TIDMCPP
RNS Number : 3066G
CPPGroup Plc
29 March 2022
29 March 2022
CPPGroup Plc
("CPP", "the Group" or "the Company")
FULL YEAR RESULTS FOR THE YEARED 31 DECEMBER 2021
A year of financial and operational progress as we refocus the
business
CPP Group (AIM: CPP), a provider of assistance and insurance
products which reduce disruptions to everyday life for millions of
customers across the world, is pleased to announce its full year
results for the 12 months ended 31 December 2021.
Financial highlights
-- Group revenue from continuing operations increased by 5% to
GBP143.6 million (2020 restated: GBP136.5 million)
-- EBITDA from continuing operations increased by 29% to GBP7.5
million (2020 restated: GBP5.8 million).
-- Profit before tax increased to GBP4.2 million (2020 restated: GBP0.9 million).
-- Cash balance of GBP22.3 million as at 31 December 2021 (2020: GBP21.9 million).
-- Final dividend proposed of 7.5 pence per share which will
represent a full year dividend of 12.5 pence per share (2020: 25.0
pence per share).
Operational progress
-- Strong recovery in our Indian market with CPP India growing
revenue by 7% and Globiva widening its client base with revenue
increasing by 51%.
-- Expanded partner base and product innovation in Turkey with
revenue growing 28% on a local currency basis.
-- Making progress in the integration of Blink to strengthen the
Group's ability to deliver innovative parametric and digital
solutions.
-- Simplification of the Group to focus on key growth areas through:
o disposal of German card protection legacy business for GBP2.4
million;
o disposal of our historically loss-making China business in
January 2022;
o restructure of Mexico and closure of the legacy Malaysia
business; and
o post period, we have commenced the wind down of the UK MGA and
Bangladesh.
-- New Board and Executive team in place to provide strategic
focus and drive the business forward sustainably.
Financial and non-financial highlights - continuing
operations
31 December
31 December 2020 (restated(1)
GBP millions 2021 ) Change
------------------------------- ----------- ------------------- ------
Financial highlights:
Group
Revenue 143.6 136.5 5%
EBITDA(2) 7.5 5.8 29%
Operating profit 2.9 2.3 27%
Profit before tax 4.2 0.9 374%
Profit/(loss) after tax 0.5 (2.5) 120%
Profit/(loss) for the year(3) 3.0 (1.6) 288%
Basic earnings/(loss) per
share (pence) 0.85 (30.21) 103%
Dividend per share (pence)(4) 12.5 25.0 (50)%
Cash and cash equivalents 22.3 21.9 2%
Segmental revenue
Ongoing Operations 134.8 125.5 8%
Restricted Operations 8.8 11.0 (21)%
Non-financial highlights:
Customer numbers (millions) 11.4 11.3 1%
=============================== =========== =================== ======
1. Restated to reflect Germany and China as discontinued operations.
2. EBITDA represents earnings before interest, taxation,
depreciation, amortisation and exceptional items.
3. Profit/(loss) for the year includes continuing and discontinued operations.
4. Comprises final dividend of 7.5 pence per share (2020: 25.0
pence per share) and interim dividend paid of 5.0 pence per share
(2020: nil) paid in September 2021.
Simon Pyper, CEO of CPP Group, commented:
"Despite the COVID-19 related headwinds which have challenged us
all, the Group not only delivered a solid set of financial results
but also made progress in simplifying and refocusing its operations
through the sale of its German Card Protection business, the
restructure of its operations in Mexico and the closure of its
operations in Malaysia. Whilst there is still much to do, the
changes introduced in 2021 have allowed the Group to refocus on its
core operations in India and Turkey, and on its digital rich, Blink
parametric business.
The Group is now focused on optimising the allocation of human,
intellectual and financial capital to where it can better achieve
commercial advantage and attractive returns. To that end, and post
the reporting period, the Group has exited from its underperforming
China, Bangladesh, and UK MGA operations. Additionally, the Board
is evaluating the change management programme, introduced by the
previous management team, to ensure that the various projects are
consistent with the Group's new 'direction of travel' and moreover,
that the benefits assumed are realisable.
I am determined to re-energise CPP, to simplify its business
model and to improve returns to shareholders."
Enquiries:
CPPGroup Plc via Alma PR
Simon Pyper, CEO
David Bowling, CFO
Sarah Atherton, Group Company Secretary
Liberum Capital Limited (Nominated Adviser +44 (0)20 3100
& Sole Broker) 2000
Richard Lindley
Lauren Kettle
+44 (0)20 3405
Alma PR (Financial PR Adviser) 0205
Josh Royston cpp @almapr.co.uk
David Ison
Kieran Breheny
Faye Calow
About CPP Group:
CPP Group is technology-driven assistance company that creates
embedded and ancillary assistance products and resolution services
that reduce disruption to everyday life for millions of people
across, at the time and place they are needed. These products are
provided through partnerships with leading insurance, banking and
finance companies as either as embedded solutions or as relevant
add-ons to enhance their core offering and deliver additional
revenue streams. CPP is listed on AIM, operated by the London Stock
Exchange.
For more information on CPP visit
https://international.cppgroup.com
REGISTERED OFFICE
CPPGroup Plc
6 East Parade
Leeds
LS1 2AD
Registered number: 07151159
Chairman's Statement
In spite of the challenges to the business of a second year of
disruption brought about by the COVID-19 pandemic, I am pleased to
report that the Group continued with important initiatives to
refocus its operations, both domestically and in its key overseas
markets of India and Turkey. Additionally, the Group made progress
in streamlining its operations, exiting from underperforming
geographies and closing down unprofitable products.
Streamlining Operations
During the year the Group shut down its loss-making operation in
Malaysia, disposed of its legacy German Card Protection business
and restructured its EU operation. After the reporting period, the
Group has also announced the winding down of its operations in
Bangladesh and its UK MGA business, and the disposal of the Chinese
operations, all of which were considered unable to deliver
profitable growth in the foreseeable future. Additionally, detailed
plans have been developed for the migration of the Group's
remaining legacy operations into a single, standalone business
unit, which, once completed, should facilitate a more profitable
and disciplined run-off of the Group's UK and non-UK back
books.
Refocusing our Business
The business is now organised along geographic lines with
in-country CEOs for India, Turkey and our UK-based,
parametric-technology business, each of whom have prime
responsibility for delivering growth in their regions. Furthermore,
the Group is in the process of developing a new IT platform which
will facilitate new product development and delivery throughout the
Group. The platform will initially launch in India in late 2022
with plans to roll-out across other markets in the Group in 2023
and 2024. This will ultimately lead to cost reductions as legacy
systems are decommissioned.
Financial Results
Despite continued COVID-19 headwinds and the strengthening of
sterling relative to other currencies in which the Group operates,
the Group delivered growth over the prior year. Group revenues from
continuing operations increased by 5% to GBP143.6 million, whilst
EBITDA from continuing operations increased by GBP1.7 million to
GBP7.5 million, inclusive of a one-time benefit from the release of
a third-party commission provision relating to the Group's legacy
card and identity products. Our balance sheet shows net cash of
GBP22.3 million (2020: GBP21.9 million), which will allow the Group
to fund further investment in its technology platform and, if
appropriate, to fund acquisitions.
People
Unsurprisingly our top priority in 2021 has been to support our
colleagues, not just in terms of creating COVID-safe office and
home-working conditions, but also to sustain their overall
well-being. We actively seek their engagement and participation,
and the achievements of the past year are a testament to their hard
work and dedication. On behalf of the Board, I offer my thanks to
them.
Board Changes
We were pleased to announce on 1 December 2021 the appointment
of Jeremy Miller as an independent Non-Executive Director,
succeeding Timothy Elliott, who stepped down from the Board at the
end of November 2021. Mark Hamlin also retired from the Board at
the end of November and stood down as Chairman of Globiva, in which
the Group holds a 51% shareholding, at the end of December. Mark
and Tim had been on the Board since 2016 and 2017 respectively and
I would like to thank them both for their years of service to the
Group. It is our objective to add one additional independent
Non-Executive Director to the Board during the current year, who
will, ideally, have specific operational experience in that part of
the insurance and assistance sectors in which the Group
operates.
Early in the year, Justine Shaw, Head of Culture and HR, left
the Group, with her responsibilities being distributed to existing
members of the management team, and, in particular, Paula
Cartwright, who was promoted to lead our HR function. In October
2021, Oliver Laird, our CFO, resigned from the business. We were
pleased to be able to announce in December the appointment of Simon
Pyper to succeed him. Simon brings with him many years of
experience, both as CFO and CEO, of growth companies in the
services sector.
Subsequent to the financial year end, Jason Walsh (announced on
8 February 2022) stood down as Chief Executive Officer, after six
years in the role and twenty years of service to the Group. I would
like to thank Jason for his many years of service and the
contribution he has made. He took the reins as Chief Executive
Officer of the Group at a difficult time, after several years of
financial and regulatory challenges had almost brought it to its
knees and he leaves a stable organisation with considerable
potential for growth.
Jason has been succeeded as CEO by Simon Pyper and, the Group
announced, on the 8 February 2022, the appointment of David
Bowling, an internal candidate with ten years' service to the
Group, as Chief Financial Officer. I have utmost confidence that
both Simon and David will make a substantial contribution to the
success of the Group in the next few years, and I congratulate them
on their appointments.
Extensive board and senior personnel changes in a short period
are inevitably unsettling for all stakeholders in the Company, but
particularly the members of the management team. I would
particularly like to recognise the commitment and fortitude of all
those members of the team who have participated in and enabled
these changes to take place in a committed and professional
manner.
I would also like to add my specific thanks to Deepak Matai, who
leads our largest operating entity in India, and his colleagues,
who have been able to deliver strong growth in spite of the impact
of COVID-19 in his country, as well as to Selnur Guzel, whose
management of our business in Turkey, along with her team, has been
even more forceful than the hurricane-force economic and currency
turbulence in which she and her colleagues have had to operate.
Outlook and Dividend
In our pre-close trading update of 19 January 2022, we reset the
Group's earnings expectations for the current financial year,
reflecting in part, the delayed benefits and additional costs
brought about by the revision to the scope and consequent
implementation timetable for the Group's new IT platform.
Along with revising the Group's earnings expectations, we are
resetting our dividend guidance. The revised guidance on dividends
will better reflect the Groups earnings expectations, cash
requirements and prospects. Consequently, the Board is pleased to
announce a final dividend of 7.5 pence per share giving a full year
dividend of 12.5 pence (2020: 25.0 pence).
The proposed final dividend will be paid on 17 May 2022 to
shareholders on the register at the close of business on 19 April
2022. The ex-dividend date will be on 14 April 2022.
Whilst it is always disappointing to re-set market expectations,
the business continues to make good progress and is, I believe,
notwithstanding heightened levels of uncertainty globally as a
result of the tragic events in the Ukraine, increasingly well
positioned for profitable and sustainable growth.
David Morrison
Chairman
28 March 2022
Chief Executive Officer's Statement
A second year of challenges created by COVID-19 has obliged our
customers, our partners and our people to adapt, often at pace, to
the ever changing and often disrupted circumstances in which they
live, work and conduct business. Our Company's performance has been
remarkably resilient, thanks to the efforts of our people and the
demonstrable value of what we do for our customers and
partners.
While revenues were impacted by COVID-19 and associated
Government imposed restrictions, particularly in our key Indian
market, our performance exceeded our own expectations and I am
pleased to report that revenues from continuing operations grew by
5%, and, on a constant currency basis, by 11%, to GBP143.6 million
(2020 restated: GBP136.5 million). Additionally, the actions
commenced in 2020 and 2021 to streamline the business, exit
unprofitable markets and reduce costs, in combination with the
one-time commission provision release in the UK, led to an
improvement in EBITDA from continuing operations of 29% to GBP7.5
million (2020 restated: GBP5.8 million) for the year.
We have also had a positive year in terms of client retention
and business development and have increased our customer base from
11.3 million to 11.4 million and, whilst our renewal rate has
reduced to 63.6% (2020 restated: 68.5%), this is principally due to
market mix with the renewal base further shifting towards India and
Turkey.
A Refocused Business
We have over the past year re-organised our operating business
and management structures to reflect how we see and manage the
business. We start 2022 with a leaner organisational structure, one
which is designed to meet the expectations of our growing client
base. The new structure reflects our geographic bias, our strategic
intent to grow our technology business Blink, and to exit from the
predominately European low growth, regulatory-intensive markets,
where declining customer numbers with a relatively fixed cost base
are eroding margin.
A Resilient Financial Performance
Group revenue grew by 5% on a reported basis and by 11% on a
constant currency basis. Ongoing revenues, which exclude revenues
relating to our Restricted Operations (legacy UK back books), grew
by 8% on a reported basis and by 14% on a constant currency basis.
Group EBITDA grew by 29% to GBP7.5m.
India : Revenue GBP119.3 million (2020: GBP108.4 million) and
EBITDA GBP7.8 million (2020: GBP7.7 million)
India is the Group's largest operating business, generating 83%
of total revenues. The business performed well, despite a circa 7%
weakening of the Indian rupee over the year, with absolute revenue
growth for 2021 of +10% (constant currency +17%). EBITDA growth was
subdued due to reduced sales efficiency associated with COVID-19,
with some modest margin erosion due to local regulatory
changes.
There are two constituent businesses:
1. CPP India: Reported 2021 +7% to GBP109.0 million (2020:
GBP101.6 million), constant currency growth of +14%.
CPP India works closely with its business partners to drive
value by growing customer loyalty through the design and delivery
of simple and innovative products which fit seamlessly into the
everyday life of consumers; and
2. Globiva: Reported 2021 +51% to GBP10.3 million (2020: GBP6.8
million), constant currency growth of +57%.
Globiva is 51% owned by the Group and is one of India's fastest
growing Business Process Management (BPM) companies providing
outsourced customer relationship management, back-office
functionality and automated human resource services to a growing
roll of clients.
Turkey : Revenue GBP3.6 million (2020: GBP3.8 million) and
EBITDA GBP0.9 million (2020: GBP0.9 million)
CPP Turkey is, in many respects, the most developed and most
balanced of our businesses, with a broad and well-established
partnership base coupled with a diverse mix of revenues. Despite
difficult economic conditions our Turkish business delivered the
highest EBITDA margin and achieved revenue and EBITDA growth, on a
constant currency basis, of +28% and +53% respectively.
Blink : Revenue GBP0.3 million (2020: GBP0.2 million) and EBITDA
loss GBP0.2 million (2020: GBP1.3 million)
Blink (CPP Innovation Limited) is a technology and software
platform focused on providing innovative insurance solutions for
the global travel sector. Blink has also designed and deployed a
parametric business interruption solution and has an active product
pipeline to enter other sectors. Blink leverages CPP's technology
platforms to deliver bespoke plug-and-play 'white label' solutions
for our partners, typically travel insurance providers.
Legacy and Restricted Operations : Revenue GBP20.4 million
(2020: GBP24.1 million) and EBITDA GBP3.4 million (2020: GBP3.5
million)
Our 'legacy and restricted' business comprises our UK and
European operations which have historically focused on the Group's
legacy Card and Identity Protection products. The UK business
continues to operate under a variation of permissions with the FCA
which does not permit new sales, however, moreover the market for
these products is in decline, which coupled with ongoing regulatory
scrutiny and a high fixed cost base, means that these books of
business will reach an inflexion point in future years where they
will be unprofitable to maintain.
Central Costs : GBP4.2 million (2020: GBP4.7 million)
Central costs before appropriate recharge to business units are
GBP10.4 million (2020: GBP11.6 million) of which GBP4.0 million
relates to the cost of the Group's IT operations. The majority of
the IT costs, which are recharged to the Group's operating
businesses, represent costs associated with maintaining regulatory
compliant, consumer data, in multiple geographies.
The Group is developing a new IT platform which is expected,
once deployed, to deliver significant efficiencies from late
2024.
Whilst IT costs have remained flat, other central costs have
decreased by 17% compared to the prior year.
Strategic Priorities
Fundamentally, we are a business which provides products and
solutions which assist and protect the daily lives, be it online or
real world, of millions of customers of major brands and financial
institutions.
Our strategy must reflect the regulatory, economic and market
nuances of the geographies in which we operate. Consequently, and
save for our new IT platform and the introduction of our Blink
proposition, there are few other scale benefits to be had, as all
our products and services are, to some degree, bespoke. However,
the lack of scale benefits does not equate to a lack of
opportunity.
Our key strategic priorities are to simplify our business, to
reduce costs and to build a platform which focuses on innovation in
each of our key geographies and organic growth which may be
supported, where appropriate, by acquisitions and strategic
investments. We have a clear approach for growing our Indian and
Turkish businesses and to wind down our legacy and restricted
operations in a disciplined and profitable manner. We also intend
to invest and grow our Blink business and to build and implement a
new Group-wide IT platform, both of which should provide some scale
efficiencies over the medium-term.
As, over time, we manage down our Legacy and Restricted
operations we are, save for Blink, in need of a coherent long-term
strategy for our UK and European markets. Whilst we have yet to set
a definitive plan for these markets our initial conclusions suggest
a move away from the traditional consumer focused products of the
Group, which are highly regulated and carry a high overhead
requirement. We are instead considering a move toward either a
technology-led strategy, or a move into the business-to-business
sector, which has more attractive economics and is less regulated,
or both. We will update on our strategy once determined.
Whichever strategy we pursue for our important UK and European
markets, implementation will require careful planning, will
leverage our current infrastructure, and where appropriate, will
include acquisitions.
STRATEGIC PRIORITIES INDIA TURKEY UK & EUROPE BLINK
Organic Growth Yes Yes No Yes
------ ------- ------------ ------
Acquisitive No Yes Yes Yes
Growth
------ ------- ------------ ------
New IT Platform Yes Yes Yes Yes
------ ------- ------------ ------
India
Our growth will be organic led, with a focus on developing
multi-product strategic partnerships across the financial services
and technology sectors. We will focus on:
1. Introducing higher margin products which augment our partners
proposition, and which generate repeatable ancillary revenues.
2. Implementing our new technology platform which will widen the
range of mobile-first and digital sales channels which we can serve
and, moreover, open access to new partner channels and new customer
segments.
Even though we have experienced high growth over the past few
years, we remain confident of further profitable growth over the
long-term.
Turkey
We will have an organic led strategy focused on entrenching
relationships and winning new partners in the mobile, digital and
financial services sectors. We will continue to innovate and
deliver services and products which improve the day-to-day lives of
consumers whilst improving revenues for both our partners and the
Group.
At the same time, acquisitions to accelerate growth are becoming
more attractive, as they would provide both a natural exchange rate
hedge and, moreover, accelerate client acquisition.
Blink
Blink is our newest business, with similar attributes to a
start-up software business. Leveraging the Group's existing product
set, Blink is focused on delivering differentiated 'white-label',
technology led services for insurance companies operating in the
Travel and Digital sectors.
We will focus on organic growth led by additional account
management and technology headcount. In the longer-term, we will
develop new products and solutions for other digital intensive
sectors.
Legacy & Restricted Operations (UK & Europe )
CPP's original strategy was one of volume, based on selling as
many of the Group's products, such as Card Protection and Identity
Protection in multiple geographies. As regulatory frameworks
tightened, and consumer buying patterns changed, the demand and
margin associated with our more traditional products started to
decline. Our approach is to manage the decline in a disciplined and
profitable manner.
Technology
We are developing a new digital cloud-based IT platform which we
expect to start rolling out in India towards the final quarter of
2022. Group-wide implementation is expected to complete during
2024. The new platform, once fully operational, will allow the
Group to lower costs, improve efficiencies in each geography and
moreover, accelerate the development and introduction of new and
complementary products and services
Specifically, the new platform is a hybrid, flexible and
cloud-first approach to managing our product proposition, CRM, and
subscription platforms. Utilising technologies which are both
scalable and adaptive, the new platform can be re-deployed to any
market and hosted in multiple countries to meet strict data
residency requirements. Moreover, the platform draws on the
strengths of Amazon Web Services to provide a secure, scalable, and
redundancy-free global infrastructure that enables the business to
'Plug & Play' third party solutions without affecting the core
platform
People
I want to thank all my CPP colleagues for their dedication, hard
work and commitment while simultaneously responding and adapting to
the effects of a global pandemic. It is a measure of the quality of
our people that our entire business pivoted seamlessly to
homeworking with no interruption to the support we give our
partners and customers.
We look forward with cautious optimism to a gradual return to
normal working patterns over the course of 2022.
Outlook
I have only been involved in the business for a short while, but
my initial impressions are unreservedly positive. We have excellent
businesses in India and Turkey where we expect further strong
underlying growth. We are building what I believe to be a
compelling proposition for the travel sector with our embryonic
Blink platform and are exiting underperforming operations both in
the UK and abroad. As if this were not enough, we are developing
and will later this year start to introduce our new, digital
cloud-based IT platform. We are, as we exit from the UK MGA and as
the renewal book continues to run-down, in need of a clear and
executable strategy for the UK, and this is something that the
Board and I will address during 2022.
We are now focused on optimising the allocation of our human,
intellectual and financial capital to where we are can better
achieve commercial advantage and attractive returns. To that end,
and post the reporting period, we further simplified the Group
through the exit from our underperforming China, Bangladesh, and UK
MGA operations. Additionally, the Board is evaluating the change
management programme, introduced by the previous management team,
to ensure that the various projects are consistent with the Group's
new 'direction of travel' and moreover, that the benefits assumed
are realisable.
At the time of writing the Group is in discussions with its
largest partner, Bajaj Finance Limited, to early renew and extend
current arrangements. While there is likely to be some commercial
trade-off between securing higher volume (revenue) and pricing we
will have stronger visibility over a substantial amount of forward
revenue.
I am determined to re-energise CPP Group, to simplify its
business model and to improve outcomes for all stakeholders and in
particular for our shareholders.
Simon Pyper
Chief Executive Officer
28 March 2022
Financial and Operational Review
Overview
The Group has continued to make solid financial progress in 2021
in the face of continued disruption in our markets from the
pandemic as we re-focus resources on the key markets which provide
the best opportunity for sustainable growth. As expected, this has
improved profitable performance and reduced the cash draw on the
business.
This strategy has led to the sale of our legacy German Card
Protection business and the exit from the Chinese market which
completed in January 2022. As a result, these businesses are
presented as discontinued operations with this review focusing on
the performance of the Group's continuing operations.
Group revenue has increased by 5% (11% constant currency) to
GBP143.6 million (2020 restated: GBP136.5 million) with the growth
continuing to be driven by our Indian market. EBITDA has also
improved to GBP7.5 million (2020 restated: GBP5.8 million) which is
a 29% (54% constant currency) increase. The EBITDA improvement
reflects the benefit of restructuring initiatives to reduce our
geographical footprint or streamline operations to focus resources
on the markets with the strongest prospects along with careful
control of the central cost base. EBITDA includes a one-time
benefit of GBP1.1 million from the release of a commission
provision in the UK. Excluding this factor EBITDA would have been
GBP6.4 million which is 9% higher than in 2020.
2020 (restated(1)
2021 )
Continuing Operations GBP'm GBP'm
---------------------------------------- ------ -----------------
Revenue 143.6 136.5
---------------------------------------- ------ -----------------
Gross profit 32.9 34.1
---------------------------------------- ------ -----------------
EBITDA(2) 7.5 5.8
---------------------------------------- ------ -----------------
Operating profit 2.9 2.3
---------------------------------------- ------ -----------------
Profit before tax 4.2 0.9
---------------------------------------- ------ -----------------
Taxation (3.7) (3.4)
---------------------------------------- ------ -----------------
Profit/(loss) for the year 0.5 (2.5)
---------------------------------------- ------ -----------------
Basic earnings/(loss) per share (pence) 0.85 (30.21)
---------------------------------------- ------ -----------------
Cash generated by operations(3) 7.4 6.2
---------------------------------------- ------ -----------------
Dividends (pence)(4) 12.5 25.0
---------------------------------------- ------ -----------------
1. Restated to reflect Germany and China as discontinued operations.
2. Excluding depreciation, amortisation and exceptional items.
3. Includes cash generated from continuing and discontinued operations.
4. Interim dividend paid and final dividend proposed
Gross profit has reduced by 4% (1% constant currency increase)
to GBP32.9 million (2020 restated: GBP34.1 million). This results
in a reduction in the gross profit margin to 22.9% (2020 restated:
25.0%) reflecting the continued growth in our Indian business which
has higher costs of acquisition associated with sales than the UK
and EU renewal books it is replacing. In addition, whilst gross
profit in India is increasing this is at a lower margin
year-on-year as an increasing share of revenue and customer growth
comes from lower margin product variants. Gross profit has also
benefitted from the GBP1.1 million commission provision release in
the UK and therefore would have been 7% lower than the prior year
at GBP31.8 million at a margin of 22.1% without it. We expect our
gross profit margins to continue to reduce in the medium-term
whilst growth is predominantly driven by India and the legacy
renewal books diminish. Longer-term margin improvement will be
driven by product diversification in India and growth in
technology-led product and distribution.
We are pleased that EBITDA has increased to GBP7.5 million (2020
restated: GBP5.8 million) which reflects the one-time GBP1.1
million commission provision release alongside a reduction in the
cost base with administrative expenses, before depreciation and
exceptional items, reducing by 10% in the year. The reducing cost
base demonstrates the expected savings from restructuring exercises
across the Group to address loss-making operations and available
operational efficiencies.
Depreciation and amortisation charges have decreased marginally
to GBP3.0 million (2020 restated: GBP3.2 million). The Group's
depreciation charges are expected to increase in the medium-term as
the new technology platform is launched in India during Q4 2022 and
Globiva increases its operational capacity to facilitate
growth.
Exceptional items charged to operating profit total GBP1.6
million (2020: GBP0.4 million) as the Group continues to focus its
resources on its key markets. Restructuring activities in the year
have included the realisation of operational efficiencies in Spain,
new business activities being halted in Mexico, the closure of
Malaysia and a reduction in central Board costs. In addition,
Blink, the parametric platform, was brought under central
management.
The growth in EBITDA, in conjunction with the exceptional items
and depreciation charges, results in operating profit increasing by
27% to GBP2.9 million (2020 restated: GBP2.3 million).
Other gains and losses comprise a gain of GBP1.5 million (2020:
GBP1.3 million loss) which reflects a fair value gain on our
investment in KYND. In December 2021, following a funding round by
KYND, our holding was diluted to 14.7% (2020: 20.0%), consequently
we no longer recognise the investment as a joint venture and have
ceased equity accounting. Our reduced share of the holding in KYND
has a fair value of GBP1.9 million which is in excess of the GBP1.4
million invested by the Group to date. Due to the one-off nature
this gain has been treated as an exceptional item outside of
operating profit.
As a result, the Group's profit before tax was GBP4.2 million
(2020 restated: GBP0.9 million) and we have a profit after tax of
GBP0.5 million (2020 restated: GBP2.5 million loss).
Tax
The tax charge from continuing operations was GBP3.7 million
(2020 restated: GBP3.4 million) which constitutes an effective tax
rate (ETR) of 88% (2020 restated: 386%). The ETR is impacted by
withholding taxes arising on dividend repatriations of GBP1.2
million (2020: GBP0.8 million) as cash increasingly generated in
our overseas markets is repatriated to the UK.
The local tax rates applying to our profitable countries which
are higher than the UK corporate income tax of 19% is also a
contributor to the high ETR. India, the most profitable of our
markets, has a local tax rate of 25.2%. In total, the tax charge
includes GBP2.0 million of Indian tax (2020: GBP1.7 million). The
tax rates in Turkey, Spain and Italy are also higher than the UK
statutory rate which adversely impacts our ETR.
Whilst the ETR is high, the overarching trend is a reduction in
ETR as savings from operational efficiencies, market exits and
restructuring exercises are reducing the number of loss-making
entities in the Group.
Adjusted ETR
2021 2020
Reported Exceptional Reported
- continuing items and - continuing Exceptional
operations one-offs(1) Adjusted operations items(1) Adjusted
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------- ------------- --------- -------------- ------------ ---------
Profit before
tax 4.2 (0.9) 3.3 0.9 1.7 2.5
-------------- ------------- --------- -------------- ------------ ---------
Tax 3.7 0.2 3.9 3.4 - 3.4
-------------- ------------- --------- -------------- ------------ ---------
ETR 88% (18)% 119% 386% - 135%
-------------- ------------- --------- -------------- ------------ ---------
1. Comprises exceptional items of GBP0.2 million (2020: GBP1.7
million) and one-time benefit from the commission provision release
in the UK of GBP1.1 million (2020: GBPnil). Further detail of
exceptional items is provided in note 5.
The exceptional items and one-offs in the year have increased
profit by GBP0.9 million whilst there has been a reduction in tax
of GBP0.2 million. Without the exceptional items and one-offs, the
Group's ETR would increase to 119% (2020 restated: 135%).
As the UK statutory rate of tax increases to 25% on the 1 April
2023, the ETR is expected to become closer aligned to the UK
statutory tax rate as the difference between the UK and the tax
rates in the overseas territories in which we make profits align.
But, the ETR will remain higher in future years as we provide for
withholding taxes on overseas distributions and continue to
generate losses in developing markets against which we are not able
to recognise deferred tax assets.
Overall, we expect a progressive reduction in our ETR as our
loss-making operations reduce, distributions from overseas
countries stabilise and volatility arising from one-off charges
declines.
Dividend
Last year we were pleased to confirm the recommencement of a
dividend. The Board remains committed to providing sustainable
returns to shareholders at a level that reflects the Group's cash
requirements and progress.
As a result, the Directors have proposed a final dividend of 7.5
pence per ordinary share giving a full year dividend of 12.5 pence
(2020: 25.0 pence). The proposed final dividend is subject to
approval by shareholders at the AGM and is expected to be paid on
17 May 2022 to all shareholders on the Register of Members on 19
April 2022 with the ex-dividend date being 14 April 2022.
Discontinued operations
The Group has classified its German and Chinese businesses as
discontinued in the current year. The total profit after tax from
discontinued operations of GBP2.5 million comprises GBP3.3 million
profit in relation to Germany and GBP0.8 million loss from
China.
2021 2020
GBP'm GBP'm
------------------------------ ------ ------
Revenue 2.5 4.7
------------------------------ ------ ------
EBITDA 0.3 1.3
------------------------------ ------ ------
Operating (loss)/profit (0.2) 1.0
------------------------------ ------ ------
(Loss)/profit after tax (0.1) 0.9
------------------------------ ------ ------
Profit on disposal 2.6 -
------------------------------ ------ ------
Profit for the year 2.5 0.9
------------------------------ ------ ------
Net liabilities held for sale (0.1) -
------------------------------ ------ ------
On 17 May 2021, the Group completed the sale of its German
business for a final cash consideration of GBP2.4 million to
Deutsche Schutzbriefgesellschaft GmbH (Mehrwerk). The proceeds,
together with the carrying value of net liabilities on disposal,
generated a profit on disposal of GBP2.7 million. Germany also
generated trading profits after tax of GBP0.6 million up to the
disposal date (2020: GBP1.5 million for a full year of trading)
Our China business was held for sale at the balance sheet date
with the transaction subsequently completing on 27 January 2022
with T-Link Holdings Limited (T-Link) for a nominal consideration
of HK$1. The terms of the transaction included a working capital
cash injection of GBP0.5 million immediately prior to completion.
The Group expects that the transaction together with trading losses
will generate a profit of approximately GBP0.6 million in 2022.
China contributed trading losses of GBP0.8 million (2020: GBP0.6
million) in the 2021 financial year.
Cash flow and net funds
2021 2020
GBP'm GBP'm
--------------------------------------------- ------ ------
EBITDA 7.7 7.2
--------------------------------------------- ------ ------
Exceptional items(1) (1.6) (0.3)
--------------------------------------------- ------ ------
Non-cash items 0.1 1.5
--------------------------------------------- ------ ------
Working capital movements 1.2 (2.2)
--------------------------------------------- ------ ------
Cash generated by operations 7.4 6.2
--------------------------------------------- ------ ------
Tax (2.8) (3.0)
--------------------------------------------- ------ ------
Operating cash flow 4.6 3.2
--------------------------------------------- ------ ------
Capital expenditure (including intangibles) (1.9) (1.8)
--------------------------------------------- ------ ------
Lease repayments (1.5) (1.7)
--------------------------------------------- ------ ------
Net proceeds from disposals 2.3 0.3
--------------------------------------------- ------ ------
Net finance revenues 0.1 0.4
--------------------------------------------- ------ ------
Dividends (2.6) -
--------------------------------------------- ------ ------
Costs of refinancing - (0.1)
Net movement in cash(3) 1.0 0.3
--------------------------------------------- ------ ------
Net funds(4) 16.4 15.3
--------------------------------------------- ------ ------
1. Exceptional items represent cash costs relating to
restructuring.
2. Net proceeds from disposals comprises cash proceeds from
disposals of GBP2.4 million (2020: GBP0.3 million) less cash
disposed with the business GBP0.1 million (2020: GBPnil).
3. Excluding the effect of exchange rates.
4. Net funds comprise cash and cash equivalents of GBP22.4
million (2020: GBP21.9 million) and a borrowing asset of GBPnil
(2020: GBP0.1 million) less lease liabilities of GBP6.0 million
(2020: GBP6.7 million).
The net funds position has increased to GBP16.4 million (2020:
GBP15.3 million), which includes cash of GBP22.4 million (2020:
GBP21.9 million). The Group has generated additional cash of GBP0.5
million in the year with increasing cash generated by operations
and cash proceeds from the sale of Germany being largely offset by
dividend payments, one-time restructuring costs and adverse foreign
exchange movements.
Cash generated by operations has increased to GBP7.4 million
(2020: GBP6.2 million) reflecting a working capital benefit mainly
driven by India. Tax paid has remained broadly stable at GBP2.8
million (2020: GBP3.0 million) which is a combination of taxes
payable on profits in our markets and withholding taxes on overseas
dividends to the UK.
Proceeds from disposal relate to the net GBP2.3 million received
on the sale of Germany. The proceeds have been more than offset by
the reintroduction of the dividend with GBP2.6 million paid in the
year in the form of a 2020 final dividend and 2021 interim
dividend.
As the Group's growth has shifted to overseas markets a material
amount of the cash balance is generated in India and Turkey along
with cash generated by the EU renewal books. These markets are
profitable which enables repatriation of funds to the UK. There are
tax costs associated with returning these funds to the UK with our
blended cost being approximately 10%. As a result of accounting
recognition principles, cash generated in India exceeds the profits
generated and available to distribute and therefore cash planning
continues to be important. This along with our regulatory
requirements in the UK, result in GBP1.5 million (2020: GBP2.1
million) cash not being immediately available to the Group, albeit
the Indian funds are fully available for use by the Indian
business.
The Group has a GBP5.0 million revolving credit facility (RCF)
which is in place until August 2023. The RCF is not currently
drawn.
Events after the balance sheet date
The Group completed the sale of China on 27 January 2022 with
T-Link.
The Group is in the process of remodelling its operating
structure as a greater focus is placed on the distribution of
technology-led propositions into the UK and Europe. These
technology-led solutions will lead to a simplified UK-based
operating model. This in conjunction with a smaller geographic
footprint has led to a restructuring process commencing in the UK,
which will see a redundancy programme in 2022. Exceptional
restructuring costs in 2022 are expected to be in the range GBP0.2
million to GBP0.3 million which is anticipated to generate
annualised savings of approximately GBP1.0 million.
Foreign exchange
The sustained strengthening of sterling through 2021 has led to
exchange rate movements continuing to work against the Group. The
primary impacts on our results have been in our Indian and Turkish
businesses where exchange rates have depreciated by approximately
7% and 37% (2020: 6% and 29%) respectively over the year. This has
adversely impacted reported results when comparing to the prior
year. We are pleased to observe that the volatile Turkish lira, led
by economic policy, seems to have stabilised in recent weeks and we
continue to manage as much as possible against a devaluation of
surplus cash balances in the market.
The reported results compared to 2020 include the following
adverse foreign exchange movements: GBP7.4 million (2020 restated:
GBP6.8 million) within revenue; and GBP0.9 million (2020 restated:
GBP0.6 million) at an EBITDA level.
Segmental performance
Constant
2021 2020 (restated)(1) currency
REVENUE GBP'm GBP'm Change change
--------------------------- -------- ------------------ -------- -----------
Ongoing Operations
--------------------------- -------- ------------------ -------- -----------
India 119.3 108.4 10% 17%
--------------------------- -------- ------------------ -------- -----------
Turkey 3.6 3.8 (5)% 28%
--------------------------- -------- ------------------ -------- -----------
Blink 0.3 0.2 84% 88%
--------------------------- -------- ------------------ -------- -----------
UK & Rest of World(2) 11.6 13.1 (11)% (8)%
--------------------------- -------- ------------------ -------- -----------
Total Ongoing Operations 134.8 125.5 8% 14%
--------------------------- -------- ------------------ -------- -----------
Restricted Operations 8.8 11.0 (21)% (22)%
--------------------------- -------- ------------------ -------- -----------
Group revenue 143.6 136.5 5% 11%
--------------------------- -------- ------------------ -------- -----------
Constant
2021 2020 (restated)(1) currency
EBITDA GBP'm GBP'm Change change
----------------------------- ------ ------------------ ------ ---------
Ongoing Operations
----------------------------- ------ ------------------ ------ ---------
India 7.8 7.7 2% 11%
----------------------------- ------ ------------------ ------ ---------
Turkey 0.9 0.9 (4)% 53%
----------------------------- ------ ------------------ ------ ---------
Blink (0.2) (1.3) 80% 80%
----------------------------- ------ ------------------ ------ ---------
UK & Rest of World(2) 0.2 (0.3) 188% 171%
----------------------------- ------ ------------------ ------ ---------
Total Ongoing Operations 8.7 7.0 27% 43%
----------------------------- ------ ------------------ ------ ---------
Restricted Operations 3.2 3.8 (14)% (14)%
----------------------------- ------ ------------------ ------ ---------
Central Functions (4.2) (4.7) 11% 11%
----------------------------- ------ ------------------ ------ ---------
Segmental EBITDA 7.7 6.1 26% 50%
----------------------------- ------ ------------------ ------ ---------
Share of loss in joint
venture (0.2) (0.3) 28% 28%
----------------------------- ------ ------------------ ------ ---------
Group EBITDA 7.5 5.8 29% 54%
----------------------------- ------ ------------------ ------ ---------
1. Restated to reflect Germany and China as discontinued
operations.
2. UK & Rest of World comprises UK, Spain, Italy, Portugal,
Mexico, Bangladesh, Malaysia and Southeast Asia (2020 only).
All percentage change figures in the segmental operating report
below are stated on a constant currency basis to eliminate the
effects of foreign exchange to enable better year-on-year
comparison.
Ongoing Operations (94% of Group revenue):
Revenue increased by 14% to GBP134.8 million (2020 restated:
GBP125.5 million) and EBITDA increased to GBP8.7 million (2020
restated: GBP7.0 million). The growth and improvement in EBITDA
performance in our Ongoing Operations segment continues to be an
important demonstration of the necessary shift from our naturally
declining legacy businesses to the key growth markets in the
Group.
Our Indian business, which includes Globiva, has had another
strong year and continues to drive the growth in this segment with
revenue increasing by 17% to GBP119.3 million (2020: GBP108.4
million). COVID-19 continued to cause some disruption particularly
during the well documented second wave in Q2 which the business was
able to withstand well following the learnings of 2020. The growth
has been fuelled by our relationship with Bajaj with a strong
increase in FoneSafe (mobile phone protection product) and LivPlus
(life assistance, health and wellness product). In Q4, the Indian
regulator introduced the requirement for second factor
authentication on recurring credit card transactions. It has taken
time for our banking partners to understand their position on this
change and to agree the sales and renewal processes for Card
Protection with CPP. We expect this additional regulatory
requirement to impact our renewal rate in 2022. The new IT platform
is progressing to plan and is expected to go live in Q4 2022. This
IT platform will be transformational for both the Indian business,
and the Group as whole, in providing additional operating
efficiencies and improved digital capability.
Globiva was not greatly impacted by the second wave of COVID-19
which is testament to the stronger operating model that it has
implemented since the initial outbreak of the pandemic. Revenue in
Globiva has grown 57% to GBP10.3 million (2020: GBP6.8 million)
with EBITDA similarly showing strong progress at GBP2.5 million
(2020: GBP1.3 million). This performance has been built on
expansion of its partner base with over ten new partners onboarded
during the year. Globiva is one of India's fastest growing BPMs and
we will continue to support the business to realise the full
potential.
Turkey has had another extremely strong year at a local currency
level growing revenue by 28% and EBITDA by 53%. This has been
achieved through growth in our partnerships with Turkiye Sigorta
and AkBank as the relationships have deepened over time. Turkey
continues to be a key market for the Group and a great example of
the success that comes from a multi-partner, multi-product
approach. Unfortunately, on a reported basis this excellent local
performance has been completely negated by the ongoing devaluation
in the Turkish lira with reported revenue 5% lower in the year and
EBITDA down 4%.
Blink has increased revenues by 88% to GBP0.3 million (2020:
GBP0.2 million) and reduced losses to GBP0.2 million (2020: GBP1.3
million). Blink's progress was severely hampered by the impact the
pandemic had on the travel industry and whilst that sector is still
far behind pre-pandemic levels there has been an increase in travel
in 2021. This improving trend in conjunction with greater digital
demand will place Blink in a strong position to capitalise on its
opportunity. In addition, Blink has added a further two products to
its portfolio in the year: Lost Luggage, which will complement
travel delay; and Blink Interruption, which enhances business
interruption claims processes and is currently in pilot phase with
a global insurer. The business has been brought under central
management which has both focused the sales effort leading to an
acceleration in pipeline conversion along with a streamlining of
costs.
In other markets, the UK has increased revenues by 39% and
reduced EBITDA losses by 21%, albeit this progress was at a slower
pace than expected, in part due to market sentiment following UK
lockdowns in Q1 2021. In addition, a major motor ancillary partner
which accounted for approximately 48% of revenue in the year,
decided to take its offering in-house and therefore this business
will not recur in 2022. The renewal books in Spain, Italy and
Portugal have been well managed and performed in line with
expectations. Sustainable new business progress through the
traditional distribution channels has continued to be difficult in
both Spain and Italy.
Restricted Operations (6% of Group revenue)
Revenue decreased by 22% to GBP8.8 million (2020: GBP11.0
million) reflecting the natural decline in the historic renewal
books of Card Protection Plan Limited (CPPL) and Homecare Insurance
Limited (HIL) and the closure of Malaysia which had become
uneconomic to maintain. The UK is now the only operation remaining
in this segment. EBITDA fell by 14% to GBP3.2 million (2020: GBP3.8
million) which reflects the lost profit from the revenue decline
partly offset by a one-time benefit of GBP1.1 million from the
release of a commission provision. Excluding the commission
provision, EBITDA would have been GBP2.1 million which is a
reduction of 44% (2020: 42%). The underlying margin in the UK book
is falling due to a relatively fixed cost base to service the
remaining customer book and high IT costs associated with the
legacy platform. The Group expects to commence work on migrating
the UK back book from its legacy platforms to a UK-version of the
new India platform in late 2023 or early 2024 with completion
during 2024. Implementation of the new platform will enable legacy
systems to be decommissioned which will unlock significant savings
in IT running costs for both the UK and the Group.
UK renewal rates have reduced to 67.6% (2020: 81.3%) due to the
planned changes in the renewal process for an additional number of
vulnerable customers and a switch in collections provider. We
continue to prioritise the best outcomes and experience for our
customers. Renewal rates are expected to stabilise and improve in
2022 as the vulnerable customer impact will reduce in subsequent
renewal cycles.
David Bowling
Chief Financial Officer
28 March 2022
Consolidated income statement
For the year ended 31 December 2021
2020
2021 (restated*)
Note GBP'000 GBP'000
------------------------------------------------------- ----- ---------- -------------
Continuing operations
------------------------------------------------------- ----- ---------- -------------
Revenue 4 143,625 136,464
======================================================= ===== ========== =============
Cost of sales (110,708) (102,317)
------------------------------------------------------- ----- ---------- -------------
Gross profit 32,917 34,147
======================================================= ===== ========== =============
Administrative expenses (29,827) (31,597)
======================================================= ===== ========== =============
Share of loss of joint venture (189) (264)
------------------------------------------------------- ----- ---------- -------------
Operating profit 2,901 2,286
------------------------------------------------------- ----- ---------- -------------
Analysed as:
------------------------------------------------------- ----- ---------- -------------
EBITDA 4 7,524 5,838
------------------------------------------------------- ----- ---------- -------------
Depreciation and amortisation (2,995) (3,196)
------------------------------------------------------- ----- ---------- -------------
Exceptional items 5 (1,628) (356)
------------------------------------------------------- ----- ---------- -------------
Investment revenues 223 412
------------------------------------------------------- ----- ---------- -------------
Finance costs (358) (512)
------------------------------------------------------- ----- ---------- -------------
Other gains and losses 5 1,45 9 (1,294)
------------------------------------------------------- ----- ---------- -------------
Profit before taxation 4,225 892
======================================================= ===== ========== =============
Taxation 6 (3,707) (3,441)
------------------------------------------------------- ----- ---------- -------------
Profit/(loss) for the year from continuing operations 518 (2,549)
------------------------------------------------------- ----- ---------- -------------
Discontinued operations
------------------------------------------------------- ----- ---------- -------------
Profit for the year from discontinued operations 9 2,490 952
------------------------------------------------------- ----- ---------- -------------
Profit/(loss) for the year 3,008 (1,597)
------------------------------------------------------- ----- ---------- -------------
Attributable to:
------------------------------- ------ --------
Equity holders of the Company 2,565 (1,680)
================================ ====== ========
Non-controlling interests 443 83
-------------------------------- ------ --------
3,008 (1,597)
------------------------------- ------ --------
Pence
Basic earnings/(loss) per share Pence (restated*)
--------------------------------- ------ -------------
Continuing operations 8 0.85 (30.21)
--------------------------------- ------ -------------
Discontinued operations 8 28.31 10.93
--------------------------------- ------ -------------
29.16 (19.28)
--------------------------------- ------ -------------
Pence
Diluted earnings/(loss) per share Pence (restated*)
----------------------------------- ------ -------------
Continuing operations 8 0.83 (30.21)
----------------------------------- ------ -------------
Discontinued operations 8 27.60 10.93
----------------------------------- ------ -------------
28.43 (19.28)
----------------------------------- ------ -------------
*Restated to reflect Germany and China as discontinued
operations. See note 2.
Consolidated statement of comprehensive income
For the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
--------------------------------------------------------------------- -------- --------
Profit/(loss) for the year 3,008 (1,597)
====================================================================== ======== ========
Items that may be reclassified subsequently to profit or loss:
===================================================================== ======== ========
Exchange differences on translation of foreign operations (695) (809)
====================================================================== ======== ========
Exchange differences reclassified on disposal of foreign operations (4) 1,294
---------------------------------------------------------------------- -------- --------
Other comprehensive (expense)/income for the year net of taxation (699) 485
---------------------------------------------------------------------- -------- --------
Total comprehensive income/(expense) for the year 2,309 (1,112)
---------------------------------------------------------------------- -------- --------
Attributable to:
--------------------------------------------------------------------- -------- --------
Equity holders of the Company 1,867 (1,145)
---------------------------------------------------------------------- -------- --------
Non-controlling interests 442 33
---------------------------------------------------------------------- -------- --------
2,309 (1,112)
--------------------------------------------------------------------- -------- --------
Consolidated balance sheet
As at 31 December 2021
2021 2020
Note GBP'000 GBP'000
-------------------------------------- ---- --------- ---------
Non-current assets
-------------------------------------- ---- --------- ---------
Goodwill 540 612
====================================== ==== ========= =========
Other intangible assets 10 3,603 3,741
====================================== ==== ========= =========
Property, plant and equipment 1,335 1,670
====================================== ==== ========= =========
Right-of-use assets 5,109 6,097
====================================== ==== ========= =========
Equity investment 11 1,889 -
====================================== ==== ========= =========
Investment in joint venture 11 - 450
====================================== ==== ========= =========
Deferred tax assets 396 858
-------------------------------------- ---- --------- ---------
Contract assets 564 426
-------------------------------------- ---- --------- ---------
13,436 13,854
-------------------------------------- ---- --------- ---------
Current assets
====================================== ==== ========= =========
Insurance assets - 46
====================================== ==== ========= =========
Inventories 102 145
====================================== ==== ========= =========
Contract assets 4,020 4,853
====================================== ==== ========= =========
Trade and other receivables 13,605 16,379
====================================== ==== ========= =========
Cash and cash equivalents 22,319 21,856
-------------------------------------- ---- --------- ---------
40,046 43,279
-------------------------------------- ---- --------- ---------
Assets classified as held for sale 9 478 -
-------------------------------------- ---- --------- ---------
40,524 43,279
-------------------------------------- ---- --------- ---------
Total assets 53,960 57,133
-------------------------------------- ---- --------- ---------
Current liabilities
====================================== ==== ========= =========
Insurance liabilities (82) (935)
====================================== ==== ========= =========
Income tax liabilities (1,362) (974)
====================================== ==== ========= =========
Trade and other payables (19,462) (20,387)
====================================== ==== ========= =========
Lease liabilities (937) (882)
====================================== ==== ========= =========
Contract liabilities (9,190) (10,889)
-------------------------------------- ---- --------- ---------
(31,033) (34,067)
-------------------------------------- ---- --------- ---------
Liabilities classified as held
for sale 9 (550) -
-------------------------------------- ---- --------- ---------
(31,583) (34,067)
-------------------------------------- ---- --------- ---------
Net current assets 8,941 9,212
-------------------------------------- ---- --------- ---------
Non-current liabilities
====================================== ==== ========= =========
Borrowings 58 98
====================================== ==== ========= =========
Deferred tax liabilities (927) (579)
====================================== ==== ========= =========
Lease liabilities (4,936) (5,756)
====================================== ==== ========= =========
Contract liabilities (1,200) (1,094)
-------------------------------------- ---- --------- ---------
(7,005) (7,331)
-------------------------------------- ---- --------- ---------
Total liabilities (38,588) (41,398)
-------------------------------------- ---- --------- ---------
Net assets 15,372 15,735
-------------------------------------- ---- --------- ---------
Equity
====================================== ==== ========= =========
Share capital 12 24,243 24,153
====================================== ==== ========= =========
Share premium account 45,225 45,225
====================================== ==== ========= =========
Merger reserve (100,399) (100,399)
====================================== ==== ========= =========
Translation reserve 136 834
====================================== ==== ========= =========
ESOP reserve 17,418 17,490
====================================== ==== ========= =========
Retained earnings 27,202 27,327
-------------------------------------- ---- --------- ---------
Equity attributable to equity holders
of the Company 13,825 14,630
====================================== ==== ========= =========
Non-controlling interests 1,547 1,105
-------------------------------------- ---- --------- ---------
Total equity 15,372 15,735
-------------------------------------- ---- --------- ---------
Consolidated statement of changes in equity
For the year ended 31 December 2021
Share
Share premium Merger Translation ESOP Retained Non-controlling Total
capital account reserve reserve reserve earnings Total interests equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
At 1 January
2020 24,056 45,225 (100,399) 299 16,999 28,928 15,108 884 15,992
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Loss for the
year - - - - - (1,680) (1,680) 83 (1,597)
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Other
comprehensive
income for the
year - - - 535 - - 535 (50) 485
---------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
Total
comprehensive
expense for the
year - - - 535 - (1,680) (1,145) 33 (1,112)
---------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
Equity-settled
share-based
payment charge 13 - - - - 491 - 491 - 491
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Deferred tax on
intangible
asset 6 - - - - - 58 58 - 58
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Exercise of
share options 97 - - - - (97) - - -
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Movement in
non-controlling
interests - - - - - 118 118 188 306
---------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
At 31 December
2020 24,153 45,225 (100,399) 834 17,490 27,327 14,630 1,105 15,735
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Profit for the
year - - - - - 2,565 2,565 443 3,008
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Other
comprehensive
expense for the
year - - - (698) - - (698) (1) (699)
---------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
Total
comprehensive
income for the
year - - - (698) - 2,565 1,867 442 2,309
---------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
Equity-settled
share-based
payment credit 13 - - - - (72) - (72) - (72)
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Exercise of
share options 12 90 - - - - (70) 20 - 20
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Deferred tax on
share options 6 - - - - - 9 9 - 9
================ ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Dividends paid 7 - - - - - (2,629) (2,629) - (2,629)
---------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
At 31 December
2021 24,243 45,225 (100,399) 136 17,418 27,202 13,825 1,547 15,372
---------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
Consolidated cash flow statement
For the year ended 31 December 2021
2021 2020
Note GBP'000 GBP'000
--------------------------------------- ---- ------- -------
Net cash from operating activities 14 4,562 3,162
======================================= ==== ======= =======
Investing activities
======================================= ==== ======= =======
Interest received 224 410
======================================= ==== ======= =======
Purchases of property, plant and
equipment (525) (356)
======================================= ==== ======= =======
Purchases of intangible assets 10 (1,370) (1,408)
======================================= ==== ======= =======
Cash consideration in respect of
sale of discontinued operations 9 2,366 -
======================================= ==== ======= =======
Cash disposed of with discontinued
operations (112) -
======================================= ==== ======= =======
Receipts from net investment lease
assets - 117
======================================= ==== ======= =======
Net cash from/(used in) investing
activities 583 (1,237)
--------------------------------------- ---- ------- -------
Financing activities
======================================= ==== ======= =======
Dividends paid 7 (2,629) -
======================================= ==== ======= =======
Costs of refinancing the bank facility - (110)
======================================= ==== ======= =======
Repayment of the lease liabilities (1,507) (1,783)
======================================= ==== ======= =======
Proceeds on disposal of partial
interest in subsidiary - 329
======================================= ==== ======= =======
Interest paid (76) (60)
======================================= ==== ======= =======
Issue of ordinary share capital 12 20 -
--------------------------------------- ---- ------- -------
Net cash used in financing activities (4,192) (1,624)
--------------------------------------- ---- ------- -------
Net in crease in cash and cash
equivalents 953 301
======================================= ==== ======= =======
Effect of foreign exchange rate
changes (400) (402)
======================================= ==== ======= =======
Cash and cash equivalents at 1 January 21,856 21,957
--------------------------------------- ---- ------- -------
Cash and cash equivalents at 31
December 22,409 21,856
--------------------------------------- ---- ------- -------
Analysed as:
Continuing operations 22,319 21,856
======================== ====== ======
Discontinued operations 9 90 -
------------------------ ------ ------
22,409 21,856
------------------------ ------ ------
Notes to condensed financial statements
1. General information
While the financial information included in this annual results
announcement has been computed in accordance with the recognition
and measurement criteria in conformity with UK-adopted
International Accounting Standards ('UK IAS') and with those parts
of the Companies Act 2006 applicable to companies reporting under
UK IAS, this announcement does not itself contain sufficient
information to comply with UK IAS. The Company will publish full
financial statements that comply with UK IAS in April 2022.
The financial information set out above does not constitute the
Company's statutory financial statements for the years ended 31
December 2021 or 31 December 2020, but is derived from the 2021
financial statements. Statutory financial statements for 2020 for
the Company prepared in conformity with EU-endorsed International
Financial Reporting Standards have been delivered to the Registrar
of Companies and those under UK IAS for 2021 for the Company will
be delivered following the Company's Annual General Meeting. The
Auditor, PKF Littlejohn LLP, has reported on these financial
statements; their report was unqualified, did not draw attention to
any matters by way of emphasis and did not contain statements under
s498 (2) or (3) of the Companies Act 2006. These 2021 financial
statements were approved by the Board of Directors on 28 March
2022.
2. Accounting policies
The same accounting policies, presentation and methods of
computation are followed in the condensed financial statements as
were applied in the Group's audited financial statements for the
year ended 31 December 2020. The following Standards and
Interpretations have become effective and have been adopted in
these condensed financial statements. The IFRS 16 practical
expedient is effective for periods beginning on or after 1 June
2020 and was early adopted by the Group in the prior year. No other
Standards or Interpretations have been adopted early in these
condensed financial statements.
Standard/Interpretation Subject
---------------------------------------- -------------------------------
IFRS 9/ IAS 39/ IFRS 7/ IFRS 4/ IFRS 16 Interest rate benchmark reform
---------------------------------------- -------------------------------
Restatement of disclosures
On 17 May 2021, the Group completed the sale of its 100%
shareholding in CPP Creating Profitable Partnerships GmbH
('Germany').
As at 31 December 2021, the Board was committed to the disposal
of CPP Asia Limited and its wholly owned subsidiary CPP Technology
Services (Shanghai) Co. Ltd (together 'China'). A sale process was
well underway as at the balance sheet date which subsequently
completed on 27 January 2022.
In accordance with IFRS 5 Non-current assets held for sale and
discontinued operations, Germany and China have been classified as
discontinued within these financial statements. Accordingly, the
comparative consolidated income statement information and
appropriate disclosure notes have been restated and China has also
been classified as held for sale as at 31 December 2021. See note 9
for further details.
Going concern
In reaching their view on the preparation of the Group's
financial statements on a going concern basis, the Directors are
required to consider whether the Group can continue in operational
existence for a period of at least 12 months from the date of this
report.
The Group has a formalised process of budgeting, reporting and
review along with procedures to forecast its profitability and cash
flows. The plans provide information to the Directors which are
used to ensure the adequacy of resources available for the Group to
meet its business objectives, both in the short-term and in
relation to its strategic priorities. The Group's revenue, profit
and cash flow forecasts are subject to robust downside stress
testing which involves modelling the impact of a combination of
plausible adverse scenarios focused on crystallisation of the
Group's key operational risks. The assessment considers the Group's
modelling of the ongoing risks associated with COVID-19, This is
done to identify risks to liquidity and covenant compliance and
enable management to formulate appropriate and timely mitigation
strategies. The Group's operations do not have a material direct
exposure to the conflict in the Ukraine.
Taking the analysis into consideration, the Directors are
satisfied that the Group has the necessary resources to continue in
operational existence for a period of at least 12 months from the
date of this report. Accordingly, they continue to adopt the going
concern basis in preparing the financial statements.
3. Critical accounting judgements and key sources of estimation
uncertainty
Critical judgements
Revenue recognition
The Group recognises revenue either immediately on inception of
a policy or over the duration of a policy where there are ongoing
obligations to fulfil to a customer. Certain of the Group's
contractual structures relating to product features require
judgement in determining whether the Group carries an obligation to
the customer over the term of the policy or if the exposure to that
obligation has been transferred to a third party on inception. This
judgement determines when the Group has completed the performance
obligation to the customer and can recognise revenue.
The Group allocates revenue on a cost plus margin basis. The
cost base may vary over time as product features are enhanced,
suppliers changed or underlying costs move. Judgement is applied in
determining if the resulting changes to the cost base represent a
temporary or permanent adjustment in the allocation of revenue to
performance obligations. If a change is considered temporary, or
within a materiality threshold, revenue recognition principles are
not amended to aid consistency.
Classification of exceptional items
Exceptional items are those items that are required to be
separately disclosed by virtue of their size or incidence or have
been separately disclosed on the income statement in order to
improve a reader's understanding of the financial statements.
Consideration of what should be included as exceptional requires
judgement to be applied. Exceptional items are considered to be
ones which are material and outside of the normal operating
practice of the Group. Items which are in other gains or losses and
exceptional from their size or nature are identified in the
exceptional note.
Assumptions and estimation uncertainties
Current tax
The Group operates in countries with complex tax regulations,
where filed tax positions may remain open to challenge by local tax
authorities for several years. Corporation taxes are recognised by
assessment of the specific tax law and likelihood of settlement.
Where the Group has uncertain tax treatments it has recognised
appropriate provisions reflecting the expected value calculated by
the sum of the probability-weighted amounts in a range of possible
outcomes.
Changes to the Group's assessment of uncertain tax treatments
would be reflected through the consolidated income statement.
4. Segmental analysis
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the Board of Directors to allocate resources
to the segments and to assess their performance. The Group's
operating segments are:
-- Ongoing Operations: India, Turkey, Spain, Portugal, Italy,
Mexico, Malaysia, the UK, Bangladesh and Blink. These businesses
have no regulatory restrictions on new sales activity. These
markets represent a combination of businesses in which we continue
to invest and drive new opportunities as well as ones that have
been strategically assessed and wound down or exited.
-- Restricted Operations: historic renewal books of our UK
regulated entities; CPPL, including its overseas branch in
Malaysia; and HIL. As a result of regulatory restrictions we are
not permitted to undertake new sales in these businesses.
-- Central Functions: central cost base required to provide
expertise and operate a listed group. Central Functions is stated
after the recharge of certain central costs that are appropriate to
transfer to both Ongoing Operations and Restricted Operations for
statutory purposes.
As at December 2021, the German and Chinese operations were
reclassified as discontinued operations, having previously been
part of Ongoing Operations, accordingly the comparatives have been
restated. See note 2.
Segment revenue and performance for the current and comparative
periods are presented below:
Ongoing Operations Restricted Operations Central Functions Total
2021 2021 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Year ended 31 December 2021
========================================= =================== ====================== ================== ==========
Continuing operations
========================================= =================== ====================== ================== ==========
Revenue - external sales 134,837 8,788 - 143,625
========================================= =================== ====================== ================== ==========
Cost of sales (110,044) (664) - (110,708)
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Gross profit 24,793 8,124 - 32,917
========================================= =================== ====================== ================== ==========
Administrative expenses excluding
depreciation, amortisation and
exceptional items (16,146) (4,866) (4,192) (25,204)
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Segmental EBITDA 8,647 3,258 (4,192) 7,713
========================================= =================== ====================== ================== ==========
Share of loss of joint venture (189)
----------------------------------------- ------------------- ---------------------- ------------------ ----------
EBITDA 7,524
========================================= =================== ====================== ================== ==========
Depreciation and amortisation (2,995)
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Exceptional items (note 5) (1,628)
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Operating profit 2,901
========================================= =================== ====================== ================== ==========
Investment revenues 223
========================================= =================== ====================== ================== ==========
Finance costs (358)
========================================= =================== ====================== ================== ==========
Other gains or losses (note 5) 1,459
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Profit before taxation 4,225
========================================= =================== ====================== ================== ==========
Taxation (3,707)
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Profit for the year from continuing
operations 518
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Discontinued operations
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Profit for the year from discontinued
operations 2,490
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Profit for the year 3,008
----------------------------------------- ------------------- ---------------------- ------------------ ----------
Total
Ongoing Operations (restated*) Restricted Operations Central Functions (restated*) (restated*)
2020 2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Year ended 31
December 2020
================ =============================== ====================== ============================== ==============
Continuing
operations
================ =============================== ====================== ============================== ==============
Revenue -
external sales 125,396 11,068 - 136,464
================ =============================== ====================== ============================== ==============
Cost of sales (100,942) (1,375) - (102,317)
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Gross profit 24,454 9,693 - 34,147
================ =============================== ====================== ============================== ==============
Administrative
expenses
excluding
depreciation,
amortisation
and
exceptional
items (17,454) (5,887) (4,704) (28,045)
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Segmental
EBITDA 7,000 3,806 (4,704) 6,102
================ =============================== ====================== ============================== ==============
Share of loss
of joint
venture (264)
---------------- ------------------------------- ---------------------- ------------------------------ --------------
EBITDA 5,838
================ =============================== ====================== ============================== ==============
Depreciation
and
amortisation (3,196)
================ =============================== ====================== ============================== ==============
Exceptional
items (note 5) (356)
---------------- ------------------------------- ---------------------- ------------------------------ ==============
Operating
profit 2,286
================ =============================== ====================== ============================== ==============
Investment
revenues 412
================ =============================== ====================== ============================== ==============
Finance costs (512)
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Other gains and
losses (note
5) (1,294)
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Profit before
taxation 892
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Taxation (3,441)
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Loss for the
year from
continuing
operations (2,549)
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Discontinued
operations
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Profit for the
year from
discontinued
operations 952
---------------- ------------------------------- ---------------------- ------------------------------ --------------
Loss for the
year (1,597)
---------------- ------------------------------- ---------------------- ------------------------------ --------------
* Restated to reflect Germany and China as discontinued
operations. See note 2.
Segment assets
2020
2021 (restated*)
GBP'000 GBP'000
-------------------------------------------- --------- ------------
Ongoing Operations 36,947 40,677
============================================ ========= ============
Restricted Operations 7,392 7,564
============================================ ========= ============
Central Functions 6,318 5,113
-------------------------------------------- --------- ------------
Total segment assets 50,657 53,354
============================================ ========= ============
Unallocated assets 2,825 1,920
-------------------------------------------- --------- ------------
Assets relating to discontinued operations 478 1,859
-------------------------------------------- --------- ------------
Consolidated total assets 53,960 57,133
-------------------------------------------- --------- ------------
* Restated to reflect Germany and China as discontinued
operations. See note 2.
Goodwill, deferred tax, equity investment and investment in
joint venture are not allocated to segments.
Capital expenditure
Intangible assets Property, plant and equipment Right-of-use assets
2021 2020 2021 2020 (restated*) 2021 2020 (restated*)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- ---------- ------------------- -------- ----------------
Continuing operations
--------------------------------- --------- --------- ---------- ------------------- -------- ----------------
Ongoing Operations 979 1,055 512 254 493 1,565
================================= ========= ========= ========== =================== ======== ================
Restricted Operations 344 352 5 18 - -
================================= ========= ========= ========== =================== ======== ================
Central Functions 47 1 8 83 6 523
--------------------------------- --------- --------- ---------- ------------------- -------- ----------------
Additions from continuing
operations 1,370 1, 408 525 355 499 2,088
--------------------------------- --------- --------- ---------- ------------------- -------- ----------------
Discontinued operations
--------------------------------- --------- --------- ---------- ------------------- -------- ----------------
Additions for discontinued
operations - - - 1 250 3
--------------------------------- --------- --------- ---------- ------------------- -------- ----------------
Consolidated total additions 1,370 1,408 525 356 749 2,091
--------------------------------- --------- --------- ---------- ------------------- -------- ----------------
* Restated to reflect Germany and China as discontinued
operations. See note 2.
Revenues from major products
2020
2021 (restated*)
GBP'000 GBP'000
-------------------------------------- --------- -------------
Continuing operations
====================================== ========= =============
Retail assistance policies 128,982 126,531
====================================== ========= =============
Retail insurance policies - 85
====================================== ========= =============
Wholesale policies 2,705 2,549
====================================== ========= =============
Non-policy revenue 11,938 7,299
-------------------------------------- --------- -------------
Revenue from continuing operations 143,625 136,464
-------------------------------------- --------- -------------
Discontinued operations
====================================== ========= =============
Retail assistance policies 2,152 4,491
====================================== ========= =============
Wholesale policies 312 189
-------------------------------------- --------- -------------
Revenue from discontinued operations 2,464 4,680
-------------------------------------- --------- -------------
Total revenue 146,089 141,144
-------------------------------------- --------- -------------
* Restated to reflect Germany and China as discontinued
operations. See note 2.
Major product streams are disclosed on the basis monitored by
senior management. 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; 'wholesale policies' are those which are
provided by business partners to their customers in relation to an
ongoing product or service which is provided for a specified period
of time; and 'non-policy revenue' is that which is not in
connection with providing an ongoing service to policyholders for a
specified period of time. The Group derives its revenue from
contracts with customers for the transfer of goods and services
which is consistent with the revenue information that is disclosed
for each reportable segment under IFRS 8.
Timing of revenue recognition
The Group derives revenue from the transfer of goods and
services over time and at a point in time as follows:
2020
2021 (restated*)
GBP'000 GBP'000
-------------------------------------- --------- -------------
Continuing operations
====================================== ========= =============
At a point in time 126,606 116,296
====================================== ========= =============
Over time 17,019 20,168
-------------------------------------- --------- -------------
Revenue from continuing operations 143,625 136,464
-------------------------------------- --------- -------------
Discontinued operations
====================================== ========= =============
At a point in time 1,496 1,606
====================================== ========= =============
Over time 968 3,074
-------------------------------------- --------- -------------
Revenue from discontinued operations 2,464 4,680
-------------------------------------- --------- -------------
Total revenue 146,089 141,144
-------------------------------------- --------- -------------
* Restated to reflect Germany and China as discontinued
operations. See note 2.
Geographical information
The Group operates across a wide number of territories, of which
India, the UK and Spain are considered individually material.
Revenue from external customers and non-current assets (excluding
equity investment, investment in joint venture and deferred tax) by
geographical location are detailed below:
External revenues Non-current assets
2020 2020
2021 (restated*) 2021 (restated*)
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------------- -------- --------------
India 119,273 108,406 7,721 8,071
========================= ========= ============== ======== ==============
UK 10,750 12,082 1,585 2,062
========================= ========= ============== ======== ==============
Spain 6,341 7,538 323 256
========================= ========= ============== ======== ==============
Turkey 3,568 3,768 249 370
========================= ========= ============== ======== ==============
Other 3,693 4,670 1,273 1,423
------------------------- --------- -------------- -------- --------------
143,625 136,464 11,151 12,182
------------------------- --------- -------------- -------- --------------
Discontinued operations 2,464 4,680 - 364
------------------------- --------- -------------- -------- --------------
146,089 141,144 11,151 12,546
------------------------- --------- -------------- -------- --------------
* Restated to reflect Germany and China as discontinued
operations. See note 2.
Information about major customers
Revenue from the customers of one business partner in the
Group's Ongoing Operations segment represented approximately
GBP84,159,000 (2019: GBP73,739,000) of the Group's total
revenue.
5. Exceptional items
Exceptional items included in the table below details all
exceptional items, which are included in operating profit, other
gains and losses and discontinued operations, as well as the
associated taxation.
2021 2020
Note GBP'000 GBP'000
----------------------------------------------------------------- ----- --------- --------
Continuing operations
----------------------------------------------------------------- ----- --------- --------
Exceptional items included within operating profit
================================================================= ===== ========= ========
Restructuring costs 1,628 161
================================================================= ===== ========= ========
Impairment of goodwill - 880
================================================================= ===== ========= ========
Customer redress and associated costs - (685)
----------------------------------------------------------------- ----- --------- --------
Exceptional charge included in operating profit 1,628 356
----------------------------------------------------------------- ----- --------- --------
Exceptional items included within other gains and losses
================================================================= ===== ========= ========
Other gains and losses - gain on reclassification of investment (1,459) -
================================================================= ===== ========= ========
Other gains and losses - foreign exchange reclassification - 1,294
----------------------------------------------------------------- ----- --------- --------
Exceptional (gain)/charge included in other gains and losses (1,459) 1,294
----------------------------------------------------------------- ----- --------- --------
Total exceptional charge included in profit before tax 169 1,650
----------------------------------------------------------------- ----- --------- --------
Tax on exceptional items (171) -
----------------------------------------------------------------- ----- --------- --------
Exceptional (gain)/charge after tax for continuing operations 8 (2) 1,650
================================================================= ===== ========= ========
Discontinued operations
================================================================= ===== ========= ========
Exceptional gain from discontinued operations 8, 9 (2,399) -
----------------------------------------------------------------- ----- --------- --------
(2,401) 1,650
----------------------------------------------------------------- ----- --------- --------
Restructuring costs of GBP1,628,000 relate to the Group's
commitment to focus on the areas of the business that have the
strongest prospects for delivering sustainable and profitable
medium to long-term growth. This has included redundancy programmes
in Spain, Blink and Mexico, as well as closure of the Malaysian
operation and head office operational restructuring. The prior year
restructuring of GBP161,000 related to redundancy costs and onerous
leases associated with the closure of the Southeast Asia
operation.
Other gains and losses in the year, reflects the gain on
reclassification of the investment in KYND Limited (KYND) from a
joint venture to an equity investment of GBP1,459,000 (2020:
GBPnil). This is following a dilution of the Group's shareholding,
after additional investment into KYND from the BGF Investment
Management Limited (BGF). As a result, the investment no longer
meets the criteria for to be held as a joint venture and is instead
reclassified as an equity investment and held at fair value (See
note 11). In the prior year, the foreign exchange reclassification
of GBP1,294,000 related to a reclassification of cumulative foreign
translation adjustments on the closure of the overseas branches in
Hong Kong and Italy.
6. Taxation
2021 2020 (restated*)
GBP'000 GBP'000
------------------------------------------------ --------- -----------------
Continuing operations
================================================ ========= =================
Current tax charge:
================================================ ========= =================
UK corporation tax 142 156
================================================ ========= =================
Foreign tax 3,386 2,895
================================================ ========= =================
Adjustments in respect of prior years (42) (29)
------------------------------------------------ --------- -----------------
Current tax relating to continuing operations 3,486 3,022
------------------------------------------------ --------- -----------------
Deferred tax charge:
================================================ ========= =================
Origination and reversal of timing differences 304 409
================================================ ========= =================
Impact of change in tax rates (37) 10
================================================ ========= =================
Adjustments in respect of prior years (46) -
------------------------------------------------ --------- -----------------
Deferred tax relating to continuing operations 221 419
------------------------------------------------ --------- -----------------
T ax charge relating to continuing operations 3,707 3,441
================================================ ========= =================
Discontinued operations
================================================ ========= =================
Tax charge relating to discontinued operations 30 168
------------------------------------------------ --------- -----------------
Total tax charge 3,737 3,609
------------------------------------------------ --------- -----------------
* Restated to reflect Germany and China as discontinued
operations. See note 2.
The following is a segmental review of the tax charge, in which
withholding taxes arising on distributions are attributed to the
country paying the distribution:
2021 2020 (restated*)
GBP'000 GBP'000
---------------------------------------- --------- -----------------
Continuing operations
======================================== ========= =================
Ongoing Operations:
======================================== ========= =================
India 2,889 2,428
======================================== ========= =================
Turkey 554 340
======================================== ========= =================
Blink - -
---------------------------------------- --------- -----------------
UK and Rest of World 107 423
---------------------------------------- --------- -----------------
Total Ongoing Operations 3,550 3,191
======================================== ========= =================
Restricted Operations - -
======================================== ========= =================
Central Functions 157 250
---------------------------------------- --------- -----------------
Tax charge for continuing operations 3,707 3,441
---------------------------------------- --------- -----------------
Discontinued operations
---------------------------------------- --------- -----------------
Tax charge for discontinued operations 30 168
---------------------------------------- --------- -----------------
3,737 3,609
---------------------------------------- --------- -----------------
* Restated to reflect Germany and China as discontinued
operations. See note 2.
Overall, UK profits chargeable to corporation tax are offset by
group relief surrendered from fellow UK entities.
UK corporation tax is calculated at 19% (2020: 19%) of the
estimated assessable profit for the year. The March 2021 Budget
announced an increase to the main rate of corporation tax to 25%
from April 2023 and this rate has been substantively enacted at the
balance sheet date. Deferred tax is provided at the rate which it
is expected to reverse.
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions - India 25.2% inclusive
of surcharges (2020: 25.2%), Spain 25% (2020: 25%), Turkey 25% for
2021, which is reducing to 23% in 2022 (2020: 22%), and Italy 27.5%
(2020: 27.5%). Non-UK deferred tax is provided at the local
prevailing tax rate which is expected to apply to the reversal of
the timing difference.
The charge for the year can be reconciled to the profit per the
consolidated income statement as follows:
2021 2020 (restated*)
GBP'000 GBP'000
---------------------------------------------------------------------------- --------- -----------------
Profit before tax from continuing operations 4,225 892
============================================================================ ========= =================
Effects of:
============================================================================ ========= =================
Tax at the UK corporation tax rate of 19% (2020: 19%) 803 170
============================================================================ ========= =================
Unprovided deferred tax arising on losses(1) 792 804
============================================================================ ========= =================
Other movement in unprovided deferred tax 164 185
============================================================================ ========= =================
Recurring expenses not deductible for tax 409 243
============================================================================ ========= =================
One-off costs not deductible for tax(2) (259) 395
============================================================================ ========= =================
Provision for withholding tax on future distributions(3) 1,217 789
============================================================================ ========= =================
Other expense not chargeable for tax purposes 250 171
============================================================================ ========= =================
Higher tax rates on overseas earnings(4) 471 552
============================================================================ ========= =================
Adjustments in respect of prior years (88) (29)
============================================================================ ========= =================
Impact of change in future tax rates on deferred tax (36) 10
============================================================================ ========= =================
(Deficit)/ surplus of share option charge compared to tax allowable amount (16) 151
---------------------------------------------------------------------------- --------- -----------------
Tax charged to income statement for continuing operations 3,707 3,441
============================================================================ ========= =================
Tax charged to the income statement for discontinued operations 30 168
---------------------------------------------------------------------------- --------- -----------------
3,737 3,609
---------------------------------------------------------------------------- --------- -----------------
* Restated to reflect Germany and China as discontinued
operations. See note 2
Effective tax charge
The net tax charge of GBP3,707,000 on a profit before tax from
continuing operations of GBP4,225,000 results in an effective tax
rate of 88% which is higher than the UK standard rate of 19%.
Additional information is provided below:
1. Deferred tax has not been recognised on the losses arising in
developing markets as the short-term profit expectations do not
support the recognition of deferred tax assets in these areas.
2. There is a one-off profit arising on KYND which is not
taxable and therefore reduces the tax charge. In the prior year
there were one-off consolidation adjustments which were not tax
deductible and therefore increased the tax charge, such as the
impairment of Blink goodwill and foreign exchange losses arising on
branch closures.
3. There is a withholding tax burden arising on repatriation of
funds from overseas countries which is included in the tax
charge.
4. Tax is chargeable at the local statutory rate in our
profitable countries, which are higher than the UK corporate income
tax rate of 19%.
The Group's effective tax rate is expected to be considerably
higher than the UK statutory tax rate in future years as
withholding taxes are provided on overseas distributions and
deferred tax credits are not taken on losses in markets that are
currently not profitable. The Group expects the rate to reduce from
the current level. The Group maintains appropriate provisions in
respect of tax uncertainties arising from operating in multiple
overseas jurisdictions.
Income tax credited to reserves during the year was as
follows:
2021 2020
GBP'000 GBP'000
-------------------------------------------------------------- --------- ---------
Deferred tax credit
============================================================== ========= =========
Timing differences on business partner intangible - 58
============================================================== ========= =========
Timing differences of equity-settled share-based charge 9 -
============================================================== ========= =========
Total deferred tax credit and total tax credited to reserves 9 58
-------------------------------------------------------------- --------- ---------
7. Dividends
2021 2020
GBP'000 GBP'000
----------------------------------------------------------------------------------------------- --------- ---------
Final dividend paid for the year ended 31 December 2020 of 25 pence per share (2019: nil pence
per share) 2,188 -
=============================================================================================== ========= =========
Interim dividend paid for the year ended 31 December 2021 of 5 pence per share (2020: nil
pence per share) 44 1 -
=============================================================================================== ========= =========
Amounts recognised as distributions to equity holders in the year 2,629 -
----------------------------------------------------------------------------------------------- --------- ---------
After 31 December 2021, the Directors have proposed a final
dividend of 7.5 pence (2020: 25.0 pence) per ordinary share. The
proposed final dividend is subject to approval by shareholders at
the AGM and has not been included as a liability in these financial
statements. The proposed dividend is expected to be paid on 17 May
2022 to all shareholders on the Register of Members on 19 April
2022 with the ex-dividend date being 14 April 2022. This has not
been accrued as a liability as at 31 December 2021, consistent with
the prior year, in accordance with IAS 8.
8. 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. In
accordance with IAS 33, potential ordinary shares are only
considered dilutive when their conversion would decrease the
earnings per share or increase the loss per share attributable to
equity holders.
Profit/(loss)
Continuing operations Discontinued operations Total
----------------------------------------- -------------------------- -------------------------- -------------------
2020 (restated*) 2020 (restated*)
2021 GBP'000 2021 GBP'000 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- ---------------- -------- ---------------- --------- --------
Profit/(loss) for the purposes of basic
and diluted earnings/(loss) per share 75 (2,632) 2,490 952 2,565 (1,680)
========================================= ======== ================ ======== ================ ========= ========
Exceptional items (net of tax) (2) 1,650 (2,399) - (2,401) 1,650
========================================= ======== ================ ======== ================ ========= ========
Profit/(loss) for the purposes of
underlying basic and diluted
earnings/(loss) per share 73 (982) 91 952 164 (30)
----------------------------------------- -------- ---------------- -------- ---------------- --------- --------
Number of shares
2021 2020
Number Number
(thousands) (thousands)
---------------------------------------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the purposes of basic earnings/(loss)
per share
and basic underlying earnings/(loss) per share 8,796 8,713
---------------------------------------------------------------------------------------- ------------- -------------
Effect of dilutive ordinary shares 225 -
---------------------------------------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the purposes of diluted earnings/(loss)
per
share and diluted underlying earnings/ (loss) per share 9,021 8,713
---------------------------------------------------------------------------------------- ------------- -------------
Continuing operations Discontinued operations Total
2020 2020
2021 (restated*) 2021 (restated*) 2021 2020
Pence Pence Pence Pence Pence Pence
Basic earnings/(loss) per share 0.85 (30.21) 28.31 10.93 29.16 (19.28)
---------------------------------------------- ------- -------------- -------- --------------- ------- --------
Diluted earnings/(loss) per share 0.83 (30.21) 27.60 10.93 28.43 (19.28)
---------------------------------------------- ------- -------------- -------- --------------- ------- --------
Basic underlying earnings/(loss) per share 0.83 (11.27) 1.03 10.93 1.86 (0.34)
---------------------------------------------- ------- -------------- -------- --------------- ------- --------
Diluted underlying earnings/(loss) per share 0.81 (11.27) 1.01 10.93 1.82 (0.34)
---------------------------------------------- ------- -------------- -------- --------------- ------- --------
* Restated to reflect Germany and China as discontinued
operations. See note 2.
The Group has 171,650,000 (2020: 171,650,000) deferred shares
which have no rights to receive dividends and only very limited
rights on a return of capital. The deferred shares have not been
admitted to trading on AIM or any other stock exchange.
Accordingly, these shares have not been considered in the
calculation of earnings/ loss per share.
9. Discontinued operations and assets and liabilities classified
as held for sale
On 17 May 2021, the Group completed the sale of its 100%
shareholding in CPP Creating Profitable Partnerships GmbH
('Germany'). The gross consideration on disposal was GBP2,366,000
(EUR2,744,000).
As at 31 December 2021, the Board was committed to the disposal
of CPP Asia Limited and its wholly owned subsidiary (together
'China'). A sale process was well underway as at the year end.
Subsequent to year end on 27 January 2022, the sale was
completed.
In accordance with IFRS 5 Non-current assets held for sale and
discontinued operations, Germany and China have been presented as
discontinued operations, and the China assets and liabilities have
been reclassified as held for sale.
Operating results for year ended 31 December 2021 reflect the
trading performance of Germany up to the date of disposal on 17 May
2021 and China for the full year. Comparative information reflects
a complete year. Both Germany and China were part of the Ongoing
Operations segment.
(i) Income statement
Germany China Total Germany
2021 2021 2021 2020 China 2020 Total 2020
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------ -------- -------- -------- -------- ----------- ----------
Revenue 1,062 1,402 2,464 3,003 1,677 4,680
======================================= ======== ======== ======== ======== =========== ==========
Cost of sales (430) (547) (977) (1,127) (746) (1,873)
======================================= ======== ======== ======== ======== =========== ==========
Gross profit 632 855 1,487 1,876 931 2,807
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Administrative expenses 2,654 (1,721) 933 (172) (1,612) (1,784)
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Operating profit/(loss) 3,286 (866) 2,420 1,704 (681) 1,023
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Analysed as:
------------------------------- ------ -------- -------- -------- -------- ----------- ----------
EBITDA 628 (322) 306 1,704 (382) 1,322
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Depreciation and amortisation - (285) (285) - (299) (299)
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Exceptional items 2,658 (259) 2,399 - - -
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Investment revenues - 1 1 - - -
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Finance costs 33 66 99 1 96 97
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Profit/(loss) before taxation 3,319 (799) 2,520 1,705 (585) 1,120
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Taxation (30) - (30) (168) - (168)
--------------------------------------- -------- -------- -------- -------- ----------- ----------
Profit/(loss) for the year 3,289 (799) 2,490 1,537 (585) 952
--------------------------------------- -------- -------- -------- -------- ----------- ----------
(ii) Exceptional items
Germany China Total Germany
2021 2021 2021 2020 China 2020 Total 2020
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ------ -------- -------- -------- -------- ----------- ----------
Profit on disposal 2,654 (72) 2,582 - - -
----------------------------------------------------- -------- -------- -------- -------- ----------- ----------
Write down of assets on reclassification as held for
sale - (113) (113) - - -
----------------------------------------------------- -------- -------- -------- -------- ----------- ----------
Restructuring costs 4 (74) (70) - - -
----------------------------------------------------- -------- -------- -------- -------- ----------- ----------
Exceptional items included in operating profit 2,658 (259) 2,399 - - -
----------------------------------------------------- -------- -------- -------- -------- ----------- ----------
Tax on exceptional items - - - - - -
--------------------------------------------- ------ -------- -------- -------- -------- ----------- ----------
Exceptional items after tax 2,658 (259) 2,399 - - -
----------------------------------------------------- -------- -------- -------- -------- ----------- ----------
(iii) Profit on disposal
The Group has recognised a profit on disposal as follows, this
includes a working capital adjustment for Germany, which was not
finalised at the half year:
Germany China Total
2021 2021 2021
GBP'000 GBP'000 GBP'000
---------------------------------------------- -------- -------- ---------
Proceeds 2,366 - 2,366
----------------------------------------------- -------- -------- ---------
Net liabilities sold 284 - 284
----------------------------------------------- -------- -------- ---------
Costs associated with disposal - (72) (72)
----------------------------------------------- -------- -------- ---------
Currency translation differences on disposal 4 - 4
----------------------------------------------- -------- -------- ---------
Profit on disposal 2,654 (72) 2,582
----------------------------------------------- -------- -------- ---------
(iv) Summary of cash flows
Germany China Total Germany
2021 2021 2021 2020 China 2020 Total 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- -------- -------- -------- -------- ----------- ----------
Net cash flows from operating activity (7,765) 54 (7,711) 1,265 (500) 765
---------------------------------------- -------- -------- -------- -------- ----------- ----------
Net cash flows from investing activity - 2 2 (894) (80) (974)
---------------------------------------- -------- -------- -------- -------- ----------- ----------
Net cash flows from financing activity 7,357 (85) 7,272 (132) 640 508
---------------------------------------- -------- -------- -------- -------- ----------- ----------
Net cash (o utflow)/ inflow (408) (29) (437) 239 60 299
---------------------------------------- -------- -------- -------- -------- ----------- ----------
(v) Assets and liabilities classified as held for sale
2021
GBP'000
--------------------------------- ---------
Current assets
--------------------------------- ---------
Other intangible assets 98
---------------------------------- ---------
Property, plant and equipment 10
---------------------------------- ---------
Right-of-use asset 138
---------------------------------- ---------
Trade and other receivables 142
---------------------------------- ---------
Cash and cash equivalents 90
---------------------------------- ---------
Total assets held for sale 478
---------------------------------- ---------
Current liabilities
--------------------------------- ---------
Trade and other payables (333)
---------------------------------- ---------
Contract liabilities (68)
---------------------------------- ---------
Leases liabilities (149)
---------------------------------- ---------
Total liabilities held for sale (550)
---------------------------------- ---------
Following reclassification to held for sale, other intangible
assets, property, plant and equipment, and right-of-use assets were
impaired by GBP58,000 in total. The impairment charge is included
within the exceptional charge on write down of assets on
reclassification as held for sale.
10. Other intangible assets
Business partner Internally generated Externally acquired
relationships software software Total
GBP'000 GBP'000 GBP'000 GBP'000
========================== ========================= ========================= ========================== ========
Cost:
-------------------------- ------------------------- ------------------------- -------------------------- --------
At 1 January 2020 644 2,761 3,796 7,201
-------------------------- ------------------------- ------------------------- -------------------------- --------
Additions - 1,267 141 1,408
-------------------------- ------------------------- ------------------------- -------------------------- --------
Disposals - - (265) (265)
-------------------------- ------------------------- ------------------------- -------------------------- --------
Exchange adjustments - (79) (23) (102)
========================== ========================= ========================= ========================== ========
At 1 January 2021 644 3,949 3,649 8,242
-------------------------- ------------------------- ------------------------- -------------------------- --------
Additions - 1,192 178 1,370
-------------------------- ------------------------- ------------------------- -------------------------- --------
Exchange adjustments - (55) (144) (199)
-------------------------- ------------------------- ------------------------- -------------------------- --------
Transfer of assets held
for sale - - (792) (792)
-------------------------- ------------------------- ------------------------- -------------------------- --------
At 31 December 2021 644 5,086 2,891 8,621
========================== ========================= ========================= ========================== ========
Accumulated amortisation:
-------------------------- ------------------------- ------------------------- -------------------------- --------
At 1 January 2020 87 837 2,744 3,668
-------------------------- ------------------------- ------------------------- -------------------------- --------
Provided during the year 142 501 428 1,071
-------------------------- ------------------------- ------------------------- -------------------------- --------
Disposals - - (211) (211)
-------------------------- ------------------------- ------------------------- -------------------------- --------
Exchange adjustments (6) (4) (17) (27)
========================== ========================= ========================= ========================== ========
At 1 January 2021 223 1,334 2,944 4,501
-------------------------- ------------------------- ------------------------- -------------------------- --------
Provided during the year 125 705 325 1,155
-------------------------- ------------------------- ------------------------- -------------------------- --------
Impairment 122 - 47 169
-------------------------- ------------------------- ------------------------- -------------------------- --------
Exchange adjustments - (20) (100) (120)
-------------------------- ------------------------- ------------------------- -------------------------- --------
Transfer of assets held
for sale - - (687) (687)
-------------------------- ------------------------- ------------------------- -------------------------- --------
At 31 December 2021 470 2,019 2,529 5,018
========================== ========================= ========================= ========================== ========
Carrying amount:
-------------------------- ------------------------- ------------------------- -------------------------- --------
At 31 December 2020 421 2,615 705 3,741
========================== ========================= ========================= ========================== ========
At 31 December 2021 174 3,067 362 3,603
-------------------------- ------------------------- ------------------------- -------------------------- --------
Amortisation of intangible assets totalling GBP1,195,000 (2020:
GBP1,071,000) is recognised through administrative expenses in the
consolidated income statement.
Internally generated software additions of GBP1,192,000 (2020:
GBP1,237,000) reflect the capitalisation of staff costs in IT
development projects.
Internally generated software includes GBP1,956,000 (2020:
GBP622,000) relating to assets in development which are not yet
operational and are not amortised. The assets held at 31 December
2021 are expected to become operational in Q4 2022.
11. Investment in joint venture and equity investment
Movement in the Group's share in joint ventures is as
follows:
2021 2020
GBP'000 GBP'000
-------------------------------- --------- ---------
Carrying amount at 1 January 450 714
================================ ========= =========
Acquisitions 168 -
================================ ========= =========
Share of losses in the year (189) (264)
-------------------------------- --------- ---------
Disposals (429) -
-------------------------------- --------- ---------
Carrying amount at 31 December - 450
-------------------------------- --------- ---------
Up to 23 December 2021, the Group held a 20% share of KYND
Limited (KYND), whose registered office is International House,
Canterbury Crescent, London, SW9 7QD. The Group's shareholding was
in the form of preference and deferred shares. KYND incurred losses
of GBP943,000 (2020: GBP1,316,000) during the year. The Group's
share of loss in the joint venture is GBP189,000 (2020:
GBP264,000), which has been recognised in the consolidated income
statement. The carrying value of the investment has been adjusted
for these losses. In the year, a loan to KYND was converted into
equity, which has been recognised as an addition to the joint
venture carrying amount.
The summarised financial information of KYND, is as follows:
2021 2020
GBP'000 GBP'000
-------------------------------------- --------- ---------
Revenue 846 171
====================================== ========= =========
Expenses (1,789) (1,487)
====================================== ========= =========
Loss for the period (943) (1,316)
-------------------------------------- --------- ---------
Group's share of loss for the period (189) (264)
-------------------------------------- --------- ---------
On 23 December 2021, KYND received additional investment from
BGF, which diluted the Group's shareholding to 14.7% in the form of
A and B shares. Taking into account share options within KYND on a
fully diluted basis the Group's holding will be 13.3%. Following
the investment, the Group could not demonstrate significant
influence and joint control and the investment could no longer be
equity accounted as a joint venture. Therefore, the investment in
joint venture was derecognised and accounted for as an equity
investment. As detailed in the table below:
2021
GBP'000
-------------------------------- ---------
Carrying amount at 1 January -
================================ =========
Acquisitions 1,889
================================= =========
Carrying amount at 31 December 1,889
--------------------------------- ---------
The equity investment in KYND is accounted for as a non-current
asset investment, under IFRS 9. The initial recognition of the
equity investment in KYND is at fair value at the date of
acquisition. This will be subsequently revalued at the accounting
dates and an election has been made for any movements in fair value
to go through other comprehensive income.
In the year, GBP1,459,000 (2020: GBPnil) was recognised as a
fair value gain through other gains and losses (note 5) which
reflected the net impact of the disposal of the joint venture and
the recognition of the equity investment at fair value.
There have been no dividends received in the year (2020: GBPnil)
from the KYND equity investment.
12. Share capital
Ordinary Deferred
shares shares of
of 9 pence
GBP1 each each Total
(thousands) (thousands) (thousands)
------------------------------ ------------ ------------ ------------
Called-up and allotted
------------------------------ ------------ ------------ ------------
At 1 January 2021 8,743 171,650 180,393
------------------------------- ------------ ------------ ------------
Issue of shares in connection
with:
------------------------------ ------------ ------------ ------------
Exercise of share options 90 - 90
------------------------------- ------------ ------------ ------------
At 31 December 2021 8,833 171,650 180,483
------------------------------- ------------ ------------ ------------
Ordinary Deferred
shares shares of
of 9 pence
GBP1 each each Total
GBP'000 GBP'000 GBP'000
------------------------------ ---------- ---------- --------
Called-up and allotted
------------------------------ ---------- ---------- --------
At 1 January 2021 8,740 15,413 24,153
------------------------------- ---------- ---------- --------
Issue of shares in connection
with:
------------------------------ ---------- ---------- --------
Exercise of share options 90 - 90
------------------------------- ---------- ---------- --------
At 31 December 2021 8,830 15,413 24,243
------------------------------- ---------- ---------- --------
Share capital at 31 December 2021 is GBP24,243,000 (2020:
GBP24,153,000). To satisfy share option exercises in the year the
Company has issued 89,735 GBP1 ordinary shares for a total equity
value of GBP90,000 and cash consideration of GBP20,000.
13. Share-based payment
Equity-settled share-based payments
Share-based payments comprise a credit relating to the 2016 LTIP
of GBP72,000 (2019: GBP491,000 charge) which are disclosed within
administrative expenses. No options have been granted in the
current year or the prior year as part of the 2016 LTIP.
2021 2020
----------------------- -----------------------
Weighted Weighted
Number average Number average
of share exercise of share exercise
options price options price
(thousands) (GBP) (thousands) (GBP)
-------------------------------- ------------ --------- ------------ ---------
2016 LTIP
-------------------------------- ------------ --------- ------------ ---------
Outstanding at 1 January 329 - 44,187 -
-------------------------------- ------------ --------- ------------ ---------
Exercised during the year (70) - (9,487) -
-------------------------------- ------------ --------- ------------ ---------
Lapsed during the year (69) - (1,602) -
-------------------------------- ------------ --------- ------------ ---------
Forfeited during the year (52) - - -
-------------------------------- ------------ --------- ------------ ---------
Share consolidation in the year - - (32,769) -
-------------------------------- ------------ --------- ------------ ---------
Outstanding at 31 December 138 - 329 -
-------------------------------- ------------ --------- ------------ ---------
Exercisable at 31 December 9 - 14 -
-------------------------------- ------------ --------- ------------ ---------
Nil-cost options and conditional shares granted under the 2016
LTIP normally vest after three years, lapse if not exercised within
ten years of grant and will lapse if option holders cease to be
employed by the Group. Vesting of 2016 LTIP options and shares are
also subject to achievement of certain performance criteria
including Group financial targets and non-financial events measured
within the vesting period.
The options outstanding at 31 December 2021 had no remaining
contractual life of (2020: one year weighted average) in the 2016
LTIP.
Cash-settled share-based payments
The Group granted certain employees with notional share options
that require the Group to pay the intrinsic value of the notional
share to the employee at the date of exercise. The notional share
options have the same requirements and conditions as the 2016 LTIP.
There have been no similar awards in 2021. The Group has recorded a
total expense in relation to cash-settled awards in 2021 of
GBP8,000 (2020: GBP8,000) which is disclosed within administrative
expenses. The Group has recorded liabilities for its cash-settled
awards of GBP137,000 (2020: GBP129,000) which are included in trade
creditors and accruals.
14. Reconciliation of operating cash flows
2021 2020
GBP'000 GBP'000
---------------------------------------------------------- --------- --------
Profit/(loss) for the year 3,008 (1,597)
========================================================== ========= ========
Adjustments for:
========================================================== ========= ========
Depreciation and amortisation 3,111 3,454
========================================================== ========= ========
Share-based payment (credit)/charge (64) 499
========================================================== ========= ========
Impairment loss on goodwill - 880
========================================================== ========= ========
Impairment loss on intangible assets 176 -
========================================================== ========= ========
Impairment loss on property, plant and equipment 3 -
========================================================== ========= ========
Impairment loss on right-of-use assets 48 41
========================================================== ========= ========
Loss on disposal of intangible assets - 54
========================================================== ========= ========
Loss on disposal of property, plant and equipment 26 30
========================================================== ========= ========
Share of loss in joint venture 189 264
========================================================== ========= ========
Lease concessions - (86)
========================================================== ========= ========
Profit from discontinued operations (2,582) -
========================================================== ========= ========
Investment revenues (224) (412)
========================================================== ========= ========
Finance costs 259 415
========================================================== ========= ========
Other gains and losses (1,459) 1,294
========================================================== ========= ========
Income tax charge 3,737 3,609
---------------------------------------------------------- --------- --------
Operating cash flows before movements in working capital 6,228 8,445
========================================================== ========= ========
Decrease/(increase) in inventories 40 (58)
========================================================== ========= ========
Decrease in contract assets 354 1,272
========================================================== ========= ========
Decrease in receivables 1,626 663
========================================================== ========= ========
Decrease/(increase) in insurance assets 46 (4)
========================================================== ========= ========
Increase/(decrease) in payables 217 (3,049)
========================================================== ========= ========
Decrease in contract liabilities (276) (953)
========================================================== ========= ========
(Decrease)/increase in insurance liabilities (853) 179
========================================================== ========= ========
Decrease in provisions - (309)
---------------------------------------------------------- --------- --------
Cash from operations 7,382 6,186
========================================================== ========= ========
Income taxes paid (2,820) (3,024)
---------------------------------------------------------- --------- --------
Net cash from operating activities 4,562 3,162
---------------------------------------------------------- --------- --------
Reconciliation of net funds
Foreign
exchange
At and other At
1 January non-cash 31 December
2021 Cash flow movements 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------- --------- ---------- ------------
Net cash per cash flow statement 21,856 953 (400) 22,409
--------------------------------- ---------- --------- ---------- ------------
Financing activities:
--------------------------------- ---------- --------- ---------- ------------
Lease liabilities (6,638) 1,507 (892) (6,023)
--------------------------------- ---------- --------- ---------- ------------
Borrowings due outside of
one year
--------------------------------- ---------- --------- ---------- ------------
* Unamortised issue costs 98 - (40) 58
--------------------------------- ---------- --------- ---------- ------------
Total movement from financing
activities (6,540) 1,507 (932) (5,965)
--------------------------------- ---------- --------- ---------- ------------
Total net funds 15,316 2,460 (1,332) 16,444
--------------------------------- ---------- --------- ---------- ------------
15. Related party transactions
Transactions with associated parties
The Group has a balance receivable from its joint venture, KYND,
in the amount of GBPnil (2020: GBP150,000). This was converted to
equity in the year (Note 11).
In the year, the Group incurred fees of GBP8,000 plus VAT (2020:
GBPnil) for services rendered from KYND, which was payable under 14
day credit terms. The creditor balance at the year end was GBP1,000
(2020: GBPnil).
Transactions with related parties
ORConsulting Limited (ORCL) is an organisation used by the Group
for consulting services in relation to leadership coaching.
Organisation Resource Limited (ORL), a company owned by Mark
Hamlin, who was the Senior Independent Director in the Group,
retains intellectual property in ORCL for which it is paid a
licence fee. The fee paid to ORCL by the Group in 2021 was
GBP81,000 plus VAT (2020: GBP63,000) and was payable under 30-day
credit terms.
Mark Hamlin was the Chairman of Globiva until 31 December 2021.
The fees for this role are paid to his consultancy company, ORL.
The fee paid to ORL by the Group in 2021 was GBP71,000 (2020:
GBP73,000) and was payable under 25-day credit terms.
The Group paid GBP166,800 to Sosafe Limited (Sosafe) in February
2021 pursuant to a settlement agreement with Sosafe and Mr Hamish
Ogston dated 23 February 2021 (the Settlement). Mr Ogston is a
director and majority shareholder of Sosafe and a substantial
shareholder in the Group and therefore the Settlement constituted a
related party transaction pursuant to AIM Rule 13. The Settlement
was made in connection with claims for certain legal and
professional costs incurred by Sosafe and Mr Ogston and represents
full and final settlement of such claims, which date back several
years and have been fully provided for since 2016. With the
exception of David Morrison, the Company's non-executive Chairman
and a representative of Mr Ogston, the independent Directors of the
Company consider, having consulted with Liberum, the Company's
nominated adviser, that the terms of the transaction were fair and
reasonable insofar as its shareholders are concerned.
Remuneration of key management personnel
The remuneration of the Directors and senior management team,
who are the key management personnel of the Group and Company, is
set out below:
2020 2019
GBP'000 GBP'000
------------------------------ --------- --------
Short-term employee benefits 1,788 2,442
============================== ========= ========
Post-employment benefits 74 89
============================== ========= ========
Termination benefits 203 -
============================== ========= ========
Share-based payments (65) 423
------------------------------ --------- --------
2,000 2,954
------------------------------ --------- --------
16. Events after the balance sheet date
The Group completed the sale of China on 27 January 2022 with
T-Link for a nominal consideration of HK$1. The terms of the
transaction included a working capital cash injection of GBP0.5
million immediately prior to completion. The Group expects that the
transaction together with trading losses and a reclassification of
cumulative translation adjustments will contribute a profit of
approximately GBP0.6 million in 2022.
The Group is in the process of remodelling its operating
structure as a greater focus is placed on the distribution of
technology-led propositions into the UK and Europe. These
technology-led solutions will lead to a simplified UK-based
operating model. This in conjunction with a smaller geographic
footprint has led to a restructuring process commencing in the UK,
which will see a redundancy programme in 2022. The total costs
associated with the restructuring is expected to be in the range
GBP0.2 million to GBP0.3 million.
Cautionary statement
This announcement has been prepared solely to provide additional
information to shareholders as a body to meet the relevant
requirements of the UK Listing Authority. The announcement should
not be relied on by any other party or for any other purpose.
The announcement contains certain forward-looking statements.
These statements are made by the Directors in good faith based on
the information available to them up to the time of approval of the
announcement but such statements should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying any such forward-looking information.
Subject to the requirements of the UK Listing Authority, CPP
undertakes no obligation to update these forward-looking statements
and it will not publicly release any revisions it may make to these
forward-looking statements that may result from events or
circumstances arising after the date of this announcement.
This information is provided by RNS, the news service of the
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END
FR DVLFLLXLEBBK
(END) Dow Jones Newswires
March 29, 2022 02:00 ET (06:00 GMT)
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