REG - CPPGroup Plc - Half Yearly Report <Origin Href="QuoteRef">CPPG.L</Origin> - Part 3
29/10/2014 16:08
- Part 3: For the preceding part double click ID:nRSc2963Qb
- 58 37 95
Depreciation / amortisation - (1,434) (442) (1,876)
Exchange adjustments - (8) (35) (43)
Carrying amount at 30 June 2014 - 1,915 4,621 6,536
Six months ended 30 June 2013 (Unaudited)
Carrying amount at 1 January 2013 1,478 15,458 13,316 30,252
Additions - 810 131 941
Disposals - (113) (45) (158)
Depreciation / amortisation - (3,486) (1,285) (4,771)
Exchange adjustments - (5) 69 64
Carrying amount at 30 June 2013 1,478 12,664 12,186 26,328
Year ended 31 December 2013 (Audited)
Carrying amount at 1 January 2013 1,478 15,458 13,316 30,252
Additions - 1,604 241 1,845
Disposals - (132) (68) (200)
Depreciation / amortisation - (6,868) (2,684) (9,552)
Exchange adjustments - (40) (65) (105)
Impairment (1,478) (6,723) (5,679) (13,880)
Carrying amount at 31 December 2013 - 3,299 5,061 8,360
10 Cash and cash equivalents
Cash and cash equivalents of £53,613,000 (H1 2013: £62,554,000; 31 December 2013: £66,900,000) includes cash deposits
maintained by the Group's insurance businesses for solvency purposes of £20,375,000 (H1 2013: £21,779,000; 31 December
2013: £27,815,000). The terms of the VVOPs agreed with the FCA restrict the disposition of assets within the UK's regulated
entities CPPL and HIL. Cash balances held within CPPL and HIL which cannot be distributed to the wider Group, without FCA
approval, amounts to £24,441,000 (H1 2013: £29,829,000; 31 December 2013: £32,706,000). This restricted cash although
unavailable to distribute to the wider Group, is available to the regulated entity in which it exists including for
operational and customer redress purposes.
11 Borrowings
30 June 2014 30 June 2013 31 December 2013
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Bank loans due within one year - 25,000 -
Less: unamortised issue costs - (1,232) -
Borrowings due within one year - 23,768 -
Bank loans due outside of one year 13,000 - 13,000
Less: unamortised issue costs (1,333) - (1,653)
Commission deferral agreement 20,349 - 11,250
Borrowings due outside of one year 32,016 - 22,597
The borrowing facilities are secured by fixed and floating charges on certain assets of the Group.
12 Provisions
Customer redress and associated costs Restructuring costs Total
£'000 £'000 £'000
Six months ended 30 June 2014 (Unaudited)
At 1 January 2014 37,398 - 37,398
Customer redress and associated costs paid in the period (23,364) - (23,364)
At 30 June 2014 14,034 - 14,034
Six months ended 30 June 2013 (Unaudited)
At 1 January 2013 28,967 - 28,967
Charged to the income statement 2,350 1,750 4,100
Customer redress and associated costs paid in the period (6,535) - (6,535)
At 30 June 2013 24,782 1,750 26,532
Year ended 31 December 2013 (Audited)
At 1 January 2013 28,967 - 28,967
Charged to the income statement 18,168 1,750 19,918
Customer redress and associated costs paid in the year (9,737) - (9,737)
Transfer to trade and other payables - (1,750) (1,750)
At 31 December 2013 37,398 - 37,398
The customer redress and associated costs provision comprises anticipated compensation payable to customers through a
redress exercise and professional fees associated with customer redress. Customer redress and associated costs are expected
to be settled within one year of the balance sheet date.
The Group is currently in discussions with the Central Bank of Ireland (CBI) in respect of historical Card Protection sales
made by Irish banks to customers in the Republic of Ireland. A provision for redress was reflected in 2013 in respect of
direct sales made by the Group. The full extent of any redress exercise has not yet been determined. There can be no
guarantee that other claims may not arise against the Group from Business Partners as part of this process. However, at
this time, it is unclear that any present obligation exists and as such, no provision has been recognised in respect of
sales concluded by a Business Partner.
13 Share capital
Share capital at 30 June 2014 amounted to £17,123,000, having increased from £17,120,000 at 31 December 2013. During the
period the Company issued 34,218 ordinary shares for cash consideration of £1,000 to option holders under its share option
schemes.
14 Reconciliation of operating cash flows
6 months ended 30 June 2014 6 months ended 30 June 2013 Year ended 31 December 2013
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Loss for the period (2,707) (2,576) (32,867)
Adjustment for:
Depreciation and amortisation 1,876 4,771 9,552
Equity settled share based payment expense 198 70 50
Impairment loss on goodwill and intangible assets and freehold property - - 5,822
Impairment of IT assets - - 8,058
Loss on disposal of property, plant and equipment - 158 200
Profit associated with disposal of discontinued operation (311) (10,398) (10,389)
Share of loss of joint venture 1,096 226 780
Investment revenues (287) (196) (404)
Finance costs 1,164 2,113 4,305
Income tax expense 780 5,102 3,033
Operating cash flows before movement in working capital 1,809 (730) (11,860)
Decrease in insurance assets 3,011 17,467 23,854
Decrease/(increase) in inventories 28 (13) 150
Decrease in receivables 1,245 1,575 8,464
Decrease in insurance liabilities (1,378) (702) (3,535)
Decrease in payables (4,334) (1,677) (2,526)
(Decrease)/increase in provisions (23,364) (2,435) 8,431
Cash (used in)/generated by operations (22,983) 13,485 22,978
Income taxes repaid/(paid) 1,858 (2,206) (2,820)
Net cash (used in)/generated by operating activities (21,125) 11,279 20,158
15 Related party transactions
Transactions with joint ventures
The Group has disposed its shareholding with its joint venture entity, Home3, the following transactions were undertaken
prior to the disposal:
6 months ended 30 June 2014 6 months ended 30 June 2013 Year ended 31 December 2013
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Costs rechargeable to Home3 incurred by the Group - 139 138
Balance receivable from Home3 - 1,789 2,299
The disposal of Home3 completed on 24 March 2014. As part of the disposal agreement the balance receivable from Home3 prior
to disposal of £2,350,000 was capitalised as an investment in the joint venture. £2,254,000 of this balance has already
been provided through the consolidated income statement between 2011 and 2013, the remaining balance of £96,000 has been
recognised in the consolidated income statement in the six months to 30 June 2014.
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 30 June 2014 6 months ended 30 June 2013 Year ended 31 December 2013
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Short term employee benefits 875 2,149 3,769
Post employment benefits 45 90 184
Termination benefits - 977 547
Share based payments 9 (69) (144)
929 3,147 4,356
DIRECTORS' RESPONSIBILITIES STATEMENT
We confirm that to the best of our knowledge:
a) The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim
Financial Reporting";
b) The Half Year Report includes a fair review of the information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and uncertainties for the remaining six months of the year);
and
c) The Half Year Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related
parties' transactions and changes therein).
By order of the Board
Brent Escott Craig Parsons
Chief Executive Officer Chief Financial Officer
28 August 2014
CAUTIONARY STATEMENT
This Half Year Report has been prepared solely to provide additional information to shareholders as a body to meet the
relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules. The Half Year Report should not be
relied on by any other party or for any other purpose.
The Half Year Report contains certain forward-looking statements. These statements are made by the directors in good faith
based on the information available to them up to the time of approval of the Half Year Report but such statements should be
treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any
such forward-looking information. Subject to the requirements of the UK Listing Authority's Disclosure and Transparency
Rules and Listing Rules, CPP undertakes no obligation to update these forward-looking statements and it will not publicly
release any revisions it may make to these forward-looking statements that may result from events or circumstances arising
after the date of this Half Year Report.
The Half Year Report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which
are significant to CPPGroup Plc and its subsidiary undertakings when viewed as a whole.
INDEPENDENT REVIEW REPORT TO CPPGROUP PLC
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 June 2014 which comprises the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated
cash flow statement and related notes 1 to 15. We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland)
2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state
to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by
the European Union. The condensed set of financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Emphasis of matter
In forming our review conclusion on the condensed consolidated interim financial statements in the Half Year Report, we
have considered the adequacy of the disclosure made in the Going concern section, and in note 2 to the condensed
consolidated interim financial statements concerning the combined effect of restrictions on new regulated business sales as
a result of the FCA's Voluntary Variation of Permissions, the impact of the redress scheme, the reliance on the release of
restricted cash from UK regulated entities or other working capital solutions and the ability of the Group to trade in line
with forecasts and comply with the terms of its borrowing facilities.
Whilst we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the
condensed consolidated interim financial statements is appropriate, these conditions indicate the existence of a material
uncertainty which may give rise to significant doubt over the Group's ability to continue as a going concern and,
therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
Having considered these matters, the Directors have concluded that it is appropriate to prepare these financial statements
on a going concern basis. The financial statements do not include the adjustments that would result if the Group were
unable to continue as a going concern. Our opinion is not qualified in respect of these matters.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Leeds, United Kingdom
28 August 2014
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