REG - CPPGroup Plc - Half-year Report
24/08/2021 07:00
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RNS Number : 5217J CPPGroup Plc 24 August 2021
24 August 2021
CPPGroup Plc
("CPP", "the Group" or "the Company")
HALF YEAR REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2021
Robust performance against a challenging backdrop
CPP Group (AIM: CPP), the multinational provider of personal protection and
insurance products and services, is pleased to announce its half year results
for the six months ended 30 June 2021.
Highlights
· Group revenue from continuing operations increased by 10% to £66.4
million (H1 2020 restated: £60.3 million)
· EBITDA from continuing operations increased by 37% to £2.6 million
(H1 2020 restated: £1.9 million)
· Reported loss before tax from continuing operations of £0.7 million
(H1 2020 restated: £0.5 million profit)
· Underlying profit before tax from continuing operations of £0.8
million (H1 2020 restated: £0.6 million)
· Loss after tax from continuing operations of £1.8 million (H1 2020
restated: £1.2 million) which improves to an overall profit for the period of
£1.3 million (H1 2020: £0.7 million loss) when including discontinued
operations
· Cash balance of £19.6 million as at 30 June 2021 (H1 2020: £18.2
million)
· 5 pence per share interim dividend declared following recommencement
of full year dividend announced in FY 2020 results
Strategic progress
· Customer numbers increased to 12.3 million (H1 2020 restated: 10.8
million, FY 2020 restated: 11.6 million)
· The partner base continues to grow, including the addition of
financial wellbeing company ClearScore in the UK
· Further product innovation to meet the changing needs of consumers
with the release of a home emergency product range in the UK and EU, and plans
to launch a similar line in Turkey
· Integration of Blink into our platform to strengthen the Group's
ability to meet the growing demand for parametric insurance solutions
· Established an IT team in our Indian business to build their new
customer platform
· Disposal of German card protection legacy business for £2.4 million
· Restructuring of Mexico and closure of Malaysia business units in
line with the Group's commitment to maximise value from its assets and focus
on the areas with the strongest prospects
Financial and non-financial highlights - continuing operations
£ millions Six months to 30 June 2021 Six months to 30 June 2020 (Restated(1)) Change
Financial highlights:
Group
Revenue 66.4 60.3 10%
EBITDA(2) 2.6 1.9 37%
Operating (loss)/profit (0.5) 0.5 (199)%
(Loss)/profit before tax
- Reported (0.7) 0.5 (231)%
- Underlying(3) 0.8 0.6 41%
Loss after tax
- Reported (1.8) (1.2) (51)%
- Underlying(3) (0.4) (1.1) 60%
Profit/(loss) for the period(4) 1.3 (0.7) 273%
Basic loss per share (pence) (23.36) (14.19) (65)%
Interim dividend per share (pence) 5.00 - n/a
Cash and cash equivalents 19.6 18.2 7%
Segmental revenue
Ongoing Operations 61.9 55.1 12%
Restricted Operations 4.5 5.2 (13)%
Non-financial highlights:
Customer numbers (millions) 12.3 10.8 13%
1. Restated to reflect Germany as a discontinued operation.
2. EBITDA represents earnings before interest, taxation, depreciation,
amortisation and exceptional items.
3. Underlying profit before tax excludes exceptional items of £1.5
million (H1 2020: £0.1 million). The tax effect of the exceptional items is
£0.1 million (H1 2020: £nil). Further detail of exceptional items is
provided in note 5 of the condensed consolidated interim financial statements.
4. Profit/(loss) for the period includes continuing and discontinued
operations.
Jason Walsh, CEO of CPP Group, commented:
"The first half of 2021 was a similar story to that of 2020, with a strong
first quarter tempered by the negative effects of COVID-19 in the second,
particularly in our main market of India. Nonetheless, we have adapted well
across our markets and delivered a solid overall performance on the
corresponding period last year while making progress in restructuring elements
of the Group to further strengthen its position for long-term, sustainable and
profitable growth.
"As COVID-19 measures have eased in India, we have seen a progressive recovery
in trading in the region with strong progress since the end of June. However,
we remain cognisant of the need to monitor the situation closely as we move
through the second half.
"Elsewhere in our key markets, we continue to make progress. Our performance
in Turkey at a local level was particularly pleasing, driven in large part by
our expanded network of partners in the territory. However, the continuing
devaluation of the lira has largely negated this performance at a Group level.
In the UK and EU we continued to build on strong foundations to develop an
innovative, differentiated and integrated business with compelling prospects.
"We remain focused on growing our offering through innovation and
strengthening our routes to market while continuing to drive efficiencies
across the Group. Whilst uncertainty remains from COVID-19, the Board believes
the Company is trading broadly in line with market expectations for the full
year with the outlook being positive for the remainder of the year.
Enquiries:
CPPGroup Plc via Alma PR
Jason Walsh, CEO
Oliver Laird, CFO
Sarah Atherton, Group Company Secretary
Liberum Capital (Nominated Adviser & Sole Broker) +44 (0)20 3100 2000
Richard Lindley
Lauren Kettle
Kane Collings
Christopher Whitaker
Alma PR (Financial PR Adviser) +44 (0)20 3405 0205
Josh Royston cpp (mailto:cpp@almapr.co.uk) @almapr.co.uk (mailto:cpp@almapr.co.uk)
David Ison
Kieran Breheny
About CPP Group:
CPP Group takes away many of the stresses and strains of daily life for
millions of people across the globe. In collaboration with selected partners
in each country in which the Group operates, it develops, aggregates, offers
and supports a range of personal protection and insurance products, which are
sold alongside, or packaged with, the core product offerings of the Group's
partners. CPP is listed on AIM, operated by the London Stock Exchange.
For more information on CPP visit https://international.cppgroup.com/
(https://international.cppgroup.com/)
Chief Executive's Statement
We delivered another half of robust financial and operational progress amid
continuing challenges related to the pandemic. To be able to do so is
testament to the quality and dedication of our teams. I am grateful to all our
colleagues, particularly those in India who have been affected by the
devastating second wave of COVID-19 in Q2. Our people have shown exceptional
resolve throughout what has been an extremely difficult time and I would like
to thank them all for the way they have dealt with a period of unprecedented
adversity.
The pandemic and its knock-on effects will continue to affect the pace of our
progress in some areas. While we must remain vigilant in continuing to manage
the situation, there are signs of a return to a more normal environment and we
can now look to the future with cautious optimism.
The Group's strategy is to maximise value from its assets and focus on the
areas of the business with the greatest prospects for delivering sustainable
and profitable medium to long-term growth. During H1 we have restructured
elements of the Group as planned. This included the sale of our German Card
Protection legacy business for £2.4 million, providing additional financial
flexibility for the Group to deliver its growth strategy. Consequently the
German business is presented as a discontinued operation with this review
focusing on the performance of the Group's continuing operations.
Financial performance
Six months ended 30 June 2021 2020(1) Change Constant currency change(2)
Continuing operations £'m £'m
Revenue 66.4 60.3 10% 19%
EBITDA 2.6 1.9 37% 88%
Operating (loss)/profit (0.5) 0.5 (199)% (288)%
(Loss)/profit before tax (0.7) 0.5 (231)% (397)%
Cash 19.6 18.2 7% n/a
1. Restated to reflect Germany as a discontinued operation
2. The constant currency basis retranslates the previous year
measures at the average actual exchange rates used in the current financial
period. This approach is applied as a means of eliminating the effects of
exchange rate movements on the period-on-period reported results. The relevant
exchange rates and analysis of exchange rate movements are included in note 3
of the condensed consolidated interim financial statements.
Group revenue of £66.4 million (H1 2020 restated: £60.3 million) has grown
by 19% on a constant currency basis driven by our Indian market where we were
pleased to see Q1 new sales return to pre-pandemic levels. Although new sales
in April and May in the region were heavily impacted by the second wave of
COVID-19, the effect was not as deep as that experienced in Q2 2020. The speed
of recovery from the latest COVID-19 shock in India is not clear, however, we
draw confidence from the early signs in Q3 of further improvements in trading.
The renewal books across all our markets, including the growing book in India,
continue to perform well providing a reliable source of revenue and cash to
the business. The Group's customer numbers have increased to 12.3 million (H1
2020 restated: 10.8 million; 31 December 2020 restated: 11.6 million) with
growth in India being well supplemented by customer acquisitions from new
partners in Turkey and the UK.
Gross profit has reduced to £15.9 million (H1 2020 restated: £16.6 million)
which is reflective of a falling gross profit margin at 24% (H1 2020 restated:
28%). This reflects growth in our Indian business which has higher costs of
acquisition associated with sales than the UK and EU renewal books it is
replacing. In addition, whilst gross profit in India is increasing this is at
a lower margin period-on-period as an increasing share of revenue and customer
growth comes from lower margin product variants. We expect the Group gross
profit margin to continue to reduce in the medium-term.
We are pleased that EBITDA has grown by 88% on a constant currency basis to
£2.6 million (H1 2020 restated: £1.9 million) following a 10% reduction in
administrative expenses, before depreciation and exceptional items. The
reducing cost base demonstrates the benefit of restructuring exercises across
the Group to address loss-making operations and cost inefficiencies.
The operating loss of £0.5 million (H1 2020 restated: £0.5 million profit)
reflects depreciation charges of £1.6 million (H1 2020: £1.8 million) and
exceptional costs of £1.5 million (H1 2020: £0.4 million credit) associated
with restructuring in H1 which focused on the effectiveness of some of the
Group's operations and the overall cost base. This led to additional
operational efficiencies being realised in Spain, new business development
activities halted in Mexico, the closure of Malaysia and a reduction in
central Board costs. In addition, Blink, the parametric insurance platform was
brought under central management.
The loss before tax of £0.7 million (H1 2020: £0.5 million profit) is
principally due to the level of exceptional restructuring activity in H1 which
will benefit future periods including H2 2021. This coupled with the fact the
Group's trading activities are weighted towards H2, led by the festival season
in India, is expected to lead to the Group reversing this position and
reporting a pre-tax profit for the full year. On an underlying basis, which
excludes exceptional items, the Group has generated a profit before tax of
£0.8 million (H1 2020 restated: £0.6 million).
Discontinued operations
This represents our German operation which was sold in May 2021. Germany was a
non-core book of Card Protection business that was placed into run-off, which
included closure of the company's operation in Hamburg, following a strategic
decision to restructure the Group's EU markets in 2018. The disposal has
enabled the Group to realise the value of the diminishing run-off book and
re-direct resources to supporting its key markets. Discontinued operation
profits in the period were £3.1 million (H1 2020 restated: £0.4 million)
comprising a profit on disposal of the business of £2.7 million (H1 2020:
£nil) and a profit after tax from the trading results of Germany prior to
disposal of £0.4 million (H1 2020 restated: £0.4 million). Further detail is
provided in note 9 to the condensed consolidated interim financial statements.
Segmental performance
Revenue H1 2021 H1 2020 Change Constant currency change
£'m (Restated)(1)
£'m
Ongoing Operations:
India 53.1 46.0 15% 26%
EU Hub 5.0 5.4 (8)% (6)%
Turkey 1.8 1.8 1% 38%
Rest of World(2) 2.0 1.9 6% 8%
Total Ongoing Operations 61.9 55.1 12% 22%
Restricted Operations 4.5 5.2 (13)% (13)%
Group revenue 66.4 60.3 10% 19%
EBITDA H1 2021 H1 2020 Change Constant currency change
£'m (Restated)(1)
£'m
Ongoing Operations:
India 3.9 2.9 29% 48%
EU Hub 0.5 1.5 (64)% (64)%
Turkey 0.4 0.4 8% 75%
Rest of World(2) (0.7) (1.9) 63% 62%
Total Ongoing Operations 4.1 2.9 40% 69%
Restricted Operations 1.0 1.4 (29)% (29)%
Central Functions (2.4) (2.3) (2)% (2)%
Segmental EBITDA 2.7 2.0 35% 81%
Share of loss in joint venture (0.1) (0.1) 2% 2%
Group EBITDA 2.6 1.9 37% 88%
1. Restated to reflect Germany as a discontinued operation.
2. Rest of World comprises China, Malaysia, Mexico, UK, Blink and
Bangladesh.
Ongoing Operations
Revenue has increased by 22% on a constant currency basis to £61.9 million
(H1 2020 restated: £55.1 million) due to the growth in India through
increased sales of our Mobile and LivCare products particularly led by the
rural market and the growing Card Protection renewal book. In addition,
Globiva, which was heavily affected by COVID-19 last year, has grown and we
are pleased that monthly revenues are now back at pre-pandemic levels.
EBITDA has increased 69% on a constant currency basis to £4.1 million (H1
2020 restated: £2.9 million) resulting from growth in India and Globiva and a
reduction in Rest of World losses following the restructuring exercises in
Blink and Mexico and the closure of Malaysia.
The good performance in India demonstrates the strength of our partner
relationships - particularly with Bajaj Finance Limited (Bajaj) and SBI Card
(SBI), our two largest partners in India - who continue to see the value of
our products in helping them to maximise revenue and increase loyalty among
their rapidly expanding customer bases. In the period, CPP customer numbers in
the region surpassed 10 million, and subsequently have continued to grow at a
healthy rate.
We have also continued to make headway in strengthening the operational side
of our Indian business. Most notably in the period, we brought in a new IT
team to build a new customer platform that will underpin our operations and
will be of benefit as we continue to scale the business in the coming years.
The performance of Globiva, the Indian business process management company in
which we own a 51% stake, was largely not impacted by the escalation of the
COVID-19 situation in Q2. Globiva spent much of 2020 building a stronger
operational model that could withstand the unique challenges posed by the
pandemic and we are pleased that this enabled the business to withstand the
shocks of the second wave. As a result, the business has been able to grow its
billable seats through the period. Overall sales have increased
period-on-period, making Globiva one of our best performing units alongside
our main Indian business.
While to date there are encouraging signs that India is emerging from the
crisis, there remains uncertainty around the rate of the recovery and we
cannot rule out the possibility of further spikes. In the short-term, we
continue to work through the challenges and remain positive about the growth
prospects of our interests in India in the second half. The structural drivers
around the growth of the middle class that have made the territory such a
success story to date show no sign of abating, giving us confidence in our
ability to deliver further growth in the years ahead.
Turkey, another of our key markets, delivered good growth against the first
half of 2020 with local revenue and retail customer numbers growing by 38% and
32% respectively. The continued weakening of lira has largely negated this
progress in the reported results. The new partnerships signed last year
developed as we had hoped and made meaningful contributions to revenue growth
- particularly those with Akbank and Türkiye Sigorta.
Our operations in Turkey were not immune from the impact of COVID-19, but
against a challenging backdrop that included periods of bank branch closures,
we worked closely with our partners to explore new and innovative acquisition
channels, while focusing on continued product innovation. In the second half,
we expect to be able to launch a home emergency product into the market in a
similar vein to the one launched in our UK and EU businesses in the first
half. This is a good example of our improved pooling of resources and
knowledge from across the Group allowing us to successfully replicate products
in different markets.
We continue to execute our strategy across our UK and EU businesses, built
around a simple principle of investing in the UK to create a strong product
delivery and distribution team and leveraging that infrastructure and
expertise to grow our presence in mainland Europe. We are pleased with the
traction we are seeing on the continent, having signed several new partners
while gradually ramping up trading momentum, particular in the energy sector.
In the UK, we signed a new partnership with ClearScore, a financial wellbeing
company, for a personal cyber product and saw a healthy inflow of new
customers from them in the period. Our relationship with ClearScore
demonstrates our growing capability in embedded insurance. As planned, we also
expanded our relationship with the RAC in the period to offer an extended
range of products, such as Excess Protect and Key insurance.
On the operational side, we merged the new and legacy UK businesses to deliver
greater synergies and efficiencies between them under a single business
structure and leadership. Notably, we integrated Blink into our tech platform
to strengthen the Group's ability to meet the growing demand for parametric
insurance solutions.
Restricted Operations
As expected, revenue has decreased by 13% to £4.5 million (H1 2020: £5.2
million) reflecting the continuing decline in the UK legacy renewal books. The
steps taken by the Group in changing the renewal process for vulnerable
customers has returned renewal levels in line with the Board's expectations.
EBITDA reduced to £1.0 million (H1 2020: £1.4 million). Following the
closure of Malaysia in H1 the UK is the only operation remaining in this
segment.
Tax
The Group's tax charge from continuing operations in H1 is £1.1 million (H1
2020 restated: £1.7 million) which mainly comprises tax payable in India,
along with smaller charges in the EU and Turkey. The reduced charge reflects a
lower tax charge in India due to additional withholding taxes recognised on
dividend distributions in the prior year and a drop in taxable profits in the
EU following restructuring in Spain resulting in lower tax charges.
Six months ended 30 June 2021 2020
Continuing Operations Discontinued Operations Total Continuing Operations Discontinued Operations Total
(Loss)/profit before tax (0.7) 3.1 2.4 0.5 0.5 1.0
Tax charge 1.1 0.1 1.2 1.7 0.1 1.8
Effective tax rate (175)% 1% 48% 338% 14% 173%
The level of exceptional restructuring charges in H1 has led to a loss before
tax which combined with the tax charge results in an effective tax rate (ETR)
of negative 175% (H1 2020 restated: positive 338%).
The half year ETR is not considered to be representative of the full year as
the Group expects to generate an overall profit before tax through the trading
performance in the second half, whilst the level of exceptional restructuring
costs will slow. The full year ETR is forecast to be approximately 220% (FY
2020 restated: 378%), but will ultimately be determined by the split of
profits and losses in the Group.
Our forecast ETR continues to be higher than the standard UK corporation tax
rate of 19%. The high rate reflects the following factors:
- A high level of one-off exceptional charges on which no tax relief
is currently available. These charges reflect restructuring activity as part
of the Group's strategy to focus resources on profitable operations;
- withholding tax charges arising on repatriation of funds from
overseas countries;
- deferred tax has not been recognised on losses arising in developing
markets as the short-term profit expectations do not support the recognition
of deferred tax assets in these areas; and
- tax is chargeable at the local statutory rate in our profitable
countries, which is higher than the UK corporate income tax rate of 19%.
Adjusted ETR
The half year adjusted ETR (which excludes the impact of exceptional items) at
152% (H1 2020 restated: 281%) demonstrates the progressive improvement in the
Group's tax position as the Group systematically addresses its loss-making
operations and overall cost-base. The adjusted ETR is summarised as follows:
H1 2021 H1 2020
Continuing operations Reported Exceptional items(1) Adjusted Reported Exceptional items(1) Adjusted
(Loss)/profit before tax (0.7) 1.5 0.8 0.5 0.1 0.6
Tax charge 1.1 0.1 1.3 1.7 - 1.7
ETR (175)% 152% 338% 281%
1. Refer to note 5 of the condensed consolidated interim financial
statements.
Whilst we expect the Group's ETR to reduce in future periods, it will remain
higher than the UK statutory tax rate (which will increase to 25% from 1 April
2023) whilst we continue to make profits in territories with similar or higher
statutory rates to the UK tax rate and provide for withholding taxes on
overseas distributions. Examples of this are India where our ETR is
approximately 35% reflecting statutory corporate income tax in combination
with additional taxes on dividends and certain intercompany services.
Similarly, our ETR in Turkey is approximately 30%.
The strategic decisions taken by the Group in H1 to close loss-making markets
or restructure operations to create small but profitable business units will
reduce the existing profit drag from developing markets. We have not been in a
position to recognise deferred tax assets on these losses which has been a
large contributor to the Group's high ETR in recent years. These actions give
the Group confidence in a progressive reduction and normalisation of the ETR
in the medium-term.
Foreign exchange
Exchange rate movements in H1 have continued to work against the Group,
particularly in our Indian and Turkish businesses where the local exchange
rates have depreciated against sterling. This has adversely impacted the
reported results when comparing to the prior period.
The reported results from continuing operations when compared to H1 2020
include the following adverse foreign exchange movements: £4.6 million (H1
2020: £1.4 million) within revenue; and £0.5 million (H1 2020: £0.1
million) at an EBITDA level. Refer to note 3 of the condensed consolidated
interim financial statements for further detail.
Financial position
The Group had cash balances at 30 June 2021 of £19.6 million (30 June 2020:
£18.2 million; 31 December 2020: £21.9 million). The cash proceeds from the
Germany sale have been more than offset by the reintroduction of the dividend
payment and one-off payments associated with restructuring activities which
have led to a reduction in cash balances of £2.3 million since the year end.
The Group's cash cycle is weighted to the second half of the year and, taking
into consideration the factors in H1 2021, on a 12 month cycle the cash
balance has increased by £1.4 million.
Dividend
In the 2020 results we announced the recommencement of dividends and our
intention to grow the dividend in the years ahead. Based on the Board's
continued confidence in the outlook, we are pleased to report that as part of
that commitment the Directors have approved an interim dividend of 5 pence per
share. The interim dividend is expected to be paid on 24 September 2021 to all
shareholders on the Register of Members on 3 September 2021 with the
ex-dividend date being 2 September 2021.
ESG focus
The Group recognises the importance of high standards of Environmental, Social
and Governance (ESG) across its operations and, in line with this, has
undertaken a review of its practices with a view to developing a strategy to
build on the initiatives already in place. We expect to be able to provide a
more comprehensive update when reporting on the full year performance.
Related party transactions
ORConsulting Limited (ORCL) is an organisation used by the Group for
consulting services in relation to leadership coaching. Organisation Resource
Limited (ORL), a company owned by Mark Hamlin who is a Non-Executive Director
of the Group, retains intellectual property in ORCL for which it is paid a
license fee. In the six months to 30 June 2021, the Group paid £65,000 plus
VAT (30 June 2020: £28,000; year ended 31 December 2020: £63,000) to ORCL,
which was payable under 30 days credit terms.
Mark Hamlin is the Chairman of Globiva. The fees for this role are paid to his
consultancy company, ORL. The fee paid to ORL by the Group in the six months
ended 30 June 2021 was £35,000 (H1 2020: £37,000; year ended 31 December
2020: £73,000) and was payable under 25 day credit terms.
The Group paid £166,800 to Sosafe Limited (Sosafe) in February 2021 pursuant
to a settlement agreement with Sosafe and Mr Hamish Ogston dated 23 February
2021 (the Settlement). Mr Ogston is a director and majority shareholder of
Sosafe and a substantial shareholder in the Group and therefore the Settlement
constituted a related party transaction pursuant to AIM Rule 13. The
Settlement was made in connection with claims for certain legal and
professional costs incurred by Sosafe and Mr Ogston and represents full and
final settlement of such claims, which date back several years and have been
fully provided for since 2016. With the exception of David Morrison, the
Company's non-executive Chairman and a representative of Mr Ogston, the
independent Directors of the Company consider, having consulted with Liberum,
the Company's nominated adviser, that the terms of the transaction were fair
and reasonable insofar as its shareholders are concerned.
Outlook
The Group has continued to respond decisively and effectively to the
challenges presented by COVID-19. While we saw varying degrees of impact
across our different markets, we were able to deliver a solid performance in
the circumstances.
Looking ahead, while the backdrop remains an uncertain one, the recovery we
have seen in India and the continued traction in our other core markets gives
us confidence that 2021 will be another year of progress. This view is
underpinned by favourable macro-trends and a proven ability to innovate in
collaboration with our partners to develop products that resonate with
consumers, as well as a strong balance sheet and an organisational structure
that is increasingly optimised for success. Therefore, whilst uncertainty
remains from COVID-19, the Board believes the Company is trading broadly in
line with market expectations for the full year.
Jason Walsh
Chief Executive Officer
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
6 months ended 6 months ended 30 June 2020 (Restated*) Year ended
30 June 2021 31 December 2020 (Restated*)
£'000 £'000 £'000
Note (Unaudited) (Unaudited) (Audited)
Continuing operations
Revenue 4 66,392 60,295 138,141
Cost of sales (50,536) (43,688) (103,063)
Gross profit 15,856 16,607 35,078
Administrative expenses (16,230) (15,990) (32,649)
Share of loss in joint venture (119) (121) (264)
Operating (loss)/profit (493) 496 2,165
Analysed as:
EBITDA 4 2,580 1,882 6,016
Depreciation and amortisation (1,584) (1,761) (3,495)
Exceptional items 5 (1,489) 375 (356)
Investment revenues 112 436 412
Finance costs (269) 40 (373)
Other gains and losses - (476) (1,294)
(Loss)/profit before taxation (650) 496 910
Taxation 6 (1,136) (1,677) (3,441)
Loss for the period from continuing operations (1,786) (1,181) (2,531)
Discontinued operations
Profit for the period from discontinued operations 9 3,062 442 934
Profit/(loss) for the period 1,276 (739) (1,597)
Attributable to:
Equity holders of the Company 1,013 (790) (1,680)
Non-controlling interests 263 51 83
1,276 (739) (1,597)
(Loss)/earnings per share
Pence Pence Pence
Basic and diluted
Continuing operations 8 (23.36) (14.19) (30.00)
Continuing and discontinued operations 8 11.55 (9.10) (19.28)
* Restated to reflect Germany as a discontinued operation. See note 2.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months ended 30 June 2021 6 months ended 30 June 2020 Year ended
31 December 2020
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Profit/(loss) for the period 1,276 (739) (1,597)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (451) (218) (809)
Exchange differences reclassified on disposal of foreign operations (4) 476 1,294
Other comprehensive (expense)/income for the period net of taxation (455) 258 485
Total comprehensive income/(expense) for the period 821 (481) (1,112)
Attributable to:
Equity holders of the Company 588 (541) (1,145)
Non-controlling interests 233 60 33
821 (481) (1,112)
CONSOLIDATED BALANCE SHEET
30 June 2021 30 June 2020 31 December 2020
£'000 £'000 £'000
Note (Unaudited) (Unaudited) (Audited)
Non-current assets
Goodwill 528 1,388 612
Other intangible assets 3,845 3,715 3,741
Property, plant and equipment 1,357 2,362 1,670
Right-of-use assets 5,577 6,325 6,097
Investment in joint venture 331 593 450
Deferred tax assets 245 802 858
Contract assets 593 541 426
12,476 15,726 13,854
Current assets
Insurance assets 31 37 46
Inventories 146 182 145
Net investment lease asset - 63 -
Contract assets 3,689 4,803 4,853
Trade and other receivables 13,119 21,998 16,379
Cash and cash equivalents 19,592 18,237 21,856
36,577 45,320 43,279
Total assets 49,053 61,046 57,133
Current liabilities
Insurance liabilities (367) (1,563) (935)
Income tax liabilities (1,047) (1,228) (974)
Trade and other payables (17,116) (23,104) (20,387)
Borrowings - 28 -
Provisions - (304) -
Lease liabilities (910) (1,153) (882)
Contract liabilities (8,405) (10,816) (10,889)
(27,845) (38,140) (34,067)
Net current assets 8,732 7,180 9,212
Non-current liabilities
Borrowings 77 - 98
Deferred tax liabilities (104) (234) (579)
Lease liabilities (5,304) (5,708) (5,756)
Contract liabilities (1,333) (1,025) (1,094)
(6,664) (6,967) (7,331)
Total liabilities (34,509) (45,107) (41,398)
Net assets 14,544 15,939 15,735
Equity
Share capital 10 24,232 24,152 24,153
Share premium account 45,225 45,225 45,225
Merger reserve (100,399) (100,399) (100,399)
Translation reserve 409 548 834
ESOP reserve 17,656 17,369 17,490
Retained earnings 26,083 28,100 27,327
Equity attributable to equity holders of the Company 13,206 14,995 14,630
Non-controlling interests 1,338 944 1,105
Total equity 14,544 15,939 15,735
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share 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 2021
(Unaudited)
At 1 January 2021 24,153 45,225 (100,399) 834 17,490 27,327 14,630 1,105 15,735
Profit for the period - - - - - 1,013 1,013 263 1,276
Other comprehensive expense for the period - - - (425) - - (425) (30) (455)
Total comprehensive income for the period - - - (425) - 1,013 588 233 821
Equity-settled share-based payment charge - - - - 166 - 166 - 166
Exercise of share options 10 79 - - - - (69) 10 - 10
Dividends 7 - - - - - (2,188) (2,188) - (2,188)
At 30 June 2021 24,232 45,225 (100,399) 409 17,656 26,083 13,206 1,338 14,544
6 months ended
30 June 2020
(Unaudited)
At 1 January 2020 24,056 45,225 (100,399) 299 16,999 28,928 15,108 884 15,992
Loss for the period - - - - - (790) (790) 51 (739)
Other comprehensive income for the period - - - 249 - - 249 9 258
Total comprehensive expense for the period - - - 249 - (790) (541) 60 (481)
Equity-settled share-based payment charge - - - - 370 - 370 - 370
Deferred tax on intangible asset - - - - - 58 58 - 58
Exercise of share options 96 - - - - (96) - - -
At 30 June 2020 24,152 45,225 (100,399) 548 17,369 28,100 14,995 944 15,939
Year ended -
31 December 2020 (Audited)
At 1 January 2020 24,056 45,225 (100,399) 299 16,999 28,928 15,108 884 15,992
Loss for the year - - - - - (1,680) (1,680) 83 (1,597)
Other comprehensive income for the year - - - 535 - - 535 (50) 485
Total comprehensive expense for the period - - - 535 - (1,680) (1,145) 33 (1,112)
Equity-settled share-based payment charge - - - - 491 - 491 - 491
Deferred tax on intangible asset - - - - - 58 58 - 58
Exercise of share options 97 - - - - (97) - - -
Movement in non-controlling interest - - - - - 118 118 188 306
At 31 December 2020 24,153 45,225 (100,399) 834 17,490 27,327 14,630 1,105 15,735
CONSOLIDATED CASH FLOW STATEMENT
Note 6 months ended 6 months ended Year ended
30 June 2021 30 June 2020 31 December 2020
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Net cash (used in)/from operating activities 11 (302) (2,279) 3,162
Investing activities
Interest received 112 434 410
Purchases of property, plant and equipment 4 (136) (290) (356)
Purchases of intangible assets 4 (756) (780) (1,408)
Receipts from net investment lease assets - 53 117
Cash consideration in respect of sale of discontinued operations 9 2,353 - -
Cash disposed of with discontinued operations (112) - -
Net cash from /(used in) investing activities 1,461 (583) (1,237)
Financing activities
Dividends paid 7 (2,188) - -
Costs of refinancing the bank facility - - (110)
Repayment of the lease liabilities (775) (975) (1,783)
Proceeds on disposal of partial interest in a subsidiary - - 329
Interest paid (37) (159) (60)
Issue of ordinary share capital 10 10 - -
Net cash used in financing activities (2,990) (1,134) (1,624)
Net (decrease)/increase in cash and cash equivalents (1,831) (3,996) 301
Effect of foreign exchange rate changes (433) 276 (402)
Cash and cash equivalents at start of period 21,856 21,957 21,957
Cash and cash equivalents at end of period 19,592 18,237 21,856
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1 General information
The condensed consolidated interim financial statements for the six months
ended 30 June 2021 do not constitute statutory accounts as defined under
Section 434 of the Companies Act 2006. The Annual Report and Financial
Statements (the 'Financial Statements') for the year ended 31 December 2020
were approved by the Board on 23 March 2021 and have been delivered to the
Registrar of Companies. The Auditor, Deloitte LLP, reported on these financial
statements; their report was unqualified, did not contain an emphasis of
matter paragraph and did not contain statements under s498 (2) or (3) of the
Companies Act 2006.
2 Accounting policies
Basis of preparation
The unaudited condensed consolidated interim financial statements for the six
months ended 30 June 2021 have been prepared in accordance with IAS 34 Interim
Financial Reporting. They do not include all the information required for full
annual financial statements and should be read in conjunction with the Group's
consolidated financial statements for the year ended 31 December 2020 which
were prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and International
Financial Reporting Standards (IFRSs).
The Group's consolidated financial statements for the year ending 31 December
2021 will be prepared in accordance with UK-adopted IFRSs.
The condensed consolidated interim financial statements were approved for
release on 23 August 2021.
The accounting policies adopted in the preparation of the condensed
consolidated interim financial statements are consistent with those followed
in the preparation of the Group's consolidated financial statements for the
year ended 31 December 2020. The Group has adopted all relevant amendments to
existing standards that are effective from 1 January 2021 with no material
impact on its consolidated results or financial position.
On 17 May 2021, the Group completed the sale of its 100% shareholding in CPP
Creating Profitable Partnerships GmbH ("Germany"). As a result, in accordance
with IFRS 5 Non-current assets held for sale and discontinued operations, the
comparative information has been restated to recognise the Germany operation
as discontinued. See note 9. The adjustments relating to the restatement have
not been audited.
Management performed a review of the presentation of certain items in the
income statement in advance of the 2020 year end. It was concluded that
foreign exchange reclassified on closure of overseas branches should be
separately presented in the income statement and goodwill impairment should be
treated as an exceptional item. Accordingly, in the 30 June 2020 comparative,
£476,000 has been reclassified from 'finance costs' to 'other gains and
losses' and £104,000 has been reclassified from 'depreciation and
amortisation' to 'exceptional items'. These are presentational changes only
and have no impact on the EBITDA, operating profit, profit before tax or net
assets of the 30 June 2020 comparative.
Going concern
In reaching their view on the preparation of the condensed consolidated
interim financial statements on a going concern basis, the Directors are
required to consider whether the Group can continue in operational existence
for a period of at least 12 months from the date of this report.
The Group has a formalised process of budgeting, reporting and review along
with procedures to forecast its profitability and cash flows. The plans
provide information to the Directors which are used to ensure the adequacy of
resources available for the Group to meet its business objectives, both in the
short-term and in relation to its strategic priorities. The Group's revenue,
profit and cash flow forecasts are subject to robust downside stress testing
which involves modelling the impact of a combination of plausible adverse
scenarios focused on crystallisation of the Group's key operational risks. The
assessment considers the Group's modelling of the risks associated with
COVID-19. This is done to identify risks to liquidity and covenant compliance
and enable management to formulate appropriate and timely mitigation
strategies.
Taking the analysis into consideration, the Directors are satisfied that the
Group has the necessary resources to continue in operational existence for a
period of at least 12 months from the date of this report. Accordingly, they
continue to adopt the going concern basis in preparing the condensed
consolidated interim financial statements.
3 Foreign exchange
The table below shows the average exchange rates for the relevant reporting
periods and closing exchange rates at the relevant period ends:
Average Closing Average Closing Average Closing
H1(1) June H1 June Full Year December
2021 2021 2020 2020 2020 2020
Indian rupee 101.78 102.68 92.89 92.72 95.57 99.58
Turkish lira 11.20 12.04 8.23 8.44 9.19 10.11
Euro 1.15 1.16 1.14 1.10 1.12 1.11
Mexican peso 28.17 27.47 27.40 28.44 27.69 27.14
Chinese yuan 8.96 8.93 8.88 8.71 8.89 8.91
1. Average exchange rates applied in constant currency calculations
Constant currency is an alternative performance measure and is used as a means
of eliminating the effects of exchange rate fluctuations on the period-on
period reported results. The constant currency basis retranslates the previous
year measures at the average actual exchange rates used in the current
financial period. The average exchange rates in H1 2021 have weakened against
sterling compared to H1 2020 which has resulted in adverse exchange movements
in the reported results.
Analysis of the constant currency impacts to revenue and EBITDA on a segmental
basis are as follows:
Ongoing Operations
Continuing operations India EU Hub Turkey Rest of World Restricted operations Central Functions Share of joint venture losses Total
H1 2021 (£'000)
Revenue 53,044 5,013 1,833 1,972 4,530 - n/a 66,392
Revenue from Ongoing Operations 53,044 5,013 1,833 1,972 n/a n/a n/a 61,862
EBITDA 3,835 526 421 (717) 1,015 (2,380) (119) 2,581
H1 2020 (£'000)
Revenue 46,007 5,431* 1,811 1,855 5,191 - n/a 60,295
Revenue from Ongoing Operations 46,007 5,431* 1,811 1,855 n/a n/a n/a 55,104
EBITDA 2,963 1,472* 391 (1,916) 1,437 (2,344) (121) 1,882
Foreign exchange movements (£'000)
Revenue (4,027) (72) (481) (22) (8) - n/a (4,610)
Revenue from Ongoing Operations (4,027) (72) (481) (22) n/a n/a n/a (4,602)
EBITDA (369) (21) (150) 33 (2) - n/a (509)
H1 2020 at H1 2021 average exchange rates (£'000)
Revenue 41,980 5,359 1,330 1,833 5,183 - n/a 55,685
Revenue from Ongoing Operations 41,980 5,359 1,330 1,833 n/a n/a n/a 50,502
EBITDA 2,594 1,451 241 (1,883) 1,435 (2,344) (121) 1,373
Period-on-period movement at constant exchange rates (%)
Revenue 26% (6)% 38% 8% (13)% n/a n/a 19%
Revenue from Ongoing Operations 26% (6)% 38% 8% n/a n/a n/a 22%
EBITDA 48% (64)% 75% 62% (29)% (2)% 2% 88%
*Restated to reflect Germany as a discontinued operation. See note 2.
4 Segmental analysis
IFRS 8 Operating segments requires operating segments to be identified on the
basis of internal reports about components of the Group that are regularly
reviewed by the Board of Directors to allocate resources to the segments and
to assess their performance. The Group's operating segments are:
· Ongoing Operations; India, China, Turkey, Spain, Portugal, Italy,
Mexico, Malaysia, UK, Bangladesh and Blink. These businesses have no
regulatory restrictions on new sales activity. These markets represent a
combination of businesses in which we continue to invest and drive new
opportunities as well as ones that have been strategically assessed and wound
down or exited.
· Restricted Operations: historic renewal books of our UK regulated
entities; CPPL, including its overseas branch in Malaysia; and HIL. As a
result of regulatory restrictions we are not permitted to undertake new sales
in these businesses.
· Central Functions: central cost base required to provide
expertise and operate a listed group. Central Functions is stated after the
recharge of certain central costs that are appropriate to transfer to both
Ongoing Operations and Restricted Operations for statutory purposes.
Segment revenue and performance for the current and comparative periods are
presented below:
Restricted Operations Central Functions Total
Ongoing Operations
Six months ended 30 June 2021 (Unaudited) £'000 £'000 £'000 £'000
Continuing operations
Revenue - external sales 61,862 4,530 - 66,392
Segmental EBITDA 4,064 1,015 (2,380) 2,699
Share of loss in joint venture (119)
EBITDA 2,580
Depreciation and amortisation (1,584)
Exceptional items (1,489)
Operating loss (493)
Investment revenues 112
Finance costs (269)
Loss before taxation (650)
Taxation (1,136)
Loss for the period from continuing operations (1,786)
Discontinued operations
Profit for the period from discontinued operations 3,062
Profit for the period 1,276
Ongoing Operations Restricted Operations Central Functions
(Restated*) Total
(Restated*)
Six months ended 30 June 2020 (Unaudited) £'000 £'000 £'000 £'000
Continuing operations
Revenue - external sales 55,104 5,191 - 60,295
Segmental EBITDA 2,910 1,437 (2,344) 2,003
Share of loss in joint venture (121)
EBITDA 1,882
Depreciation and amortisation (1,761)
Exceptional items 375
Operating profit 496
Investment revenues 436
Finance costs 40
Other gains and losses (476)
Profit before taxation 496
Taxation (1,677)
Loss for the period from continuing operations (1,181)
Discontinued operations
Profit for the period from discontinued operations 442
Loss for the period (739)
* Restated to reflect Germany as a discontinued operation. See note 2.
Ongoing Operations Restricted Operations Central Functions
(Restated*) Total
(Restated*)
Year ended 31 December 2020 (Audited) £'000 £'000 £'000 £'000
Continuing operations
Revenue - external sales 127,073 11,068 - 138,141
Segmental EBITDA 6,539 3,806 (4,065) 6,280
Share of loss in joint venture (264)
EBITDA 6,016
Depreciation and amortisation (3,495)
Exceptional items (356)
Operating profit 2,165
Investment revenues 412
Finance costs (373)
Other gains and losses (1,294)
Profit before taxation 910
Taxation (3,441)
Loss for the year from continuing operations (2,531)
Discontinued operations
Profit for the year from discontinued operations 934
Loss for the year (1,597)
* Restated to reflect Germany as a discontinued operation. See note 2.
Segmental assets
30 June 2021 30 June 2020 (Restated*) 31 December 2020
(Restated*)
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Ongoing Operations 38,740 46,027 41,340
Restricted Operations 7,670 7,615 7,564
Central Functions 1,539 3,332 5,113
Total segment assets 47,949 56,974 54,017
Assets relating to discontinued operations - 1,289 1,196
Unallocated assets 1,104 2,783 1,920
Consolidated total assets 49,053 61,046 57,133
* Restated to reflect Germany as a discontinued operation. See note 2.
Goodwill, deferred tax assets and investment in joint venture are not
allocated to segments.
Capital expenditure
Other intangible assets
6 months ended 30 June 2021 6 months ended 30 June 2020 Year ended
31 December 2020
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Continuing operations
Ongoing Operations 465 550 1,055
Restricted Operations 4 230 352
Central Functions 287 - 1
Total assets 756 780 1,408
Property, plant and equipment Right-of-use assets
6 months ended 30 June 2021 6 months ended 30 June 2020 Year ended 6 months ended 30 June 2021 6 months ended 30 June 2020 Year ended 31 December 2020
31 December 2020
£'000 £'000 £'000 £'000 £'000 £'000
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
Continuing operations
Ongoing Operations 123 223 255 444 694 1,568
Restricted Operations 5 13 18 - 41 -
Central Functions 8 54 83 - 513 523
Total assets 136 290 356 444 1,248 2,091
Timing of revenue recognition
The Group derives revenue from the transfer of goods and services over time
and at a point in time as follows:
6 months ended 30 June 2021 6 months ended 30 June 2020 Year ended 31 December 2020
(Restated*) (Restated*)
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Continuing operations
At a point in time 57,127 48,499 117,902
Over time 9,265 11,796 20,239
Revenue from continuing operations 66,392 60,295 138,141
Discontinued operations 1,062 1,459 3,003
Total revenue 67,454 61,754 141,144
* Restated to reflect Germany as a discontinued operation. See note 2.
Revenue from major products
6 months ended 30 June 2021 6 months ended 30 June 2020 Year ended
(Restated*) 31 December 2020
(Restated*)
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Continuing operations
Retail assistance policies 59,633 54,478 128,136
Retail insurance policies 2 12 85
Wholesale policies 1,280 1,662 2,621
Non-policy revenue 5,477 4,143 7,299
Revenue from continuing operations 66,392 60,295 138,141
Discontinued operations 1,062 1,459 3,003
Total revenue 67,454 61,754 141,144
* Restated to reflect Germany as a discontinued operation. See note 2.
Major product streams are disclosed on the basis monitored by the Board of
Directors. For the purpose of this product analysis, "retail assistance
policies" are those which may be insurance backed but contain a bundle of
assistance and other benefits; "retail insurance policies" are those which
protect against a single insurance risk; "wholesale policies" are those which
are provided by business partners to their customers in relation to an ongoing
product or service which is provided for a specified period of time;
"non-policy revenue" is that which is not in connection with providing an
ongoing service to policyholders for a specified period of time.
Geographical information
The Group operates across a wide number of territories, of which India, the UK
and Spain are considered individually material. Revenue from external
customers and non-current assets (excluding investment in joint venture and
deferred tax assets) by geographical location is detailed below:
External revenues Non-current assets
6 months ended 30 June 2021 6 months ended 30 June 2020 Year ended 30 June 2021 30 June 2020 31 December 2020
31 December 2020
£'000 £'000 £'000 £'000 £'000 £'000
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
Continuing operations
India 53,044 46,007 108,406 7,403 7,625 8,071
UK 5,452 5,477 12,082 2,008 3,725 2,062
Spain 3,558 3,725 7,538 215 390 256
Other 4,338 5,086 10,115 2,274 2,591 2,157
Total continuing operations 66,392 60,295 138,141 11,900 14,331 12,546
Discontinued operations 1,062 1,459 3,003 - - -
Total 67,454 61,754 141,144 11,900 14,331 12,546
Information about major customers
Revenue from customers of one business partner in our Ongoing Operations
segment represented approximately £36,156,000 (H1 2020: £30,222,000; year
ended 31 December 2020: £73,739,000) of the Group's total revenue.
5 Exceptional items
6 months ended 30 June 2021 6 months ended 30 June 2020 Year ended 31 December 2020
Note £'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Restructuring costs 1,489 206 161
Impairment of goodwill 2 - 104 880
Customer redress and associated costs - (685) (685)
Exceptional charge/(credit) included in operating profit 1,489 (375) 356
Other gains and losses - foreign exchange reclassification 2 - 476 1,294
Total exceptional charge included in profit before tax 1,489 101 1,650
Tax on exceptional items (137) - -
Total exceptional charge after tax 1,352 101 1,650
Restructuring costs of £1,489,000 (H1 2020: £206,000; year ended 31 December
2020: £161,000) relate to costs associated with wide-scale operational
changes or closure activities in Spain, Mexico, Malaysia and Blink. The
charges recognised are primarily redundancy costs.
6 Taxation
The tax charge is calculated by aggregating the tax arising in each
jurisdiction based on estimated profits chargeable to corporation tax and
withholding taxes arising in H1 2021 at the local statutory rate of tax. This
leads to a tax charge on continuing operations of £1.1 million (H1 2020
restated: £1.7 million; year ended 31 December 2020 restated: £3.4 million)
reflecting the charges arising in India, Turkey and our EU markets. These tax
charges result in an effective tax rate (ETR) at the half year of negative
175% (H1 2020 restated: positive 338%; year ended 31 December 2020 restated:
positive 378%). The Group expects to generate a profit before tax for the full
year through the trading performance in the second half, whilst the level of
exceptional restructuring costs will slow and hence the forecast full year ETR
has not been used in calculating the tax charge at H1 2021. The full year ETR
is forecast to be approximately 220%.
The corporate income tax in our profitable overseas jurisdictions is higher
than the current UK corporate income tax rate of 19% and, in addition, there
are withholding taxes applied to funds repatriated from our overseas
operations which further increases the ETR. Profits from our UK Restricted
Operations are expected to be covered by group relief from losses arising in
other UK entities.
The Group's forecast ETR for the full year is significantly higher than the UK
corporate income tax rate due to losses in our developing markets which
coupled with the one-time exceptional restructuring charges will reduce the
overall Group profit before tax to a level that is lower than the tax charges
recognised in our profitable markets. The restructuring activity undertaken in
2021 is expected to alleviate this position and enable a progressive reduction
in the Group's ETR over the medium-term.
7 Dividends
6 months ended 30 June 2021 6 months ended 30 June 2020 Year ended 31 December 2020
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Final dividend for the year ended 31 December 2020 of 25 pence per share (31 2,188 - -
December 2019: £nil)
2,188 - -
After 30 June 2021 the Directors have approved an interim dividend of 5 pence
per share for 2021. The dividend has not been accrued as a liability as at 30
June 2021. The interim dividend will be paid on 24 September 2021 with an
ex-dividend date of 2 September 2021 and a record date of 3 September 2021.
8 (Loss)/earnings per share
Basic and diluted (loss)/earnings per share has been calculated in accordance
with IAS 33 Earnings per share. Underlying (loss)/earnings per share, which
excludes exceptional items, has also been presented in order to give a better
understanding of the performance of the business. In accordance with IAS 33,
potential ordinary shares are only considered dilutive when their conversion
would decrease the earnings per share or increase the loss per share
attributable to equity holders. The diluted (loss)/earnings per share is
therefore equal to the basic (loss)/earnings per share in the six months ended
30 June 2021, six months ended 30 June 2020 and the year ended 31 December
2020.
Continuing operations Discontinued operations Total
Six months ended 30 June 2021 (Unaudited)
(Losses)/earnings £'000 £'000 £'000
(Loss)/earnings for the purposes of basic and diluted (loss)/earnings per (2,049) 3,062 1,013
share
Exceptional items (net of tax) 1,352 (2,641) (1,289)
(Loss)/earnings for the purposes of underlying basic and diluted (697) 421 (276)
(loss)/earnings per share
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic and 8,770
diluted (loss)/earnings per share and underlying (loss)/earnings per share
(Loss)/earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted (loss)/earnings per share (23.36) 34.91 11.55
Basic and diluted underlying (loss)/earnings per share (7.95) 4.80 (3.15)
Continuing operations Discontinued operations Total
Six months ended 30 June 2020 (Unaudited)
(Losses)/earnings £'000 £'000 £'000
(Loss)/earnings for the purposes of basic and diluted (loss)/earnings per (1,232) 442 (790)
share
Exceptional items (net of tax) 101 - 101
(Loss)/earnings for the purposes of underlying basic and diluted (1,131) 442 (689)
(loss)/earnings per share
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic and 8,683
diluted (loss)/earnings per share and underlying (loss)/earnings per share
(Loss)/earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted (loss)/earnings per share (14.19) 5.09 (9.10)
Basic and diluted underlying (loss)/earnings per share (13.03) 5.09 (7.94)
Continuing operations Discontinued operations Total
Year ended 31 December 2021 (Audited)
(Losses)/earnings £'000 £'000 £'000
(Loss)/profit for the purposes of basic and diluted (loss)/earnings per share (2,614) 934 (1,680)
Exceptional items (net of tax) 1,650 - 1,650
(Loss)/profit for the purposes of underlying basic and diluted (loss)/earnings (964) 934 (30)
per share
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic and 8,713
diluted (loss)/earnings per share and underlying (loss)/earnings per share
(Loss)/earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted (loss)/earnings per share (30.00) 10.72 (19.28)
Basic and diluted underlying (loss)/earnings per share (11.06) 10.72 (0.34)
9 Discontinued operations
On 17 May 2021, the Group completed the sale of its 100% shareholding in CPP
Creating Profitable Partnerships GmbH ("Germany"). The gross consideration on
disposal was £2,353,000 (€2,730,000).
In accordance with IFRS 5 Non-current assets held for sale and discontinued
operations this operation has been presented as a discontinued operation.
Profit from discontinued operations comprises the following:
6 months ended 30 June 2021 6 months ended Year ended
30 June 2020 31 December 2020
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Revenue 1,062 1,459 3,003
Cost of sales (430) (554) (1,127)
Gross profit 632 905 1,876
Administrative expenses (203) (368) (732)
EBITDA and operating profit 429 537 1,144
Finance costs 22 (21) (42)
Profit before taxation 451 516 1,102
Taxation (30) (74) (168)
Profit after taxation 421 442 934
Profit on disposal 2,641 - -
Total profit 3,062 442 934
Operating results for the six months ended 30 June 2021 reflect the trading
performance of Germany up to the date of disposal, being 17 May 2021.
Comparative information reflects a complete six months and 12 months
respectively. Prior to disposal Germany was part of the Ongoing Operations
segment.
The Group has recognised a profit on disposal of Germany as follows:
6 months ended 30 June 2021
£'000
(Unaudited)
Proceeds 2,353
Net liabilities sold 284
Costs associated with disposal -
Currency translation differences on disposal 4
Profit on disposal 2,641
The final proceeds are subject to a working capital adjustment. In accordance
with the timelines agreed in the share purchase agreement this position has
not yet been finalised. The final adjustment is expected to be highly
immaterial and is not included in the information above.
10 Share capital
Share capital at 30 June 2021 is £24,232,000 (30 June 2020: £24,152,000; 31
December 2020: £24,153,000). To satisfy share option exercises in the six
month period to 30 June 2021 the Company has issued 79,101 £1 ordinary shares
post for a total equity value of £79,000 and cash consideration of £10,000.
The total number of ordinary shares in issue at 30 June 2021 is 8,822,564 of
which 8,817,565 are fully paid and 4,999 are partly paid.
11 Reconciliation of operating cash flows
6 months ended 30 June 2021 6 months ended Year ended
30 June 2020 31 December 2020
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Profit/(loss) for the period 1,276 (739) (1,597)
Adjustments for:
Depreciation and amortisation 1,584 1,720 3,454
Share-based payment expense 226 360 499
Impairment loss on goodwill - 104 880
Impairment loss on right-of-use assets - 41 41
Loss on disposal of intangible assets - 16 54
Loss on disposal of property, plant and equipment 4 3 30
Profit on disposal of discontinued operations (2,641) - -
Share of loss of joint venture 119 121 264
Lease concessions - - (86)
Investment revenues (112) (436) (412)
Finance costs 247 (19) 415
Other gains and losses - 476 1,294
Income tax charge 1,166 1,751 3,609
Operating cash flows before movement in working capital 1,869 3,398 8,445
Increase in inventories (4) (95) (58)
Decrease in contract assets 569 1,555 1,272
Decrease/(increase) in receivables 2,084 (4,538) 663
Decrease/(increase) in insurance assets 15 5 (4)
Decrease in payables (2,493) (950) (3,049)
Decrease in contract liabilities (867) (1,792) (953)
(Decrease)/increase in insurance liabilities (568) 807 179
Decrease in provisions - (5) (309)
Cash from/(used in) operations 605 (1,615) 6,186
Income taxes paid (907) (664) (3,024)
Net cash (used in)/from operating activities (302) (2,279) 3,162
12 Related party transactions
Transactions with associated undertakings
The Group has a balance receivable from its joint venture, KYND, in the amount
of £150,000 (30 June 2020 and 31 December 2020: £150,000). The loan by the
Group to KYND forms part of KYND's participation in the UK Governments 'Future
Fund Scheme' and falls due for repayment on 26 June 2023.
In the six months to 30 June 2021, the Group incurred fees of £4,000 plus VAT
(30 June 2020 and year ended 31 December 2020: £nil) for services rendered
from KYND, which was payable under 14 day credit terms.
Transactions with related parties
ORConsulting Limited (ORCL) is an organisation used by the Group for
consulting services in relation to leadership coaching. Organisation Resource
Limited (ORL), a company owned by Mark Hamlin who is a Non-Executive Director
of the Group, retains intellectual property in ORCL for which it is paid a
license fee. In the six months to 30 June 2021, the Group paid £65,000 plus
VAT (30 June 2020: £28,000; year ended 31 December 2020: £63,000) to ORCL,
which was payable under 30 days credit terms.
Mark Hamlin is the Chairman of Globiva. The fees for this role are paid to his
consultancy company, ORL. The fee paid to ORL by the Group in the six months
ended 30 June 2021 was £35,000 (H1 2020: £37,000; year ended 31 December
2020: £73,000) and was payable under 25 day credit terms.
The Group paid £166,800 to Sosafe Limited (Sosafe) in February 2021 pursuant
to a settlement agreement with Sosafe and Mr Hamish Ogston dated 23 February
2021 (the Settlement). Mr Ogston is a director and majority shareholder of
Sosafe and a substantial shareholder in the Group and therefore the Settlement
constituted a related party transaction pursuant to AIM Rule 13. The
Settlement was made in connection with claims for certain legal and
professional costs incurred by Sosafe and Mr Ogston and represents full and
final settlement of such claims, which date back several years and have been
fully provided for since 2016. With the exception of David Morrison, the
Company's non-executive Chairman and a representative of Mr Ogston, the
independent Directors of the Company consider, having consulted with Liberum,
the Company's nominated adviser, that the terms of the transaction were fair
and reasonable insofar as its shareholders are concerned.
Remuneration of key management personnel
The remuneration of the Directors and Senior Management Team, who are the key
management personnel of the Group, is set out below:
6 months ended 6 months ended Year ended
30 June 2021 30 June 2020 31 December 2020
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Short-term employee benefits 1,024 1,143 2,442
Post-employment benefits 41 44 89
Termination benefits 203 - -
Share-based payments 108 98 423
1,376 1,285 2,954
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