CPPGroup : 2021 full year report

29 March 2022

CPPGroup Plc

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

FULL YEAR RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021

A year of financial and operational progress as we refocus the business

CPP Group (AIM: CPP), a provider of assistance and insurance products which reduce disruptions to everyday life for millions of customers across the world, is pleased to announce its full year results for the 12 months ended 31 December 2021.

Financial highlights

• • Group revenue from continuing operations increased by 5% to £143.6 million (2020 restated: £136.5 million)

• • EBITDA from continuing operations increased by 29% to £7.5 million (2020 restated: £5.8 million).

• • Profit before tax increased to £4.2 million (2020 restated: £0.9 million).

• • Cash balance of £22.3 million as at 31 December 2021 (2020: £21.9 million).

• • Final dividend proposed of 7.5 pence per share which will represent a full year dividend of 12.5 pence per share (2020: 25.0 pence per share).

Operational progress

• • Strong recovery in our Indian market with CPP India growing revenue by 7% and Globiva widening its client base with revenue increasing by 51%.

• • Expanded partner base and product innovation in Turkey with revenue growing 28% on a local currency basis.

• • Making progress in the integration of Blink to strengthen the Group's ability to deliver innovative parametric and digital solutions.

• • Simplification of the Group to focus on key growth areas through:

  • o disposal of German card protection legacy business for £2.4 million;

  • o disposal of our historically loss-making China business in January 2022;

  • o restructure of Mexico and closure of the legacy Malaysia business; and

  • o post period, we have commenced the wind down of the UK MGA and Bangladesh.

• • New Board and Executive team in place to provide strategic focus and drive the business forward sustainably.

Financial and non-financial highlights - continuing operations

31 December

31 December 2020

• 1. Restated to reflect Germany and China as discontinued operations.

• 2. EBITDA represents earnings before interest, taxation, depreciation, amortisation and exceptional items.

• 3. Profit/(loss) for the year includes continuing and discontinued operations.

• 4. Comprises final dividend of 7.5 pence per share (2020: 25.0 pence per share) and interim dividend paid of 5.0 pence

• per share (2020: nil) paid in September 2021.

Simon Pyper, CEO of CPP Group, commented:

"Despite the COVID-19 related headwinds which have challenged us all, the Group not only delivered a solid set of financial results but also made progress in simplifying and refocusing its operations through the sale of its German Card Protection business, the restructure of its operations in Mexico and the closure of its operations in Malaysia. Whilst there is still much to do, the changes introduced in 2021 have allowed the Group to refocus on its core operations in India and Turkey, and on its digital rich, Blink parametric business.

The Group is now focused on optimising the allocation of human, intellectual and financial capital to where it can better achieve commercial advantage and attractive returns. To that end, and post the reporting period, the Group has exited from its underperforming China, Bangladesh, and UK MGA operations. Additionally, the Board is evaluating the change management programme, introduced by the previous management team, to ensure that the various projects are consistent with the Group's new 'direction of travel' and moreover, that the benefits assumed are realisable.

I am determined to re-energise CPP, to simplify its business model and to improve returns to shareholders."

Enquiries:

CPPGroup Plc Simon Pyper, CEO David Bowling, CFOvia Alma PR

Sarah Atherton, Group Company Secretary

Liberum Capital Limited (Nominated Adviser & Sole Broker)

+44 (0)20 3100 2000

Richard Lindley

Lauren Kettle

Alma PR (Financial PR Adviser)

Josh Royston

+44 (0)20 3405 0205cpp@almapr.co.uk

David Ison Kieran Breheny Faye Calow

About CPP Group:

CPP Group is 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, at the time and place they are needed. These products are provided through partnerships with leading insurance, banking and finance companies as 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 visithttps://international.cppgroup.com

REGISTERED OFFICE

CPPGroup Plc

6 East Parade Leeds

LS1 2AD

Registered number: 07151159

Chairman's Statement

In spite of the challenges to the business of a second year of disruption brought about by the COVID-19 pandemic, I am pleased to report that the Group continued with important initiatives to refocus its operations, both domestically and in its key overseas markets of India and Turkey. Additionally, the Group made progress in streamlining its operations, exiting from underperforming geographies and closing down unprofitable products.

Streamlining Operations

During the year the Group shut down its loss-making operation in Malaysia, disposed of its legacy German Card Protection business and restructured its EU operation. After the reporting period, the Group has also announced the winding down of its operations in Bangladesh and its UK MGA business, and the disposal of the Chinese operations, all of which were considered unable to deliver profitable growth in the foreseeable future. Additionally, detailed plans have been developed for the migration of the Group's remaining legacy operations into a single, standalone business unit, which, once completed, should facilitate a more profitable and disciplined run-off of the Group's UK and non-UK back books.

Refocusing our Business

The business is now organised along geographic lines with in-country CEOs for India, Turkey and our UK-based, parametric-technology business, each of whom have prime responsibility for delivering growth in their regions. Furthermore, the Group is in the process of developing a new IT platform which will facilitate new product development and delivery throughout the Group. The platform will initially launch in India in late 2022 with plans to roll-out across other markets in the Group in 2023 and 2024. This will ultimately lead to cost reductions as legacy systems are decommissioned.

Financial Results

Despite continued COVID-19 headwinds and the strengthening of sterling relative to other currencies in which the Group operates, the Group delivered growth over the prior year. Group revenues from continuing operations increased by 5% to £143.6 million, whilst EBITDA from continuing operations increased by £1.7 million to £7.5 million, inclusive of a one-time benefit from the release of a third-party commission provision relating to the Group's legacy card and identity products. Our balance sheet shows net cash of £22.3 million (2020: £21.9 million), which will allow the Group to fund further investment in its technology platform and, if appropriate, to fund acquisitions.

People

Unsurprisingly our top priority in 2021 has been to support our colleagues, not just in terms of creating COVID-safe office and home-working conditions, but also to sustain their overall well-being. We actively seek their engagement and participation, and the achievements of the past year are a testament to their hard work and dedication. On behalf of the Board, I offer my thanks to them.

Board Changes

We were pleased to announce on 1 December 2021 the appointment of Jeremy Miller as an independent Non-Executive Director, succeeding Timothy Elliott, who stepped down from the Board at the end of November 2021. Mark Hamlin also retired from the Board at the end of November and stood down as Chairman of Globiva, in which the Group holds a 51% shareholding, at the end of December. Mark and Tim had been on the Board since 2016 and 2017 respectively and I would like to thank them both for their years of service to the Group. It is our objective to add one additional independent Non-Executive Director to the Board during the current year, who will, ideally, have specific operational experience in that part of the insurance and assistance sectors in which the Group operates.

Early in the year, Justine Shaw, Head of Culture and HR, left the Group, with her responsibilities being distributed to existing members of the management team, and, in particular, Paula Cartwright, who was promoted to lead our HR function. In October 2021, Oliver Laird, our CFO, resigned from the business. We were pleased to be able to announce in December the appointment of Simon Pyper to succeed him. Simon brings with him many years of experience, both as CFO and CEO, of growth companies in the services sector.

Subsequent to the financial year end, Jason Walsh (announced on 8 February 2022) stood down as Chief Executive Officer, after six years in the role and twenty years of service to the Group. I would like to thank Jason for his many years of service and the contribution he has made. He took the reins as Chief Executive Officer of the Group at a difficult time, after several years of financial and regulatory challenges had almost brought it to its knees and he leaves a stable organisation with considerable potential for growth.

Jason has been succeeded as CEO by Simon Pyper and, the Group announced, on the 8 February 2022, the appointment of David Bowling, an internal candidate with ten years' service to the Group, as Chief Financial Officer. I have utmost confidence that both Simon and David will make a substantial contribution to the success of the Group in the next few years, and I congratulate them on their appointments.

Extensive board and senior personnel changes in a short period are inevitably unsettling for all stakeholders in the Company, but particularly the members of the management team. I would particularly like to recognise the commitment and fortitude of all those members of the team who have participated in and enabled these changes to take place in a committed and professional manner.

I would also like to add my specific thanks to Deepak Matai, who leads our largest operating entity in India, and his colleagues, who have been able to deliver strong growth in spite of the impact of COVID-19 in his country, as well as to Selnur Guzel, whose management of our business in Turkey, along with her team, has been even more forceful than the hurricane-force economic and currency turbulence in which she and her colleagues have had to operate.

Outlook and Dividend

In our pre-close trading update of 19 January 2022, we reset the Group's earnings expectations for the current financial year, reflecting in part, the delayed benefits and additional costs brought about by the revision to the scope and consequent implementation timetable for the Group's new IT platform.

Along with revising the Group's earnings expectations, we are resetting our dividend guidance. The revised guidance on dividends will better reflect the Groups earnings expectations, cash requirements and prospects. Consequently, the Board is pleased to announce a final dividend of 7.5 pence per share giving a full year dividend of 12.5 pence (2020: 25.0 pence).

The proposed final dividend will be paid on 17 May 2022 to shareholders on the register at the close of business on 19 April 2022. The ex-dividend date will be on 14 April 2022.

Whilst it is always disappointing to re-set market expectations, the business continues to make good progress and is, I believe, notwithstanding heightened levels of uncertainty globally as a result of the tragic events in the Ukraine, increasingly well positioned for profitable and sustainable growth.

David Morrison

Chairman

28 March 2022

This is an excerpt of the original content. To continue reading it, access the original document here.