TIDMCPP
RNS Number : 8289M
CPPGroup Plc
19 September 2023
19 September 2023
CPPGroup Plc
("CPP Group"; "the Group"; or "the Company")
HALF YEAR REPORT FOR THE SIX MONTHSED 30 JUNE 2023
CPP Group (AIM: CPP), a provider of assistance and insurance
products, which reduce disruptions to everyday life for millions of
customers across the world, is pleased to announce its half year
results for the six months ended 30 June 2023.
Financial Highlights:
-- Group revenue from continuing operations increased by 21% to
GBP93.5 million (H1 2022 restated: GBP77.3 million).
-- Core revenues increased by 25% to GBP87.0 million (H1 2022: GBP69.5 million).
-- EBITDA from continuing operations level with prior year at
GBP2.9 million (H1 2022 restated: GBP2.9 million).
-- Central overheads reduced to GBP2.1 million (H1 2022 restated: GBP2.3 million).
-- Exceptional items total GBP5.8 million (H1 2022: GBP0.5
million) primarily relating to planned Legacy business
closures.
-- Loss before tax from continuing operations of GBP3.7 million
(H1 2022 restated: GBP1.1 million profit). On an underlying basis,
profit before tax(3) increased to GBP2.0 million (H1 2022 restated:
GBP1.6 million).
-- Cash balance of GBP16.0 million at 30 June 2023 (H1 2022:
GBP19.3 million; 31 December 2022: GBP21.0 million).
Operational Highlights:
-- Group focused on three Core businesses (Blink Parametric; CPP
India, which includes Globiva; and CPP Turkey).
-- Simplified the proposition away from "insurance" to "assurance" services.
-- Change Management Programme proceeding as planned. Subsequent
to the period end, Phase 1 of the new Indian IT platform has been
delivered.
-- Core business(4) performing well.
o New business wins for Blink Parametric
o Strong growth in CPP India and CPP Turkey
-- Plans for exiting Legacy businesses(5) are progressing at
pace, with the year-on-year decline in revenues as expected.
Simon Pyper, CEO of CPP Group, commented:
"The Group's key Indian and Turkish markets are performing well
despite recent currency headwinds. Blink Parametric (Blink), the
Group's InsurTech business focused on the global travel sector,
continues to progress, securing a number of new clients in the
important UK, European and North American markets. Additionally,
Blink has achieved a 100% renewal rate of its existing client base
which provides further validation of the value Blink helps to
create for its partners. Despite the good revenue growth, EBITDA
from continuing operations was in line with prior year at GBP2.9
million reflecting the planned investment in Blink, a mix change in
CPP India product sales, and the impact of adverse currency
movements.
Operationally, the Group is now at the implementation stage of
its Change Management Programme (CMP) which, at its conclusion,
will see the Group exit from its Legacy businesses and focus on
growing its core Blink, Indian, and Turkish operations. The key
milestones for this year are the implementation of the new IT
platform for India, the building of capacity for the Blink
platform, and commencing active closure plans for the Legacy
businesses. To date the execution of the CMP is proceeding as
planned, and the Group expects to meet the operational objectives
it set itself for this financial year. As expected, the Legacy
closure activity has led to, and will continue to incur,
substantial exceptional provisions in both these results and the
full year results and is expected to consume cash as the businesses
are wound down over the medium-term.
The strategy we are following, the course we are taking, and the
goals we have set ourselves are challenging. To transform the
business from one business model to another, from one in terminal
decline to one with long term prospects for growth requires
courage, confidence and a lot of hard work, which are the same
qualities I see in my colleagues from across the Group on a daily
basis.
Whilst progress is never as fast as I would like, I remain
confident that we are travelling in the right direction and at an
appropriate speed."
Financial and non-financial highlights - continuing
operations
Six months
Six months to 30 June
to 30 June 2022 (Restated(1)
GBP millions 2023 ) Change
----------------------------- ----------- ------------------- -------
Financial highlights:
Group
Revenue 93.5 77.3 21%
EBITDA(2) 2.9 2.9 (2)%
Operating (loss)/profit
- Reported (4.0) 1.2 (435)%
- Underlying(3) 1.8 1.7 8%
(Loss)/profit before tax
* Reported (3.7) 1.1 (425)%
* Underlying(3) 2.0 1.6 25%
(Loss)/profit after tax
- Reported (5.1) (0.3) >(999)%
- Underlying(3) 0.5 0.2 169%
Basic (loss)/earnings per
share (pence)
- Reported (59.95) (5.68) (955)%
- Underlying(3) 3.07 (0.14) >999%
Cash and cash equivalents 16.0 19.3 (17)%
Segmental
Revenue
- Core(4) 87.0 69.5 25%
- Legacy(5) 6.5 7.8 (17)%
EBITDA
- Core(4) 1.8 2.2 (18)%
- Legacy(5) 1.1 0.7 46%
Non-financial highlights:
Customer numbers (millions) 11.0 11.8 (7)%
============================= =========== =================== =======
1. Restated to reflect Mexico as a discontinued operation.
2. EBITDA represents earnings before interest, taxation,
depreciation, amortisation, and exceptional items.
3. Underlying operating profit and underlying profit before tax
excludes exceptional items of GBP5.8 million (H1 2022: GBP0.5
million). The tax effect of the exceptional items is GBP0.2 million
(H1 2022: GBPnil). Further detail of exceptional items is provided
in note 4 of the condensed consolidated interim 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.
Enquiries:
CPP Group plc
Simon Pyper, Chief Executive Tel: +44 (0)7917 795601
Officer
David Bowling, Chief Financial
Officer
Liberum Capital Limited
(Nominated Adviser and Sole Tel: +44 (0)20 3100 2000
Broker)
Richard Lindley
Lauren Kettle
About CPP Group:
CPP Group is a technology-driven assistance company that creates
embedded and ancillary real-time assistance products and resolution
services that reduce disruption to everyday life for millions of
people across the world, at the time and place they are needed, CPP
Group is listed on AIM, operated by the London Stock Exchange.
For more information on CPP visit
https://corporate.cppgroup.com/
hief Executive Officer Statement
First Half Performance
The Group is executing its revised strategy and delivering
against the key objectives of the Change Management Programme
(CMP). The Group's key Indian and Turkish markets are performing
well despite recent currency headwinds, whilst Blink Parametric
(Blink), the Group's InsurTech business, continues to progress, and
has this year secured a number of new clients in the important UK,
European and North American markets. Additionally, Blink has
achieved a 100% renewal rate of its existing client base which
provides a further proof point on the value Blink helps to create
for its partners.
Despite the good revenue growth, EBITDA from continuing
operations remained broadly level with prior year at GBP2.9 million
reflecting three key factors:
1. Blink investment : Blink is the Group's only global product,
one currently focused on delivering parametric InsurTech solutions
to the worldwide travel insurance market. It forms a key part of
the Group's strategy and needs sustained investment over the near
to medium term if it is to realise its full potential. In the first
half of this year Blink reported an EBITDA loss of GBP0.6 million
compared to a marginal loss in the prior year.
2. Indian margin erosion : as expected, CPP India's gross profit
margin has been adversely impacted by the growth of lower margin
products such as LivCare and to a lesser extent the acquisition
costs associated with a growing Card business. CPP India's gross
profit margin reduced by 2.5 percentage points to 9.4% (H1 2022:
11.9%).
3. Currency headwinds : the Group derives 91% of its revenues in
Indian rupees which has seen a weakening against sterling, the
Group's reporting currency, of over 8% for the period. On a
constant currency basis, the Group would have reported an
additional GBP0.2 million of EBITDA. A comparatively weak position
with our main trading currencies appears set to continue in H2.
Of the three key factors which subdued growth in EBITDA, the
investment in Blink and the margin erosion were forecast, whilst
the currency headwinds, particularly in India, are outside our
control.
The operating loss of GBP4.0 million (H1 2022 restated: GBP1.2
million profit) includes depreciation charges of GBP1.1 million (H1
2022 restated: GBP1.3 million) and exceptional items which have
increased to GBP5.8 million (H1 2022: GBP0.5 million) due to costs
relating to the CMP. Total exceptional costs associated with the
CMP are expected to be in the range GBP7.5 million to GBP8.5
million for the full year.
Key Performance Metrics:
GBP millions REVENUE EBITDA1
H1 2023 H1 20222 CHANGE H1 2023 H1 20222 CHANGE
-------- --------- ------- -------- --------- -------
CPP India 78.0 60.7 28% 3.0 3.1 (3)%
-------- --------- ------- -------- --------- -------
Globiva 7.2 7.1 2% 1.2 1.3 (1)%
-------- --------- ------- -------- --------- -------
CPP Turkey 1.4 1.5 (3)% 0.3 0.2 30%
-------- --------- ------- -------- --------- -------
Blink 0.4 0.2 82% (0.6) (0.1) (975)%
-------- --------- ------- -------- --------- -------
Core business
units 87.0 69.5 25% 3.9 4.5 (13)%
-------- --------- ------- -------- --------- -------
Central Functions - - n/a (2.1) (2.3) 9%
-------- --------- ------- -------- --------- -------
Core total 87.0 69.5 25% 1.8 2.2 (18)%
-------- --------- ------- -------- --------- -------
Legacy(3) 6.5 7.8 (17)% 1.1 0.7 46%
-------- --------- ------- -------- --------- -------
Group total 93.5 77.3 21% 2.9 2.9 (2)%
-------- --------- ------- -------- --------- -------
1. EBITDA represents earnings before interest, taxation,
depreciation, amortisation, and exceptional items.
2. Restated to reflect Mexico as a discontinued operation.
3. Legacy comprises UK, Spain, Italy, and Portugal.
Business unit performance
CPP India: EBITDA of GBP3.0 million (H1 2022: GBP3.1 million).
EBITDA margin 3.9% (H1 2022: 5.1%)
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 has increased by GBP17.3
million or 28% versus prior year and by 33% on a constant currency
basis. Growth has been driven by LivCare which is a "health and
wellness product" sold via our largest business partner, Bajaj
Finance Limited (Bajaj). Whilst this product does secure strong new
business for both the Group and Bajaj, it is, and will continue to
be, a relatively low margin product for CPP India. The mix change
in sales volumes from higher margin products to LivCare reduced CPP
India's gross profit margin by 2.5 percentage points to 9.4% (H1
2022: 11.9%) which equates to GBP1.9 million in gross profit.
Operating costs increased marginally during the first half
reflecting the profit-based reward structure for the in-country
executive team.
EBITDA margin reduced by 1.2 percentage points reflecting both
the reduction in the gross profit margin and the increase in
operating costs.
Globiva : EBITDA of GBP1.2 million (H1 2022: GBP1.3 million),
EBITDA margin 16.0% (H1 2022: 15.5%)
Globiva is 51% owned by the Group and provides outsourced
customer relationship management, back-office functionality, and
automated human resource services to a predominately tech-focused
client base. As a consequence of the well-publicised global tech
downturn the business, which has a significant number of tech
companies on its roster, has seen a modest softening in seat
occupancy and consequently revenues. In addition, given the
relatively high operational gearing of such businesses, the
softening in revenues has had an immediate, albeit modest, adverse
impact on EBITDA growth.
Turkey: EBITDA of GBP0.3 million (H1 2022: GBP0.2 million),
EBITDA margin 19.5% (H1 2022: 14.7%)
In February 2023, a devastating earthquake hit the southern part
of Turkey. Whilst our Turkish office is not located in the disaster
zone the lives of many, particularly for those living in the
affected area, will take some time to return to normal.
CPP Turkey performed well during the first half of the year with
EBITDA increasing by 30%. That the business has been able to
deliver real growth following the earthquake and 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 newly formed management team.
Blink: EBITDA loss of GBP0.6 million (H1 2022: GBP0.1 million
loss)
Blink is a technology and software platform provider focused on
delivering innovative Travel Disruption (flight delay and lost
luggage) solutions for the global travel sector. It is the Group's
only offering which can be sold, serviced, and delivered profitably
across multiple geographies. Blink, simply put, is along with CPP
India and CPP Turkey, the future of CPP Group.
Towards the end of last year, we set in place, as part of the
Group's 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). These work streams
will not fully conclude until Q1 2024. The necessary investment
into Blink as part of this has led to the increased first half
EBITDA losses compared to prior year.
Whilst it is too early to draw conclusions from our first half
results, there are a number of proof points such as, new client
wins, the 100% renewal of partner contracts in 2023 and numerous
Industry awards which suggest that both our approach and strategy
are sound. At the same time Blink has demonstrated the quality and
value of its proposition to its partners with policies sold which
includes Blink's services increasing by 158%, the volume of flights
tracked by Blink increasing 850% and claims paid using Blink's
technology increasing 250%.
Legacy business: EBITDA of GBP1.1 million (H1 2022 restated:
GBP0.7 million)
Following the withdrawal from China, Mexico, and Bangladesh in
2022, we continue to make good progress with exiting our Legacy
businesses. As forecast, revenue from the UK and European back
books (predominantly Card and Identity Protection) has continued to
decline. However, EBITDA has increased by GBP0.4 million primarily
due to closure activities in our Spanish market where commission
payments have decreased as a result of the terms agreed for the
transfer of business to our largest underwriter and lower
telemarketing and salary costs following cessation of new business
activities and commencement of wind-down. The exit from our Spanish
business is well progressed and will complete in H2 and in the UK
the FCA and PRA along with other stakeholders have been provided
with detailed plans of the exit from our legacy books. In all our
Legacy markets, whilst wind-downs are being initiated and executed,
the priority remains to provide the best service possible to our
customers.
Central costs: GBP2.1 million (H1 2022 restated: GBP2.3
million)
Central overheads before appropriate recharge to business units
are GBP4.6 million (H1 2022: GBP4.8 million) of which GBP1.7
million (H1 2022: GBP1.8 million) relates to the cost of the
Group's IT operations. The Group is developing a new IT platform
for our Indian business which when fully deployed will enable the
decommissioning of our expensive legacy IT systems. There will be
dual-running costs into H1 2024, but we expect a significant
reduction in the cost of the running the Group's IT estate
thereafter. Net of recharges, our reported central costs have
reduced by GBP0.2 million (9%) as the early stages of simplifying
the Group has enabled a slimming of costs.
Exceptional items
The Legacy closure activity will lead to substantial exceptional
provisions in both the interim and full year results. The first
half charge of GBP5.8 million (H1 2022: GBP0.5 million) relates
to:
-- Onerous contract provision of GBP3.3 million (H1 2022:
GBPnil) reflecting an estimate of future losses in the UK, Spain
and Portugal as the businesses are wound down and the Group's
legacy IT systems are decommissioned.
-- Restructuring and closure costs of GBP1.9 million (H1 2022:
GBP0.5 million) comprising redundancy and settlement costs in
Spain, the UK and Turkey, along with charges for retention schemes
established to safeguard the delivery of CMP activities over an
extended period of time.
-- IT impairment charges of GBP0.2 million (H1 2022: GBPnil)
relating to closure activities in the UK.
-- Deferred Bonus Plan (DBP) charges of GBP0.4 million (H1 2022:
GBPnil). As announced in April 2023, the DBP is a share-based
retention measure for the Executive Management Committee (EMC)
whereby participants agreed to defer a portion of their 2022 annual
bonus award in return for share options.
Taxation
The tax charge from continuing operations was GBP1.3 million (H1
2022: GBP1.4 million), which is an effective tax rate (ETR) of
negative 36% (H1 2022 restated: positive 126%). The tax charge
includes GBP1.2 million (H1 2022; GBP0.8 million) relating to
India.
The negative tax rate reflects the substantial CMP exceptional
charges provided in the period and increased operational investment
in Blink these are both unable to offset all their losses or
recognise tax credits whilst the Group generates taxable profits in
India and Turkey.
A high and volatile ETR is expected to persist until Legacy
operations are exited. The CMP is expected to improve the ETR in
the medium-term as the simplification of the Group enables UK-based
central costs to be further reduced and as Blink moves towards
profitability.
Adjusted ETR
Continuing operations Exceptional items Adjusted
Core Legacy Total Core Legacy Total Core Legacy Total
H1 2023 GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
===================== ======= ======= ======= ====== ====== ====== ====== ====== ======
(Loss)/profit
before tax 0.4 (4.2) (3.7) 0.6 5.2 5.8 1.0 1.0 2.0
--------------------- ------- ------- ------- ------ ------ ------ ------ ------ ------
Tax (1.3) - (1.3) (0.1) (0.1) (0.2) (1.4) (0.1) (1.5)
--------------------- ------- ------- ------- ------ ------ ------ ------ ------ ------
ETR 295% (1)% (36)% 8% 3% 3% 126% 20% 75%
===================== ======= ======= ======= ====== ====== ====== ====== ====== ======
Continuing operations Exceptional items Adjusted
H1 2022 (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 0.7 0.4 1.1 0.4 0.1 0.5 1.1 0.5 1.6
--------------------- ------- ------- ------- ------ ------ ------ ------ ------ ------
Tax (1.4) (0.1) (1.5) - - - (1.4) (0.1) (1.5)
--------------------- ------- ------- ------- ------ ------ ------ ------ ------ ------
ETR 194% 18% 126% 0% 0% 0% 121% 15% 89%
===================== ======= ======= ======= ====== ====== ====== ====== ====== ======
1. Restated to reflect Mexico as discontinued operations.
The exceptional items in the year have reduced profit before tax
by GBP5.8 million (H1 2022 restated: GBP0.5 million) whilst there
has been an associated reduction in tax of GBP0.2 million (H1 2022
restated: GBPnil). Without the exceptional items the Group's ETR
would reduce to positive 75% (H1 2022 restated: 89%).
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 126% (H1 2022 restated: 121%),
which includes withholding taxes on dividend repatriations from
India and Turkey and the loss-making Central Functions. The
increase in Core adjusted ETR reflects the increased losses
generated by additional operational investment in Blink.
Financial position
The Group had cash balances at 30 June 2023 of GBP16.0 million
(H1 2022: GBP19.3 million; 31 December 2022: GBP21.0 million). Cash
balances have reduced by GBP5.0 million since the year end
primarily due to a legislative change in India which has led to a
change in the timing of certain incentive payments to Bajaj along
with an acceleration in costs to develop the IT platform in India
which has enabled successful go-live of Phase 1 in August. The
Group's operational cash cycle is naturally weighted to H2,
however, this benefit will be significantly reduced this year as
development work on the India platform continues and substantial
redundancy costs are paid in Spain and the UK.
Whilst the Group's cash balances remain healthy at GBP16.0
million, not all of the cash resources are immediately available
for on demand working capital purposes around the Group.
Approximately 40% of the cash is considered restricted due to
either tax, legal or regulatory requirements. Cash planning is
increasingly crucial as we exit from the previously cash generative
businesses in the UK and Europe.
On 14 June 2023, the Group renewed its GBP5.0 million revolving
credit facility (RCF) for a further three year term to August 2026.
The RCF renewal, which is on improved commercial terms, is a
positive endorsement of the Group's strategic direction and will
provide cash flow flexibility as the business transforms through
the CMP.
Dividend
Due to the costs and uncertainties associated with the CMP, the
dividend payment remains suspended until further notice. If
circumstances change, the Board will review and update shareholders
when appropriate to do so.
New long-term incentive plans
In order to retain and appropriately incentivise the senior
management team to deliver long term value to shareholders, the
Group intends to launch a new Long Term Incentive Plan (LTIP) in
September. The scheme will grant options over an equivalent of 10%
of the current ordinary shares in issue with an additional
super-max target for a further 3%.
The key terms of the LTIP are as follows:
Target Target Target Total Super-max Total + super-max
1 2 3
Share price GBP3.70 GBP4.75 GBP6.00 n/a GBP9.00 n/a
-------- -------- -------- ------ ---------- ------------------
Vesting period 3 years 4 years 5 years n/a 6 years n/a
-------- -------- -------- ------ ---------- ------------------
Proportion
of current
ordinary shares 2% 3% 5% 10% 3% 13%
-------- -------- -------- ------ ---------- ------------------
Alongside the LTIP, there will be a Capital Appreciation Plan
(CAP) which is a cash-based scheme for certain senior management
with a maximum value of GBP1.5 million. The CAP mirrors the LTIP
targets and vesting periods with 10% being earned at target 1; 40%
at target 2; and 50% at target 3. The Group's major shareholders
have been consulted in establishing the key terms of the LTIP and
CAP.
The vesting targets compared to the closing share price at 30
June 2023 are ambitious, and rightly so. If achieved the management
team will have delivered a significant increase in value for all
shareholders.
Operational Highlights
Change Management Programme
In October 2022, we announced our strategy to shift towards an
InsurTech business led by Blink and supported by CPP India and CPP
Turkey, whilst addressing the challenges presented by our declining
legacy book. But a sensible strategy is only a starting point;
fulfilling our potential depends on delivering what we said we
would do. The CMP is the 'how' we build a better future for the
Group, one which on completion should provide better outcomes for
all shareholders and other stakeholders.
George Lichtenberg best summarises the importance of this
undertaking to the future of the Group "I cannot say if things will
get better if we change, what I can say is that we must change if
they are to get better".
The interdependent strategic projects include simplification of
our products through the exit of highly regulated legacy products
and investing in higher-margin products that provide assistance
when customers have a bad day; creation of a globally scalable
business through investments in technology, from scaling Blink's
parametric platform to the delivery of a standalone platform in
India; and extending our distribution partnerships to support
Blink's geographical expansion and reduce concentration risks
within our partner base.
The current projects for delivery this year are the roll-out of
a new IT Platform for CPP India (in two phases) and commencing the
run-off of the legacy books in the UK, Spain, and Portugal. All are
expected to be completed by the year end. Alongside this, we
continue a programme of enhancing the Blink proposition and
scalability.
In August, subsequent to the period end, we successfully
deployed Phase 1 of the Indian IT platform. As a result, all new
non-Card acquisitions are now being managed on the new platform,
with over 500,000 policies already live within the system. This is
a major milestone for the business which demonstrates that the
underlying technical infrastructure of the platform is robust and
scalable and gives confidence in delivery of Phase 2 (Card
product).
In addition, in June, we transferred our Italian portfolio from
legacy IT systems to a third-party fully managed service provider,
which is working well. Development work has commenced to transfer
the UK legacy books to the same third-party provider in early Q1
2024. The progress achieved with the Indian platform and Legacy
market migrations is fundamental in being ready to decommission the
Group's expensive legacy IT systems in H1 2024.
Our colleagues
The strategy we are following, the course we are taking and the
goals we have set ourselves are challenging. To transform a
business from one business model to another, from one in terminal
decline to one with long term prospects for growth requires
courage, confidence, and a lot of hard work, which are the same
qualities I see in my colleagues from across the Group on a daily
basis.
I would like to thank all my colleagues for their hard work,
professionalism, and talent during the first half of 2023.
Outlook
We are confident about the outlook and growth prospects for our
Core operations for the second half of the year though we do expect
the foreign exchange headwinds to continue for the foreseeable
future. The CMP is expected to consume cash as we exit from our
Legacy business and incur closure costs such as redundancies. That
aside, our focus remains unchanged, on reshaping and building a
business which will improve outcomes for all stakeholders over the
longer term.
Whilst progress is never as fast as I would like, I remain
confident that we are travelling in the right direction and at an
appropriate speed.
Simon Pyper
Chief Executive Officer
18 September 2023
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
6 months ended 30 June 2023 6 months ended 30 June 2022 (Restated*) (Unaudited) Year ended 31 December 2022 (Audited)
(Unaudited)
Core Legacy Core Legacy Total Core Legacy Total
Note GBP'000 GBP'000 Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing
operations
Revenue 3 87,030 6,491 93,521 69,505 7,772 77,277 154,267 15,516 169,783
Cost of sales (76,818) (1,713) (78,531) (59,314) (2,677) (61,991) (133,924) (5,087) (139,011)
--------- -------- -------------- --------------- -------------- ----------------------- ------------ ---------- ----------------
Gross profit 10,212 4,778 14,990 10,191 5,095 15,286 20,343 10,429 30,772
Administrative
expenses (9,920) (9,032) (18,952) (9,431) (4,672) (14,103) (18,469) (9,689) (28,158)
--------------- -------------- ------------ ----------
Operating
(loss)/profit 292 (4,254) (3,962) 760 423 1,183 1,874 740 2,614
Analysed as:
EBITDA 3 1,821 1,062 2,883 2,211 726 2,937 4,928 1,925 6,853
Depreciation
and
amortisation (903) (174) (1,077) (1,027) (237) (1,264) (2,055) (452) (2,507)
Exceptional
items 4 (626) (5,142) (5,768) (424) (66) (490) (999) (733) (1,732)
Investment
revenues 333 96 429 211 10 221 370 116 486
Finance costs (187) (6) (193) (264) 7 (257) (630) (26) (656)
(Loss)/profit
before taxation 438 (4,164) (3,726) 707 440 1,147 1,614 830 2,444
Taxation 5 (1,290) (55) (1,345) (1,371) (78) (1,449) (2,000) (343) (2,343)
--------------- -------------- ------------ ----------
(Loss)/profit
for the period
from continuing
operations (852) (4,219) (5,071) (664) 362 (302) (386) 487 101
Discontinued
operations
Profit for the
period from
discontinued
operations - - - - 756 756 - 676 676
--------- -------- -------------- --------------- -------------- ----------------------- ------------ ---------- ----------------
(Loss)/profit
for the period (852) (4,219) (5,071) (664) 1,118 454 (386) 1,163 777
========= ======== ============== =============== ============== ======================= ============ ========== ================
Attributable to:
Equity holders
of the Company (1,084) (4,219) (5,303) (864) 1,118 254 (640) 1,163 523
Non-controlling
interests 232 - 232 200 - 200 254 - 254
--------- -------- -------------- --------------- -------------- ----------------------- ------------ ---------- ----------------
(852) (4,219) (5,071) (664) 1,118 454 (386) 1,163 777
========= ======== ============== =============== ============== ======================= ============ ========== ================
Basic & diluted
(loss)/earnings
per share Pence Pence Pence Pence Pence Pence Pence Pence Pence
Continuing
operations 6 (12.25) (47.70) (59.95) (9.77) 4.09 (5.68) (7.24) 5.51 (1.73)
Discontinued
operations 6 - - - - 8.55 8.55 - 7.64 7.64
--------- -------- -------------- --------------- -------------- ----------------------- ------------ ---------- ----------------
6 (12.25) (47.70) (59.95) (9.77) 12.64 2.87 (7.24) 13.15 5.91
========= ======== ============== =============== ============== ======================= ============ ========== ================
* Restated to reflect Mexico as a discontinued operation. See
note 2.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
6 months ended 30 June 2023 6 months ended 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
(Loss)/profit for the period (5,071) 454 777
Items that may be reclassified
subsequently to profit or loss:
Fair value gain on equity
investment - - 152
Exchange differences on
translation of foreign
operations (484) (1,966) (2,052)
Exchange differences
reclassified on disposal of
foreign operations - 1,081 1,093
Other comprehensive expense for
the period net of taxation (484) (885) (807)
---------------------------- ---------------------------- ------------------
Total comprehensive expense for
the period (5,555) (431) (30)
============================ ============================ ==================
Attributable to:
Equity holders of the Company (5,722) (704) (286)
Non-controlling interests 167 273 256
---------------------------- ---------------------------- ------------------
(5,555) (431) (30)
============================ ============================ ==================
CONSOLIDATED BALANCE SHEET
30 June 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
Note (Unaudited) (Unaudited) (Audited)
Non-current assets
Goodwill 524 567 544
Other intangible assets 5,728 4,453 4,710
Property, plant and equipment 1,103 1,360 1,243
Right-of-use assets 3,567 4,101 3,936
Equity investment 2,041 1,889 2,041
Deferred tax assets 536 341 230
Contract assets 211 448 275
------------- ------------- -----------------
13,710 13,159 12,979
------------- ------------- -----------------
Current assets
Inventories 19 115 87
Contract assets 6,948 4,538 5,764
Trade and other receivables 14,800 15,776 19,841
Cash and cash equivalents 15,959 19,321 20,984
------------- ------------- -----------------
37,726 39,750 46,676
Total assets 3 51,436 52,909 59,655
------------- ------------- -----------------
Current liabilities
Borrowings - - 23
Income tax liabilities (1,023) (808) (1,195)
Trade and other payables (19,849) (21,732) (26,210)
Provisions 7 (947) - (224)
Lease liabilities (946) (869) (966)
Contract liabilities (12,146) (9,909) (11,238)
------------- ------------- -----------------
(34,911) (33,318) (39,810)
------------- ------------- -----------------
Net current assets 2,815 6,432 6,866
------------- ------------- -----------------
Non-current liabilities
Borrowings 125 42 -
Deferred tax liabilities (699) (626) (702)
Provisions 7 (2,685) - (145)
Lease liabilities (3,380) (4,008) (3,752)
Contract liabilities (629) (898) (773)
(7,268) (5,490) (5,372)
------------- ------------- -----------------
Total liabilities (42,179) (38,808) (45,182)
------------- ------------- -----------------
Net assets 9,257 14,101 14,473
============= ============= =================
Equity
Share capital 8 24,256 24,254 24,256
Share premium account 45,225 45,225 45,225
Merger reserve (100,399) (100,399) (100,399)
Translation reserve (1,244) (822) (825)
ESOP reserve 17,567 17,192 17,212
Retained earnings 21,882 26,831 27,201
------------- ------------- -----------------
Equity attributable to equity holders of the Company 7,287 12,281 12,670
Non-controlling interests 1,970 1,820 1,803
------------- ------------- -----------------
Total equity 9,257 14,101 14,473
============= ============= =================
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 2023
(Unaudited)
At 1 January 2023 24,256 45,225 (100,399) (825) 17,212 27,201 12,670 1,803 14,473
Loss for the period - - - - - (5,303) (5,303) 232 (5,071)
Other comprehensive
expense for the period - - - (419) - - (419) (65) (484)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Total comprehensive
expense for the period - - - (419) - (5,303) (5,722) 167 (5,555)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Equity-settled
share-based payment
charge - - - - 355 - 355 - 355
Effects of
hyperinflation - - - - - (16) (16) - (16)
At 30 June 2023 24,256 45,225 (100,399) (1,244) 17,567 21,882 7,287 1,970 9,257
======== ======== ========== ============ ======== ========= ======== ================ ========
6 months ended
30 June 2022
(Unaudited)
At 1 January 2022 24,243 45,225 (100,399) 136 17,418 27,202 13,825 1,547 15,372
Profit for the period - - - - - 254 254 200 454
Other comprehensive
expense for the period - - - (958) - - (958) 73 (885)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Total comprehensive
expense for the period - - - (958) - 254 (704) 273 (431)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Equity-settled
share-based payment
credit - - - - (226) - (226) - (226)
Exercise of share
options 11 - - - - (5) 6 - 6
Effects of
hyperinflation - - - - - 43 43 - 43
Dividends paid - - - - - (663) (663) - (663)
At 30 June 2022 24,254 45,225 (100,399) (822) 17,192 26,831 12,281 1,820 14,101
======== ======== ========== ============ ======== ========= ======== ================ ========
Year ended
31 December 2022
(Audited)
At 1 January 2022 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 period - - - (961) - 675 (286) 256 (30)
-------- -------- ---------- ------------ -------- --------- -------- ---------------- --------
Equity-settled
share-based payment
credit - - - - (206) - (206) - (206)
Exercise of share
options 13 - - - - (7) 6 - 6
Deferred tax on share
options - - - - - (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
6 months ended 6 months ended Year ended
Note 30 June 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Net cash (used in)/from operating activities 9 (2,429) (327) 3,822
Investing activities
Interest received 429 176 490
Purchases of property, plant and equipment (162) (200) (526)
Purchases of intangible assets 3 (1,643) (1,153) (2,194)
Costs associated with disposal of discontinued
operations - (72) (128)
Cash disposed of with discontinued operations - (518) (823)
Net cash used in investing activities (1,376) (1,767) (3,181)
--------------- --------------- ------------------
Financing activities
Dividends paid - - (663) (663)
Repayment of the lease liabilities (742) (713) (1,388)
Interest paid (37) (37) (75)
Issue of ordinary share capital - 6 6
Net cash used in financing activities (779) (1,407) (2,120)
--------------- --------------- ------------------
Net decrease in cash and cash equivalents (4,584) (3,501) (1,479)
Effect of foreign exchange rate changes (441) 413 54
Cash and cash equivalents at start of period 20,984 22,409 22,409
Cash and cash equivalents at end of period 15,959 19,321 20,984
--------------- --------------- ------------------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1 General information
The condensed consolidated interim financial statements for the
six months ended 30 June 2023 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 2022 were approved by the Board on 27
March 2023 and have been delivered to the Registrar of Companies.
The Auditor, PKF Littlejohn LLP, reported on these financial
statements; their report was unqualified, did not contain an
emphasis of matter paragraph and did not contain statements under
s498 (2) or (3) of the Companies Act 2006.
2 Accounting policies
Basis of preparation
The unaudited condensed consolidated interim financial
statements for the six months ended 30 June 2023 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
2022 which were prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and UK-adopted International Accounting
Standards (UK IASs). The condensed consolidated interim financial
statements were approved for release on 18 September 2023.
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 2022, except as
detailed below.
New standards
IFRS 17 is applicable for the first time in the current period.
Due to the immaterial nature of the Group's insurance operations,
no adjustment has been made for this accounting standard change as
the valuation of the remaining insurance contract balances are
expected to be materially the same under both IFRS 17 and IFRS 4 in
the context of the Group's consolidated financial statements.
Amendments to IAS 1, IAS 8 and IAS 12 also apply from this
period. There has been no material impact to the Group on
adoption.
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 was classified as discontinued the Group's consolidated
financial statements for the year ended 31 December 2022.
Accordingly, in these interim financial statements the comparative
consolidated income statement information for the six months ended
30 June 2022 and appropriate disclosure notes have been restated.
The adjustments relating to the restatement have not been
audited.
Core and Legacy presentation
Consistent with the Group's consolidated financial statements
for the year ended 31 December 2022, 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 interim presentation has also been re-presented to reflect
these changes.
Hyperinflation
The Group has operations within Turkey, which continue to meet
the criteria to be classified as a hyperinflationary economy,
whereby inflation has reached over 100% over the past three years.
The criteria was first met in the 30 June 2022 interim financial
statements and continues to be applied. Therefore, the results of
our Turkish subsidiary have been adjusted for the changes in
inflation in each reporting period shown and are stated at the
exchange rate at the end of each reporting period. The price index
in Turkey (source: Turkish Statistical Institute) has shown
inflation for the six month period to 30 June 2023 of 20% (H1 2022:
42%; and year ended 31 December 2022: 64%).
Going concern
In reaching their view on the preparation of the condensed
consolidated interim financial statements on a going concern basis,
the Directors are required to consider whether the Group can
continue in operational existence for a period of at least 12
months from the date of this report.
The Group has a formalised process of budgeting, reporting and
review along with procedures to forecast its profitability and cash
flows. The plans provide information to the Directors which are
used to ensure the adequacy of resources available for the Group to
meet its business objectives, both in the short-term and in
relation to its strategic priorities. The Group's revenue, profit
and cash flow forecasts are subject to robust downside stress
testing which involves modelling the impact of a combination of
plausible adverse scenarios focused on crystallisation of the
Group's key operational risks, taking into account the changing
economic back drop. This is done to identify risks to liquidity and
covenant compliance and enable management to formulate appropriate
and timely mitigation strategies.
Taking the analysis into consideration, the Directors are
satisfied that the Group has the necessary resources to continue in
operational existence for a period of at least 12 months from the
date of this report. Accordingly, they continue to adopt the going
concern basis in preparing the condensed consolidated interim
financial statements.
3 Segmental analysis
IFRS 8 Operating Segments requires operating segments to be
identified on the basis of internal reports about components of the
Group that are regularly reviewed by the Board of Directors to
allocate resources to the segments and to assess their
performance.
The Group is 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 the relevant geographies for statutory purposes;
and
-- Legacy (UK Legacy, UK MGA, Spain, Portugal, and Italy)
In the current period, certain exceptional items recognised
within the Central Functions business unit, have been reclassified
to Legacy, where they relate to costs specific to the closure of
the Legacy business and decommissioning of the Group's legacy IT
systems. There were no equivalent costs to reclassify in the prior
period.
In October 2022, Mexico was reclassified as discontinued, having
previously been part of the Legacy segment; accordingly, the
interim comparatives have been restated.
Segment revenue and performance for the current and comparative
periods are presented below:
Central
India Turkey Blink Functions Legacy Total
Six months ended 30 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
June 2023 (Unaudited)
Continuing operations
Revenue - external sales 85,224 1,413 393 - 6,491 93,521
Cost of sales (76,167) (612) (39) - (1,713) (78,531)
-------------------------------- --------- -------- -------- ----------- ---------- ---------
Gross profit 9,057 801 354 - 4,778 14,990
Administrative expenses
excluding depreciation,
amortisation, and exceptional
items (4,817) (525) (967) (2,082) (3,716) (12,107)
-------------------------------- --------- -------- -------- ----------- ---------- ---------
EBITDA 4,240 276 (613) (2,082) 1,062 2,883
Depreciation and amortisation (664) (56) (57) (126) (174) (1,077)
Exceptional items (note
4) - (210) - (416) (5,142) (5,768)
-------------------------------- --------- -------- -------- ----------- ---------- ---------
Operating (loss)/profit 3,576 10 (670) (2,624) (4,254) (3,962)
Investment revenues 429
Finance costs (193)
---------
Loss before taxation (3,726)
Taxation (1,345)
---------
Loss for the period (5,071)
=========
Central
India Turkey Blink Functions Legacy Total
Six months ended 30 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
June 2022 (Restated*)
(Unaudited)
Continuing operations
Revenue - external sales 67,836 1,453 216 - 7,772 77,277
Cost of sales (58,600) (687) (27) - (2,677) (61,991)
-------------------------------- --------- -------- -------- ------------ -------- ---------
Gross profit 9,236 766 189 - 5,095 15,286
Administrative expenses
excluding depreciation,
amortisation, and exceptional
items (4,905) (553) (246) (2,276) (4,369) (12,349)
-------------------------------- --------- -------- -------- ------------ -------- ---------
EBITDA 4,331 213 (57) (2,276) 726 2,937
Depreciation and amortisation (612) (72) (105) (238) (237) (1,264)
Exceptional items (note
4) - - - (424) (66) (490)
-------------------------------- --------- -------- -------- ------------ -------- ---------
Operating profit/(loss) 3,719 141 (162) (2,938) 423 1,183
Investment revenues 221
Finance costs (257)
---------
Profit before taxation 1,147
Taxation (1,449)
---------
Loss for the period
from continuing operations (302)
Discontinued operations
Profit for the period
from discontinued operations 756
---------
Profit for the period 454
=========
* Restated to reflect Mexico as a discontinued operation. See
note 2.
Central
India Turkey Blink Functions Legacy Total
Year ended 31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022 (Audited)
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
4) (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 period
from continuing operations 101
Discontinued operations
Profit for the period
from discontinued operations 676
----------
Profit for the period 777
==========
Segmental assets
30 June 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
India 32,513 31,098 38,613
Turkey 1,570 1,849 1,665
Blink 503 360 636
Central Functions 2,008 3,793 5,092
Legacy 11,741 13,012 10,834
Total segment assets 48,335 50,112 56,840
Unallocated assets 3,101 2,797 2,815
Consolidated total assets 51,436 52,909 59,655
============= ============= =================
Goodwill, deferred tax assets, and the equity investment are not
allocated to segments.
The Legacy asset balance at 30 June 2022 includes GBP1,155,000
of assets held in Mexico, which was sold in October 2022. See note
2.
Capital expenditure
Other intangible assets
-----------------------------------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Continuing operations
India 1,368 949 1,814
Turkey 14 - 36
Blink 52 72 158
Central Functions 31 5 14
Legacy 178 127 172
Total additions 1,643 1,153 2,194
============ ============ =============
In the period to 30 June 2023 GBP1,419,000 (30 June 2022:
GBP985,000, 31 December 2022: GBP1,960,000) of the total other
intangible asset additions related to internally generated software
assets in development. These reflect the capitalisation of staff
and contractor costs in IT development projects. As a result, at 30
June 2023 other intangible assets include GBP4,986,000 assets in
development, which became operational in August 2023 at which time
amortisation commenced.
Information about major customers
Revenue from customers of one business partner in our India
segment represented approximately GBP65,389,000 (H1 2022:
GBP49,825,000; year ended 31 December 2022: GBP110,128,000) of the
Group's total revenue.
4 Exceptional items
6 months ended 6 months ended 30 Year
30 June 2023 (Unaudited) June 2022 (Unaudited) ended
31
December
2022
(Audited)
Core Legacy Total Core Legacy Total Core Legacy Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing
operations
Restructuring
and
closure costs 271 1,651 1,922 424 66 490 480 332 812
Onerous
contracts - 3,313 3,313 - - - - 248 248
DBP charges 355 - 355 - - - - - -
IT asset
impairment - 178 178 - - - - 153 153
Globiva
compensation
payment - - - - - - 519 - 519
-------- -------- --------- -------- --------- --------- ----------
Exceptional
charge
included in
operating
profit 626 5,142 5,768 424 66 490 999 733 1,732
Tax on
exceptional
items (53) (140) (193) - - - (131) (61) (192)
-------- -------- --------- -------- --------- --------- --------- ---------- ---------
Total
exceptional
charge/(gain)
after
tax for
continuing
operations 573 5,002 5,575 424 66 490 868 672 1,540
Discontinued
operations
Exceptional
gain
from
discontinued
operations - - - - 7 7 - (535) (535)
-------- -------- --------- -------- --------- --------- --------- ---------- ---------
Total
exceptional
charge after
tax 573 5,002 5,575 424 73 497 868 137 1,005
======== ======== ========= ======== ========= ========= ========= ========== =========
Total exceptional costs of GBP5,768,000 comprises:
-- Restructuring and closure costs of GBP1,922,000 (H1 2022:
GBP490,000) which primarily relate to Legacy closure activities.
Redundancy and associated costs have been recognised in Spain, UK
Legacy, and Central Functions. Restructuring costs include
necessary retention provisions as part of the closure process. Core
restructuring costs also includes settlement costs relating to
Turkey.
-- Onerous contract costs of GBP3,313,000 (H1 2022: GBPnil)
reflect the finalisation of closure timelines for UK Legacy, Spain,
Portugal, and the decommissioning of the Group's legacy IT
platforms. As a result, a constructive obligation exists for
contracts that are onerous. The largest balance relates to
wind-down of the UK Legacy operations.
-- IT asset impairment costs of GBP178,000 (H1 2022: GBPnil)
relates to intangible assets held in the UK Legacy business.
-- The Deferred Bonus Plan (DBP) charges of GBP355,000 (H1 2022:
GBPnil) relates to a share-based payment retention plan put in
place to retain key EMC colleagues for the duration of the CMP.
5 Taxation
The tax charge is calculated by aggregating the tax arising in
each jurisdiction based on estimated profits chargeable to
corporation tax and withholding taxes arising in H1 2023 at the
local statutory rate of tax. This leads to a tax charge on
continuing operations of GBP1,345,000 (H1 2022: GBP1,449,000; year
ended 31 December 2022: GBP2,343,000). These tax charges result in
an effective tax rate (ETR) at the half year of negative 36% (H1
2022 restated: positive 126%; year ended 31 December 2022: positive
96%).
The ETR is reflective of the overall loss before tax in the
current period; due to the large exceptional items recognised
leading to the Legacy markets being loss making; and the continuing
losses recognised within Central Functions and Blink. These
markets, therefore, recognise only a minimal tax charge. Our
profitable markets in India and Turkey recognise tax at higher
rates than the current UK corporate income tax rate of 23.5%
(blended rate of; 19% to March 2023 increasing to 25% in April
2023) (H1 2022 and year ended 31 December 2022: 19%). There are
also withholding taxes applied to funds repatriated from our
overseas operations which further increases the ETR.
Removing the one-off exceptional items, gives an adjusted ETR of
75%, which is expected to be more reflective of the adjusted ETR
for the 2023 full year. The CMP is expected to reduce the Group's
overall ETR in the medium to long term, once it has been fully
concluded.
6 (Loss)/earnings per share
Basic and diluted (loss)/earnings per share (EPS) has been
calculated in accordance with IAS 33 Earnings per share. Underlying
earnings/(loss) per share has also been presented to give a better
understanding of the performance of the business. In accordance
with IAS 33, potential ordinary shares are only considered dilutive
when their conversion would decrease the EPS or increase the loss
per share attributable to equity holders.
Six months ended 30 June 2023 (Unaudited) Continuing operations Discontinued operations Total
(Loss)/earnings GBP'000 GBP'000 GBP'000
Loss for the purposes of basic and diluted
loss per share (5,303) - (5,303)
Exceptional items (net of tax) 5,575 - 5,575
---------------------- ------------------------ ----------------------
Earnings for the purposes of basic and
diluted underlying earnings per share 272 - 272
====================== ======================== ======================
(Loss)/earnings attributable to Core and
Legacy Core Legacy Continuing operations
GBP'000 GBP'000 GBP'000
Loss for the purposes of basic and diluted
loss per share (1,084) (4,219) (5,303)
Exceptional items (net of tax) 573 5,002 5,575
---------------------- ------------------------ ----------------------
Earnings/(loss) for the purposes of basic
and diluted underlying earnings/(loss) per
share (511) 783 272
====================== ======================== ======================
Number of shares Number
(thousands)
Weighted average number of ordinary shares
for the purposes of basic and diluted loss
per
share and basic underlying earnings per
share 8,846
Effect of dilutive ordinary shares: share
options 322
----------------------
Weighted average number of ordinary shares
for the purposes of diluted underlying
earnings
per share 9,168
======================
(Loss)/earnings per share Continuing operations Discontinued operations Total
pence pence pence
Basic and diluted loss per share (59.95) - (59.95)
====================== ======================== ======================
Basic underlying earnings per share 3.07 - 3.07
Diluted underlying earnings per share 2.97 - 2.97
====================== ======================== ======================
Core Legacy Continuing operations
pence pence pence
Basic and diluted loss per share (12.25) (47.70) (59.95)
====================== ======================== ======================
Basic underlying earnings/(loss) per share (5.78) 8.85 3.07
Diluted underlying earnings/(loss) per
share (5.57) 8.54 2.97
====================== ======================== ======================
Six months ended 30 June 2022 (Unaudited)
(Restated*) Continuing operations Discontinued operations Total
Earnings/(loss) GBP'000 GBP'000 GBP'000
Earnings/(loss) for the purposes of basic
and diluted earnings/(loss) per share (502) 756 254
Exceptional items (net of tax) 490 7 497
---------------------- ------------------------ ----------------------
Earnings/(loss) for the purposes of
underlying basic and diluted
earnings/(loss) per share (12) 763 751
====================== ======================== ======================
(Loss)/earnings attributable to Core and
Legacy Core Legacy Continuing operations
GBP'000 GBP'000 GBP'000
(Loss)/earnings for the purposes of basic
and diluted (loss)/earnings per share (864) 362 (502)
Exceptional items (net of tax) 424 66 490
---------------------- ------------------------ ----------------------
(Loss)/earnings for the purposes of basic
and diluted underlying (loss)/earnings per
share (440) 428 (12)
====================== ======================== ======================
Number of shares Number
(thousands)
Weighted average number of ordinary shares
for the purposes of basic and diluted
earnings/(loss)
per share and basic and diluted underlying
earnings/(loss) per share 8,843
Earnings/(loss) per share Continuing operations Discontinued operations Total
pence pence pence
Basic and diluted earnings/(loss) per share (5.68) 8.55 2.87
====================== ======================== ======================
Basic and diluted underlying
earnings/(loss) per share (0.14) 8.63 8.49
====================== ======================== ======================
Core Legacy Continuing operations
pence pence pence
Basic and diluted (loss)/earnings per share (9.77) 4.09 (5.68)
====================== ======================== ======================
Basic and diluted underlying
(loss)/earnings per share (4.98) 4.84 (0.14)
====================== ======================== ======================
Year ended 31 December 2022 (Audited) Continuing operations Discontinued operations Total
Earnings/(loss) GBP'000 GBP'000 GBP'000
Earnings/(loss) for the purposes of basic
and diluted earnings/(loss) per share (153) 676 523
Exceptional items (net of tax) 1,350 (535) 815
---------------------- ------------------------ ----------------------
Earnings for the purposes of basic and
diluted underlying earnings per share 1,197 141 1,338
====================== ======================== ======================
(Loss)/earnings attributable to Core and
Legacy Core Legacy Continuing operations
GBP'000 GBP'000 GBP'000
(Loss)/earnings for the purposes of basic
and diluted (loss)/earnings per share (640) 487 (153)
Exceptional items (net of tax) 678 672 1,350
---------------------- ------------------------ ----------------------
Earnings for the purposes of basic and
diluted underlying earnings per share 38 1,159 1,197
====================== ======================== ======================
Number of shares Number
(thousands)
Weighted average number of ordinary shares
for the purposes of basic and diluted
earnings/(loss)
per share and basic underlying earnings
per share 8,844
Effect of dilutive ordinary shares: share
options 30
----------------------
Weighted average number of ordinary shares
for the purposes of diluted underlying
earnings
per share 8,874
======================
Earnings/(loss) per share Continuing operations Discontinued operations Total
pence pence pence
Basic and diluted earnings/(loss) per share (1.73) 7.64 5.91
====================== ======================== ======================
Basic underlying earnings per share 13.53 1.59 15.12
Diluted underlying earnings per share 13.49 1.59 15.08
====================== ======================== ======================
Core Legacy Continuing operations
pence pence pence
Basic and diluted (loss)/earnings per share (7.24) 5.51 (1.73)
====================== ======================== ======================
Basic underlying earnings per share 0.43 13.10 13.53
Diluted underlying earnings per share 0.43 13.06 13.49
====================== ======================== ======================
7 Provisions
Onerous contract and
dilapidation costs
---------------------------------
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
-------------------------------- --------- --------- -----------
At 1 January 369 - -
Charged to the income statement 3,313 - 369
Utilised in the period (50) - -
-------------------------------- --------- --------- -----------
Total 3,632 - 369
-------------------------------- --------- --------- -----------
Onerous contracts relate to the closure activities in respect of
UK Legacy, UK MGA (recognised in the year ended 31 December 2022)
Spain, Portugal, and the decommissioning of the Group's legacy IT
systems (refer to note 4). The remaining dilapidation provision
relates to the exit of a lease in the UK.
Provisions are expected to be settled as per the following
table:
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
-------------------- --------- --------- -----------
Within one year 947 - 224
Outside of one year 2,685 - 145
-------------------- --------- --------- -----------
Total 3,632 - 369
-------------------- --------- --------- -----------
8 Share capital
Share capital at 30 June 2023 is GBP24,256,000 (30 June 2022:
GBP24,254,000; 31 December 2022: GBP24,256,000).
The total number of ordinary shares in issue at 30 June 2023 is
8,846,045 of which 8,841,045 are fully paid and 5,000 are partly
paid.
9 Reconciliation of operating cash flows
6 months ended Year ended
6 months ended 30 June 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
(Loss)/profit for the period (5,071) 454 777
Adjustments for:
Depreciation and amortisation 1,075 1,260 2,509
Share-based payment charge/(credit) 355 (248) (246)
Impairment loss on intangible assets 178 - 187
Loss on disposal of intangible assets - 175 5
Loss on disposal of property, plant and
equipment 2 42 15
Profit on disposal of discontinued operations - (657) (535)
Effects of hyperinflation (61) (69) 86
Investment revenues (429) (176) (490)
Finance costs 193 281 709
Income tax charge 1,345 1,449 2,343
Operating cash flows before movement in
working capital (2,413) 2,511 5,360
Decrease/(increase) in inventories 68 (13) 15
Increase in contract assets (1,361) (148) (1,481)
Decrease/(increase) in receivables 3,231 (1,810) (6,232)
(Decrease)/increase in payables (5,685) 1,404 7,547
Increase/(decrease) in contract liabilities 1,196 (30) 1,655
(Decrease)/increase in insurance liabilities (7) - 83
Increase in provisions 3,263 - 369
Cash (used in)/from operations (1,708) 1,914 7,316
Income taxes paid (721) (2,241) (3,494)
Net cash (used in)/from operating activities (2,429) (327) 3,822
============================ =============== ==================
10 Related party transactions
Transactions with associated undertakings
In the six months to 30 June 2023, the Group incurred fees of
GBP9,000 plus VAT (30 June 2022: GBP8,000; and year ended 31
December 2022: GBP19,000) for services rendered from KYND Limited,
which was payable under 14 day credit terms. The creditor balance
at 30 June 2023 was GBP1,000 (30 June 2022: GBPnil; 31 December
2022: GBP2,000).
Transactions with related parties
There have been no related party transactions in the current
period.
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 2023 30 June 2022 31 December 2022
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Short-term employee benefits 692 858 1,101
Post-employment benefits 10 25 27
Termination benefits - 300 300
Share-based payments 187 (195) (206)
889 988 1,222
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END
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