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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Cppgroup Plc | LSE:CPP | London | Ordinary Share | GB00BMDX5Z93 | ORD GBP1.00 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 179.50 | 175.00 | 185.00 | 568 | 08:00:01 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Security Systems Service | 193.04M | -8.66M | -0.9784 | -1.83 | 15.88M |
From May 2019 to May 2024
TIDMCPP
RNS Number : 4721H
CPPGroup Plc
18 August 2016
CPPGROUP PLC
18 AUGUST 2016
HALF YEAR REPORT
FOR THE SIX MONTHSED 30 JUNE 2016
CPPGroup Plc- Half year report for the six months ended 30 June 2016
CPPGroup Plc (CPP or the Group), the international assistance business, today announces its results for the six months ended 30 June 2016.
Operational highlights
-- New Chief Executive Officer (Jason Walsh), new Executive Director (Justine Shaw) and new Non-Executive Directors (Sir Richard Lapthorne, Mark Hamlin and Nick Cooper) appointed
-- Strategic priorities identified to drive sustainable focused growth
-- New product development well advanced; with OwlDetect, a new global cybersecurity proposition, targeted for launch in September 2016
-- Commenced a review of options to focus on development of a cost effective IT platform more suited to the Group's needs
-- Regulatory fine cleared, with the final scheduled instalment paid in July 2016
Financial highlights
-- Improved underlying operating profit from continuing operations of GBP3.6 million (H1 2015: GBP1.9 million)
-- Group revenue from continuing operations of GBP35.4 million (H1 2015: GBP38.9 million), which includes GBP5.6 million (H1 2015: GBP2.8 million) from India
-- The Group's annual renewal rate has remained stable at 72.9% (31 December 2015: 72.9%); an endorsement of the value customers continue to place on our products
-- Live policy base returns to growth at 3.9 million (31 December 2015: 3.8 million); a significant milestone representing the first period of increased policy numbers since the end of 2011
Jason Walsh, Chief Executive Officer, commented:
"CPP delivered a solid underlying performance in the first half of the year, which demonstrated the resilience of the core business. Since I was appointed CEO in May we have been developing a strategic plan that will take this core strength and build on it and return the business to sustainable growth. We are actively developing new products and are very encouraged by the global potential for OwlDetect, our cybersecurity alert service, which we plan to launch next month.
Looking ahead it is vital that we return CPP to revenue growth, which will be supported by new product development. For this reason we were very encouraged by the rise in customer numbers to 3.9 million during the first half of the year, although we believe that we are still only scratching the surface of the potential market for our services. Meanwhile we continue to address our cost base, to ensure that the Group has the appropriate resources and tools to support its planned development."
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Highlights - continuing operations Six months ended 30 June 2016 Six months ended 30 June 2015
(Unaudited) (Unaudited)
------------------------------------------- ------------------------------ ------------------------------
Revenue (GBP millions) 35.4 38.9
Operating profit (GBP millions)
- Reported 2.6 20.5
- Underlying(1) 3.6 1.9
Profit for the period (GBP millions)(2) 2.3 17.1
Basic earnings per share (pence) 0.27 2.48
Cash used in operations (GBP millions)(3) (5.6) (4.0)
Net assets (GBP millions) 12.9 5.3
Net funds (GBP millions)(4) 29.5 36.9
1. Underlying operating profit excludes an exceptional item of GBP0.5 million (H1 2015: GBP18.9 million credit) and Matching Share Plan charges of GBP0.5 million (H1 2015: GBP0.3 million). Further detail of the exceptional item is provided in note 4 to the condensed consolidated interim financial statements.
2. Profit for the period includes profit after tax from continuing and discontinued operations.
3. Cash used in operations includes cash flows from continuing and discontinued operations. Cash flows include GBP6.4 million payment of the regulatory fine (H1 2015: GBPnil).
4. Net funds comprise cash and cash equivalents of GBP33.2 million (H1 2015: GBP38.0 million) partially offset by borrowings of GBP3.7 million (H1 2015: GBP1.1 million). Cash and cash equivalents includes cash held in the UK's regulated entities of GBP25.4 million (H1 2015: GBP33.3 million) which is either for regulatory purposes or restricted by the terms of the Voluntary Variation of Permissions (VVOP). Whilst not available to the wider Group, the restricted cash is available to the regulated entity in which it exists including for operational and residual redress purposes.
Enquiries
CPPGroup Plc
Jason Walsh, Chief Executive Officer
Michael Corcoran, Chief Financial Officer
Tel: +44 (0)1904 544500
Nominated Adviser and Broker
Investec Bank plc: Sara Hale, James Rudd, Carlton Nelson
Tel: +44 (0)20 7597 4000
Media
Maitland: Neil Bennett, Daniel Yea
Tel: +44 (0)20 7379 5151
About CPP
CPP provides a range of assistance based services to customers in the UK and Ireland and in a number of international markets across Asia, Europe and Latin America. The Company's core propositions provide peace of mind for customers covering a range of areas including lost and stolen credit cards, identity theft, insurance of mobile devices, and passport assistance.
For more information on CPP visit www.cppgroupplc.com
REGISTERED OFFICE
CPPGroup Plc
Holgate Park
York
YO26 4GA
Registered number: 07151159
CHIEF EXECUTIVE'S STATEMENT
Introduction and first impressions
My appointment as CEO on 16 May 2016, followed a period of uncertainty triggered on 18 March 2016 by a requisition made by Schroder Investment Management Limited, one of the Group's major shareholders, to replace the former Non-Executive Directors and the CEO. The general meeting that followed in early May resulted in the resolutions being passed, leading to my appointment and that of the new Non-Executive Directors.
An early assessment has been made to understand the immediate issues and priorities that the business faced and has had to deal with and focus on. The four immediate priorities for the business are:
-- New revenue and customer volume growth; -- Investing in new product development, innovation and branding;
-- Designing an appropriate organisation structure with an appropriate IT platform and focused supporting resources; and
-- Promoting colleague engagement and development.
The executive team is strong and ownership of these priorities is allocated to members of the team who are directly accountable for their delivery. Colleague determination, morale and quality is evident and are critical ingredients to making a success of the business. This is demonstrated right across the Group with some of our overseas businesses showing some great growth and new business opportunities.
New revenue and customer volume growth
This is fundamental to the success of the Group and we are being innovative in how this will be achieved by deviating from our standard models. Upfront marketing investment to support direct to consumer channels in addition to traditional business models are part of our new positioning which is serving to open up additional opportunities. There are exciting opportunities in our Asian markets with more 'traditional' products and services in addition to the positive response received across a large number of our markets towards our new product development. Customer volume will become an important metric as we open up our products to these new distribution strategies.
Investing in new product development, innovation and branding
New product development and innovation is being driven by consumer insight and needs. Our newest product, OwlDetect, which is targeted for launch in September 2016, is a service that alerts a customer if any of their personal confidential information is being used or traded on the dark web. We are very excited about the global potential for OwlDetect, which draws on our deep understanding of customer needs and concerns and is absolutely in keeping with CPP's tradition of providing excellent value services that address key issues of consumer concern.
The next range of products currently under development, and soon to be launched, will centre around card loss and repatriation services delivered digitally and represent a real step forward in embracing new technology in an exciting way to deliver familiar products and services. This suite of products has both appeal and applicability across the Group; additionally they are service based propositions meaning that they can be traded in the UK without restriction. We are excited by our new product development pipeline and associated channel development which we believe will position us well to maximise current and future market opportunities.
In another important step in the redevelopment of the Group, our marketing team have embarked on an exercise to re-brand the business. We have been trading successfully in many markets for a number of years, however, the time is now right to look for a fresh start under a new image, corporate identity and branding.
Designing an appropriate organisation structure
The Group's structure will be redesigned to allow for a more cost effective and growth orientated operating model. This will look at our UK subsidiaries and how they are set up to promote good governance and customer treatment and also at new company structures, both in the UK and overseas, to promote and grow our new product initiatives.
A significant part of the cost base is invested in our IT platform. We have recently completed an in-depth review of our current IT arrangements and likely needs over the coming years. Following this we have started negotiations with SSP Limited, our current IT development partner, over a number of options that would reduce our IT spend and create a platform more suited to the Group's current and future needs.
Promoting colleague engagement and development
Our colleagues are central to the business and are at the heart of providing great products and services to our customers. The importance we place in this is demonstrated through making our existing People & Culture Director a Board level executive appointment. This will create greater influence at the right levels to drive colleague engagement and performance.
Operational review
The Group operates internationally in three regions: UK and Ireland which accounts for 45% of Group revenue; Europe and Latin America which accounts for 37% of Group revenue; and Asia Pacific which accounts for 18% of Group revenue. This distribution of revenue across the Group continues to change and due to good growth in our Asia market the dependency on the UK has reduced.
Our key international markets continue to make progress, particularly in Asia Pacific where we are developing a clear growth strategy supported by established and valued local partnerships. We have commenced a number of new campaigns in the period across key markets such as India, China and Turkey, with further opportunities identified in the majority of our other markets. During the period the UK has also implemented the price reductions and content enhancements indicated in the 2015 Annual Report. Whilst conditions in some of our markets continue to be challenging, the Group's annual renewal rate has remained encouraging at 72.9%, an endorsement of the value that existing customers place in our products. Overall, our net live customer base is growing again and is now 3.9 million.
Financial Review
Summary
Group revenue has declined by 9% for the half year to GBP35.4 million, continuing to reflect the natural decline in the UK renewal book as new regulated sales remain restricted through the terms of the VVOP. The UK decline has been partly mitigated by significant growth in India, where strong partnerships are emerging and future prospects look good.
Reported operating profit in the first half of the year is GBP2.6 million (H1 2015: GBP20.5 million, which included a net benefit of GBP18.6 million from exceptional items and Matching Share Plan (MSP) charges). Underlying operating profit, which excludes GBP0.5 million exceptional items and GBP0.5 million MSP charges, has improved to GBP3.6 million (H1 2015: GBP1.9 million). The improvement reflects increased profits in both India and the UK, and whilst trading conditions remain difficult in certain of our European markets, profit performance has remained broadly stable across all our other countries. Following the decision in 2015 to cease commission payments to UK Business Partners where they have no ongoing involvement in the renewal process and do not provide any service to the customer, investment through these ongoing savings has been made during the period into improving the customer value experience through product enhancements and price reductions. Certain Business Partners have acknowledged agreement with the Group's approach to commissions and the principle of it being to the benefit of customers, although the position with the majority of impacted Business Partners is not yet finalised.
Net finance costs and taxation total GBP0.3 million resulting in a profit after tax from continuing operations of GBP2.3 million (H1 2015: GBP16.9 million).
There are no discontinued operations in the current period (H1 2015: GBP0.2 million profit). The Group's reported profit for the period is therefore GBP2.3 million (H1 2015: GBP17.1 million).
Redress
The Group has a remaining customer redress and associated cost provision at 30 June 2016 of GBP1.3 million, which reflects the Group's current estimate of the cost to complete residual customer redress activity. There has been no additional provision made in the first half of the year. The regulatory fine has been cleared with GBP6.4 million paid during the period and the final scheduled instalment of GBP2.1 million paid in July 2016.
Balance sheet, financing and cash flow
The Group has continued to improve its financial position, increasing net assets to GBP12.9 million (31 December 2015: GBP10.0 million).
The Group's borrowing arrangements comprise a GBP5.0 million revolving credit facility which is available until February 2018, and a commission deferral balance of GBP1.4 million which is due for repayment in January 2017. At 30 June 2016, GBP2.5 million of the committed facility was utilised.
The Group's net funds position has decreased to GBP29.5 million at 30 June 2016 (31 December 2015: GBP37.6 million) as a result of capital expenditure on the Group's core platform IT system and payment of the regulatory fine. The net funds figure includes GBP25.4 million cash held in the UK's regulated entities which cannot be distributed to the wider Group without regulator approval. These cash balances are either held for regulatory purposes or are restricted by the terms of the VVOP. The restricted cash is, however, available to use in the regulated entity in which it exists.
Summary and outlook
The outlook for the business is positive, although we recognise the economic uncertainty currently present in some of our markets following the UK's decision to leave the EU and recent political events in Turkey. Colleague morale is good and all the early indicators are that our focus is on the right priorities to enable us to deliver against our growth objectives.
The Group's expectations for the full year remain unchanged, but we expect to see reduced performance levels in the remainder of the year due to the ongoing decline of the existing UK customer base, the investment in a better customer value experience in the UK and the effect of some delays in the launch of new products. Growth in new customer sales globally is expected to provide improved performance in 2017 and beyond.
The strategy and longer term viability of the business is based on the successful launch of new products globally and uncertainty in the medium term remains as this work is ongoing. However, new product development and innovation is gathering pace and the business is developing new propositions which will be fit for global application and launch in the coming months. This, coupled with our new branding initiative, will help to create the CPP of the future.
Jason Walsh
Chief Executive Officer
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
6 months ended
6 months ended 30 June 2015 Year ended
30 June 2016 restated (note 2) 31 December 2015
GBP'000 GBP'000 GBP'000
Note (Unaudited) (Unaudited) (Audited)
Continuing operations
Revenue 35,441 38,908 76,771
Cost of sales (12,230) (18,073) (32,346)
Gross profit 23,211 20,835 44,425
Administrative expenses (20,586) (383) (21,443)
Operating profit 2,625 20,452 22,982
Analysed as:
Underlying operating profit 3 3,650 1,867 6,863
Exceptional items 4 (549) 18,933 17,777
MSP charges 13 (476) (348) (1,658)
------------------------------------------------- -----
Investment revenues 120 131 282
Finance costs (224) (1,320) (1,362)
Profit before taxation 2,521 19,263 21,902
Taxation 5 (230) (2,351) (3,374)
Profit for the period from continuing operations 2,291 16,912 18,528
Discontinued operations
Profit for the period from discontinued
operations - 169 2,309
--------------- ------------------- ------------------
Profit for the period attributable to equity
holders of the Company 2,291 17,081 20,837
--------------- ------------------- ------------------
Basic earnings per share:
Continuing operations 7 0.27 2.48 2.42
Discontinued operations 7 - 0.02 0.30
--------------- ------------------- ------------------
0.27 2.50 2.72
--------------- ------------------- ------------------
Diluted earnings per share:
Continuing operations 7 0.26 2.46 2.41
Discontinued operations 7 - 0.02 0.30
--------------- ------------------- ------------------
0.26 2.48 2.71
--------------- ------------------- ------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
6 months ended 30 June 2016 6 months ended 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Profit for the period 2,291 17,081 20,837
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on
translation of foreign
operations (10) 296 271
Other comprehensive
(expense)/income for the period
net of taxation (10) 296 271
---------------------------- ---------------------------- ------------------
Total comprehensive income for
the period attributable to
equity holders of the Company 2,281 17,377 21,108
---------------------------- ---------------------------- ------------------
CONSOLIDATED BALANCE SHEET
30 June 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
Note (Unaudited) (Unaudited) (Audited)
Non-current assets
Intangible assets 8 7,893 2,810 4,825
Property, plant and equipment 8 3,545 3,657 3,502
Deferred tax asset 274 489 652
------------- ------------- -----------------
11,712 6,956 8,979
------------- ------------- -----------------
Current assets
Insurance assets 209 451 317
Inventories 37 89 43
Trade and other receivables 12,281 14,048 12,106
Cash and cash equivalents 9 33,222 38,019 39,810
------------- ------------- -----------------
45,749 52,607 52,276
Total assets 57,461 59,563 61,255
------------- ------------- -----------------
Current liabilities
Insurance liabilities (970) (1,651) (1,189)
Income tax liabilities (2,317) (2,923) (2,483)
Trade and other payables (35,565) (41,398) (42,629)
Borrowings (1,367) - -
Provisions 10 (1,771) (4,437) (2,254)
------------- -----------------
(41,990) (50,409) (48,555)
------------- ------------- -----------------
Net current assets 3,759 2,198 3,721
------------- ------------- -----------------
Non-current liabilities
Borrowings 11 (2,384) (1,130) (2,191)
Deferred tax liabilities (141) (13) (308)
Trade and other payables - (2,125) -
Provisions 10 - (606) (186)
------------- ------------- -----------------
(2,525) (3,874) (2,685)
------------- ------------- -----------------
Total liabilities (44,515) (54,283) (51,240)
------------- ------------- -----------------
Net assets 12,946 5,280 10,015
============= ============= =================
Equity
Share capital 12 23,975 23,879 23,939
Share premium account 45,225 45,109 45,225
Merger reserve (100,399) (100,399) (100,399)
Translation reserve 981 1,016 991
Equalisation reserve 5,328 6,870 6,243
ESOP reserve 13,889 12,223 13,093
Retained earnings 23,947 16,582 20,923
------------- ------------- -----------------
Total equity attributable to equity holders of the
Company 12,946 5,280 10,015
============= ============= =================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Share premium Merger Translation Equalisation ESOP Retained
capital account reserve reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended
30 June 2016
(Unaudited)
At 1 January 2016 23,939 45,225 (100,399) 991 6,243 13,093 20,923 10,015
Total
comprehensive
income - - - (10) - - 2,291 2,281
Movement on
equalisation
reserve - - - - (915) - 915 -
Current tax charge
on equalisation
reserve movement - - - - - - (182) (182)
Equity settled
share-based
payment charge - - - - - 796 - 796
Exercise of share
options 36 - - - - - - 36
At 30 June 2016 23,975 45,225 (100,399) 981 5,328 13,889 23,947 12,946
======== ======== ========== ============ ============= ======== ========= =========
6 months ended
30 June 2015
(Unaudited)
At 1 January 2015 17,126 33,291 (100,399) 720 7,487 11,891 (991) (30,875)
Total
comprehensive
income - - - 296 - - 17,081 17,377
Movement on
equalisation
reserve - - - - (617) - 617 -
Current tax charge
on equalisation
reserve movement - - - - - - (125) (125)
Equity settled
share-based
payment charge - - - - - 332 - 332
Other ordinary
share issues 6,753 11,818 - - - - - 18,571
At 30 June 2015 23,879 45,109 (100,399) 1,016 6,870 12,223 16,582 5,280
======== ======== ========== ============ ============= ======== ========= =========
Year ended
31 December 2015
(Audited)
At 1 January 2015 17,126 33,291 (100,399) 720 7,487 11,891 (991) (30,875)
Total
comprehensive
income - - - 271 - - 20,837 21,108
Movement on
equalisation
reserve - - - - (1,244) - 1,244 -
Current tax charge
on equalisation
reserve movement - - - - - - (252) (252)
Equity settled
share-based
payment charge - - - - - 1,466 - 1,466
Deferred tax on
share-based
payment charge - - - - - - 86 86
Purchase of
ordinary shares - - - - - (264) - (264)
Exercise of share
options 1 (1) - - - - (1) (1)
Other ordinary
share issues 6,812 11,935 - - - - - 18,747
At 31 December
2015 23,939 45,225 (100,399) 991 6,243 13,093 20,923 10,015
======== ======== ========== ============ ============= ======== ========= =========
CONSOLIDATED CASH FLOW STATEMENT
6 months ended 6 months ended Year ended
Note 30 June 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Net cash used in operating activities 14 (6,098) (4,167) (1,360)
Investing activities
Interest received 120 131 282
Purchases of property, plant and equipment (186) (140) (194)
Purchases of intangible assets (2,513) (2,327) (4,435)
Net cash used in investing activities (2,579) (2,336) (4,347)
--------------- --------------- ------------------
Financing activities
Proceeds from/(repayment of) bank loans 1,500 (13,000) (12,000)
Repayment of the Commission Deferral Agreement - (1,304) (1,304)
Proceeds from the Second Commission Deferral
Agreement - 1,304 1,304
Interest paid (189) (882) (903)
Cost of refinancing - (220) (220)
Cost of compromising the Commission Deferral
Agreement - (743) (743)
Issue of ordinary share capital and associated
costs 36 19,069 18,980
Net cash generated by financing activities 1,347 4,224 5,114
--------------- --------------- ------------------
Net decrease in cash and cash equivalents (7,330) (2,279) (593)
Effect of foreign exchange rate changes 742 (301) (196)
Cash and cash equivalents at start of period 39,810 40,599 40,599
Cash and cash equivalents at end of period 33,222 38,019 39,810
=============== =============== ==================
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1 General information
The condensed consolidated interim financial statements for the six months ended 30 June 2016 do not constitute statutory accounts as defined under Section 434 of the Companies Act 2006. The financial statements for the year ended 31 December 2015 were approved by the Board on 6 April 2016 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 2016 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union.
The condensed consolidated interim financial statements should be read in conjunction with the Annual Report and Financial Statements for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
The condensed consolidated interim financial statements were approved for release on 17 August 2016.
In preparing the condensed consolidated interim financial statements the comparative amounts for the six months ended 30 June 2015 have been restated to reflect the Airport Angel business as discontinued.
The accounting policies applied are consistent with those used in preparing the statutory financial statements for the year ended 31 December 2015, except for the adoption of new standards and interpretations effective as of 1 January 2016. There are no new IFRSs or IFRICs that are effective for the first time for the six months ended 30 June 2016 which have a material impact on the Group.
Going concern
The Group has continued to trade profitably in the first half of 2016 and residual redress activities are substantially complete. Whilst there continues to be some uncertainty from medium term trading and strategic risk, the Group's forecasts show that the Group has the necessary resources to trade and operate within the level of its borrowing facilities.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements.
3 Segmental analysis
Segment revenue and performance for the current and comparative periods have been as follows:
Europe
UK and and Latin Asia
Ireland America Pacific Total
Six months ended 30 June 2016 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited)
Continuing operations
Revenue - external sales 15,482 13,441 6,518 35,441
--------- ------------ --------- --------
Regional underlying operating
profit 656 2,302 692 3,650
--------- ------------ ---------
Exceptional items (note 4) (549)
MSP charges (476)
Operating profit 2,625
Investment revenues 120
Finance costs (224)
--------
Profit before taxation 2,521
Taxation (230)
--------
Profit for the period from
continuing operations 2,291
Discontinued operations
Profit for the period from -
discontinued operations
--------
Profit for the period 2,291
========
UK and Europe and Asia
Ireland Latin America Pacific Total
Six months ended 30 June 2015 GBP'000 GBP'000 GBP'000 GBP'000
- restated (note 2) (Unaudited)
Continuing operations
Revenue - external sales 22,159 12,926 3,823 38,908
--------- ---------------- --------- --------
Regional underlying operating
(loss)/profit (140) 2,102 (95) 1,867
--------- ---------------- ---------
Exceptional items (note 4) 18,933
MSP charges (348)
Operating profit 20,452
Investment revenues 131
Finance costs (1,320)
--------
Profit before taxation 19,263
Taxation (2,351)
--------
Profit for the period from
continuing operations 16,912
Discontinued operations
Profit for the period from
discontinued operations 169
--------
Profit for the period 17,081
========
Europe
UK and and Latin Asia
Ireland America Pacific Total
Year ended 31 December 2015 GBP'000 GBP'000 GBP'000 GBP'000
(Audited)
Continuing operations
Revenue - external sales 42,979 25,455 8,337 76,771
--------- ------------ --------- --------
Regional underlying operating
profit 1,989 4,594 280 6,863
--------- ------------ ---------
Exceptional items (note 4) 17,777
MSP charges (1,658)
Operating profit 22,982
Investment revenues 282
Finance costs (1,362)
Profit before taxation 21,902
Taxation (3,374)
--------
Profit for the year from continuing
operations 18,528
Discontinued operations
Profit for the year from discontinued
operations 2,309
--------
Profit for the year 20,837
========
For the purposes of resource allocation and assessing performance, operating costs and revenues are allocated to the regions in which they are earned or incurred. The above does not reflect additional annual net charges of central costs of GBP1,704,000 presented within UK and Ireland in the table above which has been charged to other regions for statutory purposes.
Segmental assets
30 June 2015
30 June 2016 restated (note 2) 31 December 2015
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
UK and Ireland 42,344 48,323 47,667
Europe and Latin America 8,773 5,720 8,074
Asia Pacific 6,070 2,829 4,065
Total segment assets 57,187 56,872 59,806
Assets relating to discontinued operations - 2,202 797
Unallocated assets 274 489 652
Consolidated total assets 57,461 59,563 61,255
Deferred tax is not allocated to segments.
Capital expenditure
Intangible assets Property, plant and equipment
----------------------------------------- ------------------------------------------
6 months 6 months
ended ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2016 2015 2015 2016 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
Continuing
operations
UK and Ireland 3,082 2,357 4,415 165 125 129
Europe and Latin
America 27 - 21 12 8 48
Asia Pacific - - - 9 7 17
Total continuing
operations 3,109 2,357 4,436 186 140 194
============ ============ ============= ============ ============ ============
Revenue from major products
6 months ended 30 June
2015 Year ended
6 months ended 30 June 2016 restated (note 2) 31 December 2015
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Continuing operations
Retail assistance policies 32,401 34,229 68,139
Retail insurance policies 1,507 3,156 5,384
Wholesale policies 1,188 1,043 2,344
Non-policy revenue 345 480 904
------------------------ ------------------------ ------------------
Revenue from continuing
operations 35,441 38,908 76,771
======================== ======================== ==================
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 the UK, Spain and India are considered individually material. Revenue from external customers and non-current assets (excluding deferred tax) by geographical location are detailed below:
External revenues Non-current assets
----------------------------------------- ------------------------------------------
6 months
ended
30 June
6 months 2015
ended restated Year ended
30 June (note 31 December 30 June 30 June 31 December
2016 2) 2015 2016 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
Continuing
operations
UK 15,264 21,692 42,179 11,180 6,145 8,062
Spain 6,067 6,231 11,873 111 131 122
India 5,575 2,779 6,256 15 11 14
Other 8,535 8,206 16,463 132 180 129
Total continuing
operations 35,441 38,908 76,771 11,438 6,467 8,327
============ ============ ============= ============ ============ ============
4 Exceptional items
6 months ended 30 June 2015 Year ended
6 months ended 30 June 2016 restated (note 2) 31 December 2015
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Requisition costs 549 - -
Commission deferral compromise
and associated costs - (19,388) (19,388)
Restructuring costs - 455 711
Customer redress and associated
costs - - 900
Exceptional charge/(credit)
included in operating profit 549 (18,933) (17,777)
Tax on exceptional items - 1,916 2,344
---------------------------- ---------------------------- -------------------
Total exceptional
charge/(credit) after tax 549 (17,017) (15,433)
============================ ============================ ===================
Requisition costs in the six month period of GBP549,000 (H1 2015: GBPnil; year ended 31 December 2015: GBPnil) relates to professional costs associated with the shareholder general meeting requisition and the subsequent interim injunction proceedings.
5 Taxation
The effective tax rate at the half year is 9.1% (H1 2014: 12.2% restated; year ended 31 December 2015: 15.4%). The effective rate is lower than the standard rate of corporation tax in the UK due to brought forward UK losses and overseas tax losses, for which deferred tax assets were not previously recognised. The effective rate is partly impacted by higher rates of tax on overseas profits. The 2016 full year rate may vary from this due to the territory mix of future 2016 profits.
6 Dividends
The Directors have not proposed an interim dividend for 2016.
7 Earnings per share
Basic and diluted earnings per share have been calculated in accordance with IAS 33 "Earnings per Share". Underlying earnings per share have also been presented in order to give a better understanding of the performance of the business.
Six months ended 30 June 2016
(Unaudited) Continuing operations Discontinued operations Total
Earnings GBP'000 GBP'000 GBP'000
Profit for the purposes of basic and
diluted earnings per share 2,291 - 2,291
Exceptional items (net of tax) 549 - 549
MSP charges (net of tax) 476 - 476
Earnings for the purposes of underlying
basic and diluted earnings per share 3,316 - 3,316
====================== ======================== ============
Number of shares Number
(thousands)
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 852,854
Effect of dilutive potential ordinary
shares: share options 27,902
------------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 880,756
Earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic earnings per share 0.27 - 0.27
Diluted earnings per share 0.26 - 0.26
====================== ======================== ============
Basic underlying earnings per share 0.39 - 0.39
Diluted underlying earnings per
share 0.38 - 0.38
====================== ======================== ============
Six months ended 30 June 2015 -
restated (note 2) (Unaudited) Continuing operations Discontinued operations Total
Earnings GBP'000 GBP'000 GBP'000
Earnings for the purposes of basic and
diluted earnings per share 16,912 169 17,081
Exceptional items (net of tax) (17,017) 25 (16,992)
MSP charges (net of tax) 283 - 283
Earnings for the purposes of underlying
basic and diluted earnings per share 178 194 372
====================== ======================== =========
Number of shares Number
(thousands)
Weighted average number of ordinary
shares for the purposes of basic and
diluted loss per
share 683,863
Effect of dilutive potential ordinary
shares: share options 4,228
------------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 688,091
Earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted earnings per share
Basic 2.48 0.02 2.50
Diluted 2.46 0.02 2.48
====================== ======================== ============
Basic and diluted underlying
earnings per share 0.02 0.03 0.05
====================== ======================== ============
Year ended 31 December 2015
(Audited) Continuing operations Discontinued operations Total
Earnings GBP'000 GBP'000 GBP'000
Earnings for the purposes of basic and
diluted earnings per share 18,528 2,309 20,837
Exceptional items (net of tax) (15,433) (38) (15,471)
MSP charges (net of tax) 1,318 - 1,318
Earnings for the purposes of underlying
basic and diluted earnings per share 4,413 2,271 6,684
Number of shares Number
(thousands)
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 766,667
Effect of dilutive potential ordinary
shares: share options 2,748
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 769,415
Earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted earnings per
share
Basic 2.42 0.30 2.72
Diluted 2.41 0.30 2.71
Basic and diluted underlying
earnings per shares
Basic 0.58 0.30 0.88
Diluted 0.57 0.30 0.87
8 Intangible and tangible assets
Intangible assets Property, plant and equipment Total
GBP'000 GBP'000 GBP'000
Six months ended 30 June 2016 (Unaudited)
Carrying amount at 1 January 2016 4,825 3,502 8,327
Additions 3,109 186 3,295
Disposals - (15) (15)
Amortisation/depreciation (49) (149) (198)
Exchange adjustments 8 21 29
Impairment - - -
Carrying amount at 30 June 2016 7,893 3,545 11,438
Six months ended 30 June 2015 (Unaudited)
Carrying amount at 1 January 2015 808 3,820 4,628
Additions 2,357 140 2,497
Disposals (1) (8) (9)
Amortisation/depreciation (325) (253) (578)
Exchange adjustments (8) (42) (50)
Impairment (21) - (21)
Carrying amount at 30 June 2015 2,810 3,657 6,467
Year ended 31 December 2015 (Audited)
Carrying amount at 1 January 2015 808 3,820 4,628
Additions 4,436 194 4,630
Disposals (1) (15) (16)
Amortisation/depreciation (391) (465) (856)
Exchange adjustments (6) (32) (38)
Impairment (21) - (21)
Carrying amount at 31 December 2015 4,825 3,502 8,327
The carrying value of intangible assets includes GBP7,667,000 (H1 2015: GBP2,621,000, 31 December 2015: GBP4,585,000) relating to the development of the core platform IT system, which is an asset under construction and will not be amortised until it becomes operational. The Group's contract with SSP Limited includes a minimum future commitment for costs relating to licensing and running the system of approximately GBP6,500,000.
9 Cash and cash equivalents
Cash and cash equivalents of GBP33,222,000 (H1 2015: GBP38,019,000; 31 December 2015: GBP39,810,000) comprises cash held on demand by the Group and short term deposits.
Cash and cash equivalents includes GBP25,402,000 (H1 2015: GBP33,265,000; 31 December 2015: GBP33,879,000) cash held in the UK's regulated entities CPPL and HIL. This cash is either maintained by the Group's insurance business for solvency purposes or restricted by the terms of the VVOP. The VVOP restricted cash cannot be distributed to the wider Group without FCA approval. The restricted cash whilst being unavailable to distribute to the wider Group, is available to the regulated entity in which it exists including for operational and residual customer redress purposes.
10 Provisions
Customer redress and associated
costs Onerous leases Total
GBP'000 GBP'000 GBP'000
Six months ended 30 June 2016
(Unaudited)
At 1 January 2016 1,611 829 2,440
Customer redress and associated costs
paid in the period (346) - (346)
Utilisation of onerous lease provision in
the period - (323) (323)
At 30 June 2016 1,265 506 1,771
Six months ended 30 June 2015
(Unaudited)
At 1 January 2015 6,356 1,658 8,014
Customer redress and associated costs
paid in the period (1,829) - (1,829)
Utilisation of onerous lease provision in
the period - (318) (318)
Transfer to trade and other payables (824) - (824)
At 30 June 2015 3,703 1,340 5,043
Year ended 31 December 2015 (Audited)
At 1 January 2015 6,356 1,658 8,014
Charged/(credited) to the income
statement 900 (97) 803
Customer redress and associated costs
paid in the year (4,821) - (4,821)
Utilisation of onerous lease provision in
the year - (732) (732)
Transfer to trade and other payables (824) - (824)
At 31 December 2015 1,611 829 2,440
The customer redress and associated costs provision comprises anticipated compensation payable to customers through residual customer redress exercises.
The onerous leases provision reflects the future lease payments and associated costs in the expected non-utilisation period at a vacated office in the UK.
The customer redress and associated costs and onerous leases provisions are both expected to be settled within one year of the balance sheet date.
11 Borrowings
30 June 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Second Commission Deferral Agreement 1,367 - -
Borrowings due within one year 1,367 - -
Bank loans due outside of one year 2,500 - 1,000
Less: unamortised issue costs (116) (190) (152)
Second Commission Deferral Agreement - 1,320 1,343
Borrowings due outside of one year 2,384 1,130 2,191
The borrowing facilities are secured by fixed and floating charges on certain assets of the Group.
At 30 June 2016, the Group had undrawn committed borrowing facilities of GBP2,500,000 (H1 2015: GBP5,000,000; 31 December 2015: GBP4,000,000).
12 Share capital
Share capital at 30 June 2016 amounted to GBP23,975,000, having increased from GBP23,939,000 at 31 December 2015. During the period the Company issued 3,646,875 ordinary shares for cash consideration of GBP36,000 to option holders under its share option schemes.
13 Share-based payment
Share-based payment charges for the six month period to 30 June 2016 comprise MSP charges of GBP500,000 (H1 2015: GBP310,000; 31 December 2015: GBP1,457,000) and Long Term Incentive Plan 2016 (2016 LTIP) charges of GBP296,000 (H1 2015: GBPnil; 31 December 2015: GBPnil). These costs are disclosed within administrative expenses, although the MSP share-based payment charge forms part of MSP charges not included in underlying operating profit.
Number of share options Weighted average exercise price
(thousands) (GBP)
Six months ended 30 June 2016 (Unaudited)
MSP
Outstanding at 1 January 2016 36,135 0.01
Forfeited during the period (10,500) 0.01
Exercised during the period (3,647) 0.01
Outstanding at 30 June 2016 21,988 0.01
Exercisable at 30 June 2016 47 0.01
2016 LTIP
Outstanding at 1 January 2016 - -
Granted during the period 26,050 -
Forfeited during the period (8,000) -
Outstanding at 30 June 2016 18,050 -
Six months ended 30 June 2015 (Unaudited)
MSP
Outstanding at 1 January 2015 - -
Granted during the period 25,650 0.01
Outstanding at 30 June 2015 25,650 0.01
Year ended 31 December 2015 (Audited)
MSP
Outstanding at 1 January 2015 - -
Granted during the year 38,010 0.01
Forfeited during the year (1,875) 0.01
Outstanding at 31 December 2015 36,135 0.01
Nil cost options and conditional shares granted under the 2016 LTIP normally vest after three years, lapse if not exercised within ten years of grant and will lapse if option holders cease to be employed by the Group. Vesting of 2016 LTIP options and shares are also subject to achievement of performance criteria including a share price measure and an underlying operating profit target over the vesting period.
The options outstanding at 30 June 2016 had a weighted average remaining contractual life of two years (30 June 2015: two years; 31 December 2015: two years) in the MSP and three years (30 June 2015: n/a; 31 December 2015: n/a) in the 2016 LTIP.
The principal assumptions underlying the valuation of the 2016 LTIP options granted during the period at the date of grant are as follows:
Weighted average share price GBP0.12 Weighted average exercise price - Expected volatility 150% Expected life 3 years Risk-free rate 0.67% Dividend yield 0%
There have been 26,050,000 share options granted in the current period. The aggregate estimated fair value of the options granted in the current period under the 2016 LTIP was GBP2,852,000.
14 Reconciliation of operating cash flows
6 months ended Year ended
6 months ended 30 June 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Profit for the period 2,291 17,081 20,837
Adjustment for:
Depreciation and amortisation 198 578 856
Equity settled share-based payment expense 796 332 1,466
Impairment loss on intangible assets - 21 21
Loss on disposal of property, plant and equipment 15 9 16
Commission deferral compromise and associated
costs - (19,388) (19,388)
Investment revenues (120) (131) (282)
Finance costs 224 1,416 1,523
Income tax expense 230 2,351 3,017
Operating cash flows before movement in working
capital 3,634 2,269 8,066
Decrease in insurance assets 108 142 276
Decrease in inventories 5 4 50
Decrease in receivables 590 254 2,234
Decrease in insurance liabilities (219) (368) (830)
Decrease in payables (9,093) (3,310) (4,410)
Decrease in provisions (669) (2,971) (5,574)
Cash used in operations (5,644) (3,980) (188)
Income taxes paid (454) (187) (1,172)
Net cash used in operating activities (6,098) (4,167) (1,360)
15 Related party transactions
Transactions with related parties
The Group has agreed to settle legal fees incurred by Mr Hamish Ogston in relation to the interim injunction proceedings which were announced on 11 April 2016 and subsequently withdrawn on 25 April 2016. Payment of these costs is outstanding, but will not exceed GBP218,000. Mr Ogston is a substantial shareholder in the Group.
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 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
(Unaudited) (Unaudited) (Audited)
Short term employee benefits 1,284 1,322 4,098
Post-employment benefits 72 48 121
Termination benefits - 235 239
Share-based payments 568 265 1,128
1,924 1,870 5,586
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUQARUPQGCM
(END) Dow Jones Newswires
August 18, 2016 02:00 ET (06:00 GMT)
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