26 March 2024
CPPGroup
Plc
("CPP
Group"; "the Group"; or "the Company")
FULL YEAR RESULTS FOR THE
YEAR ENDED 31 DECEMBER 2023
DELIVERY OF STRATEGY ON
TRACK
CPP Group (AIM: CPP), provider of
real-time, digitally delivered assistance products which reduce
disruptions to everyday life for millions of people across the
world is pleased to announce its full year results for the 12
months ended 31 December 2023.
Financial Highlights:
· Group revenue increased by 14% to £193.0 million (2022:
£169.8 million).
· EBITDA1 at £4.8 million (2022: £6.9
million).
· Core
business units3 revenues increased by 17% to £181.0
million (2022: £154.3 million).
· EBITDA from Core business units3 at £7.4 million
(2022: £8.3 million).
· Exceptional items total £8.4 million (2022: £1.7 million)
primarily relating to planned Legacy business closures.
· Loss
before tax of £6.1 million (2022: £2.4 million profit).
· Cash
balance of £19.0 million at 31 December 2023 (31 December 2022:
£21.0 million).
Operational Highlights:
· Group re-focused on three Core businesses (Blink Parametric;
CPP India; and CPP Turkey).
· Simplified proposition away from "insurance" to "digital
assurance" services.
· Core
business3 performing well.
o Seven new business partners and a 100% renewal rate for Blink
Parametric
o Strong growth in CPP India and CPP Turkey
· Change Management Programme proceeding as planned, with Phase
1 of the new Indian IT platform delivered.
· Exit
from Legacy operations progressing as expected and at
pace.
· Planned divestment of Globiva over three years for
approximately £5.1 million announced in November 2023.
· Disposal of minority interest in KYND Limited ("KYND") for
£2.6 million announced post period end.
· Post
period, due to regulatory changes in India, a subset of LivCare
business with Bajaj Finance Limited ("Bajaj") has transferred from
the Group.
Simon Pyper, CEO of CPP Group, commented:
"That we have been able to
implement and execute the Change Management Programme ("CMP"), to
divest non-core businesses such as Globiva and KYND, and at the
same time, to deliver growth from our core business, is I believe,
a testament to the quality of the people that I have the privilege
to work with.
From a trading perspective the
Group's key Indian and Turkish markets, despite currency headwinds,
performed well. Both businesses added new partners and new products
and are well positioned to make further progress in 2024.
Blink, the Group's parametric business
primarily focused on the global travel market, also made good progress, securing seven new business
partners, and achieving a 100% renewal rate of its existing client
base, both of which are further proof points of the value our
services provide to both the Insurer and end customer. Despite the
good revenue growth, EBITDA from our core business units was lower
than prior year at £7.4 million reflecting the planned investment
in Blink, a mix change in CPP India product sales, and £0.8 million
adverse currency movements.
From an operational perspective,
the Group is now at the implementation stage of its CMP which, at
its conclusion, will see the Group exit from its Legacy businesses
and focus on growing its core Blink, Indian, and Turkish
operations. The Group achieved the
majority of the objectives that it set for itself for 2023, having
over the past year delivered a new IT platform for its business in
India, exited from its legacy operations in Spain, and commenced
the closure process for its legacy UK businesses.
As expected, the legacy closure activity has led
to substantial exceptional provisions in our financial statements
and moreover, is expected to consume cash as the businesses are
wound down over the medium-term.
Whilst much has been achieved,
there remains much to be done before we fully realise our ambition
to transform CPP into a digitally led parametric business. Progress
may never be as fast as I would like, but I am confident that we
are travelling in the right direction and at an appropriate
speed."
Financial and non-financial highlights - continuing
operations
|
£
millions
|
31 December
2023
|
31 December
2022
|
Change
|
|
Financial highlights:
|
|
|
|
|
Group
|
|
|
|
|
Revenue
|
193.0
|
169.8
|
14%
|
|
EBITDA1
|
4.8
|
6.9
|
(30)%
|
|
Operating (loss)/profit
|
|
|
|
|
- Reported
|
(6.4)
|
2.6
|
(345)%
|
|
-
Underlying2
|
2.0
|
4.3
|
(54)%
|
|
(Loss)/profit before
tax
|
|
|
|
|
- Reported
|
(6.1)
|
2.4
|
(351)%
|
|
- Underlying2
|
2.3
|
4.1
|
(46)%
|
|
(Loss)/profit for the
year
|
|
|
|
|
- Reported
|
(8.1)
|
0.1
|
>(999)%
|
|
- Underlying2
|
0.1
|
1.6
|
(96)%
|
|
Basic (loss)/earnings per share
(pence)
|
|
|
|
|
- Reported
|
(97.84)
|
(1.73)
|
>(999)%
|
|
- Underlying2
|
(5.56)
|
15.12
|
(137)%
|
|
Cash and cash
equivalents
|
19.0
|
21.0
|
(9)%
|
|
Segmental
|
|
|
|
|
Revenue
|
|
|
|
|
- Core3
|
181.0
|
154.3
|
17%
|
|
- Legacy4
|
12.0
|
15.5
|
(22)%
|
|
EBITDA1
|
|
|
|
|
- Core3
|
3.0
|
5.0
|
(39)%
|
|
- Legacy4
|
1.8
|
1.9
|
(8)%
|
|
Non-financial highlights:
|
|
|
|
|
Customer numbers
(millions)
|
10.5
|
11.4
|
(8)%
|
1. EBITDA
represents earnings before interest, taxation, depreciation,
amortisation, and
exceptional items.
2.
Underlying operating profit and underlying profit before tax
excludes exceptional items of £8.4 million (2022: £1.7 million).
The tax effect of the exceptional items is £0.2 million (2022: £0.2
million). Further detail of exceptional items is provided in note 5
of the condensed consolidated financial statements.
3. Core
business units comprises revenue and EBITDA from CPP India, CPP
Turkey, Blink Parametric and Globiva. Core total also includes
central costs of £4.4 million (2022: £3.3 million).
4. Legacy
business primarily comprises the UK and European renewal books of
business, which are principally Card Protection and Identity
Protection policies.
Enquiries:
|
CPP Group plc
|
|
|
Simon Pyper, Chief Executive
Officer
|
Tel: +44 (0)7917 795601
|
|
David Bowling, Chief Financial
Officer
|
|
|
Liberum Capital Limited
|
|
|
(Nominated Adviser and Sole
Broker)
|
Tel: +44 (0)20 3100
2000
|
|
Richard Lindley
|
|
|
Will King
|
|
About CPP Group:
CPP Group is a technology-driven
assistance company that creates embedded and ancillary real-time
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, CPP Group is listed on AIM,
operated by the London Stock Exchange.
For more information on CPP
visit https://corporate.cppgroup.com/
Chairman's Statement
The last year has been one of
notable progress for the Group, as it set about implementing the
outcomes of its strategy review concluded in October 2022. The
accompanying Change Management Programme (CMP), a set of detailed
operational plans and activities by which the Group will achieve
its desired outcomes, will, at its conclusion, see the business
exit fully from its Legacy operations and migrate towards a
digitally focused parametric business, led by Blink and supported
by CPP India and CPP Turkey.
We have made good progress; the
Group achieved almost all of the objectives it set itself for 2023,
with only the second and smaller phase of the new IT platform for
its Indian business being delayed until the spring of 2024.
However, we will not rest on our collective laurels as we look to
build a business which delivers sustainable long-term value for
shareholders.
Strategy for growth
Our strategy remains unchanged,
and there have, particularly in the last quarter of 2023, been
several indicators that suggest it is both robust and
appropriate:
· Blink, the Group's parametric business primarily focused on
providing digitally delivered assistance products to the global
travel market, has secured seven new client wins and exited the
year with a record pipeline of new business opportunities. In
addition, Blink achieved a 100% renewal rate of its existing client
base, and, in most instances, secured volume growth.
· Our
businesses in India and Turkey, despite currency head winds, have
achieved growth in revenues and profitability.
· The
Group's Legacy businesses, which, as expected, continued their
decline in 2023, have started to be closed or wound down. During
the year the Group exited from its operations in Spain and
commenced the closure process for its business in the
UK.
Change Management Programme
The CMP consists of seven
inter-dependent projects, which include the delivery of a new
standalone IT platform for CPP India, a capacity and functional
build for Blink, and an orderly exit programme from our Legacy
operations.
Some key highlights on the good
progress achieved in 2023:
· new
IT platform (Phase 1) for Indian business delivered in August
2023;
· investment in Blink's operational capacity to support future
growth;
· closure of Legacy operations in Spain;
· closure planning for the Legacy UK business completed, with
closure process to commence in 2024; and
· planned divestment of Globiva for approximately £5.1 million
announced in November 2023.
The plans and objectives that we
have set ourselves for 2024, particularly those relating to the
closure of the Legacy businesses and associated IT platforms, are
demanding. We are, as ever, mindful that not all such endeavours
proceed exactly as planned and there may well be disappointments
and delays along the way. However, through the CMP that we have put
in place, we aim to mitigate risk and meet expectations.
Financial results
Group revenues, which include
results from our Legacy operations, increased by 14% to £193.0
million whilst EBITDA of £4.8 million (2022: £6.9 million) was, as
expected, lower than the prior year.
The trading performance from Core
operations (Blink, CPP India, CPP Turkey and Globiva) was robust,
with revenues increasing by 17% to £181.0 million whilst EBITDA,
which also includes central costs, reduced to £3.0 million (2022:
£5.0 million).
Our balance sheet shows cash of
£19.0 million (2022: £21.0 million), which allows the Group to fund
its working capital and CMP commitments.
People
I am firmly of the view that there
are few businesses of our size and resources which could have
contemplated the challenge of transforming from one business model
to another. That we have chosen to do so, achieved so much and
still delivered revenue growth from our Core operations, is a clear
testament to the quality, dedication and hard work of our
colleagues across the Group, for which I would like to express my
gratitude.
Board and shareholders
Following certain allegations made
against Hamish Ogston in a newspaper article in the latter part of
last year, I stood down as his nominee on the Board, but was
invited to remain in post as an independent Non-Executive Director
and Chairman. For the avoidance of doubt, Mr Ogston remains a
substantial and supportive shareholder, but he has had no active
engagement in the Company since 2013. Subsequent to the article in
question, it was not considered an appropriate time to continue
with the process to find an additional Non-Executive Director, and
there is currently no search in train. However, the membership of
the Board will be reviewed again during the course of this
year.
Outlook
We have had a positive start to
the year with trading performing in line with expectations and we
are encouraged by the good pipeline of new business within Blink.
There is much to be satisfied with, but we remain cautious and
measured, as there is much to do between now and the end of this
year and next.
David Morrison
Non-Executive Chairman
25 March 2024
Chief Executive Officer Statement
Full year performance
That we have been able to
implement and execute the CMP, to divest non-core businesses such
as Globiva and KYND, and, at the same time, to deliver growth from
our Core business is, I believe, a testament to the quality of the
people that I have the privilege to work with.
The Group's key Indian and Turkish
businesses, despite currency headwinds, performed well. Both
businesses added new partners and new products and are well
positioned to make further progress in 2024. Blink,
the Group's parametric business primarily focused
on the global travel market, also made
good progress, securing seven new business partners, and achieved a
100% renewal rate of its existing client base. These are further
proof points of the value Blink provides to both the insurer and
end customer.
Despite good revenue growth,
EBITDA from our Core business units was lower than prior year at
£7.4 million (2022: £8.3 million) reflecting the investment in
Blink and a mix change in CPP India product sales, both of which
were expected, and £0.8 million adverse currency
movements, which were outside of our
control.
1.
Blink
investment: Blink is the Group's
only global product, one currently focused on delivering parametric
InsurTech solutions to the worldwide travel insurance market. It
forms a key part of the Group's strategy and requires sustained
investment over the near- to medium-term if it is to realise its
full potential. Blink reported an EBITDA loss of £1.8
million compared to a marginal loss in the prior
year.
2.
Indian margin
erosion: as expected, CPP India's
gross profit margin has been adversely impacted by the growth of
lower margin products such as LivCare and, to a lesser extent, the
customer acquisition costs associated with a growing Card business.
CPP India's gross profit margin reduced by 1.2 percentage points to
9.3% (2022: 10.5%).
3.
Currency
headwinds: the Group derives 91% of
its revenues in Indian rupees which weakened by 6% against sterling
during the period. On a constant currency basis, the Group would
have reported an additional £0.8 million of EBITDA. A comparatively
weak position with our main trading currencies may well continue
for the foreseeable future.
The operating loss of £6.4 million
(2022: £2.6 million profit) includes depreciation charges of £2.8
million (2022: £2.5 million) and exceptional items of £8.4 million
(2022: £1.7 million) which are associated with the CMP.
Business unit performance:
|
£
millions
|
REVENUE
|
EBITDA1
|
|
|
2023
|
2022
|
CHANGE
|
2023
|
2022
|
CHANGE
|
|
CPP India
|
161.0
|
134.8
|
19%
|
5.8
|
5.6
|
5%
|
|
Globiva
|
14.5
|
15.8
|
(8)%
|
2.2
|
2.4
|
(10)%
|
|
CPP Turkey
|
4.7
|
3.2
|
46%
|
1.2
|
0.7
|
59%
|
|
Blink
|
0.8
|
0.5
|
85%
|
(1.8)
|
(0.4)
|
(291)%
|
|
Core business units
|
181.0
|
154.3
|
17%
|
7.4
|
8.3
|
(11)%
|
|
Central Functions
|
-
|
-
|
n/a
|
(4.4)
|
(3.3)
|
(30)%
|
|
Core total
|
181.0
|
154.3
|
17%
|
3.0
|
5.0
|
(39)%
|
|
Legacy2
|
12.0
|
15.5
|
(22)%
|
1.8
|
1.9
|
(8)%
|
|
Group total
|
193.0
|
169.8
|
14%
|
4.8
|
6.9
|
(30)%
|
1. EBITDA represents earnings
before interest, taxation, depreciation, amortisation and exceptional
items.
2. Legacy comprises the UK, Spain,
Italy and Portugal.
CPP India: EBITDA of £5.8
million (2022: £5.6 million), EBITDA margin of 3.6% (2022:
4.1%)
CPP India works closely with its
business partners to drive value by growing customer loyalty
through the design and delivery of simple and innovative products,
which fit seamlessly into the everyday life of consumers. Revenue
has increased by £26.2 million or 19% versus prior year and by 27%
on a constant currency basis. Growth has been driven by LivCare,
which is a health and wellness product sold via our largest
business partner, Bajaj. Whilst this product does secure strong new
business for both the Group and Bajaj, it is, and will continue to
be, a relatively low margin product for CPP India. The resulting
mix change in sales volumes from higher margin products to LivCare
reduced CPP India's gross profit margin by 1.2 percentage points to
9.3% (2022: 10.5%), which equates to £1.9 million in gross
profit.
In August, the Group delivered
Phase 1 of a new IT platform for CPP India, which is now
operational servicing Bajaj policies. Phase Two, due to go live in
the spring of 2024, will allow CPP India to operate independently
from the Centre and to service its growing partner base more
effectively. Additionally, once the new IT platform is fully
operational the Group will be able to close down its costly legacy
IT operations.
The EBITDA margin reduced by 0.5
percentage points reflecting both the reduction in the gross profit
margin and the increase in operating costs, some of which reflects
the profit-based reward structure for the in-country executive
team.
Bajaj has informed the Group that
due to regulatory changes it is transferring a portion of its
LivCare book to locally based insurers. The sale of these LivCare
policies ceased in March 2024. However, due to the benefits derived
from the CMP, the Group expects to absorb the estimated EBITDA
shortfall from LivCare within its current market
estimates.
Globiva: EBITDA of £2.2
million (2022: £2.4 million), EBITDA margin of 15.2% (2022:
15.5%)
Globiva is 51% owned by the Group
and provides outsourced customer relationship management,
back-office functionality and automated human resource services to
a predominantly tech-focused client base. As a consequence of the
well-publicised global tech downturn, the business, which has a
significant number of tech companies on its roster, has seen a
softening in seat occupancy and consequently revenues. In addition,
given the relatively high operational gearing of such businesses,
the softening in revenues has had an immediate, albeit modest,
adverse impact on EBITDA growth.
In November 2023, the Group
announced a phased divestment of its shareholding in Globiva for an
aggregate consideration of approximately £5.1 million. The
divestment of Globiva, which will be completed in early 2027, is
consistent with Group's strategy and, moreover, provides a
satisfactory outcome for both parties.
Turkey: EBITDA of £1.2
million (2022: £0.7 million), EBITDA margin of 24.6% (2022:
22.6%)
CPP Turkey performed well during
the year with EBITDA increasing by 59%. That the business has been
able to deliver real growth following the earthquake in February
and in such a turbulent economic environment reflects the quality
and strength of our proposition, of our relationships with our
business partners and of our newly formed management
team.
Blink: EBITDA loss of £1.8
million (2022: £0.4 million loss)
Blink is a technology and software
platform provider focused on delivering innovative travel
disruption (flight delay and lost luggage) solutions for the global
travel sector. It is the Group's only offering which can be sold,
serviced and delivered across multiple geographies. Blink is, along
with CPP India and CPP Turkey, the future of CPP Group.
Towards the end of last year as
part of the Group's CMP, we set in place two work streams, one
focused on building capacity (people, processes and structures) and
the other on growth (new product development and sales and
marketing). These work streams will not fully conclude until Q1
2024. The necessary investment into Blink as part of this has led
to the increased full year EBITDA losses compared to prior
year.
Whilst it is too early to draw
conclusions from our full year results, there are a number of proof
points, such as, seven new client wins including several blue-chip
insurance clients, the 100% renewal of partner contracts in 2023
(including Blue Cross in Canada) and numerous Industry awards, all
of which suggest that both our approach and strategy are sound. At
the same time, Blink has also demonstrated the quality and value of
its proposition to its partners with policies sold which includes
Blink's services increasing by 46%, the volume of flights tracked
by Blink increasing 78% and claims paid using Blink's technology
increasing 63%.
Legacy business: EBITDA of
£1.8 million (2022: £1.9 million)
Following the withdrawal from
China, Mexico and Bangladesh in 2022, we continue to make good
progress with exiting our Legacy businesses. As forecast, revenue
from the UK and European back books (predominantly Card Protection
and Identity Protection) continued to decline. However, EBITDA
reduced modestly by £0.1 million as the commencement of closure
activities across our Legacy markets reduced costs, most notably in
Spain which included beneficial commission terms on the transfer of
certain business to underwriters.
In the final quarter of 2023, the
Group completed the closure of its Spanish business and commenced
the wind-down and closure process for its UK operations.
Central costs: £4.4 million
(2022: £3.3 million)
Central overheads before
appropriate recharge to business units are £10.1 million (2022:
£9.0 million), of which £3.7 million (2022: £3.5 million) relates
to the cost of the Group's IT operations. The new IT platform for
our Indian business when fully deployed will enable the
decommissioning of our expensive legacy IT systems. There will be
dual-running costs into H1 2024, but we expect a significant
reduction in the running cost of the Group's IT estate thereafter.
Net of recharges, our reported central costs have increased by £1.1
million (30%) due to costs associated with Legacy closures,
preparations for decommissioning Legacy IT platforms, and
additional share scheme charges.
Operational highlights
From an operational perspective,
the Group is now at the implementation stage of its CMP which, at
its conclusion, will see the Group exit from its Legacy businesses
and focus on growing its Core Blink, Indian and Turkish operations.
The Group achieved the majority of its 2023 objectives, having over
the past year delivered a new IT platform for its business in
India, exited from its Legacy operations in Spain, and commenced
the closure process for its legacy UK business.
Change Management Programme
In October 2022, we announced our
strategy to shift towards an InsurTech business led by Blink and
supported by CPP India and CPP Turkey, whilst addressing the
challenges presented by our declining Legacy book. The CMP is the
'how' we build a better future for the Group, one which on
completion will provide better outcomes for all shareholders and
other stakeholders.
|
Planning:
|
Implementation:
|
Implementation:
|
Implementation:
|
|
• Established a Change Management
Programme and timeline for implementation.
|
• India IT platform Phase 1 (Bajaj products) operational in
August.
• All material Legacy books in run-off.
• Initial Blink scalability requirements complete.
• Globiva disposal agreed.
|
• India IT platform Phase 2 (Card products) operational in the
spring.
• Legacy IT platforms decommissioned.
• Legacy books continue to run-off/close.
• Legacy customer data minimised and securely
stored.
• KYND disposal completed.
|
• Legacy books continue to run-off/close in line with plan to
minimise residual activity.
• Central model adjusted in line with requirements.
• CMP complete.
|
|
2022
|
2023
|
2024
|
2025
|
In 2023 we achieved all but one of
the objectives that we set ourselves, with only Phase 2 of the new
IT platform for CPP India delayed to the spring of 2024.
During the year we
delivered:
1. Phase 1
of new IT platform for CPP India delivered in August. The platform
is fully operational with over 5 million live policies being
administered and serviced.
2. Blink
launched a new market-leading, white-labelled online user
experience platform. The scalability and speed of deployment
increased, with a step change in infrastructure and operational
capability supported by hiring of senior operational, customer
service and technical management roles.
3. Spanish
Legacy business closed in November.
4. Italian
portfolio transferred from legacy IT systems to a third party fully
managed service provider in June.
5.
Wind-down and closure programme for the UK business is
underway.
6.
Planning finalised for the decommissioning of the Group's expensive
legacy IT systems. Decommissioning is expected to be complete in H1
2024.
Our objectives for 2024 include:
the decommissioning of legacy IT platforms; migration of legacy
customer data to lower cost third party platforms; continued
investment in Blink; and the delivery of Phase 2 of the new India
IT platform.
Our colleagues
I would like to thank all my
colleagues for their commitment, hard work and
professionalism. We should take pride in what we have
achieved thus far and we should be confident about our future and
the business we are building together.
Outlook
We are confident about the outlook
and growth prospects for our Core operations although adverse
currency headwinds look set to continue for the foreseeable future.
The CMP is expected to consume cash as we continue to exit from our
Legacy business and incur closure costs, such as redundancies. That
aside, our focus remains unchanged, on reshaping and building a
business which will improve outcomes for all stakeholders over the
longer-term. Whilst progress is never as fast as I would like, I
remain confident that we are travelling in the right direction and
at an appropriate speed.
Simon Pyper
Chief Executive Officer
25 March 2024
Chief Financial Officer Statement
Overview
The Group made good financial
progress in the year, growing revenue in its Core operations. The
CMP has progressed to plan with Legacy operations being wound down
or exited, Phase 1 of the new Indian IT platform in operation and
servicing the business, and Blink continuing to grow. As a result,
and as expected, EBITDA has reduced whilst the Group repositions
itself as a technology-led business focused on three Core
businesses. The withdrawal from the Legacy markets through the CMP
will continue to reduce cash in the medium-term, yet the Group is
in a solid financial position with which to complete its
simplification in order to improve outcomes for all
stakeholders.
The Group has made other positive
strides in its simplification with the planned exit from Globiva
over three years for consideration of approximately £5.1 million
and the post-period disposal of its interest in KYND for £2.6
million. The cash consideration from these transactions will
support the CMP and further investment required to scale
Blink.
Group revenue increased by 14%
(21% constant currency) to £193.0 million (2022: £169.8 million).
Revenue growth was driven by our Core operations which represent
94% of Group revenues and were 17% higher than last year at £181.0
million (2022: £154.3 million). New business has been particularly
strong in India increasing by 19% principally through the
relationship with Bajaj. EBITDA has, as expected, reduced to £4.8
million (2022: £6.9 million). The reduction in EBITDA reflects
additional investment in Blink, a softening of margins in India and
currency headwinds.
|
Continuing Operations
|
2023
|
2022
|
|
Revenue (£ millions)
|
193.0
|
169.8
|
|
Gross profit (£
millions)
|
30.9
|
30.8
|
|
EBITDA (£
millions)1
|
4.8
|
6.9
|
|
Operating (loss)/profit (£
millions)
|
(6.4)
|
2.6
|
|
(Loss)/profit before tax (£
millions)
|
(6.1)
|
2.4
|
|
Taxation (£ millions)
|
(2.0)
|
(2.3)
|
|
(Loss)/profit for the year (£
millions)
|
(8.1)
|
0.1
|
|
Basic loss per share
(pence)
|
(97.84)
|
(1.73)
|
|
Cash generated by operations (£
millions)
|
5.5
|
7.3
|
1. Excluding
depreciation, amortisation and exceptional items.
Gross profit remained broadly flat
at £30.9 million (2022: £30.8 million). However, the gross profit
margin has decreased to 16.0% (2022: 18.1%) which is a continuation
of the change in market mix with growth in our Indian business
which has higher costs of acquisition from new sales than the
Legacy renewal books it is replacing. In addition, a shift to lower
margin product variants and inflationary pressures have impacted
our margins in India and Globiva. We expect our gross profit
margins to continue to reduce in the short- to medium-term as
withdrawal from the Legacy markets is completed as part of the CMP
before stabilising in 2025 and improving incrementally thereafter.
The margin will continue to be weighted towards India, which is
operating at a gross margin of approximately 9%.
EBITDA reduced to £4.8 million
(2022: £6.9 million) reflecting additional investment in Blink's
operational capability as the business is prepared for scale, the
softening margins in India and adverse currency movements in the
rupee and lira. On a constant currency basis EBITDA would have been
£5.6 million which is £0.8 million higher than reported.
Administrative expenses, before depreciation and exceptional items,
continue to be closely monitored, albeit there has been an increase
in the year as a result of business growth in India and Turkey,
scaling Blink and general inflationary pressures. The cost base is
expected to reduce in 2024 as the benefits of closing Legacy
operations and decommissioning the Legacy IT platforms come
through.
Depreciation and amortisation
charges have increased to £2.8 million (2022: £2.5 million). The
increase reflects the Phase 1 launch of the Group's new technology
platform in India in August 2023. The Group's depreciation charges
are expected to increase further in 2024 as Phase 2 of the platform
is launched in the Spring.
Exceptional items
As expected, the Legacy closure
activity led to substantial exceptional charges of £8.4 million
(2022: £1.7 million) which relate to:
· onerous contract provision of £3.4 million (2022: £0.2
million) reflecting an estimate for future contractual losses in
the UK and Spain as the businesses are wound down and the Group's
legacy IT systems are decommissioned;
· restructuring and closure costs of £3.7 million (2022: £0.8
million) comprising redundancy and settlement costs in Spain, the
UK and Turkey, along with charges for retention schemes established
to safeguard the delivery of the CMP activities over an extended
period of time;
· IT
impairments charges of £0.2 million (2022: £0.2 million) relating
to closure activities; and
· Deferred Bonus Plan (DBP) charges of £1.1 million (2022:
£nil). The DBP is a share-based retention measure for the Executive
Management Committee (EMC) whereby participants agreed to defer a
portion of their 2022 annual bonus in return for share
options.
The IT impairment and DBP charges
are non-cash items. At the balance sheet date, £5.9 million remains
to be paid over the next three years to settle CMP
liabilities.
The substantial exceptional costs,
result in an operating loss of £6.4 million (2022: £2.6 million
profit). Consequently, the Group is reporting a loss before tax of
£6.1 million (2022: £2.4 million profit), and a loss after tax of
£8.1 million (2022: £0.1 million profit).
Tax
The tax charge for the year is
£2.0 million (2022: £2.3 million), which is an effective tax rate
(ETR) of negative 32% (2022: positive 96%). The tax charge includes
£1.5 million (2022: £1.6 million) relating to India.
The negative tax rate reflects the
substantial CMP exceptional charges and increased operational
investment in Blink; against both of these factors the Group is
unable to offset all the losses or recognise tax credits. At the
same time the Group continues to generate taxable profits in India
and Turkey.
Adjusted ETR
|
|
Continuing Operations
|
Exceptional items
|
Adjusted
|
|
2023
|
Core
£'m
|
Legacy
£'m
|
Total
£'m
|
Core
£'m
|
Legacy
£'m
|
Total
£'m
|
Core
£'m
|
Legacy
£'m
|
Total
£'m
|
|
(Loss)/profit before
tax
|
(0.7)
|
(5.4)
|
(6.1)
|
1.4
|
7.0
|
8.4
|
0.7
|
1.6
|
2.3
|
|
Tax
|
(1.8)
|
(0.2)
|
(2.0)
|
-
|
(0.2)
|
(0.2)
|
(1.8)
|
(0.4)
|
(2.2)
|
|
ETR
|
(248)%
|
(4)%
|
(32)%
|
4%
|
3%
|
3%
|
277%
|
24%
|
97%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operation
|
Exceptional items
|
Adjusted
|
|
2022
|
Core
£'m
|
Legacy
£'m
|
Total
£'m
|
Core
£'m
|
Legacy
£'m
|
Total
£'m
|
Core
£'m
|
Legacy
£'m
|
Total
£'m
|
|
Profit/(loss) before
tax
|
1.6
|
0.8
|
2.4
|
1.0
|
0.7
|
1.7
|
2.6
|
1.5
|
4.1
|
|
Tax
|
(2.0)
|
(0.3)
|
(2.3)
|
(0.1)
|
(0.1)
|
(0.2)
|
(2.1)
|
(0.4)
|
(2.5)
|
|
ETR
|
124%
|
41%
|
96%
|
13%
|
8%
|
11%
|
82%
|
26%
|
61%
|
The exceptional items in the year
have reduced profit before tax by £8.4 million (2022: £1.7 million)
whilst there has been an associated reduction in tax of £0.2
million (2022: £0.2 million). Without the exceptional items the
Group's ETR would be 97% (2022: 61%).
As the CMP progresses, the Core
performance of the business will increasingly provide a better
indication of future performance. The Core operations adjusted ETR
is 277% (2022: 82%), which includes withholding taxes on dividend
repatriations from India and Turkey and the loss-making Central
Functions. The notable increase in Core adjusted ETR reflects the
increased losses generated by additional operational investment in
Blink and higher central costs.
A high and volatile Group ETR is
expected to persist until Legacy operations are exited. The CMP is
expected to improve both the Group and Core operations ETR in the
medium-term as the simplification of the Group enables UK-based
central costs to be further reduced and Blink moves towards
profitability.
Dividend
Due to the costs and uncertainties
associated with the CMP, the dividend payment remains suspended
until further notice. If circumstances change, the Board will
review and update shareholders when appropriate to do
so.
Foreign exchange
The general weakening against
sterling of the Group's main trading currencies, the Indian rupee
and Turkish lira, has led to an adverse exchange rate movement in
the Group's results. The Indian rupee has depreciated by 6% (2022:
5% appreciation) whilst the Turkish lira has continued to weaken
with a further 48% reduction in 2023 (2022: 63%
reduction).
The reported results compared to
2023 include the following adverse foreign exchange movements:
£10.3 million (2022: £4.5 million favourable) within revenue; and
£0.8 million (2022: £0.1 million favourable) at an EBITDA
level.
Cash flow and net funds
|
|
2023
|
2022
|
|
|
£'m
|
£'m
|
|
EBITDA
|
4.8
|
7.0
|
|
Exceptional
items1
|
(7.2)
|
(1.7)
|
|
Non-cash items
|
0.1
|
-
|
|
Working capital
movements2
|
7.8
|
2.0
|
|
Cash generated by
operations
|
5.5
|
7.3
|
|
Tax
|
(1.9)
|
(3.5)
|
|
Operating cash flow
|
3.6
|
3.8
|
|
Capital expenditure (including
intangibles)
|
(3.9)
|
(2.7)
|
|
Lease repayments
|
(1.4)
|
(1.4)
|
|
Disposal of discontinued
operations
|
-
|
(0.9)
|
|
Net finance revenues
|
0.7
|
0.4
|
|
Costs of refinancing the bank
facility
|
(0.1)
|
-
|
|
Dividends
|
-
|
(0.7)
|
|
Net movement in
cash3
|
(1.1)
|
(1.5)
|
|
Net funds4
|
15.3
|
16.3
|
1.
Cash-based exceptional items, being onerous
contract provisions and restructuring and closure costs. The other
exceptional items in the year were non-cash.
2.
Working capital includes £5.9 million (2022: £0.4
million) relating to exceptional items not yet paid.
3.
Excluding the effect of exchange
rates.
4.
Net funds comprise cash and cash equivalents of
£19.0 million (2022: £21.0 million) and a borrowing asset of £0.1
million (2022: £nil) less lease liabilities of £3.8 million (2022:
£4.7 million).
The net funds position has
decreased to £15.3 million (2022: £16.3 million), which includes
cash of £19.0 million (2022: £21.0 million). The Group had a net
cash outflow of £1.1 million (2022: £1.5 million) in the year
following an acceleration in costs to develop the IT platform in
India, which enabled the successful launch of Phase 1 in August and
progress on Phase 2 which is expected to launch in spring
2024.
Cash generated by operations has
reduced to £5.5 million (2022: £7.3 million) reflecting increased
investment to scale Blink and restructuring costs as closure
activities progress in Spain and the UK, including the UK-based IT
function. There is a net working capital benefit in the year of
£7.8 million which in part reflects restructuring costs and onerous
contract provisions that have been recognised but not yet paid. Tax
paid has decreased to £1.9 million (2022: £3.5 million) which is
due to lower taxable profits in India and a reduction in overseas
dividends to the UK which typically suffer withholding
taxes.
The Group had cash balances of
£19.0 million; however, cash is expected to progressively reduce in
the medium-term as the UK is run-off, other CMP liabilities are
settled and investment continues to scale Blink. In addition, as
the Group's growth has shifted to overseas markets a substantial
amount of the cash balance is generated in India and Turkey. As a
result, not all of our cash resources are immediately available for
distribution or on demand for working capital purposes around the
Group. At 31 December 2023, approximately 40% of the cash balances
were considered 'restricted'. There are also tax costs associated
with returning overseas funds to the UK so cash planning is
increasingly crucial as the Group's cash resources reduce over the
medium-term.
In June 2023, the Group renewed
its £5.0 million revolving credit facility (RCF) for a further
three-year term to August 2026. The RCF renewal, which is on
improved terms, is a positive endorsement of the Group's strategic
direction and will provide cash flow flexibility as the business
progresses through the CMP. The RCF is currently
undrawn.
Events after the balance sheet date
On 15 February 2024, the Group
disposed of its 13.3% (fully diluted basis) shareholding in KYND
for a cash consideration of £2.6 million. The investment in KYND
was non-core to the Group. The transaction is another positive step
in the simplification of the Group and will provide additional cash
resources to support the CMP and investment in Blink.
David Bowling
Chief Financial Officer
25 March 2024
Consolidated income statement
For the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
|
|
Core
|
Legacy
|
Total
|
Core
|
Legacy
|
Total
|
|
|
Note
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
Revenue
|
4
|
181,010
|
12,026
|
193,036
|
154,267
|
15,516
|
169,783
|
|
Cost of
sales
|
|
(159,031)
|
(3,060)
|
(162,091)
|
(133,924)
|
(5,087)
|
(139,011)
|
|
Gross
profit
|
|
21,979
|
8,966
|
30,945
|
20,343
|
10,429
|
30,772
|
|
Administrative expenses
|
|
(22,739)
|
(14,608)
|
(37,347)
|
(18,469)
|
(9,689)
|
(28,158)
|
|
Operating
(loss)/profit
|
|
(760)
|
(5,642)
|
(6,402)
|
1,874
|
740
|
2,614
|
|
Analysed
as:
|
|
|
|
|
|
|
|
|
EBITDA
|
4
|
3,013
|
1,770
|
4,783
|
4,928
|
1,925
|
6,853
|
|
Depreciation and amortisation
|
|
(2,408)
|
(362)
|
(2,770)
|
(2,055)
|
(452)
|
(2,507)
|
|
Exceptional items
|
5
|
(1,365)
|
(7,050)
|
(8,415)
|
(999)
|
(733)
|
(1,732)
|
|
Investment revenues
|
|
521
|
228
|
749
|
370
|
116
|
486
|
|
Finance
costs
|
|
(471)
|
(15)
|
(486)
|
(630)
|
(26)
|
(656)
|
|
(Loss)/profit before
taxation
|
|
(710)
|
(5,429)
|
(6,139)
|
1,614
|
830
|
2,444
|
|
Taxation
|
6
|
(1,761)
|
(199)
|
(1,960)
|
(2,000)
|
(343)
|
(2,343)
|
|
(Loss)/profit for the year from continuing
operations
|
|
(2,471)
|
(5,628)
|
(8,099)
|
(386)
|
487
|
101
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
Profit
for the year from discontinued operations
|
|
-
|
-
|
-
|
-
|
676
|
676
|
|
(Loss)/profit for the year
|
|
(2,471)
|
(5,628)
|
(8,099)
|
(386)
|
1,163
|
777
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
Equity
holders of the Company
|
|
(3,027)
|
(5,628)
|
(8,655)
|
(640)
|
1,163
|
523
|
|
Non-controlling interests
|
|
556
|
-
|
556
|
254
|
-
|
254
|
|
|
|
(2,471)
|
(5,628)
|
(8,099)
|
(386)
|
1,163
|
777
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
(loss)/earnings per share
|
|
Core
pence
|
Legacy
pence
|
Total
pence
|
Core
pence
|
Legacy
pence
|
Total
pence
|
|
Continuing operations
|
7
|
(34.22)
|
(63.62)
|
(97.84)
|
(7.24)
|
5.51
|
(1.73)
|
|
Discontinued operations
|
7
|
-
|
-
|
-
|
-
|
7.64
|
7.64
|
|
|
|
(34.22)
|
(63.62)
|
(97.84)
|
(7.24)
|
13.15
|
5.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Consolidated statement of comprehensive
income
For the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
(Loss)/profit for the
year
|
|
(8,099)
|
777
|
|
Items that may be reclassified
subsequently to profit or loss:
|
|
|
|
|
Fair value gain on equity
investment
|
|
610
|
152
|
|
Exchange differences on translation
of foreign operations
|
|
(696)
|
(2,052)
|
|
Exchange differences reclassified
on disposal of foreign operations
|
|
68
|
1,093
|
|
Other comprehensive expense for the
year net of taxation
|
|
(18)
|
(807)
|
|
Total comprehensive expense for the
year
|
|
(8,117)
|
(30)
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
Company
|
|
(8,571)
|
(286)
|
|
Non-controlling
interests
|
|
454
|
256
|
|
|
|
(8,117)
|
(30)
|
|
|
|
|
|
Consolidated balance sheet
As at 31 December
2023
|
|
|
2023
|
2022
|
|
|
|
Note
|
£'000
|
£'000
|
|
|
Non-current assets
|
|
|
|
|
|
Goodwill
|
|
513
|
544
|
|
|
Other intangible assets
|
8
|
6,619
|
4,710
|
|
|
Property, plant and
equipment
|
|
932
|
1,243
|
|
|
Right-of-use assets
|
|
3,122
|
3,936
|
|
|
Equity investment
|
|
-
|
2,041
|
|
|
Deferred tax assets
|
|
693
|
230
|
|
|
Contract assets
|
|
208
|
275
|
|
|
|
|
12,087
|
12,979
|
|
|
Current assets
|
|
|
|
|
|
Inventories
|
|
9
|
87
|
|
|
Contract assets
|
|
6,716
|
5,764
|
|
|
Trade and other
receivables
|
|
13,761
|
19,841
|
|
|
Cash and cash
equivalents
|
|
19,001
|
20,984
|
|
|
|
|
39,487
|
46,676
|
|
|
Assets classified as held for
sale
|
|
2,631
|
-
|
|
|
|
|
42,118
|
46,676
|
|
|
Total assets
|
|
54,205
|
59,655
|
|
|
Current liabilities
|
|
|
|
|
|
Borrowings
|
|
-
|
23
|
|
|
Income tax liabilities
|
|
(1,004)
|
(1,195)
|
|
|
Trade and other payables
|
|
(25,696)
|
(26,210)
|
|
|
Provisions
|
|
(1,877)
|
(224)
|
|
|
Lease liabilities
|
|
(907)
|
(966)
|
|
|
Contract liabilities
|
|
(11,581)
|
(11,238)
|
|
|
|
|
(41,065)
|
(39,810)
|
|
|
Net current assets
|
|
1,053
|
6,866
|
|
|
Non-current liabilities
|
|
|
|
|
|
Borrowings
|
|
105
|
-
|
|
|
Deferred tax liabilities
|
|
(646)
|
(702)
|
|
|
Provisions
|
|
(1,588)
|
(145)
|
|
|
Lease liabilities
|
|
(2,892)
|
(3,752)
|
|
|
Contract liabilities
|
|
(604)
|
(773)
|
|
|
|
|
(5,625)
|
(5,372)
|
|
|
Total liabilities
|
|
(46,690)
|
(45,182)
|
|
|
Net assets
|
|
7,515
|
14,473
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Share capital
|
9
|
24,257
|
24,256
|
|
|
Share premium account
|
|
45,225
|
45,225
|
|
|
Merger reserve
|
|
(100,399)
|
(100,399)
|
|
|
Translation reserve
|
|
(1,351)
|
(825)
|
|
|
ESOP reserve
|
|
18,334
|
17,212
|
|
|
Retained earnings
|
|
19,192
|
27,201
|
|
|
Equity attributable to equity holders of the
Company
|
|
5,258
|
12,670
|
|
|
Non-controlling
interests
|
|
2,257
|
1,803
|
|
|
Total equity
|
|
7,515
|
14,473
|
|
Consolidated statement of changes in equity
For the year ended 31 December
2023
|
|
|
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
|
|
At
1 January 2022
|
|
24,243
|
45,225
|
(100,399)
|
136
|
17,418
|
27,202
|
13,825
|
1,547
|
15,372
|
|
Profit for the year
|
|
-
|
-
|
-
|
-
|
-
|
523
|
523
|
254
|
777
|
|
Other comprehensive
(expense)/income for the year
|
|
-
|
-
|
-
|
(961)
|
-
|
152
|
(809)
|
2
|
(807)
|
|
Total comprehensive
(expense)/income for the year
|
|
-
|
-
|
-
|
(961)
|
-
|
675
|
(286)
|
256
|
(30)
|
|
Equity-settled share-based payment
credit
|
10
|
-
|
-
|
-
|
-
|
(206)
|
-
|
(206)
|
-
|
(206)
|
|
Exercise of share
options
|
|
13
|
-
|
-
|
-
|
-
|
(7)
|
6
|
-
|
6
|
|
Deferred tax on share
options
|
6
|
-
|
-
|
-
|
-
|
-
|
(9)
|
(9)
|
-
|
(9)
|
|
Effects of
hyperinflation
|
|
-
|
-
|
-
|
-
|
-
|
3
|
3
|
-
|
3
|
|
Dividends paid
|
|
-
|
-
|
-
|
-
|
-
|
(663)
|
(663)
|
-
|
(663)
|
|
At 31 December 2022
|
|
24,256
|
45,225
|
(100,399)
|
(825)
|
17,212
|
27,201
|
12,670
|
1,803
|
14,473
|
|
(Loss)/profit for the
year
|
|
-
|
-
|
-
|
-
|
-
|
(8,655)
|
(8,655)
|
556
|
(8,099)
|
|
Other comprehensive
(expense)/income for the year
|
|
-
|
-
|
-
|
(526)
|
-
|
610
|
84
|
(102)
|
(18)
|
|
Total comprehensive
(expense)/income for the year
|
|
-
|
-
|
-
|
(526)
|
-
|
(8,045)
|
(8,571)
|
454
|
(8,117)
|
|
Equity-settled share-based payment
charge
|
10
|
-
|
-
|
-
|
-
|
1,122
|
-
|
1,122
|
-
|
1,122
|
|
Exercise of share
options
|
9
|
1
|
-
|
-
|
-
|
-
|
(1)
|
-
|
-
|
-
|
|
Effects of
hyperinflation
|
|
-
|
-
|
-
|
-
|
-
|
37
|
37
|
-
|
37
|
|
At 31 December 2023
|
|
24,257
|
45,225
|
(100,399)
|
(1,351)
|
18,334
|
19,192
|
5,258
|
2,257
|
7,515
|
Consolidated cash flow statement
For the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
Note
|
£'000
|
£'000
|
|
Net cash from operating
activities
|
11
|
3,610
|
3,822
|
|
Investing activities
|
|
|
|
|
Interest received
|
|
749
|
490
|
|
Purchases of property, plant and
equipment
|
|
(335)
|
(526)
|
|
Purchases of intangible
assets
|
8
|
(3,551)
|
(2,194)
|
|
Costs associated with disposal of
discontinued operations
|
|
-
|
(128)
|
|
Cash disposed of with discontinued
operations
|
|
-
|
(823)
|
|
Net cash used in investing
activities
|
|
(3,137)
|
(3,181)
|
|
Financing activities
|
|
|
|
|
Dividends paid
|
|
-
|
(663)
|
|
Costs of refinancing the bank
facility
|
|
(128)
|
-
|
|
Repayment of the lease
liabilities
|
|
(1,396)
|
(1,388)
|
|
Interest paid
|
|
(69)
|
(75)
|
|
Issue of ordinary share
capital
|
9
|
-
|
6
|
|
Net cash used in financing
activities
|
|
(1,593)
|
(2,120)
|
|
Net decrease in cash and cash
equivalents
|
|
(1,120)
|
(1,479)
|
|
Effect of foreign exchange rate
changes
|
|
(863)
|
54
|
|
Cash and cash equivalents at 1
January
|
|
20,984
|
22,409
|
|
Cash and cash equivalents at 31
December
|
|
19,001
|
20,984
|
|
|
|
|
|
Notes to condensed financial statements
1. General information
While the financial information
included in this annual results announcement has been computed in
accordance with the recognition and measurement criteria in
conformity with UK-adopted International Accounting Standards ('UK
IAS') and with those parts of the Companies Act 2006 applicable to
companies reporting under UK IAS, this announcement does not itself
contain sufficient information to comply with UK IAS. The Company
will publish full financial statements that comply with UK IAS in
April 2024.
The financial information set out
above does not constitute the Company's statutory financial
statements for the years ended 31 December 2023 or 31 December 2022
but is derived from the 2023 financial statements. Statutory
financial statements for 2022 for the Company prepared under UK IAS
have been delivered to the Registrar of Companies and those for
2023 for the Company will be delivered following the Company's
Annual General Meeting. The Auditor, PKF Littlejohn LLP, has
reported on these financial statements; their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under s498 (2) or (3) of
the Companies Act 2006. These 2023 financial statements were
approved by the Board of Directors on 25 March 2024.
2. Accounting policies
The same accounting policies,
presentation and methods of computation are followed in the
condensed financial statements as were applied in the Group's
audited financial statements for the year ended 31 December 2022.
The following Standards and Interpretations have become effective
and have been adopted in these condensed financial statements. No
Standards or Interpretations have been adopted early in these
condensed financial statements.
|
Standard/Interpretation
|
Subject
|
|
IAS
1
|
Disclosure of accounting policies
|
|
IAS
8
|
Definition of accounting estimates
|
|
IAS
12
|
Deferred
tax related to assets and liabilities arising from a single
transaction
|
|
IFRS 17
|
Insurance contracts
|
IFRS 17 is applicable for the
first time in the current period. The Group's insurance operations
are not material and as a result, no adjustment has been made for
this accounting standard change as the valuation of the remaining
insurance contract balances in the Group's consolidated financial
statements will be materially the same under both IFRS 17 and IFRS
4.
Amendments to IAS 1, IAS 8 and IAS
12 have not had a material impact to the Group on
adoption.
Going concern
In reaching their view on the
preparation of the Group's 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. 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 financial statements.
3. Critical accounting judgements and key sources of
estimation uncertainty
Critical judgements
Revenue recognition
The Group recognises revenue
either immediately on inception of a policy or over the duration of
a policy where there are ongoing obligations to fulfil to a
customer. Certain of the Group's contractual structures relating to
product features require judgement in determining whether the Group
carries an obligation to the customer over the term of the policy
or if the exposure to that obligation has been transferred to a
third party on inception.
This judgement determines when
the Group has completed the performance obligation to the customer
and can recognise revenue.
The Group allocates revenue on a
cost plus margin basis. The cost base may vary over time as product
features are enhanced, suppliers changed, or underlying costs move.
Judgement is applied in determining if the resulting changes to the
cost base represent a temporary or permanent adjustment in the
allocation of revenue to performance obligations. If a change is
considered temporary, or within a materiality threshold, revenue
recognition principles are not amended to aid
consistency.
Classification of exceptional
items
Exceptional items are those items
that are required to be separately disclosed by virtue of their
size or incidence or have been separately disclosed on the income
statement in order to improve a reader's understanding of the
financial statements. Consideration of what should be included as
exceptional requires judgement to be applied. Exceptional items are
considered to be ones which are material and outside of the normal
operating practice of the Group. Items which are in other gains or
losses and exceptional from their size or nature are identified in
the exceptional note.
Assumptions and estimation
uncertainties
Current tax
The Group operates in countries
with complex tax regulations, where filed tax positions may remain
open to challenge by local tax authorities for several years.
Corporation taxes are recognised by assessment of the specific tax
law and likelihood of settlement. Where the Group has uncertain tax
treatments it has recognised appropriate provisions reflecting the
expected value calculated by the sum of the probability-weighted
amounts in a range of possible outcomes.
Changes to the Group's assessment
of uncertain tax treatments are reflected through the consolidated
income statement.
Onerous contract provisions
The Group has recognised
substantial provisions for onerous contracts in the current year.
These represent a best estimate as at the balance sheet date of the
costs to deliver contractual commitments over the remaining term of
these contracts, which is up to 36 months from the balance sheet
date. These estimates are reviewed at every reporting date;
however, there are a number of factors which could influence the
amount required for these provisions, including policy
cancellations and staff costs.
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 is managed on the basis
of five broad business units:
· India (CPP India and Globiva);
· Turkey;
· Blink;
· 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 relevant geographies for statutory purposes;
and
· Legacy (UK MGA, UK Legacy, Spain, Portugal, Italy)
Segment revenue and performance
for the current and comparative periods are presented
below:
|
Year
ended 31 December 2023
|
India
£'000
|
Turkey
£'000
|
Blink
£'000
|
Central Functions
£'000
|
Legacy
£'000
|
Total
£'000
|
|
Continuing operations
|
|
|
|
|
|
|
|
Revenue - external sales
|
175,519
|
4,675
|
816
|
-
|
12,026
|
193,036
|
|
Cost of sales
|
(157,118)
|
(1,834)
|
(79)
|
-
|
(3,060)
|
(162,091)
|
|
Gross profit
|
18,401
|
2,841
|
737
|
-
|
8,966
|
30,945
|
|
Administrative expenses excluding
depreciation, amortisation and exceptional items
|
(10,353)
|
(1,689)
|
(2,529)
|
(4,395)
|
(7,196)
|
(26,162)
|
|
EBITDA
|
8,048
|
1,152
|
(1,792)
|
(4,395)
|
1,770
|
4,783
|
|
Depreciation and
amortisation
|
(1,852)
|
(139)
|
(162)
|
(255)
|
(362)
|
(2,770)
|
|
Exceptional items (note
5)
|
-
|
(223)
|
-
|
(1,142)
|
(7,050)
|
(8,415)
|
|
Operating profit/(loss)
|
6,196
|
790
|
(1,954)
|
(5,792)
|
(5,642)
|
(6,402)
|
|
Investment revenues
|
|
|
|
|
|
749
|
|
Finance costs
|
|
|
|
|
|
(486)
|
|
Loss before taxation
|
|
|
|
|
|
(6,139)
|
|
Taxation
|
|
|
|
|
|
(1,960)
|
|
Loss for the year
|
|
|
|
|
|
(8,099)
|
|
Year ended 31 December
2022
|
India
£'000
|
Turkey
£'000
|
Blink
£'000
|
Central
Functions
£'000
|
Legacy
£'000
|
Total
£'000
|
|
Continuing operations
|
|
|
|
|
|
|
|
Revenue - external sales
|
150,613
|
3,212
|
442
|
-
|
15,516
|
169,783
|
|
Cost of sales
|
(132,413)
|
(1,448)
|
(63)
|
-
|
(5,087)
|
(139,011)
|
|
Gross profit
|
18,200
|
1,764
|
379
|
-
|
10,429
|
30,772
|
|
Administrative expenses excluding
depreciation, amortisation and exceptional items
|
(10,168)
|
(1,038)
|
(837)
|
(3,372)
|
(8,504)
|
(23,919)
|
|
EBITDA
|
8,032
|
726
|
(458)
|
(3,372)
|
1,925
|
6,853
|
|
Depreciation and
amortisation
|
(1,305)
|
(129)
|
(208)
|
(413)
|
(452)
|
(2,507)
|
|
Exceptional items (note
5)
|
(519)
|
-
|
-
|
(480)
|
(733)
|
(1,732)
|
|
Operating profit/(loss)
|
6,208
|
597
|
(666)
|
(4,265)
|
740
|
2,614
|
|
Investment revenues
|
|
|
|
|
|
486
|
|
Finance costs
|
|
|
|
|
|
(656)
|
|
Profit before taxation
|
|
|
|
|
|
2,444
|
|
Taxation
|
|
|
|
|
|
(2,343)
|
|
Profit for the year from continuing
operations
|
|
|
|
|
|
101
|
|
Discontinued operations
|
|
|
|
|
|
|
|
Profit for the year from
discontinued operations
|
|
|
|
|
|
676
|
|
Profit for the year
|
|
|
|
|
|
777
|
Segment assets
|
|
2023
£'000
|
2022
£'000
|
|
India
|
36,677
|
38,613
|
|
Turkey
|
2,293
|
1,665
|
|
Blink
|
873
|
636
|
|
Central Functions
|
958
|
5,092
|
|
Legacy
|
9,567
|
10,834
|
|
Total segment assets
|
50,368
|
56,840
|
|
Unallocated assets
|
1,206
|
2,815
|
|
Assets classified as held for
sale
|
2,631
|
-
|
|
Consolidated total
assets
|
54,205
|
59,655
|
Goodwill, deferred tax and equity
investment (classified as held for sale in the year ended 31
December 2023) are not allocated to segments.
Capital expenditure
|
|
Intangible
assets
|
Property, plant and
equipment
|
|
Right-of-use
assets
|
|
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
|
2023
£'000
|
2022
£'000
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
India
|
2,970
|
1,814
|
157
|
277
|
|
87
|
698
|
|
Turkey
|
14
|
36
|
105
|
106
|
|
294
|
98
|
|
Blink
|
251
|
158
|
27
|
3
|
|
-
|
-
|
|
Central Functions
|
138
|
14
|
19
|
140
|
|
-
|
-
|
|
Legacy
|
178
|
172
|
27
|
-
|
|
6
|
13
|
|
Total additions
|
3,551
|
2,194
|
335
|
526
|
|
387
|
809
|
Revenues from major products
Major product streams are
disclosed on the basis monitored by senior management.
|
|
2023
£'000
|
2022
£'000
|
|
Continuing operations
|
|
|
|
My Finances
|
43,519
|
39,239
|
|
My Tech
|
49,836
|
39,059
|
|
My Health
|
59,298
|
46,614
|
|
My Home
|
18,605
|
22,301
|
|
My Digital Life
|
5,690
|
5,064
|
|
My Travel
|
608
|
448
|
|
Other
|
15,480
|
17,058
|
|
Revenue from continuing operations
|
193,036
|
169,783
|
|
Revenue from discontinued operations
|
-
|
922
|
|
Total revenue
|
193,036
|
170,705
|
'Other' revenue predominantly
represents revenue from Businesses Process Management (BPM)
services provided by Globiva.
The Group derives its revenue from
contracts with customers for the transfer of goods and services
which is consistent with the revenue information that is disclosed
for each reportable segment under IFRS 8.
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:
|
|
2023
£'000
|
2022
£'000
|
|
Continuing operations
|
|
|
|
At a point in time
|
170,368
|
150,266
|
|
Over time
|
22,668
|
19,517
|
|
Revenue from continuing operations
|
193,036
|
169,783
|
|
Discontinued operations
|
|
|
|
At a point in time
|
-
|
657
|
|
Over time
|
-
|
265
|
|
Revenue from discontinued operations
|
-
|
922
|
|
Total revenue
|
193,036
|
170,705
|
Geographical information
The Group operates across a number
of territories, of which India, the UK, Spain and Turkey are
considered individually material. Revenue from external customers
and non-current assets (excluding equity investment and deferred
tax) by geographical location are detailed below:
|
|
External
revenues
|
Non-current
assets
|
|
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
|
India
|
175,519
|
150,613
|
9,867
|
9,073
|
|
UK
|
7,283
|
8,481
|
35
|
375
|
|
Turkey
|
4,675
|
3,212
|
584
|
244
|
|
Spain
|
3,127
|
4,960
|
-
|
204
|
|
Other
|
2,432
|
2,517
|
908
|
812
|
|
|
193,036
|
169,783
|
11,394
|
10,708
|
|
Discontinued operations
|
-
|
922
|
-
|
-
|
|
|
193,036
|
170,705
|
11,394
|
10,708
|
Information about major
customers
Revenue from the customers of one
business partner in the Group's Indian segment represented
approximately £134,637,000 (2022: £110,128,000) of the Group's
total revenue.
5.
Exceptional items
Exceptional items included in the
table below details all exceptional items, which are included in
operating profit and discontinued operations, as well as the
associated taxation.
|
|
|
2023
|
2022
|
|
|
Note
|
Core
£'000
|
Legacy
£'000
|
Total
£'000
|
Core
£'000
|
Legacy
£'000
|
Total
£'000
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
Restructuring and closure
costs
|
|
299
|
3,484
|
3,783
|
480
|
332
|
812
|
|
Onerous contract
provision
|
|
-
|
3,388
|
3,388
|
-
|
248
|
248
|
|
DBP charges
|
10
|
1,066
|
-
|
1,066
|
-
|
-
|
-
|
|
IT asset impairment
|
8
|
-
|
178
|
178
|
-
|
153
|
153
|
|
Globiva compensation
payment
|
|
-
|
-
|
-
|
519
|
-
|
519
|
|
Exceptional charge included in
profit before tax
|
|
1,365
|
7,050
|
8,415
|
999
|
733
|
1,732
|
|
Tax on exceptional items
|
|
(56)
|
(196)
|
(252)
|
(131)
|
(61)
|
(192)
|
|
Exceptional charge after tax for
continuing operations
|
7
|
1,309
|
6,854
|
8,163
|
868
|
672
|
1,540
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
Exceptional gain from discontinued
operations
|
7
|
-
|
-
|
-
|
-
|
(535)
|
(535)
|
|
|
|
1,309
|
6,854
|
8,163
|
868
|
137
|
1,005
|
Exceptional costs in the year,
relate to the Group's strategy to exit its Legacy markets and focus
on its Core operations.
Restructuring and closure costs
total £3,783,000 (2022: £812,000) and primarily relate to action
taken to withdraw from Legacy operations. As a result, redundancy
and associated costs have been recognised in Spain, UK Legacy, UK
MGA and Central Functions. Restructuring costs include necessary
retention provisions as part of the closure process. Core
restructuring costs also includes settlement costs relating to
Turkey. Prior year restructuring costs related to Legacy
operations, as well as settlement costs related to the departure of
the Group CEO.
The onerous contract provisions of
£3,388,000 (2022: £248,000) relate to UK Legacy, Spain and Portugal
and the decommissioning of the Group's legacy IT platforms. In the
prior year, onerous contracts provisions were recognised relating
to the UK MGA. All onerous contract provisions recognised relate to
the costs required to fulfil and exit contractual commitments above
the associated revenue receivable. This includes costs to 2027 and
is held as a provision at the balance sheet date.
DBP charges of £1,066,000 (2022:
£nil) relate to a share-based retention plan for the EMC whereby
participants agreed to defer a portion of their 2022 annual bonus
in return for share options. The plan was established to recognise
the importance of having a settled and aligned EMC that is engaged
and retained for the duration of the CMP.
The impairment of the IT assets of
£178,000 (2022: £153,000) relates to the UK Legacy business.
Following the decision to exit the UK Legacy business, a value in
use calculation was performed leading to recognition of an
impairment. The prior year related to an impairment of assets in
the UK MGA business.
In the prior year, the Globiva
compensation payment represented a one-time additional management
compensation payment to the Globiva founders following a review of
commitments in the original Shareholder Agreement.
6.
Taxation
|
|
2023
£'000
|
2022
£'000
|
|
Continuing operations
|
|
|
|
Current tax
charge/(credit):
|
|
|
|
UK corporation tax
|
-
|
-
|
|
Foreign tax
|
2,504
|
2,679
|
|
Adjustments in respect of prior
years
|
23
|
(140)
|
|
Current tax relating to continuing
operations
|
2,527
|
2,539
|
|
Deferred tax
(credit)/charge:
|
|
|
|
Origination and reversal of timing
differences
|
(151)
|
94
|
|
Impact of change in tax
rates
|
(35)
|
(8)
|
|
Adjustments in respect of prior
years
|
(381)
|
(282)
|
|
Deferred tax relating to continuing
operations
|
(567)
|
(196)
|
|
Tax charge relating to continuing
operations
|
1,960
|
2,343
|
|
Discontinued operations
|
|
|
|
Tax charge relating to discontinued
operations
|
-
|
-
|
|
Total tax charge
|
1,960
|
2,343
|
The following is a segmental
review of the tax charge, in which withholding taxes arising on
distributions are attributed to the country paying the
distribution:
|
|
2023
£'000
|
2022
£'000
|
|
Continuing operations
|
|
|
|
Core:
|
|
|
|
India
|
1,485
|
1,888
|
|
Turkey
|
370
|
316
|
|
Blink
|
(94)
|
-
|
|
Central Functions
|
-
|
(204)
|
|
Total Core
|
1,761
|
2,000
|
|
Legacy
|
199
|
343
|
|
Tax charge for continuing
operations
|
1,960
|
2,343
|
|
Discontinued operations
|
|
|
|
Tax charge for discontinued
operations
|
-
|
-
|
|
|
1,960
|
2,343
|
Overall, UK profits chargeable to
corporation tax are offset by group relief surrendered from fellow
UK entities.
UK corporation tax is calculated
at 23.5% (blended rate of 19% to March 2023 increasing to 25% from
April 2023) (2022: 19%) of the estimated assessable profit for the
year. Deferred tax is provided at the rate at which it is expected
to reverse.
Taxation for other jurisdictions
is calculated at the rates prevailing in the respective
jurisdictions - India 25.2% inclusive of surcharges (2022: 25.2%),
Spain 25% (2022: 25%), Turkey 25% (2022: 23%), and Italy 27.5%
(2022: 27.5%). Non-UK deferred tax is provided at the local
prevailing tax rate which is expected to apply to the reversal of
the timing difference.
The charge for the year can be
reconciled to the (loss)/profit per the consolidated income
statement as follows:
|
|
2023
£'000
|
2022
£'000
|
|
(Loss)/profit before tax from
continuing operations
|
(6,139)
|
2,444
|
|
Effects of:
|
|
|
|
Tax at the UK corporation tax rate
of 23.5% (2022: 19%)
|
(1,443)
|
464
|
|
Unprovided deferred tax arising on
losses1
|
3,016
|
796
|
|
Other movement in unprovided
deferred tax
|
-
|
124
|
|
Recurring expenses not deductible
for tax
|
(179)
|
241
|
|
One-off costs not deductible for
tax
|
-
|
32
|
|
Provision for withholding tax on
future distributions2
|
654
|
621
|
|
Other expense not chargeable for
tax purposes
|
(85)
|
96
|
|
Higher tax rates on overseas
earnings3
|
123
|
403
|
|
Adjustments in respect of prior
years
|
(358)
|
(422)
|
|
Impact of change in future tax
rates on deferred tax
|
(35)
|
(8)
|
|
Deficit of share option charge
compared to tax allowable amount
|
267
|
(4)
|
|
Tax charged to income statement for
continuing operations
|
1,960
|
2,343
|
|
Tax charged to the income statement
for discontinued operations
|
-
|
-
|
|
|
1,960
|
2,343
|
Effective tax charge
The net tax charge of £1,960,000
on a loss before tax from continuing operations of £6,139,000 gives
an effective tax rate (ETR) of negative 32% (2022: positive 96%)
which is lower than the standard rate of 23.5%. Exceptional items
of £8,415,000 in the current year have led to an overall loss
before tax; however, tax is still payable in our profitable Indian
and Turkish markets, resulting in a negative ETR. Further
additional information is provided below:
1. Deferred tax has
not been recognised on the losses arising in Legacy markets and
Blink, as the short-term profit expectations do not support the
recognition of deferred tax assets in these areas.
2. There is a
withholding tax burden arising on repatriation of funds from
overseas countries which is included in the tax charge.
3. Tax is chargeable
at the local statutory rates in our profitable countries, which are
higher than the UK corporate income tax rate of 23.5%.
The Group's ETR is expected to be
higher than the UK statutory tax rate in future years as
withholding taxes are provided on overseas distributions and
deferred tax credits are not taken on losses in markets that are
not profitable. The withdrawal from the Legacy markets, is expected
to result in a high and variable ETR in the medium-term. In the
longer term, once the CMP has concluded, the Group expects the rate
to reduce from its current level. The Group maintains appropriate
provisions in respect of tax uncertainties arising from operating
in multiple overseas jurisdictions.
Income tax charged to reserves
during the year was as follows:
|
|
2023
£'000
|
2022
£'000
|
|
Deferred tax
|
|
|
|
Timing differences of
equity-settled share-based charge
|
-
|
9
|
|
Total deferred tax charge and total
tax charged to reserves
|
-
|
9
|
7. (Loss)/earnings per share
Basic and diluted (loss)/earnings
per share have been calculated in accordance with IAS 33
Earnings per Share.
Underlying (loss)/earnings per share have 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.
(Loss)/profit
|
|
Continuing
operations
|
Discontinued
operations
|
Total
|
|
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
|
(Loss)/profit for the purposes of
basic and diluted (loss)/earnings per share
|
(8,655)
|
(153)
|
-
|
676
|
(8,655)
|
523
|
|
Exceptional items (net of
tax)
|
8,163
|
1,350
|
-
|
(535)
|
8,163
|
815
|
|
(Loss)/profit for the purposes of
underlying basic and diluted (loss)/earnings per share
|
(492)
|
1,197
|
-
|
141
|
(492)
|
1,338
|
(Loss)/profit attributable to Core
and Legacy
|
|
2023
|
2022
|
|
|
Core
£'000
|
Legacy
£'000
|
Continuing operations
£'000
|
Core
£'000
|
Legacy
£'000
|
Continuing operations
£'000
|
|
(Loss)/profit for the purposes of
basic and diluted (loss)/earnings per share
|
(3,027)
|
(5,628)
|
(8,655)
|
(640)
|
487
|
(153)
|
|
Exceptional items (net of
tax)
|
1,309
|
6,854
|
8,163
|
678
|
672
|
1,350
|
|
(Loss)/profit for the purposes of
underlying basic and diluted (loss)/earnings per share
|
(1,718)
|
1,226
|
(492)
|
38
|
1,159
|
1,197
|
The table above does not include
discontinued operations.
Number of shares
|
|
2023
Number
(thousands)
|
2022
Number
(thousands)
|
|
Weighted average number of ordinary
shares for the purposes of basic (loss)/earnings per share and basic
underlying (loss)/earnings per share
|
8,846
|
8,844
|
|
Effect of dilutive ordinary shares:
share options
|
295
|
30
|
|
Weighted average number of ordinary
shares for the purposes of diluted (loss)/earnings per share and diluted
underlying (loss)/earnings per share
|
9,141
|
8,874
|
|
|
Continuing operations
|
Discontinued operations
|
Total
|
|
|
2023
pence
|
2022
pence
|
2023
pence
|
2022
pence
|
2023
pence
|
2022
pence
|
|
Basic and diluted (loss)/earnings
per share
|
(97.84)
|
(1.73)
|
-
|
7.64
|
(97.84)
|
5.91
|
|
Basic underlying (loss)/earnings
per share
|
(5.56)
|
13.53
|
-
|
1.59
|
(5.56)
|
15.12
|
|
Diluted underlying (loss)/earnings
per share
|
(5.56)
|
13.49
|
-
|
1.59
|
(5.56)
|
15.08
|
|
|
2023
|
2022
|
|
|
Core
pence
|
Legacy
pence
|
Continuing
operations
pence
|
Core
pence
|
Legacy
pence
|
Continuing operations
pence
|
|
Basic and diluted (loss)/earnings
per share
|
(34.22)
|
(63.62)
|
(97.84)
|
(7.24)
|
5.51
|
(1.73)
|
|
Basic underlying (loss)/earnings
per share
|
(19.42)
|
13.86
|
(5.56)
|
0.43
|
13.10
|
13.53
|
|
Diluted underlying (loss)/earnings
per share
|
(19.42)
|
13.86
|
(5.56)
|
0.43
|
13.06
|
13.49
|
The Group has 171,650,000 (2022:
171,650,000) deferred shares which have no rights to receive
dividends and only very limited rights on a return of capital. The
deferred shares have not been admitted to trading on AIM or any
other stock exchange. Accordingly, these shares have not been
considered in the calculation of earnings/ loss per
share.
8. Other intangible assets
|
|
Business partner
relationships
£'000
|
Internally generated software
£'000
|
Externally acquired software
£'000
|
Total
£'000
|
|
Cost:
|
|
|
|
|
|
At 1 January 2022
|
644
|
5,086
|
2,891
|
8,621
|
|
Additions
|
108
|
1,960
|
126
|
2,194
|
|
Disposals
|
(108)
|
(82)
|
(54)
|
(244)
|
|
Exchange adjustments
|
-
|
18
|
14
|
32
|
|
At 1 January 2023
|
644
|
6,982
|
2,977
|
10,603
|
|
Additions
|
-
|
3,221
|
330
|
3,551
|
|
Disposals
|
-
|
(20)
|
(824)
|
(844)
|
|
Hyper-inflation
adjustment
|
-
|
-
|
17
|
17
|
|
Exchange adjustments
|
-
|
(354)
|
(71)
|
(425)
|
|
At 31 December 2023
|
644
|
9,829
|
2,429
|
12,902
|
|
|
|
|
|
|
|
Accumulated
amortisation:
|
|
|
|
|
|
At 1 January 2022
|
470
|
2,019
|
2,529
|
5,018
|
|
Provided during the
year
|
82
|
629
|
158
|
869
|
|
Disposals
|
(108)
|
(81)
|
(50)
|
(239)
|
|
Impairment
|
101
|
-
|
86
|
187
|
|
Exchange adjustments
|
(1)
|
50
|
9
|
58
|
|
At 1 January 2023
|
544
|
2,617
|
2,732
|
5,893
|
|
Provided during the
year
|
66
|
949
|
173
|
1,188
|
|
Disposals
|
-
|
(11)
|
(802)
|
(813)
|
|
Impairment
|
-
|
171
|
7
|
178
|
|
Hyper-inflation
adjustment
|
-
|
-
|
11
|
11
|
|
Exchange adjustments
|
(15)
|
(102)
|
(57)
|
(174)
|
|
At 31 December 2023
|
595
|
3,624
|
2,064
|
6,283
|
|
|
|
|
|
|
|
Carrying amount:
|
|
|
|
|
|
At 31 December 2022
|
100
|
4,365
|
245
|
4,710
|
|
At 31 December 2023
|
49
|
6,205
|
365
|
6,619
|
Amortisation of intangible assets
totalling £1,188,000 (2022: £869,000) is recognised through
administrative expenses in the consolidated income
statement.
Internally generated software
additions of £3,221,000 (2022: £1,960,000) reflect the
capitalisation of staff and contractor costs in IT development
projects.
Internally generated software
includes £1,205,000 (2022: £3,718,000) relating to assets in
development which are not yet operational and are not amortised.
The assets held at 31 December 2023 are expected to become
operational in Q2 2024.
9. Share capital
|
|
|
Ordinary
shares
of
£1
each
(thousands)
|
Deferred
shares
of
9
pence
each
(thousands)
|
|
|
Called-up and allotted
|
|
|
|
|
|
At 1 January 2023
|
|
8,846
|
171,650
|
180,496
|
|
Issue of shares in connection
with:
|
|
|
|
|
|
Exercise of share
options
|
|
1
|
-
|
1
|
|
|
|
|
|
|
|
|
|
Ordinary
shares
of
£1
each
£'000
|
Deferred
shares
of
9
pence
each
£'000
|
|
|
Called-up and allotted
|
|
|
|
|
|
At 1 January 2023
|
|
8,843
|
15,413
|
24,256
|
|
Issue of shares in connection
with:
|
|
|
|
|
|
Exercise of share
options
|
|
1
|
-
|
1
|
|
|
|
|
|
|
Share capital at 31 December 2023
is £24,257,000 (2022: £24,256,000). To satisfy share option
exercises in the year the Company has issued 1,100 £1 ordinary
shares for a total equity value of £1,000 and £nil cash
consideration.
Of the 8,847,145 (2022: 8,846,045)
ordinary shares in issue at 31 December 2023, 8,842,145 are fully
paid (2022: 8,841,045) and 5,000 (2022: 5,000) are partly
paid.
10. Share based payments
Equity-settled share-based
payments
Current share
plans
Share-based payment charges comprise
DBP charges of £1,066,000 (2022: £nil) and 2023 LTIP charges of
£56,000 (2022: £nil). These costs are disclosed within
administrative expenses, although the DBP share-based payment
charge is not included within EBITDA. There have been 635,000
options granted in the current year as part of the DBP and
1,092,000 options granted as part of the 2023 LTIP; neither plan
was in operation in the prior year.
|
|
|
|
|
|
|
Number
of share
options
(thousands)
|
Weighted
average
exercise
price
(£)
|
|
Number
of
share
options
(thousands)
|
Weighted
average
exercise
price
(£)
|
|
DBP
|
|
|
|
|
|
|
Outstanding at 1 January
|
-
|
-
|
|
-
|
-
|
|
Granted during the year
|
635
|
-
|
|
-
|
-
|
|
Outstanding at 31
December
|
635
|
-
|
|
-
|
-
|
|
Exercisable at 31
December
|
317
|
-
|
|
-
|
-
|
|
|
|
|
|
|
|
|
2023 LTIP
|
|
|
|
|
|
|
Outstanding at 1 January
|
-
|
-
|
|
-
|
-
|
|
|
|
|
|
|
|
Outstanding at 31 December
|
|
|
|
|
|
Exercisable at 31
December
|
|
|
|
|
|
Nil-cost options and conditional shares granted under the DBP will
vest in two tranches with 50% vesting after 0.75 years and the
other 50% after 1.75 years. The options will lapse if not exercised
within ten years of grant and will lapse if option holders cease to
be employed by the Group. Vesting of DBP options and shares carries
no performance conditions.
The options outstanding in the DBP
have a remaining contractual life of 0.5 years (2022:
n/a).
Nil-cost options and conditional
shares granted under the 2023 LTIP are not linked to a time-based
schedule but will vest subject to certain performance conditions,
as follows:
|
Tranche
|
Share options
(number)
|
Share price
target*
|
Maximum vesting
period
|
|
1
|
168,073
|
£3.70
|
3
years
|
|
2
|
252,114
|
£4.75
|
4
years
|
|
3
|
420,185
|
£6.00
|
5
years
|
|
Super-Max
|
252,114
|
£9.00
|
6
years
|
* The share options will vest if the
average closing share price of a share on AIM over a period of 90
consecutive calendar days equals or exceeds the share price
target.
The options will also lapse if not
exercised within ten years of grant and will lapse if option
holders cease to be employed by the Group.
The options outstanding in the 2023
LTIP have a remaining contractual life of 4.4 years (2022:
n/a).
The principal assumptions underlying
the valuation of the options granted during the year at the date of
grant are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation model
|
Black
Scholes
|
|
Monte
Carlo
|
|
Weighted average share
price
|
£2.35
|
|
£1.35
|
|
Weighted average exercise
price
|
-
|
|
-
|
|
Expected volatility
|
n/a
|
|
60%
|
|
Expected life
|
0.75
years
|
1.75
years
|
|
2.17
years
|
2.92
years
|
3.67
years
|
4.50
years
|
|
Risk-free rate
|
n/a
|
|
4.41%
|
|
Dividend yield
|
n/a
|
|
0%
|
The aggregate estimated fair value
of the options and shares granted in the current year under the DBP
was £1,493,000 and under the 2023 LTIP was £723,000.
Legacy share
plans
Administrative expenses include no
charge (2022: £206,000 credit) arising from the 2016 LTIP and the
MSP. Both the 2016 LTIP and MSP are closed and no further awards
will be made under these plans. There were no options granted in
either the current or prior year under either plan.
Details of share options outstanding
during the period under these plans are as follows:
|
|
|
|
|
|
|
Number
of share
options
(thousands)
|
Weighted
average
exercise
price
(£)
|
|
Number
of
share
options
(thousands)
|
Weighted
average
exercise
price
(£)
|
|
2016 LTIP
|
|
|
|
|
|
|
Outstanding at 1 January
|
3
|
-
|
|
138
|
-
|
|
Exercised during the year
|
(1)
|
-
|
|
(17)
|
-
|
|
Lapsed during the year
|
(1)
|
-
|
|
(13)
|
-
|
|
Forfeited during the year
|
-
|
-
|
|
(105)
|
-
|
|
Outstanding at 31 December
|
1
|
-
|
|
3
|
-
|
|
Exercisable at 31
December
|
1
|
-
|
|
3
|
-
|
|
|
|
|
|
|
|
|
MSP
|
|
|
|
|
|
|
Outstanding at 1 January
|
2
|
1.00
|
|
8
|
1.00
|
|
Exercised during the year
|
-
|
1.00
|
|
(6)
|
1.00
|
|
|
|
|
|
|
|
Outstanding at 31 December
|
|
|
|
|
|
Exercisable at 31
December
|
|
|
|
|
|
All outstanding nil-cost options and
conditional shares granted under the 2016 LTIP have vested. These
options will lapse if not exercised within ten years of grant and
will lapse if option holders cease to be employed by the Group.
There have been 1,000 (2022: 17,000) 2016 LTIP options exercised in
the current year.
The options outstanding in the 2016
LTIP had no remaining contractual life in either the current or
prior year.
There are no outstanding options
remaining under the MSP.
Cash-settled share-based
payments
CAP
The CAP is a cash-based plan
targeted at certain EMC members. The maximum aggregate amount that
can be paid under the CAP is £1,500,000.
|
Tranche
|
CAP amount
|
Share price
target
|
Maximum vesting
period
|
|
1
|
£150,000
|
£3.70
|
3
years
|
|
2
|
£600,000
|
£4.75
|
4
years
|
|
3
|
£750,000
|
£6.00
|
5
years
|
The performance conditions
associated with the CAP are the same as those under Tranches 1, 2,
and 3 of the 2023 LTIP.
The Group has recognised CAP charges
in the year of £15,000 (2022: £nil) which is disclosed within
administrative expenses. The Group has recorded liabilities for the
CAP of £15,000 (2022: £nil) which are included in trade creditors
and other payables.
2016 LTIP
The Group granted certain employees
with notional share options that require the Group to pay the
intrinsic value of the notional share to the employee at
the date of exercise. The notional share options have the same
requirements and conditions as the 2016 LTIP. No further awards
will be made under the 2016 LTIP. The Group has recorded a total
credit in relation to cash-settled awards in the year of £3,000
(2022: £40,000) which is disclosed within administrative
expenses. The Group has recorded liabilities for its cash-settled
awards of £7,000 (2022: £10,000) which are included in trade
creditors and other payables.
11. Reconciliation of operating cash flows
|
|
2023
£'000
|
2022
£'000
|
|
(Loss)/profit for the
year
|
(8,099)
|
777
|
|
Adjustments for:
|
|
|
|
Depreciation and
amortisation
|
2,770
|
2,509
|
|
Share-based payment
charge/(credit)
|
1,134
|
(246)
|
|
Impairment loss on intangible
assets
|
178
|
187
|
|
Impairment loss on property, plant
and equipment
|
40
|
-
|
|
Loss on disposal of property, plant
and equipment
|
24
|
15
|
|
Loss on disposal of intangible
assets
|
31
|
5
|
|
Profit from discontinued
operations
|
-
|
(535)
|
|
Effects of
hyperinflation
|
(82)
|
86
|
|
Investment revenues
|
(749)
|
(490)
|
|
Finance costs
|
486
|
709
|
|
Income tax charge
|
1,960
|
2,343
|
|
Operating cash flows before movements in working
capital
|
(2,307)
|
5,360
|
|
Decrease in inventories
|
78
|
15
|
|
Increase in contract
assets
|
(1,259)
|
(1,481)
|
|
Decrease/(increase) in
receivables
|
4,270
|
(6,232)
|
|
Increase in payables
|
832
|
7,547
|
|
Increase in contract
liabilities
|
833
|
1,655
|
|
(Decrease)/increase in insurance
liabilities
|
(6)
|
83
|
|
Increase in provisions
|
3,096
|
369
|
|
Cash from operations
|
5,537
|
7,316
|
|
Income taxes paid
|
(1,927)
|
(3,494)
|
|
Net cash from operating activities
|
3,610
|
3,822
|
Reconciliation of net
funds
|
|
|
|
Foreign
exchange and other non-cash movements
£'000
|
At
31
December
2023
£'000
|
|
Net cash per cash flow
statement
|
20,984
|
(1,120)
|
(863)
|
19,001
|
|
Financing activities:
|
|
|
|
|
|
Lease liabilities
|
(4,718)
|
1,396
|
(477)
|
(3,799)
|
|
Borrowings due outside of one
year:
|
|
|
|
|
|
- Unamortised issue costs
|
23
|
128
|
(46)
|
105
|
|
Total movement from financing
activities
|
(4,695)
|
1,524
|
(523)
|
(3,694)
|
|
Total net funds
|
16,289
|
404
|
(1,386)
|
15,307
|
12. Related party transactions
Transactions with associated
parties
In the year, the Group incurred
fees of £10,000 plus VAT (2022: £19,000) for services rendered from
KYND, which were payable under 14-day credit terms. The creditor
balance at the year end was £1,000 (2022: £2,000).
Transactions with related
parties
Globiva
In November 2023, the Group announced
its planned divestment of Globiva, an Indian Business Processes
Management company. The Group currently holds a 51% majority
investment. The disposal has been agreed at approximately £5.1
million (subject to currency fluctuations), for the Group's 51%
majority interest through the amendment of the existing Shareholder
Agreement, with the original Globiva Founders - who currently own
the remaining 49% investment. The transaction will provide an exit
path for the Group at an acceptable return and will provide
additional cash flows for the Group.
The sale and transfer of ownership
will be conducted over a three-year period concluding in Q1 2027.
This is based on a blended 7.1x multiple of forecast EBITDA (Indian
Accounting Standards) for 2023, 2024 and 2025 calendar years. The
Group's shareholding is expected to reduce to 35% in Q1 2025, 13%
in Q1 2026 and 0% in Q1 2027. This will be performed through
Globiva operating a share buy-back mechanism.
The transaction constitutes a related
party transaction, pursuant to Rule 13 of the AIM Rules for
Companies, as the Globiva Founders are Directors of Globiva. The
Directors consider, having consulted with the Company's nominated
adviser, Liberum Capital Limited, that the terms of the transaction
are fair and reasonable insofar as the Company's 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 and Company, is set out below:
|
|
2023
£'000
|
2022
£'000
|
|
Short-term employee
benefits
|
1,412
|
1,101
|
|
Post-employment benefits
|
20
|
27
|
|
Termination benefits
|
-
|
300
|
|
Share-based payments
|
593
|
(206)
|
|
|
2,025
|
1,222
|
13. Events after the balance sheet date
On 15 February 2024, the Group
disposed of its 13.3% (fully diluted basis) shareholding in KYND
for cash consideration of £2.6 million. The investment in KYND was
considered non-core to the Group. The transaction will provide
additional cash resources to support the CMP and investment in
Blink.
Cautionary statement
This announcement has been
prepared solely to provide additional information to shareholders
as a body to meet the relevant requirements of the UK Listing
Authority. The announcement should not be relied on by any other
party or for any other purpose.
The announcement 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 announcement 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, 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 announcement.