CPPGroup plc Annual Report 2020

FY2020 Annual Report · CPPGroup plc

Loading PDF…

CPPGroup Plc
Annual Report
& Accounts 2020

Welcome to CPP Group

What we are all about

Everyday disruptions will happen – losing
your payment cards, being locked out of your car
or home, dropping your phone, the air conditioning
failing to work on the hottest day or a company
putting your personal details at risk.

CPP Group is there for when it’s been one of those
days... our purpose is to reduce everyday disruptions.
We try to prevent disruptions from happening and fix
them quickly when they do – providing reassurance
and giving confidence. We make the complex easy
for our partners and customers.

What else you should know about us…

Strong established
model delivering
value for over
40 years.
Operating across Asia and Europe, we
are experts in our markets and listen
to partners and customers to develop
products and services that suit local
needs and conditions.

Partnerships
are important.
We design and build products for over
60 business partners across the globe.
We also manage over 40 different
service providers to source, build,
package, fulfil and support
tailored products and services
that meet partner needs.

As is getting it
right for individual
customers.
Some of our customers have been with
us from the start and describe us as that
‘someone’ to call when things go wrong.
We have a strong foundation of caring
for and retaining customers.

Read more about CPP Group on our website
https://international.cppgroup.com

G
r
o
u
p
o
v
e
r
v
i
e
w

See under the hood
of the business

Our business model on
pages 10 and 11

Inside this report

Our new Chairman talks
through his views so far

David Morrison review on page 20

Discover the value drivers
of the business

Our investment case on pages 6 and 7

Q&As with our market CEOs on pages 12 to 17

Group overview
Inside this report . . . . . . . . . . . . . . . . . . . . . . . 1
Financial and strategic highlights . . . . . . . . . . . . . . . . 2

Strategic report
At a glance . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment case . . . . . . . . . . . . . . . . . . . . . . . . 6
Our strategy . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Our business model . . . . . . . . . . . . . . . . . . . . . 10
Business review . . . . . . . . . . . . . . . . . . . . . . . 12
– Focus on India . . . . . . . . . . . . . . . . . . . . . . . 12
– Focus on UK . . . . . . . . . . . . . . . . . . . . . . . . 14
– Focus on Turkey . . . . . . . . . . . . . . . . . . . . . . 16
– A culture driven from the Centre . . . . . . . . . . . . . . . 18
Chairman’s statement . . . . . . . . . . . . . . . . . . . . 20
Chief Executive Officer’s statement . . . . . . . . . . . . . . 21
Financial and operational review . . . . . . . . . . . . . . . 24
Risk management and principal risks . . . . . . . . . . . . . 30
Section 172(1) statement . . . . . . . . . . . . . . . . . . . 32

Corporate governance
Board of Directors & Company Secretary . . . . . . . . . . . . 34
Corporate Governance Report . . . . . . . . . . . . . . . . 36
Report of the Audit Committee . . . . . . . . . . . . . . . . 40
Directors’ Remuneration Report . . . . . . . . . . . . . . . . 42
Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . 45
Statement of Directors’ responsibilities . . . . . . . . . . . . 47

Financial statements
Independent Auditor’s Report . . . . . . . . . . . . . . . . . 48
Consolidated income statement . . . . . . . . . . . . . . . . 55
Consolidated statement of comprehensive income . . . . . . . 56
Balance sheets . . . . . . . . . . . . . . . . . . . . . . . . 57
Consolidated statement of changes in equity . . . . . . . . . 58
Company statement of changes in equity . . . . . . . . . . . 59
Consolidated cash flow statement . . . . . . . . . . . . . . . 60
Notes to the financial statements . . . . . . . . . . . . . . . 61
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Company offices . . . . . . . . . . . . . . . . . . . . . . . 95
Shareholder information . . . . . . . . . . . . . . . . . . . 96

CPPGroup Plc Annual Report & Accounts 2020

Financial and strategic highlights

Growing performance in
an unprecedented time

Financial highlights

Revenue

Revenue from
Ongoing Operations1

EBITDA2

£141.1m
+2%

£130.1m
+5%

£7.2m
+32%

£141.1m

£138.4m

£110.1m

£130.1m

£123.9m

£91.3m

£7.2m

£5.4m

£3.9m

Strategic highlights

Focus on business
partner needs
• Over ten partner and product extensions.

Create advantages
through innovation
• Six new products developed and launched in 2020.

• 10% increase in partners.

• Deployed new digital claims management capability in India

• 11% increase in customer numbers.

• Maintained service to all customers – responding customer

queries within agreed service level agreements.

reducing claims times.

• Award winning technology and product innovation in Turkey

and China.

1. 2018 and 2019 have been restated for the transfer of an Italian renewal book from Restricted Operations to Ongoing Operations. Refer to note 3 on page 61.
2. EBITDA includes £3.1 million (2019: £3.3 million) start-up losses charged to the income statement relating to investments in business growth projects.

A list and explanation of our alternative performance measures (APMs) is provided in a glossary on pages 93 and 94.
The percentage change figures above are based on year-on-year movements between our reported numbers. We are a Group that operates in many overseas markets and currency
fluctuations impact our reported performance. As a result, all percentage change figures in the Strategic Report (pages 4 to 33) are presented on a constant currency basis, unless
otherwise stated. The constant currency basis is applied as a means of eliminating the effects of exchange rate movements on the year-on-year reported results. See our APMs on
pages 93 and 94.

CPPGroup Plc Annual Report & Accounts 2020

G
r
o
u
p
o
v
e
r
v
i
e
w

Dividend
The reinstatement of the dividend is an important moment for CPP. After many years of reorganisation
and investment, the Group is now positioned for what we expect to be a period of continued growth,
underpinned by our businesses in India, Turkey, and the UK. With the support of a robust balance sheet
and solid cash generation, the Board are confident that the time is right for a stronger focus on
shareholder returns in which the dividend has a key role.

25 pence
per ordinary share
final dividend
proposed

While the Group currently does not generate positive EPS – leading to an uncovered dividend on that
basis – future profit growth and progressive normalisation of the tax position will allow movement
towards conventional dividend cover to follow. The Board has thus proposed the final dividend at
a level which it is confident can be grown in the years ahead.

Profit before tax

Basic loss per share

Net funds

£2.0m
+78%

(19.28)p
-65%

£15.3m
+3%

£2.0m

£1.1m

£0.3m

(19.28)p

(11.69)p

(4.43)p

£15.3m

£14.9m

£26.0m

Develop our value
driving markets
• Strong revenue (16%) and EBITDA (£2.2 million) growth in India

Take a different approach
to culture
• Creating time to listen in our Global Conversations with

despite COVID-19 restrictions in market.

• Consistent growth in Turkey through 15 local-market leading
partners delivered through a multi-product/channel strategy.

• We are now well established as a Managing General Agent (MGA)

colleagues, and adapted our culture to support colleagues
through the pandemic.

• Our nimble culture enabled us to move call centre operations

across the Group to home-working environments.

in the UK delivering and growing revenue.

• Launch of Learn More, Be More initiative to ensure colleagues

• Renewal performance across key markets has maintained in line

with expectations.

• Focused cash and Group resources on core value driving markets.

can be the best versions of themselves.

CPPGroup Plc Annual Report & Accounts 2020

At a glance

Our business
at a glance

CPP Group operates a well-balanced product portfolio
across a number of established markets, but with one
shared purpose – to reduce disruptions to everyday life
through the creation and management of insurance and
assistance products and services.

What we offer

…to our business partners
Source, create, distribute and manage a broad range of
insurance and assistance related products and services that
enrich the value of their core product lines.

…to our 11m customers
Products that remove hassle and provide convenience,
reassurance and control when customers lose cards, personal
details and keys or when appliances, phones and electronic
devices break.

Group revenue £141.1m

Card Protection
£52.0m -4%
Provides emergency support
if cards, keys and phones are
lost or stolen.

services and auto cover.37+4+24+12+16++7++

Health & Wellbeing
£22.5m +71%
Health check assessments,
online doctor consultations and
discounted medical, pharmacy
and dentistry services.

Device & Payments
Insurance
£33.8m +26%
Phone insurance, mobile
payment insurance and
virus protection.

Cyber & Identity
£5.3m +3%
Personal and SME identity and cyber
risks protection.

Extended Warranty
£17.2m -32%
Comprehensive support for
appliances through regular services,
repairs and protection.

Other
£10.3m +50%
Market specific products such
as travel disruption cover, Business
Process Management (BPM)

CPPGroup Plc Annual Report & Accounts 2020

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

Key performance indicators

Live policies
11.7m +11%

Annual renewal rate
68.9% +0.2%

Cost/income ratio1
51.6% -4.5%

11.7m

10.6m

8.2m

68.9%

68.7%

70.6%

51.6%

56.1%

60.3%

Performance
The live policy base has increased by 11% in
the year due to growth in our Indian market,
particularly in one-time point-of-sale policies,
along with increases in our new UK business.
This has been partly offset by the continued
reduction in the size of our UK and EU Hub
renewal books.

Performance
The annual renewal rate for 2020
has increased by 0.2 percentage points
due to an improving rate in our growing
Indian renewal book. This has been mostly
offset by the negative mix impact from the
growing Indian book which typically renews
at lower rates than our diminishing UK and
EU renewal books.

Performance
Our cost/income ratio has decreased
4.5 percentage points year on year due to
growth in India which has a comparatively
low cost base (excluding commissions)
and a reduction in central costs.

1. Cost of sales (excluding commission) and administrative
expenses (excluding depreciation, amortisation and
exceptional items) as a proportion of revenue.

EBITDA margin
5.1% +1.1%

Revenue from major products
£141.1m +2%

5.1%

3.9%

3.6%

£141.1m

£138.4m

£110.1m

Performance
Our EBITDA margin has increased by
1.1 percentage points year on year reflecting
an improving margin in Ongoing Operations
and reducing central cost base.

Performance
Revenue from retail assistance policies has
increased by 2% year on year, the rate of
which was impacted by COVID-19 in Q2.
Non-policy revenue has increased by 20%
reflecting further progress with Globiva and
new claims handling services in the UK.

Retail assistance

Retail insurance

Packaged and wholesale

Non-policy revenue

APM glossary on pages 93 and 94

Where we are

UK & EU Hub
The UK is our longest-standing market and continues to innovate through repurposing as an MGA.
The UK and our European markets operate well-established Card and Identity Protection books
of business with a focus on driving value through product enhancements and high-quality
customer service.

Turkey
A strong multi-partner, multi-product business
with a growing reputation for local partner
innovation and cyber protection products –
helping us to win multiple new contracts in 2020
and deliver a strong trading performance.

Read more on pages 12 and 13

CPPGroup Plc Annual Report & Accounts 2020

Investment case

Reasons to invest
in CPP

Customer and
revenue growth is
strong and we expect
this to continue
driven principally by our Indian business
but also benefiting from increasing scale
in Turkey and the UK. Customer numbers
have grown from 4.3 million at the end
of 2016 to 11.7 million in 2020 and our
existing partnership base gives us access
to over 200 million potential customers.

Our partners are
major global
companies
for whom we create products that brings
them ancillary revenue streams, profit and
customer loyalty; as well as delivering
highly-valued services to their customers.

Profits will
increase further
particularly in India
on the back of further successful products
like LivCare, growth in Globiva and building
economies of scale in our other territories.
Operational efficiencies and cost savings
have been realised through consolidation
of our European businesses.

Partnerships

We are a trusted and
low complexity option
for partners to drive
innovation and
additional revenue.

>60
business partners

Our products are integrated
into the point of sale of
partners’ core products
improving relevance
and reach.

>40
service provider partners

Market trends show an
increasing demand for
partnerships within banking
and insurance sectors to fast
track innovation whilst they
focus on their core offering.

CPPGroup Plc Annual Report & Accounts 2020

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

Increasing cash
generation from
growth markets
and well managed
back-books.
Strong net cash position at the end of
2020 of £21.9 million is augmented by
profitable growing businesses in India and
Turkey along with reliable cash generation
from the legacy UK and EU back-books.

Our effective tax
rate is expected
to reduce through
2021/2
and begin to normalise as profitable
markets continue to progress, losses
diminish in territories where we have been
investing for growth in recent years and
central costs continue to be closely
controlled. Historically no tax benefit has
been available to CPP in relation to the
start-up losses incurred by our investment
for growth projects.

The Group’s capital
allocation strategy
balances the
financial health of
the business, the
ongoing requirement
for investment into
the business and
returns to
shareholders.
The Group has not paid a dividend since
2011. The last five years have been
characterised by a substantial restructuring,
repositioning and transformation of the
Group in order to return the business to
growth. With a healthy balance sheet and
lower levels of investment spend now being
required, the Board views the resumption of
dividends as both timely and appropriate as
well as reflecting the wider ambition of the
Group going forward.

Proven track record
of growing long-term
partnerships with major
brands in our local
markets, providing
access to 200 million
potential customers.

CPPGroup Plc Annual Report & Accounts 2020

Partnerships

Our strategy

Business strategy

We will focus on adding new partners while strengthening our
relationships with existing ones, and owning more of the value chain
to further optimise our margins.

Focus on
partner needs

Create advantages
through innovation

Extend relationships with partners to maximise
opportunities for product diversification and increase
retention of partners and customers.

Our progress in 2020
• Widened product portfolio with existing partners, the most

notable of these was in India with the LivCare product generating
further impressive sales through Bajaj Finance Ltd (Bajaj).

• Extended our product portfolio in Turkey to appeal to additional

segments of the DenizBank customer base.

• Widened the coverage of our Card Protection product in India,

Turkey and Spain.

• Expanded our partner offering in the UK to include claims

handling services for the RAC.

Priorities for 2021
• Focus on business partners for acquisition and servicing.

Broaden our product portfolio and improve our
customer experiences.

Our progress in 2020
• Deployed a new digital claims journey in India reducing claims
handling times and driving improvements in the customer
experience and internal efficiencies.

• Switched to a cloud-based telephony servicing platform in the UK.

• Launch of new fully digital cyber and travel products in the

Turkish market opening new product and channel opportunities.

Priorities for 2021
• Increase our participation in growing categories and channels

through investing in product development.

• Increase usage of digital channels for in-life servicing and claims

handling to drive further product engagement and increase retention.

• Launch of new technology platform in India further modernising

• Focus on robust governance and assurance frameworks.

our service delivery and connectivity with partners.

• Further partner diversification to balance Group portfolio.

CPPGroup Plc Annual Report & Accounts 2020

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

Develop our value
driving markets

Take a different
approach to culture

Prioritise resource allocation towards markets that provide
the best opportunity for growth and strong returns.

Our progress in 2020
• Maintained service to all customers, across our markets,

throughout lockdown whilst transferring customer service
colleagues to home working.

Invest in our people and our culture to grow our business.

Our progress in 2020
• Global Conversations with colleagues to understand the wider
impact of the pandemic, giving us a platform to define new
adaptable and productive working practices.

• Invested in our local leadership teams to focus on culture and

• Closure of our small Southeast Asia office to focus resource

behaviours to drive performance.

on profit generating markets.

• Focused resource into our UK new business which has firmly

established itself as an innovative UK MGA.

• Launch of our ‘Learn More Be More’ initiative – a space created
for our people to explore and utilise to help them be the best
version of themselves.

Priorities for 2021
• Own more of the value chain in key markets to increase margin

and differentiation.

Priorities for 2021
• Develop the ‘CPP Next Generation’ initiative, re-establishing how
we do business and how we work as a company to face the future.

• Reprioritise sales channels in Spain away from expensive

• Launch a new peer support programme ‘Home support’ to

telemarketing to generate profitable returns.

• Focus on serving existing customers from a lower cost base in our

understand the positive impact colleagues can have to be there
for their peers to discuss professional or personal issues.

Mexican market where new business activity has been less successful.

• Continue to promote diversity, inclusion and wellbeing initiatives.

CPPGroup Plc Annual Report & Accounts 2020

Our business model

Creating value for
all our stakeholders

Delivering large-scale distribution partnerships to create value
for all our stakeholders.

We are driven by
Our purpose – To reduce disruptions
to everyday life

We are guided by

We create and
manage products
and services

Our values
Our values and progressive culture enable us to innovate and build
long-term relationships with partners and customers.

Partner-led design
Our decentralised operating model enables us to apply our local
market know-how to offer tailored propositions and flexible
commercial models to our partners.

Our partners and mutual customers
Our local market experts are driven by our partners’ and customers’
needs for value through protection, reassurance, convenience and
the removal of complexity.

Customisation and aggregation
We bring propositions to life through contracting with a wide range
of market leading service, technology, lifestyle and insurance providers.

Innovation
We use our innovation capabilities to bring together, customise
and manage products from our service providers.

Distribution
We see most success when our products and services are offered
at point-of-sale for our partners’ core products.

Effective governance
A strong Group governance framework provides oversight and
support to our markets including a robust decision making and
risk management processes.

Managing the customer experience
To ensure we are available when customers need us, we look
after the design and implementation of the end-to-end
customer experience.

Read our focus on India on pages 12 and 13

Read our focus on Turkey on pages 16 and 17

CPPGroup Plc Annual Report & Accounts 2020

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

The value
we create

Customers
Protection of day-to-day assets.

Assistance and peace of mind.

Preventing and reducing disruptions and financial losses.

11.7m

customers

Business partners
Augment core products to enhance customer loyalty and ancillary
revenue streams.

A trusted single brand to manage products, servicing
and third party services.

Valuable MI & data analytics.

10%

increase in partnerships

Colleagues
A clear purpose at work and a commitment to the protection
of our colleagues’ professional and personal wellbeing.

78%
of colleagues enjoyed regular contact with their local
teams and the International Support Centre (ISC) whilst
working remotely

Over a third
of colleagues took part in our Global Conversation

Shareholders
Strong financial position and cash flows to deliver on strategy.

Resource concentration in markets that deliver profitable returns.

25 pence

per ordinary share final dividend proposed

Read our investment case on pages 6 and 7

CPPGroup Plc Annual Report & Accounts 2020

How we generate
revenue

Retail
Products and services are sold as an ancillary offering alongside
a partners’ core product. Customers pay monthly or annual
premiums to CPP and we pay commission to our partners. These
can be one-time revenue streams or policies that will convert to a
renewal. Our renewal books provide reliable revenue streams with
lower associated acquisition costs.

Wholesale & non-policy
To drive differentiation and loyalty our products are embedded within a
partners’ core product where the partner pays CPP a fee per user.
Non-policy revenue includes our growing BPM services.

Business review

Focus on

India

CPP India’s CEO, Deepak Matai,
talks about how the Indian
business responded to the
pandemic to deliver a record
breaking year.

revenue

£108m
16%

revenue growth

49%

EBITDA growth

CPPGroup Plc Annual Report & Accounts 2020

The financial performance
indicates that the business
performed well. Can you
summarise the impact that
the pandemic is having and
how you have responded?
We started the year strongly with revenue being over 40% higher
in Q1 compared to 2019 but from late March we felt the impact of
a full lockdown in India which hit our access to partner point-of-sale
channels and our own tele-marketing structure.

We have a resilient model with our book of renewing customers
growing and renewal rates continuing to hold up well. This contributed
to a strong cash balance and resource to fund investments in our
partnerships, product capabilities and digital experiences during the
year so that we could respond to the market challenges in the
optimum way.

During Q2’s strict lockdown we focused on controlling variable costs
and stayed close to our partners – listening to their challenges and
innovating on their behalf as they concentrated on core business
lines. We developed new features for SBI Card (SBI) customers –
focusing on entertainment and tele-health features to enhance
customer value and drive increased premiums per sale. It was this
focus on cash conservation and our partners, combined with our
local market expertise, which put us in a good position to see the
business return to pre-COVID levels in Q3.

We saw a similar picture in our BPM company, Globiva. At the
start of the crisis the business had over 2,000 billable seats which
decreased to under 1,000 during Q2/Q3. During this time Globiva
focused on reducing costs and investing in new partnerships – the
business has now finished the year back over 2,000 seats and with
4 new partners which puts it in a good position for 2021.

I am immensely proud of our response to the pandemic as it
sparked innovation, even closer relationships with our colleagues
and partners and certainly helped to drive the excellent recovery
we have seen in the business with Q4 achieving record-breaking
sales and increases in average premiums.

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

Despite a robust performance,
what hurdles remain and how
might you look to mitigate these
to ensure a positive 2021 outlook?
We continue to face challenges from the macro-economic environment
such as increasing inflation and unemployment rates, a drag on
consumer spending and the potential of future lockdowns. We will
focus on mitigating these risks through improving the customer
experience and product value to ensure the best possible renewal rates
which, in turn, provide an ongoing and dependable source of revenue.
In 2020, we did this through improving our claims process within our
FoneSafe product by introducing pick up and drop services to enable
easier claims and increased control of the proposition. We have
improved our digital experiences through the launch of an online app to
manage customer servicing and claims experiences. This digital service
will also have an ongoing cost benefit.

We will look for opportunities to increase our ownership in the value
chain to improve our margins and provide a wider service to key
partners. As well as developing a technology platform to widen the range
of mobile-first and digital sales and servicing channels to open up access
to new partner channels and new customer segments. We will continue
with our strategy of developing multi-product partnerships with new and
existing partners to drive diversified business growth.

With that in mind, what are
your longer-term aspirations
for CPP India?
Our aim is to be the largest B2B products and service aggregator
across financial services and telecoms sectors. To be highly valued
by our customers and partners for providing tailored solutions and
generating reliable ancillary revenues. Our path to do this is to
package and manage micro-insurance offerings from multiple
providers alongside our headline propositions of Card Protection,
FoneSafe, Asset Secure and LivCare.

Our method is quite simple, but hard to replicate. We will continue to
deeply embed ourselves in our partners’ business and develop multi-
product relationships, a model that has served us so well with Bajaj and
one that we are making inroads in replicating with partners such as SBI
and Tata Capital who have recently added LivCare to their offering.

Deepak Matai
Chief Executive Officer, CPP India
23 March 2021

Revenue and customer growth

5
1

2
1

0
3

6
4

9
5

5
6

2
8

0
0
1

5
9

8
0
1

2016

2017

2018

2019

2020

Customers (m)

Revenue (£m)

Year in review

Q1
• 1.9 million policy sales in Q1 (+43% on Q1 2019).

• £31 million revenue in Q1 (+74% on Q1 2019).

• Award for Best Risk Management Framework and Systems’
award in the Emerging Companies category at the annual
CNBC-TV18 India Risk Management Awards for 2020.

Q2
• Sales reduced to less than 30% of normal levels as access

to point-of-sale channels in retail stores closed.

• Focus on variable cost controls.

• Focused on engagement with partners.

Q3
• Developed new product line, Credit Protekt for launch

with Tata Capital in 2021.

• Increased value to customers with the addition of

entertainment features and online doctor support into
Card Protection product for SBI Card.

Q4
• Performance returns to pre-COVID levels with a record-

breaking 750,000 sales in one month.

• Launched our claims app for FoneSafe to improve the

customer experience and drive efficiencies.

• Ended the year with 9.6 million customers.

• 2.2 million policy sales in Q4 (+12% on Q4 2019).

• £36 million revenue in Q4 (+22% on Q4 2019).

CPPGroup Plc Annual Report & Accounts 2020

Business review continued

Focus on

CPP UK’s MD Michael Whitfield
talks about how the UK business
has changed and how building a
Managing General Agent (MGA)
business will drive future success.

241%revenue growth
0.2m

customers

CPPGroup Plc Annual Report & Accounts 2020

The UK is a well-established
market for CPP but in 2018
you announced a relaunch.
How has this progressed and
what are the key components
of the business now?
CPP UK has developed into a well-established MGA business from
a standing start in just two years. We have won and launched
new partnerships in the year including RAC and Gallagher. This is
complemented by a strong 2021 pipeline, with inbound approaches
from prospective partners which is a significant change in momentum
for the business.

We accelerated this growth through the acquisition of Business &
Domestic Insurance Services (B&D) in late 2019 which has held-up
well throughout the pandemic. The B&D product portfolio is now
fully integrated, enabling us to offer a full suite of ancillary products
to be sold alongside motor, property and SME insurance. In addition,
we have developed a range of innovative, award winning cyber
products and services.

Another vital component is our legacy Card and Identity Protection
business, where we have a strong heritage in claims handling and
customer service excellence. We have taken proactive action to
ensure that we continue to deliver value to our existing customer
base through increased engagement, simplification of our claims
process and contacting certain cohorts of customers to ensure they
are still receiving value from the product. This has led to a reduction
in legacy revenue and profit delivery in line with our expectations.
In the medium-term gross written premiums from the MGA business
will increase, demonstrating the gradual shift in the business model.

The pandemic has accelerated our digital innovation. This included
relocating our contact centre in York to our Leeds headquarters,
alongside full virtual working arrangements and a switch to a digital
multi-channel customer servicing platform to help modernise and
widen our customer channel options.

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

What are the longer-term
aspirations for the CPP UK
business and what steps are
being taken to accelerate success?
Our ambition is to become the ‘go to’ MGA and ancillary product
provider. We intend to own a major part of the value chain,
including taking some of the insurance risk, which will increase our
speed to market. Our claims handling expertise, growing partnership
network and product development capabilities will help us towards
realising the vision.

We will amalgamate our legacy and new UK business activities
to enable us to capitalise on the expertise of both teams and drive
forward a combined UK business which is a significant contributor
to Group revenue and profit. This new structure will serve to protect
our regulated back book income and processes within the legacy
business whilst also giving the new business team a more solid and
scalable infrastructure in which to grow new business; advancing our
reputation as the one-stop shop for ancillary products and services.

Michael Whitfield
Managing Director, CPP UK
23 March 2021

What our customers have to say

Europe

“ I just wanted to say thank you for all
your help getting our key replaced. It’s
all sorted and everything is as it should
be. A very professional and prompt
service. Appreciate it.”

(RAC customer)

Our markets in Europe are focused on maximising product
value for our long-standing Card Protection renewal customers
to ensure reliable recurring revenues. We believe our markets
in Europe, particularly Spain, have potential to grow and we
will implement a new operating model in 2021 to separate
our legacy and new business elements. New business will
be refocused to different sales channels and away from
telemarketing channels, which have a high upfront cost, to
generate a quicker and more reliable return on investment.
The repositioning of the business will also lead to additional
cost efficiencies.

CPPGroup Plc Annual Report & Accounts 2020

Business review continued

Focus on

Turkey

It has been a difficult year
for most businesses and global
economies. However some of the
challenges faced in Turkey have
been unique. How has performance
in your market fared?
It is true that we have faced some of the worst economic conditions
seen for over 20 years, with the Turkish lira depreciating significantly,
inflation hovering around 20% and a global pandemic. Despite all
these pressures we have achieved our original pre-pandemic targets
and grew our retail volumes by 15% with renewal rates holding at
around 56%.

The pandemic presented opportunities and due to the efforts from
my team, the collaboration we enjoy with partners, and the support
we receive from the Group, we were able to deliver a number
of product extensions. This included the launch of the first travel
parametric insurance product in the market and a new cyber product.
The most notable product extensions were the adaption of our
long-standing Card Protection product line to include mobile payments
protection and a customised version of the product adapted for the
agricultural market which we launched with DenizBank in October
(achieving 40,000 new customers by the end of the year).

In the midst of all this innovation, I was heartened by CPP Turkey
being recognised as a ‘Great Place To Work’ by the GPTW Institute
and by the response of our contact centres that adapted our
systems and processes to work from home whilst delivering
reduced levels of agent attrition and improved sales conversions.

Selnur Guzel, our CPP Turkey CEO,
discusses how the team have
delivered on their plans through
a dedication to business partners,
innovation and customer service.

9%revenue growth
97%

EBITDA growth

0.6m

customers

new partners

CPPGroup Plc Annual Report & Accounts 2020

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

What are the strengths of CPP
Turkey that puts it in a position
to withstand further volatilities
in the market and capitalise
on opportunities?
Nothing is more important to us than delivering high-quality service,
technology and customer-driven experiences to business partners.
This firmly held belief helps us to nurture and protect our long-
standing strategic partnerships with major brands such as AXA,
Vakifbank, Denizbank and Garantibank whilst creating new
opportunities with Türkiye Sigorta, Halkbank and Akbank.

Average length of partnerships

We can only maintain long-standing partnerships through the
strength of our service and ability to innovate. The decentralised
model that CPP operates helps us to innovate in exactly the
way our partners and the market require us to – the launch
of the agricultural product targeted at the farmers community
is testimony to that.

Increasingly our differentiator is creating digital-led innovations
for partners and it is setting us apart in a competitive market.
We further developed our credentials in this space through
securing deals with Ray Sigorta as well as DenizBank and AXA
Sigorta for our proactive dark web monitoring service, Cybercare.

In addition we developed a parametric travel insurance
product, Travel Smart, for insurance provider Anadolu Sigorta.
The product was selected as winner in the Best Technology
category at the Turkey Payment System Magazine – building on
our previous success at the same event in 2019 where we won
the ‘Most Innovative Product’ for our CyberCare product. This is
reinforcing our reputation as the key partner in the Turkish
financial services market and is paving the way for a strong
pipeline for 2021 and beyond.

Selnur Guzel
Chief Executive Officer, CPP Turkey
23 March 2021

CPPGroup Plc Annual Report & Accounts 2020

Business review continued

A culture driven from the

Centre

At the immediate outset of the pandemic this led to an online
discussion forum being created to ensure colleagues could stay
connected and supported from the centre despite working remotely.

We conducted a major listening exercise, comprising of small workshops
led by senior leadership plus online polls and conversations to consider
ways the business could adapt over the long-term to reflect new
outlooks created by the changing world around us.

Principles for the future
Using the overarching themes raised by colleagues, teams within
the ISC developed a set of principles that outline future ways of
working and expectations.

Each principle affirms the business’ thinking on areas such as
flexible working, inclusivity, staying connected, wellbeing, equality
and development. They are all underpinned with the commitments
required of both colleagues and managers.

A series of new initiatives have been rolled out to bring the principles
to life. These include launching a peer support network to give all
colleagues access to advocacy and advice in their professional or
personal lives; a new online peer recognition tool to celebrate the
day-to-day achievements of our people; a series of video tutorials to
improve the separation between work and home life; and a suite of
guidance and advice covering five key areas of wellbeing – physical,
mental, digital, social and financial – for colleagues to access and
build their knowledge.

Justine Shaw
People & Culture Director

Adapting our culture to new perspectives
At CPP we know that the right people-centric culture, focusing
on the behaviours we value, builds a successful and sustainable
business. A good culture enables good governance, when people
feel safe to speak up and share insights and issues.

During 2020, this was exemplified by work carried out to respond
to the differing impacts on colleagues created by COVID-19 and
the huge social movements for change that arose during the year.

What our colleagues told us about the impact of the pandemic

People want more
choice to work in a
hybrid way – 87% of people
that took part in a poll said
that they would like to carry
on working from home but
go to the office when they
need/want to

People missed peer to peer
connection with colleagues
and those opportunities for
informal chats and moments
for spontaneous
collaboration/inspiration

Colleagues expressed an
ambition to tackle social
issues that affect everyone
and be supported through
the process

Colleagues felt that we’ve
shifted our mental models
from the belief that we need
to be in an office from 9–5 to
be productive to one that is
output based

People were enjoying a
better work/life balance.
“I only used to see my 9 year
old for 45 mins in the evening.
I’m now seeing her when she’s
awake and that is brilliant.”

CPPGroup Plc Annual Report & Accounts 2020

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

ISC

• Technology

• Business change

• Finance

• Marketing

• Legal

• Insight

• Internal Audit & Risk

• Communications

• Product development

• Culture

Based in Leeds, UK, our ISC sets the overall direction and strategy
for the Group, provides oversight and control, technology solutions
and nurtures the Group’s culture.

Technology
Our central technology team are key to the delivery of our overall
business objectives. They enable us to operate flexible and secure
systems across multiple geographies.

Key achievements in 2020 included managing the transfer of
customer data for India and Turkey to local servers to comply with
new regulation in these markets. We have also completed a series
of integrations with key partners in value-driving markets which
improve data quality, collections and renewal rates. These integrations
further embed CPP within our partners’ core processes.

In addition, we have moved to a cloud-first approach with
programmes of work underway to deliver corporate infrastructure
and back-end customer databases to cloud technologies.

We have made solid progress in the delivery of a new technology
platform for India. We have recruited a development team in India
that will look to launch the initial platform towards the end of 2021.
Our priority is ensuring this platform is developed in a way that
supports growth of the Indian business and reduces the overall
cost of IT. The structure of this platform can be easily transferred
to our other markets in the future.

Product and user experience
Our central product team work closely with the local market teams
to share best practice and provide challenge and expertise to hone the
execution in market. In 2020 we have seen a number of new products
launched across the Group all of which fit into the wider product
strategy and deliver on our core purpose.

The team manage the Group’s own digital products working with
the markets to drive distribution. This will be an area of greater
focus in 2021 as we see greater potential for these products
to deliver differentiation and growth across the Group.

The central team have made good progress in digitising key
elements of our customer journeys and experiences across
a range of products and markets in the Group.

Finance and assurance
Our central assurance team ensure that we have oversight of
regulatory changes and potential impacts across the markets.
This is combined with a robust risk management programme using
a common assessment methodology providing greater granularity
of detail on individual risks and increased transparency of scale
of threat levels and their trend direction.

Our central finance team have had a key role to play during 2020
managing available cash balances across the Group and ensuring
strong cost control measures are in place to mitigate against the
reduction of income during the early days of the pandemic.

CPPGroup Plc Annual Report & Accounts 2020

Chairman’s statement

CPPGroup Plc Annual Report & Accounts 2020

I am pleased to present my first
report as Chairman, having joined
the Board in mid-November and
assumed this role at the end of
January 2021.

In the time that I have been involved with the business I see evidence
of a strategy evolving, as well as products, services, partners and
operating capabilities that I am confident will generate growth in
the next few years, as well as satisfactory returns to shareholders.

A year ago, few people had comprehended the implications of
the COVID-19 pandemic and its impact on companies and their
customers. It is to the considerable credit of the management and
our people that, having suffered from the impact of COVID-19,
particularly in the second quarter, the Group was able to recover
and operate so strongly in the latter part of the year; a performance
that provides encouragement when considering the outlook for 2021
and beyond.

At the time of writing, we remain in the grip of the pandemic,
though news regarding vaccines provides hope that a return to a
more normal environment will take place over the next few months.
In the meantime, we remain focused on the health and safety of our
colleagues and we continue to follow government guidelines in each
of the countries in which we operate.

Results
The operational progress is reflected in the results considered in
this Annual Report. Revenues increased to over £140 million, driven
by a growth in customer numbers and I am also pleased that, in
the current climate, we continue to add new partnerships such as
Gallagher in the UK. Combined with improved operational efficiency,
this has resulted in EBITDA of £7.2 million (2019: £5.4 million). CPP
retains a strong balance sheet, with cash amounting to £21.9 million
as at 31 December 2020 (2019: £22.0 million).

People
These achievements could not have been delivered had it not been
for the commitment and fortitude of our colleagues throughout the
organisation. On behalf of the Board, I offer my thanks to all of them.

The Board has seen several changes with Simon Thompson joining
as a Non-Executive Director in June, prior to my own appointment in
November. After the financial year ended, Sir Richard Lapthorne retired
as Chairman, a role he had held since May 2016, and Nick Cooper
also left as a Non-Executive Director at the end of February. I would
like to thank them both for their service to the Company and to wish
them well.

Dividend
I am pleased to announce that the Board is recommending the
re-introduction of a dividend for the first time in almost ten years.
This reflects confidence in the future of the Group and the prospect
of rising profitability and cash generation. The proposed final
dividend for the year is 25 pence per ordinary share.

Whilst wholly contingent on financial results, the economic climate
in the countries in which we operate and there being no material
adverse and unforeseen developments, it is the Board’s intention
to increase the dividend paid over the next few years.

David Morrison
Chairman
23 March 2021

Chief Executive Officer’s statement

2020 was a year characterised
by robust financial and
operational progress despite
the disruption caused by
the COVID-19 pandemic.

We are growing the business and building value for shareholders
and, while the pandemic meant we had to adapt rapidly to new
ways of working as well as with changing consumer behaviours, our
organisational culture and focus on forging long-lasting relationships
with our partners meant we were able to navigate its challenges,
grow and end the year a stronger business.

Revenues for the year were up 7% to £141.1 million, underpinned
by growth in our customer base of 11% to 11.7 million. This
performance bodes well for what we can achieve as trading
conditions begin to normalise. India, the Group’s main market,
was again the major contributor after a stronger than anticipated
recovery in the second half, supported by a steady performance
in our Globiva and Turkish operations and from a solid performance
in the renewal books in the UK and EU markets.

The pandemic will have far-reaching impacts on the global economy.
We will need to monitor this closely, and further work will be done
from an organisational perspective to position the business for
sustainable and profitable long-term growth, but CPP is a resilient
and efficient business capable of delivering against the most difficult
of backdrops.

With the hard work that has gone into transforming the business
in recent years, signs of recovery from the pandemic across several
of our markets, favourable long-term market trends and continued
traction across our growth markets, there is a sense of optimism
in the business.

Crossing an inflexion point
In last year’s results, we reported that adjusted EBITDA
from our Ongoing Operations was on a par with
EBITDA from our Restricted Operations. The former
has now surpassed the latter, marking the moment
where the Group has overcome the decline in its
UK renewal book and is now on a growth
trajectory underpinned by the progress being
made in India. Our legacy business remains
an important part of the Group, but the
key measures of value from a profit and
cash perspective now lie within our
ongoing business.

Our operating model across
the Group is based on strong,
self-sustainable and largely
independent country businesses
with vertical integration of
people and systems, overseen
by our central team from a
governance, assurance and
finance perspective.

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

CPPGroup Plc Annual Report & Accounts 2020

Chief Executive Officer’s statement continued

Crossing an inflexion point continued
India
India remains the standout performer. While second quarter sales
activity fell to less than 30% of normal levels because of lockdown
conditions, we saw a better-than-expected return of partner and
consumer confidence in the second half, leading to sales levels
through Q4 surpassing the previous year. Alongside the resurgence
in demand for protection for mobile phones and household
appliances, we also saw encouraging uptake of our products
tailored to the largely untapped rural market.

Globiva, the Indian business process management company in
which we own a majority stake, saw a similar uptick in the second
half as government restrictions eased. The number of billable
seats is back up to over 2,000, having fallen to a low of 975
during the local lockdown, from a high of 2,000 in the first quarter
pre-pandemic. In August, the founders of Globiva exercised their
right to repurchase 10% of the company’s share capital, reducing
CPP’s controlling interest to 51%, demonstrating the confidence
they have in the prospects of the business.

The long-term structural drivers around the growth of the Indian
middle class and their associated spending patterns remain intact.
These factors alongside the fact that our two main partners in India,
Bajaj and SBI, have outperformed the rest of the market, will ensure
that CPP remains well-placed to benefit from this expanding
consumer segment.

Turkey
In Turkey, we benefited from the diversity of our partner base and
product range in the period, faring well overall despite the impact
of the pandemic. We continued to expand our existing relationships,
most notably with Denizbank, and explore new ways to grow our
presence in the market through signing new partners and
introducing new products and services into the sector.

UK
We continued to make progress in the year in establishing our
new business in the UK. The integration of B&D is now complete.
We have made encouraging headway in signing new partners
in our home market, and the focus for 2021 will be on building
those opportunities.

We have increasingly seen the new and legacy businesses in the UK
complementing each other and in 2021 we will be delivering greater
synergies and efficiencies between them under a single business
structure and leadership.

Operational changes
In line with our commitment to drive operational efficiency across
the Group and to maximise value from our assets, as previously
announced we closed our small Southeast Asia office in May. This
activity has continued in Q1 2021 where we have further restructured
our EU Hub to provide operational focus and efficiencies and ceased
our new business efforts in Mexico where we will instead focus on
running the renewal book efficiently with a smaller team. Having
built the parametric platform along with an innovative product set
and strong pipeline the Blink founders have decided it is the right
time to look to new opportunities away from CPP. We will bring the
Blink operations under central management to further leverage our
expertise in distribution and drive growth in the parametric product
set. In addition, in Q2 2021 we intend to close our Malaysian
operation where the customer base has reduced to a level that

is economically unviable. We will continue to apply strict resource
allocation methodology to our operations, ensuring we focus
investment in the areas of the business that have the strongest
prospects for delivering strong, sustainable and profitable medium
to long-term growth.

Growing and strengthening our partner base
The fact we were not only able to maintain our partner base
but grow it demonstrates the value our business partners attach
to our services, even as their own priorities shifted and evolved
in response to the pandemic.

As the key route to market for our products, our partners are at the
heart of everything we do – the success of the business hinges on
our ability to understand their customers’ needs and provide products
and services that meet them. Our strategy is to widen our addressable
market by adding new partners while strengthening our relationships
with existing ones, and expanding the products we provide to them.
The last year has both tested those relationships and strengthened
them, as we have been able to respond to the impact of the
pandemic on their businesses and customers.

In India, for example, we further strengthened our relationships
with Bajaj and SBI, two key regional partners. We have worked
closely with Bajaj through the pandemic which helped drive the
recovery in second half, and with SBI we have tweaked our product
offering to better suit the needs of their customers during this
health crisis. Both Bajaj and SBI are excellent examples of large-scale
businesses with which we have established strong partnerships and
have incrementally built revenues over time.

We signed partnerships with Vakifbank, the third largest bank
in Turkey, Akbank and Türkiye Sigorta, a state-owned insurance
company, all of which we expect to develop in 2021. These and
other new partners reflect the very healthy levels of interest we
are seeing in Turkey from financial services businesses looking
to add additional revenue streams and bolster their competitive
advantage through complementary products and services.

In the UK, we signed several new partnerships including Gallagher
and RAC. Being trusted by organisations of this calibre is a valuable
endorsement of the quality of our offering in our home market, and
we look forward to continuing to deepen our relationships with them
while developing other opportunities elsewhere.

Our culture
Our people are critical to the commercial success of the business
and we have worked hard in recent years to bring everyone in the
Group closer together and cultivate a supportive and inclusive culture
built on trust and clear communication. With the sudden and widespread
shift to remote working that took place in the first half, I have no
doubt that the investment that has been made in our culture was
a key factor in the success of the transition and the high levels of
productivity and service levels that were subsequently achieved.

Our focus in 2020 has been on protecting the wellbeing of our
colleagues around the world. With most having worked from home
for the majority of the year, we have emphasised the importance
of connection and collaboration, and measured performance
against output and contribution rather than hours at a computer.
Our approach is epitomised by our global conversation initiative,
in which we spoke to colleagues from around the world to find out
what is important to them, what their concerns are and how we can
help them cope with change. From there, we were able to formulate

CPPGroup Plc Annual Report & Accounts 2020

new ways of thinking and innovating that will be of benefit to the
Group for years to come.

I would like to take this opportunity to thank our colleagues for the way
they have responded to the pandemic and for their hard work and
dedication in driving the business forward in challenging circumstances.

Financial performance
Group revenue increased by 7% to £141.1 million (2019: £138.4 million)
reflecting the strong performance in our key growth market, India,
both in our core business and in Globiva. This was supported by
a resilient performance in our Turkish operation and the consistent
performance of our renewal portfolios in the UK and EU. This
revenue performance was underpinned by continued growth in
our customer numbers, which increased 11% to 11.7 million
(2019: 10.6 million) and a renewal rate of 68.9% (2019: 68.7%).
The growth in our customer base and the renewal rate remaining
steady, despite the impact of the pandemic, is an endorsement
of the continued customer demand for the products we create
and distribute.

Our customer base of 11.7 million comprises cohorts of customers
that are different in nature: 3.4 million are via our traditional customer
model where the sale is typically made alongside the partner’s core
product and we retain the right to renew the customer at the end of
the policy; 6.5 million are one-time point-of-sale products (for example,
sold alongside a loan for a mobile phone or a consumer durable);
and 1.8 million are wholesale customers which typically attract
a lower premium as they are offered the product by partners
as part of a larger package of services.

EBITDA has increased 49% to £7.2 million (2019: £5.4 million). The
improvement reflects growth in India along with a carefully managed
and reducing central cost base partially offset by the ongoing decline
in our UK and EU renewal books. Adjusted EBITDA, which excludes
losses from investments for business growth projects, has increased
to £10.3 million (2019: £8.7 million). Operating profit has increased
to £3.3 million (2019: £1.6 million).

Profit before tax has increased to £2.0 million (2019: £1.1 million)
however, our effective tax rate (ETR) remains high in 2020 at 179%
(2019: 183%) which is driving the reported loss for the Group of
£1.6 million (2019: loss of £1.0 million). We expect our ETR to
reduce to less than 100% in the short to medium-term as our
loss-making operations reduce their losses through either business
development or restructuring activities, such as those already
undertaken in 2021, and volatility from one-off charges is lowered.
The ETR will remain higher than the UK statutory rate of tax due
to the jurisdictions in which profits are generated.

Our Restricted Operations are in natural decline. As announced in
last year’s results, we decided to take more proactive action with
certain elements of the historic renewal book in the UK which reduced
renewals in 2020. As a result, and as expected, revenue and EBITDA
in this segment were 24% and 42% lower than in 2019 respectively.
The proactive programme with our customers will continue in 2021
which is expected to further accelerate the decline in our customer
base and revenues.

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

Current trading and outlook
During 2020, the COVID-19 pandemic presented us with
unexpected challenges. As a Group, we responded to these
quickly and effectively and as a result, we were able to deliver
strong growth in customer numbers, revenues and EBITDA,
while being mindful at all times of the safety and wellbeing
of our colleagues globally.

Although the pandemic persists, the ability to adapt and
innovate during 2020 in a variety of ways, as uniquely required
by each of the markets we operate in, gives us confidence that
we will achieve further solid progress in 2021. This is a view
supported by the trends we are seeing in the business in our
trading performance year-to-date, notably in our most
important market, India.

Our balance sheet is strong and this, combined with our
confidence in the outlook, is reflected in our decision to
recommence dividend payments for the first time since 2011.

Jason Walsh
Chief Executive Officer
23 March 2021

CPPGroup Plc Annual Report & Accounts 2020

Financial and operational review

CPPGroup Plc Annual Report & Accounts 2020

The Group’s financial
performance in 2020 has shown
good progress on the previous
year. This performance has
been achieved in the face of the
pandemic where new sales in all
of our markets were curtailed in
the early months of the crisis.
The subsequent recovery in
these markets has been solid
and is testament to the value
customers and business
partners see in our products.

Revenue

Gross profit

EBITDA1

Operating profit

Profit before tax

Taxation

Loss for the year

2020
£’m

141.1

37.0

7.2

3.3

2.0

(3.6)

(1.6)

2019
£’m

138.4

40.5

5.4

1.6

1.1

(2.1)

(1.0)

Basic loss per share (pence)2

(19.3)

(11.7)

Cash generated by operations (£ millions)

Dividends (pence)3

6.2

25.0

2.8

—

1. Excluding depreciation, amortisation and exceptional items.
2. 2019 has been restated to reflect the impact of the share consolidation
completed on 29 May 2020. Further details provided in note 3 of the
consolidated financial statements.

3. Final dividend proposed.

Overview
Group revenues increased 7% on a constant currency basis to
£141.1 million (2019: £138.4 million), with growth being driven
by our Indian market. EBITDA across the Group improved to £7.2 million
which is a 49% constant currency increase on the previous year
(2019: £5.4 million). The improvement reflects growth in India
along with a carefully managed and reducing central cost base.
These advances are offset by the ongoing decline in our UK and
EU renewal books. The Group’s adjusted EBITDA for 2020, which
excludes losses associated with business growth projects, for 2020
is £10.3 million (2019: £8.7 million). This trading progress has led to
operating profit more than doubling to £3.3 million (2019: £1.6 million).

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

As our businesses develop this is driving an improvement in EBITDA
margins through a combination of profitable growth, reduced losses
and lower central costs. We expect this trend to continue with
EBITDA margins improving in the coming years. This will be
achieved through our loss-making businesses moving into breakeven or
profitable positions in the short to medium-term, and margins being
further augmented by increasing our share of the value chain
through investments like Globiva.

Gross profit has reduced by 9% to £37.0 million (2019: £40.5 million).
As a result, our gross profit margin has reduced to 26% (2019: 29%)
reflecting the growth in our Indian business which has higher costs of
acquisition associated with sales than the UK and EU renewal book
businesses it is replacing. We expect our gross profit margins to
continue to reduce (albeit at a lower rate) in the medium-term whilst
growth is predominantly driven by India and the legacy renewal
books diminish.

As a result, EBITDA has increased to £7.2 million (2019: £5.4 million).

Depreciation charges have increased marginally to £3.5 million
(2019: £3.3 million) mainly due to Globiva’s larger operational
footprint as it continued to grow throughout 2020.

Exceptional items charged to operating profit total £0.4 million
(2019: £0.5 million) which includes £0.8 million goodwill write-off
in Blink following the impact COVID-19 has had on travel insurance
which is its primary market and a £0.1 million goodwill impairment
of Valeos. In addition, there were £0.2 million of restructuring costs
relating to the closure of our Southeast Asia operation. These costs
have been partly offset by a £0.7 million credit relating to the
reversal of historical customer redress liabilities.

The growth in EBITDA, in conjunction with the exceptional items and
depreciation charges results in operating profit increasing by 151%
on a constant currency basis to £3.3 million (2019: £1.6 million).

The cost base continues to be proactively managed with administrative
expenses, before depreciation and exceptional items, reducing by
15% in the year. This reduction follows strict controls implemented
on discretionary expenditure and the realisation of savings from
streamlining the EU Hub operation in 2019. The focus on costs will
be maintained in 2021 with further savings expected to be driven
by operational changes in our EU Hub and action being taken on
under-performing markets that continue to require central support.

Net interest and finance charges have decreased to net £nil
(2019: £0.5 million) due to foreign exchange movements. Other
gains and losses are a charge of £1.3 million (2019: £nil) reflecting
the one-time impact of cumulative foreign exchange balances being
reclassified from reserves to the income statement following the
closure of dormant overseas branches. Due to the one-off nature
this charge has been treated as an exceptional item outside of
operating profit.

Quarterly performance

REVENUE GROWTH1

Ongoing Operations

India

EU Hub

Turkey

Rest of World

Total Ongoing Operations

Restricted Operations

Group revenue

As a result, the Group’s profit before tax was £2.0 million
(2019: £1.1 million) and our loss after tax was £1.6 million
(2019: £1.0 million).

Q1
2020
£’m

74%

(20)%

35%

53%

(34)%

41%

Q2
2020
£’m

(31)%

(16)%

(5)%

12%

(27)%

(25)%

(26)%

Q3
2020
£’m

(15)%

15%

19%

(21)%

Q4
2020
£’m

22%

(15)%

21%

17%

18%

(13)%

15%

FY
2020
£’m

16%

(16)%

20%

11%

(24)%

1. Revenue growth is on a constant currency basis compared to the corresponding quarter in 2019.

CPPGroup Plc Annual Report & Accounts 2020

Financial and operational review continued

Tax
In 2020 the tax charge is £3.6 million (2019: £2.1 million) which is an effective tax rate (ETR) of 179% (2019: 183%). The high ETR
reflects that losses in our developing markets currently reduce the overall Group profit before tax to a level that is lower than the tax charges
recognised in our profitable markets. This is further exacerbated by Group policy that deferred tax assets should only be recognised when
profit forecasts indicate tax losses will be utilised in the short-term. By their very nature, our developing markets are investments for growth
and profit expectations in the short-term lead us not to recognise deferred tax assets in these markets. Whilst the overarching trend is a
reduction in losses and central overheads, the ETR continues to be impacted by the level of losses in markets which remain in development
at the end of 2020 for which we are unable to get tax benefits through recognition of deferred tax assets.

The Group’s ETR is further impacted by additional factors such as local tax rates applying to our profitable countries which are higher than
the UK corporate income tax rate of 19%. As the most profitable of our markets, India is a contributor to the high ETR with a local tax rate
of 25.2%. In total, the tax charge includes £1.7 million of Indian tax (2019: £1.2 million). The tax rates in Turkey and the EU Hub are also
higher than the UK statutory rate which further adversely impacts our ETR.

As cash is increasingly generated in our overseas markets repatriation planning to the UK is important as we re-establish a dividend policy.
In 2020, the tax charge included a provision for withholding taxes arising on dividend repatriations of £0.8 million (2019: £0.3 million).
The charge included £0.5 million provided on distributions paid in 2020 and an additional £0.3 million is provided through deferred tax
on distributions expected to be paid in 2021. The majority of the withholding taxes arise on distributions made by our Indian operations,
however withholding taxes have also been provided on expected Turkish and Italian distributions.

Adjusted ETR

Profit before tax

Tax

ETR

2020

Exceptional
items 1
£’m

1.7

—

Reported
£’m

2.0

3.6

179%

Adjusted
£’m

3.7

3.6

99%

Reported
£’m

1.1

2.1

183%

2019

Exceptional
items 1
£’m

0.5

0.1

Adjusted
£’m

1.6

2.2

134%

1. Refer to note 6 of the consolidated financial statements.

The total exceptional charges arising in the year of £0.4 million also had an adverse effect on the ETR as they were not available for tax relief.
The effect of these charges has been a reduction in profit without a corresponding tax credit. Without these one-off items in 2020, the
Group’s ETR would have been 99% (2019: 134%), which demonstrates the reducing nature of the Group’s underlying ETR.

The ETR is expected to remain higher than the UK statutory tax rate in future years as we continue to make profits in territories with higher
tax rates than the UK, provide for withholding taxes on overseas distributions and continue to generate losses in developing markets against
which we are not able to recognise deferred tax assets. However, overall, we expect a progressive reduction in our ETR as our loss-making
operations reduce losses through either business development or restructuring activities, such as those already undertaken in 2021,
distributions from overseas countries stabilise and volatility arising from one-off charges are reduced.

Dividend
The Group performed resiliently in 2020 and is confident in its ability to grow its revenue and profits going forward. In addition, CPP’s
restructuring phase is now nearing completion and the level of investment expenditure required to operate the existing business will be
on a declining trend from this point.

These factors have led to a review of the Group’s capital allocation policy and the Directors have proposed a final dividend of 25 pence per
ordinary share. The proposed final dividend is subject to approval by shareholders at the AGM and is expected to be paid on 12 May 2021
to all shareholders on the Register of Members on 9 April 2021 with the ex-dividend date being 8 April 2021.

Foreign exchange
Uncertainty in the global economy increased volatility in exchange rate movements in 2020. This has adversely impacted the reported results
when comparing to the prior year. The largest impacts have been in our Indian and Turkish businesses where the exchange rate has
depreciated by 6% and 29% respectively in 2020.

The reported results compared to 2019 include the following adverse foreign exchange movements: £6.8 million (2019: £0.1 million) within
revenue; £0.6 million (2019: £0.1 million) at an EBITDA level; and an exceptional foreign exchange loss of £1.3 million (2019: £nil)
recognised through other gains and losses.

APM glossary on pages 93 and 94

CPPGroup Plc Annual Report & Accounts 2020

Cash flow and net funds

EBITDA

Exceptional items1

Non-cash items

Working capital movements

Cash generated by operations

Tax

Operating cash flow

Capital expenditure (including intangibles)

Lease repayments

Proceeds from Globiva partial disposal

Net finance revenues

Costs of refinancing

Net movement in cash2

Net funds3

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

2020
£’m

7.2

(0.3)

1.5

(2.2)

6.2

(3.0)

3.2

(1.8)

(1.7)

0.3

0.4

(0.1)

0.3

15.3

2019
£’m

5.4

(0.5)

1.6

(3.7)

2.8

(1.7)

1.1

(3.7)

(1.6)

—

0.1

—

(4.1)

14.9

1. Exceptional items represent cash costs relating to restructuring; all other exceptional costs in the year were non-cash.
2. Excluding the effect of exchange rates.
3. Net funds comprise cash and cash equivalents of £21.9 million (2019: £22.0 million), a borrowing asset of £0.1 million (2019: £nil) and net investment lease assets of £nil

(2019: £0.2 million) less lease liabilities of £6.7 million (2019: £7.3 million).

The net funds position has increased to £15.3 million (2019: £14.9 million) which includes cash of £21.9 million (2019: £22.0 million). The
Group has generated additional cash of £0.3 million in the year with increased cash generated by operations and lower capital expenditure
being partly offset by increased tax payments.

Cash generated by operations has increased to £6.2 million (2019: £2.8 million) reflecting the growth reported in EBITDA and a reduced
working capital outflow following a net benefit in the year from India. Cash generated by operations includes a cash outflow of £3.5 million
(2019: £2.3 million) as we continue to build capability in our investment for growth projects.

Tax paid has increased to £3.0 million (2019: £1.7 million) due to profitable growth in India which increases the tax paid and the payment
of withholding taxes on overseas dividends to the UK.

Capital expenditure has reduced to £1.8 million (2019: £3.7 million). This reflects a reduction in IT development, the completion of projects
in the prior year, and IT investment being concentrated on the Indian product platform which is largely being developed in-country at a lower
cost than in the UK.

The acquisition of Globiva included provision for the founders to repurchase 10% of the share capital at a pre-agreed value on the successful
achievement of certain business targets. The targets were met in early 2020 with the founders exercising their right and paying £0.3 million
to the Group.

The broadly flat cash profile demonstrates that cash generation in markets like India and Turkey and our Restricted Operations renewal book
together with ongoing cost efficiencies, has now reached the point where it is sufficient to fund the costs associated with our investments for
growth operations and our central cost base including Group IT. This improving profile of cash generation will continue as our key markets
continue to grow and we reduce losses in our other markets through either successful business development or appropriate management action.

As the Group’s growth has shifted to overseas markets a material amount of the cash balance is generated in India and Turkey along with
cash generated by the EU renewal books. These markets are profitable which enables repatriation of funds to the UK. There are tax costs
associated with returning these funds to the UK with our blended cost being approximately 10%. As a result of accounting recognition
principles cash generated in India exceeds the profits generated and available to distribute and therefore careful cash planning is in place.
This along with our regulatory requirements in the UK, result in £2.1 million cash not being immediately available to the Group, albeit the
Indian funds are fully available for use by the Indian business.

During the year the Group renewed its £5.0 million revolving credit facility (RCF) for a further three-year term which in the current economic
environment was a strong endorsement of our financial stability. The RCF is not currently drawn.

Events after the balance sheet date
The Group has undertaken a series of restructuring activities in Q1 2021 as it re-balances its resource allocation policy and addresses markets
where large-scale operational efficiencies are available or there is no clear indication of medium to long-term profitability. Action has been taken in our
Blink, Spain, Mexico and Malaysia businesses and is expected to result in total restructuring costs in the range of £1.1 million to £1.4 million.
The restructuring activity is expected to generate annualised cost savings in the range of £1.1 million to £1.4 million.

CPPGroup Plc Annual Report & Accounts 2020

Financial and operational review continued

Segmental performance

REVENUE

Ongoing Operations

India

EU Hub

Turkey

Rest of World2

Total Ongoing Operations

Restricted Operations

Group revenue

EBITDA

Ongoing Operations

India

EU Hub

Turkey

Rest of World2

Total Ongoing Operations

Restricted Operations

Central Functions

Segmental EBITDA

Share of loss in joint venture

Group EBITDA

2020
£’m

108.4

14.0

3.8

3.9

130.1

11.0

141.1

2020
£’m

7.7

3.2

0.9

(3.7)

8.1

3.8

(4.4)

7.5

(0.3)

7.2

2019
(restated) 1
£’m

99.6

16.5

4.4

3.4

123.9

14.5

138.4

2019
(restated) 1
£’m

5.5

3.4

0.7

(4.1)

5.5

6.6

(6.4)

5.7

(0.3)

5.4

Change

(15)%

(14)%

15%

(24)%

Change

38%

(5)%

29%

44%

Constant
currency
change

16%

(16)%

20%

11%

(24)%

Constant
currency
change

49%

(6)%

97%

62%

(42)%

31%

29%

18%

32%

31%

45%

18%

49%

1. Restated for the transfer of an Italian renewal book from Restricted Operations to the EU Hub in Ongoing Operations. See note 3 in the consolidated financial statements.
2. Rest of World comprises China, Malaysia, Mexico, UK, Blink, Bangladesh and Southeast Asia.

All percentage change figures in the segmental operating report below are stated on a constant currency basis to eliminate the effects
of foreign exchange to enable better year-on-year comparison.

Ongoing Operations (92% of Group revenue)
Revenue increased by 11% to £130.1 million (2019 restated: £123.9 million) and EBITDA has increased strongly to £8.1 million
(2019 restated: £5.5 million). This segment includes investments in business growth projects, the costs of which have decreased year
on year to £2.8 million (2019: £3.0 million) following the decision to close Southeast Asia in the early part of the year.

The continued growth and improvement in EBITDA performance in our Ongoing Operations segment is an important part of the Group’s
development as we become increasingly less dependent on our naturally declining legacy business.

Our Indian business continues to drive the growth in this segment with revenue increasing by 16% to £108.4 million (2019: £99.6 million).
The Indian government lockdown had a material impact on new sales activity in Q2, however the recovery was strong through the second
half, with Q4 exceeding prior year sales. The recovery and growth has been fuelled by our relationship with Bajaj, particularly in sales of
FoneSafe (mobile phone insurance) and LivPlus (life insurance and wellness product).

Globiva was similarly impacted by the Indian lockdown which checked the rate of growth the business was achieving. However, despite
the economic backdrop Globiva has increased both revenue and EBITDA year on year. This performance included successfully winning and
onboarding a number of new partners. Globiva is an integral part of the margin enhancement opportunity available to the Group coupled
with growing revenue generation.

Our Turkish business performed strongly in the year, growing revenue by 9% and EBITDA by 97%. This has been achieved through
expanding distribution with existing partners (including new product variants), and by establishing relationships with new partners that
provides our Turkish business with a wider platform for growth. On a reported basis this performance was tempered by the Turkish lira
which has devalued by 29% in the year.

Revenue in our EU Hub reduced by 16% as new revenue generation is not yet at a level to offset the reduction in the renewal books.
The performance of the renewal books continues to be strong with renewal rates of 83.3% (2019: 82.9%). In Spain we have seen some
new sales progress in the year, however, the financial performance of these campaigns has been disappointing. Consequently, the EU Hub
profitability in the year has reduced by 6% with the cost efficiencies from previous restructuring being offset by reducing profit from the
declining renewal books and cost inefficiencies in new campaigns. The high upfront costs associated with the under-performing telemarketing
channel has led to a review of the operating model and in early 2021 we will refocus to alternative sales channels. This will also enable
additional cost efficiencies to be generated.

CPPGroup Plc Annual Report & Accounts 2020

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

Within Rest of World, the UK has made good progress in the year, successfully embedding its acquisition of B&D and commencing new deals
with Gallagher and the RAC both of whom offer further opportunities in 2021. In Mexico we were disappointed to lose the Coppel campaign
at the end of the year and following a review of future prospects and the ongoing funding requirement of the business it was decided to
reduce new business development activities. From the beginning of 2021 Mexico will be run predominantly as a renewal book operation
with a slimmed down local team managed from the corporate centre. China focused on enhancing its product suite with a new digital travel
solution launched in late 2020 and digital solutions for the health sector in development. Blink’s progress was heavily impacted by the effect
of the pandemic on the travel sector. Bangladesh, which operates from a low cost base, launched a new mobile phone insurance product
which is expected to develop in 2021.

Restricted Operations (8% of Group revenue)
Revenue decreased by 24% to £11.0 million (2019 restated: £14.5 million) reflecting the natural decline in the historic renewal books
of Card Protection Plan Limited (CPPL) and Homecare Insurance Limited (HIL) along with an increase in revenue deferral following contractual
changes to the UK products. EBITDA fell by 42% to £3.8 million (2019 restated: £6.6 million) which reflects the lost profit from the revenue
decline together with a cost base that cannot be lowered in line with the reducing customer base as a core level of operational capability
is required to service the remaining book.

Renewal rates remained strong at 81.3% (2019: 83.6%) which is key in managing the rate of decline in the book.

The focus in our Restricted Operations is to ensure that the best customer outcomes are delivered in the most cost-effective way. We continue to
proactively review the make-up of our UK customer renewal book and have a programme in place to address certain customers to ensure the
best outcomes are achieved for them. This programme commenced at the beginning of 2020 and is expected to continue to result in greater
non-renewals in years to come which will increase the current rate of revenue decline. In addition, the decision has been taken to close the
small renewal book in Malaysia during 2021 where the customer base has reduced to a level that is no longer economically viable to run.

Central Functions
Our central cost base has reduced by 31% to £4.4 million (2019: £6.4 million) as we continue to benefit from supplier contract reviews,
streamlining of our UK-based IT function and cost control measures implemented.

Adjusted EBITDA

Ongoing Operations

Restricted Operations

Central Functions

Segmental EBITDA

Share of loss in joint
venture

Group EBITDA

Investment
in business
growth
projects 2
£’m

2.8

—

2.8

0.3

3.1

2020
£’m

8.1

3.8

(4.4)

7.5

(0.3)

7.2

2020
adjusted
EBITDA
£’m

10.9

3.8

2020
adjusted
margin 3
%

34%

(4.4)

(100)%

10.3

—

10.3

n/a

2019
adjusted
EBITDA
(Restated) 1
£’m

8.5

6.6

(6.4)

8.7

—

8.7

2019
adjusted
margin
(Restated) 1
%

45%

(100)%

n/a

Change

27%

(42)%

31%

17%

n/a

17%

Constant
currency
change

37%

(42)%

31%

26%

n/a

26%

1. Restated for the transfer of an Italian renewal book from Restricted Operations to the EU Hub in Ongoing Operations. See note 3 in the consolidated financial statements.
2. The business growth projects in Ongoing Operations are UK £1.1 million (2019: £1.2 million), Blink £1.3 million (2019: £1.2 million), Bangladesh £0.2 million (2019: £0.2 million)

and Southeast Asia £0.2 million (2019: £0.4 million). These projects are disclosed within Rest of World.

3. Adjusted margin is defined as adjusted EBITDA divided by revenue.

Adjusted EBITDA excludes investments in business growth projects. The Group’s adjusted EBITDA has increased to £10.3 million
(2019: £8.7 million), reflecting the progress made in our key markets within Ongoing Operations, where adjusted EBITDA has increased
to £10.9 million (2019 restated: £8.5 million).

Investments in business growth projects represent start-up businesses that the Group has funded to contribute to the future growth and
sustainability of the Group. Naturally businesses progress from start-up to developing status with the expectation that the level of funding to
that business reduces over time. After an initial cycle of three years it is considered appropriate to transfer the UK, Blink and Bangladesh to
developing status in 2021. As a result, this year represents the final year that these businesses will be excluded from the adjusted measure.

Oliver Laird
Chief Financial Officer
23 March 2021

CPPGroup Plc Annual Report & Accounts 2020

Risk management and principal risks

Managing key risks

The Group’s risk management framework enables risks to be
managed and reported consistently and objectively. CPP operates
a ‘three lines of defence’ model across the Group. Each country
is responsible for setting its own risk appetite and managing its
risks, with oversight from Group control functions and
independent review carried out by Internal Audit.

Internal control and oversight
The Board has overall responsibility for the system of internal control
and for monitoring its effectiveness. During the year, assurance was
gained from delegation to the Audit Committee and Risk & Compliance
Committee, each overseeing the system of internal control and the
risk management framework.

Risk library
The risk library supports the risk framework and allows risks to be
categorised and reported consistently across CPP’s various markets.
This enables the aggregation of risks to obtain a group risk profile
and exposure. The Group has five principal risks: business;
reputational; conduct; operational; and financial.

Key risks to the Group, together with their respective management
strategies, are reported to the Board via these Committees.
Subsequent to the year end, the Risk & Compliance Committee
has been disbanded in favour of matters being considered directly
by the Board. The Board continues to monitor and challenge the
effectiveness of the risk management framework by which strategic
risks to the Group are identified, evaluated and managed.

Risk and control self-assessment
The country level risks are subject to review and challenge by
the Group risk function on a quarterly basis, following submission
of a risk and control self-assessment. We have continued to enhance
and embed the risk management framework with the introduction
of a more sophisticated risk assessment methodology, piloted with
a number of countries which is expected to be rolled out across
the Group in 2021.

Principal risks and uncertainties

Description

Mitigation

Commentary

Status

Business risk

This risk relates to inappropriate
business or strategic choices,
or changes within the internal
or external operating/
competitive environment.

We operate a decentralised model, allowing
our countries to react rapidly to internal
or external factors which may affect their
business or customers. The risk framework
provides a mechanism for visibility and
escalation at Group level. The Group
continues to monitor the exposure to the
COVID-19 pandemic across all its markets,
using local market understanding to
manage key relationships and risks.

The Group has focused on ensuring the
business continues to deliver service to
its customers and partners whilst focusing
on the wellbeing of its colleagues during
the continued disruptions and uncertainties
caused by the pandemic. The Group risk
function has continued to work collaboratively
with all countries, ensuring that key
strategic opportunities and projects are
sufficiently supported from a risk and
compliance perspective.

Reputational risk

The risk to CPP of damage
arising from business partners,
third parties and our provision
of products and services
to customers.

We have effective governance practices in
place and follow the three lines of defence
model. CPP recognise the importance of
having sustainable and controlled growth
strategies driven by products that meet
the needs of our customers and business
partners. We continue to monitor supplier
performance whilst maintaining or developing
strong and collaborative relationships.

The Group continues to engage with
business partners and suppliers to ensure
the smooth continuation of services.

CPPGroup Plc Annual Report & Accounts 2020

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

Increase

Stable

Improving

Description

Conduct risk

Mitigation

Commentary

Status

There is a risk that actual or
potential customer harm arises,
or may arise, from the way
CPP, its colleagues or third
parties conduct their business,
as well as the ongoing
suitability of CPP products.

CPP promotes a strong compliance
culture across the Group to put the
interests of customers first. We value
good relationships with regulators.
Our compliance functions support local
management in meeting existing/future
regulatory obligations.

In 2020 we continued to enhance our
product portfolio to respond to changing
customer needs. Customer engagement
initiatives have been undertaken across the
Group focusing on product awareness.

In 2020, work has continued to progress
the IT strategy to deliver the benefits of
a more flexible, cloud-driven platform
solution. CPP has demonstrated its
resilience during the pandemic as we
continued to maintain processes and
customer services whilst rapidly moving to
a working from home environment across
the Group. We have also taken appropriate
steps to mitigate Brexit related impacts.

The risk remains within appetite.
The overall liquidity profile is actively
managed, ensuring that the business plans
and strategy are effective and aligned.

Operational risk

CPP is at risk of loss, as a
result of inadequate or failed
processes, people, systems or
external events.

Financial risk

The financial risk represents
the exposure of the Group to
funding and liquidity risks
which could result in the
inability to meet financial
obligations as they fall due or
to maintain an effective
funding base.

CPP aims to create an overall risk conscious
organisation. Operational risks outside
appetite fall under quarterly Group review
and challenge with tracking of mitigating
actions. Within the countries, second line
risk resource provides oversight of
operational risk. The Group operates
within the ISO 27001 based framework
and associated relevant controls as well
as being PCI compliant where applicable.
There is a structure in place to manage
and govern outsourcing relationships from
due diligence to risk-based oversight.

The central finance team is responsible for
managing cash flow and liquidity across the
Group. Short and medium-term forecasts
of expected cash needs across the Group
are regularly reviewed and stress tested
to ensure availability of liquidity, maintaining
adequate reserves and banking facilities.
The Group also seeks to repatriate available
overseas funds to the UK to help reduce the
impact of foreign exchange fluctuations.

CPP has an RCF in place, which has been
renewed for a further three-year term, and
we periodically review our expected financial
position against our banking covenants to
ensure that our plans do not create a risk
of breach.

External environment – pandemic risk

The Group continues to monitor COVID-19
across all its markets, and to proactively
take steps to maintain running operations.

The COVID-19 pandemic
continues to evolve and have a
disruptive impact on the global
economy. CPP remains cautious
as to whether the Group’s
operational capacity and
service levels could be
adversely impacted as a
consequence of reduced
staffing levels or declining
effectiveness of business
partners or third party
support services.

Colleagues’ wellbeing remains our top
priority and the Group have implemented
a number of measures in 2020 and continue
to develop and enhance the support structure.
The operational teams across the Group
continue to operate effectively but we
remain alert to the potential for further
disruption and the ongoing risk to data
security which remains a priority. The
potential impact of the pandemic on the
performance of our suppliers and business
partners continues to be closely monitored.

CPPGroup Plc Annual Report & Accounts 2020

Section 172(1) statement

The Directors fully understand their responsibilities
under section 172 of the Companies Act to promote
the success of the Company, having regard to:

• the likely consequences of any decision in the long-term;

• the interests of the Company’s employees;

• the need to foster the Company’s business relationships with suppliers, customers and others;

• the impact of the Company’s operations on the community and the environment;

• the desirability of the Company in maintaining a reputation for high standards of business

conduct; and

• the need to act fairly as between members of the Company.

The Board has identified our key stakeholders which are set out below, along with details of the
forms of engagement undertaken by the Board:

Our shareholders

Why they matter to us

As well as being providers of capital, our shareholders provide valuable insight into the market and the impact
of our strategy, which are key to enabling us to grow and invest in the future success of the business.

Types of engagement

• AGM.

• Annual Report & Accounts, half yearly trading results, notices of general meetings.

• Stock exchange announcements and press releases.

• Investors’ section of the Group’s website.

How the Board engages

• CEO and CFO meetings with major shareholders and retail investors to outline performance and future

direction of the business.

• CEO feedback to the Board on shareholder interactions.

How consideration for
them influenced the
Board’s decision making

• Non-Independent Non-Executive Director intermediation with respective sponsoring shareholders.

During the year a nominee director of each of the two major shareholders was appointed to the Board.

The AGM remains a key means of communication with our shareholders. Although unable to hold an ‘in
person’ AGM in 2020 due to COVID-19 restrictions, shareholders were given the opportunity to ask questions
via our website in advance of the meeting and were encouraged to vote via an online portal.

Among the resolutions put to the AGM was a proposal for a 1:100 consolidation of the Group’s ordinary
shares. The Board believed this would benefit shareholders by helping to reduce the volatility in the
Company’s share price and enable a more consistent valuation of the Company.

CPPGroup Plc Annual Report & Accounts 2020

S
t
r
a
t
e
g
i
c
r
e
p
o
r
t

Our business partners

Why they matter to us

The long-term sustainability of our business depends on building and maintaining long lasting mutually beneficial
relationships with our partners.

Types of engagement

• Commercial discussions.

• Face to face meetings (where possible).

• Press releases.

• Communications such as Annual Report & Accounts, half yearly trading results, trading updates, RNS Reach

announcements and investor fact sheets.

How the Board engages

• Although the ability to travel to the Group’s territories was extremely limited in 2020, the Board retains

oversight through regular communications between the executive team and in-country management and
their feedback to the Board as a whole.

Further details of our focus on partner needs is given on page 8.

How consideration for
them influenced the
Board’s decision making

The Board continues to place significant emphasis on our assurance framework, which has been developed
further during the year, ensuring that strong standards are applied throughout the Group, thus enabling us to give
assurance of regulatory compliance and strong business processes to our business partners and ultimately, to
build a strong, sustainable business for our shareholders.

Our colleagues

Why they matter to us

Our colleagues continue to be our most valuable resource, being key to the continuing success of our business.

Types of engagement

Maintaining colleague wellbeing and morale has been a major focus for the business in 2020, with all
our territories impacted by the global pandemic and most colleagues working from home at some point during
the year. With this in mind the following additional measures have been put in place during the year.

• All colleagues across the Group invited to join weekly or fortnightly video calls with the CEO.

• Group intranet expanded to include a ‘Stay Well’ section to help colleagues with their wellbeing.

• Periodic global conversations, known as ‘Real Life Connect’, open to all colleagues, with a member of the

senior leadership team in attendance, to exchange views on their experience of working during the pandemic
and the Company’s response.

• Introduction of ‘Home Support’ which provides a network of colleagues who volunteer to provide support

and encouragement to colleagues on an informal basis and entirely in confidence.

Further details of how our culture has responded to the exceptional circumstances of the year is included
on page 9.

How the Board engages

• Continued investment in cultural development.

• The Board receives regular reports from the People & Culture Director on colleague engagement and

cultural matters.

• The CEO has reported to the Board throughout the year on the ongoing impact of COVID-19 from a colleague

and overall business perspective.

How consideration for
them influenced the
Board’s decision making

From the Real Life Connect sessions, it became apparent that a flexible approach to homeworking (even when
return to the office is allowed) would be of benefit to colleagues and, ultimately, the productivity of the business.
As well as regular reports from the executive team, the Board received a presentation on a framework of ten
principles proposed for ‘CPP Next Generation’.

See pages 18 and 19 for more on a culture driven from the Centre.

The Strategic Report section on pages 4 to 33 of this Annual Report has been reviewed and approved by the Board of Directors
on 23 March 2021.

Jason Walsh
Chief Executive Officer

CPPGroup Plc Annual Report & Accounts 2020

Board of Directors & Company Secretary

Confident
leadership

David Morrison
Chairman

Jason Walsh
Chief Executive Officer

Oliver Laird
Chief Financial Officer

Justine Shaw
People & Culture Director

Appointment
May 2016.

Appointment
June 2017.

Appointment
July 2016.

Experience
A Fellow of CIMA, Oliver
has more than 15 years’
experience in senior finance
roles in regulated financial
services businesses, including
as CFO of First Direct Bank
and Finance Director of the
Co-operative Insurance Division.

External appointments
Non-Executive Trustee of the
Leeds University Union.

Skills brought to
the Board
Sector and financial expertise.

Experience
Jason first joined CPP in 2002
holding a number of senior
roles including UK Managing
Director responsible for the
Group’s regulated businesses.
He then spent almost two years
working as a consultant with
Ernst & Young within its
Financial Services Advisory
Practice, returning to CPP
in May 2016 as Group CEO.

External appointments
None.

Skills brought to
the Board
Broad knowledge of the
Group and its products and
the financial services sector
in general.

Experience
Justine has over 20 years’
experience in senior strategic
and operational HR roles both
in the UK and Canada,
spanning telecom, financial
services and consulting/
professional engineering.

Joining CPP as Head of HR
Operations in February 2012,
more recently Justine has
performed a number of senior
roles including Chief People
Officer with a focus on talent
management and a positive
performance culture.

External appointments
None.

Skills brought to
the Board
Expertise in talent development
and culture change.

Appointment
Appointed as Non-Independent
Non-Executive Director in
November 2020, and as
Chairman in February 2021.

Experience
David has spent the majority
of his career in private equity,
starting with 3i plc, before
spending 13 years with
Abingworth Management,
predominantly with responsibility
for investment activity in the
United States. In 1998 he
started Prospect Investment
Management, which was
responsible for making
and managing early-stage
investments on behalf of
a small group of investors.
Notable holdings included
PayPoint plc and Venture
Production plc, both of which
became FTSE 250 companies
whilst Prospect’s clients were
shareholders.

External appointments
David remains a director of
various private companies and is
also a non-executive director of
Strategic Equity Capital plc.

Skills brought to
the Board
Strategy and investment expertise.

CPPGroup Plc Annual Report & Accounts 2020

Mark Hamlin

Senior Independent

Director

Appointment

May 2016.

Experience

Tim Elliott

Independent

Appointment

September 2017.

Experience

A Clinical Psychologist, Mark

Tim spent 30 years as an

is Chairman of the Organisation

investment banker in a

Simon Thompson

Non-Independent

Appointment

June 2020.

Sarah Atherton

General Counsel &

Company Secretary

Appointment

January 2021.

Experience

Simon held senior positions

in investment banks before

Experience

A qualified solicitor, Sarah

joined CPP’s in-house legal

Non-Executive Director

Resource Group. He is a senior

variety of capital markets,

becoming Managing Director

team in 2010 from Walker

adviser to the boards of global

credit, advisory, client and

at Barclays Global Investors.

Morris LLP. Initially working

businesses in many areas

management roles including

He was chair of London Stock

for the Group’s UK businesses,

including strategy, culture and

as a Managing Director at

corporate change programmes.

JP Morgan and at Barclays

Capital. After banking,

Exchange’s Institutional

Investor Group and the

Investment Association’s

Sarah later moved into Group

legal roles, most recently taking

up the role of General Counsel

Tim broadened his financial

Dealing Committee. He was

and Company Secretary.

services experience, becoming

a partner of hedge fund,

Mark was Deputy Chairman

of Cable & Wireless

Communications plc until the

company was sold in May 2016.

Born in Johannesburg, Mark

is involved with a number

of charities in both Africa and

the UK.

External appointments

Chairman of Organisation

Resource Limited and Project

Forty Four Limited; Director of

OR Talent Limited, OR Talent

Incorporated and OR Property

Limited; Non-Executive Director

of Beckers Group, X44 Limited,

Colart Group Holdings Limited;

and Trustee of Gloucestershire

Everyman Theatre

Company Limited.

Skills brought to

the Board

Expertise in strategy, culture

and corporate change and

business psychology.

a Partner of KPMG, firstly in

corporate finance and then

as the client lead partner

responsible for the firm’s

worldwide relationship with a

number of major UK companies.

Advisory work included audit

tender preparation, strategy

review and transaction

diligence, capital structuring

and capital raising.

External appointments

Senior Adviser to Alvarez

& Marsal LLP and a

non-executive director

of Premier Foods Plc.

Skills brought to

the Board

Finance and strategy expertise.

External appointments

None.

Skills brought to

the Board

Legal and company

administration.

Millgate Capital, before moving

to Legal & General Investment

Management as COO.

External appointments

Simon currently holds roles as a

Citizens Advice trustee, school

governor and local charity chair

alongside his work as a mentor

and board adviser.

Skills brought to

the Board

Strategy and investment expertise.

C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e

Key

A Audit Committee

R Remuneration Committee

Chair of Committee

David Morrison

Jason Walsh

Oliver Laird

Justine Shaw

Chairman

Chief Executive Officer

Chief Financial Officer

People & Culture Director

Appointment

Appointed as Non-Independent

May 2016.

Appointment

June 2017.

Appointment

July 2016.

Non-Executive Director in

November 2020, and as

Chairman in February 2021.

Experience

Jason first joined CPP in 2002

holding a number of senior

Experience

A Fellow of CIMA, Oliver

has more than 15 years’

Experience

Justine has over 20 years’

experience in senior strategic

roles including UK Managing

experience in senior finance

and operational HR roles both

David has spent the majority

Director responsible for the

roles in regulated financial

in the UK and Canada,

of his career in private equity,

Group’s regulated businesses.

services businesses, including

spanning telecom, financial

starting with 3i plc, before

spending 13 years with

Abingworth Management,

He then spent almost two years

as CFO of First Direct Bank

working as a consultant with

and Finance Director of the

services and consulting/

professional engineering.

Ernst & Young within its

Co-operative Insurance Division.

predominantly with responsibility

Financial Services Advisory

for investment activity in the

Practice, returning to CPP

External appointments

Non-Executive Trustee of the

Leeds University Union.

Skills brought to

the Board

Sector and financial expertise.

in May 2016 as Group CEO.

External appointments

None.

Skills brought to

the Board

Broad knowledge of the

Group and its products and

the financial services sector

in general.

Joining CPP as Head of HR

Operations in February 2012,

more recently Justine has

performed a number of senior

roles including Chief People

Officer with a focus on talent

management and a positive

performance culture.

External appointments

None.

Skills brought to

the Board

Expertise in talent development

and culture change.

United States. In 1998 he

started Prospect Investment

Management, which was

responsible for making

and managing early-stage

investments on behalf of

a small group of investors.

Notable holdings included

PayPoint plc and Venture

Production plc, both of which

became FTSE 250 companies

whilst Prospect’s clients were

shareholders.

External appointments

David remains a director of

various private companies and is

also a non-executive director of

Strategic Equity Capital plc.

Skills brought to

the Board

Strategy and investment expertise.

Mark Hamlin
Senior Independent
Director

Appointment
May 2016.

Experience
A Clinical Psychologist, Mark
is Chairman of the Organisation
Resource Group. He is a senior
adviser to the boards of global
businesses in many areas
including strategy, culture and
corporate change programmes.

Mark was Deputy Chairman
of Cable & Wireless
Communications plc until the
company was sold in May 2016.
Born in Johannesburg, Mark
is involved with a number
of charities in both Africa and
the UK.

External appointments
Chairman of Organisation
Resource Limited and Project
Forty Four Limited; Director of
OR Talent Limited, OR Talent
Incorporated and OR Property
Limited; Non-Executive Director
of Beckers Group, X44 Limited,
Colart Group Holdings Limited;
and Trustee of Gloucestershire
Everyman Theatre
Company Limited.

Skills brought to
the Board
Expertise in strategy, culture
and corporate change and
business psychology.

Tim Elliott
Independent
Non-Executive Director

Simon Thompson
Non-Independent
Non-Executive Director

Sarah Atherton
General Counsel &
Company Secretary

Appointment
September 2017.

Appointment
June 2020.

Appointment
January 2021.

Experience
A qualified solicitor, Sarah
joined CPP’s in-house legal
team in 2010 from Walker
Morris LLP. Initially working
for the Group’s UK businesses,
Sarah later moved into Group
legal roles, most recently taking
up the role of General Counsel
and Company Secretary.

External appointments
None.

Skills brought to
the Board
Legal and company
administration.

Experience
Simon held senior positions
in investment banks before
becoming Managing Director
at Barclays Global Investors.
He was chair of London Stock
Exchange’s Institutional
Investor Group and the
Investment Association’s
Dealing Committee. He was
a partner of hedge fund,
Millgate Capital, before moving
to Legal & General Investment
Management as COO.

External appointments
Simon currently holds roles as a
Citizens Advice trustee, school
governor and local charity chair
alongside his work as a mentor
and board adviser.

Skills brought to
the Board
Strategy and investment expertise.

Experience
Tim spent 30 years as an
investment banker in a
variety of capital markets,
credit, advisory, client and
management roles including
as a Managing Director at
JP Morgan and at Barclays
Capital. After banking,
Tim broadened his financial
services experience, becoming
a Partner of KPMG, firstly in
corporate finance and then
as the client lead partner
responsible for the firm’s
worldwide relationship with a
number of major UK companies.
Advisory work included audit
tender preparation, strategy
review and transaction
diligence, capital structuring
and capital raising.

External appointments
Senior Adviser to Alvarez
& Marsal LLP and a
non-executive director
of Premier Foods Plc.

Skills brought to
the Board
Finance and strategy expertise.

CPPGroup Plc Annual Report & Accounts 2020

Principle 1: Establish a strategy and
business model which promote long-term
value for shareholders

A full description of our strategy and business model are given
on pages 8 to 11. Key challenges to their execution are detailed
under ‘Risk management and principal risks’ beginning on page 30.

Principle 2: Seek to understand and meet
shareholder needs and expectations

The Board is committed to maintaining good relationships with
shareholders. The Chairman is responsible for ensuring that
appropriate channels of communication are established between
the Executive Directors and shareholders, ensuring that the views
of shareholders are made known to the Board.

The Annual General Meeting (AGM) provides the Board with an
opportunity to meet and communicate directly with private investors.

Principle 3: Take into account wider
stakeholder and social responsibilities and
their implications for longer-term success

Our business model seeks to add value to the wider community,
with particular reference to:

• our business partners;

• our shareholders;

• our customers; and

• our colleagues.

Details of how we seek to create value for each of these stakeholders
are given in the business model on pages 10 and 11.

An outline of how the Directors have discharged their duties in
accordance with section 172(1) of the Companies Act 2006 can
be found on pages 32 and 33.

Principle 4: Embed effective risk
management, considering both opportunities
and threats, throughout the organisation

Until March 2021 the Company had a dedicated Risk & Compliance
Committee responsible for identifying and overseeing key risks and
the resources available to manage them. With effect from March
2021, matters previously considered by the Risk & Compliance
Committee are dealt with directly by the Board.

The Group’s risk framework enables risks to be identified, measured,
managed, monitored and reported consistently and objectively.
A full description of the Group’s risk management framework and
principal risks is given on pages 30 and 31.

Corporate Governance Report

Chairman’s introduction

On behalf of the Board I am pleased to
present our Corporate Governance Report
for the year ended 31 December 2020.

As your Chairman, I am responsible for
ensuring that the Board operates within
a sound governance framework that
underpins the Group’s ability to achieve
its strategic goals.

The Board has adopted and complies
with the Quoted Companies Alliance
Corporate Governance Code (the QCA
Code) which remains well suited to the
Group, at its current stage of
development.

The ten principles of the QCA Code are
addressed below with an outline of how
the Group complies with each principle,
and any departures from the Code.

David Morrison
Chairman

CPPGroup Plc Annual Report & Accounts 2020

Principle 5: Maintain the Board as a
well-functioning, balanced team led
by the Chair

The Board believes that the balance between Non-Executive
Directors and Executive Directors reflects the changing needs of
the business and allows the Board to exercise objectivity of decision
making and proper control of the Group’s business. Within that the
Board maintains a balance of independent and non-independent
Non-Executive Directors.

On joining the Board, Non-Executive Directors receive a formal
appointment letter, which identifies the estimated time commitment
expected of them. The average anticipated time commitment is two
days per month, although the nature of the role makes it impossible
to be specific. Directors understand that they may be required to
devote additional time in respect of preparation time and ad hoc
matters that may arise from time to time. A potential Director
candidate is required to disclose all significant outside commitments
prior to appointment and any future external appointments must
be approved in advance by the Chairman.

The number of meetings attended by each Director during 2020
is given on page 39.

Principle 6: Ensure that between them the
Directors have the necessary up-to-date
experience, skills and capabilities

The Board considers itself diverse in terms of the background,
experience and personal qualities each individual member brings to
the Board, and recognises the benefits that greater diversity at the
most senior levels of the Group may bring.

Details of the experience and skills of each of the Directors are
given on pages 34 and 35.

The Board receives at its meetings detailed reports from senior
management on the performance of the Group and other information
as necessary. Regular updates are provided on relevant legal and
regulatory, corporate governance and financial reporting developments.

All Directors have access to the advice and services of the Company
Secretary and the Board also obtains advice from professional
advisers as and when required.

Principle 7: Evaluate Board performance
based on clear and relevant objectives,
seeking continuous improvement

In 2018, the Board undertook an externally facilitated questionnaire
based Board evaluation, conducted by BP&E Global, following which
certain changes were implemented. Given the stability of the Board
and the relatively small number of recommendations arising from
that review, the Board has not carried out a further formal
effectiveness review since. It is the Board’s intention to undertake
one in 2021.

C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e

Principle 8: Promote a corporate culture that
is based on ethical values and behaviours

Our business distributes products through long-term partnership
arrangements. Quality of approach and a high level of integrity are
essential for sustainable success and, having made good progress
in fundamentally changing the organisation, we recognise the need
to ensure we have the right people in the right place and in the
right roles.

Having an Executive Director specifically responsible for people and
culture enables the Board to monitor and promote a healthy
corporate culture.

The Board continues to invest in a dedicated programme to address,
formulate and implement an open, honest and authentic culture
that extends consistently throughout the Group. Further information
may be found on page 18.

Principle 9: Maintain governance
structures and processes that are fit for
purpose and support good decision
making by the Board

Papers for Board and Committee meetings are circulated in advance
of meetings, including to any Director who is unable to attend. Each
member of the Board has access to all information relating to the
Group and to the advice and services of the Company Secretary
(who is responsible for ensuring that Board procedures are followed).
All Board members also have access to external advice at the
expense of the Group, should they need it.

Details of our governance framework are given on page 38.

It should be noted that in a departure from the QCA Code, with
effect from 16 March 2021, membership of the Remuneration
Committee includes a non-independent Non-Executive Director,
in addition to a Senior Independent Director and an independent
Non-Executive Director. Given the relatively small size of the Board,
the Directors consider this necessary and that the structure is
appropriate given the balance between independent and non-
independent members of the Committee.

Principle 10: Communicate how the
Company is governed and is performing by
maintaining dialogue with shareholders and
other relevant stakeholders

The Company maintains a corporate website (https://international.
cppgroup.com) which complies with AIM Rule 26 and contains a
range of information of interest to institutional and private investors,
including the Group’s annual and half yearly reports, trading
statements and all regulatory announcements relating to the Group.

As soon as practicable after the conclusion of any general meeting,
the voting results are released through a regulatory information
service (RIS) with a copy of the announcement posted on the
Company’s website at https://international.cppgroup.com/investors/
stock-info/

All historical Annual Reports, Company circulars and notices
of general meetings are available on the Company’s website at
https://international.cppgroup.com/investors/shareholder-info/

CPPGroup Plc Annual Report & Accounts 2020

Corporate Governance Report continued

Our governance framework

Our Board

As at the date of this report the Board
comprises seven Directors – the
Chairman (Non-Independent), three
Executive Directors, one Senior
Independent Director, one Independent
Non-Executive Director and one
Non-Independent Non-Executive Director.

See pages 34 and 35

Membership at 31 December 2020
Membership at 31 December 2020 – As
at 31 December 2020, the Board comprised
nine Directors – the Chairman, three
Executive Directors, three Independent
Non-Executive Directors and two
Non-Independent Non-Executive Directors.
Sir Richard Lapthorne, former Chairman,
resigned with effect from 31 January
2021 and has been replaced by David
Morrison, an existing Non-Independent
Non-Executive Director. Nick Cooper,
former Independent Non-Executive
Director, resigned with effect from
28 February 2021. Mark Hamlin was
appointed Senior Independent Director
on 17 March 2021.

Meetings held in 2020
Seven

Key matters reserved for the Board
• responsibility for the overall leadership of the Group and setting the Group’s values

and standards;

• approval of the Group’s long-term ambitions, objectives and commercial strategy;

• material changes to the Group’s corporate structure, including any acquisitions

or disposals;

• ensuring maintenance of a sound system of internal control and risk management;

• approval of annual and half year results and trading updates;

• approval of the annual financial budget;

• approval of the dividend policy; and

• material capital investments.

The full schedule of matters reserved to the Board is available on the Company’s website,
https://international.cppgroup.com

Audit Committee

Risk & Compliance Committee
(disbanded from March 2021)

Remuneration Committee

Key objectives
To assist the Board in discharging
its duties and responsibilities for
financial reporting and internal
financial control.

Membership at
31 December 2020
• Tim Elliott (Chairman)

• Sir Richard Lapthorne

• Mark Hamlin

• Nick Cooper

• Simon Thompson

• David Morrison

Key objectives
To assist the Board in fulfilling
its oversight responsibilities with
regard to the risk appetite of the
Group and the risk management
and compliance framework and the
governance structure that supports it.

Membership at
31 December 2020
• Nick Cooper (Chairman)

Key objectives
Recommend to the Board the
remuneration of the Chairman,
Executive Directors, Company
Secretary and senior management.

Membership at
31 December 2020
• Mark Hamlin (Chairman)

• Sir Richard Lapthorne

• Mark Hamlin

• Tim Elliott

• Simon Thompson

• David Morrison

• Nick Cooper

• Tim Elliott

Meetings held in 2020
Five

Meetings held in 2020
Four

Meetings held in 2020
Three

Read about our
Audit Committee
on pages 40 and 41

Read about our Risk &
Compliance Committee
on page 39

Read about our
Remuneration Committee
on pages 42 to 44

CPPGroup Plc Annual Report & Accounts 2020

C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e

Directors’ attendance at Board and Committee meetings in 2020

Board

Audit
Committee

Risk & Compliance
Committee

Remuneration
Committee

Attendance

David Morrison

Jason Walsh

Oliver Laird

Justine Shaw

Mark Hamlin

Tim Elliott

Simon Thompson

Sir Richard Lapthorne

Nick Cooper

—

100%

84%

Nick Cooper was unable to attend the July Board and Committee meetings due to conflicting commitments with a new executive appointment.

Roles and responsibilities
Chairman
The Chairman, David Morrison, is responsible for the leadership
of the Board and setting its agenda, ensuring that the Board as
a whole plays a full and constructive part in the determination
and development of the Group’s strategy and overall
commercial objectives.

Chief Executive Officer
The Chief Executive Officer, Jason Walsh, oversees the management
of the business and, supported by his executive team, is responsible
for the day-to-day running of the business. He is accountable to the
Board for the Group’s operational and financial performance.

Board Committees
The Audit Committee and the Remuneration Committee are standing
Committees of the Board. Written terms of reference of these
Committees, including their objectives and the authority delegated
to them by the Board, are available upon request from the Company
Secretary or via the Company’s website at https://international.
cppgroup.com. Terms of reference are reviewed annually by the
relevant Committee and approved by the Board.

There was also a Risk & Compliance Committee until March 2021
when this was disbanded in favour of such matters being considered
by the Board.

The Company Secretary acts as secretary to all Board Committees;
Committees also have access to independent expert advice, if required.

Internal control and compliance
The Audit Committee and the Risk & Compliance Committee have
received regular reports on compliance with Group policies and
procedures. On behalf of the Board, the Audit Committee and the
Risk & Compliance Committee confirm that, through discharging
their responsibilities under their terms of reference, they have
reviewed the effectiveness of the Group’s system of internal
controls and are able to confirm that necessary actions have been
or are being taken to remedy any failings or weaknesses identified.

Report of the Risk &
Compliance Committee

Key responsibilities
The Committee’s key responsibilities were defined in the
Committee terms of reference and included:

• review reports and recommendations regarding the

Group’s overall risk strategy, appetite, policies, capacity
and tolerances and make recommendations to the Board;

• review the appropriateness and effectiveness of the

Group’s management systems and controls and approve
any related disclosures;

• review appropriateness of the governance functions’

policies and procedures;

• consider reports from each governance function,

including those on adherence to the Group’s policies
and standards and the maintenance of a risk and
compliance culture;

• recommend to the Board the appointment or removal

of the Head of Risk & Compliance; and

• keep under review the adequacy and effectiveness of
the Group’s governance functions and the timeliness
and effectiveness of management actions.

Membership and meetings
Only Committee members were entitled to attend meetings.
Other individuals such as the Executive Directors, the Group
Legal Counsel, the Head of Internal Audit and the Head of
Risk & Compliance may have been invited to attend all or
part of any meeting as appropriate.

Main activities of the Committee during the year
Specific matters dealt with during the year include:

Full details of the Group’s system of internal control and its
relationship to the corporate governance structure are contained
in the risk management and principal risks section of this report
on pages 30 and 31.

• assurance framework;

• product governance;

• information security; and

Conflicts of interest
The Company Secretary keeps a record of any actual or potential
conflict of interest declared by the Directors. Directors are required
to declare any specific conflicts that arise from each Board agenda
and a Director would be expected to refrain from voting on any
matter that represented an actual or potential conflict of interest.

• data management and data protection.

In March 2021 the Committee was disbanded with matters
previously put to the Committee now being considered by
the Board.

CPPGroup Plc Annual Report & Accounts 2020

Report of the Audit Committee

On behalf of the Audit Committee I am pleased to
present the Audit Committee Report for the year ended
31 December 2020.

The Audit Committee Report sets out details of the
Audit Committee including its composition and
responsibilities and seeks to provide an insight into
the work undertaken by the Committee during the year.

Meetings and membership
Only Committee members are entitled to attend meetings. Others
attend by invitation of the Committee Chairman. During the year
the external Auditor, the Executive Directors, the Global Accounting
Director and the Head of Internal Audit attended meetings to
report to the Committee and provide clarification and explanations
where appropriate.

Each member is considered to possess up-to-date and appropriate
financial or accounting experience and the Board is satisfied that the
Committee, as a whole, has sufficient experience and competence
relevant to the Group’s business.

Main activities during the year
The Committee fully recognises its role of protecting the interests
of shareholders and other stakeholders with regard to the integrity
of published financial information and the performance of the
external and internal audit. The main activities of the Committee
during the year were:

Key accounting items
The Committee has received management papers providing
regular updates on the development of the Group’s key accounting
approaches during the year including revenue recognition, the
response to COVID-19, impairment of non-current assets, foreign
exchange and capital maintenance.

Financial statements
The Committee reviewed and discussed financial disclosures made
in the annual results announcement, the Annual Report & Accounts
and the Half Year Report, together with any related management
letters, letters of representation and reports from the External Auditor.

Tim Elliott
Chairman of the Audit Committee

Other members

Mark Hamlin

Simon Thompson

CPPGroup Plc Annual Report & Accounts 2020

C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e

Key financial reporting and accounting issues
The primary area of judgement considered by the Committee in
relation to the 2020 financial statements and how it was addressed
by management is shown below:

Area of judgement Management action

Revenue
recognition

The Committee has received detailed updates
from senior management in relation to the
revenue recognition approach across the Group
during the year. Revenue recognition matters
considered included the impact of changes in
benefit features to the Card Protection product
in India and a change in contractual structure
to the Card Protection product in the UK.
The Committee has concluded that revenue
recognition continues to be dealt
with appropriately.

External Auditor
The Committee has responsibility for overseeing the relationship
with the External Auditor and approves the External Auditor’s
engagement letter, audit fee and audit and client services plan
(including the planned levels of materiality). The External Auditor
attends meetings as appropriate and meets at least annually with
the Committee without Executive Management present. The
Chairman of the Committee also meets privately with the External
Auditor on a regular basis.

The Committee receives regular detailed reports from the External
Auditor, including a formal written report dealing with the audit
objectives, the Auditor’s qualifications, expertise and resource,
the effectiveness of the audit process, the procedures and policies
for maintaining independence and compliance with the ethical
standards issued by the Financial Reporting Council. The Committee
is satisfied with the performance of the External Auditor during
the year and the policies and procedures in place to maintain its
objectivity and independence and has recommended that Deloitte
LLP be reappointed at the forthcoming AGM.

Auditor’s independence, objectivity and effectiveness
Fees paid to the External Auditor are shown in note 7 to the
consolidated financial statements. The External Auditor may provide
non-audit services from time to time. The Committee keeps under
review the level of non-audit fees as a proportion of the total fees
paid to Deloitte LLP and is satisfied that any non-audit work that
has been carried out during the year is appropriate.

The following controls are in place to ensure that Auditor objectivity
and independence are safeguarded:

• a policy on the use of the Auditor for non-audit work has been

agreed by the Committee. This ensures that work would usually
only be awarded when, by virtue of the Auditor’s knowledge,
skills or experience, the Auditor is clearly to be preferred over
alternative suppliers;

• the Committee receives and reviews each year an analysis
of any non-audit work awarded to the Auditor over the
financial period; and

• the Committee receives each year a report from the External
Auditor outlining any matters that the Auditor considers bear
on its independence and which need to be disclosed to the
Audit Committee.

Internal audit
The Committee approves the annual internal audit plan, monitors
progress against this plan and receives reports after each audit
performed. Progress against actions identified in these reports is
monitored by the Committee. In addition, the Committee receives
and reviews all instances of whistleblowing in the business.

The Committee has assessed the resources available to the Internal
Audit department to complete its remit and has approved the use of
additional co-sourced resource within the India business for 2021;
this resource will support with both large-scale operational audits in
India as well as providing increased technical input into the oversight
of the development of India’s new IT platform. In light of the ongoing
COVID-19 pandemic the Committee has also agreed a contingency
budget to ensure continued coverage of all areas of the Group and
completion of the 2021 audit plan in the event that the audit team
face continued travel restrictions.

The Internal Audit function uses a risk-based approach to provide
assurance across all Group companies and functional areas. The
internal audit plan is regularly reviewed to ensure that it reflects
change and business development across the Group. The 2020
internal audit plan was affected by COVID-19, both in terms of
execution of audits, which were predominantly completed remotely,
and in relation to the risk areas covered. Adjustments to the audit
plan were agreed by the Committee to ensure the most appropriate
Group risks were considered, including focused work on the impact
of COVID-19 within the Group’s operational control environment.
Appropriate focus on the ongoing impact of the COVID-19 will
continue in 2021.

As a reflection of the continued growth in our businesses in Asia our
coverage of that region represents greater than half of the Group
audit plan for 2021. The internal audit plan also includes significant
coverage of change, including focus on the development of a new
IT platform for India, consideration of the impact of the restructure
on the control environment in the Mexican business, and post
implementation reviews for change programmes and product
launches within the UK.

The appointment and removal of the Head of Internal Audit is the
responsibility of the Committee. The Internal Audit department
continues to have unrestricted access to all Group documentation,
premises, functions and employees, as required. The Head of
Internal Audit has direct access to the Board and the Audit
Committee and is jointly accountable to the Audit Committee
Chairman and Group CFO.

Committee effectiveness
During the year, the Committee carried out an effectiveness review
based around the completion of a gap analysis against best practice.
The main actions identified were:

• the formal diarising of the regular meetings which are held

without Executive Management present; and

• consideration of the need to increase discussion around FRC

Hot Topics.

Tim Elliott
Chairman of the Audit Committee
23 March 2021

CPPGroup Plc Annual Report & Accounts 2020

Directors’ Remuneration Report

On behalf of the Remuneration Committee, I am
pleased to present the Directors’ Remuneration
Report (the Remuneration Report) for the year
ended 31 December 2020.

The Remuneration report sets out details of the Remuneration
Committee, including its composition and responsibilities, the
Group’s executive remuneration policy and details of Directors’
remuneration for the year under review.

As an AIM-listed company, CPP is not required to prepare the
Remuneration Report in accordance with the Directors’ Remuneration
Report Regulations 2002 or the Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations 2013
(together, the Regulations). We do, however, support the principles
of the Regulations and seek to follow them to the extent that they
are relevant to CPP as an AIM-listed company.

Role and responsibilities of the Remuneration Committee
The Committee is responsible for recommending to the Board the
remuneration of the Chairman, Executive Directors, Company Secretary
and senior management. The remuneration of Non-Executive Directors
is a matter for the Chairman and the executive members of the
Board. The Committee also recommends and monitors the level
and structure of remuneration for senior management.

Activities during the year
The main activities of the Committee during the year under review
and up to the date of this report were:

• reviewing existing and consideration of future long-term incentive
plans including the implementation of the Realisation Proceeds
Plan (RPP) and Dividend Matching Plan (DMP);

• reviewing short-term incentive plans;

• strategy for year-end salary reviews;

• agreeing terms for senior appointments and exits; and

• review of Group Remuneration Policy.

Mark Hamlin
Chairman of the Remuneration Committee

Other members

Tim Elliott

Simon Thompson

CPPGroup Plc Annual Report & Accounts 2020

C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e

Advisers to the Remuneration Committee
The Committee received advice over the year from independent
remuneration consultants OIS Consulting Limited (OIS), which
provided no other services to the Company. Fees paid to OIS
during the year totalled £95,000 (2019: £115,000).

and conditions across the Company, especially when determining
annual salary increases. The Committee receives information about
pay and conditions across the Group and, except in exceptional
circumstances, executives receive the same percentage increase
as other employees in the country in which they operate.

During the year, Eversheds LLP, have provided advice to the
Committee in connection with the implementation of the RPP
and DMP.

Executive Directors’ remuneration
In the year under review, the Executive Directors’ total remuneration
package comprised:

The Committee also receives advice and support from the
People & Culture Director, the Group CEO, the Group CFO
and the Company Secretary.

• fixed pay, including base salary, pension contributions, car

allowance and an allowance to spend on a range of benefits
available within the Group’s flexible benefits scheme; and

No other advisers have provided significant services to the
Committee in the year.

• variable pay, comprising bonus opportunity and participation

in the Group’s long-term incentive plans.

Remuneration policy
The executive remuneration policy is designed to ensure that the
remuneration of Executive Directors and the senior management
team is sufficient to recruit, retain and motivate high quality individuals,
whilst increasing the sustainable value of the business. The Committee
reviews the remuneration policy from time to time, taking whatever
action it considers necessary to ensure that remuneration is aligned
with the overall strategic objectives of the Group.

In accordance with its terms of reference, in considering executive
pay, the Committee has regard to levels of remuneration and terms

Service contracts and letters of appointment
The Executive Directors have service contracts that are subject
to six months’ notice by either party.

Non-Executive Directors receive written letters of appointment
and their appointments are subject to one month’s notice.

Copies of Directors’ service contracts and letters of appointment
are available for inspection by shareholders at the Group’s
registered office.

Directors’ remuneration (audited information)
The remuneration of the Executive and Non-Executive Directors serving during the year was as follows:

Executive Directors

Jason Walsh

Oliver Laird

Justine Shaw

Non-Executive Directors

David Morrison1

Mark Hamlin2

Tim Elliott

Simon Thompson3

Sir Richard Lapthorne

Nick Cooper

Base salary/
fees
£’000
2020

Taxable
benefits
£’000
2020

277

204

194

160

—

Bonus
£’000
2020

201

124

117

—

Pension
£’000
2020

Total
£’000

2020

2019

—

573

391

371

160

656

441

419

—

160

1. David Morrison was appointed to the Board on 13 November 2020.
2. The Company made a contribution of £73,000 (2019: £75,000) towards Mark Hamlin’s fees for the position of Chairman of the Globiva Board. See note 37 on page 92.
3. Simon Thompson was appointed to the Board on 9 June 2020.

Bonuses
Executive Director and senior management bonus awards are linked to both Group financial performance and the achievement of pre-agreed
events, thus ensuring that Directors’ pay is aligned to the Group’s strategic priorities.

Share incentives
Details of awards held, granted and exercised by the current Directors in the Group’s share plans are detailed below:

Director

Jason Walsh

Oliver Laird

Justine Shaw

Balance held at
1 January 2020 *

Number of share
options granted
in year

Number of share
options exercised

Number of share
options lapsed

in year *

Balance held at
31 December 2020

215,012

68,658

82,618

—

55,416

11,122

11,083

7,991

1,605

1,598

151,605

55,931

69,937

* Recalculated to take account of the 1:100 share consolidation in May 2020.

CPPGroup Plc Annual Report & Accounts 2020

Directors’ Remuneration Report continued

Current share plans
2016 Long Term Incentive Plan (2016 LTIP)
This plan was introduced in January 2016, when options were
awarded to Executive Directors and certain members of the senior
management team. Further awards have been made in 2017, 2018
and 2019. Options will vest, subject to the achievement of specified
performance conditions, on the third anniversary of the date of grant,
and will expire on the tenth anniversary of grant. The three-year
vesting period for the 2017 awards completed in the year and
following an assessment of the performance conditions the awards
vested at a level of 87.4%.

Clawback and malus provisions apply to awards made under this plan.

Long Term Incentive Plans
Following a detailed review of our long term incentive plans, the
Committee decided to make no further awards from 2020 under
the 2016 LTIP. In its place we have adopted cash-based incentive
plans which are designed to reward executives only if and when
shareholders receive payments (in the form of ordinary or special
dividends). The principle underlying these plans is that shareholders
should receive at least 90% of any value distributed.

The Committee considered that the share price has not reflected the
true value of CPP and that further awards under the 2016 LTIP
would cause unnecessary dilution of shareholders’ interests. Two
cash-based plans have been created to better align management
rewards with how the Board believes that value will be delivered
over the medium to long term. Specifically:

• The Realisation Proceeds Plan (RPP) covers any events over

the next ten years which result in special dividend payments to
shareholders (for example, following the partial or full sale of a
business unit). If the event produces a gain for CPP (compared
to a baseline value established at the end of 2019) and some
or all of the proceeds are distributed then 10% of the distributed
gain will be paid to participants. Individuals were granted awards
of units in the RPP equivalent to 80% of the maximum available,
leaving flexibility for the Committee to award the remaining 20%
of the units in future.

• The Dividend Matching Plan (DMP) is an annual plan which provides
for a bonus pool equivalent to 10% of any ordinary dividends
declared within that year. Individuals are awarded a share of the
potential pool at the beginning of the year and any payments will
be made at the same time as dividends are paid to shareholders.

Legacy share plans
Matching Share Plan (MSP)
Under the MSP, which was introduced in June 2015, the then
Executive Directors and certain members of the senior management
team were given the opportunity to purchase shares for consideration
of 3 pence per share (the Investment Shares). The price of 3 pence
per share reflected that paid by the external investors at the time
of the share placing in February 2015. For each Investment Share
purchased, options over three Matching Shares were awarded.
The options have an exercise price of £1 following the share
consolidation in May 2020. No performance conditions were
attached to these options which have now vested in full. No further
awards will be made under the MSP.

Clawback and malus provisions apply to awards made under the MSP.

2010 Restricted Stock Plan (RSP)
The RSP was a non-performance-based share plan aimed at
incentivising the second tier of management across the Group and
Executive Directors were not eligible to participate. Employment was
the only condition attached to this plan. All awards made under the
plan are fully vested.

Shareholder dilution
In line with the ABI guidelines, the rules of the current incentive
schemes provide that commitments to issue new shares or reissue
treasury shares, when aggregated with awards under all of the
Company’s other schemes, must not exceed 10% of the issued
ordinary share capital in any rolling ten-year period commencing
on admission of the Group’s shares to AIM.

Newly issued shares are currently used to satisfy the exercise
of all employee and executive equity-settled options.

Directors’ shareholdings
The Directors who were in post at the end of the year under review held the following beneficial interests in the Company’s ordinary shares:

Ordinary shares held
at 31 December 2020 *

Ordinary shares held
at 31 December 2019 *

Interests in unexercised shares

under incentive plans *

67,000

69,745

43,554

21,076

14,365

1,450

3,250

47,000

9,328

4,256

9,993

14,365

1,450

3,250

—

151,605

55,931

69,937

—

Sir Richard Lapthorne

Jason Walsh

Oliver Laird

Justine Shaw

Mark Hamlin

Nick Cooper

Tim Elliott

* Recalculated to take account of the 1:100 share consolidation in May 2020.

Mark Hamlin
Chairman of the Remuneration Committee
23 March 2021

CPPGroup Plc Annual Report & Accounts 2020

C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e

Directors’ Report

The Directors present their Annual Report and audited financial statements of the Group for the year ended 31 December 2020.

Principal activities
The principal activity of the Group is the provision of assistance products. Further information on the Group’s business can be found
in the following sections of the Annual Report, which are incorporated by reference into this report:

• the Strategic Report on pages 4 to 33;

• the Corporate Governance Report on pages 36 to 39;

• the Report of the Audit Committee on pages 40 and 41; and

• the Directors’ Remuneration Report on pages 42 to 44.

Directors
The Directors who served throughout the year and to the date of this report are shown in the table below.

David Morrison

Jason Walsh

Oliver Laird

Justine Shaw

Mark Hamlin

Tim Elliott

Simon Thompson

Sir Richard Lapthorne

Nick Cooper

(appointed 13 November 2020)

Chairman

Chief Executive Officer

Chief Financial Officer

People & Culture Director

Senior Independent Director

Non-Executive Director

Non-Independent Non-Executive Director

(appointed 9 June 2020)

Chairman

Non-Executive Director

(resigned 31 January 2021)

(resigned 28 February 2021)

Under the Company’s Articles of Association any Director who has
been a Director at each of the preceding two AGMs and who was
not appointed or reappointed by the Company in general meeting
at, or since, either such meeting shall retire by rotation. Accordingly,
Mark Hamlin, Tim Elliott, Oliver Laird, David Morrison and Simon
Thompson will seek re-election at the forthcoming AGM.

Brief biographical details for each Director are set out on pages 34
and 35. Details of Committee memberships are set out in the
Corporate Governance Report on page 38.

Details of Directors’ beneficial interests in and options over the
Company’s shares are set out in the Directors’ Remuneration Report
on pages 42 to 44.

Dividends
The Directors recommend a final dividend of 25 pence per ordinary
share to be paid on 12 May 2021 to ordinary shareholders on the
register on 9 April 2021. No dividends were paid by the Group in
the prior year.

Insurance
The Company has appropriate insurance cover in place in respect
of any potential litigation against Directors.

Events after the balance sheet date
The Group has undertaken a review of the operational effectiveness
of its business units and restructuring activities initiated where it is
considered large-scale operational efficiencies are available or there
is not a clear pathway to profitable performance in the medium to
long-term. As a result, the Group has restructured its Blink, Spain,
Mexico and Malaysia operations. Refer to note 38 on page 92 for
further detail.

Annual General Meeting
The AGM of the Company is to be held on 28 April 2021. As at the
date of this report, the UK Government has put in place a national
lockdown with ‘stay at home’ measures. In light of this, the AGM
will be held as a ‘closed’ meeting and shareholders will not be able
to attend in person. If the Board needs to make changes to the
AGM arrangements (including where and how the AGM is conducted),

such changes will be notified in advance through the Company’s
website and, where appropriate, by RIS announcement. The notice
of the AGM and an explanation of any non-routine business are set
out in the circular accompanying this Annual Report or on the
Company’s website at https://international.cppgroup.com

The notice of the meeting specifies deadlines for exercising voting
rights and appointing a proxy or proxies to vote in relation to
resolutions to be proposed at the meeting.

Change of control provisions
Some agreements to which the Company or its subsidiaries are
a party may be at risk of termination by counterparties in certain
restricted circumstances in the event of a change of control of the
Company. The Directors are not aware of any agreements between
the Company and its Directors or employees that provide for
compensation for loss of office or employment that occurs because
of a takeover bid.

Capital structure
Details of the issued share capital, together with movements in
the Company’s issued share capital for the period, can be found
in note 33 on page 88.

The Company’s capital comprises ordinary shares of £1 each, which
carry no right to fixed income. Each fully paid share carries the right
to one vote at a general meeting of the Company.

Details of the Group’s employee share schemes are set out in
note 34 on pages 88 to 90.

Business relationships
The Board is fully aware that the long-term sustainability of our
business depends on building and maintaining long lasting mutually
beneficial relationships with our partners. With a B2B2C operating
model, insights and requests from business partners in terms of
product and marketing strategies are key to the Board’s focus and
development in these areas. The Group CEO and Executive Directors
often meet with prospective and existing business partners,
reporting back to the Board on the results of those meetings.

CPPGroup Plc Annual Report & Accounts 2020

Directors’ Report continued

Substantial shareholdings
On 31 December 2020, the Company had been notified, in accordance with the Disclosure and Transparency Rules of the FCA, of the
notifiable interests in the ordinary share capital of the Company set out in the table below. As far as the Directors are aware, as at
31 December 2020 no person had a beneficial interest in 3% or more of the voting share capital except for the following:

Name

Funds managed by Phoenix Asset Management Partners Limited

Milton Magna Limited (a company controlled by Mr Hamish Ogston)

Mr Hamish Ogston

Schroders plc

Mr Hamish Ogston holds a beneficial interest in 41.23% of the
issued shares of the Company. Under the terms of a relationship
agreement between Mr Ogston and the Company dated
22 December 2014 and effective from the Company’s admission
to AIM, for so long as Mr Ogston and any person or corporate body
connected to him (a Controlling Shareholder) holds, in aggregate,
30% or more of the ordinary shares or the voting rights attaching
to the shares, Mr Ogston shall not and shall procure that each
Controlling Shareholder shall not:

• vote in favour of or propose any resolution to amend the Articles
of Association which would be contrary to the principle of the
independence of the Company from the shareholder or any
of the Controlling Shareholders;

• take any action which precludes any member of the Group from
carrying on its business independently of Mr Ogston or any
Controlling Shareholder; or

• take any action (or omit to take any action) to prejudice the

Company’s status as a company admitted to AIM or its suitability
for admission to AIM or the Company’s compliance with the AIM
Rules, other than in the circumstances of a takeover or merger
of the Company.

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. The assessment considers the Group’s modelling
of the risks associated with COVID-19. 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.

Employees
The Group is committed to employment policies that provide
equality of opportunity to all employees based only on their relevant
skills and capabilities and that ensure no employee or applicant is
treated unfairly on any grounds including: ethnic origin; religion;
gender; sexual orientation; or disability.

CPPGroup Plc Annual Report & Accounts 2020

Ordinary
shares

3,172,366

2,641,443

963,317

876,853

36.28%

30.21%

11.02%

10.03%

Every possible support will be offered to any employee who
becomes disabled during the course of their employment, with
reasonable adjustments made wherever possible.

The Group communicates with employees by means of regular business
updates, fortnightly CEO calls and weekly CEO blogs on the intranet.

Further information on our culture and employee engagement can
be found on page 18.

Anti-bribery and corruption
The Group is committed to ensuring that it has effective processes
and procedures in place to counter the risk of bribery and corruption.
A formal anti-bribery policy is in place and appropriate training is
provided according to the level of risk attached to a role.

Modern Slavery Act
The Group has a zero-tolerance approach to modern slavery and will
not knowingly support or deal with any business involved in slavery
and/or human trafficking. Our Modern Slavery Policy reflects our
commitment to maintaining ethical practices in all of our supply
chains and across our business. The steps taken to help manage the
risks outlined by the legislation are detailed in our modern slavery
statement published annually on our website https://international.
cppgroup.com/modern-slavery-statement

Streamlined Energy and Carbon Reporting (SECR)
None of the Group’s UK-based entities individually or collectively
meet the mandatory requirements of the new SECR regulations in
the UK. The Group actively considers how it can best minimise the
environmental footprint its global operations create, however, it has
opted to not voluntarily apply the SECR reporting guidance in the
current year.

Auditor
Each person who is a Director at the date of approval of this report
confirms that:

• so far as the Director is aware, there is no relevant audit

information of which the Company’s Auditor is unaware; and

• the Director has taken all the steps that he/she ought to have
taken as a Director in order to make him/herself aware of any
relevant audit information and to establish that the Company’s
Auditor is aware of that information.

This confirmation is given and should be interpreted in accordance
with the provisions of section 418 of the Companies Act 2006.

Deloitte LLP has expressed its willingness to continue in office as
Auditor. Accordingly, a resolution to reappoint Deloitte LLP will be
proposed at the AGM.

By order of the Board

Sarah Atherton
General Counsel & Company Secretary
23 March 2021

Statement of Directors’ responsibilities

The Directors are responsible for preparing the Annual Report
& Accounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors are required
to prepare the consolidated financial statements in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006 and International
Financial Reporting Standards (IFRS) and have elected to prepare
the Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice, including
Financial Reporting Standard 101 ‘Reduced Disclosure Framework’.
Under company law the Directors must not approve the accounts
until they are satisfied that they give a true and fair view of the
state of affairs of the Company and the Group and of the profit
or loss of the Group for that period.

In preparing the consolidated financial statements, International
Accounting Standard 1 requires that Directors:

• properly select and apply accounting policies;

• present information, including accounting policies, in a

manner that provides relevant, reliable, comparable and
understandable information;

• provide additional disclosures when compliance with the specific

requirements in IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the Group’s financial position and financial performance; and

• make an assessment of the Company’s ability to continue

as a going concern.

In preparing the Company financial statements, the Directors are
required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether the Financial Reporting Standard 101 ‘Reduced

Disclosure Framework’ has been followed, subject to any material
departures disclosed and explained in the financial statements; and

• prepare the Company financial statements on the going concern
basis unless it is inappropriate to presume that the Company will
continue in business.

C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e

The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the

relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit/loss of the
Company and the undertakings included in the consolidation
taken as a whole; and

• the Strategic Report includes a fair review of the development

and performance of the business and the position of the Company
and the undertakings included in the consolidation as a whole,
together with a description of the principal risks and uncertainties
that they face.

By order of the Board

Jason Walsh
Chief Executive Officer
23 March 2021

Oliver Laird
Chief Financial Officer
23 March 2021

CPPGroup Plc Annual Report & Accounts 2020

Independent Auditor’s Report
To the members of CPPGroup Plc

Report on the audit of the financial statements

1. Opinion

In our opinion:

• the financial statements of CPPGroup Plc (the Company) and its subsidiaries (together the Group) give a true and fair view of
the state of the Group’s and of the Company’s affairs as at 31 December 2020 and of the Group’s loss for the year then ended;

• the Group financial statements have been properly prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRSs);

• the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and

• the Group and Company financial statements have been prepared in accordance with the requirements

of the Companies Act 2006.

We have audited the financial statements which comprise:

• the consolidated income statement;

• the consolidated statement of comprehensive income;

• the consolidated and company balance sheets;

• the consolidated and company statements of changes in equity;

• the consolidated cash flow statement; and

• the related notes 1 to 38.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and international
accounting standards in conformity with the requirements of the Companies Act 2006 and IFRSs. The financial reporting framework that has
been applied in the preparation of the Company financial statements is applicable law and United Kingdom Accounting Standards, including
FRS 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

2. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.

We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the Financial Reporting Council’s (the FRC’s) Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Summary of our audit approach

Key audit matters

The key audit matter that we identified in the current year was revenue recognition.

Within this report, key audit matters are identified as follows:

Newly identified

Increased level of risk

Similar level of risk

Decreased level of risk

Materiality

Scoping

The materiality that we used for the Group financial statements was £1.4 million which was determined on the
basis of 1.0% of revenue.

The Group audit scope involved performing full scope audits on its significant components in the UK, Spain and
India, with specified audit procedures for Turkey and analytical procedures being performed for the rest of the
Group at a Group level. In aggregate, our testing covered 91% of the Group’s revenue, 85% of the Group’s
profit before tax and 96% of the Group’s net assets.

Significant changes
in our approach

In the prior year audit, we identified a key audit matter in relation to the cessation of commission payments
to certain business partners in the UK. This was not identified as a key audit matter for the 2020 audit as there
had been no change in the circumstances and accounting position taken by the Group in the year. Disclosure
in relation to this matter is included in note 30.

We also evaluated the impact that the COVID-19 pandemic had on the Group’s operations and performance as part of
our audit risk assessment, and in our challenge of accounting judgements, estimates and going concern. We concluded
that whilst there has been immaterial impairments to goodwill relating to a part of the business that has been
adversely affected by the COVID-19 pandemic, there are no new key audit matters or material accounting
changes in relation to the COVID-19 pandemic.

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

4. Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate.

Our evaluation of the Directors’ assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of accounting included:

• enquiring of senior management in relation to their going concern assessment, including the impacts of the COVID-19 pandemic across
the Group’s international operations and the steps that the Group could take in the event that economic and other factors deteriorate
that could lead to further government or regulatory action, restrictions or lockdowns;

• evaluating management’s assessment of the risks facing the Group and the Company including:

• liquidity risk;

• capital risk (including minimum and/or solvency capital requirements);

• funding risk (including the availability of the Group’s sources of funding through its undrawn Revolving Credit Facility and compliance

with its related covenant); and

• operational resilience, business continuity plans, monitoring of outsourced operations, ability to continue to serve customers, comply

with regulations and maintain appropriate internal controls across its significant international components;

• challenging management’s key assumptions underpinning the going concern basis of accounting, by:

• assessing the reasonableness of significant movements in forecast cash flows and considering its consistency with other available

information and our understanding of the Group’s businesses;

• inspecting and evaluating the mathematical accuracy of current forecasts and comparing these to actual post year end performance;

• assessing the Group’s ability to accurately forecast its future cash flows by assessing how historical performance of the Group compares

against previous forecasts, including key performance indicators;

• assessing the consistency of forecasts used in preparation of the financial statements with those used to evaluate the recoverability

of the intercompany debtors for the Company; and

• assessing management’s stress and scenario testing and performing reverse stress testing;

• inspecting correspondence between the Group and its regulators up to the date of signing our audit report; and

• evaluating the appropriateness of disclosures in the 2020 financial statements relating to going concern and the principal risks and

uncertainties that the Group faces, particularly in the context of the COVID-19 pandemic.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s and Company’s ability to continue as a going concern for a period of at least
12 months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

5. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.

CPPGroup Plc Annual Report & Accounts 2020

Independent Auditor’s Report continued
To the members of CPPGroup Plc

Report on the audit of the financial statements continued

5. Key audit matters continued

Revenue recognition

Key audit matter description

How the scope of our audit
responded to the key audit
matter

The recognition of revenue under IFRS 15 Revenue from Contracts with Customers for the Group’s
products, totalling £141 million (2019: £138 million), requires significant judgement in:

• identifying separate performance obligations that are either completed at the inception of a customer’s

policy or relate to servicing obligations that are performed over the term of a policy; and

• determining and implementing the appropriate basis on which to allocate revenue between
these separate performance obligations, particularly for new and material amendments to
existing products.

Due to the significance of the judgements involved in determining and implementing appropriate
revenue recognition policies under IFRS 15 for products that include different customer benefits that
are bundled together, we identified a specific risk of fraud due to possible manipulation of this balance.

The Group uses a cost plus margin method to allocate revenue between performance obligations.
Changes in customer usage of the different benefits in the bundled products can fluctuate over time,
which could change the revenue recognition calculations. This makes the accuracy and completeness
of the data used for the calculations an area of focus for our audit procedures. This is particularly
relevant to India where changes in customer usage may be most prevalent due to new business
growth which would have the largest impact on revenue due to the size of the customer book.

The Group’s accounting policies regarding revenue recognition are detailed in note 3 ‘significant
accounting policies’ on pages 62 and 63, and discussed further in note 4 ‘critical accounting
judgements and key sources of estimation uncertainty’ on page 66, note 5 ‘segmental analysis’
on page 69 and the Report of the Audit Committee on page 41.

We obtained an understanding of the Group’s processes and relevant controls identified in relation
to revenue recognition.

We tested the relevant manual controls used to reconcile the general ledger with underlying
customer databases and cash received from customers. In addition, we used IT specialists to
test the relevant IT and automated controls in place over the core administration systems used
to generate journal entries that are posted to the general ledger.

We evaluated the Group’s revenue recognition in relation to new products for compliance with IFRS
15 – Contracts with customers against underlying contract information. Where material products
were amended in the year, we assessed if changes to the Group’s performance obligations had
been identified and appropriately updated for within the Group’s revenue recognition calculations.

We tested the source data used within the revenue allocation calculations performed in India in
order to assess its accuracy and completeness. We considered the fluctuations of customer usage
of benefits in the bundled products during the year, and whether this may have been affected
by government restrictions in response to the COVID-19 pandemic and whether this could have
a material impact on the revenue balance.

In addition, we independently re-calculated the Group’s material revenue streams from source
policyholder data in order to evaluate the implementation of the Group’s revenue allocation methods
and performed data analytics to identify if there were individual policies holding characteristics
of audit interest to focus our testing. We selected a sample of transactions and agreed these
to supporting evidence to assess the accuracy of revenue recorded in the general ledger.

Key observations

As a result of our testing, we considered that the revenue recognition policies applied were
consistent with IFRS 15, and that the revenue allocation calculations performed were appropriate.

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

6. Our application of materiality

6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions
of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work
and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Materiality

£1.4 million (2019: £1.4 million).

£0.7 million (2019: £0.7 million).

Group financial statements

Company financial statements

Basis for determining
materiality

1.0% of the revenue balance (2019: 1.0%).

Company materiality equates to 1% of net assets
(2019: 1% of net assets).

Rationale for the
benchmark applied

We used revenue to determine the Group
materiality because it is a primary metric used
by management to measure the performance of
new sales and the sustainability of renewal
portfolios across the Group.

Materiality has been capped at 50% (2019: 50%) of Group
materiality to ensure appropriate coverage in the scope of
our audit procedures when aggregated to a Group level.

We used net assets to determine the Company
materiality due to it being the key benchmark
for a parent holding company.

6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.

Group financial statements

Company financial statements

Performance materiality

70% (2019: 70%) of Group materiality.

70% (2019: 70%) of Company materiality.

Basis and rationale
for determining
performance materiality

We determined performance materiality with reference to factors such as:

• our understanding of the Group, its complexity and purpose;

• the quality of its control environment (including the impact of COVID-19 and the Group’s transition

to remote working arrangements); and

• the low level of uncorrected misstatements in previous audits.

6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £70,000 (2019: £70,000),
as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the
Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

7. An overview of the scope of our audit

7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls and assessing
the risks of material misstatement that existed at the Group level.

Based on that assessment, we focused our Group audit scope primarily on the work in four significant components located in India, the
United Kingdom, Spain and Turkey. Three of these were subject to a full scope audit (2020 and 2019: India, United Kingdom and Spain)
whilst we performed specified audit procedures on specified account balances in Turkey (2019: Turkey) where the extent of testing performed
was based on our assessment of the material risks that existed at the Group level. For the Group’s remaining components, we performed
substantive analytical procedures at a Group level to understand movements in key financial statement line items from the prior year, and
performed additional, follow-up audit procedures where unusual and/or unexpected trends were identified.

The scope of our audit was consistent with the prior year.

Overall, these significant components represent the principal business units of the Group, and account for 91% (2019: 92%) of the Group’s
revenue, 85% (2019: 92%) of the Group’s profit before tax and 96% (2019: 95%) of the Group’s net assets.

CPPGroup Plc Annual Report & Accounts 2020

Independent Auditor’s Report continued
To the members of CPPGroup Plc

Report on the audit of the financial statements continued

7. An overview of the scope of our audit continued

7.2. Working with other auditors
At the planning stage of our audit, for all significant components, we issued instructions, conducted briefing calls with the component audit
partners and engagement teams, and reviewed their risk assessments in order to assess the scope of substantive testing needed at a Group
level. As part of this process, we communicated the levels of materiality applicable to each individual component, which were lower than
Group materiality and ranged from £0.2 million to £0.9 million (2019: £0.1 million to £1.1 million).

In response to the COVID-19 pandemic, which limited our ability to make component visits in person (2019: we visited India in person),
more frequent calls were held between the Group and component teams and remote access to relevant documents was provided. Given
the pandemic, all of the 2020 audit was performed in a remote working environment. Throughout this time, we increased the frequency
of interactions with management.

We maintained regular communication with our component audit teams throughout the audit and discussed any matters of significance to the
Group audit as they arose. We discussed the conclusions of their work via conference calls with the component and Group audit partners, and
local and Group management teams, and reviewed the audit work performed as well as the conclusions and findings communicated to us.

At the Group level, we also tested the consolidation process and carried out analytical procedures to support our conclusion that there were
no significant risks of material misstatement of the aggregated financial information of the remaining components not subject to a full scope
audit or an audit of specified account balances.

8. Other information

The other information comprises the information included in the Annual Report other than the financial
statements and our Auditor’s Report thereon. The Directors are responsible for the other information contained
within the Annual Report.

We have nothing to
report in this regard.

Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.

9. Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue
as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

10. Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s Report.

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

11. Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.

11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:

• the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration

policies, key drivers for Directors’ remuneration, bonus levels and performance targets;

• results of our enquiries of management, internal audit and the Audit Committee about their own identification and assessment of the

risks of irregularities;

• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:

• identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

• detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and

• the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and

• the matters discussed among the audit engagement team including significant component audit teams and relevant internal specialists,

including tax and IT, regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following areas: revenue recognition. In common with all audits under ISAs (UK), we are
also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions of those
laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key
laws and regulations we considered in this context included the Companies Act 2006 and tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty imposed by the local regulators
in countries where the Group has significant operations.

11.2. Audit response to risks identified
As a result of performing the above, we identified revenue recognition as a key audit matter related to the potential risk of fraud. The key
audit matters section of our report explains the matter in more detail and also describes the specific procedures we performed in response
to that key audit matter.

In addition to the above, our procedures to respond to risks identified included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant

laws and regulations described as having a direct effect on the financial statements;

• enquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential litigation and claims;

• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement

due to fraud;

• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with

HMRC, the FCA and the PRA; and

• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other

adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating
the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including
internal specialists and significant component audit teams, and remained alert to any indications of fraud or non-compliance with laws
and regulations throughout the audit.

CPPGroup Plc Annual Report & Accounts 2020

Independent Auditor’s Report continued
To the members of CPPGroup Plc

Report on other legal and regulatory requirements

12. Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements

are prepared is consistent with the financial statements; and

• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course
of the audit, we have not identified any material misstatements in the Strategic Report or the Directors’ Report.

13. Matters on which we are required to report by exception

13.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

We have nothing
to report in respect
of these matters.

• adequate accounting records have not been kept by the Company, or returns adequate for our audit have

not been received from branches not visited by us; or

• the Company financial statements are not in agreement with the accounting records and returns.

13.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’
remuneration have not been made.

We have nothing
to report in respect
of this matter.

14. Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

David Heaton (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Statutory Auditor
Manchester, United Kingdom
23 March 2021

CPPGroup Plc Annual Report & Accounts 2020

Consolidated income statement
For the year ended 31 December 2020

Revenue

Cost of sales

Gross profit

Administrative expenses

Share of loss in joint venture

Operating profit

Analysed as:

EBITDA

Depreciation and amortisation

Exceptional items

Investment revenues

Finance costs

Other gains and losses

Profit before taxation

Taxation

Loss for the year

Attributable to:

Equity holders of the Company

Non-controlling interests

Loss per share

Basic and diluted

* Restated for the share consolidation. See note 3 for further detail.

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

Note

2020
£’000

2019
£’000

141,144

138,362

(104,190)

(97,874)

36,954

40,488

(33,381)

(38,541)

(264)

3,309

7,160

(3,495)

(356)

412

(415)

(1,294)

2,012

(3,609)

(1,597)

(320)

1,627

5,442

(3,305)

(510)

508

(1,003)

—

1,132

(2,076)

(944)

(1,680)

(1,009)

(1,597)

(944)

Pence

Restated *
Pence

(19.28)

(11.69)

CPPGroup Plc Annual Report & Accounts 2020

Consolidated statement of comprehensive income
For the year ended 31 December 2020

Loss for the year

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translation of foreign operations

Exchange differences reclassified on disposal of foreign operations

Other comprehensive income/(expense) for the year net of taxation

Total comprehensive expense for the year

Attributable to:

Equity holders of the Company

Non-controlling interests

2020
£’000

(1,597)

(809)

1,294

485

(1,112)

2019
£’000

(944)

(219)

—

(219)

(1,163)

(1,145)

(1,188)

(1,112)

(1,163)

CPPGroup Plc Annual Report & Accounts 2020

Balance sheets
As at 31 December 2020

Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Investment in joint venture
Deferred tax asset
Net investment lease assets
Contract assets

Current assets
Insurance assets
Inventories
Net investment lease assets
Contract assets
Trade and other receivables
Cash and cash equivalents

Total assets
Current liabilities
Insurance liabilities
Income tax liabilities
Trade and other payables
Lease liabilities
Contract liabilities

Net current assets
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Lease liabilities
Contract liabilities

Total liabilities
Net assets
Equity
Share capital
Share premium account
Merger reserve
Translation reserve
ESOP reserve
Retained earnings
Equity attributable to equity holders of the Company
Non-controlling interests
Total equity

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

Consolidated

Company

Note

2020
£’000

2019
£’000

2020
£’000

2019
£’000

15
16
17
18
19
20
31
28
23

21
22
28
23
24
25

27
28
23

29
31
30
28
23

612
3,741
1,670
6,097
—
450
858
—
426
13,854

46
145
—
4,853
16,379
21,856
43,279
57,133

(935)
(974)
(20,387)
(882)
(10,889)
(34,067)
9,212

98
(579)
—
(5,756)
(1,094)
(7,331)
(41,398)
15,735

24,153
45,225
(100,399)
834
17,490
27,327
14,630
1,105
15,735

1,492
3,533
2,362
6,496
—
714
1,152
16
709
16,474

42
87
140
6,108
17,778
21,957
46,112
62,586

(756)
(601)
(23,922)
(1,371)
(12,169)
(38,819)
7,293

50
(373)
(309)
(5,895)
(1,248)
(7,775)
(46,594)
15,992

24,056
45,225
(100,399)
299
16,999
28,928
15,108
884
15,992

—
—
—
—
15,545
—
48
—
—
15,593

—
—
—
—
79,314
12,433
91,747
107,340

—
—
(15,615)
—
—
(15,615)
76,132

—
—
—
—
—
—
(15,615)
91,725

24,153
45,225
—
—
10,864
11,483
91,725
—
91,725

—
—
—
—
15,597
—
141
—
—
15,738

—
—
—
—
77,831
3,109
80,940
96,678

—
—
(16,120)
—
—
(16,120)
64,820

—
—
—
—
—
—
(16,120)
80,558

24,056
45,225
—
—
10,373
904
80,558
—
80,558

The notes on pages 61 to 92 form an integral part of these financial statements.

The Company reported a profit for the financial year ended 31 December 2020 of £10,676,000 (2019: £18,210,000).

Approved by the Board of Directors and authorised for issue on 23 March 2021 and signed on its behalf by:

Jason Walsh
Chief Executive Officer

Oliver Laird
Chief Financial Officer

Company registration number: 07151159

CPPGroup Plc Annual Report & Accounts 2020

Consolidated statement of changes in equity
For the year ended 31 December 2020

Share
capital
£’000

Share
premium
account
£’000

Note

Merger
reserve
£’000

Translation
reserve
£’000

ESOP
reserve
£’000

Retained
earnings
£’000

Non-
controlling
interests
£’000

Total
£’000

Total
equity
£’000

31 December 2018

24,021

45,225

(100,399)

478

15,884

30,323

15,532

734

16,266

Change of accounting policy –
IFRS 16

At 1 January 2019

Loss for the year

Other comprehensive expense
for the year

Total comprehensive expense
for the year

Equity-settled share-based
payment charge

Deferred tax on intangible asset

Exercise of share options

Movement in non-controlling
interests

31 December 2019

Loss for the year

Other comprehensive income
for the year

Total comprehensive expense
for the year

Equity-settled share-based
payment charge

Deferred tax on intangible asset

Exercise of share options

Movement in non-controlling
interests

—

24,021

45,225

(100,399)

—

478

—

(203)

15,884

30,120

15,329

—

(1,009)

—

734

(203)

16,063

(944)

(179)

—

(179)

(40)

(219)

(179)

—

(1,009)

(1,188)

(1,163)

—

1,115

—

(58)

—

1,115

(58)

(125)

—

— (1,680)

(1,680)

—

125

884

1,115

(58)

—

15,992

(1,597)

535

—

535

(50)

485

— (1,680) (1,145)

(1,112)

491

—

(97)

491

—

491

—

118

188

306

24,056

45,225

(100,399)

299

16,999

28,928

15,108

At 31 December 2020

24,153

45,225 (100,399)

834

17,490

27,327

14,630

1,105

15,735

CPPGroup Plc Annual Report & Accounts 2020

Company statement of changes in equity
For the year ended 31 December 2020

At 1 January 2019

Profit and total comprehensive income for the year

Equity-settled share-based payment charge

Exercise of share options

At 31 December 2019

Profit and total comprehensive income for the year

Equity-settled share-based payment charge

Exercise of share options

At 31 December 2020

Note

Share
capital
£’000

24,021

—

Share
premium
account
£’000

45,225

—

ESOP
reserve
£’000

9,258

—

1,115

—

24,056

45,225

10,373

—

491

—

Retained
earnings
£’000

(17,306)

18,210

—

904

10,676

—

(97)

Total
£’000

61,198

18,210

1,115

80,558

10,676

491

—

24,153

45,225

10,864

11,483

91,725

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

CPPGroup Plc Annual Report & Accounts 2020

Consolidated cash flow statement
For the year ended 31 December 2020

Net cash from operating activities

Investing activities

Interest received

Purchases of property, plant and equipment

Purchases of intangible assets

Receipts from net investment lease assets

Net cash used in investing activities

Financing activities

Costs of refinancing the bank facility

Repayment of the lease liabilities

Proceeds on disposal of partial interest in a subsidiary

Interest paid

Issue of ordinary share capital

Net cash used in financing activities

Net decrease in cash and cash equivalents

Effect of foreign exchange rate changes

Cash and cash equivalents at 1 January

Cash and cash equivalents at 31 December

Note

2020
£’000

3,162

410

(356)

(1,408)

117

2019
£’000

1,138

499

(1,477)

(2,184)

157

(1,237)

(3,005)

(110)

(1,783)

329

(60)

—

(1,624)

301

(402)

21,957

21,856

—

(1,770)

—

(444)

(2,179)

(4,046)

25,955

21,957

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

Notes to the financial statements

1. General information
CPPGroup Plc (the Company) is a public company limited by shares incorporated in England and Wales under the Companies Act 2006 and
domiciled in the United Kingdom. Its registered office is 6 East Parade, Leeds LS1 2AD. The Group comprises CPPGroup Plc and its
subsidiaries. The Group’s principal activity during the year was the provision of assistance products.

The consolidated and Company financial statements are presented in pounds sterling, the functional currency of the Company. All financial
information is rounded to the nearest thousand (£’000) except where otherwise indicated. Foreign operations are included in accordance
with the policies set out in note 3.

The Company has taken advantage of the exemption in the Companies Act 2006, section 408, not to present its own income statement.
The Company reported a profit after tax for the year of £10,676,000 (2019: £18,210,000) which included dividends received from subsidiary
undertakings of £14,000,000 (2019: £21,840,000).

2. Adoption of new Standards
New Standards adopted
The following Standards and Interpretations have become effective and have been adopted in these financial statements. The IFRS 16
practical expedient is effective for periods beginning on or after 1 June 2020 and has therefore been early adopted by the Group. There are
no other Standards or Interpretations that have been adopted early in these financial statements.

Standard/Interpretation

IFRS 3 (amendments)

IAS 1 (amendments)

IAS 8 (amendments)

Subject

Business combinations – definition of a business

Presentation of financial statements – definition of material

Accounting estimates – definition of material

IFRS 16 (practical expedient)

COVID-19 related rent concessions

Standards not yet applied
At the date of authorisation of these financial statements, the following relevant Standards and Interpretations, which have not been applied
in these financial statements, were in issue but not yet effective (and in some cases have not yet been adopted by the EU):

Standard/Interpretation

Subject

IAS 1

IFRS 17

Presentation of financial statements

Insurance contracts

Period first applies
(year ended)

31 December 2022

31 December 2023

The Group has yet to quantify the impact of these new standards but does not expect them to have a material impact on the Group in
future periods.

3. Significant accounting policies
Basis of preparation
These consolidated financial statements on pages 55 to 92 present the performance of the Group for the year ended 31 December 2020.
The financial statements have been prepared in accordance with international accounting standards in conformity with the requirements
of the Companies Act 2006 and International Financial Reporting Standards (IFRSs). The consolidated financial statements have been
prepared under the historical cost basis.

The Company meets the definition of a qualifying entity under Financial Reporting Standard 100 (FRS 100) issued by the Financial Reporting
Council (FRC). Accordingly, the financial statements have been prepared in accordance with FRS 101 Reduced Disclosure Framework as
issued by the FRC incorporating the Amendments to FRS 101 issued by the FRC in July 2015 and July 2016. The Company financial
statements have also been prepared under the historical cost basis.

As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available in relation to Standards not yet effective,
presentation of a cash flow statement, share-based payments and related party transactions.

Restatement of disclosures
In December 2019, the Card Protection policy book in the Italian branch of Card Protection Plan Limited (CPPL) was transferred to CPP Italia
Srl, an Italian legal entity in the Ongoing Operations segment. The Italian branch of CPPL has subsequently been closed in 2020. The revenue
and EBITDA associated with the policy book is material and in 2020 has been recognised in Ongoing Operations. As a result, in accordance
with IFRS 8 Operating Segments, the Group has restated the comparative information to transfer the relevant Italian results from Restricted
Operations to Ongoing Operations. The transfer recognised between segments in the comparative information for revenue is £2,913,000 and
for EBITDA is £1,035,000. See note 5.

On 29 May 2020, a share consolidation was undertaken on the basis of one new ordinary share of £1 issued for every 100 former ordinary
shares of 1 penny. Refer to note 33 for further details. In accordance with IAS 33 Earnings per Share, the share consolidation and change
in nominal value of ordinary shares has resulted in a restatement of the comparative information, see note 14.

Going concern
The Board of Directors has, at the time of approving the consolidated financial statements, a reasonable expectation that the Company and
the Group have adequate resources to continue in operational existence for at least 12 months from the date of this report. Accordingly they
continue to adopt the going concern basis of accounting in preparing the consolidated financial statements. Further details of the Directors’
assessment are set out in the Directors’ Report on page 46.

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

3. Significant accounting policies continued
Basis of consolidation
The consolidated financial statements include the results, cash flows, assets and liabilities of the Company and the entities under its control.
Control is achieved when the Company has power over the investee; is exposed or has rights to variable return from its involvement with the
investee; and has the ability to use its power to affect its returns.

Subsidiary undertakings are all entities over which the Group has the power to govern the financial and operating policies. The power to govern
is also achieved when the Group is exposed to variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. This power is generally accompanied by the Group having a shareholding of more than one half of the voting
rights. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date
of acquisition or up to the effective date of disposal. Adjustments are made, where necessary, to the financial statements of subsidiaries to bring
their accounting policies into line with Group policies. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

Exceptional items
Items which are exceptional, being material in terms of size and/or nature, are presented separately from underlying business performance in the
consolidated income statement. The separate reporting of exceptional items helps provide an indication of the Group’s underlying business performance.

Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event; it is probable that the
Group will be required to settle that obligation; and a reliable estimate can be made of the amount of the obligation. The amount recognised
as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account
the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is
recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Share-based payments
The Group’s current share plan under which it has issued share options is the 2016 Long Term Incentive Plan (2016 LTIP). Costs in relation
to the 2016 LTIP are disclosed within administrative expenses.

The Group has an additional share-based payment scheme in the form of a Realisation Proceeds Plan (RPP). This scheme is treated as cash
or equity-settled dependent upon the distributable proceeds resulting from a realisation event. The RPP scheme has been issued to certain
employees and vests once a realisation event occurs. At the date at which the realisation event occurs the fair value of the award will be
assessed and recognised through the income statement. The awards will be settled immediately following the realisation event with no such
vesting period occurring and no subsequent measurement required.

The Group has issued share options to certain of its employees through legacy share plans which consist of the Matching Share Plan (MSP)
and the Restricted Stock Plan (RSP). There are no costs recognised in relation to these plans in the consolidated income statement. Options
under these plans have vested and remain available for exercise.

Share options are treated as equity-settled if the Group has the ability to determine whether to settle exercises in cash or by the issue of
shares. Share options are measured at fair value at the date of grant, based on the Group’s estimate of shares that will eventually vest, and
adjusted for the effect of non-market based vesting conditions each year. Non-market vesting conditions include a change in control of the
Group and are considered by the Directors at each year end. The fair value of equity-settled share-based payments is expensed in the
consolidated income statement on a straight line basis over the vesting period, with a corresponding increase in equity, subject to adjustment
for forfeited options.

Where the terms of an equity-settled award are modified, the cost based on the original award terms continues to be recognised over the
remainder of the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental
fair value of any modification, based on the fair value of the original award and the fair value of the modified award, both as measured on the
date of modification. No reduction is recognised if the difference is negative.

For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the
liability. At each balance sheet date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured,
with any changes in fair value recognised in profit or loss for the year.

The fair value of share options is measured by use of the Black Scholes option pricing model and the Monte Carlo simulation model.

Revenue recognition
Retail assistance revenue
The Group provides a range of assistance products and services that may be insurance backed as well as including a bundle of assistance
and other services. Revenue attributable to the Group’s assistance products is comprised of the prices paid by customers for the assistance
products net of any cancellations, sales taxes and underwriting fees dependent on the terms of the arrangement.

Revenue is recognised either immediately on inception of a policy or over the duration of the policy where we have ongoing obligations
to fulfil with a customer. The Group’s performance obligations typically include a combination of intermediary services, claims handling and
policy administration services and providing access to a range of relevant assistance benefits. This allocation of revenue is determined by
each product and its features and is calculated on a cost plus margin basis. Revenue recognised on inception relates to the Group’s role
as intermediary in the policy sale and immediate delivery of certain features. Revenue recognised over the life of the policy relates to the
administration process and ongoing services where obligations exist to provide future services, such as claims handling. The proportion
of recognition on inception and over a period of time varies across the Group’s suite of products dependent on the services performed and
product features included. Provisions for cancellations are made at the time revenue is recorded and are deducted from revenue.

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

3. Significant accounting policies continued
Revenue recognition continued
Retail assistance revenue continued
For certain other of the Group’s assistance products, there are no introduction fees. In these arrangements, revenue is comprised of the
subscriptions received from members, net of underwriting fees and exclusive of any sales taxes. These subscriptions are recognised over
the duration of the service provided.

Wholesale policies
Wholesale revenue is generally comprised of fees billed directly to business partners, exclusive of any sales taxes, and is recognised as those
fees are earned.

Non-policy revenue
Non-policy revenue is comprised of fees billed directly to customers or business partners for services provided under separate non-policy
based arrangements. Such revenue is recognised, exclusive of any sales taxes, as those fees are earned.

Contract assets
The Group recognises contract assets in the consolidated balance sheet. Contract assets represent costs that are incremental to obtaining
a customer contract, typically commission costs. Contract assets are recognised in the consolidated income statement in line with the profile
of the associated revenue within the relevant customer contract. These assets have been classified as either current or non-current reflecting
the period in which they are expected to be recognised through the consolidated income statement.

Contract liabilities
The Group recognises contract liabilities in the consolidated balance sheet. Contract liabilities have been classified as current or non-current,
reflecting the period in which future performance obligations are expected to be satisfied and when the liability is to be recognised in the
consolidated income statement.

Insurance revenue
Insurance contracts are those contracts that transfer significant insurance risk at the inception of the contract. Insurance risk is transferred
when the Group agrees to compensate a policyholder if a specified uncertain future event (other than a change in a financial variable)
adversely affects the policyholder.

Revenue attributable to the Group’s insurance contracts comprises premiums paid by customers and is exclusive of any sales taxes and similar
duties. Premiums from insurance policies are recognised as revenue on a straight line basis over the life of the policy.

Provisions for unearned premiums are made, representing the part of gross premiums written that is estimated to be earned in the following
or subsequent financial periods, on a straight line basis for each policy. The provision for unearned premiums is recorded under insurance
liabilities on the consolidated balance sheet.

Acquisition costs are amortised over the life of the average policy. Acquisition costs which are expensed in the following or subsequent
accounting periods are recorded in the balance sheet as deferred acquisition costs and include a proportionate allowance for commissions
and post-sale set up costs incurred in respect of unearned premiums not amortised at the balance sheet date.

Insurance claims provisions
Claims incurred comprise the Group’s claims payments and internal settlement expenses during the period, together with the movement in
the Group’s provision for outstanding claims over the period, including an estimate for claims incurred but not reported. Differences between
the estimated cost and subsequent settlement of claims are recognised in the consolidated income statement in the year in which they
are settled.

Investments in subsidiaries
Investments in subsidiaries in the Company balance sheet are stated at cost less accumulated impairment losses. Investments are periodically
reviewed for impairment by comparing the carrying value to value in use.

Business combinations
The acquisitions of subsidiaries are accounted for using the acquisition method. The consideration transferred for acquisition of a subsidiary is
measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquired business. The acquired identifiable assets, liabilities and contingent liabilities that
meet the conditions for recognition under IFRS 3 Business Combinations are measured at their fair value at the acquisition date. Acquisition-
related costs are expensed as incurred.

Joint arrangements
Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification
depends on contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Group has one
joint venture at the time of reporting. Investments in joint ventures are accounted for using the equity method of accounting after being
recognised initially at cost on the consolidated balance sheet. The investment is subsequently adjusted to recognise the Group’s share of
post-acquisition profits or losses and the Group’s share of profit or loss is recognised in the consolidated income statement. Dividends
received or receivable from joint ventures are recognised as a reduction in the carrying amount of the investment.

When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other
unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf
of the other entity.

The carrying amount of equity-accounted investments is tested for impairment in accordance with Group policy.

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

3. Significant accounting policies continued
Non-controlling interests
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that is not held by the Group and is presented
within equity on the consolidated balance sheet, separately from the Company’s equity holdings. The Group recognises any non-controlling
interest in acquired entities on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share
of the acquired entity’s net identifiable assets.

Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value
of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised
as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

Goodwill is not subject to amortisation but is tested for impairment annually.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on disposal.

Impairment
For the purpose of impairment testing, goodwill is allocated to cash generating units (CGUs). If the recoverable amount of a CGU is less than
its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit. An impairment
loss for goodwill is not reversed in a subsequent period.

Intangible assets
Externally acquired software
Externally acquired software is measured at purchase cost and is amortised on a straight line basis over its estimated useful life of four
to five years.

Internally generated software
Internally generated intangible assets arising from the Group’s software development programmes are recognised from the point at which
the following conditions are met:

• an asset is created that can be identified;

• it is probable that the asset created will generate future economic benefits; and

• the development cost of the asset can be measured reliably.

Internally generated software is amortised on a straight line basis over its estimated useful life of four to five years.

Intangible assets arising from business combinations
Intangible assets arising from business combinations are initially stated at their fair values and amortised over their useful economic lives as follows:

• Business partner relationships: in line with the relevant projected revenues.

Property, plant and equipment
Property, plant and equipment are shown at purchase cost, net of accumulated depreciation.

Depreciation is provided at rates calculated to write off the costs, less estimated residual value, of each asset over its expected useful life
as follows:

Computer systems:

4–5 years straight line

Furniture and equipment:

4 years straight line

Leasehold improvements:

Over the shorter of the life of the lease and the useful economic life of the asset

Impairment of intangible assets and property, plant and equipment
Annually the Group reviews the carrying amounts of both its intangible assets and property, plant and equipment to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss, if any. The recoverable amount is the higher of the fair value less costs
to sell and value in use. In assessing value in use, the estimated future cash flows are discounted at their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the assets for which the estimates
of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the
asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit may be increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset or cash generating unit in prior years.

Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and bank deposits with a term from inception of three months or less, less bank overdrafts
where there is a right to offset. Bank overdrafts are presented as current liabilities to the extent that there is no right to offset with cash
balances in the same currency.

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

3. Significant accounting policies continued
Leases
The Group assesses whether a contract is or contains a lease at inception of the contract. The Group’s leases include properties, equipment
and motor vehicles. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in
which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and low value assets. For these
leases, the Group recognises the lease payments as an expense through the consolidated income statement on a straight line basis over the
term of the lease.

Lease liabilities
The lease liability is initially measured at the present value of the lease payments, discounted by using the relevant incremental borrowing
rate available to the Group in each territory where a lease is held. Lease liabilities include the net present value of the following: lease
payments; fixed payments, including any incentives; variable lease payments; and amounts payable under residual value guarantees.

Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the consolidated income statement over
the lease period providing a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets
Right-of-use assets are measured at cost comprising the following: the amount of the initial measurement of lease liability and any lease
payments made at or before the commencement date; less any lease incentives received, any initial direct costs and final committed
restoration costs.

The right-of-use asset is depreciated on a straight line basis over the shorter of the asset’s useful life and the lease term.

Variable lease payments
When a lease includes terms that change the future lease payments, such as index-linked reviews, the lease liability (and related right-of-use
asset) is remeasured based on the revised future lease payments at the date on which the revision is triggered.

Extension and termination options
A number of the Group’s lease arrangements include extension and termination options. These terms are used to maximise operational
flexibility in respect of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not
by the respective lessor. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably
certain to be extended (or not terminated), considering historical trends and circumstances of the lease arrangement.

Impact of IFRS 16 practical expedient for COVID-19 related rent concessions
The practical expedient permits a lessee to elect not to assess whether a COVID-19-related rent concession is a lease modification. A lessee
that makes this election shall account for any change in lease payments resulting from the COVID-19-related rent concession applying
IFRS 16 as if the change were not a lease modification.

The practical expedient applies only to rent concessions occurring as a direct consequence of COVID-19 and only if all of the following
conditions are met:

a) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration

for the lease immediately preceding the change;

b) any reduction in lease payments affects only payments originally due on or before 30 June 2021 (a rent concession meets this condition
if it results in reduced lease payments on or before 30 June 2021 and increased lease payments that extend beyond 30 June 2021); and

c) there is no substantive change to other terms and conditions of the lease.

In the current financial year, the Group has applied the amendment to IFRS 16 (as issued by the IASB in May 2020) in advance of its effective
date. The application of the amendment has not had a material impact on the Group’s financial statements, refer to note 28.

Taxation
Taxation on the profit or loss for the year comprises both current and deferred tax as well as adjustments in respect of prior years. Taxation
is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the tax is
also included within equity. Current tax is the expected tax payable on the taxable income for the year using tax rates that have been enacted
or substantively enacted by the balance sheet date.

Deferred tax is provided in full, using the liability method, on all taxable and deductible temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised
to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or liability
is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiary undertakings except where the
Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the
foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when they relate to income tax levied by the same taxation authority and the Group/Company intends to settle its current tax assets and
liabilities on a net basis.

Pension costs
Pension costs represent contributions made by the Group to defined contribution pension schemes. These are expensed as incurred.

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

3. Significant accounting policies continued
Foreign currencies
In preparing the financial information of the individual entities that comprise the Group, transactions in currencies other than the entity’s
functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At each balance sheet date, monetary
assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the balance sheet
date. Income and expense items are translated at the average exchange rates for the period. Exchange differences are classified as equity
and transferred to the Group’s translation reserve.

Goodwill and fair value adjustments arising on the acquisition of foreign entities are treated as assets and liabilities of the foreign entity and
are translated at the closing rate.

On disposal of foreign operations, the cumulative amount of exchange differences previously recognised directly in equity for that foreign
operation are transferred to the consolidated income statement as part of the profit or loss on disposal.

Financial instruments
Financial assets and financial liabilities are recognised in the consolidated balance sheet when the Group becomes a party to the contractual
provisions of the instrument.

Financial assets
Trade receivables, loans, other receivables or cash and cash equivalents that have fixed or determinable payments that are not quoted
in an active market are initially recorded at fair value and subsequently at amortised cost using the effective interest method, less allowance
for any estimated irrecoverable amounts.

Investments in debt instruments are initially measured at fair value, including transaction costs directly attributable to the acquisition of the
financial asset. Financial assets held at fair value through profit and loss are initially recognised at fair value and transaction costs are expensed.

Where debt instruments are designated as ‘fair value through profit and loss’, gains and losses arising from changes in fair value are included
in the income statement for the period. For debt instruments designated as ‘fair value through other comprehensive income’ gains or losses
arising from changes in fair value are recognised in other comprehensive income. Equity investments that do not have a quoted market price
in an active market and whose fair value cannot be reliably measured by other means are held at amortised cost.

Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Equity instruments are measured at fair value with gains or losses recognised through the income statement.

Financial liabilities
Financial liabilities, including borrowings, are initially measured at the proceeds received, net of transaction costs. They are subsequently
measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

4. Critical accounting judgements and key sources of estimation uncertainty
The preparation of consolidated financial statements in accordance with IFRS requires the use of assumptions, estimates and judgements
that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results in the future may differ from those reported.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

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.

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

4. Critical accounting judgements and key sources of estimation uncertainty continued
Assumptions and estimation uncertainties
Contractual matters
The Group has made certain commercial and contractual decisions that are not yet agreed with all affected parties. The Group is satisfied
with its position from both a legal and regulatory perspective. Appropriate financial provisions are in place in respect of these matters and
are included in trade and other payables. The Group has applied the reduced disclosures available within IAS 37 as it does not consider
it appropriate to disclose the detail of contractual matters as it may prejudice any future discussions.

The appropriate level of financial provision may vary and impact the consolidated income statement depending on the outcome of any future
discussions with those parties affected.

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 would be reflected through the consolidated income statement.

5. 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’s
operating segments are:

• Ongoing Operations: India, China, Turkey, Spain, Germany, Portugal, Italy, Mexico, Malaysia, the UK, Bangladesh, Blink and Southeast

Asia. These businesses have no regulatory restrictions on new sales activity. These markets represent a combination of businesses in which
we continue to invest and drive new opportunities as well as ones that have been strategically assessed and wound down or exited.

• Restricted Operations: historic renewal books of our UK regulated entities; CPPL, including its overseas branch in Malaysia; and HIL.

As a result of regulatory restrictions we are not permitted to undertake new sales in these businesses.

• 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 both Ongoing Operations and Restricted Operations for statutory purposes.

In December 2019, the Italian renewal book was transferred from Restricted Operations to the EU Hub in Ongoing Operations. In accordance
with IFRS 8 the comparatives have been restated for this segment reallocation. See note 3.

Segment revenue and performance for the current and comparative periods are presented below:

Year ended 31 December 2020

Revenue – external sales

Cost of sales

Gross profit

Administrative expenses excluding depreciation, amortisation
and exceptional items

Ongoing
Operations
2020
£’000

Restricted
Operations
2020
£’000

Central
Functions
2020
£’000

Total
2020
£’000

130,076

(102,815)

27,261

11,068

(1,375)

9,693

—

141,144

(104,190)

36,954

(19,231)

(5,887)

(4,412)

(29,530)

Segmental EBITDA

Share of loss of joint venture

EBITDA

Depreciation and amortisation

Exceptional items (note 6)

Operating profit

Investment revenues

Finance costs

Other gains and losses

Profit before taxation

Taxation

Loss for the year

8,030

3,806

(4,412)

7,424

(264)

7,160

(3,495)

(356)

3,309

412

(415)

(1,294)

2,012

(3,609)

(1,597)

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

5. Segmental analysis continued

Year ended 31 December 2019

Revenue – external sales

Cost of sales

Gross profit

Administrative expenses excluding depreciation, amortisation,
and exceptional items

Segmental EBITDA

Share of loss of joint venture

EBITDA

Depreciation and amortisation

Exceptional items (note 6)

Operating profit

Investment revenues

Finance costs

Profit before taxation

Taxation

Loss for the year

* Restated for a change in the composition of operating segments. See note 3.

Segment assets

Ongoing Operations

Restricted Operations

Central Functions

Total segment assets

Unallocated assets

Consolidated total assets

Ongoing
Operations
(Restated*)
2019
£’000

Restricted
Operations
(Restated*)
2019
£’000

123,875

(97,018)

26,857

(21,282)

5,575

14,487

(856)

13,631

(7,023)

6,608

Central
Functions
2019
£’000

—

(6,421)

Total
2019
£’000

138,362

(97,874)

40,488

(34,726)

5,762

(320)

5,442

(3,305)

(510)

1,627

508

(1,003)

1,132

(2,076)

(944)

2020
£’000

42,536

7,564

5,113

55,213

1,920

57,133

2019
(Restated*)
£’000

43,874

11,278

4,076

59,228

3,358

62,586

* Restated for a change in the composition of operating segments. See note 3.

Goodwill, deferred tax and investment in joint venture are not allocated to segments.

Capital expenditure

Ongoing Operations

Restricted Operations

Central Functions

Total assets

Intangible assets

Property, plant and equipment

Right-of-use assets

2020
£’000

1,055

352

1,408

2019
£’000

1,857

295

2,184

2020
£’000

255

356

2019
£’000

1,069

145

263

1,477

2020
£’000

1,568

—

523

2019
£’000

3,065

—

2,091

3,065

CPPGroup Plc Annual Report & Accounts 2020

5. Segmental analysis continued
Revenues from major products

Retail assistance policies

Retail insurance policies

Wholesale policies

Non-policy revenue

Consolidated total revenue

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

2020
£’000

2019
£’000

131,022

128,300

2,738

7,299

3,859

6,106

141,144

138,362

Major product streams are disclosed on the basis monitored by senior management. For the purpose of this product analysis, ‘retail assistance
policies’ are those which may be insurance backed but contain a bundle of assistance and other benefits; ‘retail insurance policies’ are those
which protect against a single insurance risk; ‘wholesale policies’ are those which are provided by business partners to their customers in relation
to an ongoing product or service which is provided for a specified period of time; and ‘non-policy revenue’ is that which is not in connection with
providing an ongoing service to policyholders for a specified period of time. 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.

Disclosures in notes 8, 21 and 26 regarding accounting for insurance contracts provide information relating to all contracts within the scope
of IFRS 4 and therefore include both retail insurance policies and the insurance components of retail assistance and wholesale policies.

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:

At a point in time

Over time

Total

2020
£’000

117,903

23,241

141,144

2019
£’000

115,014

23,348

138,362

Geographical information
The Group operates across a wide number of territories, of which India, the UK and Spain are considered individually material. Revenue from
external customers and non-current assets (excluding investment in joint venture and deferred tax) by geographical location is detailed below:

Geographical location

India

Spain

Other

Total

External revenues

Non-current assets

2020
£’000

2019
£’000

108,406

12,082

7,538

13,118

99,613

14,176

8,608

15,965

2020
£’000

8,071

2,062

256

2,157

2019
£’000

7,791

3,490

481

2,846

141,144

138,362

12,546

14,608

Information about major customers
Revenue from the customers of one business partner in the Group’s Ongoing Operations segment represented approximately £73,739,000
(2019: £69,832,000) of the Group’s total revenue.

6. Exceptional items

Restructuring costs

Impairment of goodwill

Customer redress and associated costs

Exceptional charge included in operating profit

Other gains and losses – foreign exchange reclassification

Total exceptional charge included in profit before tax

Tax on exceptional items

Total exceptional charge after tax

Note

2020
£’000

161

880

(685)

356

1,294

1,650

—

1,650

2019
£’000

510

—

510

—

510

(125)

385

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

6. Exceptional items continued
Restructuring costs of £161,000 primarily relate to redundancy costs and onerous contracts associated with the closure of the Southeast Asia
operation. The prior year restructuring of £510,000 relates to redundancy programmes in Spain and the UK-based central IT function.

Impairment of goodwill of £880,000 (2019: £nil) comprises the write down of goodwill relating to CPP Innovation Limited (Blink) of £776,000
and Valeos (2013) Limited (Valeos) of £104,000. The Directors decided to write down the goodwill following an assessment of discounted
cash flow forecasts of each business. Blink’s primary product, Travel, has been severely impacted by COVID-19 with market uncertainty continuing.

Customer redress and associated costs are a credit of £685,000 (2019: £nil) and relate to the reversal of certain redress payments made
in prior years. The credit is considered exceptional as it is a reversal of exceptional charges recognised in previous years.

Other gains and losses in the year reflects a reclassification of cumulative translation adjustments of £1,294,000 (2019: £nil) from the
translation reserve to the income statement. This related to the closure of overseas branches in Hong Kong and Italy.

7. Loss for the year

Loss for the year has been arrived at after charging/(crediting):

Operating lease charges

Net foreign exchange (gains)/losses

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Impairment of goodwill

Impairment of right-of-use assets

Impairment of intangible assets

Loss on disposal of property, plant and equipment

Loss on disposal of intangible assets

Customer redress and associated costs

Other gains and losses

Other restructuring costs

Staff costs

Share-based payments

Restructuring/redundancy costs

Other staff costs

Total staff costs

Movement in the lifetime expected credit loss

Fees payable to Deloitte LLP and its associates for audit and non-audit services are as follows:

Payable to the Company’s auditor for the audit of the Company and consolidated financial statements

Fees payable to the Company’s auditor and its associates for other services to the Group:

– Audit of the Company’s subsidiaries, pursuant to legislation

Total audit services

Other services

Total non-audit services

Note

6,9

Total

2020
£’000

256

(249)

912

1,471

1,071

880

—

(685)

1,294

(62)

499

223

27,368

28,090

—

2020
£’000

327

423

428

2019
£’000

360

395

690

1,302

991

—

322

—

1,220

785

27,806

29,811

—

2019
£’000

322

384

399

8. Insurance revenues and costs
Revenues and costs arising from all of the Group’s insurance contracts as defined by IFRS 4 are set out below. An analysis of the Group’s
revenue from retail insurance only policies is set out in note 5.

Revenue earned from insurance activities

Gross premiums written

Change in provision for unearned premiums

Earned premiums

CPPGroup Plc Annual Report & Accounts 2020

2020
£’000

2,406

(182)

2,224

2019
£’000

1,448

(158)

1,290

8. Insurance revenues and costs continued
Costs incurred from insurance activities

Claims (recovered)/paid

– Gross amount

– Decrease in provision for gross claims

Acquisition costs

– Costs incurred

– Movement in deferred acquisition costs

Other expenses

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

2020
£’000

2019
£’000

(9)

(3)

(12)

—

1,121

1,110

(19)

—

1,223

1,282

The following assumption has an impact on insurance revenues:

• Unearned premiums on prepaid insurance policies are recognised as revenue on a straight line basis over the life of the policy. Changes

to the expected life of classes of policies will therefore impact the period in which these items are recognised.

Earned premiums of £2,224,000 is higher than revenue from retail insurance disclosed in note 5. Earned premiums includes charges for
assistance features and as such are disclosed within revenue from retail assistance in note 5.

Other expenses are costs associated with servicing customers and administration costs related to operating a regulated insurance business
in the UK.

Claims recovered in the year of £9,000 includes £17,000 relating to the reversal of claims cheques paid in prior years that have not been cashed.

9. Staff costs
Staff costs during the year (including Executive Directors)

Wages and salaries

Social security costs

Restructuring/redundancy costs

Share-based payments (see note 34)

Pension costs

Average number of employees

Ongoing Operations

Restricted Operations

Central Functions

Total

2020
£’000

24,064

2,508

223

499

796

2019
£’000

24,200

2,800

785

1,220

806

28,090

29,811

2020

1,898

2,041

2019

1,634

102

1,800

The increase in average number of employees in Ongoing Operations reflects the growth in Globiva in the current year.

The Group utilises third party service providers in a number of its overseas operations.

Total staff costs incurred by the Company during the year were £3,342,000 (2019: £3,962,000) and the average number of employees
was 10 (2019: 11).

Details of the remuneration of Directors are included in the Directors’ Remuneration Report on pages 42 to 44.

10. Investment revenues

Interest on bank deposits

Interest on net investment lease assets

Total

2020
£’000

410

412

2019
£’000

499

508

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

11. Finance costs

Interest on borrowings

Amortisation of capitalised loan issue costs

Interest on lease liabilities

Other – exchange movements

12. Taxation

Current tax charge:

UK corporation tax

Foreign tax

Adjustments in respect of prior years

Total current tax

Deferred tax charge:

Origination and reversal of timing differences

Impact of change in UK tax rates

Adjustments in respect of prior years

Total deferred tax

Total tax charge

Total

2020
£’000

542

(249)

415

2020
£’000

156

2,926

(29)

3,053

546

—

556

3,609

2019
£’000

514

395

1,003

2019
£’000

1,836

(103)

1,804

254

(10)

272

2,076

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:

Ongoing operations:

India

EU hub

Turkey

Rest of World

Total Ongoing Operations

Restricted Operations

Central Functions

Total tax charge

2020
£’000

2019
£’000

2,428

1,438

584

340

431

166

—

3,359

2,035

—

250

—

3,609

2,076

Overall, UK profits chargeable to corporation tax are offset by group relief surrendered from fellow UK entities.

UK corporation tax is calculated at 19% (2019: 19%) of the estimated assessable profit for the year. The March 2021 Budget announced an
increase to the main rate of corporation tax to 25% from April 2023. This rate has not been substantively enacted at the balance sheet date,
as a result deferred tax balances as at 31 December 2020 continue to be measured at 19%. If all of the deferred tax was to reverse at the
amended rate the impact to the closing deferred tax position would be to increase the deferred tax asset by £15,000.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions – India 25.2% inclusive of surcharges
(2019: 25.2%); Spain 25% (2019: 25%); Turkey 22% (2019: 22%) which is reducing to 20% in 2021; and Italy 27.5% (2019: 27.5%).
Non-UK deferred tax is provided at the local prevailing tax rate.

CPPGroup Plc Annual Report & Accounts 2020

12. Taxation continued
The charge for the year can be reconciled to the profit per the consolidated income statement as follows:

Profit before tax

Effects of:

Tax at the UK corporation tax rate of 19% (2019: 19%)

Unprovided deferred tax arising on losses1

Other movement in unprovided deferred tax

Recurring expenses not deductible for tax

One-off costs not deductible for tax2

Provision for withholding tax on future distributions3

Other expense not chargeable for tax purposes

Higher tax rates on overseas earnings4

Adjustments in respect of prior years

Impact of change in future tax rates on deferred tax

Surplus of share option charge compared to tax allowable amount

Total tax charged to income statement

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

2020
£’000

2,012

2019
£’000

1,132

382

699

185

304

395

789

171

552

(29)

151

215

440

141

339

—

250

521

(75)

(10)

184

3,609

2,076

Effective tax charge
The net tax charge of £3,609,000 on a profit before tax of £2,012,000 results in an effective tax rate of 179% (2019: 183%) which is higher
than the UK standard rate of 19%. Additional information is provided below:

1. deferred tax has not been recognised on the losses arising in developing markets as the short-term profit expectations do not support the

recognition of deferred tax assets in these areas;

2. there are one-off consolidation adjustments which are not tax deductible and therefore increase the tax charge, such as the impairment

of Blink goodwill and foreign exchange losses arising on the closure of overseas branches;

3. there is a withholding tax charge arising on repatriation of funds from overseas countries; and

4. tax is chargeable at the local statutory rate in our profitable countries, which are higher than the UK corporate income tax rate of 19%.

The Group’s effective tax rate is expected to be considerably higher than the UK statutory tax rate in future years as profits continue to be
generated in territories with higher than UK tax rates, withholding taxes are provided on overseas distributions and deferred tax credits are
not taken on losses arising in developing markets. The Group expects the rate to reduce from the 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:

Deferred tax (credit)/charge

Timing differences on business partner intangible

Total deferred tax (credit)/charge

Total tax (credited)/charged to reserves

2020
£’000

2019
£’000

(58)

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

13. Dividends
After 31 December 2020, the Directors have proposed a final dividend of 25 pence per ordinary share. The proposed final dividend is subject
to approval by shareholders at the AGM and has not been included as a liability in these financial statements. The proposed dividend is expected
to be paid on 12 May 2021 to all shareholders on the Register of Members on 9 April 2021 with the ex-dividend date being 8 April 2021.

14. Loss per share
Basic and diluted loss per share has been calculated in accordance with IAS 33 Earnings per Share. Underlying loss per share has 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. The diluted loss per share is therefore equal to the basic loss per share in the current and prior year.

Loss

Loss for the purposes of basic and diluted loss per share

Exceptional items (net of tax)

Loss for the purposes of underlying basic and diluted loss per share

Number of shares

Weighted average number of ordinary shares for the purposes of basic and diluted loss per share and basic
and diluted underlying loss per share

Basic and diluted loss per share

Basic and diluted underlying loss per share

* Restated for the share consolidation completed on 29 May 2020. See note 3.

Total

2020
£’000

(1,680)

1,650

(30)

2019
£’000

(1,009)

385

(624)

2020
Number
(thousands)

2019
(Restated *)
Number
(thousands)

8,713

8,629

Total

2020
Pence

(19.28)

(0.34)

2019
(Restated *)
Pence

(11.69)

(7.23)

The Group has 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 loss per share.

15. Goodwill

Cost and carrying value

At 1 January

Impairment charge

At 31 December

2020
£’000

1,492

(880)

612

2019
£’000

1,492

—

1,492

Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are expected to benefit from that business combination.
The carrying amount of goodwill has been allocated as follows:

Blink

Valeos

Globiva

At 31 December

2020
£’000

—

612

2019
£’000

776

104

612

1,492

During the financial year ended 31 December 2020 a total impairment charge of £880,000 was recognised against goodwill held (2019: £nil).
This was in relation to the acquired goodwill of Blink and Valeos, which have been written down in full, see note 6.

The Group tests goodwill annually for impairment or more frequently if there is indication goodwill may be impaired.

CPPGroup Plc Annual Report & Accounts 2020

15. Goodwill continued
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations
are discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount
rates using rates that reflect current market assessments of the time value of money and risks specific to the CGU. The growth rates are
based on business plans and reflect the early development stage of the CGUs. The pre-tax rate used to discount the forecast cash flows
of the CGU at 31 December 2020 is 11% (2019: 11%).

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

16. Other intangible assets

Cost

At 1 January 2019

Additions

Disposals

Exchange adjustments

At 1 January 2020

Additions

Disposals

Exchange adjustments

At 31 December 2020

Accumulated amortisation

At 1 January 2019

Provided during the year

Disposals

Impairment

Exchange adjustments

At 1 January 2020

Provided during the year

Disposals

Exchange adjustments

At 31 December 2020

Carrying amount

At 31 December 2019

At 31 December 2020

Business
partner
relationships
£’000

Internally
generated
software
£’000

Externally
acquired
software
£’000

304

340

—

644

—

1,600

1,237

—

(76)

2,761

1,267

—

(79)

3,345

607

(7)

(149)

3,796

141

(265)

(23)

644

3,949

3,649

Total
£’000

5,249

2,184

(7)

(225)

7,201

1,408

(265)

(102)

8,242

1,956

2,461

—

(1)

142

—

(6)

505

339

—

(7)

837

501

—

(4)

564

(1)

322

(97)

2,744

428

(211)

(17)

223

1,334

2,944

557

421

1,924

2,615

1,052

705

991

(1)

322

(105)

3,668

1,071

(211)

(27)

4,501

3,533

3,741

Amortisation of intangible assets totalling £1,071,000 (2019: £991,000) is recognised through administrative expenses in the consolidated
income statement.

Internally generated software additions of £1,267,000 (2019: £1,237,000) reflect the capitalisation of staff costs in IT development projects.

Internally generated software includes £622,000 (2019: £765,000) relating to assets in development which are not yet operational and are
not amortised. The assets held at 31 December 2020 have an anticipated delivery date of 2022.

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

17. Property, plant and equipment

Leasehold
improvements
£’000

Computer
systems
£’000

Furniture and
equipment
£’000

Cost

At 1 January 2019

Additions

Disposals

Exchange adjustments

At 1 January 2020

Additions

Disposals

Exchange adjustments

At 31 December 2020

Accumulated depreciation

At 1 January 2019

Provided during the year

Disposals

Exchange adjustments

At 1 January 2020

Provided during the year

Disposals

Exchange adjustments

At 31 December 2020

Carrying amount

At 31 December 2019

At 31 December 2020

919

174

(33)

(54)

1,006

103

(150)

(27)

932

385

197

(33)

(34)

515

222

(136)

(19)

582

491

350

3,461

1,178

(262)

(193)

4,184

223

(776)

(44)

3,587

2,605

409

(244)

(130)

2,640

582

(761)

2,492

1,544

1,095

938

125

(309)

(59)

695

(213)

(33)

479

611

(293)

(34)

368

108

(212)

(10)

254

327

225

Total
£’000

5,318

1,477

(604)

(306)

5,885

356

(1,139)

(104)

4,998

3,601

690

(570)

(198)

3,523

912

(1,109)

3,328

2,362

1,670

CPPGroup Plc Annual Report & Accounts 2020

18. Leases
The Group’s right-of-use assets are as follows:

Cost

At 1 January 2019 – on adoption of IFRS 16

Additions

Exchange adjustments

At 1 January 2020

Additions

Disposals

Exchange adjustments

At 31 December 2020

Accumulated depreciation

At 1 January 2019 – on adoption of IFRS 16

Provided during the year

Exchange adjustments

At 1 January 2020

Provided during the year

Disposals

Impairment

Exchange adjustments

At 31 December 2020

Carrying amount

At 31 December 2019

At 31 December 2020

The Group has recognised the following amounts in loss for the year:

Depreciation and impairment of right-of-use assets

Credit relating to rent concessions

Interest expense on lease liabilities

Interest received on net investment lease asset

Expense relating to short-term leases

Expense relating to leases of low value assets

At 31 December 2020, the Group was committed to £101,000 (2019: £215,000) for short-term leases.

The net cash outflow for leases amounts to £1,666,000 (2019: £1,613,000).

19. Investment in subsidiaries

Company

Cost

At 1 January

Acquisitions

Disposals

At 31 December

Provisions for impairment

At 1 January

Recognised in the year

At 31 December

Carrying amount

At 1 January

At 31 December

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

Property
£’000

Motor vehicles
£’000

Equipment
£’000

Total
£’000

4,617

3,024

(421)

7,220

2,062

(1,344)

(297)

7,641

—

1,137

(46)

1,091

1,323

(637)

(52)

1,766

6,129

5,875

196

(19)

218

(29)

(9)

209

—

(4)

(14)

—

(6)

138

133

310

—

310

—

(20)

—

290

—

(12)

—

139

234

151

2020
£’000

1,512

(86)

542

(2)

160

5,123

3,065

(440)

7,748

2,091

(1,393)

(306)

8,140

—

1,302

(50)

1,252

1,471

(663)

(58)

2,043

6,496

6,097

2019
£’000

1,302

—

514

(9)

338

2020
£’000

15,597

—

15,597

—

15,597

15,545

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

19. Investment in subsidiaries continued
There have been no acquisitions or disposals of investments in the financial year ended 31 December 2020.

The investment impairment of £52,000 (2019: £nil) during the year reflects the closure of the operation in Southeast Asia.

Investments in Group entities at 31 December 2020 were as follows:

Country of
incorporation/
registration

Class of
shares held

Percentage
of share
capital held

Investments in subsidiary undertakings held directly

CPP Group Limited

CPP Worldwide Holdings Limited

CPP South East Asia Assistance Services Pte. Limited

England & Wales

Ordinary shares

England & Wales

Ordinary shares

Singapore

Ordinary shares

Investments in subsidiary undertakings held through an intermediate subsidiary

Card Protection Plan Limited

CPP Assistance Services Limited

CPP European Holdings Limited

CPP Holdings Limited

CPP International Holdings Limited

CPP Services Limited

CPPGroup Services Limited

Homecare (Holdings) Limited

Homecare Insurance Limited

Valeos (2013) Limited

Blink Innovation (UK) Limited

CPP Innovation Limited

CPP Technology Services (Shanghai) Co. Limited

CPP Creating Profitable Partnerships GmbH

CPP Asia Limited

CPP Assistance Services Private Limited

Globiva Services Private Limited

CPP Global Assistance Bangladesh Limited

CPP Italia Srl

CPP Malaysia Sdn. Bhd

Servicios de Asistencia a Tarjetahabientes CPP Mexico, S. de R.L. de C.V.

Profesionales en Proteccion Individual, S. de R.L. de C.V.

CPP Mediacion Y Proteccion SL

CPP Proteccion Y Servicios de Asistencia SAU

CPP Real Life Services Support SL

Key Line Auxiliar SL

CPP Sigorta Aracilik Hizmetleri Anonim Sirketi

CPP Yardim ve Destek Hizmetleri Anonim Sirketi

100%

51%

100%

England & Wales

Ordinary shares

England & Wales

Ordinary shares

England & Wales

Ordinary shares

England & Wales

Ordinary shares

England & Wales

Ordinary shares

England & Wales

Ordinary shares

England & Wales

Ordinary shares

England & Wales

Ordinary shares

England & Wales

Ordinary shares

England & Wales

Ordinary shares

England & Wales

Ordinary shares

Ireland

Ordinary shares

China

Ordinary shares

Germany

Ordinary shares

Hong Kong

Ordinary shares

India

Ordinary shares

Bangladesh

Ordinary shares

Italy

Ordinary shares

Malaysia

Ordinary shares

Mexico

Ordinary shares

Mexico

Ordinary shares

Spain

Ordinary shares

Turkey

Ordinary shares

Turkey

Ordinary shares

99.99%

On 11 August 2020, in accordance with performance targets established on acquisition, the Group sold 10% of its shares in Globiva Service
Private Limited to its founders. This has reduced the percentage of shares held by the Group from 61% to 51%. See note 35 for further detail.

The principal activity of all of the subsidiaries is to provide services in connection with the Group’s major product streams.

The individual entities’ registered addresses are shown in the Company offices section on page 95.

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

19. Investment in subsidiaries continued
The following subsidiaries are exempt from the requirements of the Companies Act 2006 relating to the audit of individual accounts by virtue
of section 479A of the Act.

CPP Group Limited

CPP Worldwide Holdings Limited

CPP European Holdings Limited

CPP Holdings Limited

CPP International Holdings Limited

CPP Services Limited

Valeos (2013) Limited

20. Investment in joint venture
Movement in the Group’s share in joint ventures is as follows:

Carrying amount at 1 January

Share of losses in the year

Carrying amount at 31 December

Company
number

06535283

07154018

04362765

01659493

04543668

03709675

08718589

2020
£’000

714

(264)

450

2019
£’000

1,034

(320)

714

The Group holds a 20% share of KYND Limited (KYND) whose registered office is International House, Canterbury Crescent, London SW9
7QD. The Group’s shareholding is in the form of preference and deferred shares. KYND incurred losses of £1,316,000 (2019: £1,600,000)
during the year. The Group’s share of the loss in the joint venture is £264,000 (2019: £320,000) which has been recognised in the
consolidated income statement. The carrying value of the investment has been adjusted for these losses resulting in a carrying amount of
£450,000 at 31 December 2020 (2019: £714,000). The losses are not deemed an indicator of impairment as KYND continues to be in the early
stages of its business development.

The summarised financial information of KYND, in which the Group has a 20% interest, is as follows:

Non-current assets

Current assets

Current liabilities

Non-current liabilities

Net (liabilities)/assets

Group’s share of net (liabilities)/assets

Revenue

Expenses

Loss for the period

Group’s share of loss for the period

21. Insurance assets

Amounts due from policyholders and intermediaries

2020
£’000

862

(312)

(1,510)

(930)

(186)

2020
£’000

171

(1,487)

(1,316)

(264)

2020
£’000

2019
£’000

464

(119)

—

386

2019
£’000

(1,619)

(1,600)

(320)

2019
£’000

Amounts due from policyholders and intermediaries represent the total exposure to credit risk in respect of insurance activities.

Credit is not generally offered to retail customers on insurance premiums. No interest is charged on insurance receivables at any time.

Individually or collectively material insurance receivables are assessed for expected credit losses based on past experience of credit default
with those counterparties. There has been no instance of credit defaults with insurance customers or counterparties and credit risk is reduced
as insurance receivables are dispersed amongst a broad customer base.

The Group’s insurance receivable balance does not include any debtors which are past due at the balance sheet date in either the current
or prior year.

There have been no overdue but unprovided debts in either the current or prior year.

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

22. Inventories

Consumables and supplies

23. Contract assets and liabilities
The Group has recognised the following assets and liabilities related to contracts with customers:

Non-current contract assets

Current contract assets

Total contract assets

2020
£’000

145

2020
£’000

426

4,853

5,279

2019
£’000

709

6,108

6,817

Contract assets represent deferred commission costs that are recognised in line with the pattern of recognition of the associated revenue.
Non-current contract assets will be charged to the balance sheet over a period of greater than 12 months from the balance sheet date.

Non-current contract liabilities

Current contract liabilities

Total contract liabilities

2020
£’000

1,094

10,889

11,983

2019
£’000

1,248

12,169

13,417

Contract liabilities represent revenue which is recognised over the life of a policy. Non-current contract liabilities will be credited to the
consolidated income statement over a period of greater than 12 months from the balance sheet date.

24. Trade and other receivables

Trade receivables

Prepayments and accrued income

Amounts due from Group entities

Other debtors

Total trade and other receivables

Consolidated

Company

2020
£’000

8,409

4,016

—

3,954

16,379

2019
£’000

9,330

5,187

—

3,261

17,778

2020
£’000

—

79,262

79,314

2019
£’000

—

77,746

77,831

The Group’s trade and other receivables are predominantly non-interest bearing.

The Group’s trade receivables relate to retail customer payments awaiting collection and wholesale counterparties.

The Group is responsible for activating the collection process for our retail customers. The collection is received within a specified period
of processing the transaction resulting in credit risk being considered low for these items.

Wholesale counterparty balances are assessed for expected credit losses based on past experience of credit default with those counterparties
and the Group’s experience as a whole in relation to credit defaults. The Group does not have any notable past experience of customer and
counterparty credit defaults, due in part to the quality of the relationship it has with its counterparties and their credit ratings.

Where credit is offered to customers, the average credit period offered is 29 days (2019: 30 days). No interest is charged on trade receivables
at any time. Disclosures regarding credit risk relate only to counterparties or customers offered credit.

Overall exposure continues to be mainly spread over a large number of customers but where concentration exists this is with highly
rated counterparties.

The Group has not provided, in either the current or prior year, for any debtors included in the Group’s trade receivable balances which are
past due at the reporting date. There has been no material change in credit quality of our debtors and the Group believes that the amounts
are still recoverable.

Movement in the lifetime expected credit loss

At 1 January

Decrease in expected credit loss recognised in the income statement

At 31 December

2020
£’000

—

2019
£’000

—

The Company has amounts due from Group entities which are repayable on demand. Interest has been charged on these balances in line
with the Group’s external borrowing rate for the majority of the year, which was LIBOR plus 2.5%.

The Company has recognised a provision for non-recoverability of inter-company loans totalling £774,000 (2019: £nil). The Company has
not previously held a provision for non-recoverability of receivables.

CPPGroup Plc Annual Report & Accounts 2020

25. Cash and cash equivalents
Consolidated cash and cash equivalents of £21,856,000 (2019: £21,957,000) comprises cash held on demand by the Group and short-term deposits.

Cash and cash equivalents includes £753,000 (2019: £987,000) required to be maintained by the Group’s insurance business for solvency purposes.

Concentration of credit risk is reduced, as far as practicable, by placing cash on deposit across a number of institutions with the best available
credit ratings. The credit quality of counterparties is as follows:

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

BBB

Rating information not available

2020
£’000

3,832

9,155

4,003

4,362

—

504

21,856

2019
£’000

4,595

10,683

1,864

3,472

—

1,343

21,957

Ratings are measured using Fitch’s long-term ratings, which are defined such that ratings ‘AAA’ to ‘BBB’ denote investment grade
counterparties, offering low to moderate credit risk. ‘AAA’ represents the highest credit quality, indicating that the counterparty’s ability to
meet financial commitments is highly unlikely to be adversely affected by foreseeable events.

Company cash and cash equivalents was £12,433,000 (2019: £3,109,000). The balance has increased in the year following the receipt of dividends
from subsidiary undertakings of £14,000,000. The benefit of this has been partly offset by ongoing central costs recognised in the Company.

The Company is party to a cross-guarantee in respect of a bank account netting arrangement in which it is a participant alongside certain
other Group companies. Cash and cash equivalents for the Company includes £12,424,000 (2019: £3,104,000) which is held in a bank
account subject to this arrangement.

26. Insurance liabilities

Claims reported

Claims incurred but not reported

Total claims

Unearned premium

Total insurance liabilities

2020
£’000

—

935

2019
£’000

—

753

756

Provisions for claims reported and processed are based on estimated costs from third party suppliers. Provisions for claims incurred but not
reported are an estimate of costs for the number of claims not yet processed at the year end. Claims outstanding at the year end are
expected to be settled within the following 12 months.

Provision for unearned premiums

At 1 January

Written in the year

Earned in the year

At 31 December

2020
£’000

753

2,406

(2,224)

935

2019
£’000

595

1,448

(1,290)

753

Unearned premiums are released as revenue on a straight line basis over the life of the relevant policy. Unearned premiums have increased
following a contractual change in premium allocation with another Group company. The change was implemented to all renewals from
1 October 2019 onwards.

Movement in claims provision
Movements in the claims provision, gross and net of reinsurance, are as follows. There have been no significant differences between year-end
claims provisions and the amounts settled in the subsequent year.

At 1 January 2019

Cash paid for claims settled in the year

Increase in liabilities arising from current year claims

At 1 January 2020

Cash paid for claims settled in the year

Increase in liabilities arising from current year claims

Claims cheques not cashed

At 31 December 2020

Gross
£’000

Reinsurance
£’000

(76)

(17)

—

Net
£’000

(76)

(17)

—

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

27. Trade and other payables

Trade creditors and accruals

Other tax and social security

Other payables

Amounts payable to Group entities

Total trade and other payables

Consolidated

Company

2020
£’000

18,359

1,650

378

—

2019
£’000

20,184

1,683

2,055

—

20,387

23,922

2020
£’000

1,444

157

14,011

15,615

2019
£’000

1,478

—

14,564

16,120

Trade creditors and accruals comprise amounts outstanding for trade purchases and ongoing costs. The average credit period for trade
purchases is 35 days (2019: 40 days). Interest is not suffered on trade payables. The Group has financial management policies in place
to ensure that all payables are settled within the pre-agreed credit terms.

The Company has amounts payable to Group entities which are repayable on demand. Interest has been charged on these balances in line
with the Group’s external borrowing rate for the majority of the year, which was LIBOR plus 2.5%.

28. Lease liabilities
The maturity analysis of the Group’s lease liabilities is as follows:

Year 1

Year 2

Year 3

Year 4

Year 5

After 5 years

Less: unearned interest

Total lease liabilities

Non-current lease liabilities

Current lease liabilities

Total lease liabilities

2020
£’000

1,396

1,317

1,250

1,139

1,132

2,628

8,862

2019
£’000

1,925

1,344

1,183

1,127

1,028

3,137

9,744

(2,224)

6,638

(2,478)

7,266

2020
£’000

5,756

882

6,638

2019
£’000

5,895

1,371

7,266

As a result of the COVID-19 pandemic the Group has benefited from lease payment holidays on certain of its lease agreements and
extensions on two leases. The Group has applied the practical expedient to these rent concession agreements. The payment holidays
have reduced the payment in the year to 31 December 2020 by £132,000 and the extensions have increased the payments in the year
to 31 December 2024 and 31 December 2025 by £21,000 and £26,000 respectively. The Group has re-measured the lease liability using
the revised lease payments and the discount rate originally applied to the lease, resulting in a decrease in the lease liability of £86,000
which has been recognised in the income statement as a credit to variable lease expense.

In the previous financial year ended 31 December 2019 the Group had arrangements on a property in the UK where it had subleases that
were classified as finance leases. During the financial year ended 31 December 2020 these sublease arrangements were terminated early and
the net investment asset was derecognised. The net investment lease asset recognised in the financial statements is as follows:

Year 1

Year 2

Less: unearned interest

Total net investment lease assets

Non-current net investment assets

Current net investment assets

Total net investment lease assets

CPPGroup Plc Annual Report & Accounts 2020

2020
£’000

—

2020
£’000

—

2019
£’000

143

159

(3)

156

2019
£’000

140

156

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

29. Borrowings
The carrying value of the Group’s financial liabilities, for short- and long-term borrowings, is as follows:

Bank loans due in less than one year

Less: unamortised issue costs

Borrowings due within one year

Bank loans due outside of one year

Less: unamortised issue costs

Borrowings due outside of one year

Consolidated

Company

2020
£’000

—

(98)

2019
£’000

2020
£’000

2019
£’000

—

(50)

—

The Group’s bank borrowing facility is in the form of a £5,000,000 revolving credit facility (RCF). At 31 December 2020, the Group has
£5,000,000 undrawn committed borrowing facilities (2019: £5,000,000).

On 26 August 2020, the £5,000,000 RCF was extended for a three-year term to 31 August 2023. The extended RCF bears interest at a
variable rate of LIBOR plus a margin of 3.75%. It is secured by fixed and floating charges on certain assets of the Group. The financial
covenants of the RCF are based on the interest cover and minimum total cash balance of the Group. The Group has been in compliance
with these covenants since inception of the RCF.

The weighted average interest rate paid during the year on the bank loan was 1.2% (2019: 1.0%). The weighted average interest rate
reflects the interest rate charged for the commitment on the undrawn element, the rate for which increased on renewal of the RCF to 1.5%
from 1.0%.

30. Provisions

At 1 January

Credited to the income statement

Utilised in the year

Derecognised on the adoption of IFRS 16

At 31 December

Onerous lease and
dilapidation costs

2020
£’000

309

(93)

(216)

—

2019
£’000

862

(43)

(278)

(232)

309

The onerous lease and dilapidation costs provision of £309,000 related to expected dilapidation costs on expiry of a lease in the UK. Following
a negotiated early exit of the lease in September 2020, dilapidation costs totalling £216,000 were agreed with the landlord, with the surplus
provision of £93,000 credited to exceptional items in the income statement.

The Group has made certain commercial and contractual decisions that are not yet agreed with all affected parties. The Group is satisfied
with its position from both a legal and regulatory perspective. Appropriate financial provisions are in place in respect of these matters and
are included in trade and other payables.

Provisions are expected to be settled as per the following table:

Within one year

Outside of one year

At 31 December

2020
£’000

—

2019
£’000

—

309

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

31. Deferred tax
The following are the major deferred tax assets/(liabilities) recognised by the Group and the movements thereon during the current and prior years:

Consolidated

At 1 January 2019

(Charged)/credited to income statement

Business partner intangible

Exchange differences

At 1 January 2020

(Charged)/credited to income statement

Business partner intangible

Exchange differences

At 31 December 2020

Company

At 1 January 2019

Charged to income statement

Charged to equity

At 1 January 2020

Credited to income statement

Charged to equity

At 31 December 2020

Withholding
taxes on
future
dividends
£’000

Share-based
payments
£’000

Other
short-term
timing
differences
£’000

Tax losses
£’000

790

(97)

—

(26)

667

(137)

—

(26)

504

—

(250)

—

(250)

(328)

—

(578)

111

—

141

(94)

—

234

(58)

—

221

306

Total
£’000

1,135

(272)

(58)

(26)

779

(557)

(1)

279

Share-based
payments
£’000

111

—

141

(93)

—

Deferred tax assets and liabilities are stated at tax rates expected to apply on the forecast date of reversal, based on tax laws substantively
enacted at the balance sheet date.

Certain deferred tax assets and liabilities have been offset where the Group or the Company is entitled to and intends to settle tax liabilities
on a net basis. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Deferred tax assets

Deferred tax liabilities

Consolidated

Company

2020
£’000

858

(579)

279

2019
£’000

1,152

(373)

779

2020
£’000

—

2019
£’000

141

—

141

At the balance sheet date the Group has unused tax losses of £47,332,000 (2019: £49,924,000) available for offset against future profits.
A deferred tax asset of £561,000 (2019: £667,000) has been recognised in respect of anticipated profits in Germany. No other deferred tax
asset has been recognised with respect to these losses due to the unpredictability of future profit streams in the underlying companies and
restrictions on offset of taxable profits and losses between Group companies. Included in these losses are £3,964,000 (2019: £7,663,000)
which, if not used, will expire between one and twelve years (2019: one and twelve years). Other losses will be carried forward indefinitely.

The Group has recognised a deferred tax liability for withholding taxes arising on unremitted earnings from overseas subsidiaries, to the
extent it is probable that a distribution will be made in the foreseeable future crystallising the withholding tax.

At the balance sheet date the Company has unused tax losses of £18,184,000 (2019: £17,645,000) available for offset against future profits.
No deferred tax asset has been recognised in respect of these losses due to the unpredictability of future profit streams in the Company and
restrictions on offset of taxable profits and losses between Group companies. The losses can be carried forward indefinitely.

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

32. Financial instruments
Capital risk management
The Group manages its capital to safeguard its ability to continue as a going concern.

The Group does not have a target level of gearing but seeks to maintain an appropriate balance of debt and equity while aiming to provide
returns for shareholders and benefits for other stakeholders. The Group’s principal debt facility during the year was a £5.0 million RCF, this
was extended in August 2020 for a further three-year term expiring on 31 August 2023.

The Group makes adjustments to its capital structure in light of economic conditions. To maintain or adjust the capital structure the Group
may adjust a dividend payment to shareholders, return capital to shareholders or issue new shares. The Directors have considered the capital
requirements of the Group, including the availability of cash reserves, and are intending to re-embark with a dividend policy including the
proposal to pay a final dividend in respect of the current year.

Externally imposed capital requirement
Three of the Group’s principal subsidiaries, CPPL, HIL and Blink UK have capital requirements imposed by the FCA and PRA in the UK.
All subsidiaries have complied with their respective imposed capital requirements throughout the current and prior year.

Card Protection Plan Limited and Blink Innovation (UK) Limited
CPPL and Blink UK are regulated by the FCA as insurance intermediaries and are required to hold a minimum level of capital resources
relative to regulated business revenue.

The ratio of current and future capital resources to regulated business revenue is reported monthly to management to ensure compliance.
There have been no instances of non-compliance in either the current or prior years.

Homecare Insurance Limited
HIL is authorised and regulated by the PRA and regulated by the FCA as an insurance underwriter and therefore maintains its capital
resources in accordance with the PRA’s Rulebook. HIL and its immediate parent company, Homecare (Holdings) Limited, calculate their
Solvency Capital Requirement using the Solvency II Standard Formula and report this quarterly to the HIL Board and to the PRA. As at
31 December 2020, HIL’s ratio of eligible funds to meet its Solvency Capital Requirement was 138% (2019: 146%) (both the current and
prior year are unaudited). There have been no instances of non-compliance in either the current or prior year.

Fair value of financial instruments
The fair value of non-derivative financial instruments is determined using pricing models based on discounted cash flow analysis using prices
from observable current market transactions; hence, all are classified as Level 2 in the fair value hierarchy. Financial assets and liabilities are
carried at the following amounts:

Financial assets

2020
£’000

2019
£’000

34,468

34,746

Financial assets comprise cash and cash equivalents, net investment lease assets, trade and other receivables, insurance assets and
taxes receivable.

There is no significant difference between the fair value and carrying amount of any financial asset.

Financial liabilities

Financial liabilities at amortised cost

2020
£’000

2019
£’000

27,996

32,101

Financial liabilities at amortised cost comprise lease liabilities, borrowings, trade creditors, accruals, taxes payable, insurance claims
and provisions.

There is no significant difference between the fair value and carrying amount of any financial liability, since liabilities are either short-term
in nature or bear interest at variable rates.

Financial risk management objectives
The Group’s activities expose it to the risks of changes in foreign exchange rates and interest rates. The Board of Directors determines the
Treasury Policy of the Group and delegates the authority for execution of the policy to the Group Treasurer. Any changes to the Treasury
Policy are authorised by the Board of Directors. The limited use of financial derivatives is governed by the Treasury Policy and derivatives
are not entered into for speculative purposes.

Interest rate risk
The Group is exposed to interest rate risk to the extent that short and medium-term interest rates fluctuate. The Group manages this risk
through the use of interest rate swaps, when appropriate, in accordance with its Treasury Policy. There has been no use of interest rate
derivatives in either the current or prior year. The interest cover (being defined as the ratio of underlying EBITDA to interest paid) at
31 December 2020 was 138x (2019: 109x).

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

32. Financial instruments continued
Interest rate sensitivity analysis
The Group is mainly exposed to movements in the relevant inter-bank lending rates in the jurisdictions in which cash balances are held. The
following table details the Group’s sensitivity to a 2% increase and a 1.5% decrease in inter-bank lending rates throughout the year. These
percentages represent the Directors’ assessment of a reasonably possible change in inter-bank lending rates across all geographical areas
where cash is held. The sensitivity analysis includes the impact of changes in inter-bank lending rates on yearly average cash and bank loans.

Increase of 2%

Increase in profit before tax

Increase in shareholders’ equity

Decrease of 1.5%

Decrease in profit before tax

Decrease in shareholders’ equity

2020
£’000

415

(310)

2019
£’000

433

(325)

Foreign currency risk
The Group has exposure to foreign currency risk where it has investments in overseas operations which have functional currencies other than
sterling and are affected by foreign exchange movements. The carrying amounts of the Group’s principal foreign currency denominated
assets and liabilities are as follows:

Euro

Indian rupee

Turkish lira

Liabilities

Assets

2020
£’000

3,134

9,920

988

2019
£’000

4,655

13,786

1,548

2020
£’000

5,338

14,166

2,127

2019
£’000

6,047

16,339

2,303

Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 20% decrease in the euro, Indian rupee and Turkish lira exchange rates with sterling.
This represents the Directors’ assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only
foreign currency denominated financial instruments and adjusts their translation at the year end for a change in foreign currency rates.

Profit before tax

Shareholders’ equity

Euro currency impact

Indian rupee currency impact

Turkish lira currency impact

2020
£’000

(46)

(367)

2019
£’000

(6)

(232)

2020
£’000

—

(708)

2019
£’000

—

(426)

2020
£’000

(218)

(190)

2019
£’000

(89)

(126)

Credit risk
Credit risk refers to the risk that a counterparty defaults on its contractual obligations resulting in financial loss to the Group. The Group does
not actively hedge its credit risk.

The Group’s retail trade and insurance receivables are mainly with a broad base of individual customers and are therefore not generally
exposed to any one customer, resulting in low credit risk.

The Group’s wholesale activities can result in material balances existing with a small number of counterparties and therefore increased credit
risk exists. The Group continues to maintain some wholesale contracts and considers that it mitigates this credit risk through good quality
relationships with counterparties and only partnering with counterparties with established credit ratings.

Counterparty credit limits are determined in accordance with the Treasury Policy for cash and cash equivalents and the Counterparty and
Credit Risk Policy for receivables. Any balance that falls into an overdue status is monitored. Further details of the monitoring of and provision
for overdue debts are outlined for insurance assets in note 21 and trade and other receivables in note 24.

The carrying amount of financial assets recorded in the consolidated financial statements, which are stated net of expected credit losses and
impairment losses, represents the Group’s maximum exposure to credit risk.

Liquidity risk
The Group has a policy of repatriation and pooling of funding where possible in order to maximise the return on surplus cash or minimise
the level of debt required. The Group has significant available cash balances; however, increasingly cash is being generated through our
Indian operation and is not currently available in its entirety for repatriation to the UK due to historical trading losses. Group Treasury
continually monitors the level of short-term funding requirements and balances the need for short-term funding with the long-term funding
needs of the Group. Additional undrawn facilities that the Group had at its disposal to further reduce liquidity risk are included in note 29.

Compliance with financial ratios and other covenant obligations of the Group’s bank loans is monitored on a monthly basis by Executive
Directors and by the Board of Directors at each Board meeting.

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

32. Financial instruments continued
Liquidity and interest risk tables
Assets
The following table details the Group’s expected maturity for its non-derivative financial assets, based on the undiscounted contractual
maturities of the financial assets.

Weighted
average
effective
interest rate
%

2019

Non-interest bearing assets

Variable rate instruments

n/a

2.3%

2020

Non-interest bearing assets

Variable rate instruments

n/a

1.9%

Less than
1 month
£’000

8,118

16,000

24,118

6,572

18,353

24,925

1–3
months
£’000

1,684

6,025

7,709

2,380

3,503

5,883

3 months
to 1 year
£’000

1,987

2,059

2,828

—

2,828

1–5
years
£’000

406

422

832

—

832

Over
5 years
£’000

438

—

438

—

Total
£’000

12,633

22,113

34,746

12,612

21,856

34,468

Liabilities
The following table details the Group’s remaining contractual maturity for its financial liabilities, based on the undiscounted cash flows of
financial liabilities and the earliest date at which the Group can be required to pay. The table includes both interest and principal cash flows
and assumes no changes in future LIBOR rates.

2019

Non-interest bearing liabilities

Variable rate instruments

Fixed rate instruments

2020

Less than
1 month
£’000

1–3
months
£’000

3 months
to 1 year
£’000

13,870

121

13,999

5,733

366

6,114

5,029

884

5,981

Non-interest bearing liabilities

10,291

3,719

6,458

Variable rate instruments

Fixed rate instruments

158

645

10,376

3,890

7,159

1–5
years
£’000

3,167

3,239

296

3,453

125

3,874

Over
5 years
£’000

146

2,728

—

2,874

594

2,303

—

Total
£’000

24,835

7,266

106

32,207

21,358

6,638

200

2,897

28,196

Insurance risk
The Group’s exposure to risk from insurance contracts has reduced significantly in recent times; however, it continues to apply a prudent
approach to its management of remaining potential exposures.

The lines of policies underwritten are limited to general insurance classes underwritten by HIL, an entity within the Group, which is authorised
and regulated by the PRA and regulated by the FCA. The Group’s remaining lines of insurance business, and thus its insurance risk portfolio,
are primarily focused on low transaction value, short-term individual lines.

The Group’s policy is to establish a specific claims provision at any point in time on each line of business, based on claims reported up to and
including the last day of each accounting period, including an element to represent claims incurred but not yet reported. Details of claims
provisions carried are provided in note 26.

The Group continues to monitor changes in rates of claims and settlement costs per claim. In addition, reliance on key suppliers to fulfil the
Group’s insurance contracts continues to be monitored.

The Group therefore considers its exposure to risk arising from its insurance contracts to be appropriately managed.

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

33. Share capital

Called-up and allotted

At 1 January 2020

Issue of shares in connection with:

Exercise of share options (pre-consolidation)

Share consolidation

Exercise of share options (post-consolidation)

At 31 December 2020

Called-up and allotted

At 1 January 2020

Issue of shares in connection with:

Exercise of share options (pre-consolidation)

Share consolidation

Exercise of share options (post-consolidation)

At 31 December 2020

Ordinary
shares of
1 penny
each
(thousands)

Ordinary
shares of
£1 each
(thousands)

Deferred
shares of
9 pence
each
(thousands)

Total
(thousands)

864,650

9,485

—

(874,135)

8,741

171,650

1,036,300

—

9,485

(865,394)

—

Ordinary
shares of
1 penny
each
£’000

8,643

—

8,743

171,650

180,393

Ordinary
shares of
£1 each
£’000

Deferred
shares of
9 pence
each
£’000

Total
£’000

15,413

24,056

—

8,740

15,413

24,153

(8,738)

8,738

On 29 May 2020, a share consolidation was undertaken on the basis of one new ordinary share of £1 issued for every 100 former ordinary shares of
1 penny. The share consolidation exercise has reduced the total number of ordinary shares in issue by 865,394,000 whilst the equity value has remained
unchanged. The new ordinary shares carry the same rights as the former ordinary shares. The deferred shares were not subject to the share consolidation.

Of the 8,743,463 ordinary shares in issue at 31 December 2020, 8,738,463 are fully paid and 5,000 are partly paid.

The ordinary shares are entitled to the profits of the Company which it may from time to time determine to distribute in respect of any
financial year or period.

All holders of ordinary shares shall have the right to attend and vote at all general meetings of the Company. On a return of assets on liquidation,
the assets (if any) remaining, after the debts and liabilities of the Company and the costs of winding up have been paid or allowed for, shall belong
to, and be distributed amongst, the holders of all the ordinary shares in proportion to the number of such ordinary shares held by them respectively.

Deferred shares have no voting rights, no rights to receive dividends and only very limited rights on a return of capital. The deferred shares
have not been listed for trading in any market and are not freely transferable.

34. Share-based payment
Equity-settled share-based payments
Current share plans
Share-based payment charges comprise 2016 LTIP charges of £491,000 (2019: £1,115,000) which are disclosed within administrative
expenses. No options have been granted in the current year as part of the 2016 LTIP (2019: 18,092,000 options granted).

The share consolidation which completed on 29 May 2020 led to outstanding share options being reduced in the ratio of one option over a £1 ordinary
share for 100 options over a 1 penny ordinary share. As a result, the number of outstanding 2016 LTIP share options has reduced by 32,769,000.

2016 LTIP

Outstanding at 1 January

Granted during the year

Share consolidation in the year

Exercised during the year

Lapsed during the year

Forfeited during the year

Outstanding at 31 December

Exercisable at 31 December

CPPGroup Plc Annual Report & Accounts 2020

2020

2019

Number
of share
options
(thousands)

Weighted
average
exercise
price
(£)

Number
of share
options
(thousands)

Weighted
average
exercise
price
(£)

44,187

—

(32,769)

(9,487)

(1,602)

—

329

—

37,981

18,092

—

(7,417)

(4,469)

44,187

—

34. Share-based payment continued
Equity-settled share-based payments continued
Current share plans continued
Nil-cost options and conditional shares granted under the 2016 LTIP normally vest after three years, lapse if not exercised within ten years
of grant and will lapse if option holders cease to be employed by the Group. Vesting of 2016 LTIP options and shares are also subject to
achievement of certain performance criteria including Group financial targets and non-financial events measured within the vesting period.

The options outstanding at 31 December 2020 had a weighted average remaining contractual life of one year (2019: one year) in the 2016 LTIP.

Legacy share plans
Administrative expenses include no charge (2019: £nil) in relation to the MSP, the RSP or the 2005 ESOP Scheme. There were no options
granted in either the current or prior year under any of the Group’s legacy plans. No further awards will be made under these share plans.

Details of share options outstanding during the period under these plans are as follows:

2020

2019

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

MSP

Outstanding at 1 January

Share consolidation in the year

Exercised during the year

Outstanding at 31 December

Exercisable at 31 December

RSP

Outstanding at 1 January

Share consolidation in the year*

Lapsed during the year

Outstanding at 31 December

Exercisable at 31 December

2005 ESOP Scheme

Outstanding at 1 January

Lapsed during the year

Outstanding at 31 December

Exercisable at 31 December

Number
of share
options
(thousands)

2,798

(2,798)

—

(33)

(5)

—

Weighted
average
exercise
price
(£)

Number
of share
options
(thousands)

Weighted
average
exercise
price
(£)

0.01

1.00

—

1.00

—

6,343

—

(3,545)

2,798

—

(2)

1,106

(1,106)

—

0.01

—

0.01

—

2.28

—

All outstanding options granted under the MSP have vested and following the share consolidation have an exercise price of £1 (2019: 1 penny).
The share consolidation reduced the number of outstanding MSP share options by 2,770,000 in total. The MSP options lapse if not exercised
within ten years of the grant date and will lapse if option holders cease to be employed by the Group. No further awards will be made under
this plan. No options were exercised during the year (2019: 3,545,000).

All outstanding nil-cost options and conditional shares granted under the RSP have vested. The share consolidation reduced the number
of outstanding RSP share options by 33,000. The RSP options will lapse if not exercised within ten years of grant and will lapse if option
holders cease to be employed by the Group. No further awards can be made under this plan.

All outstanding 2005 ESOP scheme options expired in the prior year. No further awards can be made under this plan.

The options outstanding in the MSP, RSP and 2005 ESOP Scheme (prior year only) had no weighted average remaining contractual life
in either the current or prior year.

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

34. Share-based payment continued
Realisation proceeds plan (RPP)
The RPP is a new share-based payment award scheme implemented during the current year. This scheme can be treated as cash- or
equity-settled dependent upon the distributable proceeds arising from a realisation event. The RPP scheme has been issued to certain
employees and vests once a realisation event occurs. At 31 December 2020, there has been no realisation event and the expectation of
one occurring is uncertain, accordingly no fair value has been attributed to the awards at the balance sheet date and there are no charges
recognised in relation to this scheme in the consolidated income statement.

Cash-settled share-based payments
In 2019, 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.
There have been no similar awards in 2020. The Group has recorded a total expense in relation to cash-settled awards in 2020 of
£8,000 (2019: £105,000) which are disclosed within administrative expenses. The Group has recorded liabilities for its cash-settled awards
of £129,000 (2019: £121,000) which are included in trade creditors and accruals in note 27.

35. Non-controlling interests
On 7 September 2018, the Group agreed to take a majority holding in Globiva, a company incorporated in India. The Group acquired 61%
of the share capital of Globiva for a total cash consideration of £2,019,000 (Indian rupee 184,000,000). The acquisition was completed
in three tranches and was accounted for as a step acquisition with the final tranche being paid in May 2019.

On 11 August 2020 the Group sold 10% of its holding in Globiva for consideration of £329,000 decreasing its shareholding in Globiva from
61% to 51%. As a result of the transaction, the Group recognised an increase in non-controlling interests of £188,000 along with an increase
in equity attributable to owners of the parent of £118,000 and a profit on disposal of £23,000.

Summarised financial information and resultant non-controlling interest for Globiva is detailed below and disclosed before intercompany eliminations.

Summarised balance sheet

Current assets

Current liabilities

Net current assets

Non-current assets

Non-current liabilities

Net assets

Accumulated net assets attributable to non-controlling interests at 49% (2019: 39%)

Summarised income statement

Revenue

Profit before taxation

Taxation

Profit for the year

Other comprehensive expense

Total comprehensive income

Total comprehensive income attributable to non-controlling interests

2020
£’000

2,657

2019
£’000

2,467

(1,635)

(1,532)

1,022

4,819

935

4,993

(3,955)

(4,126)

1,886

1,105

2020
£’000

8,650

266

(67)

199

(116)

1,802

884

2019
£’000

7,162

106

188

(95)

CPPGroup Plc Annual Report & Accounts 2020

36. Reconciliation of operating cash flows

Loss for the year

Adjustments for:

Depreciation and amortisation

Share-based payment expense

Impairment loss on goodwill

Impairment loss on intangible assets

Impairment loss on right-of-use assets

Share of loss of joint venture

Loss on disposal of property, plant and equipment

Loss on disposal of intangible assets

Lease concessions

Investment revenues

Finance costs

Other gains and losses

Income tax charge

Operating cash flows before movements in working capital

(Increase)/decrease in inventories

Decrease/(increase) in contract assets

Decrease/(increase) in receivables

Increase in insurance assets

(Decrease)/increase in payables

(Decrease)/increase in contract liabilities

Increase in insurance liabilities

Decrease in provisions

Cash from operations

Income taxes paid

Net cash from operating activities

Reconciliation of net funds

Net cash per cash flow statement

Investing activities:

Net investment lease assets

Total movement from investing activities

Financing activities:

Lease liabilities

Borrowings due outside of one year

– Unamortised issue costs

Total movement from financing activities

Total net funds

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

2020
£’000

(1,597)

3,454

499

880

—

264

(86)

(412)

415

1,294

3,609

8,445

(58)

1,272

663

(4)

(3,049)

(953)

179

(309)

6,186

(3,024)

3,162

2019
£’000

(944)

2,983

1,220

—

322

—

320

—

(508)

1,003

—

2,076

6,512

(2,133)

(4,970)

(18)

1,556

2,245

139

(553)

2,850

(1,712)

1,138

Note

At
1 January
2020
£’000

21,957

Cash flow
£’000

301

Foreign
exchange
and other
non-cash
movements
£’000

At
31 December
2020
£’000

(402)

21,856

156

(117)

(39)

—

(7,266)

1,783

(1,155)

(6,638)

(7,216)

14,897

110

1,893

2,077

(62)

(1,217)

(1,658)

(6,540)

15,316

CPPGroup Plc Annual Report & Accounts 2020

Notes to the financial statements continued

37. Related party transactions
Transactions with associated parties
The Group has a balance receivable from its joint venture, KYND, in the amount of £150,000 (2019: £nil). The loan by the Group to KYND
forms part of KYND’s participation in the UK Government’s ‘Future Fund Scheme’ and falls due for repayment on 26 June 2023.

Transactions with related parties
ORConsulting Limited (ORCL) is an organisation used by the Group for consulting services in relation to leadership coaching. Organisation
Resource Limited (ORL), a company owned by Mark Hamlin, who is the Senior Independent Director in the Group, retains intellectual
property in ORCL for which it is paid a licence fee. The fee paid to ORCL by the Group in 2020 was £63,000 plus VAT (2019: £100,000)
and was payable under 30-day credit terms.

Mark Hamlin is the Chairman of Globiva. The fees for this role are paid to his consultancy company, ORL. The fee paid to ORL by the Group
in 2020 was £73,000 (2019: £75,000) and was payable under 25-day credit terms.

Certain bank loans taken out by Group entities are secured against the assets of the Company. There were no amounts outstanding on these
loans at 31 December in either the current or prior year. The £5,000,000 facility commitment remains available.

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:

Short-term employee benefits

Post-employment benefits

Share-based payments

2020
£’000

2,442

423

2,954

2019
£’000

2,412

893

3,392

Required disclosures regarding remuneration of the Directors are included in the Directors’ Remuneration Report on pages 42 to 44.

38. Events after the balance sheet date
In the first quarter of 2021 the Group has undertaken a review of the operational effectiveness of its business units. The Group has supported
a number of its operations in recent years as part of its plan to develop and organically grow the business. As the Group re-balances its resource
allocation policy these operations have been assessed and restructuring activities initiated where it is considered large-scale operational
efficiencies are available or there is not a clear pathway to profitable performance in the medium to long-term.

As a result, the Group has restructured its Blink, Spanish, Mexican and Malaysian businesses. This activity has resulted in costs associated
with colleagues leaving the business, professional costs to support the activity and office closure costs. The total costs associated with the
restructuring is expected to be in the range of £1.1 million to £1.4 million.

CPPGroup Plc Annual Report & Accounts 2020

Glossary

Alternative performance measures
In reporting financial information, the Group presents alternative performance measures (APMs), which are not defined or specified under
the requirements of IFRS.

The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with
additional helpful information on the performance of the business. The APMs are consistent with how the business performance is planned
and reported within the internal management reporting to the Board and Audit Committee. Some of these measures are also used for the
purpose of setting remuneration targets.

The key APMs that the Group uses include: EBITDA; adjusted EBITDA; and constant currency measures. Definitions of these are presented
in the table below.

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

APM

EBITDA

Operating profit

Closest equivalent
statutory measurement

Reconciling to
statutory measures

Definition and purposes

Consolidated
income statement
and note 5

Operating profit before the impact of depreciation, amortisation and
exceptional items. The Group considers this to be an important measure
of Group performance and is consistent with how the business performance
is reported to and assessed by the Board and the Audit Committee.

Page 29 and
consolidated
income statement

Operating profit before the impact of depreciation, amortisation, exceptional
items and investments for business growth projects. The Group considers this
to be an important alternative measure of the Group performance and is
consistent with how the business performance is reported to and assessed
by the Board and the Audit Committee.

Adjusted EBITDA

Operating profit

Investments in
business growth
projects

None

Underlying loss
per share

Adjusted
effective tax rate

Earnings per share

Note 14

Effective tax rate

Page 26

Constant
currency basis

Revenue,
operating profit

Page 94

Live policies/
customers

Annual renewal
rate

Net funds

None

Not applicable

Cost/income ratio

None

Not applicable

A grouping of business growth projects presently in start-up phase that will
contribute to the future growth and sustainability of the Group. The projects,
their values and the timeframe for inclusion within the grouping are pre-
defined by associated investment plans.

The investments in business growth projects currently include the
following losses:

Location

Segment

31 December 2020 31 December 2019

Blink

Ongoing Operations

£1.1 million

£1.2 million

Ongoing Operations

£1.3 million

£1.2 million

Bangladesh

Ongoing Operations

£0.2 million

Southeast Asia

Ongoing Operations

£0.2 million

£0.4 million

KYND

n/a

£0.3 million

Profit after tax attributable to equity holders of the Company and before the
impact of exceptional items (adjusted for tax), divided by the weighted
average number of ordinary shares in issue during the financial year.

Adjusted tax charge as a proportion of adjusted profit before tax.
Adjustments are made to profit before tax for exceptional items including
any associated adjustments to the tax charge for these items.

The year-on-year change in revenue and EBITDA retranslating the prior year
reported results at the exchange rates applied in the current year. These
measures are presented as a means of eliminating the effects of exchange
rate fluctuations on the year-on-year reported results.

The total number of active policies that provide continuing cover or services
to policyholders.

The net amount of annual retail policies remaining on book after the
scheduled renewal date, as a proportion of those available to renew.

Total cash and cash equivalents; plus net investment lease assets;
less borrowings; and less lease liabilities.

Cost of sales (excluding commission) and administrative expenses
(excluding depreciation, amortisation and exceptional items)
as a proportion of total revenue.

CPPGroup Plc Annual Report & Accounts 2020

Glossary continued

Constant currency tables

Ongoing Operations

India

EU Hub

Turkey

ROW

Restricted
Operations

Central
Functions

108,406

14,037

3,768

3,865

11,068

108,406

14,037

3,768

3,865

n/a

7,644

n/a

3,237

n/a

882

n/a

(3,733)

11,068

3,806

—

n/a

(4,412)

Share
of joint
venture
losses

Total

n/a

141,144

n/a

130,076

n/a

(264)

11,068

7,160

99,613

16,535*

4,377

3,350

14,487*

—

n/a

138,362

99,613

16,535*

4,377

3,350

n/a

123,875

n/a

5,559

n/a

3,404*

n/a

686

n/a

14,487*

n/a

(4,074)

6,608*

(6,421)

n/a

(320)

14,487

5,442

2020 (£’000)

Revenue

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

2019 (£’000)

Revenue

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

Foreign exchange movements (£’000)

Revenue

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

(5,980)

n/a

(424)

273

n/a

2019 at 2020 average exchange rates (£’000)

(909)

(136)

(909)

(136)

n/a

(239)

n/a

(7)

n/a

(7)

(3)

Revenue

93,633

16,808

3,468

3,214

14,480

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

93,633

16,808

3,468

3,214

n/a

5,135

n/a

3,440

n/a

447

n/a

(4,073)

14,480

6,605

Year-on-year movement at constant exchange rates (%)

Revenue

16%

(16)%

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

16%

(16)%

n/a

49%

n/a

(6)%

n/a

97%

20%

(24)%

20%

n/a

(24)%

(42)%

* Restated for a change in the composition of operating segments. See note 3 on page 61.

—

n/a

—

n/a

(6,421)

n/a

31%

n/a

(6,759)

(6,752)

(7)

(629)

n/a

131,603

n/a

117,123

n/a

(320)

14,480

4,813

n/a

11%

n/a

18%

(24)%

49%

CPPGroup Plc Annual Report & Accounts 2020

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

Bangladesh
Ventura Iconia
Level-8, Plot No-37
Road No-11, Block-H
Banani
Dhaka-1213
Bangladesh

Tel: +880-9612-114477

Malaysia
Suite 8.01 8th Floor,
Menara IGB Mid Valley City,
Lingkaran Syed Putra
59200 Kuala Lumpur
Malaysia

Tel: +60 3 2096 9577
Fax: +60 3 2096 9797

China
Room 1202,
Century Tower, No. 1196,
Century Avenue
Pudong New District
Shanghai
China

Tel: +86 21 3875 7183

Southeast Asia
Registered office address:
68 Circular Road
#02-01
Singapore 049422

Tel: +65 6955 7669

Company offices

International Support Centre
CPPGroup Plc
6 East Parade
Leeds
LS1 2AD
United Kingdom

Tel: +44 (0)113 487 7350
https://international.cppgroup.com

Country operation offices
UK
6 East Parade
Leeds
LS1 2AD
United Kingdom

Tel: +44 (0)113 487 7350

Ireland
Unit 2
1st Floor, 52 South Mall
Cork
Ireland

Tel: +35 (0)21 237 5290

Spain
Parque Empresarial Alvento
Via de los Poblados 1
Edif. B, 6ª Planta
28033 Madrid
Spain

Tel: +34 91 121 16 00
Fax: +34 91 121 16 16

Italy
Via Paracelso, 26
20864 Agrate Brianza (MB)
Italy

Tel: +39 039 657801

Portugal
Rua Quinta das Palmeiras, 91 – 1 ºA
Torre Madrid
2780-154 Oeiras
Portugal

Tel: +351 21 458 48 27

Germany
Ballindamm 39
20095 Hamburg
Germany

Tel: +49 40 55 56 62 83
Fax: +49 40 55 56 63 030

Turkey
Bora Sokak. Nida Kule Göztepe
Kat:19
34732 Kadıköy Istanbul
Turkey

Tel: +90 216 665 25 25
Fax: +90 216 665 25 26

Mexico
Paseo de la Reforma 342 Piso 26,
Colonia Juárez, Alcaldía Cuauhtémoc,
Ciudad de México,
CP 06600,
México

Tel: +55 8000 3147
Fax: +55 8000 3148

India
Registered office address:
A-370, Second Floor
Kalkaji
New Delhi – 110019
India

Primary business address:
Ground Floor, Wing-A
Golf View Corp, Tower-A
Golf Course Road, DLF-V
Sector 42, Gurgaon–122002
Haryana
India

Tel: +91 124 409 3900
Fax: +91 124 404 1004

Globiva
AIHP Signature
2nd Floor, 418-419 AIHP Signature,
Udyog Vihar, Phase-IV, Gurugram,
Haryana-122015
India

Tel: +91 124 603 4900

CPPGroup Plc Annual Report & Accounts 2020

Shareholders who have a query regarding their
shareholding should contact the Company’s share
registrar at:
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL

Tel: +44 (0)20 8639 3399

When contacting the registrar please have the investor code and
information relating to the name and address in which the shares
are held.

Investor relations
Requests for further copies of the Annual Report & Accounts,
or other investor relations enquiries, should be addressed to
the Company Secretary at the registered office.

Shareholder information

Registered office:
CPPGroup Plc
6 East Parade
Leeds
LS1 2AD
United Kingdom

Tel: +44 (0)113 487 7350

The Company’s shares are listed on AIM. Company information
and share price details are available on the corporate website
at https://international.cppgroup.com

Company registration number:
07151159

Nominated adviser and broker:
Liberum Capital Limited
Ropemaker Place
Level 12
25 Ropemaker Street
London
EC2Y 9LY

Auditor:
Deloitte LLP
1 City Square
Leeds
LS1 2AL

Legal advisers:
Squire Patton Boggs
6 Wellington Place
Leeds
LS1 4AP

Media consultants:
Alma PR
71–73 Carter Lane
London
EC4V 5EQ

CPPGroup Plc Annual Report & Accounts 2020

www.cppgroup.com

CPP Group, 6 East Parade, Leeds LS1 2AD, United Kingdom,
Tel: +44 (0)113 487 7350