TIDMCPP
RNS Number : 5272A
CPPGroup Plc
26 September 2022
26 September 2022
CPPGroup Plc
("CPP Group"; "the Group"; or "the Company")
HALF YEAR REPORT FOR THE SIX MONTHSED 30 JUNE 2022
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 half year
results for the six months ended 30 June 2022.
Financial Highlights:
-- Group revenue from continuing operations increased by 18% to
GBP77.8 million (H1 2021 restated: GBP65.7 million)
-- Core revenues increased by 26% to GBP69.5 million (H1 2021: GBP55.0 million)
-- EBITDA from continuing operations increased by 18% to GBP3.1
million (H1 2021 restated: GBP2.6 million)
-- Central overheads reduced to GBP4.8 million (H1 2021: GBP5.5 million)
-- Exceptional items of GBP0.5 million (H1 2021: GBP1.5 million)
-- Profit before tax from continuing operations increased to
GBP1.3 million (H1 2021 restated: GBP0.5 million loss)
-- Loss after tax from continuing operations improves to GBP0.2
million (H1 2021 restated: GBP1.6 million loss)
-- Cash balance of GBP19.3 million at 30 June 2022 (H1 2021: GBP19.6 million)
-- Dividends suspended pending completion of the strategy review (Change Programme)
Operational Highlights:
-- Simplified structure focused on four business units
-- Simplified the proposition away from "insurance" to "assurance" services
-- Simplified the management and operational structures
-- Core business (CPP India, CPP Turkey, Blink and Globiva) performing well
-- Major partner renewals for CPP India, and new partner wins for both CPP Turkey and Blink
-- Legacy Business (UK & European back book) revenues continue to record year-on-year decline
Simon Pyper, CEO of CPP Group, commented:
"Despite global economic headwinds, the Group has, from a
trading perspective, delivered robust revenue growth, particularly
from its Indian and Turkish operations. Blink, the Group's
InsurTech business focused on the Global Travel Sector, also
performed well, albeit from a low base. As international travel
recovers, Blink is starting to see real growth in its new business
pipeline both domestically and internationally. The good
performance from our core markets somewhat masks the structural
decline in profitability from our Legacy Businesses, a decline long
understood by the business though never addressed.
On appointment, I found a business which had no adequate plan to
address the decline in its Legacy Business, which had no sense of
purpose, and no strategy for the future. Consequently, much of my
time since appointment as CEO has been focused on simplifying the
business, simplifying our proposition, and simplifying our
management and operating structures. Additionally, the management
team and I have been working on a broader Change Programme, the aim
of which is to define what CPP's purpose is, and to set a course
("strategy") for the business which over time should improve
outcomes for our key stakeholder groups.
It is my expectation that I will be able to share the key
outputs from the Change Programme with shareholders in October of
this year.
In spite of the uncertain economic climate, the Board remains
confident in the outlook and growth prospects for our core
operations. However, structural issues pertaining to our Legacy
Business and associated IT costs need to be addressed which will
have some impact on overall performance and we will provide further
guidance in due course."
Financial and non-financial highlights - continuing
operations
Six months
Six months to 30 June
to 30 June 2021 (Restated(1)
GBP millions 2022 ) Change
------------------------------ ----------- ------------------- ------
Financial highlights:
Group
Revenue 77.8 65.7 18%
EBITDA(2) 3.1 2.6 18%
Operating profit/(loss) 1.3 (0.3) 529%
Profit/(loss) before tax
* Reported 1.3 (0.5) 363%
* Underlying(3) 1.8 1.0 78%
(Loss)/profit after tax
- Reported (0.2) (1.6) 90%
- Underlying(3) 0.3 (0.3) 223%
Basic loss per share (pence) (4.09) (21.53) 81%
Cash and cash equivalents 19.3 19.6 (1)%
Segmental revenue
Core(4) 69.5 55.0 26%
Legacy(5) 8.3 10.7 (22)%
Non-financial highlights:
Customer numbers (millions) 12.1 11.9 2%
============================== =========== =================== ======
1. Restated to reflect China as a discontinued operation.
2. EBITDA represents earnings before interest, taxation,
depreciation, amortisation and exceptional items.
3. Underlying profit before tax excludes exceptional items of
GBP0.5 million (H1 2021: GBP1.5 million). The tax effect of the
exceptional items is GBPnil (H1 2021: GBP0.1 million). Further
detail of exceptional items is provided in note 4 of the condensed
consolidated interim financial statements.
4. Core revenue comprises CPP India, CPP Turkey, Blink and Globiva.
5. Legacy Business primarily comprises the UK and European
renewal books of business, which are principally Card Protection
and Identity Protection policies.
Enquiries:
CPP Group plc
Simon Pyper, Chief Executive Tel: via Alma PR
Officer
David Bowling, Chief Financial
Officer
Liberum Capital Limited
(Nominated Adviser and Sole Tel: +44 (0)20 3100 2000
Broker)
Richard Lindley
Lauren Kettle
Alma PR
(Financial PR Adviser) Tel: +44 (0)20 3405 0205
Josh Royston
David Ison
Kieran Breheny
About CPP Group:
CPP Group is a technology-driven assistance company that creates
embedded and ancillary real-time assistance products and resolution
services that reduce disruption to everyday life for millions of
people across the world, at the time and place they are needed, CPP
Group is listed on AIM, operated by the London Stock Exchange.
For more information on CPP visit
https://international.cppgroup.com/
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act 2018.
Chief Executive's Statement
First Half Performance
Despite global economic headwinds, the Group has, from a trading
perspective, delivered robust revenue growth, particularly from its
Indian and Turkish operations. Blink, the Group's InsurTech
business focused on the Global Travel Sector, also performed well,
albeit from a low base. As international travel recovers, Blink is
starting to see real growth in its new business pipeline both
domestically and internationally. The good performance from our
core markets somewhat masks the structural decline in profitability
from our Legacy Businesses, a decline long understood by the
business though never addressed.
The Group's revenue performance against prior year has also
benefited from favourable comparatives (impact of COVID-19
restrictions on 2021 revenues) and foreign exchange movements. Of
the 18% increase in year-on-year revenues to GBP77.8 million (H1
2021 restated: GBP65.7 million), circa 5% is due to favourable
comparatives from COVID-19 and 2% is due to favourable foreign
exchange movements. Adjusting for these two factors, the Group's
underlying revenue growth for the first half was 11%, which given
the prevailing economic environment is a more than satisfactory
outcome.
EBITDA improved by 18% or GBP0.5 million to GBP3.1 million (H1
2021 restated: GBP2.6 million). The Legacy business, as expected,
recorded a decline in EBITDA for the period of GBP0.4 million which
partially offset the GBP0.4 million improvement from the Core
business and the GBP0.4 million benefit of reduced central costs.
Group EBITDA margin for the period remained broadly level with
prior year at 4.0%.
Operating profit has increased to GBP1.3 million (H1 2021
restated: GBP0.3 million loss) which includes depreciation charges
of GBP1.3 million (H1 2021 restated: GBP1.4 million) and
exceptional items which have reduced to GBP0.5 million (H1 2021:
GBP1.5 million). The exceptional items in the period principally
reflect the exit costs of the former CEO. As a result, the Group's
profit before tax has improved to GBP1.3 million (H1 2021 restated:
GBP0.5 million loss).
Key Performance Metrics:
GBP millions REVENUE EBITDA
H1 2022 H1 2021(1) CHANGE H1 2022 H1 2021(1) CHANGE
-------- ----------- -------- ---------- ----------- -------
CPP India 60.7 48.7 25% 3.1 2.8 13%
-------- ----------- -------- ---------- ----------- -------
Globiva 7.1 4.4 61% 1.3 1.1 12%
-------- ----------- -------- ---------- ----------- -------
CPP Turkey 1.5 1.8 (21)% 0.2 0.4 (49)%
-------- ----------- -------- ---------- ----------- -------
Blink 0.2 0.1 58% (0.1) (0.2) 53%
-------- ----------- -------- ---------- ----------- -------
Core Business 69.5 55.0 26% 4.5 4.1 8%
-------- ----------- -------- ---------- ----------- -------
Legacy Business 8.3 10.7 (22)% 0.8 1.2 (31)%
-------- ----------- -------- ---------- ----------- -------
Business
Unit Total 77.8 65.7 18% 5.3 5.3 0%
-------- ----------- -------- ---------- ----------- -------
Central Functions - - - (2.2) (2.6) 15%
-------- ----------- -------- ---------- ----------- -------
Share of JV - - - - (0.1) 100%
-------- ----------- -------- ---------- ----------- -------
Group Total 77.8 65.7 18% 3.1 2.6 18%
-------- ----------- -------- ---------- ----------- -------
Attributable
to:
-------- ----------- -------- ---------- ----------- -------
CPP Shareholders 2.5 2.1 20%
-------- ----------- -------- ---------- ----------- -------
Non-Controlling
Interests 0.6 0.5 12%
-------- ----------- -------- ---------- ----------- -------
1. Restated to reflect China as a discontinued operation.
CPP India: EBITDA of GBP3.1 million (H1 2021: GBP2.8 million),
EBITDA margin 5.1% (H1 2021: 5.6%)
Revenue has increased by GBP12.0m or 25% versus prior year, and
by 21% on a constant currency basis, in part due to prior year
comparatives being impacted by COVID-19, with volume growth derived
from our My Tech, My Health, and My Home assistance products.
During the period, CPP India secured contract extensions with its
two largest partners, Bajaj Finance Limited (Bajaj), and SBI Cards.
EBITDA margin reduced by 0.5% reflecting a modest change in revenue
mix during the period towards lower margin products (particularly
in My Health), and amortisation of the Bajaj marketing
incentive.
Globiva : EBITDA of GBP1.3 million (H1 2021: GBP1.1 million),
EBITDA margin 17.5% (H1 2021: 25.2%)
Third party revenue of GBP7.1 million which is +61% versus prior
year, and on a constant currency basis by +55%. Revenue growth
reflects new business wins and underlying occupancy (number of
seats) improvement, noting that prior year comparatives reflect a
business recovering from the impact of COVID-19 restrictions. The
EBITDA margin has reduced by 7.7% which is function of new business
growth and occupancy utilisation.
Turkey: EBITDA of GBP0.2 million (H1 2021: GBP0.4 million),
EBITDA margin 14.7% (H1 2021: 23.0%)
Revenues have decreased by GBP0.4 million or -21% versus prior
year, this reduction is all foreign exchange related as on a
constant currency basis the business recorded revenue growth of
27%, reflecting in part, the development of the Turkiye Insurance
relationship established in 2021. The EBITDA margin reduced by 8.3%
reflecting cost inflation brought about by local economic
conditions.
Blink: EBITDA loss of GBP0.1 million (H1 2021: GBP0.2 million
loss)
There is a dedicated management and operational team now in
place to build capacity and to drive growth. The pipeline for
Blink's Travel Disruption products (Flight Delay and Lost Baggage)
is starting to see real growth. Post period end, the business has
started to provide its services to four new partners.
Legacy Business: EBITDA of GBP0.8 million (H1 2021: GBP1.2
million)
There has been a continued decline in both revenue and EBITDA
from the UK and European Back Books (predominantly Card Protection
and Identity Protection).
Central costs: GBP2.2 million (H1 2021: GBP2.6 million)
Central overheads before appropriate recharge to business units
are GBP4.8 million (H1 2021: GBP5.5 million) which is a reduction
of GBP0.7 million primarily reflecting lower Executive and Board
costs. The central costs include GBP1.8 million (H1 2021: GBP2.0
million) relating to the cost of the Group's IT operations which
forms the principal element of the costs recharged to business
units.
EBITDA Attributable to Shareholders
The Group holds a 51% majority interest in Globiva, a Business
Processes Management company incorporated in India, with the other
49% of the shares beneficially owned by the three founders of the
business. As the Group demonstrates control of the business through
its majority holding, CPP is required under accounting standards to
consolidate 100% of Globiva's revenues and earnings into its
financial statements. The minority interest, being the 49% held by
the founders, is recorded at the foot of the Group's income
statement as "Attributable to non-controlling interests". When our
holding in Globiva falls below the 51% threshold the Group will
relinquish control and will no longer consolidate Globiva's
revenues and earnings. In the normal course of business, this is
expected to occur in 2026.
Taxation
The Group's tax charge from continuing operations is GBP1.4
million (H1 2021: GBP1.1 million) which reflects an effective tax
rate (ETR) of 113% (H1 2021 restated: negative 232%). The tax
charge mainly comprises tax payable in India, along with smaller
charges from our European and Turkish markets.
The Group's ETR is expected to remain high and variable over the
medium term, as the Group executes its Change Programme. The
programme once complete is expected to lead to a stabilisation in
the ETR at a much lower level. However, it is still expected to
remain notably higher than the UK statutory rate of 19% as we make
most of our taxable profit in India, provide for withholding taxes
on overseas distributions and continue to generate losses in
certain markets against which we are not able to recognise deferred
tax assets.
Adjusted ETR
The adjusted ETR (which excludes the impact of exceptional
items) at 81% (H1 2021 restated: 127%) demonstrates the progressive
improvement in the Group's tax position as the Group addresses its
loss-making operations and overall cost-base. The adjusted ETR
reflects a more normalised tax charge for the Group.
The adjusted ETR is summarised as follows:
H1 2022 H1 2021
---------------------------------- ----------------------------------
Exceptional Exceptional
Continuing operations Reported items(1) Adjusted Reported items(1) Adjusted
Profit before tax 1.3 0.5 1.8 (0.5) 1.5 1.0
Tax charge 1.4 - 1.4 1.1 0.2 1.3
ETR 113% n/a 81% (232)% 9% 127%
1. Refer to note 4 of the condensed consolidated interim financial statements.
Overall, we expect a progressive reduction in our ETR as our
loss-making operations reduce, distributions from overseas markets
stabilise and volatility arising from one-off charges declines.
Financial Position
The Group had cash balances at 30 June 2022 of GBP19.3 million
(H1 2021: GBP19.6 million; 31 December 2021: GBP22.3 million). The
extension of the Bajaj contract included payment of upfront fees,
which along with costs to develop the IT platform in India,
restructuring costs in the UK and payment of the dividend have led
to the GBP3.1 million reduction in cash since the year end.
Although the Group's cash cycle is naturally weighted to H2 this
benefit will be reduced this year as development work on the India
platform accelerates. Whilst the Group has previously and continues
to report healthy cash balances, it should be noted that not all
cash is available for distribution or able to be used on demand for
working capital purposes in all parts of the Group. At present,
approximately 40% of the Group's cash balances are "restricted" due
to either tax, legal, or regulatory requirements.
Operational Highlights
Simplified Structure
The business is now organised around four business units being
CPP India, CPP Turkey, Blink and the Legacy Business (UK &
European back book) along with Central Functions. Each business
unit is managed by a dedicated CEO who has full accountability for
delivering agreed financial and non-financial objectives. This
simplified structure will allow for local decisions to be made more
quickly and moreover, allow each business to more effectively react
to changing business partner needs.
Globiva is managed independently of the Group and save for CPP
holding three Board seats (including the Chairman) and having the
majority voting rights there is minimal management and operational
interaction between the two companies.
Simplified Proposition
There is a move to providing a suite of technology-enabled
assistance products and services focused around six themes: My
Travel; My Tech; My Health; My Digital Life; My Home; and My
Finances. Our simplified proposition reflects and supports our
purpose, one of being a "technology-driven assistance company that
creates embedded and ancillary real-time assistance products and
resolution services that reduce disruption to everyday life for
millions of people across the world, at the time and place they are
needed".
Simplified Management and Operational Structure
The Executive Management Committee ("EMC"), is chaired by me and
comprises the four Business Unit CEOs, the Group Chief Financial
Officer, the Chief Risk and Operating Officer, the Group HR
Director, and the Group Legal Counsel. The EMC is the key
decision-making committee of the business focused on delivering the
Group's strategic, operational, and financial objectives. The
committee meets weekly.
The Operational Board, which reports to the EMC, reviews,
implements, and monitors actions agreed at the EMC. In simple terms
the Operational Board is focused on the "doing" whilst the EMC is
focused on the "management" of the business. The Operational Board
meets weekly, is chaired by me, and comprises several EMC members
and other senior executives and managers of the Group.
Dividend
Due to the costs and uncertainties associated with the Change
Programme, the Board has taken the decision to suspend dividend
payment until further notice. If circumstances change, the Board
will review and update shareholders when appropriate to do so.
Outlook
We are confident about the outlook and growth prospects for our
core operations for the second half of the year. However, we do
expect some softening in reported margin in the second half
reflecting a modest mix change towards lower margin products, the
impact of the new commercial terms agreed with Bajaj when extending
the contract in May and revised incentive costs for our CPP India
team. However, structural issues pertaining to our Legacy Business
and associated IT costs need to be addressed which will have some
impact on overall performance and we will provide further guidance
in due course. Our expectations are that we will be able to provide
the key outputs of the Change Programme in October.
Simon Pyper
Chief Executive Officer
23 September 2022
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
6 months ended 6 months ended 30 June 2021 Year ended
30 June 2022 (Restated*) 31 December 2021
GBP'000 GBP'000 GBP'000
Note (Unaudited) (Unaudited) (Audited)
Continuing operations
Revenue 3 77,768 65,670 143,625
Cost of sales (62,173) (50,230) (110,708)
--------------- ---------------------------------- ------------------
Gross profit 15,595 15,440 32,917
Administrative expenses (14,256) (15,633) (29,827)
Share of loss in joint venture - (119) (189)
Operating profit/(loss) 1,339 (312) 2,901
Analysed as:
EBITDA 3 3,100 2,619 7,524
Depreciation and amortisation (1,264) (1,442) (2,995)
Exceptional items 4 (497) (1,489) (1,628)
Investment revenues 176 112 223
Finance costs (228) (289) (358)
Other gains and losses - - 1,459
--------------- ---------------------------------- ------------------
Profit/(loss) before taxation 1,287 (489) 4,225
Taxation 5 (1,449) (1,136) (3,707)
(Loss)/profit for the period from
continuing operations (162) (1,625) 518
Discontinued operations
Profit for the period from
discontinued operations 8 616 2,901 2,490
--------------- ---------------------------------- ------------------
Profit for the period 454 1,276 3,008
=============== ================================== ==================
Attributable to:
Equity holders of the Company 254 1,013 2,565
Non-controlling interests 200 263 443
--------------- ---------------------------------- ------------------
454 1,276 3,008
=============== ================================== ==================
(Loss)/earnings per share
Basic Pence Pence (Restated*) Pence
Continuing operations 7 (4.09) (21.53) 0.85
Continuing and discontinued
operations 7 2.87 11.55 29.16
=============== ================================== ==================
Diluted Pence Pence (Restated*) Pence
Continuing operations 7 (4.09) (21.53) 0.83
Continuing and discontinued operations 7 2.87 11.55 28.43
======= ================== ======
* Restated to reflect China as a discontinued operation. See
note 2.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
6 months ended 30 June 2022 6 months ended 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Profit for the period 454 1,276 3,008
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on
translation of foreign
operations 196 (451) (695)
Exchange differences
reclassified on disposal of
foreign operations (1,081) (4) (4)
Other comprehensive expense for
the period net of taxation (885) (455) (699)
---------------------------- ---------------------------- ------------------
Total comprehensive
(expense)/income for the period (431) 821 2,309
============================ ============================ ==================
Attributable to:
Equity holders of the Company (704) 588 1,867
Non-controlling interests 273 233 442
---------------------------- ---------------------------- ------------------
(431) 821 2,309
============================ ============================ ==================
CONSOLIDATED BALANCE SHEET
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
Note (Unaudited) (Unaudited) (Audited)
Non-current assets
Goodwill 567 528 540
Other intangible assets 4,453 3,845 3,603
Property, plant and equipment 1,360 1,357 1,335
Right-of-use assets 4,101 5,577 5,109
Equity investment 1,889 - 1,889
Investment in joint venture - 331 -
Deferred tax assets 341 245 396
Contract assets 448 593 564
------------- ------------- -----------------
13,159 12,476 13,436
------------- ------------- -----------------
Current assets
Inventories 115 146 102
Contract assets 4,538 3,689 4,020
Trade and other receivables 15,776 13,150 13,605
Cash and cash equivalents 19,321 19,592 22,319
------------- ------------- -----------------
39,750 36,577 40,046
Assets classified as held for sale - - 478
39,750 36,577 40,524
Total assets 52,909 49,053 53,960
------------- ------------- -----------------
Current liabilities
Income tax liabilities (808) (1,047) (1,362)
Trade and other payables (21,732) (17,483) (19,5 44 )
Lease liabilities (869) (910) (937)
Contract liabilities (9,909) (8,405) (9,190)
------------- ------------- -----------------
(33,318) (27,845) (31,033)
------------- ------------- -----------------
Liabilities classified as held for sale - - (550)
------------- ------------- -----------------
(33,318) (27,845) (31,583)
------------- ------------- -----------------
Net current assets 6,432 8,732 8,941
------------- ------------- -----------------
Non-current liabilities
Borrowings 42 77 58
Deferred tax liabilities (626) (104) (927)
Lease liabilities (4,008) (5,304) (4,936)
Contract liabilities (898) (1,333) (1,200)
(5,490) (6,664) (7,005)
------------- ------------- -----------------
Total liabilities (38,808) (34,509) (38,588)
------------- ------------- -----------------
Net assets 14,101 14,544 15,372
============= ============= =================
Equity
Share capital 9 24,254 24,232 24,243
Share premium account 45,225 45,225 45,225
Merger reserve (100,399) (100,399) (100,399)
Translation reserve (822) 409 136
ESOP reserve 17,192 17,656 17,418
Retained earnings 26,831 26,083 27,202
------------- ------------- -----------------
Equity attributable to equity holders of the Company 12,281 13,206 13,825
Non-controlling interests 1,820 1,338 1,547
------------- ------------- -----------------
Total equity 14,101 14,544 15,372
============= ============= =================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
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
6 months ended
30 June 2022
(Unaudited)
At 1 January
2022 24,243 45,225 (100,399) 136 17,418 27,202 13,825 1,547 15,372
Profit for the
period - - - - - 254 254 200 454
Other
comprehensive
expense for the
period - - - (958) - - (958) 73 (885)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Total
comprehensive
expense for the
period - - - (958) - 254 (704) 273 (431)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Effects of
hyperinflation - - - - - 43 43 - 43
Equity-settled
share-based
payment credit - - - - (226) - (226) - (226)
Exercise of
share options 9 11 - - - - (5) 6 - 6
Dividends 6 - - - - - (663) (663) - (663)
At 30 June 2022 24,254 45,225 (100,399) (822) 17,192 26,831 12,281 1,820 14,101
======== ======== ========== ============ ======== ========= ======== ================ ========
6 months ended
30 June 2021
(Unaudited)
At 1 January
2021 24,153 45,225 (100,399) 834 17,490 27,327 14,630 1,105 15,735
Profit for the
period - - - - - 1,013 1,013 263 1,276
Other
comprehensive
expense for the
period - - - (425) - - (425) (30) (455)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Total
comprehensive
income for the
period - - - (425) - 1,013 588 233 821
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Equity-settled
share-based
payment charge - - - - 166 - 166 - 166
Exercise of
share options 79 - - - - (69) 10 - 10
Dividends 6 - - - - - (2,188) (2,188) - (2,188)
At 30 June 2021 24,232 45,225 (100,399) 409 17,656 26,083 13,206 1,338 14,544
======== ======== ========== ============ ======== ========= ======== ================ ========
Year ended
31 December 2021
(Audited)
At 1 January
2021 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
period - - - (698) - 2,565 1,867 442 2,309
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Equity-settled
share-based
payment credit - - - - (72) - (72) - (72)
Exercise of
share options 90 - - - - (70) 20 - 20
Deferred tax on
share options - - - - - 9 9 - 9
Dividends 6 - - - - - (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
6 months ended 6 months ended Year ended
Note 30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Net cash (used in)/from operating activities 10 (327) (302) 4,562
Investing activities
Interest received 176 112 224
Purchases of property, plant and equipment (200) (136) (525)
Purchases of intangible assets 3 (1,153) (756) (1,370)
Cash consideration in respect of sale of
discontinued operations 8 - 2,353 2,366
Costs associated with disposal of discontinued
operations 8 (72) - -
Cash disposed of with discontinued operations (518) (112) (112)
Net cash (used in)/from investing activities (1,767) 1,461 583
--------------- --------------- ------------------
Financing activities
Dividends paid 6 (663) (2,188) (2,629)
Repayment of the lease liabilities (713) (775) (1,507)
Interest paid (37) (37) (76)
Issue of ordinary share capital 9 6 10 20
Net cash used in financing activities (1,407) (2,990) (4,192)
--------------- --------------- ------------------
Net (decrease)/increase in cash and cash equivalents (3,501) (1,831) 953
Effect of foreign exchange rate changes 413 (433) (400)
Cash and cash equivalents at start of period 22,409 21,856 21,856
Cash and cash equivalents at end of period 19,321 19,592 22,409
--------------- --------------- ------------------
Analysed as:
Continuing operations 19,321 19,592 22,319
Discontinued operations - - 90
--------------- --------------- ------------------
19,321 19,592 22,409
--------------- --------------- ------------------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1 General information
The condensed consolidated interim financial statements for the
six months ended 30 June 2022 do not constitute statutory accounts
as defined under Section 434 of the Companies Act 2006. The Annual
Report and Financial Statements (the 'Financial Statements') for
the year ended 31 December 2021 were approved by the Board on 28
March 2022 and have been delivered to the Registrar of Companies.
The Auditor, PKF Littlejohn LLP, reported on these financial
statements; their report was unqualified, did not contain an
emphasis of matter paragraph and did not contain statements under
s498 (2) or (3) of the Companies Act 2006.
2 Accounting policies
Basis of preparation
The unaudited condensed consolidated interim financial
statements for the six months ended 30 June 2022 have been prepared
in accordance with IAS 34 Interim Financial Reporting. They do not
include all the information required for full annual financial
statements and should be read in conjunction with the Group's
consolidated financial statements for the year ended 31 December
2021 which were prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and UK-adopted International Accounting
Standards (UK IASs).
The condensed consolidated interim financial statements were
approved for release on 23 September 2022.
The accounting policies adopted in the preparation of the
condensed consolidated interim financial statements are consistent
with those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 December 2021.
Discontinued operations
On 27 January 2022, the Group completed the sale of its 100%
shareholding in CPP Asia Limited and its wholly owned subsidiary
CPP Technology Services (Shanghai) Co. Ltd (together "China"). As a
result, in accordance with IFRS 5 Non-current assets held for sale
and discontinued operations, the 30 June 2021 comparative
information has been restated to recognise the China operation as
discontinued. Discontinued operations also include Germany, which
was sold on 17 May 2021 (refer to note 8). The adjustments relating
to the restatement have not been audited.
Segmental reporting
The Group has revised its segmental reporting from 1 January
2022. In accordance with IFRS 8 the operating segments have been
changed to reflect the way in which the Group is now managed and
how resources are allocated. The Group's operating segments are
identified as India, Turkey, Blink, UK & Rest of the World (UK
& ROW) and Central Functions. These segments replace the
'Ongoing Operations', 'Restricted Operations' and 'Central
Functions' basis that was previously in place. The prior period
segmental information has been restated to reflect the change.
Further detail is included in note 3. The adjustments relating to
the restatement have not been audited.
Hyperinflation
The Group has operations in Turkey, which has now met the
criteria to be classified as a hyperinflationary economy. This is
based on the Turkish Statistical Institute published consumer price
index, which has cumulative inflation of 109.4% over a three year
period as at March 2022. IAS 29 Financial Reporting in
Hyperinflationary Economies requires that inflation accounting is
applied to the financial statements of entities where the
cumulative inflation rate in three years approximates or exceeds
100%. Inflation accounting aims to restate the value of the assets,
liabilities and P&L items of an entity in terms of the monetary
values as at the reporting period end date, to better represent
their true and fair value.
This is performed by applying a conversion factor calculated
using the reporting date inflation index over the inflation index
at the date of recognition or revaluation of non-monetary or profit
and loss financial statement line items. The CPI inflation index
published by the Turkish Statistical Institute has been used for
this calculation.
In Turkey's case, this has impacted other intangible assets,
property, plant and equipment, right-of-use assets, prepayments,
contract liabilities, deferred tax, share capital and all income
statement items. Monetary items are not restated as they are
already recognised in terms of the monetary unit current at the
balance sheet date. The exchange rate then used to retranslate all
financial statement line items (including income statement items)
is the period end exchange rate, which as at 30 June 2022 was
20.33.
On initial adoption in the period ending 30 June 2022, the
impact of inflation to the start of the period is recognised as a
movement in retained earnings. Comparative balances are not
restated. Inflation for the current period has been recognised
within finance costs. The inflation index has moved by 42.35% from
31 December 2021 to 30 June 2022.
The overall impact of inflation accounting in Turkey in the
period has been as follows;
6 months
ended 30
June 2022
GBP'000
(Unaudited)
Net Assets 106
Profit before
Tax 59
Taxation (10)
Profit after
Tax 49
Retained earnings 43
Translation
reserve 14
Insurance balances
The comparative balance sheet information as at 30 June 2021 and
31 December 2021 has been re-presented to recognise insurance
assets and liabilities within 'trade and other receivables' and
'trade and other payables' respectively. This change reflects the
immaterial nature of both the balances and the Group's insurance
operations. The presentational changes have no impact on the
EBITDA, operating profit, profit before tax or net assets of either
the 30 June 2021 or 31 December 2021 comparatives.
Going concern
In reaching their view on the preparation of the condensed
consolidated interim 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, taking into consideration the
changing economic back drop. This is done to identify risks to
liquidity and covenant compliance and enable management to
formulate appropriate and timely mitigation strategies.
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 condensed consolidated interim
financial statements.
3 Segmental analysis
IFRS 8 Operating segments 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 have changed in the current year and
the comparatives have been restated accordingly.
The Group is now managed on the basis of five broad business
units:
-- India (CPP India and Globiva) ;
-- Turkey;
-- Blink;
-- UK & Rest of World (UK MGA business, UK legacy business
(previously categorised as restricted operations), Spain, Portugal,
Italy and Mexico); and
-- Central Function s - 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 the relevant geographies for statutory purposes.
Segment revenue and performance for the current and comparative
periods are presented below:
UK
& Rest
of Central
India Turkey Blink World Functions Total
Six months ended 30 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
June 2022 (Unaudited)
Continuing operations
Revenue - external sales 67,836 1,453 216 8,263 - 77,768
Segmental EBITDA 4,330 213 (57) 821 (2,207) 3,100
-------- -------- -------- --------- -----------
Share of loss in joint
venture -
--------
EBITDA 3,100
Depreciation and amortisation (1,264)
Exceptional items (497)
Operating profit 1,339
Investment revenues 176
Finance costs (228)
--------
Profit before taxation 1,287
Taxation (1,449)
--------
Loss for the period
from continuing operations (162)
Discontinued operations
Profit for the period
from discontinued operations 616
--------
Profit for the period 454
========
UK
& Rest
of Central
India Turkey Blink World Functions Total
Six months ended 30 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
June 2021 (Unaudited)
Continuing operations
(Restated*(,) **)
Revenue - external sales 53,044 1,833 137 10,656 - 65,670
Segmental EBITDA 3,835 421 (120) 1,186 (2,584) 2,738
-------- -------- -------- --------- -----------
Share of loss in joint
venture (119)
--------
EBITDA 2,619
Depreciation and amortisation (1,442)
Exceptional items (1,489)
Operating loss (312)
Investment revenues 112
Finance costs (289)
--------
Loss before taxation (489)
Taxation (1,136)
--------
Loss for the period
from continuing operations (1,625)
Discontinued operations
Profit for the period
from discontinued operations 2,901
--------
Profit for the period 1,276
========
* Restated to reflect China as a discontinued operation. See
note 2. ** Restated to reflect new operating segments. See note 2
.
UK
& Rest
of Central
India Turkey Blink World Functions Total
Year ended 31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2021 (Audited)
Continuing operations
(Restated**)
Revenue - external sales 119,273 3,568 319 20,465 - 143,625
Segmental EBITDA 7,830 849 (254) 3,480 (4,192) 7,713
-------- -------- -------- --------- -----------
Share of loss in joint
venture (189)
--------
EBITDA 7,524
Depreciation and amortisation (2,995)
Exceptional items (1,628)
Operating profit 2,901
Investment revenues 223
Finance costs (358)
Other gains and losses 1,459
--------
Profit before taxation 4,225
Taxation (3,707)
--------
Profit for the period
from continuing operations 518
Discontinued operations
Profit for the period
from discontinued operations 2,490
--------
Profit for the period 3,008
========
** Restated to reflect new operating segments. See note 2 .
Segmental assets (Restated**)
30 June 2022 30 June 2021 (Restated*) 31 December 2021
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
India 31,098 29,731 2 9,252
Turkey 1,849 1,871 1 ,754
Blink 360 472 4 06
UK & Rest of World 13,012 13,619 1 2,927
Central Functions 3,793 1,539 6 ,318
Total segment assets 50,112 47,232 50,657
Assets relating to discontinued operations - 717 478
Unallocated assets 2,797 1,104 2,825
Consolidated total assets 52,909 49,053 53,960
============= ========================= =================
* Restated to reflect China as a discontinued operation. See
note 2. ** Restated to reflect new operating segments. See note
2.
Goodwill, deferred tax assets, equity investment and investment
in joint venture are not allocated to segments.
Capital expenditure (Restated**)
Other intangible assets
-----------------------------------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Continuing operations
India 949 267 712
Turkey - 1 -
Blink 72 99 151
UK & Rest of World 127 102 460
Central Functions 5 287 47
Total additions 1,153 756 1,370
============ ============ =============
** Restated to reflect new operating segments. See note 2.
In the period to 30 June 2022 GBP985,000 (30 June 2021:
GBP636,000, 31 December 2021: GBP1,192,000) of the total other
intangible asset additions related to internally generated software
assets in development. These reflect the capitalisation of staff
and contractor costs in IT development projects.
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:
6 months ended 30 June 2021
6 months ended 30 June 2022 (Restated*) Year ended 31 December 2021
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Continuing
operations
At a point in
time 68,739 56,421 126,606
Over time 9,029 9,249 17,019
----------------------------- ---------------------------- -----------------------------
Revenue from
continuing
operations 77,768 65,670 143,625
Discontinued
operations 114 1,785 2,464
----------------------------- ---------------------------- -----------------------------
Total revenue 77,882 67,455 146,089
============================= ============================ =============================
* Restated to reflect China as a discontinued operation. See
note 2.
Information about major customers
Revenue from customers of one business partner in our India
segment represented approximately GBP49,825,000 (H1 2021:
GBP36,156,000; year ended 31 December 2021: GBP84,159,000) of the
Group's total revenue.
4 Exceptional items
6 months
ended 6 months Year ended
30 June ended 30 31 December
2022 June 2021 2021
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Restructuring costs 497 1,489 1,628
Exceptional charge included
in operating profit 497 1,489 1,628
Other gains and losses -
gain on reclassification
of investment - - (1,459)
------------ ------------ -------------
Total exceptional charge
included in profit before
tax 497 1,489 169
Tax on exceptional items - (137) (171)
------------ ------------ -------------
Total exceptional charge/(gain)
after tax 497 1,352 (2)
============ ============ =============
Restructuring costs of GBP497,000 primarily relate to settlement
costs in exiting the former CEO and redundancy costs in the UK MGA
as the business moves to closure. The prior year restructuring
costs relates to wide-scale operational changes or closure
activities in Spain, Mexico, Malaysia, Blink and Head Office, as
well as closure of the Malaysian operations. The charges recognised
are primarily settlement or redundancy costs.
5 Taxation
The tax charge is calculated by aggregating the tax arising in
each jurisdiction based on estimated profits chargeable to
corporation tax and withholding taxes arising in H1 2022 at the
local statutory rate of tax. This leads to a tax charge on
continuing operations of GBP1.4 million (H1 2021 restated: GBP1.1
million; year ended 31 December 2021: GBP3.7 million) reflecting
the charges arising in India, Turkey and our European markets.
These tax charges result in an effective tax rate (ETR) at the half
year of 113% (H1 2021 restated: negative 232%; year ended 31
December 2021: 88%).
The corporate income tax in our profitable overseas
jurisdictions is higher than the current UK corporate income tax
rate of 19% and, in addition, there are withholding taxes applied
to funds repatriated from our overseas operations which further
increases the ETR. Profits generated from our UK operations are
expected to be covered by group relief from losses arising in other
UK entities.
The Mini-Budget on 23 September 2022, announced a reversal of
the planned increase in April 2023 to 25% of the corporate income
tax rate in the UK. The rate will now remain at its current level
of 19%. This change has not been substantively enacted at the
balance sheet date, and as a result deferred tax balances continue
to be measured at 25%. The reversal is not expected to have a
material impact on the financial statements.
The Group's forecast ETR for the full year is notably higher
than the UK corporate income tax rate due to losses principally in
Blink and the UK, which coupled with the one-time exceptional
restructuring charges will reduce the overall Group profit before
tax to a level that is lower than the tax charges recognised in our
profitable markets. The strategic refocus and restructuring
activity undertaken in 2022 is expected to alleviate this position
and enable a progressive reduction in the Group's ETR over the
longer-term.
6 Dividends
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Interim dividend for the year
ended 31 December 2021 of 5 pence - - 441
Final dividend for the year ended
31 December 2021 of 7.5 pence
(2020: 25 pence) 663 2,188 2,188
------------ ------------ -------------
663 2,188 2,629
============ ============ =============
The Directors have not proposed an interim dividend for
2022.
7 (Loss)/earnings per share
Basic and diluted (loss)/earnings per share (EPS) has been
calculated in accordance with IAS 33 Earnings per share. Underlying
(loss)/earnings per share, which excludes exceptional items, has
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 EPS or increase the loss per share attributable
to equity holders. Consequently, options are not dilutive on
continuing operations in the period and therefore, in accordance
with IAS 33, have not been treated as dilutive on discontinued
operations or total EPS. The diluted (loss)/earnings per share is
therefore equal to the basic (loss)/earnings per share in the six
months ended 30 June 2022.
Continuing Discontinued
Six months ended 30 June 2022 (Unaudited) operations operations Total
(Loss)/earnings GBP'000 GBP'000 GBP'000
(Loss)/earnings for the purposes of basic and diluted (loss)/earnings per share (362) 616 254
Exceptional items (net of tax) 497 (657) (160)
----------- ----------------- ------------
Earnings/(loss) for the purposes of underlying basic and diluted earnings/(loss) per share 135 (41) 94
=========== ================= ============
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic and diluted (loss)/earnings
per share and basic underlying earnings/(loss) per share 8,843
Effect of dilutive ordinary shares: share options 57
Weighted average number of ordinary shares for the purposes of diluted underlying earnings/(loss)
per share 8,900
============
Continuing Discontinued
(Loss)/earnings per share operations operations Total
Pence Pence Pence
Basic and diluted (loss)/earnings per share (4.09) 6.96 2.87
=============== ============= ==============
Basic and diluted underlying earnings/(loss) per share 1.53 (0.46) 1.07
=============== ============= ==============
Six months ended 30 June 2021
(Unaudited) (Restated*) Continuing operations Discontinued operations Total
(Loss)/earnings GBP'000 GBP'000 GBP'000
(Loss)/earnings for the purposes of basic
and diluted (loss)/earnings per share (1,888) 2,901 1,013
Exceptional items (net of tax) 1,352 (2,641) (1,289)
---------------------- ------------------------ --------
(Loss)/earnings for the purposes of
underlying basic and diluted
(loss)/earnings per share (536) 260 (276)
====================== ======================== ========
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic and diluted
(loss)/earnings
per share and underlying (loss)/earnings per share 8,770
============
Continuing Discontinued Total
(Loss)/earnings per share operations operations
Pence Pence Pence
Basic and diluted (loss)/earnings per share (21.53) 33.08 11.55
================== ================= ========
Basic and diluted underlying (loss)/earnings per share (6.11) 2.96 (3.15)
================== ================= ========
* Restated to reflect China as a
discontinued operation.
Year ended 31 December 2021
(Audited) Continuing operations Discontinued operations Total
Earnings GBP'000 GBP'000 GBP'000
Profit for the purposes of basic and
diluted earnings per share 75 2,490 2,565
Exceptional items (net of tax) (2) (2,399) (2,401)
---------------------- ------------------------ -----------
Profit for the purposes of underlying
basic and diluted earnings per share 73 91 164
====================== ======================== ===========
Number of shares Number
(thousands)
Weighted average number of ordinary shares
for the purposes of basic earnings per
share and
basic underlying earnings per share 8,796
Effect of dilutive ordinary shares: share
options 225
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share
and diluted underlying earnings per share 9,021
Earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic earnings per share 0.85 28.31 29.16
Diluted earnings per share 0.83 27.60 28.43
===========
Basic underlying earnings per share 0.83 1.03 1.86
Diluted underlying earnings per share 0.81 1.01 1.82
8 Discontinued operations
On 27 January 2022, the Group completed the sale of its 100%
shareholding in CPP Asia Limited and its wholly owned subsidiary
CPP Technology Services (Shanghai) Co. Ltd (together "China").
Consideration on disposal was HKD 1.
In the prior period, on 17 May 2021, the Group completed the
sale of its 100% shareholding in CPP Creating Profitable
Partnerships GmbH ("Germany"). The final consideration on disposal
was GBP2,366,000 (EUR2,752,000).
In accordance with IFRS 5 Non-current assets held for sale and
discontinued operations this operation has been presented as a
discontinued operation.
Profit from discontinued operations comprises the following:
Six months ended 30 June 2022 China
GBP'000
(Unaudited)
Revenue 114
Cost of sales (33)
Gross profit 81
Administrative expenses (114)
EBITDA and operating profit (33)
Finance costs (8)
Loss before taxation (41)
Taxation -
Loss after taxation (41)
Profit on disposal 657
Total profit 616
Six months ended 30 June 2021 Germany China Total
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Unaudited)
Revenue 1,062 723 1,785
Cost of sales (430) (306) (736)
Gross profit 632 417 1,049
Administrative expenses (4) (796) (800)
EBITDA and operating profit 628 (379) 249
Finance costs 33 8 41
Profit/(loss) before taxation 661 (371) 290
Taxation (30) - (30)
Profit/(loss) after taxation 631 (371) 260
Profit on disposal 2,641 - 2,641
Total profit 3,272 (371) 2,901
Year ended 31 December 2021 Germany China Total
GBP'000 GBP'000 GBP'000
(Audited) (Audited) (Audited)
Revenue 1,062 1,402 2,464
Cost of sales (430) (547) (977)
Gross profit 632 855 1,487
Administrative expenses - (1,649) (1,649)
EBITDA and operating profit 632 (794) (162)
Finance costs 33 67 100
Profit/(loss) before taxation 665 (727) (62)
Taxation (30) - (30)
Profit/(loss) after taxation 635 (727) (92)
Profit/(loss) on disposal 2,654 (72) 2,582
Total profit/(loss) 3,289 (799) 2,490
Operating results for the six months ended 30 June 2022 reflect
the trading performance of China up to the date of disposal, being
27 January 2022. Comparative information reflects a complete six
months and 12 months respectively. Prior to disposal China was part
of the UK & ROW segment. In the prior periods, Germany is
included up to the date of disposal on 17 May 2021.
The Group has recognised a profit on disposal as follows:
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
(China) (Germany) (Germany and China)
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Proceeds - 2,353 2,366
Net
(assets)/liabilities
sold (424) 2 8 4 284
Costs associated with
disposal - - (72)
Currency translation
differences on
disposal 1,081 4 4
Profit on disposal 657 2,641 2,582
9 Share capital
Share capital at 30 June 2022 is GBP24,254,000 (30 June 2021:
GBP24,232,000; 31 December 2021: GBP24,243,000). To satisfy share
option exercises in the six month period to 30 June 2022 the
Company has issued 11,069 GBP1 ordinary shares for a total equity
value of GBP11,000 and cash consideration of GBP6,000.
The total number of ordinary shares in issue at 30 June 2022 is
8,844,267 of which 8,839,268 are fully paid and 4,999 are partly
paid.
10 Reconciliation of operating cash flows
6 months ended Year ended
6 months ended 30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Profit for the period 454 1,276 3,008
Adjustments for:
Depreciation and amortisation 1,260 1,584 3,111
Share-based payment (credit)/charge (248) 226 (64)
Impairment loss on right-of-use assets - - 48
Impairment loss on intangible assets - - 176
Impairment loss on property, plant and equipment - - 3
Loss on disposal of intangible assets 175 - -
Loss on disposal of property, plant and equipment 42 4 26
Profit on disposal of discontinued operations (657) (2,641) (2,582)
Share of loss of joint venture - 119 189
Effects of hyperinflation (69) - -
Investment revenues (176) (112) (224)
Finance costs 281 247 259
Other gains and losses - - (1,459)
Income tax charge 1,449 1,166 3,737
Operating cash flows before movement in working
capital 2,511 1,869 6,228
(Increase)/decrease in inventories (13) (4) 40
(Increase)/decrease in contract assets (148) 569 354
(Increase)/decrease in receivables (1,810) 2,099 1,672
Increase/(decrease) in payables 1,404 (3,061) ( 636)
Decrease in contract liabilities (30) (867) (276)
Cash from operations 1,914 605 7,382
Income taxes paid (2,241) (907) (2,820)
Net cash (used in)/from operating activities (327) (302) 4,562
11 Related party transactions
Transactions with associated undertakings
In the six months to 30 June 2022, the Group incurred fees of
GBP8,000 plus VAT (30 June 2020: GBP4,000 and year ended 31
December 2020: GBP8,000) for services rendered from KYND, which was
payable under 14 day credit terms. The creditor balance at 30 June
2022 was GBPnil (30 June 2021: GBPnil, 31 December 2021:
GBP1,000).
Transactions with related parties
On 27 January 2022, the Group completed the sale of China to
T-Link Holdings Limited ("T-Link") for nominal cash consideration
of HK$1. As part of the Disposal, the Group made a working capital
cash injection into China of GBP0.5 million.
The majority shareholder of T-Link is Wilson Chan, the CEO of
China. The terms of the Disposal reflect the ongoing cash losses
and investment requirements of China. The Board concluded that sale
of the business to T-Link rather than a closure was both the least
costly for the Group and the right option for all stakeholders,
enabling the Group to focus on its core markets while ensuring in
China the smooth transition of colleagues and continuity of service
to partners and their customers.
As Wilson Chan is CEO of China and a majority shareholder in
T-Link, the Disposal constitutes a related party transaction. The
Directors consider, having consulted with the Company's nominated
adviser, Liberum Capital Limited, that the terms of the Disposal
are fair and reasonable insofar as the Company's 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, is set out
below:
6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Short-term employee benefits 858 1,024 1,788
Post-employment benefits 25 41 74
Termination benefits 300 203 203
Share-based payments (195) 108 (65)
988 1,376 2,000
12 Events after the balance sheet date
Transactions with related parties
In July 2022, the Group agreed to amend the Globiva Shareholder
Agreement (SHA) and certain other arrangements. The Group holds a
51% majority interest in Globiva, with the other 49% of share
beneficially owned by the three founders. CPP agreed to provide
additional funding of GBP0.5 million through an existing repayable
interest-bearing loan which was utilised to make a one-time
compensation payment to the Globiva founders. The SHA further
entitled, upon achievement of certain performance targets, the
Globiva founders to either a cash payment or to buyback of 10% of
the ordinary shares in Globiva from CPP. Under the amended
arrangements, the Globiva founders will, on meeting performance
targets, buyback 10% of the ordinary shares, however in the normal
course of business, this cannot be triggered until 1 January 2026
at the earliest.
The compensation payment to the Globiva founders, who are also
Directors of Globiva, along with the other arrangements constitute
a related party transaction under AIM Rule 13. The Directors of CPP
Group consider, having consulted with the Company's nominated
adviser, Liberum Capital Limited, that the terms of the transaction
are fair and reasonable insofar as the Company's shareholders are
concerned.
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Cppgroup (LSE:CPP)
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