REG - CPPGroup Plc - UPDATE ON CURRENT TRADING AND OUTLOOK

CPPGroupAnnouncement

31/05/2022 07:00

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RNS Number : 3074N  CPPGroup Plc  31 May 2022

31 May 2022

CPPGroup Plc

("CPP", "CPP Group", "the Group" or "the Company")

 

UPDATE ON CURRENT TRADING AND OUTLOOK, CONTRACT EXTENSION AND CHANGE MANAGMENT
PROGRAMME

 

CPP Group (AIM: CPP), a provider of assistance products which reduce the
disruptions to everyday life for people around the world provides an update on
current trading and outlook, specifically regarding the impact of a contract
extension in India and its change management programme.

 

Contract Extension and Change Management Programme:

The Group highlighted in its 2021 Annual Report, that it was in negotiations
with its largest business partner, based in India, regarding the early renewal
and extension of current commercial arrangements whilst also conducting a
review of the change management programme introduced by previous management.
Both workstreams have now been concluded.

 

Business Partner Contract Extension

Negotiations have come to a positive conclusion, however as previously
highlighted, there was some expectation that in securing a contract extension
there would be a commercial trade-off between revenue and pricing which has
proven to be the case. The Group has, by extending the contract to December
2024, improved certainty over a significant proportion of its future revenues
whilst our business partner has secured improved commercial terms. Due to the
upfront nature of the improved terms, there will be a reduction to this year's
EBITDA expectations, albeit this should be recovered in the 2023 and 2024
financial years.

 

Change Management Programme

The Group in concluding its review of the change management programme, which
encompassed the design and build of a new IT platform for the Group's Indian
operations, a new IT platform to manage the Group's legacy back book, and the
exit from the UK Managing General Agent ("MGA") business, has identified that
these projects overall will take longer, cost more to implement, and secure
fewer benefits than originally anticipated. In particular, the benefits
hitherto anticipated from the migration to new IT platforms are unlikely to
materialise until the final quarter of 2024, with the result that IT costs
will remain at a significantly higher level than anticipated for the next two
years.

 

Current Trading and Outlook

Trading for the three months to 31 March 2022 is in line with prior
expectations, with revenues (unaudited) from continuing operations being some
4% ahead of the prior year.

 

Whilst the Group expects to recover the 2022 earnings shortfall brought about
by the contract extension, the reduced benefits and additional costs
associated with the change management programme have resulted in a lowering of
expectations for both the 2022 and 2023 financial years. The Board now expects
EBITDA from continuing operations for the financial year 2022 to be in the
range of £5.8 million to £6.3 million, with a similar expectation for the
2023 financial year outturn.

 

Simon Pyper, CEO of CPP Group, commented:

"In the 2021 Annual Report I said that "We are, as we exit from the UK MGA
and as the renewal book continues to run-down, in need of a clear and
executable strategy for the UK, and this is something that the Board and I
will address during 2022". We have made good progress, and I expect that we
will later this year update shareholders and other stakeholders on our
direction of travel and on our plans to build a business which delivers long
term profitable growth and increased value to shareholders."

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit)
Regulations 2019. Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to be in the
public domain.

 

Enquiries:

 CPPGroup plc
 Simon Pyper, Chief Executive Officer    via Alma PR
 David Bowling, Chief Financial Officer

 Liberum Capital Limited
 (Nominated Adviser and Sole Broker)     Tel: +44 (0)20 3100 2000
 Richard Lindley
 Lauren Kettle

 Alma PR
 (Financial PR Adviser)                  Tel: +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 is a technology-driven assistance company that creates embedded and
ancillary 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. These products are provided through partnerships with
leading insurance, banking and finance companies either as embedded solutions
or as relevant add-ons to enhance their core offering and deliver additional
revenue streams. 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/)

 

 

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