REG - CPPGroup Plc - Half-year Report for 6 months ended 30 June 2023
19/09/2023 07:00
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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 MONTHS ENDED 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 £93.5
million (H1 2022 restated: £77.3 million).
· Core revenues increased by 25% to £87.0 million (H1 2022: £69.5
million).
· EBITDA from continuing operations level with prior year at £2.9
million (H1 2022 restated: £2.9 million).
· Central overheads reduced to £2.1 million (H1 2022 restated: £2.3
million).
· Exceptional items total £5.8 million (H1 2022: £0.5 million)
primarily relating to planned Legacy business closures.
· Loss before tax from continuing operations of £3.7 million (H1 2022
restated: £1.1 million profit). On an underlying basis, profit before tax(3)
increased to £2.0 million (H1 2022 restated: £1.6 million).
· Cash balance of £16.0 million at 30 June 2023 (H1 2022: £19.3
million; 31 December 2022: £21.0 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 £2.9 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
£ millions Six months to 30 June 2023 Six months to 30 June 2022 (Restated(1)) 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 £5.8 million (H1 2022: £0.5 million). The tax effect of
the exceptional items is £0.2 million (H1 2022: £nil). 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 Officer Tel: +44 (0)7917 795601
David Bowling, Chief Financial Officer
Liberum Capital Limited
(Nominated Adviser and Sole Broker) Tel: +44 (0)20 3100 2000
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/
(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 £2.9 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 £0.6 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 £0.2 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 £4.0 million (H1 2022 restated: £1.2 million profit)
includes depreciation charges of £1.1 million (H1 2022 restated: £1.3
million) and exceptional items which have increased to £5.8 million (H1 2022:
£0.5 million) due to costs relating to the CMP. Total exceptional costs
associated with the CMP are expected to be in the range £7.5 million to £8.5
million for the full year.
Key Performance Metrics:
£ 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 £3.0 million (H1 2022: £3.1 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 £17.3 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 £1.9 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 £1.2 million (H1 2022: £1.3 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 £0.3 million (H1 2022: £0.2 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 £0.6 million (H1 2022: £0.1 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 £1.1 million (H1 2022 restated: £0.7 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 £0.4 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: £2.1 million (H1 2022 restated: £2.3 million)
Central overheads before appropriate recharge to business units are £4.6
million (H1 2022: £4.8 million) of which £1.7 million (H1 2022: £1.8
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 £0.2 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 £5.8 million
(H1 2022: £0.5 million) relates to:
· Onerous contract provision of £3.3 million (H1 2022: £nil)
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 £1.9 million (H1 2022: £0.5
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 £0.2 million (H1 2022: £nil) relating to
closure activities in the UK.
· Deferred Bonus Plan (DBP) charges of £0.4 million (H1 2022: £nil).
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 £1.3 million (H1 2022: £1.4
million), which is an effective tax rate (ETR) of negative 36% (H1 2022
restated: positive 126%). The tax charge includes £1.2 million (H1 2022;
£0.8 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
H1 2023 Core Legacy Total Core Legacy Total Core Legacy Total
£'m £'m £'m £'m £'m £'m £'m £'m £'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
£'m £'m £'m £'m £'m £'m £'m £'m £'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 £5.8
million (H1 2022 restated: £0.5 million) whilst there has been an associated
reduction in tax of £0.2 million (H1 2022 restated: £nil). 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 £16.0 million (H1 2022: £19.3
million; 31 December 2022: £21.0 million). Cash balances have reduced by
£5.0 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 £16.0 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 £5.0 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 1 Target 2 Target 3 Total Super-max Total + super-max
Share price £3.70 £4.75 £6.00 n/a £9.00 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 £1.5
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)
Note Core Legacy Total £'000 Core Legacy Total Core Legacy Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'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 - - - - 676 676
- 756 756
(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
6 months ended 30 June 2023 6 months ended 30 June 2022 Year ended
31 December 2022
£'000 £'000 £'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
£'000 £'000 £'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 capital Share premium account Merger reserve Translation reserve ESOP reserve Retained earnings Total Non-controlling interests Total equity
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'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
Note 6 months ended 6 months ended Year ended
30 June 2023 30 June 2022 31 December 2022
£'000 £'000 £'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:
India Turkey Central Functions Legacy Total
Blink
Six months ended 30 June 2023 (Unaudited) £'000 £'000 £'000 £'000 £'000 £'000
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 (4,817) (525) (967) (2,082) (3,716) (12,107)
items
EBITDA 4,240 276 1,062 2,883
(613) (2,082)
Depreciation and amortisation (664) (56) (57) (126) (174) (1,077)
Exceptional items (note 4) - (210) - (416) (5,142) (5,768)
Operating (loss)/profit (3,962)
3,576 10 (670) (2,624) (4,254)
Investment revenues 429
Finance costs (193)
Loss before taxation (3,726)
Taxation (1,345)
Loss for the period (5,071)
India Turkey Legacy Total
Blink Central Functions
Six months ended 30 June 2022 (Restated*) (Unaudited) £'000 £'000 £'000 £'000 £'000 £'000
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 (4,905) (553) (246) (2,276) (4,369) (12,349)
items
EBITDA 4,331 213 726 2,937
(57) (2,276)
Depreciation and amortisation (612) (72) (105) (238) (237) (1,264)
Exceptional items (note 4) - - - (424) (66) (490)
Operating profit/(loss) 1,183
3,719 141 (162) (2,938) 423
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.
India Turkey Total
Central Functions Legacy
Blink
Year ended 31 December 2022 (Audited) £'000 £'000 £'000 £'000 £'000 £'000
Continuing operations
Revenue - external sales 150,613 3,212 169,783
442 - 15,516
Cost of sales (132,413) (1,448) (63) - (5,087) (139,011)
Gross profit 18,200 1,764 30,772
379 - 10,429
Administrative expenses excluding depreciation, amortisation, and exceptional (10,168) (1,038) (837) (3,372) (8,504) (23,919)
items
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
£'000 £'000 £'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 £1,155,000 of assets held
in Mexico, which was sold in October 2022. See note 2.
Capital expenditure
Other intangible assets
6 months ended 30 June 2023 6 months ended 30 June 2022 Year ended
31 December 2022
£'000 £'000 £'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 £1,419,000 (30 June 2022: £985,000, 31
December 2022: £1,960,000) 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 £4,986,000
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 £65,389,000 (H1 2022: £49,825,000; year ended 31
December 2022: £110,128,000) of the Group's total revenue.
4 Exceptional items
6 months ended 30 June 2023 (Unaudited) 6 months ended 30 June 2022 (Unaudited) Year ended 31 December 2022 (Audited)
Core £'000 Legacy £'000 Total £'000 Core £'000 Legacy £'000 Total £'000 Core £'000 Legacy £'000 Total £'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 £5,768,000 comprises:
· Restructuring and closure costs of £1,922,000 (H1 2022: £490,000)
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 £3,313,000 (H1 2022: £nil) 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 £178,000 (H1 2022: £nil) relates to
intangible assets held in the UK Legacy business.
· The Deferred Bonus Plan (DBP) charges of £355,000 (H1 2022: £nil)
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 £1,345,000 (H1 2022:
£1,449,000; year ended 31 December 2022: £2,343,000). 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.
Continuing operations Discontinued operations Total
Six months ended 30 June 2023 (Unaudited)
(Loss)/earnings £'000 £'000 £'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
£'000 £'000 £'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 (511) 783 272
earnings/(loss) per share
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic and 8,846
diluted loss per share and basic underlying earnings per share
Effect of dilutive ordinary shares: share options 322
Weighted average number of ordinary shares for the purposes of diluted 9,168
underlying earnings per share
(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
Continuing operations Discontinued operations Total
Six months ended 30 June 2022 (Unaudited) (Restated*)
Earnings/(loss) £'000 £'000 £'000
Earnings/(loss) for the purposes of basic and diluted earnings/(loss) per (502) 756 254
share
Exceptional items (net of tax) 490 7 497
Earnings/(loss) for the purposes of underlying basic and diluted (12) 763 751
earnings/(loss) per share
(Loss)/earnings attributable to Core and Legacy Core Legacy Continuing operations
£'000 £'000 £'000
(Loss)/earnings for the purposes of basic and diluted (loss)/earnings per (864) 362 (502)
share
Exceptional items (net of tax) 424 66 490
(Loss)/earnings for the purposes of basic and diluted underlying (440) 428 (12)
(loss)/earnings per share
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic and 8,843
diluted earnings/(loss) per share and basic and diluted underlying
earnings/(loss) per share
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)
Continuing operations Discontinued operations Total
Year ended 31 December 2022 (Audited)
Earnings/(loss) £'000 £'000 £'000
Earnings/(loss) for the purposes of basic and diluted earnings/(loss) per (153) 676 523
share
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
£'000 £'000 £'000
(Loss)/earnings for the purposes of basic and diluted (loss)/earnings per (640) 487 (153)
share
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 8,844
diluted earnings/(loss) per share and basic underlying earnings per share
Effect of dilutive ordinary shares: share options 30
Weighted average number of ordinary shares for the purposes of diluted 8,874
underlying earnings per share
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 2023 30 June 2022 31 December 2022
£'000 £'000 £'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 2023 30 June 2022 31 December 2022
£'000 £'000 £'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 £24,256,000 (30 June 2022: £24,254,000; 31
December 2022: £24,256,000).
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 30 June 2023 6 months ended Year ended
30 June 2022 31 December 2022
£'000 £'000 £'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 £9,000 plus VAT
(30 June 2022: £8,000; and year ended 31 December 2022: £19,000) for
services rendered from KYND Limited, which was payable under 14 day credit
terms. The creditor balance at 30 June 2023 was £1,000 (30 June 2022: £nil;
31 December 2022: £2,000).
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
£'000 £'000 £'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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