CPPGroup Plc UPDATE ON CURRENT TRADING AND OUTLOOK (3074N)
May 31 2022 - 2:00AM
UK Regulatory
TIDMCPP
RNS Number : 3074N
CPPGroup Plc
31 May 2022
31 May 2022
CPPGroup Plc
("CPP", "CPP Group", "the Group" or "the Company")
UPDATE ON CURRENT TRADING AND OUTLOOK, CONTRACT EXTENSION AND
CHANGE MANAGMENT PROGRAMME
CPP Group (AIM: CPP), a provider of assistance products which
reduce the disruptions to everyday life for people around the world
provides an update on current trading and outlook, specifically
regarding the impact of a contract extension in India and its
change management programme.
Contract Extension and Change Management Programme:
The Group highlighted in its 2021 Annual Report, that it was in
negotiations with its largest business partner, based in India,
regarding the early renewal and extension of current commercial
arrangements whilst also conducting a review of the change
management programme introduced by previous management. Both
workstreams have now been concluded.
Business Partner Contract Extension
Negotiations have come to a positive conclusion, however as
previously highlighted, there was some expectation that in securing
a contract extension there would be a commercial trade-off between
revenue and pricing which has proven to be the case. The Group has,
by extending the contract to December 2024, improved certainty over
a significant proportion of its future revenues whilst our business
partner has secured improved commercial terms. Due to the upfront
nature of the improved terms, there will be a reduction to this
year's EBITDA expectations, albeit this should be recovered in the
2023 and 2024 financial years.
Change Management Programme
The Group in concluding its review of the change management
programme, which encompassed the design and build of a new IT
platform for the Group's Indian operations, a new IT platform to
manage the Group's legacy back book, and the exit from the UK
Managing General Agent ("MGA") business, has identified that these
projects overall will take longer, cost more to implement, and
secure fewer benefits than originally anticipated. In particular,
the benefits hitherto anticipated from the migration to new IT
platforms are unlikely to materialise until the final quarter of
2024, with the result that IT costs will remain at a significantly
higher level than anticipated for the next two years.
Current Trading and Outlook
Trading for the three months to 31 March 2022 is in line with
prior expectations, with revenues (unaudited) from continuing
operations being some 4% ahead of the prior year.
Whilst the Group expects to recover the 2022 earnings shortfall
brought about by the contract extension, the reduced benefits and
additional costs associated with the change management programme
have resulted in a lowering of expectations for both the 2022 and
2023 financial years. The Board now expects EBITDA from continuing
operations for the financial year 2022 to be in the range of GBP5.8
million to GBP6.3 million, with a similar expectation for the 2023
financial year outturn.
Simon Pyper, CEO of CPP Group, commented:
" In the 2021 Annual Report I said that "We are, as we exit from
the UK MGA and as the renewal book continues to run-down, in need
of a clear and executable strategy for the UK, and this is
something that the Board and I will address during 2022". We have
made good progress, and I expect that we will later this year
update shareholders and other stakeholders on our direction of
travel and on our plans to build a business which delivers long
term profitable growth and increased value to shareholders."
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as amended by The
Market Abuse (Amendment) (EU Exit) Regulations 2019. Upon the
publication of this announcement via the Regulatory Information
Service, this inside information is now considered to be in the
public domain.
Enquiries:
CPPGroup plc
Simon Pyper, Chief Executive via Alma PR
Officer
David Bowling, Chief Financial
Officer
Liberum Capital Limited
(Nominated Adviser and Sole Tel: +44 (0)20 3100 2000
Broker)
Richard Lindley
Lauren Kettle
Alma PR
(Financial PR Adviser) Tel: +44 (0)20 3405 0205
Josh Royston cpp @almapr.co.uk
David Ison
Kieran Breheny
About CPP Group:
CPP Group is a technology-driven assistance company that creates
embedded and ancillary assistance products and resolution services
that reduce disruption to everyday life for millions of people
across the world, at the time and place they are needed. These
products are provided through partnerships with leading insurance,
banking and finance companies either as embedded solutions or as
relevant add-ons to enhance their core offering and deliver
additional revenue streams. CPP is listed on AIM, operated by the
London Stock Exchange.
For more information on CPP visit
https://international.cppgroup.com/
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