TIDMCPP
RNS Number : 5217J
CPPGroup Plc
24 August 2021
24 August 2021
CPPGroup Plc
("CPP", "the Group" or "the Company")
HALF YEAR REPORT FOR THE SIX MONTHSED 30 JUNE 2021
Robust performance against a challenging backdrop
CPP Group (AIM: CPP), the multinational provider of personal
protection and insurance products and services, is pleased to
announce its half year results for the six months ended 30 June
2021.
Highlights
-- Group revenue from continuing operations increased by 10% to
GBP66.4 million (H1 2020 restated: GBP60.3 million)
-- EBITDA from continuing operations increased by 37% to GBP2.6
million (H1 2020 restated: GBP1.9 million)
-- Reported loss before tax from continuing operations of GBP0.7
million (H1 2020 restated: GBP0.5 million profit)
-- Underlying profit before tax from continuing operations of
GBP0.8 million (H1 2020 restated: GBP0.6 million)
-- Loss after tax from continuing operations of GBP1.8 million
(H1 2020 restated: GBP1.2 million) which improves to an overall
profit for the period of GBP1.3 million (H1 2020: GBP0.7 million
loss) when including discontinued operations
-- Cash balance of GBP19.6 million as at 30 June 2021 (H1 2020: GBP18.2 million)
-- 5 pence per share interim dividend declared following
recommencement of full year dividend announced in FY 2020
results
Strategic progress
-- Customer numbers increased to 12.3 million (H1 2020 restated:
10.8 million, FY 2020 restated: 11.6 million)
-- The partner base continues to grow, including the addition of
financial wellbeing company ClearScore in the UK
-- Further product innovation to meet the changing needs of
consumers with the release of a home emergency product range in the
UK and EU, and plans to launch a similar line in Turkey
-- Integration of Blink into our platform to strengthen the
Group's ability to meet the growing demand for parametric insurance
solutions
-- Established an IT team in our Indian business to build their new customer platform
-- Disposal of German card protection legacy business for GBP2.4 million
-- Restructuring of Mexico and closure of Malaysia business
units in line with the Group's commitment to maximise value from
its assets and focus on the areas with the strongest prospects
Financial and non-financial highlights - continuing
operations
Six months
Six months to 30 June
to 30 June 2020 (Restated(1)
GBP millions 2021 ) Change
--------------------------------- ----------- ------------------- -------
Financial highlights:
Group
Revenue 66.4 60.3 10 %
EBITDA(2) 2.6 1.9 37 %
Operating (loss)/profit (0.5) 0.5 (199) %
(Loss)/profit before tax
* Reported (0.7) 0.5 (231) %
* Underlying(3) 0.8 0.6 41%
Loss after tax
- Reported (1.8) (1.2) (51) %
- Underlying(3) (0.4) (1.1) 60%
Profit/(loss) for the period(4) 1.3 (0.7) 273 %
Basic loss per share (pence) (23.36) (14.19) (65) %
Interim dividend per share 5.00 - n/a
(pence)
Cash and cash equivalents 19.6 18.2 7 %
Segmental revenue
Ongoing Operations 61.9 55.1 12 %
Restricted Operations 4.5 5.2 (13) %
Non-financial highlights:
Customer numbers (millions) 12.3 10.8 13 %
================================= =========== =================== =======
1. Restated to reflect Germany 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
GBP1.5 million (H1 2020: GBP0.1 million). The tax effect of the
exceptional items is GBP0.1 million (H1 2020: GBPnil). Further
detail of exceptional items is provided in note 5 of the condensed
consolidated interim financial statements.
4. Profit/(loss) for the period includes continuing and discontinued operations.
Jason Walsh, CEO of CPP Group, commented:
"The first half of 2021 was a similar story to that of 2020,
with a strong first quarter tempered by the negative effects of
COVID-19 in the second, particularly in our main market of India.
Nonetheless, we have adapted well across our markets and delivered
a solid overall performance on the corresponding period last year
while making progress in restructuring elements of the Group to
further strengthen its position for long-term, sustainable and
profitable growth.
"As COVID-19 measures have eased in India, we have seen a
progressive recovery in trading in the region with strong progress
since the end of June. However, we remain cognisant of the need to
monitor the situation closely as we move through the second
half.
"Elsewhere in our key markets, we continue to make progress. Our
performance in Turkey at a local level was particularly pleasing,
driven in large part by our expanded network of partners in the
territory. However, the continuing devaluation of the lira has
largely negated this performance at a Group level. In the UK and EU
we continued to build on strong foundations to develop an
innovative, differentiated and integrated business with compelling
prospects.
"We remain focused on growing our offering through innovation
and strengthening our routes to market while continuing to drive
efficiencies across the Group. Whilst uncertainty remains from
COVID-19, the Board believes the Company is trading broadly in line
with market expectations for the full year with the outlook being
positive for the remainder of the year.
Enquiries:
CPPGroup Plc via Alma PR
Jason Walsh, CEO
Oliver Laird, CFO
Sarah Atherton, Group Company Secretary
Liberum Capital (Nominated Adviser & Sole +44 (0)20 3100
Broker) 2000
Richard Lindley
Lauren Kettle
Kane Collings
Christopher Whitaker
+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 takes away many of the stresses and strains of daily
life for millions of people across the globe. In collaboration with
selected partners in each country in which the Group operates, it
develops, aggregates, offers and supports a range of personal
protection and insurance products, which are sold alongside, or
packaged with, the core product offerings of the Group's partners.
CPP is listed on AIM, operated by the London Stock Exchange.
For more information on CPP visit
https://international.cppgroup.com/
Chief Executive's Statement
We delivered another half of robust financial and operational
progress amid continuing challenges related to the pandemic. To be
able to do so is testament to the quality and dedication of our
teams. I am grateful to all our colleagues, particularly those in
India who have been affected by the devastating second wave of
COVID-19 in Q2. Our people have shown exceptional resolve
throughout what has been an extremely difficult time and I would
like to thank them all for the way they have dealt with a period of
unprecedented adversity.
The pandemic and its knock-on effects will continue to affect
the pace of our progress in some areas. While we must remain
vigilant in continuing to manage the situation, there are signs of
a return to a more normal environment and we can now look to the
future with cautious optimism.
The Group's strategy is to maximise value from its assets and
focus on the areas of the business with the greatest prospects for
delivering sustainable and profitable medium to long-term growth.
During H1 we have restructured elements of the Group as planned.
This included the sale of our German Card Protection legacy
business for GBP2.4 million, providing additional financial
flexibility for the Group to deliver its growth strategy.
Consequently the German business is presented as a discontinued
operation with this review focusing on the performance of the
Group's continuing operations.
Financial performance
Six months ended 30 Constant
June 2021 2020(1) currency
Continuing operations GBP'm GBP'm Change change(2)
Revenue 66.4 60.3 10% 19%
EBITDA 2.6 1.9 37% 88%
Operating (loss)/profit (0.5) 0.5 (199)% (288)%
(Loss)/profit before
tax (0.7) 0.5 (231)% (397)%
Cash 19.6 18.2 7% n/a
1. Restated to reflect Germany as a discontinued operation
2. The constant currency basis retranslates the previous year
measures at the average actual exchange rates used in the current
financial period. This approach is applied as a means of
eliminating the effects of exchange rate movements on the
period-on-period reported results. The relevant exchange rates and
analysis of exchange rate movements are included in note 3 of the
condensed consolidated interim financial statements.
Group revenue of GBP66.4 million (H1 2020 restated: GBP60.3
million) has grown by 19% on a constant currency basis driven by
our Indian market where we were pleased to see Q1 new sales return
to pre-pandemic levels. Although new sales in April and May in the
region were heavily impacted by the second wave of COVID-19, the
effect was not as deep as that experienced in Q2 2020. The speed of
recovery from the latest COVID-19 shock in India is not clear,
however, we draw confidence from the early signs in Q3 of further
improvements in trading.
The renewal books across all our markets, including the growing
book in India, continue to perform well providing a reliable source
of revenue and cash to the business. The Group's customer numbers
have increased to 12.3 million (H1 2020 restated: 10.8 million; 31
December 2020 restated: 11.6 million) with growth in India being
well supplemented by customer acquisitions from new partners in
Turkey and the UK.
Gross profit has reduced to GBP15.9 million (H1 2020 restated:
GBP16.6 million) which is reflective of a falling gross profit
margin at 24% (H1 2020 restated: 28%). This reflects growth in our
Indian business which has higher costs of acquisition associated
with sales than the UK and EU renewal books it is replacing. In
addition, whilst gross profit in India is increasing this is at a
lower margin period-on-period as an increasing share of revenue and
customer growth comes from lower margin product variants. We expect
the Group gross profit margin to continue to reduce in the
medium-term.
We are pleased that EBITDA has grown by 88% on a constant
currency basis to GBP2.6 million (H1 2020 restated: GBP1.9 million)
following a 10% reduction in administrative expenses, before
depreciation and exceptional items. The reducing cost base
demonstrates the benefit of restructuring exercises across the
Group to address loss-making operations and cost
inefficiencies.
The operating loss of GBP0.5 million (H1 2020 restated: GBP0.5
million profit) reflects depreciation charges of GBP1.6 million (H1
2020: GBP1.8 million) and exceptional costs of GBP1.5 million (H1
2020: GBP0.4 million credit) associated with restructuring in H1
which focused on the effectiveness of some of the Group's
operations and the overall cost base. This led to additional
operational efficiencies being realised in Spain, new business
development activities halted in Mexico, the closure of Malaysia
and a reduction in central Board costs. In addition, Blink, the
parametric insurance platform was brought under central
management.
The loss before tax of GBP0.7 million (H1 2020: GBP0.5 million
profit) is principally due to the level of exceptional
restructuring activity in H1 which will benefit future periods
including H2 2021. This coupled with the fact the Group's trading
activities are weighted towards H2, led by the festival season in
India, is expected to lead to the Group reversing this position and
reporting a pre-tax profit for the full year. On an underlying
basis, which excludes exceptional items, the Group has generated a
profit before tax of GBP0.8 million (H1 2020 restated: GBP0.6
million).
Discontinued operations
This represents our German operation which was sold in May 2021.
Germany was a non-core book of Card Protection business that was
placed into run-off, which included closure of the company's
operation in Hamburg, following a strategic decision to restructure
the Group's EU markets in 2018. The disposal has enabled the Group
to realise the value of the diminishing run-off book and re-direct
resources to supporting its key markets. Discontinued operation
profits in the period were GBP3.1 million (H1 2020 restated: GBP0.4
million) comprising a profit on disposal of the business of GBP2.7
million (H1 2020: GBPnil) and a profit after tax from the trading
results of Germany prior to disposal of GBP0.4 million (H1 2020
restated: GBP0.4 million). Further detail is provided in note 9 to
the condensed consolidated interim financial statements.
Segmental performance
H1 2020
H1 2021 (Restated)(1)
Constant
currency
Revenue GBP'm GBP'm Change change
Ongoing Operations:
-------- --------------- ------- ----------
India 53.1 46.0 15% 26%
-------- --------------- ------- ----------
EU Hub 5.0 5.4 (8)% (6)%
-------- --------------- ------- ----------
Turkey 1.8 1.8 1% 38%
-------- --------------- ------- ----------
Rest of World(2) 2.0 1.9 6% 8%
-------- --------------- ------- ----------
Total Ongoing Operations 61.9 55.1 12% 22%
-------- --------------- ------- ----------
Restricted Operations 4.5 5.2 (13)% (13)%
-------- --------------- ------- ----------
Group revenue 66.4 60.3 10% 19%
========================== ======== =============== ======= ==========
H1 2020
H1 2021 (Restated)(1)
Constant
currency
EBITDA GBP'm GBP'm Change change
Ongoing Operations:
-------- --------------- ------- ----------
India 3.9 2.9 29% 48%
-------- --------------- ------- ----------
EU Hub 0.5 1.5 (64)% (64)%
-------- --------------- ------- ----------
Turkey 0.4 0.4 8% 75%
-------- --------------- ------- ----------
Rest of World(2) (0.7) (1.9) 63% 62%
-------- --------------- ------- ----------
Total Ongoing Operations 4.1 2.9 40% 69%
-------- --------------- ------- ----------
Restricted Operations 1.0 1.4 (29)% (29)%
-------- --------------- ------- ----------
Central Functions (2.4) (2.3) (2)% (2)%
-------- --------------- ------- ----------
Segmental EBITDA 2.7 2.0 35% 81%
-------- --------------- ------- ----------
Share of loss in
joint venture (0.1) (0.1) 2% 2%
-------- --------------- ------- ----------
Group EBITDA 2.6 1.9 37% 88%
========================== ======== =============== ======= ==========
1. Restated to reflect Germany as a discontinued operation.
2. Rest of World comprises China, Malaysia, Mexico, UK, Blink and Bangladesh.
Ongoing Operations
Revenue has increased by 22% on a constant currency basis to
GBP61.9 million (H1 2020 restated: GBP55.1 million) due to the
growth in India through increased sales of our Mobile and LivCare
products particularly led by the rural market and the growing Card
Protection renewal book. In addition, Globiva, which was heavily
affected by COVID-19 last year, has grown and we are pleased that
monthly revenues are now back at pre-pandemic levels.
EBITDA has increased 69% on a constant currency basis to GBP4.1
million (H1 2020 restated: GBP2.9 million) resulting from growth in
India and Globiva and a reduction in Rest of World losses following
the restructuring exercises in Blink and Mexico and the closure of
Malaysia.
The good performance in India demonstrates the strength of our
partner relationships - particularly with Bajaj Finance Limited
(Bajaj) and SBI Card (SBI), our two largest partners in India - who
continue to see the value of our products in helping them to
maximise revenue and increase loyalty among their rapidly expanding
customer bases. In the period, CPP customer numbers in the region
surpassed 10 million, and subsequently have continued to grow at a
healthy rate.
We have also continued to make headway in strengthening the
operational side of our Indian business. Most notably in the
period, we brought in a new IT team to build a new customer
platform that will underpin our operations and will be of benefit
as we continue to scale the business in the coming years.
The performance of Globiva, the Indian business process
management company in which we own a 51% stake, was largely not
impacted by the escalation of the COVID-19 situation in Q2. Globiva
spent much of 2020 building a stronger operational model that could
withstand the unique challenges posed by the pandemic and we are
pleased that this enabled the business to withstand the shocks of
the second wave. As a result, the business has been able to grow
its billable seats through the period. Overall sales have increased
period-on-period, making Globiva one of our best performing units
alongside our main Indian business.
While to date there are encouraging signs that India is emerging
from the crisis, there remains uncertainty around the rate of the
recovery and we cannot rule out the possibility of further spikes.
In the short-term, we continue to work through the challenges and
remain positive about the growth prospects of our interests in
India in the second half. The structural drivers around the growth
of the middle class that have made the territory such a success
story to date show no sign of abating, giving us confidence in our
ability to deliver further growth in the years ahead.
Turkey, another of our key markets, delivered good growth
against the first half of 2020 with local revenue and retail
customer numbers growing by 38% and 32% respectively. The continued
weakening of lira has largely negated this progress in the reported
results. The new partnerships signed last year developed as we had
hoped and made meaningful contributions to revenue growth -
particularly those with Akbank and Türkiye Sigorta.
Our operations in Turkey were not immune from the impact of
COVID-19, but against a challenging backdrop that included periods
of bank branch closures, we worked closely with our partners to
explore new and innovative acquisition channels, while focusing on
continued product innovation. In the second half, we expect to be
able to launch a home emergency product into the market in a
similar vein to the one launched in our UK and EU businesses in the
first half. This is a good example of our improved pooling of
resources and knowledge from across the Group allowing us to
successfully replicate products in different markets.
We continue to execute our strategy across our UK and EU
businesses, built around a simple principle of investing in the UK
to create a strong product delivery and distribution team and
leveraging that infrastructure and expertise to grow our presence
in mainland Europe. We are pleased with the traction we are seeing
on the continent, having signed several new partners while
gradually ramping up trading momentum, particular in the energy
sector.
In the UK, we signed a new partnership with ClearScore, a
financial wellbeing company, for a personal cyber product and saw a
healthy inflow of new customers from them in the period. Our
relationship with ClearScore demonstrates our growing capability in
embedded insurance. As planned, we also expanded our relationship
with the RAC in the period to offer an extended range of products,
such as Excess Protect and Key insurance.
On the operational side, we merged the new and legacy UK
businesses to deliver greater synergies and efficiencies between
them under a single business structure and leadership. Notably, we
integrated Blink into our tech platform to strengthen the Group's
ability to meet the growing demand for parametric insurance
solutions.
Restricted Operations
As expected, revenue has decreased by 13% to GBP4.5 million (H1
2020: GBP5.2 million) reflecting the continuing decline in the UK
legacy renewal books. The steps taken by the Group in changing the
renewal process for vulnerable customers has returned renewal
levels in line with the Board's expectations. EBITDA reduced to
GBP1.0 million (H1 2020: GBP1.4 million). Following the closure of
Malaysia in H1 the UK is the only operation remaining in this
segment.
Tax
The Group's tax charge from continuing operations in H1 is
GBP1.1 million (H1 2020 restated: GBP1.7 million) which mainly
comprises tax payable in India, along with smaller charges in the
EU and Turkey. The reduced charge reflects a lower tax charge in
India due to additional withholding taxes recognised on dividend
distributions in the prior year and a drop in taxable profits in
the EU following restructuring in Spain resulting in lower tax
charges.
Six months ended
30 June 2021 2020
----------------------------------- -----------------------------------
Continuing Discontinued Continuing Discontinued
Operations Operations Total Operations Operations Total
(Loss)/profit before
tax (0.7) 3.1 2.4 0.5 0.5 1.0
Tax charge 1.1 0.1 1.2 1.7 0.1 1.8
Effective tax rate (175)% 1% 48% 338% 14% 173%
The level of exceptional restructuring charges in H1 has led to
a loss before tax which combined with the tax charge results in an
effective tax rate (ETR) of negative 175% (H1 2020 restated:
positive 338%).
The half year ETR is not considered to be representative of the
full year as the Group expects to generate an overall profit before
tax through the trading performance in the second half, whilst the
level of exceptional restructuring costs will slow. The full year
ETR is forecast to be approximately 220% (FY 2020 restated: 378%),
but will ultimately be determined by the split of profits and
losses in the Group.
Our forecast ETR continues to be higher than the standard UK
corporation tax rate of 19%. The high rate reflects the following
factors:
- A high level of one-off exceptional charges on which no tax
relief is currently available. These charges reflect restructuring
activity as part of the Group's strategy to focus resources on
profitable operations;
- withholding tax charges arising on repatriation of funds from overseas countries;
- deferred tax has not been recognised on losses arising in
developing markets as the short-term profit expectations do not
support the recognition of deferred tax assets in these areas;
and
- tax is chargeable at the local statutory rate in our
profitable countries, which is higher than the UK corporate income
tax rate of 19%.
Adjusted ETR
The half year adjusted ETR (which excludes the impact of
exceptional items) at 152% (H1 2020 restated: 281%) demonstrates
the progressive improvement in the Group's tax position as the
Group systematically addresses its loss-making operations and
overall cost-base. The adjusted ETR is summarised as follows:
H1 2021 H1 2020
---------------------------------- ----------------------------------
Exceptional Exceptional
Continuing operations Reported items(1) Adjusted Reported items(1) Adjusted
(Loss)/profit before
tax (0.7) 1.5 0.8 0.5 0.1 0.6
Tax charge 1.1 0.1 1.3 1.7 - 1.7
ETR (175)% 152% 338% 281%
1. Refer to note 5 of the condensed consolidated interim financial statements.
Whilst we expect the Group's ETR to reduce in future periods, it
will remain higher than the UK statutory tax rate (which will
increase to 25% from 1 April 2023) whilst we continue to make
profits in territories with similar or higher statutory rates to
the UK tax rate and provide for withholding taxes on overseas
distributions. Examples of this are India where our ETR is
approximately 35% reflecting statutory corporate income tax in
combination with additional taxes on dividends and certain
intercompany services. Similarly, our ETR in Turkey is
approximately 30%.
The strategic decisions taken by the Group in H1 to close
loss-making markets or restructure operations to create small but
profitable business units will reduce the existing profit drag from
developing markets. We have not been in a position to recognise
deferred tax assets on these losses which has been a large
contributor to the Group's high ETR in recent years. These actions
give the Group confidence in a progressive reduction and
normalisation of the ETR in the medium-term.
Foreign exchange
Exchange rate movements in H1 have continued to work against the
Group, particularly in our Indian and Turkish businesses where the
local exchange rates have depreciated against sterling. This has
adversely impacted the reported results when comparing to the prior
period.
The reported results from continuing operations when compared to
H1 2020 include the following adverse foreign exchange movements:
GBP4.6 million (H1 2020: GBP1.4 million) within revenue; and GBP0.5
million (H1 2020: GBP0.1 million) at an EBITDA level. Refer to note
3 of the condensed consolidated interim financial statements for
further detail.
Financial position
The Group had cash balances at 30 June 2021 of GBP19.6 million
(30 June 2020: GBP18.2 million; 31 December 2020: GBP21.9 million).
The cash proceeds from the Germany sale have been more than offset
by the reintroduction of the dividend payment and one-off payments
associated with restructuring activities which have led to a
reduction in cash balances of GBP2.3 million since the year end.
The Group's cash cycle is weighted to the second half of the year
and, taking into consideration the factors in H1 2021, on a 12
month cycle the cash balance has increased by GBP1.4 million.
Dividend
In the 2020 results we announced the recommencement of dividends
and our intention to grow the dividend in the years ahead. Based on
the Board's continued confidence in the outlook, we are pleased to
report that as part of that commitment the Directors have approved
an interim dividend of 5 pence per share. The interim dividend is
expected to be paid on 24 September 2021 to all shareholders on the
Register of Members on 3 September 2021 with the ex-dividend date
being 2 September 2021.
ESG focus
The Group recognises the importance of high standards of
Environmental, Social and Governance (ESG) across its operations
and, in line with this, has undertaken a review of its practices
with a view to developing a strategy to build on the initiatives
already in place. We expect to be able to provide a more
comprehensive update when reporting on the full year
performance.
Related party transactions
ORConsulting Limited (ORCL) is an organisation used by the Group
for consulting services in relation to leadership coaching.
Organisation Resource Limited (ORL), a company owned by Mark Hamlin
who is a Non-Executive Director of the Group, retains intellectual
property in ORCL for which it is paid a license fee. In the six
months to 30 June 2021, the Group paid GBP65,000 plus VAT (30 June
2020: GBP28,000; year ended 31 December 2020: GBP63,000) to ORCL,
which was payable under 30 days credit terms.
Mark Hamlin is the Chairman of Globiva. The fees for this role
are paid to his consultancy company, ORL. The fee paid to ORL by
the Group in the six months ended 30 June 2021 was GBP35,000 (H1
2020: GBP37,000; year ended 31 December 2020: GBP73,000) and was
payable under 25 day credit terms.
The Group paid GBP166,800 to Sosafe Limited (Sosafe) in February
2021 pursuant to a settlement agreement with Sosafe and Mr Hamish
Ogston dated 23 February 2021 (the Settlement). Mr Ogston is a
director and majority shareholder of Sosafe and a substantial
shareholder in the Group and therefore the Settlement constituted a
related party transaction pursuant to AIM Rule 13. The Settlement
was made in connection with claims for certain legal and
professional costs incurred by Sosafe and Mr Ogston and represents
full and final settlement of such claims, which date back several
years and have been fully provided for since 2016. With the
exception of David Morrison, the Company's non-executive Chairman
and a representative of Mr Ogston, the independent Directors of the
Company consider, having consulted with Liberum, the Company's
nominated adviser, that the terms of the transaction were fair and
reasonable insofar as its shareholders are concerned.
Outlook
The Group has continued to respond decisively and effectively to
the challenges presented by COVID-19. While we saw varying degrees
of impact across our different markets, we were able to deliver a
solid performance in the circumstances.
Looking ahead, while the backdrop remains an uncertain one, the
recovery we have seen in India and the continued traction in our
other core markets gives us confidence that 2021 will be another
year of progress. This view is underpinned by favourable
macro-trends and a proven ability to innovate in collaboration with
our partners to develop products that resonate with consumers, as
well as a strong balance sheet and an organisational structure that
is increasingly optimised for success. Therefore, whilst
uncertainty remains from COVID-19, the Board believes the Company
is trading broadly in line with market expectations for the full
year.
Jason Walsh
Chief Executive Officer
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
6 months ended 6 months ended 30 June 2020 Year ended
30 June 2021 (Restated*) 31 December 2020 (Restated*)
GBP'000 GBP'000 GBP'000
Note (Unaudited) (Unaudited) (Audited)
Continuing operations
Revenue 4 66,392 60,295 138,141
Cost of sales (50,536) (43,688) (103,063)
Gross profit 15,856 16,607 35,078
Administrative expenses (16,230) (15,990) (32,649)
Share of loss in joint
venture (119) (121) (264)
Operating (loss)/profit (493) 496 2,165
Analysed as:
EBITDA 4 2,580 1,882 6,016
Depreciation and
amortisation (1,584) (1,761) (3,495)
Exceptional items 5 (1,489) 375 (356)
Investment revenues 112 436 412
Finance costs (269) 40 (373)
Other gains and losses - (476) (1,294)
(Loss)/profit before
taxation (650) 496 910
Taxation 6 (1,136) (1,677) (3,441)
Loss for the period from
continuing operations (1,786) (1,181) (2,531)
Discontinued operations
Profit for the period from
discontinued operations 9 3,062 442 934
--------------- ---------------------------- -----------------------------
Profit/(loss) for the period 1,276 (739) (1,597)
=============== ============================ =============================
Attributable to:
Equity holders of the
Company 1,013 (790) (1,680)
Non-controlling interests 263 51 83
--------------- ---------------------------- -----------------------------
1,276 (739) (1,597)
=============== ============================ =============================
(Loss)/earnings per share
Pence Pence Pence
Basic and diluted
Continuing operations 8 (23.36) (14.19) (30.00)
Continuing and discontinued
operations 8 11.55 (9.10) (19.28)
=============== ============================ =============================
* Restated to reflect Germany as a discontinued operation. See
note 2.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
6 months ended 30 June 2021 6 months ended 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Profit/(loss) for the period 1,276 (739) (1,597)
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on
translation of foreign
operations (451) (218) (809)
Exchange differences
reclassified on disposal of
foreign operations (4) 476 1,294
Other comprehensive
(expense)/income for the period
net of taxation (455) 258 485
---------------------------- ---------------------------- ------------------
Total comprehensive
income/(expense) for the period 821 (481) (1,112)
============================ ============================ ==================
Attributable to:
Equity holders of the Company 588 (541) (1,145)
Non-controlling interests 233 60 33
---------------------------- ---------------------------- ------------------
821 (481) (1,112)
============================ ============================ ==================
CONSOLIDATED BALANCE SHEET
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
Note (Unaudited) (Unaudited) (Audited)
Non-current assets
Goodwill 528 1,388 612
Other intangible assets 3,845 3,715 3,741
Property, plant and equipment 1,357 2,362 1,670
Right-of-use assets 5,577 6,325 6,097
Investment in joint venture 331 593 450
Deferred tax assets 245 802 858
Contract assets 593 541 426
------------- ------------- -----------------
12,476 15,726 13,854
------------- ------------- -----------------
Current assets
Insurance assets 31 37 46
Inventories 146 182 145
Net investment lease asset - 63 -
Contract assets 3,689 4,803 4,853
Trade and other receivables 13,119 21,998 16,379
Cash and cash equivalents 19,592 18,237 21,856
------------- ------------- -----------------
36,577 45,320 43,279
Total assets 49,053 61,046 57,133
------------- ------------- -----------------
Current liabilities
Insurance liabilities (367) (1,563) (935)
Income tax liabilities (1,047) (1,228) (974)
Trade and other payables (17,116) (23,104) (20,387)
Borrowings - 28 -
Provisions - (304) -
Lease liabilities (910) (1,153) (882)
Contract liabilities (8,405) (10,816) (10,889)
------------- ------------- -----------------
(27,845) (38,140) (34,067)
------------- ------------- -----------------
Net current assets 8,732 7,180 9,212
------------- ------------- -----------------
Non-current liabilities
Borrowings 77 - 98
Deferred tax liabilities (104) (234) (579)
Lease liabilities (5,304) (5,708) (5,756)
Contract liabilities (1,333) (1,025) (1,094)
(6,664) (6,967) (7,331)
------------- ------------- -----------------
Total liabilities (34,509) (45,107) (41,398)
------------- ------------- -----------------
Net assets 14,544 15,939 15,735
============= ============= =================
Equity
Share capital 10 24,232 24,152 24,153
Share premium account 45,225 45,225 45,225
Merger reserve (100,399) (100,399) (100,399)
Translation reserve 409 548 834
ESOP reserve 17,656 17,369 17,490
Retained earnings 26,083 28,100 27,327
------------- ------------- -----------------
Equity attributable to equity holders of the Company 13,206 14,995 14,630
Non-controlling interests 1,338 944 1,105
------------- ------------- -----------------
Total equity 14,544 15,939 15,735
============= ============= =================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Share premium Merger Translation ESOP Retained Non-controlling Total
capital account reserve reserve reserve earnings Total interests equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended
30 June 2021
(Unaudited)
At 1 January
2021 24,153 45,225 (100,399) 834 17,490 27,327 14,630 1,105 15,735
Profit for the
period - - - - - 1,013 1,013 263 1,276
Other
comprehensive
expense for the
period - - - (425) - - (425) (30) (455)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Total
comprehensive
income for the
period - - - (425) - 1,013 588 233 821
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Equity-settled
share-based
payment charge - - - - 166 - 166 - 166
Exercise of
share options 10 79 - - - - (69) 10 - 10
Dividends 7 - - - - - (2,188) (2,188) - (2,188)
At 30 June 2021 24,232 45,225 (100,399) 409 17,656 26,083 13,206 1,338 14,544
======== ======== ========== ============ ======== ========= ======== ================ ========
6 months ended
30 June 2020
(Unaudited)
At 1 January
2020 24,056 45,225 (100,399) 299 16,999 28,928 15,108 884 15,992
Loss for the
period - - - - - (790) (790) 51 (739)
Other
comprehensive
income for the
period - - - 249 - - 249 9 258
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Total
comprehensive
expense for the
period - - - 249 - (790) (541) 60 (481)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Equity-settled
share-based
payment charge - - - - 370 - 370 - 370
Deferred tax on
intangible
asset - - - - - 58 58 - 58
Exercise of
share options 96 - - - - (96) - - -
At 30 June 2020 24,152 45,225 (100,399) 548 17,369 28,100 14,995 944 15,939
======== ======== ========== ============ ======== ========= ======== ================ ========
Year ended
31 December 2020
(Audited) -
At 1 January
2020 24,056 45,225 (100,399) 299 16,999 28,928 15,108 884 15,992
Loss for the
year - - - - - (1,680) (1,680) 83 (1,597)
Other
comprehensive
income for the
year - - - 535 - - 535 (50) 485
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Total
comprehensive
expense for the
period - - - 535 - (1,680) (1,145) 33 (1,112)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Equity-settled
share-based
payment charge - - - - 491 - 491 - 491
Deferred tax on
intangible
asset - - - - - 58 58 - 58
Exercise of
share options 97 - - - - (97) - - -
Movement in
non-controlling
interest - - - - - 118 118 188 306
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
At 31 December
2020 24,153 45,225 (100,399) 834 17,490 27,327 14,630 1,105 15,735
======== ======== ========== ============ ======== ========= ======== ================ ========
CONSOLIDATED CASH FLOW STATEMENT
6 months ended 6 months ended Year ended
Note 30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Net cash (used in)/from operating activities 11 (302) (2,279) 3,162
Investing activities
Interest received 112 434 410
Purchases of property, plant and equipment 4 (136) (290) (356)
Purchases of intangible assets 4 (756) (780) (1,408)
Receipts from net investment lease assets - 53 117
Cash consideration in respect of sale of
discontinued operations 9 2,353 - -
Cash disposed of with discontinued operations (112) - -
Net cash from /(used in) investing activities 1,461 (583) (1,237)
--------------- --------------- ------------------
Financing activities
Dividends paid 7 (2,188) - -
Costs of refinancing the bank facility - - (110)
Repayment of the lease liabilities (775) (975) (1,783)
Proceeds on disposal of partial interest in a
subsidiary - - 329
Interest paid (37) (159) (60)
Issue of ordinary share capital 10 10 - -
Net cash used in financing activities (2,990) (1,134) (1,624)
--------------- --------------- ------------------
Net (decrease)/increase in cash and cash equivalents (1,831) (3,996) 301
Effect of foreign exchange rate changes (433) 276 (402)
Cash and cash equivalents at start of period 21,856 21,957 21,957
Cash and cash equivalents at end of period 19,592 18,237 21,856
=============== =============== ==================
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1 General information
The condensed consolidated interim financial statements for the
six months ended 30 June 2021 do not constitute statutory accounts
as defined under Section 434 of the Companies Act 2006. The Annual
Report and Financial Statements (the 'Financial Statements') for
the year ended 31 December 2020 were approved by the Board on 23
March 2021 and have been delivered to the Registrar of Companies.
The Auditor, Deloitte LLP, reported on these financial statements;
their report was unqualified, did not contain an emphasis of matter
paragraph and did not contain statements under s498 (2) or (3) of
the Companies Act 2006.
2 Accounting policies
Basis of preparation
The unaudited condensed consolidated interim financial
statements for the six months ended 30 June 2021 have been prepared
in accordance with IAS 34 Interim Financial Reporting. They do not
include all the information required for full annual financial
statements and should be read in conjunction with the Group's
consolidated financial statements for the year ended 31 December
2020 which were prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and International Financial Reporting Standards
(IFRSs).
The Group's consolidated financial statements for the year
ending 31 December 2021 will be prepared in accordance with
UK-adopted IFRSs.
The condensed consolidated interim financial statements were
approved for release on 23 August 2021.
The accounting policies adopted in the preparation of the
condensed consolidated interim financial statements are consistent
with those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 December 2020. The Group
has adopted all relevant amendments to existing standards that are
effective from 1 January 2021 with no material impact on its
consolidated results or financial position.
On 17 May 2021, the Group completed the sale of its 100%
shareholding in CPP Creating Profitable Partnerships GmbH
("Germany"). As a result, in accordance with IFRS 5 Non-current
assets held for sale and discontinued operations, the comparative
information has been restated to recognise the Germany operation as
discontinued. See note 9. The adjustments relating to the
restatement have not been audited.
Management performed a review of the presentation of certain
items in the income statement in advance of the 2020 year end. It
was concluded that foreign exchange reclassified on closure of
overseas branches should be separately presented in the income
statement and goodwill impairment should be treated as an
exceptional item. Accordingly, in the 30 June 2020 comparative,
GBP476,000 has been reclassified from 'finance costs' to 'other
gains and losses' and GBP104,000 has been reclassified from
'depreciation and amortisation' to 'exceptional items'. These are
presentational changes only and have no impact on the EBITDA,
operating profit, profit before tax or net assets of the 30 June
2020 comparative.
Going concern
In reaching their view on the preparation of the condensed
consolidated interim financial statements on a going concern basis,
the Directors are required to consider whether the Group can
continue in operational existence for a period of at least 12
months from the date of this report.
The Group has a formalised process of budgeting, reporting and
review along with procedures to forecast its profitability and cash
flows. The plans provide information to the Directors which are
used to ensure the adequacy of resources available for the Group to
meet its business objectives, both in the short-term and in
relation to its strategic priorities. The Group's revenue, profit
and cash flow forecasts are subject to robust downside stress
testing which involves modelling the impact of a combination of
plausible adverse scenarios focused on crystallisation of the
Group's key operational risks. The assessment considers the Group's
modelling of the risks associated with COVID-19. This is done to
identify risks to liquidity and covenant compliance and enable
management to formulate appropriate and timely mitigation
strategies.
Taking the analysis into consideration, the Directors are
satisfied that the Group has the necessary resources to continue in
operational existence for a period of at least 12 months from the
date of this report. Accordingly, they continue to adopt the going
concern basis in preparing the condensed consolidated interim
financial statements.
3 Foreign exchange
The table below shows the average exchange rates for the
relevant reporting periods and closing exchange rates at the
relevant period ends:
Average Closing Average Closing Average Closing
H1(1) June H1 June Full Year December
2021 2021 2020 2020 2020 2020
Indian rupee 101.78 102.68 92.89 92.72 95.57 99.58
Turkish lira 11.20 12.04 8.23 8.44 9.19 10.11
Euro 1.15 1.16 1.14 1.10 1.12 1.11
Mexican peso 28.17 27.47 27.40 28.44 27.69 27.14
Chinese yuan 8.96 8.93 8.88 8.71 8.89 8.91
1. Average exchange rates applied in constant currency calculations
Constant currency is an alternative performance measure and is
used as a means of eliminating the effects of exchange rate
fluctuations on the period-on period reported results. The constant
currency basis retranslates the previous year measures at the
average actual exchange rates used in the current financial period.
The average exchange rates in H1 2021 have weakened against
sterling compared to H1 2020 which has resulted in adverse exchange
movements in the reported results.
Analysis of the constant currency impacts to revenue and EBITDA
on a segmental basis are as follows:
Ongoing Operations
---------------------------------------
Share
of
joint
Continuing Rest of Restricted Central venture
operations India EU Hub Turkey World operations Functions losses Total
H1 2021 (GBP'000)
Revenue 53,044 5,013 1,833 1,972 4,530 - n/a 66,392
Revenue from
Ongoing
Operations 53,044 5,013 1,833 1,972 n/a n/a n/a 61,862
EBITDA 3,835 526 421 (717) 1,015 (2,380) (119) 2,581
------------------ -------- ------- ------- ----------- ----------- ---------- -------- --------
H1 2020 (GBP'000)
Revenue 46,007 5,431* 1,811 1,855 5,191 - n/a 60,295
Revenue from
Ongoing
Operations 46,007 5,431* 1,811 1,855 n/a n/a n/a 55,104
EBITDA 2,963 1,472* 391 (1,916) 1,437 (2,344) (121) 1,882
------------------ -------- ------- ------- ----------- ----------- ---------- -------- --------
Foreign exchange
movements
(GBP'000)
Revenue (4,027) (72) (481) (22) (8) - n/a (4,610)
Revenue from
Ongoing
Operations (4,027) (72) (481) (22) n/a n/a n/a (4,602)
EBITDA (369) (21) (150) 33 (2) - n/a (509)
------------------ -------- ------- ------- ----------- ----------- ---------- -------- --------
H1 2020 at H1
2021 average
exchange rates
(GBP'000)
Revenue 41,980 5,359 1,330 1,833 5,183 - n/a 55,685
Revenue from
Ongoing
Operations 41,980 5,359 1,330 1,833 n/a n/a n/a 50,502
EBITDA 2,594 1,451 241 (1,883) 1,435 (2,344) (121) 1,373
------------------ -------- ------- ------- ----------- ----------- ---------- -------- --------
Period-on-period
movement at
constant exchange
rates (%)
Revenue 26% (6)% 38% 8% (13)% n/a n/a 19%
Revenue from
Ongoing
Operations 26% (6)% 38% 8% n/a n/a n/a 22%
EBITDA 48% (64)% 75% 62% (29)% (2)% 2% 88%
------------------ -------- ------- ------- ----------- ----------- ---------- -------- --------
* Restated to reflect Germany as a discontinued operation. See
note 2.
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.
The Group's operating segments are:
-- Ongoing Operations ; India, China, Turkey, Spain, Portugal,
Italy, Mexico, Malaysia, UK, Bangladesh and Blink. These businesses
have no regulatory restrictions on new sales activity. These
markets represent a combination of businesses in which we continue
to invest and drive new opportunities as well as ones that have
been strategically assessed and wound down or exited.
-- Restricted Operations : historic renewal books of our UK
regulated entities; CPPL, including its overseas branch in
Malaysia; and HIL. As a result of regulatory restrictions we are
not permitted to undertake new sales in these businesses.
-- Central Functions : central cost base required to provide
expertise and operate a listed group. Central Functions is stated
after the recharge of certain central costs that are appropriate to
transfer to both Ongoing Operations and Restricted Operations for
statutory purposes.
Segment revenue and performance for the current and comparative
periods are presented below:
Ongoing Restricted Central
Operations Operations Functions Total
Six months ended 30 June 2021 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited)
Continuing operations
Revenue - external sales 61,862 4,530 - 66,392
Segmental EBITDA 4,064 1,015 (2,380) 2,699
------------- ------------ -----------
Share of loss in joint venture (119)
--------
EBITDA 2,580
Depreciation and amortisation (1,584)
Exceptional items (1,489)
Operating loss (493)
Investment revenues 112
Finance costs (269)
--------
Loss before taxation (650)
Taxation (1,136)
--------
Loss for the period from continuing
operations (1,786)
Discontinued operations
Profit for the period from
discontinued operations 3,062
--------
Profit for the period 1,276
========
Ongoing
Operations Restricted Central Total
(Restated*) Operations Functions (Restated*)
Six months ended 30 June 2020 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited)
Continuing operations
Revenue - external sales 55,104 5,191 - 60,295
Segmental EBITDA 2,910 1,437 (2,344) 2,003
------------- ------------ -----------
Share of loss in joint venture (121)
--------------
EBITDA 1,882
Depreciation and amortisation (1,761)
Exceptional items 375
Operating profit 496
Investment revenues 436
Finance costs 40
Other gains and losses (476)
--------------
Profit before taxation 496
Taxation (1,677)
--------------
Loss for the period from continuing
operations (1,181)
Discontinued operations
Profit for the period from
discontinued operations 442
--------------
Loss for the period (739)
==============
* Restated to reflect Germany as a discontinued operation. See
note 2.
Ongoing
Operations Restricted Central Total
(Restated*) Operations Functions (Restated*)
Year ended 31 December 2020 GBP'000 GBP'000 GBP'000 GBP'000
(Audited)
Continuing operations
Revenue - external sales 127,073 11,068 - 138,141
Segmental EBITDA 6,539 3,806 (4,065) 6,280
------------- ------------ -----------
Share of loss in joint venture (264)
--------------
EBITDA 6,016
Depreciation and amortisation (3,495)
Exceptional items (356)
Operating profit 2,165
Investment revenues 412
Finance costs (373)
Other gains and losses (1,294)
Profit before taxation 910
Taxation (3,441)
--------------
Loss for the year from continuing
operations (2,531)
Discontinued operations
Profit for the year from discontinued
operations 934
--------------
Loss for the year (1,597)
==============
* Restated to reflect Germany as a discontinued operation. See
note 2.
Segmental assets
31 December 2020
30 June 2021 30 June 2020 (Restated*) (Restated*)
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Ongoing Operations 38,740 46,027 41,340
Restricted Operations 7,670 7,615 7,564
Central Functions 1,539 3,332 5,113
Total segment assets 47,949 56,974 54,017
Assets relating to discontinued operations - 1,289 1,196
Unallocated assets 1,104 2,783 1,920
Consolidated total assets 49,053 61,046 57,133
============= ========================= =================
* Restated to reflect Germany as a discontinued operation. See
note 2.
Goodwill, deferred tax assets and investment in joint venture
are not allocated to segments.
Capital expenditure
Other intangible assets
-----------------------------------------
6 months
6 months ended Year ended
ended 30 30 June 31 December
June 2021 2020 2020
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Continuing operations
Ongoing Operations 465 550 1,055
Restricted Operations 4 230 352
Central Functions 287 - 1
Total assets 756 780 1,408
============ ============ =============
Property, plant and equipment Right-of-use assets
----------------------------------------- -----------------------------------------
6 months 6 months 6 months
6 months ended Year ended ended ended Year ended
ended 30 30 June 31 December 30 June 30 June 31 December
June 2021 2020 2020 2021 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
Continuing operations
Ongoing Operations 123 223 255 444 694 1,568
Restricted Operations 5 13 18 - 41 -
Central Functions 8 54 83 - 513 523
Total assets 136 290 356 444 1,248 2,091
============ ============ ============= ============ ============ =============
Timing of revenue recognition
The Group derives revenue from the transfer of goods and
services over time and at a point in time as follows:
6 months ended 30 June 2020 Year ended 31 December 2020
6 months ended 30 June 2021 (Restated*) (Restated*)
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Continuing
operations
At a point in time 57,127 48,499 117,902
Over time 9,265 11,796 20,239
---------------------------- ---------------------------- ----------------------------
Revenue from
continuing
operations 66,392 60,295 138,141
Discontinued
operations 1,062 1,459 3,003
---------------------------- ---------------------------- ----------------------------
Total revenue 67,454 61,754 141,144
============================ ============================ ============================
* Restated to reflect Germany as a discontinued operation. See
note 2.
Revenue from major products
6 months ended 30 June 2020 Year ended
(Restated*) 31 December 2020
6 months ended 30 June 2021 (Restated*)
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Continuing
operations
Retail assistance policies 59,633 54,478 128,136
Retail insurance policies 2 12 85
Wholesale policies 1,280 1,662 2,621
Non-policy revenue 5,477 4,143 7,299
---------------------------- ---------------------------- ------------------
Revenue from continuing
operations 66,392 60,295 138,141
Discontinued operations 1,062 1,459 3,003
---------------------------- ---------------------------- ------------------
Total revenue 67,454 61,754 141,144
============================ ============================ ==================
* Restated to reflect Germany as a discontinued operation. See
note 2.
Major product streams are disclosed on the basis monitored by
the Board of Directors. For the purpose of this product analysis,
"retail assistance policies" are those which may be insurance
backed but contain a bundle of assistance and other benefits;
"retail insurance policies" are those which protect against a
single insurance risk; "wholesale policies" are those which are
provided by business partners to their customers in relation to an
ongoing product or service which is provided for a specified period
of time; "non-policy revenue" is that which is not in connection
with providing an ongoing service to policyholders for a specified
period of time.
Geographical information
The Group operates across a wide number of territories, of which
India, the UK and Spain are considered individually material.
Revenue from external customers and non-current assets (excluding
investment in joint venture and deferred tax assets) by
geographical location is detailed below:
External revenues Non-current assets
----------------------------------------- -------------------------------------------
6 months 6 months Year ended
ended 30 ended 30 31 December 30 June 30 June 31 December
June 2021 June 2020 2020 2021 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
Continuing
operations
India 53,044 46,007 108,406 7,403 7,625 8,071
UK 5,452 5,477 12,082 2,008 3,725 2,062
Spain 3,558 3,725 7,538 215 390 256
Other 4,338 5,086 10,115 2,274 2,591 2,157
Total continuing
operations 66,392 60,295 138,141 11,900 14,331 12,546
Discontinued
operations 1,062 1,459 3,003 - - -
------------ ------------ ------------- ------------ ------------ -------------
Total 67,454 61,754 141,144 11,900 14,331 12,546
============ ============ ============= ============ ============ =============
Information about major customers
Revenue from customers of one business partner in our Ongoing
Operations segment represented approximately GBP36,156,000 (H1
2020: GBP30,222,000; year ended 31 December 2020: GBP73,739,000) of
the Group's total revenue.
5 Exceptional items
6 months
ended 6 months Year ended
30 June ended 30 31 December
2021 June 2020 2020
Note GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Restructuring costs 1,489 206 161
Impairment of goodwill 2 - 104 880
Customer redress and associated
costs - (685) (685)
------------ ------------ -------------
Exceptional charge/(credit) included
in operating profit 1,489 (375) 356
Other gains and losses - foreign
exchange reclassification 2 - 476 1,294
------------ ------------ -------------
Total exceptional charge included
in profit before tax 1,489 101 1,650
Tax on exceptional items (137) - -
------------ ------------ -------------
Total exceptional charge after
tax 1,352 101 1,650
============ ============ =============
Restructuring costs of GBP1,489,000 (H1 2020: GBP206,000; year
ended 31 December 2020: GBP161,000) relate to costs associated with
wide-scale operational changes or closure activities in Spain,
Mexico, Malaysia and Blink. The charges recognised are primarily
redundancy costs.
6 Taxation
The tax charge is calculated by aggregating the tax arising in
each jurisdiction based on estimated profits chargeable to
corporation tax and withholding taxes arising in H1 2021 at the
local statutory rate of tax. This leads to a tax charge on
continuing operations of GBP1.1 million (H1 2020 restated: GBP1.7
million; year ended 31 December 2020 restated: GBP3.4 million)
reflecting the charges arising in India, Turkey and our EU markets.
These tax charges result in an effective tax rate (ETR) at the half
year of negative 175% (H1 2020 restated: positive 338%; year ended
31 December 2020 restated: positive 378%). The Group expects to
generate a profit before tax for the full year through the trading
performance in the second half, whilst the level of exceptional
restructuring costs will slow and hence the forecast full year ETR
has not been used in calculating the tax charge at H1 2021. The
full year ETR is forecast to be approximately 220%.
The corporate income tax in our profitable overseas
jurisdictions is higher than the current UK corporate income tax
rate of 19% and, in addition, there are withholding taxes applied
to funds repatriated from our overseas operations which further
increases the ETR. Profits from our UK Restricted Operations are
expected to be covered by group relief from losses arising in other
UK entities.
The Group's forecast ETR for the full year is significantly
higher than the UK corporate income tax rate due to losses in our
developing markets which coupled with the one-time exceptional
restructuring charges will reduce the overall Group profit before
tax to a level that is lower than the tax charges recognised in our
profitable markets. The restructuring activity undertaken in 2021
is expected to alleviate this position and enable a progressive
reduction in the Group's ETR over the medium-term.
7 Dividends
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Final dividend for the year ended
31 December 2020 of 25 pence per
share (31 December 2019: GBPnil) 2,188 - -
------------ ------------ -------------
2,188 - -
============ ============ =============
After 30 June 2021 the Directors have approved an interim
dividend of 5 pence per share for 2021. The dividend has not been
accrued as a liability as at 30 June 2021. The interim dividend
will be paid on 24 September 2021 with an ex-dividend date of 2
September 2021 and a record date of 3 September 2021.
8 (Loss)/earnings per share
Basic and diluted (loss)/earnings per share has been calculated
in accordance with IAS 33 Earnings per share. Underlying
(loss)/earnings per share, which excludes exceptional items, has
also been presented in order to give a better understanding of the
performance of the business. In accordance with IAS 33, potential
ordinary shares are only considered dilutive when their conversion
would decrease the earnings per share or increase the loss per
share attributable to equity holders. The diluted (loss)/earnings
per share is therefore equal to the basic (loss)/earnings per share
in the six months ended 30 June 2021, six months ended 30 June 2020
and the year ended 31 December 2020.
Six months ended 30 June 2021
(Unaudited) Continuing operations Discontinued operations Total
(Losses)/earnings GBP'000 GBP'000 GBP'000
(Loss)/earnings for the purposes of
basic and diluted (loss)/earnings per
share (2,049) 3,062 1,013
Exceptional items (net of tax) 1,352 (2,641) (1,289)
---------------------- ------------------------ ------------
(Loss)/earnings for the purposes of
underlying basic and diluted
(loss)/earnings per share (697) 421 (276)
====================== ======================== ============
Number of shares Number
(thousands)
Weighted average number of ordinary
shares for the purposes of basic and
diluted (loss)/earnings
per share and underlying
(loss)/earnings per share 8,770
============
(Loss)/earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted (loss)/earnings
per share (23.36) 34.91 11.55
====================== ======================== ============
Basic and diluted underlying
(loss)/earnings per share (7.95) 4.80 (3.15)
====================== ======================== ============
Six months ended 30 June 2020
(Unaudited) Continuing operations Discontinued operations Total
(Losses)/earnings GBP'000 GBP'000 GBP'000
(Loss)/earnings for the purposes of basic
and diluted (loss)/earnings per share (1,232) 442 (790)
Exceptional items (net of tax) 101 - 101
(Loss)/earnings for the purposes of
underlying basic and diluted
(loss)/earnings per share (1,131) 442 (689)
Number of shares Number
(thousands)
Weighted average number of ordinary
shares for the purposes of basic and
diluted (loss)/earnings
per share and underlying (loss)/earnings
per share 8,683
(Loss)/earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted (loss)/earnings per
share (14.19) 5.09 (9.10)
Basic and diluted underlying
(loss)/earnings per share (13.03) 5.09 (7.94)
Year ended 31 December 2021 (Audited) Continuing operations Discontinued operations Total
(Losses)/earnings GBP'000 GBP'000 GBP'000
(Loss)/profit for the purposes of basic
and diluted (loss)/earnings per share (2,614) 934 (1,680)
Exceptional items (net of tax) 1,650 - 1,650
(Loss)/profit for the purposes of
underlying basic and diluted
(loss)/earnings per share (964) 934 (30)
Number of shares Number
(thousands)
Weighted average number of ordinary
shares for the purposes of basic and
diluted (loss)/earnings
per share and underlying (loss)/earnings
per share 8,713
(Loss)/earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted (loss)/earnings per
share (30.00) 10.72 (19.28)
Basic and diluted underlying
(loss)/earnings per share (11.06) 10.72 (0.34)
9 Discontinued operations
On 17 May 2021, the Group completed the sale of its 100%
shareholding in CPP Creating Profitable Partnerships GmbH
("Germany"). The gross consideration on disposal was GBP2,353,000
(EUR2,730,000).
In accordance with IFRS 5 Non-current assets held for sale and
discontinued operations this operation has been presented as a
discontinued operation.
Profit from discontinued operations comprises the following:
6 months ended Year ended
6 months ended 30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Revenue 1,062 1,459 3,003
Cost of sales (430) (554) (1,127)
Gross profit 632 905 1,876
Administrative expenses (203) (368) (732)
EBITDA and operating profit 429 537 1,144
Finance costs 22 (21) (42)
Profit before taxation 451 516 1,102
Taxation (30) (74) (168)
Profit after taxation 421 442 934
Profit on disposal 2,641 - -
Total profit 3,062 442 934
Operating results for the six months ended 30 June 2021 reflect
the trading performance of Germany up to the date of disposal,
being 17 May 2021. Comparative information reflects a complete six
months and 12 months respectively. Prior to disposal Germany was
part of the Ongoing Operations segment.
The Group has recognised a profit on disposal of Germany as
follows:
6 months ended 30 June 2021
GBP'000
(Unaudited)
Proceeds 2,353
Net liabilities sold 284
Costs associated with disposal -
Currency translation differences on disposal 4
Profit on disposal 2,641
The final proceeds are subject to a working capital adjustment.
In accordance with the timelines agreed in the share purchase
agreement this position has not yet been finalised. The final
adjustment is expected to be highly immaterial and is not included
in the information above.
10 Share capital
Share capital at 30 June 2021 is GBP24,232,000 (30 June 2020:
GBP24,152,000; 31 December 2020: GBP24,153,000). To satisfy share
option exercises in the six month period to 30 June 2021 the
Company has issued 79,101 GBP1 ordinary shares post for a total
equity value of GBP79,000 and cash consideration of GBP10,000.
The total number of ordinary shares in issue at 30 June 2021 is
8,822,564 of which 8,817,565 are fully paid and 4,999 are partly
paid.
11 Reconciliation of operating cash flows
6 months ended Year ended
6 months ended 30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Profit/(loss) for the period 1,276 (739) (1,597)
Adjustments for:
Depreciation and amortisation 1,584 1,720 3,454
Share-based payment expense 226 360 499
Impairment loss on goodwill - 104 880
Impairment loss on right-of-use assets - 41 41
Loss on disposal of intangible assets - 16 54
Loss on disposal of property, plant and equipment 4 3 30
Profit on disposal of discontinued operations (2,641) - -
Share of loss of joint venture 119 121 264
Lease concessions - - (86)
Investment revenues (112) (436) (412)
Finance costs 247 (19) 415
Other gains and losses - 476 1,294
Income tax charge 1,166 1,751 3,609
Operating cash flows before movement in working
capital 1,869 3,398 8,445
Increase in inventories (4) (95) (58)
Decrease in contract assets 569 1,555 1,272
Decrease/(increase) in receivables 2,084 (4,538) 663
Decrease/(increase) in insurance assets 15 5 (4)
Decrease in payables (2,493) (950) (3,049)
Decrease in contract liabilities (867) (1,792) (953)
(Decrease)/increase in insurance liabilities (568) 807 179
Decrease in provisions - (5) (309)
Cash from/(used in) operations 605 (1,615) 6,186
Income taxes paid (907) (664) (3,024)
Net cash (used in)/from operating activities (302) (2,279) 3,162
12 Related party transactions
Transactions with associated undertakings
The Group has a balance receivable from its joint venture, KYND,
in the amount of GBP150,000 (30 June 2020 and 31 December 2020:
GBP150,000). The loan by the Group to KYND forms part of KYND's
participation in the UK Governments 'Future Fund Scheme' and falls
due for repayment on 26 June 2023.
In the six months to 30 June 2021, the Group incurred fees of
GBP4,000 plus VAT (30 June 2020 and year ended 31 December 2020:
GBPnil) for services rendered from KYND, which was payable under 14
day credit terms.
Transactions with related parties
ORConsulting Limited (ORCL) is an organisation used by the Group
for consulting services in relation to leadership coaching.
Organisation Resource Limited (ORL), a company owned by Mark Hamlin
who is a Non-Executive Director of the Group, retains intellectual
property in ORCL for which it is paid a license fee. In the six
months to 30 June 2021, the Group paid GBP65,000 plus VAT (30 June
2020: GBP28,000; year ended 31 December 2020: GBP63,000) to ORCL,
which was payable under 30 days credit terms.
Mark Hamlin is the Chairman of Globiva. The fees for this role
are paid to his consultancy company, ORL. The fee paid to ORL by
the Group in the six months ended 30 June 2021 was GBP35,000 (H1
2020: GBP37,000; year ended 31 December 2020: GBP73,000) and was
payable under 25 day credit terms.
The Group paid GBP166,800 to Sosafe Limited (Sosafe) in February
2021 pursuant to a settlement agreement with Sosafe and Mr Hamish
Ogston dated 23 February 2021 (the Settlement). Mr Ogston is a
director and majority shareholder of Sosafe and a substantial
shareholder in the Group and therefore the Settlement constituted a
related party transaction pursuant to AIM Rule 13. The Settlement
was made in connection with claims for certain legal and
professional costs incurred by Sosafe and Mr Ogston and represents
full and final settlement of such claims, which date back several
years and have been fully provided for since 2016. With the
exception of David Morrison, the Company's non-executive Chairman
and a representative of Mr Ogston, the independent Directors of the
Company consider, having consulted with Liberum, the Company's
nominated adviser, that the terms of the transaction were fair and
reasonable insofar as its shareholders are concerned.
Remuneration of key management personnel
The remuneration of the Directors and Senior Management Team,
who are the key management personnel of the Group, is set out
below:
6 months ended 6 months ended Year ended
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Short-term employee benefits 1,024 1,143 2,442
Post-employment benefits 41 44 89
Termination benefits 203 - -
Share-based payments 108 98 423
1,376 1,285 2,954
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END
IR PPUQCRUPGGQW
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