TIDMCPP
RNS Number : 3843U
CPPGroup Plc
28 March 2023
28 March 2023
CPPGroup Plc
("CPP", "the Group" or "the Company")
FULL YEAR RESULTS FOR THE YEARED 31 DECEMBER 2022
A RESILIENT FINANCIAL PERFORMANCE AND CHANGE MANAGEMENT
PROGRAMME COMMENCED
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 2022.
Financial highlights
-- Group revenue from continuing operations increased by 19% to
GBP169.8 million (2021 restated: GBP142.8 million)
-- EBITDA(2) from continuing operations decreased by 5% to
GBP6.9 million (2021 restated: GBP7.2 million).
-- Core revenues(4) increased by 25% to GBP154.3 million (2021:
GBP123.2 million) and Core EBITDA(4) increased by 20% to GBP5.0
million (2021: GBP4.1 million)
-- Central overheads reduced to GBP3.3 million (2021 restated: GBP4.3 million)
-- Profit before tax from continuing operations decreased to
GBP2.4 million (2021 restated: GBP4.3 million). On an underlying
basis(3) , profit before tax increased to GBP4.1 million (2021
restated: GBP3.1 million)
-- Profit after tax from continuing operations reduced to GBP0.1
million (2021 restated: GBP0.6 million)
-- Cash balance of GBP21.0 million at 31 December 2022 (2021: GBP22.3 million)
Operational progress
-- Simplified structure focused on four Core business units
(Blink Parametric; CPP India; CPP Turkey; and Globiva)
-- Strategy in place to migrate to a product-led global InsurTech business
-- Simplified the management and operational structures
-- Core business(4) performing well, growing revenues and EBITDA
-- Major partner renewals for CPP India, and new partner wins
for both CPP Turkey and Blink Parametric
-- Legacy business(5) revenues and EBITDA continue to decline year-on-year
-- Change management programme progressing well and to plan:
o Disposal of China and Mexico and withdrawal from
Bangladesh;
o Terms agreed with underwriters to exit from Spain and Portugal
over the next 12 months; and
o Blink Parametric scalability project well advanced during the
year and completed post period.
Financial and non-financial highlights - continuing
operations
31 December
2021
31 December (Restated(1)
GBP millions 2022 ) Change
----------------------------- ------------ --------------- -------
Financial highlights:
Group
Revenue 169.8 142.8 19%
EBITDA(2) 6.9 7.2 (5)%
Operating profit 2.6 3.0 (12)%
Profit before tax
* Reported 2.4 4.3 (43)%
* Underlying(3) 4.1 3.1 38%
Profit/(loss) for the
year
* Reported 0.1 0.6 (82)%
* Underlying(3) 1.6 (0.8) 294%
Basic ( loss)/ earnings
per share (pence) (1.73) 1.51 (215)%
Cash and cash equivalents 21.0 22.3 (6)%
Segmental
Revenue
* Core(4) 154.3 123.2 25%
* Legacy(5) 15.5 19.6 (21)%
EBITDA(2)
* Core(4) 5.0 4.1 20%
* Legacy(5) 1.9 3.1 (39)%
Non-financial highlights:
Customer numbers (millions) 11.4 11.4 0%
============================= ============ =============== =======
1. Restated to reflect Mexico 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
GBP1.7 million (2021 restated: GBP1.2 million credit, comprising an
exceptional credit of GBP0.1 million and a one-time benefit from
the release of a commission provision of GBP1.1 million). The tax
effect of the exceptional items is GBP0.2 million (2021: GBP0.2
million). Further detail of exceptional items is provided in note 5
of the condensed consolidated financial statements.
4. Core business revenue comprises CPP India, CPP Turkey, Blink
Parametric and Globiva. In addition to these business units Core
EBITDA includes central costs.
5. Legacy business primarily comprises the UK and European
renewal books of business, which are principally Card Protection
and Identity Protection policies.
Simon Pyper, CEO of CPP Group, commented:
" In many respects, the results for the 2022 financial year are
the last set of results for the Group as historically constituted.
Our new strategy and accompanying change management programme,
published in October of last year, sets a new course for the
business which will see the Group exit from its Legacy businesses,
address critical IT infrastructure requirements, and migrate
towards an InsurTech business led by Blink Parametric and supported
by CPP India and CPP Turkey.
We have already made some good progress with regards to our
Legacy businesses, withdrawing from China, Bangladesh, and Mexico.
Additionally, in the fourth quarter of last year, we agreed terms
to dispose of our legacy Spanish and Portuguese operations which
included the transfer of some business to a third-party
underwriter. Despite the progress thus far, the change management
programme, a complex set of eight inter-dependent projects, is not
expected to fully conclude before the end of the 2025 financial
year. The size and scope of the change being implemented is
profound and challenging, but I remain firmly of the view, that we
have set the right course for the business, which, over time, will
deliver satisfactory returns for shareholders and other
stakeholders.
From a trading perspective our Core businesses are performing
very much in line with expectations. From an operational point of
view, we continue to make good progress in implementing the change
management programme and expect to deliver on the objectives we
have set ourselves for the 2023 financial year."
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
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
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 October of last year, we set out the conclusions of an
extensive strategy review, the future direction of the Group and
the accompanying change management programme (CMP). This will see
the Group exit from its Legacy operations, address critical IT
infrastructure requirements, and migrate the Group towards an
InsurTech business led by Blink Parametric (Blink) and supported by
CPP India and CPP Turkey. It is a bold and ambitious strategy, and
it is certainly not without risk, but I firmly believe that it is
the right course, setting a clear framework and direction of travel
for the Group, which will improve outcomes for shareholders and
other stakeholders.
Strategy for growth
Our new strategy reflects our starting point. We have two
successful businesses in India and Turkey, a sub-scale business
with considerable potential in Blink, and a Legacy business in
terminal decline. Over a period of three years, the Group will
focus on new product and new partner development in India and
Turkey, we will seek to build our InsurTech capability, with Blink
at its core, whilst we withdraw from the Legacy businesses, and the
liabilities associated with them.
The execution of this plan and the operational risks associated
with it are not insignificant. Through the CMP we have put in
place, which is discussed in more detail in the Chief Executive
Officer's statement, we aim both to mitigate the risk and to exceed
expectations. However, we are mindful that not all such endeavours
proceed exactly as planned and there may be disappointments and
delays along the way.
Financial results
Trading performance from Core operations (Blink, CPP India, CPP
Turkey and Globiva) was robust, with revenues increasing by 25% to
GBP154.3 million and EBITDA, which also includes central costs,
increasing by GBP0.9 million to GBP5.0 million. Group revenues from
continuing operations, which include results from our Legacy
operations, increased by 19% to GBP169.8 million whilst EBITDA of
GBP6.9 million was 12% better than the prior year (adjusting for
the 2021 GBP1.1 million commission release in UK Legacy
operations). Our balance sheet shows cash of GBP21.0 million (2021:
GBP22.3 million), which allows the Group to fund its working
capital and CMP commitments.
People
The course we have set ourselves brings uncertainty, the need
for adaptability and a willingness to embrace change. It has also
led, inevitably, to changes in personnel and to the departure of
some colleagues who have served the Group with diligence for many
years. It is in that context that I, and my fellow Board members,
would like to thank all of our colleagues for their
professionalism, hard work and dedication during a year of
substantive change.
During the course of the year, we began meeting and considering
candidates for appointment to the Board, recognising the benefits
brought by independent non-executive directors who can also add
value through their knowledge of the sectors in which we operate or
their experience of some of the challenges thrown up by the CMP.
Whilst that process continues the focus and engagement of the
current Non-Executive Directors and their support for and
challenges to the executive team has been immensely valuable as the
revised strategy was being developed during the course of last
year. The Board pays full attention to governance issues and
endorses the importance of independent directors as well as the
benefits of diversity. However, its primary focus during this
period of transformation is on delivering a strategy for growth and
returns from which all shareholders and other stakeholders will
benefit.
Outlook
We have had a positive start to the year with trading from
continuing operations performing in line with expectations and we
are encouraged by the good pipeline of new business within Blink.
Additionally, the CMP is being progressed with key milestones
either being achieved or on track to being achieved in line with
our plans. Nevertheless, we remain cautious and measured, as there
is much to do over the course of 2023 and 2024.
David Morrison
Non-Executive Chairman
27 March 2023
Chief Executive Officer's Statement
Introduction
In many respects, the results for the 2022 financial year are
the last set of results for the Group as historically constituted.
Our new strategy and accompanying CMP published in October of last
year, sets a new course for the business, which will see the Group
exit from its Legacy businesses, address critical IT infrastructure
requirements, and migrate towards an InsurTech business led by
Blink and supported by CPP India and CPP Turkey.
We have already made some good progress with regards to our
Legacy business, withdrawing from China, Bangladesh, and Mexico.
Additionally, in the fourth quarter of last year, we agreed terms
to exit from our legacy Spanish and Portuguese operations which
included the transfer of some business to a third-party
underwriter. Despite the progress thus far, the CMP, a complex set
of eight inter-dependent projects, is not expected fully to
conclude before the end of the 2025 financial year.
The size and scope of the change being implemented is profound
and challenging, but I remain firmly of the view, that we have set
the right course for the business, which, over time, will deliver
satisfactory returns for shareholders and other stakeholders.
A focused business
Our organisational structure reflects our strategic intent, to
grow Blink, our InsurTech business, and to grow CPP India and CPP
Turkey. Each of these businesses has their own management team with
full responsibility for revenue and EBITDA growth. Our Legacy
business has its own experienced team which is responsible for the
measured wind down and closure now in train. The Centre's role will
also change, moving, over time, to a slimmer refocused model, which
pressure-tests the businesses' targets and strategies, allocates
capital and, where appropriate, actively promotes the sharing of
best practice.
A resilient financial performance
Group revenue from continuing operations grew by 19% on a
reported basis and by 15% on a constant currency basis. Revenues
from our Core operations, which exclude our Legacy business (UK and
European back books), grew by 25% on a reported basis and by 21% on
a constant currency basis. Group EBITDA was marginally lower than
prior year at GBP6.9 million (2021 restated: GBP7.2 million),
albeit this is 12% higher when excluding the one-time GBP1.1
million commission release recognised in the UK in the prior
year.
Blink Parametric: Revenue GBP0.5 million (2021: GBP0.3 million)
and EBITDA loss GBP0.4 million (2021: loss GBP0.3 million)
Blink is a technology and software platform focused on providing
innovative Travel Disruption (flight delay and lost luggage)
solutions for the global travel sector. Despite being part of CPP
Group since 2017, little was done to maximise its potential - it
was in many respects an orphaned asset. During the year we set in
place, as part of the CMP, two work streams, one focused on
building capacity (people; processes; and structures) and the other
on growth (new product development; and sales and marketing). The
benefits of these two work streams will probably not be seen until
the second half of 2023. That said, some of the work we are
undertaking has started to be recognised, and in 2022 Blink won
several prestigious industry awards including:
-- Insurance Times Awards - 'Excellence in Technology - Service Provider'
-- ITIJ Awards - 'Outstanding Industry Contribution of the year'
-- InsurTech100. Blink Parametric made FinTechGlobal's InsurTech 100 for 2022
India: Revenue GBP150.6 million (2021: GBP119.3 million) and
EBITDA GBP8.0 million (2021: GBP7.8 million)
India is the Group's largest operating business, generating
circa 89% of total revenues. The business performed well,
benefiting from both volume growth and favourable exchange rate
movement. On a constant currency basis, revenue growth for 2022 was
20% . EBITDA growth was subdued reflecting, in part, a change in
revenue mix towards lower margin products, and increased operating
costs.
There are two constituent businesses:
1. CPP India: Reported revenue up 24% to GBP134.8 million (2021:
GBP109.0 million), constant currency revenue growth of 18%
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. Revenue growth for 2022 was robust with
the number of live polices at year end increasing by 2% to 9.8
million, but with some movement towards lower margin products such
as LivCare. Operating costs increased during the year due to
additional third-party costs and improved incentives for the
in-country executive team.
2. Globiva: Reported revenue up 54% to GBP15.8 million (2021:
GBP10.3 million), constant currency growth of 46%.
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. Revenue growth reflects several new business wins,
a favourable exchange rate and, importantly, a full twelve months
of trading without any COVID-19 disruption. Like the majority of
India-based BPMs, Globiva's largest operating cost relates to seat
occupancy (employees), which has increased significantly over the
past year which, in turn, had an adverse impact on EBITDA
growth.
Turkey: Revenue GBP3.2 million (2021: GBP3.6 million) and EBITDA
GBP0.7 million (2021: GBP0.8 million)
CPP Turkey performed well during the year with revenue and
EBITDA increasing by 42% and 36% respectively on a constant
currency basis. That the business has been able to deliver real
growth in such a turbulent economic environment is a testament to
the quality and strength of our proposition, of our relationships
with our business partners, and of our management team. CPP Turkey
ended the year with a live policy count of 1.1 million, a major
landmark and a substantial increase on the prior year.
In February 2023, a devastating earthquake hit the southern part
of Turkey. Whilst our Turkish office is not located in the disaster
area most colleagues have been impacted in some way through family,
friends or business connections. We continue to monitor the
situation closely and are providing any support that is needed to
our colleagues.
Legacy operations: Revenue GBP15.5 million (2021 restated:
GBP19.6 million) and EBITDA GBP1.9 million (2021 restated: GBP3.3
million)
Our Legacy operations (UK and European back books) are in
terminal decline and will soon become unprofitable. To address
this, the Group announced, in October of last year, its plans to
exit from its Legacy operations in an orderly manner, effected by
the CMP, which will take three years to conclude.
Live policies: Number of live polices at 31 December 11.4
million (2021 restated: 11.4 million)
Live policy growth is a good indicator of business performance
for CPP India and CPP Turkey. Live policies in our Core businesses
have increased to 10.9 million (2021: 10.4 million) whilst, as
expected, they have reduced in our Legacy operations to 0.5 million
(2021 restated: 1.0 million)
millions CPP India CPP Turkey Legacy Group
---------------- --------- ---------- ------ -----
My Finances 3.3 0.3 0.5 4.1
Vs Lyr % +12% +16% -34% +4%
---------------- --------- ---------- ------ -----
My Tech 1.8 - - 1.8
Vs Lyr % -25% n/a n/a -25%
---------------- --------- ---------- ------ -----
My Health 2.5 0.1 - 2.6
Vs Lyr % +23% >+999% n/a +24%
---------------- --------- ---------- ------ -----
My Home 2.2 - - 2.2
Vs Lyr % -2% n/a n/a 0%
---------------- --------- ---------- ------ -----
My Digital Life - 0.7 - 0.7
Vs Lyr % n/a +28% n/a +19%
---------------- --------- ---------- ------ -----
My Travel - - - -
Vs Lyr % n/a n/a n/a n/a
---------------- --------- ---------- ------ -----
Total 9.8 1.1 0.5 11.4
Vs Lyr % +2% +27% -39% 0%
---------------- --------- ---------- ------ -----
Central costs: GBP3.3 million down 22% in the year (2021
restated: GBP4.3 million)
Central costs before allocation are GBP9.0 million (2021:
GBP10.4 million) of which GBP 3.5 million (2021: 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 the second
half of 2024.
Net of recharges, central costs have reduced by GBP1.0 million
year-on-year primarily due to a reduction in Board and executive
costs along with the cost benefits from a 60% reduction in the
Leeds Head Office space which was finalised during Q3.
A simple strategy we can execute : Group
The over-arching strategy is to exit the Legacy business and to
migrate CPP to an InsurTech business led by Blink and supported by
CPP India and CPP Turkey. InsurTech businesses generally have
attractive economics, they generate high levels of repeat business,
they operate with high margins and are commonly valued more highly
than their traditional insurance counterparts. The strategy, if
executed correctly, will simplify the business and its operations
and, moreover, will set out a clear purpose for the Group, one that
leverages the global nature of Blink's parametric propositions.
1) Where we will compete: The Group will focus on designing
innovative assistance products and services which augment and
create value (customer satisfaction, customer loyalty and new
business) for its growing distribution business partner base.
2) Base of competitive advantage: Differentiation, with a focus
on new product development, product innovation, and quality of
service to our current and future business partners.
3) Strategic direction: Market penetration and development for Blink, CPP India and CPP Turkey.
4) Method of Implementation: Internal development with product
acquisitions which enrich or enhance our proposition. We will, at
the same time, withdraw from our Legacy business and dispose of
non-core business investments.
5) Constraints: Management bandwidth as we are going through a
period of substantial change. Finding suitable acquisitions at an
appropriate price. Moving from an informal approach to a formal
approach and structure, with a set of processes for continuous
production, innovation, and development.
Our strategy is in two stages :
Stage one is to migrate away from the regulated Legacy business
and to focus on Blink, CPP India and CPP Turkey. Stage two is to
develop CPP into a product-led, global InsurTech business (Blink),
supported by CPP India and CPP Turkey.
Blink Parametric CPP India CPP Turkey The Centre
Global InsurTech Market development Market development Refocused model
business, and penetration and penetration which is low
initially with local with local cost and:
focused on market responsibility market responsibility - oversees
the Travel for new product for new product the business
Disruption development development - pressure
market tests business
+ Organic approach + Organic approach + unit strategies
Market development with some and allocates
and penetration, Incentives product acquisitions resources
with formal to encourage where appropriate - enables functional
New Product management expertise
Development to build long-term - facilitates
approach shareholder best practice
value - manages key
Organic and stakeholders
acquisition
led approach
with acquisitions
biased towards
product or
technology
gaps
Whilst this is a relatively simple strategy, it will take three
years to implement fully.
A simple strategy we can execute : By business unit
Blink Parametric: A differentiated suite of products with a
focus on technology and innovation providing the basis for
competitive advantage, particularly in the Travel Disruption
(flight delay and lost luggage) market over the near to medium
term. With regard to Blink's strategic direction, there are
opportunities to introduce the suite of Travel Disruption products
to new geographies including North and South America, India, and
Asia. Product development, either organic or through small bolt on
acquisitions, will focus on identifying innovative digital
solutions for our distributors and end customers.
The business today is not fully scalable and the ability to
execute the strategy is somewhat constrained as there has, since
acquisition in 2017, been insufficient investment in people,
processes, and structures to facilitate growth. This lack of
investment is being addressed as part of the CMP.
We have set out what we believe to be an achievable strategy;
one which, post the CMP, we can execute at pace.
CPP India : The business will continue with its successful local
market strategy, which is focused on providing low-cost innovative
product and service solutions to a growing distributor base. The
strategic direction for CPP India is one of increasing its
distributor footprint and, where appropriate, developing a broader
range of online and mobile app products and services, particularly
within the Lifestyle and Healthcare markets. While acquisition
multiples in India remain beyond our reach, both market and new
product development will have to be internally led.
The strategy as set is an achievable one, though it is highly
dependent upon the retention and incentivisation of the CPP India
management team and the implementation of the new Indian IT
platform scheduled for 2023.
From a risk perspective the majority of CPP India's revenues are
currently generated from two long-standing distributor
relationships, one of which is due for renewal around the end of
2024. Whilst we are confident that these arrangements will be
renewed, our strategy, even if successfully implemented, will not
materially rebalance this concentration risk in the foreseeable
future.
CPP Turkey: Similar to CPP India, the business will continue
with its successful local market strategy, which is focused on
providing innovative products and services to a broad and
diversified distributor base. CPP Turkey has an enviable track
record of developing products which increase both the perceived and
real value of those products offered by its distributors to the end
consumer. New product development is a critical part of the
strategic process for CPP Turkey and this will continue, albeit via
a more formalised process which focuses on shared learning and best
practice.
The strategy is in many respects 'more of the same' though,
similar to CPP India, it is highly dependent upon the retention and
incentivisation of the local management team.
From an execution and delivery perspective, the strategy is an
achievable one. The key risk, in terms of outcomes, is continued
economic turbulence in Turkey, which may either reduce demand for
our products or services, or further weaken exchange rates, or
both.
The Centre : Where the business units develop their own
strategies (CPP India and CPP Turkey) and control many of the
resources to execute those plans, the Centre will pressure-test the
businesses' targets and strategies, will actively promote the
sharing of best practices, and will, where appropriate, provide
select expertise or shared services. In general, the business unit
CEO's own their profit and loss accounts and make appropriate
investment trade-offs. The Centre provides services only where it
has better expertise or a lower cost than the businesses can
provide on their own.
Legacy business : The Legacy UK and European Card Protection
business has, since 2012, been in decline and will, if not
addressed, become both unprofitable and a significant drain on the
Group's resources. Our intention through the CMP is to withdraw
from these products and markets.
Withdrawal from the Legacy business will be a long and complex
process, one with many regulatory and operational
inter-dependencies and is very much dependent upon the goodwill of
both our partners and colleagues. As we progress, each decision we
make and each action we implement will have due regard to the best
interests and well-being of our partners and colleagues.
Change Management Programme (CMP)
The CMP is the process by which the Group will effect strategic
change, exiting from its Legacy operations and building an
InsurTech business supported by CPP India and CPP Turkey. The CMP
is a complex, inter-dependent set of eight projects which are
expected to conclude late 2025.
The CMP projects are summarised as:
-- Legacy IT platform and new Indian IT platform development
The development of a new customer service platform for CPP
India, which will be delivered in two phases (Phase 1 - non-Card
products; and Phase 2 - Card products). The new platform will
ensure all customer data resides fully in India and that India has
an independently managed customer IT infrastructure which enables
the decommissioning of the Group's legacy IT platform and improved
efficiency to India's operational model.
-- Cessation of UK & European legacy books
A complex multi workstream programme which will accelerate the
natural cessation of the UK and European back books enabling the
decommissioning of the Group's expensive legacy IT platform, the
removal of management focus on legacy/run off books and is intended
to remove the drag of the Legacy business on the Group's
valuation.
-- Blink scalability
Currently a sub-scale business which is at an early stage of
development, Blink requires a programme of activity to ensure that
its operational processes are adequately robust to manage a
substantially larger volume of transactions and to become the
Groups third business of strategic growth alongside CPP India and
CPP Turkey.
Key risks associated with the CMP:
Each project is supervised by the Executive Management Committee
(EMC) and implemented by the Operational Board but, due to size and
complexity, there will be some execution risks, namely:
-- People risk
Key person dependencies have been considered with supporting
plans developed in the event key team members leave the business
before the CMP is concluded. Capacity risk is also considerable in
many areas, with several colleagues or team members involved in
multiple projects. People risk is likely to remain high for the
duration of the CMP.
-- Financial risk
The complexity and duration of the CMP may lead to cost over
runs particularly if key team members exit ahead of programme
delivery.
-- Complex interdependencies
There are many interdependencies between the projects, with the
risk of financial and people impacts disrupting multiple projects.
Additionally, the interdependencies have the potential to delay the
decommissioning of the legacy IT platform.
-- Third-party dependencies
Legacy contracts often involve multiple parties and the
agreements with them cannot be dissolved unilaterally by the Group.
The pace of change is often adversely impacted by third-parties not
operating to CPP's timelines.
Financial implications of the CMP:
-- Dual running costs
As we build out the IT platform for CPP India and migrate from
the legacy systems, the Group will have a period of dual running
costs whilst we operate both platforms. We expect to suffer these
dual running costs until the first quarter of 2025, after which we
should be able to realise material cost savings.
-- Restructure and retention costs
Costs associated with the CMP will be substantial, as will the
redundancy and retention packages which we will need to introduce.
We will provide guidance on these costs as we progress.
-- Impact on Group's cash resources and dividend
The dual running costs and costs associated with the restructure
are material, however we expect to be able to service these costs
from existing and forecast resources. Due to the costs and
uncertainties associated with the CMP, as previously announced, the
Board has taken the decision to suspend dividend payments until
further notice. If circumstances change, the Board will review and
update shareholders when appropriate to do so.
People
The size, scope and complexity of our CMP should not be
under-estimated. It is a huge undertaking, one which at times can
seem somewhat daunting, to re-engineer a business as complex as CPP
and in so doing, move from one business model to another. That we
can contemplate such an undertaking reflects the quality,
dedication, and commitment of my colleagues from across the
Group.
Personally, I am humbled by their continued support, in what for
some, can only be the most uncertain of times. Their commitment to
the task we have set ourselves is exemplary, for us at CPP our
'grasp really does exceed our reach'.
Outlook
From a trading perspective our Core businesses are performing
very much in line with expectations. From an operational point of
view, we continue to make good progress in implementing the CMP and
expect to deliver on the objectives we have set ourselves for the
2023 financial year.
Simon Pyper
Chief Executive Officer
27 March 2023
Chief Financial Officer's Report
Overview
The Group made good financial progress in the year, growing
revenue and EBITDA in our Core operations. 2022 has been a pivotal
year for the Group which announced the decision to exit from our
Legacy businesses, which will complete in the medium term, and
focus on a simplified proposition in our Core markets. The
accelerated withdrawal from the Legacy markets through the CMP will
reduce overall profitability and cash over the next two years,
however, the Group is in a good financial position with which to
embark on this important step which will improve outcomes for all
shareholders and other stakeholders in the medium-term.
The strategy reset led to the disposal of our China business in
January 2022 and our Mexico businesses in October 2022. As a
result, they are presented as discontinued operations, with this
review focusing on the performance of the Group's continuing
operations.
Group revenue increased by 19% (15% constant currency) to
GBP169.8 million (2021 restated: GBP142.8 million). Revenue growth
was driven by our Core operations which represent 91% of Group
revenues and are 25% higher than last year at GBP154.3 million
(2021: GBP123.2 million). New business has been particularly strong
in CPP India and Globiva, both of which were impacted in 2021 by
COVID-19. EBITDA has reduced marginally to GBP6.9 million (2021
restated: GBP7.2 million), however the comparative figure for 2021
included a one-time release of a commission provision in the UK of
GBP1.1 million, and therefore, when excluding this factor, Group
EBITDA is 12% higher than the prior year. The EBITDA improvement
reflects good progress in our Core operations with increased
profitability in India and a reduced central cost base following
the Board and executive changes in 2021 and the early part of
2022.
2021 (Restated(1)
Continuing operations 2022 )
----------------------------------------------- ------ -----------------
Revenue (GBP millions) 169.8 142.8
----------------------------------------------- ------ -----------------
Gross profit (GBP millions) 30.8 32.3
----------------------------------------------- ------ -----------------
EBITDA (GBP millions)(2) 6.9 7.2
----------------------------------------------- ------ -----------------
Operating profit (GBP millions) 2.6 3.0
----------------------------------------------- ------ -----------------
Profit before tax (GBP millions) 2.4 4.3
----------------------------------------------- ------ -----------------
Taxation (GBP millions) (2.3) (3.7)
----------------------------------------------- ------ -----------------
Profit for the year (GBP millions) 0.1 0.6
----------------------------------------------- ------ -----------------
Basic (loss)/earnings per share (pence) (1.73) 1.51
----------------------------------------------- ------ -----------------
Cash generated by operations (GBP millions)(3) 7.3 7.4
----------------------------------------------- ------ -----------------
Dividends (pence) - 12.5
----------------------------------------------- ------ -----------------
1. Restated to reflect Mexico as discontinued operations.
2. Excluding depreciation, amortisation and exceptional items.
3. Includes cash generated from continuing and discontinued operations.
Gross profit reduced by 5% to GBP30.8 million (2021 restated:
GBP32.3 million). This results in a reduction in the gross profit
margin to 18.1% (2021 restated: 22.6%) which is a continuation of
the change in market mix with 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, a shift to lower
margin product variants and inflationary pressures are challenging
our margins in India and Globiva. Excluding the aforementioned
GBP1.1 million commission release in the UK, gross profit is just
1% lower than the prior year. We expect our gross profit margins to
continue to reduce in the medium-term as withdrawal from the Legacy
markets is completed as part of the CMP before stabilising in 2025
and improving incrementally thereafter. The Group's results will
remain weighted towards India which operates at a margin of
approximately 11%.
EBITDA reduced marginally to GBP6.9 million (2021 restated:
GBP7.2 million; GBP6.1 million excluding commission release),
however this reflects a 12% increase on a like-for-like basis. The
improvement follows a reduction in the cost base with
administrative expenses, before depreciation and exceptional items,
reducing by 4% in the year. The reducing cost base demonstrates the
expected savings from restructuring exercises across our Legacy
operations and also cost savings from the Board and executive
changes in 2021 and early 2022.
Depreciation and amortisation charges have decreased to GBP2.5
million (2021 restated: GBP2.9 million). The Group's depreciation
charges are expected to increase in 2023 and beyond as the new
technology platform is launched in India during H2 2023 and Globiva
increases its operational capacity to facilitate growth.
Exceptional items charged to operating profit total GBP1.7
million (2021 restated: GBP1.3 million) which comprises
restructuring and closure costs of GBP1.2 million and a GBP0.5
million one-time payment to the Globiva Founders to compensate for
unfulfilled commitments by CPP in the shareholder agreement. The
restructuring and closure costs includes settlement costs relating
to the departure of the former CEO; redundancy and onerous contract
costs in the UK MGA, which is being wound down, and redundancy
costs in Spain as we prepare to withdraw from the market.
Restructuring and closure costs will continue to be high in the
medium-term as we withdraw from all Legacy markets as part of the
CMP.
The marginal reduction in absolute EBITDA, in conjunction with
higher exceptional costs, results in operating profit decreasing by
12% to GBP2.6 million (2021 restated: GBP3.0 million).
The Group's profit before tax was GBP2.4 million (2021 restated:
GBP4.3 million), with the comparative benefitting from a one-time
fair value gain of GBP1.5 million on our investment in KYND. Profit
after tax is GBP0.1 million (2021 restated: GBP0.6 million).
Core and Legacy
2022 2021
Core Legacy Core Legacy
Continuing operations GBP'm GBP'm GBP'm GBP'm
------------------------ ------ ------ ------ ------
EBITDA 5.0 1.9 4.1 3.1
------------------------ ------ ------ ------ ------
Profit before tax 1.6 0.8 1.2 3.1
------------------------ ------ ------ ------ ------
(Loss)/profit after tax (0.4) 0.5 (2.4) 3.0
======================== ====== ====== ====== ======
Post-tax profitability in Legacy currently exceeds the Core
business, however the profit trajectory of the Legacy businesses is
in terminal decline and costs have already been cut to a level
where they are now essentially fixed, including an expensive
central legacy IT estate. Without action being taken, the Legacy
businesses were shortly going to be loss-making with no route to a
return to profitability.
The Core performance will be impacted in the medium-term by dual
IT running costs and investment in Blink capability as the business
scales. Upon conclusion of the CMP central costs will reduce
allowing the profitable performance of the Core business units to
come to the fore.
Tax
The tax charge from continuing operations was GBP2.3 million
(2021: GBP3.7 million), which is an effective tax rate (ETR) of 96%
(2021 restated: 87%). The ETR includes withholding taxes on
dividend repatriations from overseas entities of GBP0.6 million
(2021: GBP1.2 million).
The local tax rates are higher than the current UK rate of tax
of 19%, most notably in India which contributes a large portion of
the Group's profits and has a local tax rate of 25.2%. The total
tax charge from our Indian operations is GBP1.6 million (2021:
GBP2.0 million). The profitable operations in Turkey, Spain and
Italy also have higher local tax rates. Loss-making operations are
unable to offset all of their losses and tax credits are unable to
be recognised on these losses.
The CMP is expected to improve the ETR in the medium-term once
complete. A high and volatile ETR is expected to persist in the
short-term, as the Legacy operations are exited, and additional
costs are incurred to facilitate these closures against which it
won't be possible to recognise tax credits. The reduction in
volatility from one-off costs once the CMP has concluded is
expected to result in the ETR stabilising and beginning to reduce
towards the UK statutory rate of tax which will increase to 25% on
1 April 2023.
Adjusted ETR
Continuing operations Exceptional items(2) Adjusted
Core Legacy Total Core Legacy Total Core Legacy Total
2022 GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
===================== ======= ======= ======= ======= ======= ====== ====== ====== ======
Profit before tax 1.6 0.8 2.4 1.0 0.7 1.7 2.6 1.5 4.1
--------------------- ------- ------- ------- ------- ------- ------ ------ ------ ------
Tax (2.0) (0.3) (2.3) (0.1) (0.1) (0.2) (2.1) (0.4) (2.5)
--------------------- ------- ------- ------- ------- ------- ------ ------ ------ ------
ETR 124% 41% 96% 13% 8% 11% 82% 26% 61%
===================== ======= ======= ======= ======= ======= ====== ====== ====== ======
Exceptional items
Continuing operations and one-offs(2) Adjusted
2021 (Restated(1) Core Legacy Total Core Legacy Total Core Legacy Total
) GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
===================== ======= ======= ======= ======= ======= ====== ====== ====== ======
Profit/(loss) before
tax 1.2 3.1 4.3 0.6 (1.8) (1.2) 1.8 1.3 3.1
--------------------- ------- ------- ------- ------- ------- ------ ------ ------ ------
Tax (3.6) (0.1) (3.7) - (0.2) (0.2) (3.6) (0.3) (3.9)
--------------------- ------- ------- ------- ------- ------- ------ ------ ------ ------
ETR 314% 3% 87% 0% (9)% (14)% 208% 21% 128%
===================== ======= ======= ======= ======= ======= ====== ====== ====== ======
1. Restated to reflect Mexico as discontinued operations.
2. Comprises exceptional items of GBP1.7 million (2021 restated:
GBP0.1 million credit) and a prior year one-time benefit from a
commission provision release in the UK of GBP1.1 million. Further
detail of exceptional items is provided in note 5.
The exceptional items in the year have reduced profit before tax
by GBP1.7 million (2021 restated: GBP1.2 million increase) whilst
there has been an associated reduction in tax of GBP0.2 million
(2021: GBP0.2 million). Without the exceptional items the Group's
ETR would reduce to 61% (2021 restated: 128%).
As the CMP progresses the Core performance of the business will
increasingly provide a better indication of future performance. The
Core operations adjusted ETR is 82% (2021: 208%), which includes
withholding taxes on dividend repatriations from India and Turkey
and the loss-making Central Functions. Further details on the Core
tax charge by location is provided in note 6.
Discontinued operations
The Group's Chinese and Mexican businesses have both been
recognised as discontinued following completion of their disposals
in the current year. The total profit after tax from discontinued
operations of GBP0.7 million comprises GBP0.6 million profit in
relation to China and a GBP0.1 million profit from Mexico.
2021 (Restated(1)
2022 )
GBP'm GBP'm
------------------------------ ------ -----------------
Revenue 0.9 3.3
------------------------------ ------ -----------------
EBITDA 0.2 0.6
------------------------------ ------ -----------------
Operating profit/(loss) 0.2 (0.2)
------------------------------ ------ -----------------
Profit/(loss) after tax 0.2 (0.2)
------------------------------ ------ -----------------
Profit on disposal 0.5 2.6
------------------------------ ------ -----------------
Profit for the year 0.7 2.4
------------------------------ ------ -----------------
Net liabilities held for sale - (0.1)
------------------------------ ------ -----------------
1. Restated to reflect Mexico as discontinued operations.
On 27 January 2022, the Group completed the sale of its China
business to 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 transaction generated a profit on disposal of
GBP0.7 million. China also generated trading losses of GBP0.1
million up to the disposal date (2021: GBP0.8 million losses
representing a full year of trading).
On 20 October 2022, the Group completed the sale of its Mexican
business to Rafael Ortiz Moran and Silvia Daniela Rodriguez Gaona
for a nominal consideration of $1 (Mexican peso). As part of the
disposal, the Group left cash balances of GBP0.3 million in the
business to cover initial working capital and other committed
liabilities. The transaction generated a loss on disposal of GBP0.1
million which was offset by a trading profit of GBP0.2 million up
to the disposal date (2021: GBP0.1 million losses representing a
full year of trading).
Cash flow and net funds
2022 2021
GBP'm GBP'm
--------------------------------------------- ------ ------
EBITDA 7.0 7.7
--------------------------------------------- ------ ------
Exceptional items(1) (1.7) (1.6)
--------------------------------------------- ------ ------
Non-cash items - 0.1
--------------------------------------------- ------ ------
Working capital movements 2.0 1.2
--------------------------------------------- ------ ------
Cash generated by operations 7.3 7.4
--------------------------------------------- ------ ------
Tax (3.5) (2.8)
--------------------------------------------- ------ ------
Operating cash flow 3.8 4.6
--------------------------------------------- ------ ------
Capital expenditure (including intangibles) (2.7) (1.9)
--------------------------------------------- ------ ------
Lease repayments (1.4) (1.5)
--------------------------------------------- ------ ------
Disposal of discontinued operations (0.9) 2.3
--------------------------------------------- ------ ------
Net finance revenues 0.4 0.1
--------------------------------------------- ------ ------
Dividends (0.7) (2.6)
Net movement in cash(2) (1.5) 1.0
--------------------------------------------- ------ ------
Net funds(3) 16.3 16.4
--------------------------------------------- ------ ------
1. Cash cost of exceptional items.
2. Excluding the effect of exchange rates.
3. Net funds comprise cash and cash equivalents of GBP21.0
million (2021: GBP22.4 million) less lease liabilities of GBP4.7
million (2021: GBP6.0 million).
The net funds position has decreased marginally to GBP16.3
million (2021: GBP16.4 million), which includes cash of GBP21.0
million (2021: GBP22.4 million including discontinued operations).
The Group had a net cash outflow of GBP1.5 million in the year
which reflects the payment of upfront fees to extend the Bajaj
contract and costs to develop the IT platform in India.
Cash generated by operations was broadly flat at GBP7.3 million
(2021: GBP7.4 million) with a working capital benefit in India
being offset by a reduction in operating cash flows. Tax paid has
increased to GBP3.5 million (2021: GBP2.8 million) which is a
combination of taxes payable on profits in our markets and
withholding taxes on overseas dividends to the UK.
The Group has a healthy cash balance of GBP21.0 million, however
as the Group's growth has shifted to overseas markets a material
amount of the cash balance is generated in India and Turkey. As a
result, all our cash resources are not immediately available for
distribution or on demand for working capital purposes around the
Group. In addition, there are tax costs associated with returning
overseas funds to the UK with our blended cost being approximately
10%. At 31 December 2022, approximately 40% of the cash balances
were considered 'restricted'. Cash planning is important and will
become increasingly crucial as the CMP is executed and previously
cash generative businesses in the UK and Europe are wound down.
The Group has a GBP5.0 million revolving credit facility (RCF)
which is in place until August 2023. The RCF is not currently
drawn. Discussions are at an advanced stage with the lender to
extend the RCF for a further three year term.
Events after the balance sheet date
On 6 February 2023, Turkey was hit by a devastating earthquake.
Turkey is one of the Group's Core markets. New sales activity has
been impacted by approximately 50% in February and March following
Government guidance on restricting telemarketing activity. This
guidance is expected to be relaxed in April. There is currently no
evidence of a notable deterioration in renewal rates. The financial
impact on the Group from the effects of the earthquake is currently
uncertain but is not expected to be material. All colleagues are
receiving any support necessary. The Group continues to closely
monitor the situation.
Foreign exchange
The general weakening of Sterling during 2022, particularly
against the Indian rupee, has led to a favourable exchange rate
movement in the Group's results. The Indian rupee has appreciated
by 5% (2021: 7% depreciation) which due to the relative size of our
operations in India has more than compensated for the continued
weakening in the Turkish lira which depreciated by 63% (2021:
37%).
The reported results compared to 2021 include the following
favourable foreign exchange movements: GBP4.5 million (2021
restated: GBP7.4 million adverse) within revenue; and GBP0.1
million (2021 restated: GBP0.9 million adverse) at an EBITDA
level.
Segmental performance
GBP millions REVENUE EBITDA
2021
Constant Constant
2021 (Restated(1) currency (Restated(1) currency
2022 ) Change change 2022 ) Change change
================== ===== ================= ======= ========= ===== ============= ======= =========
CPP India 134.8 109.0 24% 18% 5.6 5.4 4% (1)%
------------------ ----- ----------------- ------- --------- ----- ------------- ------- ---------
Globiva 15.8 10.3 54% 46% 2.4 2.4 (1)% (5)%
------------------ ----- ----------------- ------- --------- ----- ------------- ------- ---------
CPP Turkey 3.2 3.6 (10)% 42% 0.7 0.8 (14)% 36%
------------------ ----- ----------------- ------- --------- ----- ------------- ------- ---------
Blink 0.5 0.3 38% 39% (0.4) (0.3) (80)% (76)%
================== ===== ================= ======= ========= ===== ============= ======= =========
Core business
units 154.3 123.2 25% 21% 8.3 8.4 (1)% (2)%
------------------ ----- ----------------- ------- --------- ----- ------------- ------- ---------
Central Functions - - n/a n/a (3.3) (4.3) 22% 22%
================== ===== ================= ======= ========= ===== ============= ======= =========
Core total 154.3 123.2 25% 21% 5.0 4.1 20% 19%
------------------ ----- ----------------- ------- --------- ----- ------------- ------- ---------
Legacy(2) 15.5 19.6 (21)% (22)% 1.9 3.3 (42)% (42)%
------------------ ----- ----------------- ------- --------- ----- ------------- ------- ---------
Share of loss
in joint venture - - n/a n/a - (0.2) 100% 100%
================== ===== ================= ======= ========= ===== ============= ======= =========
Group total 169.8 142.8 19% 15% 6.9 7.2 (5)% (6)%
================== ===== ================= ======= ========= ===== ============= ======= =========
1. Restated to reflect Mexico as discontinued
2. Legacy comprises UK, Spain, Italy, Portugal, Bangladesh and
Malaysia.
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.
Core businesses (91% of Group revenue):
Revenue increased by 21% to GBP154.3 million (2021: GBP123.2
million) and EBITDA increased to GBP5.0 million (2021 restated:
GBP4.1 million).
Our Indian business had another strong year with revenue
increasing by 18% to GBP134.8 million (2021: GBP109.0 million), due
in small part to the comparatives being impacted by COVID-19. The
good performance has been fuelled by growth in LivCare and Asset
Secure through Bajaj Finance Limited (Bajaj) along with an
encouraging resurgence of Card Protection in Q4 as our banking
partners settled on amended processes following the changes to
recurring card transactions introduced by the Indian regulator in
Q4 2021. During the year, India also agreed contract extensions
with its two largest partners, Bajaj and SBI Cards which is
expected to drive revenue growth in the coming years. The new IT
platform is progressing well with the first phase (non-Card
business) expected to go-live in Q3 2023 and the second phase (Card
business) set to follow in Q1 2024. The new IT platform will be
transformational for the Indian business in providing additional
operating efficiencies and improved digital capability.
Globiva, in which we hold a 51% investment, has progressed well
widening its partner base which has led to revenue growing by 46%
to GBP15.8 million (2021: GBP10.3 million). The revenue mix has
shifted in the year with Globiva's business through international
partners reducing which along with inflationary wage pressures has
reduced the EBITDA margin to 16% (2021: 24%). As a result, EBITDA
is flat on the prior year at GBP2.4 million (2021: GBP2.4 million).
Globiva remains one of India's fastest growing BPM's and continues
to have a strong proposition engineered on quality.
Turkey has had another excellent year, in the face of an
extremely difficult macro-economic environment. At a local
performance level revenues have grown by 42% and EBITDA by 36%.
This has been achieved through growth in our partnership with
Turkiye Sigorta which included the launch of a new Health
Protection product. Turkey is a prime example of the success that
comes from a multi-partner, multi-product approach. Unfortunately,
on a reported basis this very good local performance has been
completely negated by the ongoing devaluation in the Turkish lira
with reported revenue 10% lower in the year and EBITDA down
14%.
Blink has increased revenues by 39% to GBP0.5 million (2021:
GBP0.3 million) reflecting four new partner launches, including a
large deal in Asia, as well as growth in business through existing
partnerships. The prior year benefited from some one-time billing
which has not repeated in 2022, therefore this year's revenue is
more sustainable and reflects an annual recurring revenue of GBP0.6
million (2021: GBP0.2 million). Blink is a cornerstone of the
Group's strategy even though at an early stage in its development
and during the year a focus was placed on enhancing processes and
ensuring a fully scalable proposition. The headcount in Blink has
been increased in all areas of the business to accelerate growth.
As a result, although revenue has increased, EBITDA losses have
increased to GBP0.4 million (2021: GBP0.3 million). Investment in
operational capability will continue in 2023 to capitalise on
Blink's strong pipeline and wider opportunities
Central Functions costs have reduced by 22% to GBP3.3 million
(2021 restated: GBP4.3 million) due to a significant reduction in
Board and executive costs following a change in the composition of
both along with a reduction in IT costs. Transfer pricing charges
from the Centre to trading business units have reduced in the year
as Legacy operations have declined or started to be wound down.
This is expected to continue further in 2023 as the first phase of
India's IT platform becomes operational whilst the costs associated
with the Group's legacy IT platform will remain until a position is
reached to decommission the system. The dual IT running costs from
India and Legacy are expected to persist until late 2024.
Legacy businesses (9% of Group revenue)
Revenue decreased by 22% to GBP15.5 million (2021 restated:
GBP19.6 million), reflecting the natural decline in the historic
renewal books in the UK, Spain, Italy and Portugal. EBITDA fell by
42% to GBP1.9 million (2021 restated: GBP3.3 million) which
reflects the lost profit from the revenue decline, although the
like-for-like decline was lower once the GBP1.1 million release of
a commission provision in 2021 is excluded. The Group's strategy is
to withdraw from these markets in a sensible and compliant manner
which is sensitive to the interests of both our partners and
colleagues. Good progress has been made in Spain and Portugal with
agreements reached with underwriters during Q4 which will enable
our exit from these markets over the next 12 months. In the UK and
Italy, we continue to renew policies with withdrawal plans being
finalised, which will be communicated to all stakeholders at the
appropriate time.
David Bowling
Chief Financial Officer
27 March 2023
Consolidated income statement
For the year ended 31 December 2022
2022 2021
------------------------------- ---------------------------------------
Total
Core Legacy Total Core Legacy (Restated*)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Continuing operations
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Revenue 4 154,267 15,516 169,783 123,160 19,663 142,823
===================================== ===== ========== ======== ========= ========= ======== ==================
Cost of sales (133,924) (5,087) (139,011) (104,319) (6,160) (110,479)
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Gross profit 20,343 10,429 30,772 18,841 13,503 32,344
===================================== ===== ========== ======== ========= ========= ======== ==================
Administrative expenses (18,469) (9,689) (28,158) (17,543) (11,633) (29,176)
===================================== ===== ========== ======== ========= ========= ======== ==================
Share of loss of joint venture - - - - (189) (189)
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Operating profit 1,874 740 2,614 1,298 1,681 2,979
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Analysed as:
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
EBITDA 4 4,928 1,925 6,853 4,105 3,141 7,246
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Depreciation and amortisation (2,055) (452) (2,507) (2,220) (698) (2,918)
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Exceptional items 5 (999) (733) (1,732) (587) (762) (1,349)
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Investment revenues 370 116 486 195 16 211
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Finance costs (630) (26) (656) (347) (19) (366)
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Other gains and losses 5 - - - - 1,459 1,459
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Profit before taxation 1,614 830 2,444 1,146 3,137 4,283
===================================== ===== ========== ======== ========= ========= ======== ==================
Taxation 6 (2,000) (343) (2,343) (3,600) (107) (3,707)
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Profit/(loss) for the year from
continuing operations (386) 487 101 (2,454) 3,030 576
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Discontinued operations
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Profit for the year from
discontinued operations 8 - 676 676 - 2,432 2,432
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Profit/(loss) for the year (386) 1,163 777 (2,454) 5,462 3,008
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Attributable to:
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Equity holders of the Company (640) 1,163 523 (2,897) 5,462 2,565
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Non-controlling interests 254 - 254 443 - 443
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
(386) 1,163 777 (2,454) 5,462 3,008
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Core Legacy Total Core Legacy Total
Basic (loss)/earnings per share pence pence pence pence pence (Restated*) pence
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Continuing operations 7 (7.24) 5.51 (1.73) (32.94) 34.45 1.51
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Discontinued operations 7 - 7.64 7.64 - 27.65 27.65
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
(7.24) 13.15 5.91 (32.94) 62.10 29.16
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Core Legacy Total Core Legacy Total
Diluted (loss)/earnings per share pence pence pence pence pence (Restated*) pence
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Continuing operations 7 (7.24) 5.51 (1.73) (32.11) 33.58 1.47
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
Discontinued operations 7 - 7.64 7.64 - 26.96 26.96
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
(7.24) 13.15 5.91 (32.11) 60.54 28.43
------------------------------------- ----- ---------- -------- --------- --------- -------- ------------------
*Restated to reflect Mexico as discontinued operations. See note
2.
Consolidated statement of comprehensive income
For the year ended 31 December 2022
2022 2021
GBP'000 GBP'000
--------------------------------------------------------------------- -------- --------
Profit for the year 777 3,008
====================================================================== ======== ========
Items that may be reclassified subsequently to profit or loss:
===================================================================== ======== ========
Fair value gain on equity investment 152 -
===================================================================== ======== ========
Exchange differences on translation of foreign operations (2,052) (695)
====================================================================== ======== ========
Exchange differences reclassified on disposal of foreign operations 1,093 (4)
---------------------------------------------------------------------- -------- --------
Other comprehensive expense for the year net of taxation (807) (699)
---------------------------------------------------------------------- -------- --------
Total comprehensive (expense)/income for the year (30) 2,309
---------------------------------------------------------------------- -------- --------
Attributable to:
--------------------------------------------------------------------- -------- --------
Equity holders of the Company (286) 1,867
---------------------------------------------------------------------- -------- --------
Non-controlling interests 256 442
---------------------------------------------------------------------- -------- --------
(30) 2,309
--------------------------------------------------------------------- -------- --------
Consolidated balance sheet
As at 31 December 2022
2022 2021
Note GBP'000 GBP'000
-------------------------------------- ---- --------- ---------
Non-current assets
-------------------------------------- ---- --------- ---------
Goodwill 544 540
====================================== ==== ========= =========
Other intangible assets 9 4,710 3,603
====================================== ==== ========= =========
Property, plant and equipment 1,243 1,335
====================================== ==== ========= =========
Right-of-use assets 3,936 5,109
====================================== ==== ========= =========
Equity investment 2,041 1,889
====================================== ==== ========= =========
Deferred tax assets 230 396
-------------------------------------- ---- --------- ---------
Contract assets 275 564
-------------------------------------- ---- --------- ---------
12,979 13,436
-------------------------------------- ---- --------- ---------
Current assets
====================================== ==== ========= =========
Inventories 87 102
====================================== ==== ========= =========
Contract assets 5,764 4,020
====================================== ==== ========= =========
Trade and other receivables 19,841 13,605
====================================== ==== ========= =========
Cash and cash equivalents 20,984 22,319
-------------------------------------- ---- --------- ---------
46,676 40,046
-------------------------------------- ---- --------- ---------
Assets classified as held for sale - 478
-------------------------------------- ---- --------- ---------
46,676 40,524
-------------------------------------- ---- --------- ---------
Total assets 59,655 53,960
-------------------------------------- ---- --------- ---------
Current liabilities
====================================== ==== ========= =========
Borrowings 23 -
====================================== ==== ========= =========
Income tax liabilities (1,195) (1,362)
====================================== ==== ========= =========
Trade and other payables (26,210) (19,544)
====================================== ==== ========= =========
Provisions (224) -
====================================== ==== ========= =========
Lease liabilities (966) (937)
====================================== ==== ========= =========
Contract liabilities (11,238) (9,190)
-------------------------------------- ---- --------- ---------
(39,810) (31,033)
-------------------------------------- ---- --------- ---------
Liabilities classified as held for
sale - (550)
-------------------------------------- ---- --------- ---------
(39,810) (31,583)
-------------------------------------- ---- --------- ---------
Net current assets 6,866 8,941
-------------------------------------- ---- --------- ---------
Non-current liabilities
====================================== ==== ========= =========
Borrowings - 58
====================================== ==== ========= =========
Deferred tax liabilities (702) (927)
====================================== ==== ========= =========
Provisions (145) -
====================================== ==== ========= =========
Lease liabilities (3,752) (4,936)
====================================== ==== ========= =========
Contract liabilities (773) (1,200)
-------------------------------------- ---- --------- ---------
(5,372) (7,005)
-------------------------------------- ---- --------- ---------
Total liabilities (45,182) (38,588)
-------------------------------------- ---- --------- ---------
Net assets 14,473 15,372
-------------------------------------- ---- --------- ---------
Equity
====================================== ==== ========= =========
Share capital 10 24,256 24,243
====================================== ==== ========= =========
Share premium account 45,225 45,225
====================================== ==== ========= =========
Merger reserve (100,399) (100,399)
====================================== ==== ========= =========
Translation reserve (825) 136
====================================== ==== ========= =========
ESOP reserve 17,212 17,418
====================================== ==== ========= =========
Retained earnings 27,201 27,202
-------------------------------------- ---- --------- ---------
Equity attributable to equity holders
of the Company 12,670 13,825
====================================== ==== ========= =========
Non-controlling interests 1,803 1,547
-------------------------------------- ---- --------- ---------
Total equity 14,473 15,372
-------------------------------------- ---- --------- ---------
Consolidated statement of changes in equity
For the year ended 31 December 2022
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
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
year - - - (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 6 - - - - - 9 9 - 9
=============== ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Dividends paid - - - - - (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
=============== ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Profit for the
year - - - - - 523 523 254 777
=============== ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Other
comprehensive
expense for
the year - - - (961) - 152 (809) 2 (807)
--------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
Total
comprehensive
expense for
the year - - - (961) - 675 (286) 256 (30)
--------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
Equity-settled
share-based
payment credit - - - - (206) - (206) - (206)
=============== ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Exercise of
share options 10 13 - - - - (7) 6 - 6
=============== ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Deferred tax on
share options 6 - - - - - (9) (9) - (9)
=============== ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Effects of
hyperinflation - - - - - 3 3 - 3
=============== ==== ======= ======= ========= =========== ======= ========= ======= =============== =======
Dividends paid - - - - - (663) (663) - (663)
--------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
At 31 December
2022 24,256 45,225 (100,399) (825) 17,212 27,201 12,670 1,803 14,473
--------------- ---- ------- ------- --------- ----------- ------- --------- ------- --------------- -------
Consolidated cash flow statement
For the year ended 31 December 2022
2022 2021
Note GBP'000 GBP'000
--------------------------------------- ---- ------- -------
Net cash from operating activities 11 3,822 4,562
======================================= ==== ======= =======
Investing activities
======================================= ==== ======= =======
Interest received 490 224
======================================= ==== ======= =======
Purchases of property, plant and
equipment (526) (525)
======================================= ==== ======= =======
Purchases of intangible assets 9 (2,194) (1,370)
======================================= ==== ======= =======
Cash consideration in respect of
sale of discontinued operations 8 - 2,366
======================================= ==== ======= =======
Costs associated with disposal of
discontinued operations (128) -
======================================= ==== ======= =======
Cash disposed of with discontinued
operations ( 823) (112)
======================================= ==== ======= =======
Net cash ( used in)/ from investing
activities (3,181) 583
--------------------------------------- ---- ------- -------
Financing activities
======================================= ==== ======= =======
Dividends paid (663) (2,629)
======================================= ==== ======= =======
Repayment of the lease liabilities (1,388) (1,507)
======================================= ==== ======= =======
Interest paid (75) (76)
======================================= ==== ======= =======
Issue of ordinary share capital 10 6 20
--------------------------------------- ---- ------- -------
Net cash used in financing activities (2,120) (4,192)
--------------------------------------- ---- ------- -------
Net (decrease)/increase in cash
and cash equivalents (1,479) 953
======================================= ==== ======= =======
Effect of foreign exchange rate
changes 54 (400)
======================================= ==== ======= =======
Cash and cash equivalents at 1 January 22,409 21,856
--------------------------------------- ---- ------- -------
Cash and cash equivalents at 31
December 20,984 22,409
--------------------------------------- ---- ------- -------
Analysed as:
Continuing operations 20,984 22,319
========================= ====== ======
Discontinued operations - 90
------------------------- ------ ------
20,984 22,409
------------------------ ------ ------
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 2023.
The financial information set out above does not constitute the
Company's statutory financial statements for the years ended 31
December 2022 or 31 December 2021 but is derived from the 2022
financial statements. Statutory financial statements for 2021 for
the Company prepared in conformity with UK-endorsed International
Financial Reporting Standards have been delivered to the Registrar
of Companies and those under UK IAS for 2022 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 2022 financial
statements were approved by the Board of Directors on 27 March
2023.
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 2022. The following Standards and
Interpretations have become effective and have been adopted in
these condensed financial statements. No Standards or
Interpretations have been adopted early in these condensed
financial statements.
Standard/Interpretation Subject
------------------------ --------------------------------------------------------------------------------------------
Onerous Contracts: directly related costs are considered when determining if a contract is
onerous, including incremental costs of fulfilling a contract and allocation of other
direct
IAS 37 costs.
------------------------ --------------------------------------------------------------------------------------------
IFRS 1 Subsidiary as a first time adopter.
------------------------ --------------------------------------------------------------------------------------------
IFRS 9 Fees in the 10 per cent test for derecognition of a financial liability.
------------------------ --------------------------------------------------------------------------------------------
Core and Legacy presentation
In October 2022, the Board set out the findings of its strategic
review, which will see the Group withdraw from its Legacy
businesses and focus resources on its Core growth businesses in
India, Turkey and its InsurTech, Blink. In order to aid users of
the financial statements, additional columns have been added to the
income statement and relevant notes to illustrate the income and
cost base of the Core and Legacy businesses. The prior year
presentation has also been represented to reflect these changes.
This presentation is expected to continue throughout the closure
period of the Legacy businesses.
Restatement of disclosures
On 20 October 2022, the Group completed the sale of its
wholly-owned subsidiaries Servicios de Asistencia a Tarjehabientes
CPP Mexico S de RL de CV and Profesionales en Proteccion Individual
S de RL de CV (together Mexico).
In accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, Mexico has been classified as discontinued
within these financial statements. Accordingly, the comparative
consolidated income statement information and appropriate
disclosure notes have been restated.
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, Legacy 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 available in note 4.
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 inflationary pressures, risks associated
with its CMP and the recent devastating earthquake in Turkey. 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 financial statements.
Hyperinflation
The Group has operations in Turkey, which has met the criteria
to be classified as a hyperinflationary economy in the year. This
is based on the Turkish Statistical Institute published consumer
price index, which had 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 income statement items of an entity in terms of the
monetary values as at the balance sheet 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 to revalue non-monetary balance sheet
and all income statement 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 31 December 2022 was
22.55.
On initial adoption in the year ended 31 December 2022, the
impact of inflation to the start of the year is recognised as a
movement in retained earnings. Comparative balances are not
restated. The inflation impact for the current year has been
recognised within finance costs. The annual inflation rate was
64.3% as at 31 December 2022.
The overall impact of inflation accounting in Turkey in the year
has been as follows:
Year ended
31 December
2022
GBP'000
------------------- -------------
Net assets 89
------------------- -------------
Profit before
tax 122
------------------- -------------
Taxation (36)
------------------- -------------
Profit after
tax 86
------------------- -------------
Retained earnings 3
------------------- -------------
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 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.
As at 1 January 2022, the Group changed the segmental reporting,
reflecting how the Core business is now managed on a more
geographical basis. Each segment has a distinct owner who is held
accountable and expected to report on their segment
performance.
The Group is now managed on the basis of five broad business
units:
-- India (CPP India and Globiva);
-- Turkey;
-- Blink;
-- 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 relevant geographies for statutory purposes; and
-- Legacy (UK MGA, UK Legacy, Spain, Portugal, Italy)
This replaces the Group's previous operating segments which were
Ongoing Operations and Restricted Operations. The Central Functions
segment remains unchanged within the new structure.
The prior period has been restated to reflect the new segmental
reporting used by the Group.
During the year, Mexico was reclassified to discontinued
operations, having previously been part of Legacy; accordingly, the
comparatives have been restated.
Segment revenue and performance for the current and comparative
periods are presented below:
Year ended 31 December 2022 India Turkey Blink Central Functions Legacy Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations
========================================= ========== ========== ========= ================= ========= ==========
Revenue - external sales 150,613 3,212 442 - 15,516 169,783
========================================= ========== ========== ========= ================= ========= ==========
Cost of sales (132,413) (1,448) (63) - (5,087) (139,011)
----------------------------------------- ---------- ---------- --------- ----------------- --------- ----------
Gross profit 18,200 1,764 379 - 10,429 30,772
========================================= ========== ========== ========= ================= ========= ==========
Administrative expenses excluding
depreciation, amortisation and
exceptional items (10,168) (1,038) (837) (3,372) (8,504) (23,919)
----------------------------------------- ---------- ---------- --------- ----------------- --------- ----------
EBITDA 8,032 726 (458) (3,372) 1,925 6,853
========================================= ========== ========== ========= ================= ========= ==========
Depreciation and amortisation (1,305) (129) (208) (413) (452) (2,507)
----------------------------------------- ---------- ---------- --------- ----------------- --------- ----------
Exceptional items (note 5) (519) - - (480) (733) (1,732)
----------------------------------------- ---------- ---------- --------- ----------------- --------- ----------
Operating profit/(loss) 6,208 597 (666) (4,265) 740 2,614
========================================= ========== ========== ========= ================= ========= ==========
Investment revenues 486
========================================= ========== ========== ========= ================= ========= ==========
Finance costs (656)
========================================= ========== ========== ========= ================= ========= ==========
Profit before taxation 2,444
========================================= ========== ========== ========= ================= ========= ==========
Taxation (2,343)
----------------------------------------- ---------- ---------- --------- ----------------- --------- ----------
Profit for the year from continuing
operations 101
----------------------------------------- ---------- ---------- --------- ----------------- --------- ----------
Discontinued operations
----------------------------------------- ---------- ---------- --------- ----------------- --------- ----------
Profit for the year from discontinued
operations 676
----------------------------------------- ---------- ---------- --------- ----------------- --------- ----------
Profit for the year 777
----------------------------------------- ---------- ---------- --------- ----------------- --------- ----------
Year ended 31 December 2021 Central
India Turkey Blink Functions Legacy Total (Restated*(,) **)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
Continuing operations
=================================== ========== ========= ========= ========== ========= ========================
Revenue - external sales 119,273 3,568 319 - 19,663 142,823
=================================== ========== ========= ========= ========== ========= ========================
Cost of sales (102,640) (1,658) (21) - (6,160) (110,479)
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
Gross profit 16,633 1,910 298 - 13,503 32,344
=================================== ========== ========= ========= ========== ========= ========================
Administrative expenses excluding
depreciation, amortisation and
exceptional items (8,803) (1,062) (552) (4,319) (10,173) (24,909)
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
Segmental EBITDA 7,830 848 (254) (4,319) 3,330 7,435
=================================== ========== ========= ========= ========== ========= ========================
Share of loss of joint venture - - - - (189) (189)
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
EBITDA 7,830 848 (254) (4,319) 3,141 7,246
=================================== ========== ========= ========= ========== ========= ========================
Depreciation and amortisation (1,212) (209) (223) (576) (698) (2,918)
=================================== ========== ========= ========= ========== ========= ========================
Exceptional items (note 5) - - (348) (239) (762) (1,349)
----------------------------------- ---------- --------- --------- ========== ========= ========================
Operating profit/(loss) 6,618 639 (825) (5,134) 1,681 2,979
=================================== ========== ========= ========= ========== ========= ========================
Investment revenues 211
=================================== ========== ========= ========= ========== ========= ========================
Finance costs (366)
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
Other gains and losses (note 5) 1,459
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
Profit before taxation 4,283
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
Taxation (3,707)
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
P rofit for the year from
continuing operations 576
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
Discontinued operations
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
Profit for the year from
discontinued operations 2,432
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
Profit for the year 3,008
----------------------------------- ---------- --------- --------- ---------- --------- ------------------------
* Restated to reflect Mexico as discontinued operations. See
note 2. ** Restated for new segmental disclosure. See note 2.
Segment assets
2021
2022 (Restated**)
GBP'000 GBP'000
-------------------------------------------- --------- -------------
India 38,613 29,252
============================================ ========= =============
Turkey 1,665 1,959
============================================ ========= =============
Blink 636 406
============================================ ========= =============
Central Functions 5,092 5,840
============================================ ========= =============
Legacy 10,834 13,200
-------------------------------------------- --------- -------------
Total segment assets 56,840 50,657
============================================ ========= =============
Unallocated assets 2,815 2,825
-------------------------------------------- --------- -------------
Assets relating to discontinued operations - 478
-------------------------------------------- --------- -------------
Consolidated total assets 59,655 53,960
-------------------------------------------- --------- -------------
** Restated for new segmental disclosure. See note 2 .
Goodwill, deferred tax and equity investment are not allocated
to segments.
Capital expenditure
Intangible assets Property, plant and equipment Right-of-use assets
2021 (Restated*(,) 2021 (Restated*(,) 2021 (Restated*(,)
2022 **) 2022 **) 2022 **)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- ------------------- -------- -------------------- -------- --------------------
Continuing
operations
-------------------- --------- ------------------- -------- -------------------- -------- --------------------
India 1,814 712 277 430 698 -
==================== ========= =================== ======== ==================== ======== ====================
Turkey 36 - 106 24 98 228
==================== ========= =================== ======== ==================== ======== ====================
Blink 158 151 3 2 - -
==================== ========= =================== ======== ==================== ======== ====================
Central Functions 14 47 140 8 - 6
==================== ========= =================== ======== ==================== ======== ====================
Legacy 172 460 - 60 13 265
-------------------- --------- ------------------- -------- -------------------- -------- --------------------
Additions from
continuing
operations 2,194 1,370 526 524 809 499
-------------------- --------- ------------------- -------- -------------------- -------- --------------------
Discontinued
operations
-------------------- --------- ------------------- -------- -------------------- -------- --------------------
Additions for
discontinued
operations - - - 1 - 250
-------------------- --------- ------------------- -------- -------------------- -------- --------------------
Consolidated total
additions 2,194 1,370 526 525 809 749
-------------------- --------- ------------------- -------- -------------------- -------- --------------------
* Restated to reflect Mexico as discontinued operations. See
note 2. ** Restated for new segmental disclosure. See note 2.
Revenues from major products
Major product streams are disclosed on the basis monitored by
senior management.
The Group has refreshed its product architecture and reporting
to the Board has been on the following product categories; My
Finances, My Tech, My Health, My Home, My Digital Life, My Travel
and Other. The prior period has also been represented to reflect
this change.
Previously this was presented as retail assistance policies,
retail insurance policies, wholesale policies, and non-policy
revenue.
2021
2022 (Restated*(,) **)
GBP'000 GBP'000
-------------------------------------- ---------- -------------------
Continuing operations
====================================== ========== ===================
My Finances 39,239 41,237
====================================== ========== ===================
My Tech 39,059 38,964
====================================== ========== ===================
My Health 46,614 28,065
====================================== ========== ===================
My Home 22,301 16,859
====================================== ========== ===================
My Digital Life 5,064 6,116
====================================== ========== ===================
My Travel 448 224
====================================== ========== ===================
Other 17,058 11,358
-------------------------------------- ---------- -------------------
Revenue from continuing operations 169,783 142,823
-------------------------------------- ---------- -------------------
Revenue from discontinued operations 922 3,266
-------------------------------------- ---------- -------------------
Total revenue 170,705 146,089
-------------------------------------- ---------- -------------------
* Restated to reflect Mexico as discontinued operations. See
note 2. ** Restated for new segmental disclosure. See note 2.
'Other' revenue predominantly represents revenue from BPM
services provided by Globiva.
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:
2021
2022 (Restated*)
GBP'000 GBP'000
-------------------------------------- ---------- -------------
Continuing operations
====================================== ========== =============
At a point in time 150,266 125,910
====================================== ========== =============
Over time 19,517 16,913
-------------------------------------- ---------- -------------
Revenue from continuing operations 169,783 142,823
-------------------------------------- ---------- -------------
Discontinued operations
====================================== ========== =============
At a point in time 657 2,191
====================================== ========== =============
Over time 265 1,075
-------------------------------------- ---------- -------------
Revenue from discontinued operations 922 3,266
-------------------------------------- ---------- -------------
Total revenue 170,705 146,089
-------------------------------------- ---------- -------------
* Restated to reflect Mexico as discontinued operations. See
note 2.
Geographical information
The Group operates across a wide number of territories, of which
India, the UK, Spain and Turkey are considered individually
material. Revenue from external customers and non-current assets
(excluding equity investment and deferred tax) by geographical
location are detailed below:
External revenues Non-current assets
2021 2021
2022 (Restated*) 2022 (Restated*)
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------- -------------- --------- --------------
India 150,613 119,273 9,073 7,721
========================= ========== ============== ========= ==============
UK 8,481 10,750 375 1,585
========================= ========== ============== ========= ==============
Spain 4,960 6,341 204 323
========================= ========== ============== ========= ==============
Turkey 3,212 3,568 244 249
========================= ========== ============== ========= ==============
Other 2,517 2,891 812 1,273
------------------------- ---------- -------------- --------- --------------
169,783 142,823 10,708 11,151
------------------------- ---------- -------------- --------- --------------
Discontinued operations 922 3,266 - -
------------------------- ---------- -------------- --------- --------------
170,705 146,089 10,708 11,151
------------------------- ---------- -------------- --------- --------------
* Restated to reflect Mexico as discontinued operations. See
note 2.
Information about major customers
Revenue from the customers of one business partner in the
Group's Indian segment represented approximately GBP110,128,000
(2021: GBP84,159,000) 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.
2022 2021
----------------------------- ----------------------------------------
Core Legacy Total Core Legacy Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 (Restated*) GBP'000
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
Continuing operations
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
Exceptional items included within operating profit
======================================================== ======== ======== ======== ======== ====================
Restructuring and closure costs 480 580 1,060 587 762 1,349
====================================== ===== ========= ======== ======== ======== ======== ====================
IT asset impairment - 153 153 - - -
====================================== ===== ========= ======== ======== ======== ======== ====================
Globiva compensation payment 519 - 519 - - -
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
Exceptional charge included in
operating profit 999 733 1,732 587 762 1,349
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
Exceptional items included within other gains and
losses
======================================================== ======== ======== ======== ======== ====================
Other gains and losses - gain on
reclassification of investment - - - - (1,459) (1,459)
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
Exceptional gain included in other
gains and losses - - - - (1,459) (1,459)
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
Total exceptional charge/(gain)
included in profit before tax 999 733 1,732 587 (697) (110)
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
Tax on exceptional items (131) (61) (192) - (171) (171)
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
Exceptional charge/(gain) after tax
for continuing operations 7 868 672 1,540 587 (868) (281)
====================================== ===== ========= ======== ======== ======== ======== ====================
Discontinued operations
====================================== ===== ========= ======== ======== ======== ======== ====================
Exceptional gain from discontinued
operations 7, 8 - (535) (535) - (2,120) (2,120)
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
868 137 1,005 587 (2,988) (2,401)
-------------------------------------- ----- --------- -------- -------- -------- -------- --------------------
* Restated to reflect Mexico as discontinued operations. See
note 2.
Restructuring and closure costs total GBP1,060,000 (2021:
GBP1,349,000) and primarily relate to action taken to withdraw from
Legacy operations. As a result, redundancy and associated costs
have been recognised in Spain, UK Legacy, UK MGA and Central
Functions. Core restructuring costs also includes settlement costs
associated with the departure of the former CEO. In combination
these total GBP812,000 (2021: GBPnil). Prior year restructuring
costs relate to Spain and Blink, as well as closure of the
Malaysian operation and head office operational restructuring.
Included within restructuring and closure costs is a provision
for Onerous Contracts relating to the UK MGA for GBP248,000 (2021:
GBPnil), which relates to the costs required to fulfil and exit
contractual commitments above the associated revenue receivable.
This includes costs to 2025 and is held as a provision at the year
end.
The impairment of the IT assets of GBP153,000 (2021: GBPnil)
relates to the UK MGA. As a result of the decision to exit the UK
MGA business, a value in use calculation was performed leading to
recognition of an impairment.
The Globiva compensation payment represents a one-time
additional management compensation payment to the Globiva founders.
This followed a review of the original Shareholder Agreement signed
in September 2018, which included commitments for operational seats
from the Group that it is unable to fulfil. Further disclosure is
provided in note 12.
In the prior year, other gains and losses reflected the gain on
reclassification of the investment in KYND Limited (KYND) from a
joint venture to an equity investment of GBP1,459,000.
6. Taxation
2022 2021
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Continuing operations
================================================ ========= =========
Current tax charge:
================================================ ========= =========
UK corporation tax - 142
================================================ ========= =========
Foreign tax 2,679 3,386
================================================ ========= =========
Adjustments in respect of prior years (140) (42)
------------------------------------------------ --------- ---------
Current tax relating to continuing operations 2,539 3,486
------------------------------------------------ --------- ---------
Deferred tax (credit)/charge:
================================================ ========= =========
Origination and reversal of timing differences 94 304
================================================ ========= =========
Impact of change in tax rates (8) (37)
================================================ ========= =========
Adjustments in respect of prior years (282) (46)
------------------------------------------------ --------- ---------
Deferred tax relating to continuing operations (196) 221
------------------------------------------------ --------- ---------
Tax charge relating to continuing operations 2,343 3,707
================================================ ========= =========
Discontinued operations
================================================ ========= =========
Tax charge relating to discontinued operations - 30
------------------------------------------------ --------- ---------
Total tax charge 2,343 3,737
------------------------------------------------ --------- ---------
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:
2022 2021 (Restated**)
GBP'000 GBP'000
---------------------------------------- --------- ------------------
Continuing operations
======================================== ========= ==================
Core:
======================================== ========= ==================
India 1,888 2,889
======================================== ========= ==================
Turkey 316 554
======================================== ========= ==================
Blink - -
---------------------------------------- --------- ------------------
Central Functions (204) 157
---------------------------------------- --------- ------------------
Total Core 2,000 3,6 0 0
======================================== ========= ==================
Legacy 343 107
---------------------------------------- --------- ------------------
Tax charge for continuing operations 2,343 3,707
---------------------------------------- --------- ------------------
Discontinued operations
---------------------------------------- --------- ------------------
Tax charge for discontinued operations - 30
---------------------------------------- --------- ------------------
2,343 3,737
---------------------------------------- --------- ------------------
**Restated to reflect the change in segmental reporting in the
year. 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% (2021: 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 (2021: 25.2%), Spain 25% (2021: 25%), Turkey 23%
(2021: 25%), which is reducing to 20% in 2023, and Italy 27.5%
(2021: 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:
2022 2021 (Restated*)
GBP'000 GBP'000
----------------------------------------------------------------- --------- -----------------
Profit before tax from continuing operations 2,444 4,283
================================================================= ========= =================
Effects of:
================================================================= ========= =================
Tax at the UK corporation tax rate of 19% (2021: 19%) 464 814
================================================================= ========= =================
Unprovided deferred tax arising on losses(1) 796 792
================================================================= ========= =================
Other movement in unprovided deferred tax 124 153
================================================================= ========= =================
Recurring expenses not deductible for tax 241 409
================================================================= ========= =================
One-off costs not deductible for tax 32 (259)
================================================================= ========= =================
Provision for withholding tax on future distributions(2) 621 1,217
================================================================= ========= =================
Other expense not chargeable for tax purposes 96 250
================================================================= ========= =================
Higher tax rates on overseas earnings(3) 403 471
================================================================= ========= =================
Adjustments in respect of prior years (422) (88)
================================================================= ========= =================
Impact of change in future tax rates on deferred tax (8) (36)
================================================================= ========= =================
Deficit of share option charge compared to tax allowable amount (4) (16)
----------------------------------------------------------------- --------- -----------------
Tax charged to income statement for continuing operations 2,343 3,707
================================================================= ========= =================
Tax charged to the income statement for discontinued operations - 30
----------------------------------------------------------------- --------- -----------------
2,343 3,737
----------------------------------------------------------------- --------- -----------------
* Restated to reflect Mexico as discontinued operations. See
note 2
Effective tax charge
The net tax charge of GBP2,343,000 on a profit before tax from
continuing operations of GBP2,444,000 gives an effective tax rate
of 96% (2021 restated: 87%) which is higher than the standard rate
of 19%. Additional information is provided below:
1. Deferred tax has not been recognised on the losses arising in
Legacy markets and Blink, as the short-term profit expectations do
not support the recognition of deferred tax assets in these
areas.
2. There is a withholding tax burden arising on repatriation of
funds from overseas countries which is included in the tax
charge.
3. Tax is chargeable at the local statutory rates 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 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 not profitable. The withdrawal
from the Legacy markets, is expected to result in a high and
variable effective tax rate in the medium term. In the longer term,
once the CMP has concluded, the Group expects the rate to reduce
from its current level. The Group maintains appropriate provisions
in respect of tax uncertainties arising from operating in multiple
overseas jurisdictions.
Income tax charged/(credited) to reserves during the year was as
follows:
2022 2021
GBP'000 GBP'000
--------------------------------------------------------------------------------- --------- ---------
Deferred tax
================================================================================= ========= =========
Timing differences of equity-settled share-based charge 9 (9)
================================================================================= ========= =========
Total deferred tax charge/(credit) and total tax charged/(credited) to reserves 9 (9)
--------------------------------------------------------------------------------- --------- ---------
7 . Earnings/(loss) per share
Basic and diluted (loss)/earnings 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
----------------------------------------- -------------------------- -------------------------- -------------------
2021 (Restated*) 2021 (Restated*)
2022 GBP'000 2022 GBP'000 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- ---------------- -------- ---------------- --------- --------
Profit/(loss) for the purposes of basic
and diluted (loss)/earnings per share (153) 133 676 2,432 523 2,565
========================================= ======== ================ ======== ================ ========= ========
Exceptional items (net of tax) 1,350 (281) (535) (2,120) 815 (2,401)
========================================= ======== ================ ======== ================ ========= ========
Profit/(loss) for the purposes of
underlying basic and diluted
earnings/(loss) per share 1,197 (148) 141 312 1,338 164
----------------------------------------- -------- ---------------- -------- ---------------- --------- --------
* Restated to reflect Mexico as discontinued operations. See
note 2
Profit/(loss) attributable to Core and Legacy
2022 2021
------------------------------------------- -------------------------------------------
Continuing operations
Core Legacy Continuing operations Core Legacy (Restated*)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- --------- ---------------------- --------- --------- ---------------------
(Loss)/profit for the
purposes of basic and
diluted (loss)/earnings
per share (640) 487 (153) (2,897) 3,030 133
============================ ======== ========= ====================== ========= ========= =====================
Exceptional items (net of
tax) 678 672 1,350 587 (868) (281)
============================ ======== ========= ====================== ========= ========= =====================
Profit/(loss) for the
purposes of underlying
basic and diluted
earnings/(loss) per share 38 1,159 1,197 (2,310) 2,162 (148)
---------------------------- -------- --------- ---------------------- --------- --------- ---------------------
* Restated to reflect Mexico as discontinued operations. See
note 2.
The table above does not include discontinued operations.
Number of shares
2022 2021
Number Number
(thousands) (thousands)
---------------------------------------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the purposes of basic ( loss)/ earnings
per
share and basic underlying earnings/(loss) per share 8,844 8,796
---------------------------------------------------------------------------------------- ------------- -------------
Effect of dilutive ordinary shares: share options 30 225
---------------------------------------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the purposes of diluted (loss)/ earnings
per
share and diluted underlying earnings/(loss) per share 8,874 9,021
---------------------------------------------------------------------------------------- ------------- -------------
Continuing operations Discontinued operations Total
2021 2021
2022 (Restated*) 2022 (Restated*) 2022 2021
pence pence pence pence pence pence
Basic (loss)/earnings per share (1.73) 1.51 7.64 27.65 5.91 29.16
---------------------------------------------- -------- ------------- --------- -------------- -------- -------
Diluted (loss)/earnings per share (1.73) 1.47 7.64 26.96 5.91 28.43
---------------------------------------------- -------- ------------- --------- -------------- -------- -------
Basic underlying earnings/(loss) per share 13.53 (1.68) 1.59 3.54 15.12 1.86
---------------------------------------------- -------- ------------- --------- -------------- -------- -------
Diluted underlying earnings/(loss) per share 13.49 (1.68) 1.59 3.54 15.08 1.86
---------------------------------------------- -------- ------------- --------- -------------- -------- -------
* Restated to reflect Mexico as discontinued operations. See
note 2.
2022 2021
------------------------------------- ----------------------------------------
Continuing operations
Core Legacy Continuing operations Core Legacy (Restated*)
pence pence pence pence pence pence
Basic (loss)/earnings per share (7.24) 5.51 (1.73) (32.94) 34.45 1.51
------------------------------------- ------ ------ --------------------- ------- ------- ----------------------
Diluted (loss)/earnings per share (7.24) 5.51 (1.73) (32.11) 33.58 1.47
------------------------------------- ------ ------ --------------------- ------- ------- ----------------------
Basic underlying earnings/(loss) per
share 0.43 13.10 13.53 (26.26) 24.58 (1.68)
------------------------------------- ------ ------ --------------------- ------- ------- ----------------------
Diluted underlying earnings/(loss)
per share 0.43 13.06 13.49 (26.26) 24.58 (1.68)
------------------------------------- ------ ------ --------------------- ------- ------- ----------------------
* Restated to reflect Mexico as discontinued operations. See
note 2.
The Group has 171,650,000 (2021: 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.
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 HK$ 1.
On 20 October 2022, the Group completed the sale of its
wholly-owned subsidiaries Servicios de Asistencia a Tarjehabientes
CPP Mexico S de RL de CV and Profesionales en Proteccion Individual
S de RL de CV (together Mexico). Consideration on disposal was 1
Mexican peso.
In the prior year, 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 addition, the disposal of China was considered highly
probable and therefore the assets and liabilities of China were
classified as held for sale.
Operating results for the year ended 31 December 2022 reflect
the trading performance of China and Mexico up to the respective
dates of disposal. The comparative information reflects a full year
for China and Mexico, and Germany up to the date of disposal.
China, Mexico and Germany were part of the Legacy segment.
(i) Income statement
2022 2021
---------------------------- --------------------------------------------------------
China Mexico Total Germany China Mexico (Restated) Total (Restated)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Revenue 114 808 922 1,062 1,402 802 3,266
======================= ===== ======== ======== ======== ======== ======== ================== ================
Cost of sales (33) (318) (351) (430) (547) (229) (1,206)
======================= ===== ======== ======== ======== ======== ======== ================== ================
Gross profit 81 490 571 632 855 573 2,060
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Administrative
expenses 543 (389) 154 2,654 (1,721) (651) 282
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Operating
profit/(loss) 624 101 725 3,286 (866) (78) 2,342
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Analysed as:
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
EBITDA (33) 225 192 628 (322) 279 585
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Depreciation and
amortisation - (2) (2) - (285) (78) (363)
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Exceptional items 5 657 (122) 535 2,658 (259) (279) 2,120
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Investment revenues 4 - 4 - 1 12 13
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Finance costs (12) (41) (53) 33 66 8 107
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Profit/(loss) before
taxation 616 60 676 3,319 (799) (58) 2,462
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Taxation 6 - - - (30) - - (30)
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
Profit/(loss) for the
year 616 60 676 3,289 (799) (58) 2,432
----------------------- ----- -------- -------- -------- -------- -------- ------------------ ----------------
(ii) Exceptional items
2022 2021
------------------------------- -----------------------------------------------
Mexico Total
China Mexico Total Germany China (Restated) (Restated)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ --------- --------- --------- --------- --------- ------------ -----------
Profit/(loss) on disposal 657 (122) 535 2,654 (72) - 2,582
------------------------------------ --------- --------- --------- --------- --------- ------------ -----------
Write down of assets on
reclassification as held for sale - - - - (113) - (113)
------------------------------------ --------- --------- --------- --------- --------- ------------ -----------
Restructuring costs - - - 4 (74) (279) (349)
------------------------------------ --------- --------- --------- --------- --------- ------------ -----------
Exceptional items included in
operating profit 657 (122) 535 2,658 (259) (279) 2,120
------------------------------------ --------- --------- --------- --------- --------- ------------ -----------
Tax on exceptional items - - - - - - -
------------------------------------ --------- --------- --------- --------- --------- ------------ -----------
Exceptional items after tax 657 (122) 535 2,658 (259) (279) 2,120
------------------------------------ --------- --------- --------- --------- --------- ------------ -----------
(iii) Profit on disposal
The Group has recognised a profit on disposal as follows:
2022 2021
----------------------------- -----------------------------
China Mexico Total Germany China Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- -------- -------- -------- -------- ---------
Proceeds - - - 2,366 - 2,366
---------------------------------------------- --------- -------- -------- -------- -------- ---------
Net (assets)/liabilities sold (424) (45) (469) 284 - 284
---------------------------------------------- --------- -------- -------- -------- -------- ---------
Costs associated with disposal - (56) (56) - (72) (72)
---------------------------------------------- --------- -------- -------- -------- -------- ---------
Currency translation differences on disposal 1,081 (21) 1,060 4 - 4
---------------------------------------------- --------- -------- -------- -------- -------- ---------
Profit/(loss) on disposal 657 (122) 535 2,654 (72) 2,582
---------------------------------------------- --------- -------- -------- -------- -------- ---------
(iv) Summary of cash flows
2022 2021
---------------------------- --------------------------------------
China Mexico Total Germany China Mexico Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- -------- -------- --------
Net cash flows from operating activity (55) 175 120 (7,765) 54 (151) (7,862)
Net cash flows from investing activity 4 (1) 3 - 2 12 14
Net cash flows from financing activity (39) (523) (562) 7,357 (85) 320 7,592
---------------------------------------- --------
Net cash (outflow)/inflow (90) (349) (439) (408) (29) 181 (256)
9 . 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 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 1 January 2022 644 5,086 2,891 8,621
Additions 108 1,960 126 2,194
Disposals (108) (82) (54) (244)
Exchange adjustments - 18 14 32
At 31 December 2022 644 6,982 2,977 10,603
Accumulated amortisation:
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 1 January 2022 470 2,019 2,529 5,018
Provided during the year 82 629 158 869
Disposals (108) (81) (50) (239)
Impairment 101 - 86 187
Exchange adjustments (1) 50 9 58
At 31 December 2022 544 2,617 2,732 5,893
Carrying amount:
At 31 December 2021 174 3,067 362 3,603
At 31 December 2022 100 4,365 245 4,710
Amortisation of intangible assets totalling GBP869,000 (2021:
GBP1,155,000) is recognised through administrative expenses in the
consolidated income statement.
Internally generated software additions of GBP1,960,000 (2021:
GBP1,192,000) reflect the capitalisation of staff and contractor
costs in IT development projects.
Internally generated software includes GBP3,718,000 (2021:
GBP1,956,000) relating to assets in development which are not yet
operational and are not amortised. The assets held at 31 December
2022 are expected to become operational in Q3 2023.
10. Share capital
Ordinary Deferred
shares shares of
of 9 pence
GBP1 each each Total
(thousands) (thousands) (thousands)
------------------------------ ------------ ------------ ------------
Called-up and allotted
At 1 January 2022 8,833 171,650 180,483
Issue of shares in connection
with:
Exercise of share options 13 - 13
At 31 December 2022 8,846 171,650 180,496
------------------------------- ------------ ------------ ------------
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 2022 8,830 15,413 24,243
Issue of shares in connection
with:
Exercise of share options 13 - 13
At 31 December 2022 8,843 15,413 24,256
------------------------------- ---------- ---------- --------
Share capital at 31 December 2022 is GBP24,256,000 (2021:
GBP24,243,000). To satisfy share option exercises in the year the
Company has issued 12,847 GBP1 ordinary shares for a total equity
value of GBP13,000 and cash consideration of GBP6,000.
Of the 8,846,045 (2021: 8,833,198) ordinary shares in issue at
31 December 2022, 8,841,045 are fully paid (2021: 8,828,198) and
5,000 (2021: 5,000) are partly paid.
11. Reconciliation of operating cash flows
2022 2021
GBP'000 GBP'000
Profit for the year 777 3,008
Adjustments for:
Depreciation and amortisation 2,509 3,111
Share-based payment credit (246) (64)
Impairment loss on intangible assets 187 176
Impairment loss on property, plant and equipment - 3
Impairment loss on right-of-use assets - 48
Share of loss in joint venture - 189
Loss on disposal of property, plant and equipment 15 26
Loss on disposal of intangible assets 5 -
Profit from discontinued operations (535) (2,582)
Effects of hyperinflation 86 -
Investment revenues (490) (224)
Finance costs 709 259
Other gains and losses - (1,459)
Income tax charge 2,343 3,737
Operating cash flows before movements in working capital 5,360 6,228
Decrease in inventories 15 40
(Increase)/decrease in contract assets (1,481) 354
(Increase)/decrease in receivables (6,232) 1,626
Decrease in insurance assets - 46
Increase in payables 7,547 217
Increase/(decrease) in contract liabilities 1,655 (276)
Increase/(decrease) in insurance liabilities 83 (853)
Increase in provisions 369 -
Cash from operations 7,316 7,382
Income taxes paid (3,494) (2,820)
Net cash from operating activities 3,822 4,562
Reconciliation of net funds
Foreign
exchange
At and other At
1 January non-cash 31 December
2022 Cash flow movements 2022
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------- --------- ---------- ------------
Net cash per cash flow statement 22,409 (1,479) 54 20,984
Financing activities:
Lease liabilities (6,023) 1,388 (83) (4,718)
Borrowings due outside of
one year
* Unamortised issue costs 58 - (35) 23
Total movement from financing
activities (5,965) 1,388 (118) (4,695)
Total net funds 16,444 (91) (64) 16,289
12. Related party transactions
Transactions with associated parties
In the year, the Group incurred fees of GBP19,000 plus VAT
(2021: GBP8,000) for services rendered from KYND, which was payable
under 14-day credit terms. The creditor balance at the year end was
GBP2,000 (2021: GBP1,000).
Transactions with related parties
China disposal
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 (Liberum), that the terms of the
disposal are fair and reasonable insofar as the Company's
shareholders are concerned.
Mexico disposal
On 20 October 2022, the Group completed the sale of Mexico, to
Rafael Ortiz Moran and Silvia Daniela Rodriguez Gaona for a nominal
cash consideration of $1 (Mexican peso). As part of the disposal,
the Group has left cash balances of circa GBP280,000 to cover
initial working capital requirements and other committed
liabilities. Rafael Ortiz Moran is the Country Manager of Mexico.
The sale terms reflect the run-off nature of the business which was
forecast to become unprofitable again in 2023 and the Group's
desire to exit the Legacy markets in the most cost effective
manner.
As Rafael Ortiz Moran is the Country Manager of Mexico, the
disposal constitutes a related party transaction. The Directors
consider, having consulted with the Company's nominated adviser,
Liberum, that the terms of the disposal are fair and reasonable
insofar as the Company's shareholders are concerned.
Globiva
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 shares
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. The Directors of the Group consider,
having consulted with the Company's nominated adviser, Liberum,
that the terms of the transaction 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 and Company, is
set out below:
2022 2021
GBP'000 GBP'000
Short-term employee benefits 1,101 1,788
Post-employment benefits 27 74
Termination benefits 300 203
Share-based payments (206) (65)
1,222 2,000
13. Events after the balance sheet date
On 6 February 2023, Turkey was hit by a devastating earthquake.
Turkey is one of the Group's Core markets. New sales activity has
been impacted by approximately 50% in February and March following
Government guidance on restricting telemarketing activity. This
guidance is expected to be relaxed in April. There is currently no
evidence of a notable deterioration in renewal rates. The financial
impact on the Group from the effects of the earthquake is currently
uncertain but is not expected to be material. All colleagues are
receiving any support necessary. The Group continues to closely
monitor the situation.
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.
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END
FR UBRAROUUOUUR
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