 1,340 5,043
Six months ended 30 June 2014
(Unaudited)
At 1 January 2014 37,398 - 37,398
Customer redress and associated costs
paid in the period (23,364) - (23,364)
At 30 June 2014 14,034 - 14,034
Year ended 31 December 2014 (Audited)
At 1 January 2014 37,398 - 37,398
Charged to the income statement 3,000 1,658 4,658
Customer redress and associated costs
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 02:00 ET (06:00 GMT)
Cppgroup (LSE:CPP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Cppgroup (LSE:CPP)
Historical Stock Chart
From Apr 2023 to Apr 2024
