CPPGroup plc Annual Report 2021

FY2021 Annual Report · CPPGroup plc

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Real-time
assistance

CPPGroup Plc
Annual Report & Accounts 2021

About us

Welcome to
CPP Group

Technology has changed the way we work, travel,
consume and communicate, and people’s lives are
busier, more complex and lived at a faster pace than
ever before.

With this change comes a profound need to provide
safe, easy to use technological solutions which protect
and improve people’s daily lives and wellbeing.

Purpose
To reduce the disruptions of everyday life for people around the
world through our real-time technology solutions.

Strategy
Responsiveness: A relentless focus on partner and end
customer needs.

We deliver on our purpose through our user-centric assistance
products that provide effective, targeted resolutions to customers
of major brands and financial institutions at the time and place
they are needed, making CPP and our partners indispensable
in everyday life.

Read more on page 11

Read more about
CPP Group on our website
corporate.cppgroup.com

Highlights

A resilient
performance

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Financial highlights
Although our business and the businesses of our partners have been impacted by COVID-19, our Company has been resilient
and our performance has been robust due to our actions over the last two years to simplify and strengthen CPP.

Revenue

£143.6m
+5%

£143.6m

£136.5m

£133.4m

Profit before tax
£4.2m
+374%

£4.2m

£0.9m

£0.6m

Revenue from
Ongoing Operations
£134.8m
+8%

£134.8m

£125.5m

£118.9m

Dividend
12.5p
-50%

12.5p

25.0p

EBITDA1

£7.5m
+29%

£7.5m

£5.8m

£4.5m

Net funds
£16.4m
+7%

£16.4m

£15.3m

£14.9m

1. 2021 EBITDA includes a one-time benefit of £1.1 million from the release of a commission provision in the UK.

All figures are from continuing operations only with 2019 and 2020 comparatives restated to treat Germany and
China as discontinued operations. Refer to note 2 on page 51.

APM glossary on page 86

Group overview
Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Strategic report
What we do . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Where we are . . . . . . . . . . . . . . . . . . . . . . . . . 3
Chairman’s statement . . . . . . . . . . . . . . . . . . . . . 4
Chief Executive Officer’s statement . . . . . . . . . . . . . . . 6
Our business model . . . . . . . . . . . . . . . . . . . . . . 9
Investment case . . . . . . . . . . . . . . . . . . . . . . . 10
Our strategy . . . . . . . . . . . . . . . . . . . . . . . . . 11
Key performance indicators . . . . . . . . . . . . . . . . . . 12
Chief Financial Officer’s report . . . . . . . . . . . . . . . . 13
Sustainability. . . . . . . . . . . . . . . . . . . . . . . . . 19
Risk management and principal risks . . . . . . . . . . . . . 21
Section 172(1) statement . . . . . . . . . . . . . . . . . . . 24

Corporate governance
Board of Directors & Company Secretary . . . . . . . . . . . . 26
Corporate Governance Report . . . . . . . . . . . . . . . . 28
Report of the Audit Committee . . . . . . . . . . . . . . . . 32
Directors’ Remuneration Report . . . . . . . . . . . . . . . . 34
Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . 37
Statement of Directors’ responsibilities . . . . . . . . . . . . 39

Financial statements
Independent Auditor’s Report . . . . . . . . . . . . . . . . . 40
Consolidated income statement . . . . . . . . . . . . . . . . 45
Consolidated statement of comprehensive income . . . . . . . 46
Balance sheets . . . . . . . . . . . . . . . . . . . . . . . . 47
Consolidated statement of changes in equity . . . . . . . . . 48
Company statement of changes in equity . . . . . . . . . . . 49
Consolidated cash flow statement . . . . . . . . . . . . . . . 50
Notes to the financial statements . . . . . . . . . . . . . . . 51
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Company offices . . . . . . . . . . . . . . . . . . . . . . . 88
Shareholder information . . . . . . . . . . . . . . . . . . . 89

CPPGroup Plc Annual Report & Accounts 2021

What we do

We are a technology-driven
assistance company

CPP Group is a technology-driven assistance company that creates
embedded and ancillary real-time assistance products and resolution
services that reduce disruption to everyday life for millions of people
across the world, at the time and place they are needed.

Our solutions smooth out life across six product categories:

My Digital life
Safeguarding consumers’ online identities
through the monitoring of personal data
breaches, combined with practical, specialist
support and protecting businesses from
cyber risk through a range of online solutions.

OwlDetect
Identity Protection
Personal Cyber Insurance
Mobile Payments Protection

My Home
Helping consumers look after their homes
through preventative maintenance services,
extended warranties for appliances, home
emergency assistance, combined with
entertainment features.

Extended Warranty
Home Emergency

My Finances
Immediate assistance and financial
protection to protect payment cards
and mobile banking.

Card Protection

My Travel
Real-time automated solutions if
consumers’ flights are cancelled,
delayed or if their luggage is lost.

Parametric Flight Disruption
Parametric Lost Luggage

My Tech
Keeping consumers connected through
theft and damage insurance for phone
and gadgets, whilst providing real-time
protection through anti-virus software
and repair or replacement services in
the event of loss, theft or damage.

Phone and Gadget Insurance

My Health
Utilising technology to care for
consumers’ health through quick access
to health check assessments, online
doctor consultations and discounted
medical, pharmacy and dentistry
services, and supported with life and
critical illness insurance.

LivCare and mobile doctor services

CPPGroup Plc Annual Report & Accounts 2021

Where we are

We run our business across three core operations in
India, Turkey and UK & ROW. Each operation is headed
by a local CEO to ensure alignment to local market trends
and consumer/partner needs.

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India
Revenues from 2021

£119.3m
2020: £108.4m
India is the Group’s largest and fastest growing business, driving
the Group’s near-term growth. The market offers organic growth
through the expansion of existing partnerships with credit card
providers and non-banking financial companies, and increased
digital distribution and servicing to attract new partnerships.

Our Business Process Management (BPM) business, Globiva,
in which we hold a 51% interest, offers growth opportunities
through increased capacity and continued development of
technology-based services.

Turkey
Revenues from 2021

£3.6m
2020: £3.8m
A strong multi-partner, multi-product business with a growing
reputation for award-winning, local partner innovation and
cyber protection products – helping us to retain long-standing
partnerships with our insurer and banking partners and win
multiple new contracts in 2021 to deliver a strong trading
performance despite economic headwinds.

Our partners
We work with over 70 major brand
and financial institutions to distribute
our real-time assistance products
and services to their end customers.

UK and ROW
Revenues
from 2021

£20.7m
2020: £24.3m
Our UK and European markets operate well-established Card
and Identity Protection books of business providing strong
cash flows. The markets are focused on driving value through
product enhancements and high-quality customer service.

Managed from the UK and Ireland we operate a technology-led
product and service business delivering real-time resolution
assistance services for partners worldwide through our Blink
Parametric platform. This provides a scalable, technology-led
service with existing distribution partnerships and strong
growth potential in Canada, North America, LATAM, Asia
and Europe.

CPPGroup Plc Annual Report & Accounts 2021

Chairman’s statement

Positioning the Group
for profitable growth

“

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

David Morrison
Chairman

CPPGroup Plc Annual Report & Accounts 2021

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

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

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

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

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

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

Subsequent to the financial year end, Jason Walsh (announced on
8 February 2022) stood down as Chief Executive Officer, after six
years in the role and 20 years of service to the Group. I would like
to thank Jason for his many years of service and the contribution he
has made. He took the reins as Chief Executive Officer of the Group
at a difficult time, after several years of financial and regulatory
challenges had almost brought it to its knees and he leaves a stable
organisation with considerable potential for growth.

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

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

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

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

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

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

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

David Morrison
Non-Executive Chairman
28 March 2022

CPPGroup Plc Annual Report & Accounts 2021

Chief Executive Officer’s statement

Building a technology-driven
assistance company

“

A second year of challenges
created by COVID-19 has obliged
our customers, our partners and our
people to adapt, often at pace, to the
ever changing and often disrupted
circumstances in which they live,
work and conduct business.”

Simon Pyper
Chief Executive Officer

Our Company’s performance has been remarkably resilient, thanks
to the efforts of our people and the demonstrable value of what we
do for our customers and partners.

While revenues were impacted by COVID-19 and associated
Government imposed restrictions, particularly in our key Indian
market, our performance exceeded our own expectations and I
am pleased to report that revenues from continuing operations
grew by 5%, and on a constant currency basis by 11%, to £143.6
million (2020 restated: £136.5 million). Additionally, the actions
commenced in 2020 and 2021 to streamline the business, exit
unprofitable markets and reduce costs, in combination with the one-
time commission provision release in the UK, led to an improvement
in EBITDA from continuing operations of 29% to £7.5 million (2020
restated: £5.8 million) for the year.

We have also had a positive year in terms of client retention and
business development and have increased our customer base from
11.3 million to 11.4 million and whilst our renewal rate has reduced
to 63.6% (2020 restated: 68.5%) this is principally due to market
mix with the renewal base further shifting towards India and Turkey.

CPPGroup Plc Annual Report & Accounts 2021

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A refocused business
We have over the past year re-organised our operating business
and management structures to reflect how we see and manage the
business. We start 2022 with a leaner organisational structure, one
which is designed to meet the expectations of our growing client
base. The new structure reflects our geographic bias, our strategic
intent to grow our technology business Blink, and to exit from the
predominately European low growth, regulatory-intensive markets
where declining customer numbers with a relatively fixed cost base
are eroding margin.

A resilient financial performance
Group revenue grew by 5% on a reported basis and by 11% on a
constant currency basis. Ongoing revenues, which exclude revenues
relating to our Restricted Operations (legacy UK back books), grew
by 8% on a reported basis and by 14% on a constant currency
basis. Group EBITDA grew by 29% to £7.5 million.

India: revenue £119.3 million (2020: £108.4 million)
and EBITDA £7.8 million (2020: £7.7 million)
India is the Group’s largest operating business, generating 83% of total
revenues. The business performed well, despite a circa 7% weakening
of the Indian rupee over the year, with absolute revenue growth
for 2021 of +10% (constant currency +17%). EBITDA growth was
subdued due to reduced sales efficiency associated with COVID-19,
with some modest margin erosion due to local regulatory changes.

There are two constituent businesses:

1. CPP India: Reported 2021 +7% to £109.0 million (2020:

£101.6 million), constant currency growth of +14%. CPP India works
closely with its business partners to drive value by growing customer
loyalty through the design and delivery of simple and innovative
products which fit seamlessly into the everyday life of consumers; and

2. Globiva: Reported 2021 +51% to £10.3 million (2020: £6.8 million),
constant currency growth of +57%. Globiva is 51% owned by
the Group and is one of India’s fastest growing BPM companies
providing outsourced customer relationship management, back-
office functionality and automated human resource services to a
growing roll of clients.

Turkey: revenue £3.6 million (2020: £3.8 million)
and EBITDA £0.9 million (2020: £0.9 million)
CPP Turkey is, in many respects, the most developed and most
balanced of our businesses, with a broad and well-established
partnership base coupled with a diverse mix of revenues. Despite
difficult economic conditions our Turkish business delivered the
highest EBITDA margin and achieved revenue and EBITDA growth,
on a constant currency basis, of +28% and +53% respectively.

Blink: revenue £0.3 million (2020: £0.2 million) and
EBITDA loss £0.2 million (2020: £1.3 million loss)
Blink (CPP Innovation Limited) is a technology and software platform
focused on providing innovative insurance solutions for the global travel
sector. Blink has also designed and deployed a parametric business
interruption solution and has an active product pipeline to enter other
sectors. Blink leverages CPP’s technology platforms to deliver bespoke
plug-and-play ‘white label’ solutions for our partners, typically travel
insurance providers.

Legacy and Restricted Operations:
revenue £20.4 million (2020: £24.1 million) and
EBITDA £3.4 million (2020: £3.5 million)
Our ‘legacy and restricted’ business comprises our UK and European
operations which have historically focused on the Group’s legacy
Card and Identity Protection products. The UK business continues
to operate under a variation of permissions with the FCA which
does not permit new sales, however, moreover the market for
these products is in decline, which coupled with ongoing regulatory

scrutiny and a high fixed cost base, means that these books of
business will reach an inflexion point in future years where they will
be unprofitable to maintain.

Central costs: £4.2 million (2020: £4.7 million)
Central costs before appropriate recharge to business units are
£10.4 million (2020: £11.6 million) of which £4.0 million relates to
the cost of the Group’s IT operations. The majority of the IT costs,
which are recharged to the Group’s operating businesses, represent
costs associated with maintaining regulatory compliant, consumer
data, in multiple geographies.

The Group is developing a new IT platform which is expected,
once deployed, to deliver significant efficiencies from late 2024.

Whilst IT costs have remained flat, other central costs have
decreased by 17% compared to the prior year.

Strategic priorities
Fundamentally, we are a business which provides products and
solutions which assist and protect the daily lives, be it online
or real world, of millions of customers of major brands and
financial institutions.

Our strategy must reflect the regulatory, economic and market
nuances of the geographies in which we operate. Consequently,
and save for our new IT platform and the introduction of our Blink
proposition, there are few other scale benefits to be had, as all our
products and services are, to some degree, bespoke. However, the
lack of scale benefits does not equate to a lack of opportunity.

Our key strategic priorities are to simplify our business, to reduce
costs and to build a platform which focuses on innovation in each of
our key geographies and organic growth which may be supported,
where appropriate, by acquisitions and strategic investments. We
have a clear approach for growing our Indian and Turkish businesses
and to wind down our legacy and restricted operations in a disciplined
and profitable manner. We also intend to invest and grow our
Blink business and to build and implement a new Group-wide IT
platform, both of which should provide some scale efficiencies over
the medium-term.

As, over time, we manage down our legacy and restricted
operations we are, save for Blink, in need of a coherent long-term
strategy for our UK and European markets. Whilst we have yet to
set a definitive plan for these markets our initial conclusions suggest
a move away from the traditional consumer focused products of
the Group, which are highly regulated and carry a high overhead
requirement. We are instead considering a move toward either a
technology-led strategy, or a move into the business-to-business
sector, which has more attractive economics and is less
regulated, or both.

Whichever strategy we pursue for our important UK and European
markets, implementation will require careful planning, will leverage our
current infrastructure, and, where appropriate, will include acquisitions.

1. India
Our growth will be organic led, with a focus on developing
multi-product strategic partnerships across the financial services
and technology sectors. We will focus on:

1. Introducing higher margin products which augment our partners
proposition, and which generate repeatable ancillary revenues.

2. Implementing our new technology platform, which will widen

the range of mobile-first and digital sales channels which we can
serve and, moreover, open access to new partner channels and
new customer segments.

Even though we have experienced high growth over the past few
years, we remain confident of further profitable growth over
the long-term.

CPPGroup Plc Annual Report & Accounts 2021

Chief Executive Officer’s statement continued

Strategic priorities continued
2. Turkey
We will have an organic led strategy focused on entrenching
relationships and winning new partners in the mobile, digital
and financial services sectors. We will continue to innovate and
deliver services and products which improve the day-to-day lives
of consumers whilst improving revenues for both our partners and
the Group.

At the same time, acquisitions to accelerate growth are becoming
more attractive, as they would provide both a natural exchange rate
hedge and, moreover, accelerate client acquisition.

3. Blink
Blink is our newest business, with similar attributes to a start-up
software business. Leveraging the Group’s existing product set, Blink
is focused on delivering differentiated ‘white label’, technology-led
services for insurance companies operating in the Travel and
Digital sectors.

We will focus on organic growth led by additional account
management and technology headcount. In the longer-term,
we will develop new products and solutions for other digital
intensive sectors.

4. Legacy and Restricted Operations (UK & Europe)
CPP’s original strategy was one of volume, based on selling as
many of the Group’s products, such as Card Protection and Identity
Protection in multiple geographies. As regulatory frameworks tightened,
and consumer buying patterns changed, the demand and margin
associated with our more traditional products started to decline.
Our approach is to manage the decline in a disciplined and
profitable manner.

5. Technology
We are developing a new digital cloud-based IT platform which
we expect to start rolling out in India towards the final quarter of
2022. Group-wide implementation is expected to complete during
2024. The new platform, once fully operational, will allow the
Group to lower costs, improve efficiencies in each geography and,
moreover, accelerate the development and introduction of new and
complementary products and services.

Specifically, the new platform is a hybrid, flexible and cloud-first
approach to managing our product proposition, CRM, and subscription
platforms. Utilising technologies which are both scalable and adaptive,
the new platform can be re-deployed to any market and hosted
in multiple countries to meet strict data residency requirements.
Moreover, the platform draws on the strengths of Amazon Web
Services to provide a secure, scalable and redundancy-free global
infrastructure that enables the business to ‘Plug & Play’ third party
solutions without affecting the core platform.

Our strategic priorities

People
I want to thank all my CPP colleagues for their dedication,
hard work and commitment while simultaneously responding and
adapting to the effects of a global pandemic. It is a measure of the
quality of our people that our entire business pivoted seamlessly
to home-working with no interruption to the support we give our
partners and customers.

We look forward with cautious optimism to a gradual return to
normal working patterns over the course of 2022.

Outlook
I have only been involved in the business for a short while,
but my initial impressions are unreservedly positive. We have
excellent businesses in India and Turkey where we expect further
strong underlying growth. We are building what I believe to be a
compelling proposition for the travel sector with our embryonic Blink
platform and are exiting underperforming operations both in the
UK and abroad. As if this were not enough, we are developing and
will later this year start to introduce our new, digital cloud-based IT
platform. We are, as we exit from the UK MGA and as the renewal
book continues to run-down, in need of a clear and executable
strategy for the UK, and this is something that the Board and
I will address during 2022.

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

At the time of writing the Group is in discussions with its largest
partner, Bajaj Finance Limited, to early renew and extend current
arrangements. While there is likely to be some commercial trade-off
between securing higher volume (revenue) and pricing we will have
stronger visibility over a substantial amount of forward revenue.

I am determined to re-energise CPP, to simplify its business model
and to improve outcomes for all stakeholders, and in particular for
our shareholders.

Simon Pyper
Chief Executive
28 March 2022

Acquisitive growth

New IT platform

Organic growth

India
Turkey
Blink

Turkey
UK and Europe
Blink

India
Turkey
UK and Europe
Blink

CPPGroup Plc Annual Report & Accounts 2021

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Our business model

Capturing market opportunity through
technology, people and partnerships
CPP builds products and solutions which provide assistance and
protection to consumers in their everyday lives, be it online or real world.

We provide assistance and protection solutions
Digital
Protecting consumers and businesses from cyber risks. Assisting customers
through preventative anti-virus software, personal data monitoring, alerts
and practical support if sensitive data is compromised.

Real world
Protecting consumers’ wellbeing through the provision of accessible
health services. Assisting with the inconveniences at home and on the
move through appliance warranties & maintenance services, payment card
cancellation, lost or damaged phones and gadget insurance, and real-time
access to cash or airport lounges in the event of flight delays/lost luggage.

We do this leveraging key resources

Technology
Investments in technology
platforms to drive product
development, operational
leverage and efficiencies.

Data
Utilising customer data
analytics and large global
data sets to drive targeted
product innovation,
delivery and distribution.

Partnerships
Our business is structured
to develop deep
understanding of our
partners, markets and
end customer needs.

Financials
A strong cash position
(£22.3 million) to fund our
capacity for reinvestment
to secure long-term value
for shareholders.

Colleagues
Investments in the
development of a learning
culture to engage the
best people right across
the business.

To support our
core activities
1. Distribution and relationships
Products and services are embedded or sold as an
ancillary offering at relevant points in the partner
customer journey. We operate flexible commercial
structures and fully-managed, white label
customer experiences.

2. Bundled services
We create bespoke products, insurance and services
to augment local partners’ propositions to fit their
commercial models and customer needs. We do this
through CPP developed products, third party services
and joint ventures.

3. Technology services
We develop white label, plug and play solutions from
our Blink Parametric platform and transfer them across
multiple markets in a low resource, systematic and
replicable way, driving margin expansion.

Generating
revenue through
High recurring customer annuity revenue
Customers pay monthly or annual premiums to CPP
and we pay commission to our partners.

Recurring partner revenue
Partners pay recurring monthly fees to include our
services into their core product on an embedded basis.

Fixed-term revenue
One-time, one or three-year, revenue streams from
ancillary products that operate under a fixed term.

Delivering value for customers and partners
Partners
• Delivering innovation, loyalty, additional revenue and profit.

Customers
• Swift, affordable and transparent assistance products.

• API/tech-led delivery enables seamless integration, differentiation and

• Instant claims processing and payments.

speed to market.

• Event-based, automated claims processing to improve usage.

• Disruptions to customer lives are managed with little impact.

>70

active partners

11.4m

customers protected (live base number)

CPPGroup Plc Annual Report & Accounts 2021

Investment case

Building sustainable
shareholder value

Strong customer
and retail growth

We have established, well managed businesses in India and
Turkey which have sustained strong customer and revenue
growth for a number of years. Our customer numbers have
increased to 11.4 million in 2021 and we continue to grow our
partner base, further increasing opportunities.

Partnerships with leading
global businesses

We create products that bring our partners ancillary revenue
streams, profit and enhanced customer loyalty; as well as
delivering highly valued services to their customers.

Increased profits

Increasing cash
generation

Our strong partnerships have seen profits grow in recent years
which will continue through deepening existing relationships
and successful product diversification. In addition, the work
undertaken to simplify the Group, including exit of loss-making
markets, enables the Group to focus its resources on growth
markets from a lower cost base.

A strong cash position at the end of 2021 of £22.3 million is
supported by the growing businesses in India and Turkey and
profitable returns from the legacy renewal books in the UK and
Europe. This places CPP in a strong position to support strategic
initiatives and maintain a focus on returns to shareholders.

Effective tax rate

Strong capital allocation

As previously guided, our effective tax rate is reducing following
actions to exit loss-making operations and ongoing control of the
central cost base. This demonstrates that the overall tax burden
compared to returns is falling and allows for a sustainable
covered dividend policy.

The Group has a strong balance sheet. Our capital allocation
strategy balances the financial health of the business, the ability
to fund strategic initiatives for growth and deliver sustainable
returns to shareholders.

CPPGroup Plc Annual Report & Accounts 2021

Our strategy

How we’ll deliver value
for all stakeholders

We have a clear goal: to become the leading provider of
technology-driven assistance products that are delivered
when and where people need them.

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Strategic pillars
To deliver on this goal we will continue the development of the Group strategy to simplify our business, drive organic growth, hunt for
acquisitions and strategic investments, reduce costs and build a platform which focuses on growth and innovation.

Responsiveness
A relentless focus on
end customer and
partner needs.

Innovation and
experience
Leverage our technology
platform to deliver a global
plug and play, white label
solution for our Partners.

Focus
Developing our value-driving
markets, exiting from low
growth legacy markets and
distributing our technology
solutions globally.

Transform
Investment in our people
and simplified structure
across the Group.

Priorities

Desired outcomes

•

Deliver new technology platform for our
Indian business.

Grow our India business through widening
distribution routes and higher margin products.

• Grow our Blink Parametric business globally.

•

Grow our Turkish business through organic
activity and acquisitions.

Grow our UK and European market through an
acquisition route.

Simplify and wind down our Legacy business
migrating from legacy technology.

• Investment in our people and re-setting the culture.

•

Simpler business to manage – clear focus on growth
not legacy.

Reduction of the cost of technology across the Group.

Strong revenue growth with higher margins.

Balanced growth for the business, de-risking
dependency on India.

Value adding acquisitions to accelerate growth.

Reduction in our regulatory burden.

Re-set culture in line with the refocused strategy to
accelerate growth and execute technology delivery.

CPPGroup Plc Annual Report & Accounts 2021

Key performance indicators

Measuring
our progress

Live policies
11.4m +1%

11.4m

11.3m

10.2m

Annual renewal rate
63.6% -4.9%

Cost/income ratio
50.8% -1.1%

63.6%

68.5%

68.7%

50.8%

51.9%

56.1%

Measure
The total number of active policies that provide
continuing cover or services to policyholders.

Performance
The live policy base has increased by 1% in the
year due to 30% growth in customer numbers in
Turkey and 1% growth in India. This has been
offset by the continued reduction in the size of
our UK and European renewal books. The rate
of customer growth has slowed in comparison to
previous periods as one-time policy sales in India
begin to level out year on year.

Measure
The net amount of annual retail policies remaining
on book after the scheduled renewal date, as a
proportion of those available to renew.

Measure
Cost of sales (excluding commission) and
administrative expenses1 as a percentage
of revenue.

Performance
The annual renewal rate for 2021 has decreased
by 4.9 percentage points. The reduced rate
reflects the negative mix impact from a greater
weighting towards our Indian and Turkish books
which typically renew at lower rates than our
diminishing legacy renewal books along with
a rate reduction in the UK following further
changes in the renewal process for vulnerable
customer groups.

Performance
Our cost/income ratio has decreased
1.1 percentage points year on year.
The improvement is due to the mix benefit
of 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
5.2% +0.9%

Revenue from major products
£143.6m +5%

5.2%

4.3%

3.4%

£143.6m

£136.5m

£133.4m

Measure
EBITDA as a percentage of revenue.

Performance
Our EBITDA margin has increased by
1.0 percentage points year on year with the
benefit from a one-time commission release in the
UK and reducing central costs being partly offset
by reducing efficiency in the UK legacy business.
Excluding the UK commission release EBITDA
margin would be broadly flat at 4.4%.

Measure
Revenue from the Group’s major products
and services (defined in note 5 to the
financial statements).

Performance
Revenue from retail assistance policies has
increased by 2% year on year due to growth
in India which has been partly offset by the
continued decline in the renewal books in our
traditional UK and European markets. Non-policy
revenue has increased by 54% reflecting a strong
recovery in Globiva after a COVID-19 impacted
prior year and growth in claims handling services
in the UK.

Retail assistance

Retail insurance

Packaged and wholesale

Non-policy revenue

APM glossary on page 86

All KPI comparative information for 2019 and 2020 has been restated to remove Germany and China which are discontinued operations.

CPPGroup Plc Annual Report & Accounts 2021

Chief Financial Officer’s report

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Refocusing
the business
“

The Group has continued to make solid
financial progress in 2021 in the face of
continued disruption in our markets from
the pandemic as we refocus its resources
on the key markets which provide the best
opportunity for sustainable growth. As
expected, this has improved profitable
performance and reduced the cash draw
on the business.”

David Bowling
Chief Financial Officer

CPPGroup Plc Annual Report & Accounts 2021

Chief Financial Officer’s report continued

This strategy has led to the
sale of our legacy German Card
Protection business and the exit
from the Chinese market which
completed in January 2022.
As a result, these businesses
are presented as discontinued
operations with this review
focusing on the performance of
the Group’s continuing operations.

Group revenue has increased by 5% (11% constant currency)
to £143.6 million (2020 restated: £136.5 million) with the growth
continuing to be driven by our Indian market. EBITDA has also
improved to £7.5 million (2020 restated: £5.8 million) which is a 29%
(54% constant currency) increase. The EBITDA improvement reflects
the benefit of restructuring initiatives to reduce our geographical
footprint or streamline operations to focus resources on the markets
with the strongest prospects along with careful control of the central
cost base. EBITDA includes a one-time benefit of £1.1 million from
the release of a commission provision in the UK. Excluding this
factor, EBITDA would have been £6.4 million, which is 9% higher
than in 2020.

Continuing operations

Revenue

Gross profit

EBITDA2

Operating profit

Profit before tax

Taxation

Profit/(loss) for the year

Basic earnings/(loss) per share (pence)

Cash generated by operations3

Dividends (pence)4

2021
£’m

143.6

32.9

7.5

2.9

4.2

(3.7)

0.5

0.85

7.4

12.5

2020
(restated)1
£’m

136.5

34.1

5.8

2.3

0.9

(3.4)

(2.5)

(30.21)

6.2

25.0

1. Restated to reflect Germany and China as discontinued operations.
2. Excluding depreciation, amortisation and exceptional items.
3. Includes cash generated from continuing and discontinued operations.
4. Interim dividend paid and final dividend proposed.

Gross profit has reduced by 4% (1% constant currency increase)
to £32.9 million (2020 restated: £34.1 million). This results in a
reduction in the gross profit margin to 22.9% (2020 restated: 25.0%)
reflecting the continued growth in our Indian business which has
higher costs of acquisition associated with sales than the UK and EU
renewal books it is replacing. In addition, whilst gross profit in India
is increasing this is at a lower margin year on year as an increasing
share of revenue and customer growth comes from lower margin
product variants. Gross profit has also benefitted from the £1.1
million commission provision release in the UK and therefore would
have been 7% lower than the prior year at £31.8 million at a margin
of 22.1% without it. We expect our gross profit margins to continue
to reduce in the medium-term whilst growth is predominantly driven
by India and the legacy renewal books diminish. Longer-term margin
improvement will be driven by product diversification in India and
growth in technology-led product and distribution.

Revenue growth
5%

Full year dividend
12.5 pence

CPPGroup Plc Annual Report & Accounts 2021

We are pleased that EBITDA has increased to £7.5 million
(2020 restated: £5.8 million) which reflects the one-time £1.1 million
benefit from the commission provision release alongside a reduction
in the cost base with administrative expenses, before depreciation
and exceptional items, reducing by 10% in the year. The reducing
cost base demonstrates the expected savings from restructuring
exercises across the Group to address loss-making operations and
available operational efficiencies.

Depreciation and amortisation charges have decreased marginally to
£3.0 million (2020 restated: £3.2 million). The Group’s amortisation
charges are expected to increase in the medium term as the new
technology platform is launched in India during Q4 2022 and
Globiva increases its operational capacity to facilitate growth.

Exceptional items charged to operating profit total £1.6 million
(2020: £0.4 million) as the Group continues to focus its resources
on its key markets. Restructuring activities in the year have included
the realisation of operational efficiencies in Spain, new business
activities being halted in Mexico, the closure of Malaysia and a
reduction in central Board costs. In addition, Blink, the parametric
platform, was brought under central management.

The growth in EBITDA, in conjunction with the exceptional items
and depreciation charges, results in operating profit increasing by
27% to £2.9 million (2020 restated: £2.3 million).

Other gains and losses comprise a gain of £1.5 million (2020:
£1.3 million loss) which reflects a fair value gain on our investment
in KYND. In December 2021, following a funding round by KYND,
our holding was diluted to 14.7% (2020: 20.0%), consequently we
no longer recognise the investment as a joint venture and have
ceased equity accounting. Our reduced share of the holding in KYND
has a fair value of £1.9 million which is in excess of the £1.4 million
invested by the Group to date. Due to the one-off nature this gain
has been treated as an exceptional item outside of operating profit.

As a result, the Group’s profit before tax was £4.2 million
(2020 restated: £0.9 million) and we have a profit after tax
of £0.5 million (2020 restated: £2.5 million loss).

Tax
The tax charge from continuing operations was £3.7 million
(2020 restated: £3.4 million) which constitutes an effective tax rate
(ETR) of 88% (2020 restated: 386%). The ETR is impacted by
withholding taxes arising on dividend repatriations of £1.2 million
(2020: £0.8 million) as cash increasingly generated in our overseas
markets is repatriated to the UK.

The local tax rates applying to our profitable countries which
are higher than the UK corporate income tax of 19% is also a
contributor to the high ETR. India, the most profitable of our
markets, has a local tax rate of 25.2%. In total, the tax charge
includes £2.0 million of Indian tax (2020: £1.7 million). The
tax rates in Turkey, Spain and Italy are also higher than the UK
statutory rate which adversely impacts our ETR.

Whilst the ETR is high, the overarching trend is a reduction in
ETR as savings from operational efficiencies, market exits and
restructuring exercises are reducing the number of loss-making
entities in the Group.

APM glossary on page 86

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Cash balance
£22.3m

Adjusted ETR

Profit before tax

Tax

ETR

PBT

Tax

ETR

2021

Reported
– continuing
operations
£’m

Exceptional
items and
one-offs 1
£’m

4.2

3.7

(0.9)

0.2

Adjusted
£’m

3.3

3.9

88% (18)%

119%

2020

Reported
– continuing
operations
£’m

Exceptional
items 1
£’m

0.9

3.4

386%

1.7

—

Adjusted
£’m

2.5

3.4

135%

1. Comprises exceptional items of £0.2 million (2020: £1.7 million) and one-time

benefit from the commission provision release in the UK of £1.1 million (2020: £nil).
Further detail of exceptional items is provided in note 6 on page 60.

The exceptional items and one-offs in the year have increased
profit by £0.9 million whilst there has been a reduction in tax of
£0.2 million. Without the exceptional items and one-offs, the
Group’s ETR would increase to 119% (2020 restated: 135%).

As the UK statutory rate of tax increases to 25% on 1 April 2023,
the ETR is expected to become closer aligned to the UK statutory
tax rate as the difference between the UK and the tax rates in the
overseas territories in which we make profits align. But, the ETR will
remain higher in future years as we 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.

Overall, we expect a progressive reduction in our ETR as our
loss-making operations reduce, distributions from overseas countries
stabilise and volatility arising from one-off charges declines.

CPPGroup Plc Annual Report & Accounts 2021

Chief Financial Officer’s report continued

Dividend
Last year we were pleased to confirm the recommencement of a
dividend. The Board remains committed to providing sustainable
returns to shareholders at a level that reflects the Group’s cash
requirements and progress.

As a result, the Directors have proposed a final dividend of
7.5 pence per ordinary share giving a full year dividend of
12.5 pence (2020: 25.0 pence). The proposed final dividend is
subject to approval by shareholders at the AGM and is expected
to be paid on 17 May 2022 to all shareholders on the Register
of Members on 19 April 2022 with the ex-dividend date being
14 April 2022.

Discontinued operations,
The Group has classified its German and Chinese businesses
as discontinued in the current year (see note 15 on page 66).
The total profit after tax from discontinued operations of £2.5
million comprises £3.3 million profit in relation to Germany and
£0.8 million loss from China.

Revenue

EBITDA

Operating (loss)/profit

(Loss)/profit after tax

Profit on disposal

Profit for the year

Net liabilities held for sale

2021
£’m

2.5

0.3

(0.2)

(0.1)

2.6

2.5

(0.1)

2020
£’m

4.7

1.3

1.0

0.9

—

0.9

—

On 17 May 2021, the Group completed the sale of its German
business for a final cash consideration of £2.4 million to Deutsche
Schutzbriefgesellschaft GmbH (Mehrwerk). The proceeds, together
with costs associated with the disposal and the carrying value of net
liabilities on disposal, generated a profit on disposal of £2.7 million.
Germany also generated trading profits after tax of £0.6 million up
to the disposal date (2020: £1.5 million for a full year of trading).

Our China business was held for sale at the balance sheet date
with the transaction subsequently completing on 27 January 2022
with T-Link Holdings Limited (T-Link) for a nominal consideration
of HK$1. The terms of the transaction included a working capital
cash injection of £0.5 million immediately prior to completion. The
Group expects that the transaction together with trading losses
will generate a profit of approximately £0.6 million in 2022. China
contributed trading losses of £0.8 million (2020: £0.6 million) in the
2021 financial year.

CPPGroup Plc Annual Report & Accounts 2021

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

Net proceeds from disposals2

Net finance revenues

Dividends

Costs of refinancing

Net movement in cash3

Net funds4

2021
£’m

7.7

(1.6)

0.1

1.2

7.4

(2.8)

4.6

(1.9)

(1.5)

2.3

0.1

(2.6)

—

1.0

16.4

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

1. Exceptional items represent cash costs relating to restructuring.
2. Net proceeds from the disposal comprises cash proceeds from disposal of £2.4 million
(2020: £0.3 million) less cash disposed with business of £0.1 million (2020: £nil).

3. Excluding the effect of exchange rates.
4. Net funds comprise cash and cash equivalents of £22.4 million (2020: £21.9 million)
and a borrowing asset of £nil (2020: £0.1 million) less lease liabilities of £6.0 million
(2020: £6.7 million).

The net funds position has increased to £16.4 million (2020: £15.3
million), which includes cash of £22.4 million (2020: £21.9 million).
The Group has generated additional cash of £0.5 million in the year
with increasing cash generated by operations and cash proceeds
from the sale of Germany being largely offset by dividend payments,
one-time restructuring costs and adverse foreign exchange movements.

Cash generated by operations has increased to £7.4 million
(2020: £6.2 million) reflecting a working capital benefit mainly driven
by India. Tax paid has remained broadly stable at £2.8 million
(2020: £3.0 million) which is a combination of taxes payable on
profits in our markets and withholding taxes on overseas dividends
to the UK.

Proceeds from disposal relate to the net £2.3 million received on
the sale of Germany. The proceeds have been more than offset by
the reintroduction of the dividend with £2.6 million paid in the year
in the form of a 2020 final dividend and 2021 interim dividend.

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 cash planning continues
to be important. This, along with our regulatory requirements in
the UK, results in £1.5 million (2020: £2.1 million) cash not being
immediately available to the Group, albeit the Indian funds are
fully available for use by the Indian business.

The Group has a £5.0 million revolving credit facility (RCF) which
is in place until August 2023. The RCF is not currently drawn.

APM glossary on page 86

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Events after the balance sheet date
The Group completed the sale of China on 27 January 2022
with T-Link.

The Group is in the process of remodelling its operating structure
as a greater focus is placed on the distribution of technology-led
propositions into the UK and Europe. These technology-led solutions
will lead to a simplified UK-based operating model. This in conjunction
with a smaller geographic footprint has led to a restructuring process
commencing in the UK, which will see a redundancy programme in
2022. Exceptional restructuring costs in 2022 are expected to be in
the range £0.2 million to £0.3 million which is anticipated to generate
annualised savings of approximately £1.0 million.

Foreign exchange
The sustained strengthening of sterling through 2021 has led to
exchange rate movements continuing to work against the Group.
The primary impacts on our results have been in our Indian and
Turkish businesses where exchange rates have depreciated by
approximately 7% and 37% (2020: 6% and 29%) respectively
over the year. This has adversely impacted reported results when
comparing to the prior year. We are pleased to observe that the
volatile Turkish lira, led by economic policy, seems to have stabilised
in recent weeks and we continue to manage as much as possible
against a devaluation of surplus cash balances in the market.

The reported results compared to 2020 include the following adverse
foreign exchange movements: £7.4 million (2020 restated: £6.8 million)
within revenue; and £0.9 million (2020 restated: £0.6 million) at an
EBITDA level.

Segmental performance

REVENUE

Ongoing Operations

India

Turkey

Blink

UK & Rest of World2

Total Ongoing Operations

Restricted Operations

Group revenue

EBITDA

Ongoing Operations

India

Turkey

Blink

UK & Rest of World2

Total Ongoing Operations

Restricted Operations

Central Functions

Segmental EBITDA

Share of loss in joint venture

Group EBITDA

2021
£’m

2020
(restated) 1
£’m

119.3

108.4

3.6

0.3

11.6

134.8

8.8

143.6

2021
£’m

7.8

0.9

(0.2)

0.2

8.7

3.2

(4.2)

7.7

(0.2)

7.5

3.8

0.2

13.1

125.5

11.0

136.5

2020
(restated) 1
£’m

7.7

0.9

(1.3)

(0.3)

7.0

3.8

(4.7)

6.1

(0.3)

5.8

Change

10%

(5)%

84%

(11)%

(21)%

Change

(4)%

80%

188%

27%

(14)%

11%

26%

28%

29%

Constant
currency
change

17%

28%

88%

(8)%

14%

(22)%

11%

Constant
currency
change

11%

53%

80%

171%

43%

(14)%

11%

50%

28%

54%

1. Restated to reflect Germany and China as discontinued operations.
2. UK & Rest of World comprises UK, Spain, Italy, Portugal, Mexico, Bangladesh, Malaysia and Southeast Asia (2020 only).

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.

CPPGroup Plc Annual Report & Accounts 2021

Chief Financial Officer’s report continued

Ongoing Operations (94% of Group revenue)
Revenue increased by 14% to £134.8 million (2020 restated:
£125.5 million) and EBITDA increased to £8.7 million (2020 restated:
£7.0 million). The growth and improvement in EBITDA performance
in our Ongoing Operations segment continues to be an important
demonstration of the necessary shift from our naturally declining
legacy businesses to the key growth markets in the Group.

Our Indian business, which includes Globiva, has had another
strong year and continues to drive the growth in this segment
with revenue increasing by 17% to £119.3 million (2020:
£108.4 million). COVID-19 continued to cause some disruption
particularly during the well documented second wave in Q2 which
the business was able to withstand well following the learnings
of 2020. The growth has been fuelled by our relationship with
Bajaj with a strong increase in FoneSafe (mobile phone protection
product) and LivPlus (life assistance, health and wellness product).
In Q4, the Indian regulator introduced the requirement for second
factor authentication on recurring credit card transactions. It has
taken time for our banking partners to understand their position
on this change and to agree the sales and renewal processes for
Card Protection with CPP. We expect this additional regulatory
requirement to impact our renewal rate in 2022. The new IT
platform is progressing to plan and is expected to go live in
Q4 2022. This IT platform will be transformational for both the
Indian business, and the Group as a whole, in providing additional
operating efficiencies and improved digital capability.

Globiva was not greatly impacted by the second wave of COVID-19
which is testament to the stronger operating model that it has
implemented since the initial outbreak of the pandemic. Revenue
in Globiva has grown 57% to £10.3 million (2020: £6.8 million)
with EBITDA similarly showing strong progress at £2.5 million
(2020: £1.3 million). This performance has been built on expansion
of its partner base with over ten new partners onboarded during
the year. Globiva is one of India’s fastest growing BPMs and we will
continue to support the business to realise the full potential.

Turkey has had another extremely strong year at a local currency
level growing revenue by 28% and EBITDA by 53%. This has been
achieved through growth in our partnerships with Turkiye Sigorta
and AkBank as the relationships have deepened over time. Turkey
continues to be a key market for the Group and a great example
of the success that comes from a multi-partner, multi-product
approach. Unfortunately, on a reported basis this excellent
local performance has been completely negated by the ongoing
devaluation in the Turkish lira with reported revenue 5% lower
in the year and EBITDA down 4%.

India revenue
£119.3m +17%

CPPGroup Plc Annual Report & Accounts 2021

Blink has increased revenues by 88% to £0.3 million (2020: £0.2 million)
and reduced losses to £0.2 million (2020: £1.3 million). Blink’s
progress was severely hampered by the impact the pandemic
had on the travel industry and whilst that sector is still far behind
pre-pandemic levels there has been an increase in travel in 2021.
This improving trend in conjunction with greater digital demand,
will place Blink in a strong position to capitalise on its opportunity.
In addition, Blink has added a further two products to its portfolio
in the year: Lost Luggage, which will complement travel delay;
and Blink Interruption, which enhances business interruption
claims processes and is currently in pilot phase with a global
insurer. The business has been brought under central management
which has both focused the sales effort leading to an acceleration
in pipeline conversion along with a streamlining of costs.

In other markets, the UK has increased revenues by 39% and reduced
EBITDA losses by 21%, albeit this progress was at a slower pace
than expected, in part due to market sentiment following UK
lockdowns in Q1 2021. In addition, a major motor ancillary partner
which accounted for approximately 48% of revenue in the year,
decided to take its offering in-house and therefore this business will
not recur in 2022. The renewal books in Spain, Italy and Portugal
have been well managed and performed in line with expectations.
Sustainable new business progress through the traditional distribution
channels has continued to be difficult in both Spain and Italy.

Restricted Operations (6% of Group revenue)
Revenue decreased by 22% to £8.8 million (2020: £11.0 million)
reflecting the natural decline in the historic renewal books of Card
Protection Plan Limited (CPPL) and Homecare Insurance Limited
(HIL) and the closure of Malaysia which had become uneconomic
to maintain. The UK is now the only operation remaining in this
segment. EBITDA fell by 14% to £3.2 million (2020: £3.8 million)
which reflects the lost profit from the revenue decline partly offset by
a one-time benefit of £1.1 million from the release of a commission
provision. Excluding the commission provision, EBITDA would have
been £2.1 million which is a reduction of 44% (2020: 42%). The
underlying margin in the UK book is falling due to a relatively fixed
cost base to service the remaining customer book and high IT costs
associated with the legacy platform. The Group expects to commence
work on migrating the UK back book from its legacy platforms to
a UK-version of the new India platform in late 2023 or early 2024
with completion during 2024. Implementation of the new platform
will enable legacy systems to be decommissioned which will unlock
significant savings in IT running costs for both the UK and the Group.

UK renewal rates have reduced to 67.6% (2020: 81.3%) due
to the planned changes in the renewal process for an additional
number of vulnerable customers and a switch in collections provider.
We continue to prioritise the best outcomes and experience for our
customers. Renewal rates are expected to stabilise and improve in
2022 as the vulnerable customer impact will reduce in subsequent
renewal cycles.

David Bowling
Chief Financial Officer
28 March 2022

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Sustainability

The value of CPP in society

CPP Group recognises our role in serving society and our communities
– knowing that our success is linked to the progress of the people,
partners and communities we serve.

The focus on wider Environmental, Social and Governance factors
continues to evolve rapidly, with increasing interest from a wide
range of stakeholders including our colleagues, partners, customers
and investors. Our intention is to enhance the integration of these
issues within our strategic priorities and business model to deliver
a positive societal impact that generates long-term returns for
all stakeholders.

We believe that by focusing on our corporate purpose and
developing products and services that minimise disruption to
daily life we can make a positive impact and play a meaningful
role in societal progress and the protection of consumers and
their communities.

CPP contributes to our communities through the promotion of
financial and social equality. Whilst we are on the initial journey of
formalising our ESG strategy activity, our approach will be informed
through four core areas of commitment:

• Building consumer resilience and protection – one of the most
tangible ways we can positively impact society is through the
benefits our products offer in terms of resilience and protection
(refer to page 2 for our product benefits). We will work with
partners to develop future products and services that boost
protection for consumers that protect them from adverse
material impacts.

• Contribute towards equality and inclusivity in our communities –
improve the prosperity of our communities through training, job
creation and the partnering of small and large companies that
assist with product provision, whilst strengthening investments in
businesses to increase our target audience. We will support our
communities through voluntary work and fundraising.

• Empowering our colleagues to do more – promote and nurture
an environment to create conditions for diversity, inclusion and
wellbeing, enabling talent attraction and retention.

• Being a responsible business – quantify and reduce the impact of
energy and resources used by our operations on the environment,
as well as ensuring our strategic partners comply with all
applicable laws, regulations and standards within the markets
in which they operate.

Progress so far
Our culture and colleagues are critical to the success of CPP
Group and we want our business to be one where our people
have equal opportunities and are valued as individuals. We
are focused on promoting the wellbeing of our colleagues
and we operate an intranet portal with discussion groups and
comprehensive resources on various aspects of wellbeing
including mental, physical, social, financial and digital health.
We develop colleagues through a range of global initiatives
and celebrate them through our recognition programmes.

To further develop our approach to Diversity & Inclusion and
promote a working environment that stimulates creativity,
collaboration and inclusivity we produce a Gender pay gap
report and conduct the CPP Group Global Conversation –
a Group-wide initiative where colleagues are invited to discuss
themes of open-mindedness and diversity of thought. Our
ESG strategy roadmap will further develop objectives and
initiatives that focus on gender, multi-generational, multi-
cultural, LGBT+ and disability.

We encourage colleagues to get involved in charitable events
in their communities, and support their causes through a
charitable matching policy, charitable donations through
our payroll, as well as communicating colleague led activity
throughout the organisation using our intranet. At the Group
level we partner with the Leeds Community Foundation to
support social initiatives in our community.

Whilst our business model of creating assistance products
and services that are sold through partners is significantly
lower consumption than most other industries, we nonetheless
recognise that we have our part to play in reducing carbon
emissions in all our communities. We pro-actively manage
office-based consumption through renewable energy sources
in our Leeds office, energy saving modes for lighting, and lower
energy consumption laptops and workstations throughout the
Group and we seek to minimise the impact on the environment
by limiting travel of our people through the adoption of hybrid
working guidelines.

CPPGroup Plc Annual Report & Accounts 2021

Sustainability continued

Progressing our
ESG position

We will recognise the Sustainable Development Goals (SDGs) and are committed to play
our part and work in partnership with our stakeholders to support the delivery of the
Goals. We will be progressing our ESG position, in line with the SDGs of relevance to CPP,
further in 2022 through four key stages of work conducted over a six-month period:

Scoping
We will define the ambition and objectives of our ESG
strategy further through internal interviews, stakeholder
discussions/workshops and surveys. We have conducted a
peer review of industry frameworks and reporting guidelines
and we will engage with key stakeholders to understand the
key issues facing the business and our sector.

Development
We have commenced a materiality assessment which will
complete in Q2 2022. This will be reviewed each year in
order to assess progress and remain aligned with evolving
stakeholder expectations and to ensure it reflects feedback
from ongoing stakeholder engagement. This will aid us in
the development of our ESG roadmap throughout 2022 as we
identify and assess ESG issues that could affect our business
and will aid our understanding of the topics that matter most
to stakeholders to guide our future sustainability strategy
and reporting.

Assessment and monitoring
We recognise that markets and stakeholders need clear,
relevant and consistent information alongside appropriate
governance, with Board oversight, and in line with developing
our ESG strategy roadmap we will focus on developing metrics
as defined by relevant industry frameworks that track our
progress and enhance disclosure and transparency.

Implementation
We will form an ESG steering committee with the core
responsibility of developing and coordinating projects and
proposals for ESG integration in the business. The committee
will also be responsible for understanding and monitoring how
our business practices are sustainable in environmental and
social terms, as well as being well governed. The committee
will be attended by members of the Executive Management
Committee and supported by our Board.

Our ESG programme will be an evolving process and we expect to provide further detail on our long-term objectives and priorities
under each of the E, S and G dimensions. This will be supported through enhanced reporting, which will be further articulated following
the materiality assessment, in the latter part of 2022, as we continue to develop our approach, goals and measures that enhance our
understanding of what drives our sustainability and have a positive societal impact in the years to come.

CPPGroup Plc Annual Report & Accounts 2021

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Risk management and principal risks

Managing key risks

This report explains the risk oversight arrangements we operate
within the Group along with an overview of what we believe are
the principal risks facing the Group.

The Board devotes a section of its standing agenda to the oversight
of the Group’s risk position, dedicating time to consideration of the
most significant emerging and current risks along with assessing
and challenging management’s mitigation plans. During the year the
Board has considered many areas of risk and has given particular
focus to discussions on:

Individual countries are responsible for the collation and reporting of
risks and controls assurance on a quarterly basis through both a risk
and controls self-assessment and an assurance dashboard. Collation
is supported and challenged by the Group’s central Risk function,
with the Group Internal Audit function providing independent
monitoring and reporting into the Group’s Audit Committee.

• People risk – the knowledge and skill of our colleagues is

central to achieving the Group’s strategic ambitions. The Board
has given consideration to people risk throughout the year, with
particular focus on the impact of the pandemic and competitive
recruitment markets in many territories that we operate.

• Regulatory change in India – the Board has given consideration
to the developments in the Reserve Bank of India (RBI) regulations
and Data Regulations within India and their actual and potential
future impact on the Indian operations.

• Technology development – the development of a new Indian

IT platform is a significant strategic project for the Group, as such
the Board has maintained oversight of progress and risks arising
from the development.

Risk management framework
The Group has a formal structure for the identification and
management of risk which is in use across all business units.
Reflecting the significant variations in risk environment within the
countries that CPP operates, each country is responsible for setting
its own risk appetite and managing its risks, with challenge and
assurance oversight from Group control functions and independent
review by Internal Audit.

Risk environment
The Group operates in multiple countries and as such is impacted by
significant events in each country along with their macro-economic
environments. The year has seen significant inflation and turbulence
in the Turkish lira and although our operation in Turkey has continued
to thrive through their strategy of diversification of product and
distribution channels, the impact of foreign exchange rates on
returns from the Turkish business have been closely monitored.

Most of the Group’s markets continued to be impacted by
COVID-19 throughout 2021 with various levels of government
restrictions and lockdowns implemented to reduce the spread of the
virus. The Group has continued to withstand the impacts of this,
both commercially and operationally. The impact on colleagues has
been closely monitored throughout the year including consideration
of operational resilience, key person dependencies along with
impacts on morale and colleague wellbeing.

Principal risks and uncertainties

Overview

Detail

Mitigation

Status

1. Business risk

Business Risk is the risk
posed by changes in the
external environment in which
the Group operates, which
could damage the success of
the business.

The Group is exposed to multiple
potential sources of business risk including
revenue volatility due to factors such
as macro-economic conditions or market
restrictions (including the impact of pandemic
and regulatory change), reliance on significant
business partners, structural inefficiencies
or competition from new market entrants
or innovative service propositions.

The Group addresses these risks
through the Strategic and Business
Planning processes. Business Plans are
formed for all Group entities and reviewed,
challenged and monitored by both
Executive Management and the Board.

Increase

Stable

Improving

CPPGroup Plc Annual Report & Accounts 2021

Risk management and principal risks continued

Principal risks and uncertainties continued

Overview

Detail

Mitigation

Status

2. Operational risk

Operational risk is the risk of financial loss, as a result of inadequate or failed internal processes, systems or human error. It is considered
in many forms, most notably in 2021 the Group focused on:

Change risk

People risk

Information technology risk

The Group is investing in a
significant level of technology
development focusing on
both providing future facing
technology to support an
excellent level of customer
service for the current
product base, along with
enabling increased innovative
and technology-led product
development within the Group.
Technology solutions represent
a corner stone in effective
Group operations and we will
continue to invest to mitigate
risks in this area. Particular
areas of risk focus include:

The Group continues to have an ambitious
change programme which includes
substantial technical development.
The execution of technical change has
significant risks attached to it which are
being closely monitored.

All major projects have an appropriate
governance structure including Steering
Groups and Group Risk oversight with
regular reporting to the Group’s Executive
Management Committee and Board.

People risk has been a focus for individual
countries and the Board throughout the
year. The impact of the pandemic on
resource levels, morale and colleague
wellbeing, along with the competitive
recruitment markets seen in many of
the territories as local restrictions have
been lifted, have been closely monitored.
The buoyant market for technical roles,
both in the UK and India, is also being
closely monitored.

Cyber risk
Cyber risk incorporates a wide array of
potential threats to Group businesses. These
can include network or perimeter threats or
a breach of online controls. These risks have
been magnified during the pandemic with
increases seen in phishing activity.

Business resilience
Ensuring ongoing resilience of systems.
The Group’s operations utilise complex IT
architecture made up of multiple systems
managed across multiple countries and
supported by a combination of internal
and external technology teams.

The Group has a Pandemic Committee
that continues to focus on the wellbeing of
colleagues. Along with this the Group has
sought to geographically spread its technical
resource to help reduce the pressures of a
single market.

Controls to mitigate cyber-attacks are in
place and managed by specialist colleagues
with challenge and oversight by the risk
team; this remains an ever evolving area
of risk which is closely monitored.

Ongoing monitoring of systems resilience
is in place along with disaster recovery
planning and testing on a regular basis.

Increase

Stable

Improving

CPPGroup Plc Annual Report & Accounts 2021

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Overview

Detail

Mitigation

Status

3. Regulatory risk

The risk of failure to comply with the regulation and legislation governing any of our Group businesses.

Regulatory landscape

The Group places significant focus
on compliance with the regulation and
legislation governing our business activities
across all territories to help ensure strong
customer outcomes in all our activities. We
continue to see an increase in regulatory
scope, focus and activity in many geographies.
Most notably in 2021, the RBI introduced
new consumer protection regulation in India.

Data governance also remains a key
area of focus, GDPR regulations are well
established in European entities and Turkey
with further work expected in relation
to the Indian Data Bill in 2022. As noted
above the increase in potential cyber risk
directly links to increased data risks around
the Group.

Horizon scanning for key regulatory change
is in place across the Group with regular
updates to the Board on key regulatory
changes and where appropriate change
plans to ensure ongoing compliance.

Where relevant the Group complies with
PCI standards and is certified annually
along with the ongoing internal challenge
around data governance and information
security controls.

Reputational risk in effect arises through
the poor management of risks generally.
The consequences would have a
significant adverse effect on the Group’s
future prospects.

The Board is responsible for overseeing that
reputational risk is adequately managed
across all Group entities through oversight
of the risk management framework,
which includes quarterly assessments and
challenge of all risk areas across the Group.

Data governance

4. Reputational risk

Reputational risk is the
risk to earnings resultant
from negative market, or
public opinion.

Increase

Stable

Improving

“

The Group has a formal structure for
the identification and management
of risk which is in use across all
business units.”

CPPGroup Plc Annual Report & Accounts 2021

Section 172(1) statement

Maintaining
stakeholder
relationships

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 between all 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.

• Non-Independent Non-Executive Director intermediation

with respective sponsoring shareholders.

How consideration for them influenced the Board’s
decision making
A nominee Director of each of the two major shareholders are
members of the Board. The AGM continues to be a key means of
communication with our shareholders. Although unable to hold
an ‘in person’ AGM again in 2021 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.

CPPGroup Plc Annual Report & Accounts 2021

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

limited again in 2021, 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 9.

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.

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Our colleagues
Why they matter to us
Our colleagues continue to be our most valuable resource, being
key to the continuing success and growth of our business.

Types of engagement
Maintaining colleague wellbeing and morale remained a major
focus for the business in 2021, with all our territories impacted by
the global pandemic and most colleagues continuing to work from
home at some point during the year. With this in mind the following
activities took place to support our colleagues:

• All colleagues across the Group invited to join fortnightly and

monthly video calls with the Group 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 Open-mindedness within CPP.

• Team based coaching was undertaken for CPP UK to unify the

culture across the UK business.

• The Accelerant Programme ran remotely with 23 colleagues from

across the Group taking part.

• Long Service celebrations were held again across the Group for

colleagues reaching 10, 15 and 20 years of service.

• Greater visibility of the Board members was encouraged which
gave colleagues the ability to meet the Chairman informally.

How the Board engages
• Continued investment in cultural development.

• The Board receives regular reports from the Group HR 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
The introduction of Hybrid Working and supporting toolkits to
enable CPP get the best for both colleagues and the business,
was developed in collaboration with colleagues.

The Strategic Report section on pages 2 to 25 of this Annual
Report has been reviewed and approved by the Board of
Directors on 28 March 2022.

Simon Pyper
Chief Executive Officer

CPPGroup Plc Annual Report & Accounts 2021

Board of Directors & Company Secretary

Leadership for a
sustainable future

David Morrison
Chairman

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.

Skills brought to the Board
Strategy and investment expertise.

CPPGroup Plc Annual Report & Accounts 2021

Simon Pyper
Chief Executive Officer

Appointment
Appointed as CFO in January 2022 and as CEO in February 2022.

Experience
Simon was formerly the Chief Executive Officer and Chief Financial
Officer of digital marketing group Be Heard Group plc. Prior to this,
he was Chief Financial Officer of AIM listed GlobalData plc for ten years.
During his tenure, Simon oversaw its admission to AIM and facilitated
its acquisition led growth strategy. He has also held various financial
and commercial positions with Musgrave UK and the Arcadia Group.
Simon is a member of the Chartered Institute of Management
Accountants and holds an MBA from Henley Management College.

External appointments
Simon is a Director of Gresham House Strategic plc and Innovaderma plc.

Skills brought to the Board
Sector and financial expertise.

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David Bowling
Chief Financial Officer

Appointment
March 2022.

Experience
A qualified Chartered Accountant, David
has been with CPP Group for over ten years
undertaking a number of senior roles within
the Group Finance function, most recently
as Group Finance Director. Prior to CPP
he was Group Accountant for Barchester
Healthcare Limited.

External appointments
None.

Skills brought to the Board
Finance and sector expertise.

Sarah Atherton
General Counsel &
Company Secretary

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.

Jeremy Miller
Independent
Non-Executive Director

Appointment
December 2021.

Experience
Jeremy who is a qualified Chartered
Accountant, working with KPMG early in
his career, has over 30 years’ investment
banking experience working for leading financial
services firms. He has held senior roles at
Dresdner Kleinwort Wassertein, James Capel
and most recently as London Chief Operating
Officer with Centerview Partners.

External appointments
Jeremy remains a Non-Executive Director
of This Land, Cenkos Securities and
Non-Executive Chairman of the National
Merchant Buying Society.

Skills brought to the Board
Expertise in advising on strategic, compliance
and governance matters.

Key

Audit Committee

Remuneration Committee

Nomination Committee

Chair of Committee

Simon Thompson
Non-Independent
Non-Executive Director

Appointment
June 2020.

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.

CPPGroup Plc Annual Report & Accounts 2021

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 2021.

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

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

A full description of our business model and strategy are given
on pages 9 and 11. Key challenges to their execution are detailed
under ‘Risk management and principal risks’ on pages 21 to 23.

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 page 9.

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 24 and 25.

CPPGroup Plc Annual Report & Accounts 2021

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. Those matters previously
considered by the Risk & Compliance Committee are now 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 21 to 23.

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. It is the Group’s intention to appoint an
additional independent Non-Executive Director in 2022.

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 2021
is given on page 31.

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 26 and 27.

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.

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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 relatively small number of
recommendations arising from that review, the Board has not conducted
a further formal effectiveness review. It was the Board’s intention to
undertake a review in 2021, however this was postponed as a result
of Board changes. A new Nomination Committee was established in
December 2021 which will consider this as part of its remit.

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.

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 19.

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, along
with external advice at the expense of the Group, should they need it.

Details of our governance framework is given on page 30.

The following departures from the QCA Code should be noted.
Membership of the Remuneration Committee includes a non-independent
Non-Executive Director, and currently has a temporary non-independent
Non-Executive Chair. The Audit Committee’s membership also temporarily
includes an additional non-independent Non-Executive Director. Given
the relatively small size of the Board and recent changes to the Board,
the Directors consider these departures to be necessary.

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 2021

Corporate Governance Report continued

Our governance framework

Our Board

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

See pages 26 and 27

Membership at 31 December 2021
As at 31 December 2021, the Board
comprised four Directors – the
Chairman, one Executive Director,
one Independent Non-Executive
Director and one Non-Independent
Non-Executive Director.

Meetings held in 2021
Eight

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

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 2021
• Jeremy Miller (Chairman)

• Simon Thompson

• David Morrison (appointed as a member on a temporary

basis with effect from December 2021)

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

Membership at 31 December 2021
• Simon Thompson (Interim Chairman with effect from

17 January 2022)

• David Morrison (appointed as a member on a temporary

basis with effect from December 2021)

• Jeremy Miller

Meetings held in 2021
Seven

Meetings held in 2021
Four

Read about our Audit Committee
on pages 32 and 33

Read about our Remuneration Committee
on pages 34 to 36

CPPGroup Plc Annual Report & Accounts 2021

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Directors’ attendance at Board and Committee meetings in 2021

Board

Audit
Committee

Remuneration
Committee

Attendance

David Morrison

Jason Walsh

Oliver Laird

Justine Shaw

Mark Hamlin

Tim Elliott

Simon Thompson

Jeremy Miller

—

100%

67%

100%

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, Simon Pyper, 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, the Remuneration Committee and the Nomination 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.

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 Board and the Audit Committee receive regular reports on compliance with Group policies and procedures. The Board, and
the Audit Committee on its behalf, 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.

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 21 to 23.

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.

CPPGroup Plc Annual Report & Accounts 2021

Report of the Audit Committee

Jeremy Miller
Chairman of the Audit Committee

Other members
David Morrison
Simon Thompson

On behalf of the Audit Committee,
I am pleased to present the Audit
Committee Report for the year
ended 31 December 2021.

The Audit Committee Report sets
out details of its composition,
responsibilities and an overview
of the work undertaken by the
Committee during the year.

CPPGroup Plc Annual Report & Accounts 2021

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The Committee fully
recognises its role in
protecting the interests
of shareholders and
other stakeholders
having responsibility
for monitoring the
integrity of published
financial information.”

Meetings and membership
Although only Committee members are entitled to attend meetings,
the entire Board is invited and typically attends. Others attend by
invitation of the Committee Chairman. During the year the External
Auditor, the Group Finance Director and the Group Director of Audit,
Risk and Assurance attended meetings to report to the Committee
and provide clarification and explanations where appropriate. Details
of attendance at the Committee can be found on page 31.

Each Committee member is considered to possess recent and
relevant financial 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 in protecting the interests
of shareholders and other stakeholders having responsibility for
monitoring the integrity of published financial information, including
the review of significant financial judgements; reviewing the selection
and appointment of the External Auditor and the effectiveness of the
external audit process; and monitoring performance of the internal
audit function in assessing the Group’s internal control and risk
management systems.

In 2021, the main activities of the Committee 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, incentive scheme
accounting, discontinued operations 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.

Key financial reporting and accounting issues
The primary area of judgement considered by the Committee in
relation to the 2021 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
Identity Protection product in the UK. The Committee
has concluded that revenue recognition continues
to be dealt with appropriately.

The Committee also received various materials supporting statements
on risk management, internal controls and long-term viability, which
along with consideration of the accuracy, integrity and consistency
of the messages conveyed within the Annual Report & Accounts
have enabled the Committee to recommend the document to the
Board as a fair, balanced and understandable reflection of the
Group’s position.

External Auditor
The Committee has primary 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. After
completing a robust tender process in line with best practice, the
Committee has recommended that PKF Littlejohn LLP (PKF) be
appointed as External Auditor at the forthcoming AGM.

External 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 PKF 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 the External
Auditor’s objectivity and independence are safeguarded:

• a policy on the use of the External 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 External Auditor’s
knowledge, skills or experience, the External 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 External Auditor over the financial
period; and

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

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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 continued use of co-sourced resource within the India business
for 2022; 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.

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 2021 Internal Audit Plan continued to be affected by
COVID-19, both in terms of execution of audits, which continued
to be predominantly completed remotely, and in relation to the risk
areas covered. Adjustments to the Internal Audit Plan were agreed
by the Committee to ensure the most appropriate coverage for
the Group. As the pandemic situation continues to stabilise there
is an expectation of increased onsite audit work in 2022, although
contingencies for remote working remain in place in the event of
further waves of COVID-19.

The ambitious change agenda of the Group was also reflected in
the focus of Internal Audit Plan, with a notable proportion of the
team’s time devoted to change initiatives including the development
of the new IT platform in India, which represents a strategic
IT development for the Group.

The appointment and removal of the Group Head of Audit, Risk
and Assurance 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 Group Head of Audit, Risk and Assurance has direct access to
the Board and the Audit Committee and is jointly accountable to the
Audit Committee Chairman and Group CEO.

Committee effectiveness
During the year, the Committee carried out an effectiveness review
based around the completion of a gap analysis against best practice.
No significant issues were identified.

Jeremy Miller
Chairman of the Audit Committee
28 March 2022

CPPGroup Plc Annual Report & Accounts 2021

Directors’ Remuneration Report

Simon Thompson
Interim Chairman of the Remuneration Committee

Other members
David Morrison
Jeremy Miller

On behalf of the Remuneration
Committee, I am pleased
to present the Directors’
Remuneration Report (the
Remuneration Report) for the
year ended 31 December 2021.

CPPGroup Plc Annual Report & Accounts 2021

“

The Committee
is responsible for
recommending
to the Board the
remuneration of the
Chairman, Executive
Directors, Company
Secretary and
senior management.”

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 long-term incentive plans;

• reviewing short-term incentive plans;

• strategy for year end salary reviews;

• agreeing terms for senior appointments and exits; and

• review of Group Remuneration Policy.

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 £87,600.

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

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

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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
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.

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

• 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

• variable pay, comprising bonus opportunity and participation

in the Group’s long-term incentive plans.

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 Walsh1

Oliver Laird2

Justine Shaw3

Non-Executive Directors

David Morrison

Mark Hamlin4

Tim Elliott5

Simon Thompson

Jeremy Miller6

Sir Richard Lapthorne7

Nick Cooper8

Base salary/
fees
£’000
2021

Taxable
benefits10
£’000
2021

Bonus9
£’000
2021

Pension
£’000
2021

Total
£’000

2021

2020

277

171

154

106

—

463

289

218

106

573

391

371

—

160

1. Jason Walsh resigned as CEO on 7 February 2022.
2. Oliver Laird resigned as CFO on 31 October 2021.
3. Justine Shaw resigned as People & Culture Director on 16 April 2021. The base salary includes £97,000 payment in lieu of notice. In addition to the information above a further

settlement payment of £97,000 was paid in the year.

4. Mark Hamlin resigned as Senior Independent Director on 30 November 2021. During the year the Company made a contribution of £71,000 (2020: £73,000) towards Mark’s

fees for the position of Chairman of the Globiva Board from which he resigned on 31 December 2021. See note 38 on page 85.

5. Tim Elliott resigned as Non-Executive Director on 30 November 2021.
6. Jeremy Miller was appointed as Non-Executive Director on 1 December 2021.
7. Sir Richard Lapthorne resigned as Chairman on 31 January 2021.
8. Nick Cooper resigned as Non-Executive Director on 28 February 2021.
9. Bonus figures relate to payments made in 2021 under the Dividend Matching Plan.
10. Taxable benefits relate to a combined total of flexible benefits and car allowance.

Simon Pyper and David Bowling were both appointed subsequent to the financial year end and are therefore not included in the Directors’
remuneration table for 2021.

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

Balance held at
1 January 2021

151,605

Number of share
options granted
in year

Number of share
options exercised
in year

Number of share
options lapsed
in year

Balance held at
31 December 2021

—

22,482

23,872

105,251

CPPGroup Plc Annual Report & Accounts 2021

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 2018 awards completed in the year and following an
assessment of the performance conditions the awards vested at a
level of 48.5%.

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

Long Term Incentive Plans
There are two cash-based incentive plans in place that were
introduced in 2020 to replace the 2016 LTIP, they were 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 Realisation Proceeds Plan (RPP) covers any events over the
ten years from its introduction which results 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
2020) 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 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 are 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, as of May 2021 all shares have lapsed
or been exercised.

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:

Jason Walsh

92,227

69,745

105,251

Ordinary shares held
at 31 December 2021

Ordinary shares held
at 31 December 2020

Interests in unexercised shares
under incentive plans

Simon Thompson
Interim Chairman of the Remuneration Committee
28 March 2022

CPPGroup Plc Annual Report & Accounts 2021

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Directors’ Report

The Directors present their Annual Report and audited financial statements of the Group for the year ended 31 December 2021.

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 2 to 25;

• the Corporate Governance Report on pages 28 to 31;

• the Report of the Audit Committee on pages 32 and 33; and

• the Directors’ Remuneration Report on pages 34 to 36.

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

David Morrison
Simon Pyper

David Bowling
Jason Walsh
Oliver Laird
Justine Shaw
Mark Hamlin
Tim Elliott
Simon Thompson
Jeremy Miller
Sir Richard Lapthorne
Nick Cooper

Chairman
Chief Executive Officer

Chief Financial Officer
Chief Executive Officer
Chief Financial Officer
People & Culture Director
Senior Independent Director
Non-Executive Director
Non-Independent Non-Executive Director
Independent Non-Executive Director
Chairman
Non-Executive Director

(appointed 1 January 2022)

(appointed 7 March 2022)
(resigned 7 February 2022)
(resigned 31 October 2021)
(resigned 16 April 2021)
(resigned 30 November 2021)
(resigned 30 November 2021)

(appointed 1 December 2021)
(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,
Simon Pyper, David Bowling and Jeremy Miller will seek election at
the forthcoming AGM.

Brief biographical details for each Director are set out on pages
26 and 27. Details of Committee memberships are set out in the
Corporate Governance Report on page 30.

Details of Directors’ beneficial interests in and options over the
Company’s shares are set out in the Directors’ Remuneration Report
on pages 34 to 36.

Dividends
The Directors recommend a final dividend of 7.5 pence per ordinary
share to be paid on 17 May 2022 to ordinary shareholders on the
register on 19 April 2022. A final dividend of 25 pence per share was
paid for the year ended 31 December 2020. An interim dividend of
5 pence per share was paid in September following announcement
of the half year results for the period ended 30 June 2021.

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 completed the sale of its business in China and has
commenced a redundancy programme in the UK. Refer to note 39
on page 85 for further details.

Annual General Meeting
The AGM of the Company is to be held on 3 May 2022. 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
34 on page 81.

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
35 on pages 82 and 83.

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 CFO often meet
with prospective and existing business partners, reporting back
to the Board on the results of those meetings.

CPPGroup Plc Annual Report & Accounts 2021

Directors’ Report continued

Substantial shareholdings
On 31 December 2021, 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 2021 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 40.81% 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 ongoing 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. The Group’s operations
do not have a material direct exposure to the conflict in the Ukraine.

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 2021

Ordinary
shares

3,168,096

2,641,443

963,317

889,852

35.87%

29.90%

10.91%

10.07%

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, monthly CEO calls and weekly CEO blogs on the intranet.

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.

During the year ended 31 December 2021, PKF Littlejohn LLP have
been engaged as Auditor of the Company in place of Deloitte LLP.
Accordingly, a resolution to appoint PKF Littlejohn LLP will be
proposed at the AGM.

By order of the Board

Sarah Atherton
General Counsel & Company Secretary
28 March 2022

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 UK-adopted International
Accounting Standards (UK IAS) 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 UK IAS 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.

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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

Simon Pyper
Chief Executive Officer
28 March 2022

David Bowling
Chief Financial Officer
28 March 2022

CPPGroup Plc Annual Report & Accounts 2021

Independent Auditor’s Report
To the members of CPPGroup Plc

Opinion
We have audited the financial statements of CPPGroup Plc (the parent company) and its subsidiaries (the Group) for the year ended
31 December 2021 which comprise the consolidated statement of comprehensive income, the consolidated income statement, the consolidated
and parent company statements of financial position, the consolidated and parent company statements of changes in equity, the consolidated
statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that
has been applied in their preparation is applicable law and UK-adopted international accounting standards. The Financial reporting framework
that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting
Standards, including FRS 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

• the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 31 December 2021

and of the Group’s profit for the year then ended;

• the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;

• the parent company financial statements have been properly prepared in accordance with United Kingdom generally accepted accounting

practice; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

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 parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including 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.

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 parent company’s ability to continue to adopt the going concern basis
of accounting included:

• a comparison of actual results for the year to past budgets to assess the forecasting ability/accuracy of management;

• reviewing the two-year plan prepared by management for the period, providing challenge to key assumptions and reviewing the

reasonableness of the following:

• significant movements in forecasted cash flows and evaluating the reasoning for the changes;

• accuracy of the two-year plan forecasts by comparing the forecasts to historical trends and performance; and

• substantiating the forecasts’ inputs with supporting documentation;

• review of the parent company and its subsidiaries’ correspondence with regulators up to the date of signing our audit report;

• review of the financial statements disclosures for the year ended 31 December 2021 and its supporting documents;

• evaluation of the Directors’ going concern assessment, including the impacts of the COVID-19 pandemic and the actions that management

can take in the event that there are further restrictions or lockdowns;

CPPGroup Plc Annual Report & Accounts 2021

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Conclusions relating to going concern continued
• assessment of the risks faced by the Group and the parent company, which includes:

• credit risk, liquidity risk, currency risk, funding risk and capital risk (including minimum solvency capital requirements);

• operational resilience and business continuity plans;

• ability to continually provide services to customers;

• compliance with regulations; and

• maintaining appropriate oversight and control over the Group’s significant international components; and

• reviewing post-year end RNS announcements.

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 or parent 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.

Our application of materiality
The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit
procedures. The materiality applied to the Group financial statements was £1.46 million based on 1% of revenue. We based the materiality
on revenue because we consider this to be the most relevant performance indicator of the Group and is a significant driver of profit or loss
for the year.

The performance materiality was £1.02 million. We set performance materiality at 70% of overall financial statement materiality to reflect
the risk associated with the judgemental and key areas of management estimation within the financial statements.

The materiality applied to the parent company financial statements was £158,000 based on 5% of profit before tax, as there is no revenue
recorded in the holding company. The performance materiality was £110,600. For each component in the scope of our Group audit, we
allocated a materiality that was less than our overall Group materiality. As a group which is in the process of growing its product revenue
streams, component materiality was set with reference to either revenue or profit before tax.

We agreed with those charged with governance that we would report all differences identified during the course of our audit in excess
of £73,000.

No significant changes have come to light through the audit fieldwork which has caused us to revise our materiality figure.

Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular
we looked at areas involving significant accounting estimates and judgements by the Directors and considered future events that are inherently
uncertain. We have identified Revenue recognition as significant risk and key audit matter during the year – details relating to key audit matters
are provided in the following section of our report. As in all of our audits, we also addressed the risk of management override of internal controls,
including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to
fraud. Of all the 32 components of the Group, a full scope audit was performed on the complete financial information of 12 components, and
for the components not considered significant, we performed a limited scope review which consisted of analytical review procedures, together
with substantive testing as appropriate on Group audit risk areas applicable to those components based on their relative size, risks in the
business and our knowledge of the entity appropriate to respond to the risk of material misstatement.

Of all the 32 reporting components of the Group, 3 significant components are located outside United Kingdom and audited by PKF network
firm operating under our instruction and the audits of the remaining components were performed in Leeds, conducted by PKF Littlejohn LLP,
using a team with specific experience of auditing companies operating in the insurance sector and publicly listed entities.

The Senior Statutory Auditor interacted regularly with the component audit teams during all stages of the audit and was responsible for the
scope and direction of the audit process. This, in conjunction with additional procedures performed, gave us appropriate evidence for our
opinion on the Group and parent company financial statements.

CPPGroup Plc Annual Report & Accounts 2021

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

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 period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including 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.

Key audit matter

How our scope addressed this matter

Revenue recognition (Refer note 4)

Under ISA (UK) 240 there is a rebuttable presumption that revenue
recognition is a fraud risk.

IFRS 15 Revenue from Contracts with Customers requires that
the Group, for each of its material revenue streams, identify the
individual performance obligations owed to its customers, against
which revenue is allocated and recognised.

We have carried out the following procedures:

• documented our understanding of the internal control

environment in operation for the significant income streams and
undertaken walkthroughs across all material revenue streams to
gain assurance that the key controls within these processes have
been operating in the period under audit;

Due to the nature of the Group’s products, most notably in the
Indian market, which involve the provision of different services
over varying periods of time, the recognition of revenue is complex
and involves the application of management judgement when
identifying specific performance obligations.

• assessed the design and tested the operating effectiveness
of controls relating to the collation and apportionment of
costs used in the revenue recognition calculations in the Group
material territories. We have also focused our controls testing
in India on the accuracy of revenue recording;

The key judgements applied include the identification of, and
allocation of revenue between, different performance obligations,
particularly in India where revenue growth is fastest and
most complex.

Management judgement is also applied when determining the
costs associated with discharging the Group’s various performance
obligations, used as the basis for the revenue allocation
calculations performed.

• we have focused our controls testing at group on the

governance oversight over the revenue recognition policies
applied in each territory, as well as the consideration
and challenge provided over the revenue allocation
mechanisms adopted;

• obtained and agreed a sample of costs incurred to supporting

information to assess the accuracy and completeness of revenue
allocation calculations performed in the Group material territories;

We consider that there is significant audit risk in relation to:

• tested a sample of revenue transactions recorded on either side

• the appropriateness and compliance of the Group’s revenue
recognition policies under IFRS 15 for new and existing
products; and

• the accuracy of revenue allocation calculations performed

across the Group, most notably in India in light of local regulatory
changes in the period, and the accuracy and completeness
of underlying cost data upon which it is based.

of the year end to gain assurance over cut-off risk;

• reviewed any legal opinions / correspondence and challenged

management’s classification of their products where appropriate;

• used data analytics to perform analytical procedures and
performed substantive tests of detail in order to audit the
underlying revenue balances in India, the UK, Spain and Turkey;

• reviewed intra-group revenue and ensured transactions are

eliminated correctly on consolidation, along with any intra-group
profits; and

• reviewed any post-year end revenue credit adjustments to
ensure that these credits are recorded in the correct period
and these adjustments are valid postings.

CPPGroup Plc Annual Report & Accounts 2021

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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. Our opinion on the Group and parent
company 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.

We have nothing to report in this regard.

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.

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from

branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

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

Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the Group and parent
company 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 Group and parent company financial statements, the Directors are responsible for assessing the Group and the parent
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 parent company or to cease operations, or have no
realistic alternative but to do so.

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.

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:

• We obtained an understanding of the Group and the parent company and the sector in which they operate to identify laws and regulations
that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through
discussions with management, industry research and the application of cumulative audit knowledge and experience of the sector.

• We determined the principal laws and regulations relevant to the Group and the Company in this regard to be those arising from the

Companies Act 2006, FCA Handbook, Solvency II, AIM rules, GDPR, Employment Law, Health and Safety Law, Anti-bribery and Money
Laundering Regulations and the Quoted Companies Alliance Corporate Governance Code. Local laws and regulations in India, Spain,
Ireland, Turkey and other locations where the Group operates, were also considered.

• There was regular interaction with the component Auditors during all stages of the audit, including procedures designed to identify

non-compliance with laws and regulations, including fraud.

CPPGroup Plc Annual Report & Accounts 2021

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

Auditor’s responsibilities for the audit of the financial statements continued
• We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the

Group or the Company with those laws and regulations. These procedures included, but were not limited to:

• discussions with management regarding potential non-compliance;

• review of legal and professional fees to understand the nature of the costs and the existence of any non-compliance with laws and

regulations; and

• review of minutes of meetings of those charged with governance, regulatory correspondence and RNS announcements.

• We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable
presumption of a risk of fraud arising from management override of controls, that the potential for management bias was identified in relation
to the revenue recognition policy of the Group and, as noted above, we addressed this by challenging the assumptions and judgements
made by management when auditing that critical accounting judgement.

• As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of business and review of bank statements during
the year to identify any large and unusual transactions where the business rationale is not clear.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or
regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of
instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or misrepresentation.

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

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.

Martin Watson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
3rd Floor, One Park Row, Leeds, United Kingdom
28 March 2022

CPPGroup Plc Annual Report & Accounts 2021

Consolidated income statement
For the year ended 31 December 2021

Continuing operations

Revenue

Cost of sales

Gross profit

Administrative expenses

Share of loss of joint venture

Operating profit

Analysed as:

EBITDA

Depreciation and amortisation

Exceptional items

Investment revenues

Finance costs

Other gains and losses

Profit before taxation

Taxation

Profit/(loss) for the year from continuing operations

Discontinued operations

Profit for the year from discontinued operations

Profit/(loss) for the year

Attributable to:

Equity holders of the Company

Non-controlling interests

Basic earnings/(loss) per share

Continuing operations

Discontinued operations

Diluted earnings/(loss) per share

Continuing operations

Discontinued operations

* Restated to reflect Germany and China as discontinued operations. See note 2.

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Note

2021
£’000

2020

(restated *)

£’000

143,625

136,464

(110,708)

(102,317)

32,917

34,147

(29,827)

(31,597)

(189)

2,901

7,524

(2,995)

(1,628)

223

(358)

1,459

4,225

(3,707)

518

2,490

3,008

2,565

443

3,008

Pence

0.85

28.31

29.16

Pence

0.83

27.60

28.43

(264)

2,286

5,838

(3,196)

(356)

412

(512)

(1,294)

892

(3,441)

(2,549)

952

(1,597)

(1,680)

(1,597)

Pence
(restated *)

(30.21)

10.93

(19.28)

Pence
(restated *)

(30.21)

10.93

(19.28)

CPPGroup Plc Annual Report & Accounts 2021

Consolidated statement of comprehensive income
For the year ended 31 December 2021

Profit/(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 (expense)/income for the year net of taxation

Total comprehensive income/(expense) for the year

Attributable to:

Equity holders of the Company

Non-controlling interests

2021
£’000

3,008

(695)

(4)

(699)

2,309

1,867

442

2,309

2020
£’000

(1,597)

(809)

1,294

485

(1,112)

(1,145)

(1,112)

CPPGroup Plc Annual Report & Accounts 2021

Balance sheets
As at 31 December 2021

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

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

Assets classified as held for sale

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

Liabilities classified as held for sale

Net current assets
Non-current liabilities
Borrowings
Deferred tax liabilities
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

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Consolidated

Company

Note

2021
£’000

2020
£’000

2021
£’000

2020
£’000

16
17
18
19
20
21
21
32
24

22
23
24
25
26

28
29
24

30
32
29
24

540
3,603
1,335
5,109
—
1,889
—
396
564
13,436

—
102
4,020
13,605
22,319
40,046
478
40,524
53,960

(82)
(1,362)
(19,462)
(937)
(9,190)
(31,033)
(550)
(31,583)
8,941

58
(927)
(4,936)
(1,200)
(7,005)
(38,588)
15,372

24,243
45,225
(100,399)
136
17,418
27,202
13,825
1,547
15,372

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

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

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

—
—
—
—
15,770
—
—
57
—
15,827

—
—
—
81,941
5,368
87,309
—
87,309
103,136

—
—
(15,275)
—
—
(15,275)
—
(15,275)
72,034

—
(47)
—
—
(47)
(15,322)
87,814

24,243
45,225
—
—
10,792
7,554
87,814
—
87,814

—
—
—
—
15,545
—
—
48
—
15,593

—
—
—
79,314
12,433
91,747
—
91,747
107,340

—
—
(15,615)
—
—
(15,615)
—
(15,615)
76,132

—
—
—
—
—
(15,615)
91,725

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

The notes on pages 51 to 85 form an integral part of these financial statements.

The Company reported a loss for the financial year ended 31 December 2021 of £1,239,000 (2020: £10,676,000 profit).

Approved by the Board of Directors and authorised for issue on 28 March 2022 and signed on its behalf by:

Simon Pyper
Chief Executive Officer

David Bowling
Chief Financial Officer

Company registration number: 07151159

CPPGroup Plc Annual Report & Accounts 2021

Consolidated statement of changes in equity
For the year ended 31 December 2021

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

24,056

45,225

(100,399)

299

16,999

28,928

15,108

At 1 January 2020

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

—

At 31 December 2020

24,153

45,225

(100,399)

Profit for the year

Other comprehensive expense
for the year

Total comprehensive income
for the year

Equity-settled share-based
payment credit

Exercise of share options

Deferred tax on share options

Dividends paid

—

Total
equity
£’000

15,992

(1,597)

884

—

535

—

834

—

(698)

—

491

—

(1,680)

—

535

(50)

485

(1,680)

(1,145)

(1,112)

—

(97)

491

—

491

—

118

188

306

17,490

27,327

14,630

1,105

15,735

—

2,565

443

3,008

—

(698)

(1)

(699)

2,565

1,867

442

2,309

(72)

—

(70)

(72)

—

(72)

— (2,629)

(2,629)

— (2,629)

At 31 December 2021

24,243

45,225 (100,399)

136

17,418

27,202

13,825

1,547

15,372

CPPGroup Plc Annual Report & Accounts 2021

Company statement of changes in equity
For the year ended 31 December 2021

At 1 January 2020

Profit and total comprehensive income for the year

Equity-settled share-based payment charge

Exercise of share options

At 31 December 2020

Loss and total comprehensive expense for the year

Equity-settled share-based payment credit

Exercise of share options

Deferred tax on share options

Dividends paid

At 31 December 2021

Note

Share
capital
£’000

24,056

—

Share
premium
account
£’000

45,225

—

ESOP
reserve
£’000

10,373

—

491

—

Retained
earnings
£’000

904

10,676

—

(97)

Total
£’000

80,558

10,676

491

—

24,153

45,225

10,864

11,483

91,725

—

(72)

—

(1,239)

—

(70)

(72)

(2,629)

24,243

45,225

10,792

7,554

87,814

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CPPGroup Plc Annual Report & Accounts 2021

Note

2021
£’000

4,562

224

(525)

2020
£’000

3,162

410

(356)

(1,370)

(1,408)

2,366

(112)

—

583

—

(1,507)

—

(76)

—

117

(1,237)

—

(110)

(1,783)

329

(60)

—

(4,192)

(1,624)

953

(400)

21,856

22,409

301

(402)

21,957

21,856

(2,629)

22,319

21,856

—

22,409

21,856

Consolidated cash flow statement
For the year ended 31 December 2021

Net cash from operating activities

Investing activities

Interest received

Purchases of property, plant and equipment

Purchases of intangible assets

Cash consideration in respect of sale of discontinued operations

Cash disposed of with discontinued operations

Receipts from net investment lease assets

Net cash from/(used in) from investing activities

Financing activities

Dividends paid

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 increase 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

Analysed as:

Continuing operations

Discontinued operations

CPPGroup Plc Annual Report & Accounts 2021

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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 loss after tax for the year of £1,239,000 (2020: £10,676,000 profit) which included dividends received from subsidiary
undertakings of £nil (2020: £14,000,000).

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 was early adopted by the Group in the prior year. No other
Standards or Interpretations have been adopted early in these financial statements.

Standard/Interpretation

Subject

IFRS 9/IAS 39/IFRS 7/IFRS 4/IFRS 16

Interest rate benchmark reform

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:

Standard/Interpretation

Subject

IAS 1

IAS 8

IFRS 17

Presentation of financial statements

Definition of accounting estimates

Insurance contracts

Period first applies
(year ended)

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 45 to 85 present the performance of the Group for the year ended 31 December 2021.
The financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of
the Companies Act 2006 and UK-adopted International Accounting Standards (UK IASs). 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
On 17 May 2021, the Group completed the sale of its 100% shareholding in CPP Creating Profitable Partnerships GmbH (Germany).

As at 31 December 2021, the Board was committed to the disposal of CPP Asia Limited and its wholly owned subsidiary CPP Technology
Services (Shanghai) Co. Ltd (together, China). A sale process was well underway as at the balance sheet date which subsequently completed
on 27 January 2022.

In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, Germany and China have been classified as
discontinued within these financial statements. Accordingly, the comparative consolidated income statement information and appropriate
disclosure notes have been restated and China has also been classified as held for sale as at 31 December 2021. See note 15 for further details.

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 a period of at least 12 months from the date of this report. The assessment considers
the Group’s modelling of the ongoing risks associated with COVID-19. Accordingly they continue to adopt the going concern basis of accounting in
preparing the consolidated financial statements. Further details of the Directors’ assessment is set out in the Directors’ Report on page 38.

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.

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

3. Significant accounting policies continued
Basis of consolidation continued
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 and within operating profit, 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 contained within
operating profit helps provide an indication of the Group’s underlying business performance. Items which are in other gains or losses and
exceptional from their size or nature are identified in the exceptional note.

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 there are ongoing obligations
to fulfil with a customer. The Group’s performance obligations typically include a combination of intermediary services, claims handling,
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 2021

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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 deferred income and 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 represent deferred income and 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. 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. Joint arrangements are
de-recognised when a significant influence can no longer be demonstrated, in accordance with IAS 28 Investments in Associates and
Joint Ventures.

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

3. Significant accounting policies continued
Equity investments
Equity investments are initially recognised at fair value, in accordance with IFRS 9. They are revalued at reporting dates and an election has
been made that the fair value gains or losses are recognised in other comprehensive income. This is due to the non-current nature of the
equity investment and the Group’s intention to hold this as a long-term investment. The Group’s equity investment represents its shareholding
in KYND Limited on a fully diluted basis.

In the year, there has been a one-off gain on the dilution of the Group’s shareholding in KYND, which has resulted in the derecognition of
KYND as a joint venture and the recognition of KYND as an equity investment. This has been recognised as other gains and losses in the
consolidated income statement.

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
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 of goodwill
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.

CPPGroup Plc Annual Report & Accounts 2021

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3. Significant accounting policies continued
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.

Assets and liabilities classified as held for sale and discontinued operations
Assets and liabilities are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and
the sale is highly probable. Assets and liabilities classified as held for sale are stated at the lower of carrying amount and fair value less costs
to sell. They are not depreciated or amortised from the point they are recognised as held for sale.

Operations are classified as discontinued when they are either disposed or are part of a single co-ordinated plan to dispose, and represent
a major line of business or geographical area of operation. Discontinued operations include all income and expenses relating to the
discontinued operations, including exceptional items, taxation, profit or loss on disposal and costs to sell.

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.

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.

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.

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

3. Significant accounting policies continued
Taxation continued
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.

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. These are derecognised when the contractual provisions have ceased or substantially all of the risks and
rewards have been transferred.

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 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 other comprehensive income.

Classification
Financial assets are classified at level 1 to 3 depending on if they are quoted instruments (level 1), have observable inputs (level 2) or have
unobservable inputs (level 3).

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 are
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.

CPPGroup Plc Annual Report & Accounts 2021

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4. Critical accounting judgements and key sources of estimation uncertainty continued
Critical judgements continued
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 those which are material and outside of the
normal operating practice of the Group.

Assumptions and estimation uncertainties
Current tax
The Group operates in countries with complex tax regulations, where filed tax positions may remain open to challenge by local tax authorities
for several years. Corporation taxes are recognised by assessment of the specific tax law and likelihood of settlement. Where the Group has
uncertain tax treatments it has recognised appropriate provisions reflecting the expected value calculated by the sum of the probability-weighted
amounts in a range of possible outcomes.

Changes to the Group’s assessment of uncertain tax treatments 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, Turkey, Spain, Portugal, Italy, Mexico, Malaysia, the UK, Bangladesh and Blink. 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.

As at 31 December 2021, the German and Chinese operations were reclassified as discontinued, having previously been part of Ongoing
Operations; accordingly, the comparatives have been restated.

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

Year ended 31 December 2021

Continuing operations

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

Other gains and losses (note 6)

Profit before taxation

Taxation

Profit for the year from continuing operations

Discontinued operations

Profit for the year from discontinued operations

Profit for the year

Ongoing
Operations
2021
£’000

Restricted
Operations
2021
£’000

Central
Functions
2021
£’000

Total
2021
£’000

134,837

(110,044)

24,793

8,788

(664)

8,124

—

143,625

(110,708)

32,917

(16,146)

(4,866)

(4,192)

(25,204)

8,647

3,258

(4,192)

7,713

(189)

7,524

(2,995)

(1,628)

2,901

223

(358)

1,459

4,225

(3,707)

518

2,490

3,008

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

5. Segmental analysis continued

Year ended 31 December 2020

Continuing operations

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

Other gains and losses (note 6)

Profit before taxation

Taxation

Loss for the year from continuing operations

Discontinued operations

Profit for the year from discontinued operations

Loss for the year

* Restated to reflect Germany and China as discontinued operations. See note 2.

Segment assets

Ongoing Operations

Restricted Operations

Central Functions

Total segment assets

Unallocated assets

Assets relating to discontinued operations

Consolidated total assets

Ongoing
Operations
2020

(restated*)

£’000

Restricted
Operations
2020
£’000

Central
Functions
2020

Total
2020

(restated*)

£’000

125,396

(100,942)

24,454

(17,454)

7,000

11,068

(1,375)

9,693

(5,887)

3,806

—

(4,704)

2021
£’000

36,947

7,392

6,318

50,657

2,825

478

53,960

136,464

(102,317)

34,147

(28,045)

6,102

(264)

5,838

(3,196)

(356)

2,286

412

(512)

(1,294)

892

(3,441)

(2,549)

952

(1,597)

2020

(restated*)

£’000

40,677

7,564

5,113

53,354

1,920

1,859

57,133

* Restated to reflect Germany and China as discontinued operations. See note 2.

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

CPPGroup Plc Annual Report & Accounts 2021

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Intangible assets

Property, plant and equipment

Right-of-use assets

5. Segmental analysis continued
Capital expenditure

Continuing operations

Ongoing Operations

Restricted Operations

Central Functions

2021
£’000

979

344

Additions from continuing operations

1,370

Discontinued operations

Additions from discontinued operations

Consolidated total additions

—

1,370

* Restated to reflect Germany and China as discontinued operations. See note 2.

Revenues from major products

Continuing operations

Retail assistance policies

Retail insurance policies

Wholesale policies
Non-policy revenue

Revenue from continuing operations

Discontinued operations

Retail assistance policies
Wholesale policies

Revenue from discontinued operations

Total revenue

2020
£’000

1,055

352

1,408

—

1,408

2021
£’000

512

525

—

525

2020

(restated*)

£’000

254

355

356

2021
£’000

493

—

499

250

749

2020

(restated*)

£’000

1,565

—

523

2,088

2,091

2021
£’000

2020

(restated*)

£’000

128,982

126,531

—

2,705
11,938

2,549
7,299

143,625

136,464

2,152
312

2,464

4,491
189

4,680

146,089

141,144

* Restated to reflect Germany and China as discontinued operations. See note 2.

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, 22 and 27 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:

Continuing operations

At a point in time
Over time

Revenue from continuing operations

Discontinued operations

At a point in time
Over time

Revenue from discontinued operations

Total revenue

* Restated to reflect Germany and China as discontinued operations. See note 2.

2021
£’000

2020

(restated*)

£’000

126,606
17,019

143,625

116,296
20,168

136,464

1,496
968

2,464

1,606
3,074

4,680

146,089

141,144

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

5. Segmental analysis continued
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 equity investment, investment in joint venture and deferred tax) by geographical
location is detailed below:

Geographical location for continuing operations

India

Spain

Turkey

Other

Total for continuing operations

Discontinued operations

External revenues

Non-current assets

2021
£’000

2020

(restated*)

£’000

119,273

10,750

6,341

3,568

3,693

108,406

12,082

7,538

3,768

4,670

143,625

136,464

2,464

4,680

2021
£’000

7,721

1,585

323

249

1,273

11,151

—

146,089

141,144

11,151

2020

(restated*)

£’000

8,071

2,062

256

370

1,423

12,182

364

12,546

* Restated to reflect Germany and China as discontinued operations. See note 2.

Information about major customers
Revenue from the customers of one business partner in the Group’s Ongoing Operations segment represented approximately £84,159,000
(2020: £73,739,000) of the Group’s total revenue.

6. Exceptional items
Exceptional items included in the table below detail all exceptional items, which are included in operating profit, other gains and losses and
discontinued operations, as well as the associated taxation.

Continuing operations

Exceptional items included within operating profit

Restructuring costs

Impairment of goodwill

Customer redress and associated costs

Exceptional charge included in operating profit

Exceptional items included within other gains and losses

Other gains and losses – gain on reclassification of investment

Other gains and losses – foreign exchange reclassification

Exceptional (gain)/charge included in other gains and losses

Total exceptional charge included in profit before tax

Tax on exceptional items

Exceptional (gain)/charge after tax for continuing operations

Discontinued operations

Exceptional gain from discontinued operations

Note

2021
£’000

2020
£’000

14,15

1,628

—

1,628

(1,459)

—

(1,459)

169

(171)

(2)

(2,399)

(2,401)

161

880

(685)

356

—

1,294

1,650

—

1,650

—

1,650

Restructuring costs of £1,628,000 relate to the Group’s commitment to focus on the areas of the business that have the strongest prospects
for delivering sustainable and profitable medium to long-term growth. This has included redundancy programmes in Spain, Blink and Mexico,
as well as closure of the Malaysian operation and head office operational restructuring. The prior year restructuring of £161,000 related to
redundancy costs and onerous leases associated with the closure of the Southeast Asia operation.

Other gains and losses in the year reflect the gain on reclassification of the investment in KYND Limited (KYND) from a joint venture to an
equity investment of £1,459,000 (2020: £nil). This is following a dilution of the Group’s shareholding, after additional investment into KYND
from BGF Investment Management Limited (BGF). As a result, the investment no longer meets the criteria to be held as a joint venture and is
reclassified as an equity investment and held at fair value (see note 21). In the prior year, the foreign exchange reclassification of £1,294,000
related to a reclassification of cumulative foreign translation adjustments on the closure of the overseas branches in Hong Kong and Italy.

CPPGroup Plc Annual Report & Accounts 2021

7. Profit for the year

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

Operating lease charges

Net foreign exchange gains

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

Impairment of property, plant and equipment

Loss on disposal of property, plant and equipment

Loss on disposal of intangible assets

Customer redress and associated costs

Other (gains)/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

Continuing operations

Discontinued operations

Total

2021
£’000

2020

(restated*)

£’000

2021
£’000

2020

(restated*)

£’000

Note

2021
£’000

2020
£’000

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(107)

(102)

103

(278)

703

1,150

973

—

169

—

254

(147)

883

1,389

880

—

(685)

(1,459)

1,294

182

—

162

(62)

(4)

35,9

(64)

1,496

27,938

29,370

—

499

223

26,354

27,076

—

924

998

—

191

—

1,014

—

105

(385)

716

1,240

1,155

—

176

—

256

(249)

912

1,471

1,071

880

—

(685)

(1,459)

1,294

(158)

(62)

(64)

1,570

28,862

30,368

—

499

223

27,368

28,090

—

* Restated to reflect Germany and China as discontinued operations. See note 2.

Fees payable to PKF Littlejohn LLP (2020: 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

2021
£’000

103

226

329

—

329

2020
£’000

327

423

428

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

2021
£’000

539

853

1,392

2020
£’000

2,406

(182)

2,224

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

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

Claims paid/(recovered)

– Gross amount

– Decrease in provision for gross claims

Acquisition costs

– Costs incurred

Other expenses

2021
£’000

—

681

698

2020
£’000

(9)

(3)

(12)

1,121

1,110

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 £1,392,000 (2020: £2,224,000) are higher than revenue from retail insurance disclosed in note 5. Earned premiums include
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.

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 35)

Pension costs

Continuing operations

Discontinued operations

Total

2021
£’000

24,718

2,594

1,496

(64)

626

2020

(restated*)

£’000

23,110

2,448

223

499

796

29,370

27,076

2021
£’000

804

120

—

998

2020

(restated*)

£’000

954

—

2021
£’000

25,522

2,714

1,570

(64)

626

2020
£’000

24,064

2,508

223

499

796

1,014

30,368

28,090

* Restated to reflect Germany and China as discontinued operations. See note 2.

Average number of employees

Continuing operations

Ongoing Operations

Restricted Operations

Central Functions

Total for continuing operations

Discontinued operations

2021

2020

3,311

1,882

3,452

3,466

2,025

2,041

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 £2,006,000 (2020: £3,342,000) and the average number of employees was
seven (2020: ten).

Details of the remuneration of Directors are included in the Directors’ Remuneration Report on pages 34 to 36.

10. Investment revenues

Interest on bank deposits

Interest on net investment lease assets

Continuing operations

Discontinued operations

Total

2021
£’000

223

—

223

2020
£’000

410

412

2021
£’000

—

2020
£’000

—

2021
£’000

224

—

224

2020
£’000

410

412

CPPGroup Plc Annual Report & Accounts 2021

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11. Finance costs

Continuing operations

Discontinued operations

Total

Interest on borrowings

Amortisation of capitalised loan issue costs
Interest on lease liabilities

Other – exchange movements

2021
£’000

40
520

(278)

358

2020

(restated*)

£’000

62
537

(147)

512

2021
£’000

—

—
8

(107)

(99)

2020

(restated*)

£’000

—

—
5

(102)

(97)

* Restated to reflect Germany and China as discontinued operations. See note 2.

12. Taxation

Continuing operations

Current tax charge:
UK corporation tax
Foreign tax

Adjustments in respect of prior years

Current tax relating to continuing operations

Deferred tax charge:

Origination and reversal of timing differences
Impact of change in tax rates

Adjustments in respect of prior years

Deferred tax relating to continuing operations

Tax charge relating to continuing operations

Discontinued operations

Tax charge relating to discontinued operations

Total tax charge

2021
£’000

40
528

(385)

259

2020
£’000

62
542

(249)

415

2021
£’000

2020

(restated*)

£’000

142
3,386

(42)

3,486

304
(37)

(46)

221

156
2,895

(29)

3,022

409
10

—

419

3,707

3,441

3,737

168

3,609

* Restated to reflect Germany and China as discontinued operations. See note 2.

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:

2020

Continuing operations

Ongoing Operations:
India
Turkey
Blink

UK and Rest of World

Total Ongoing Operations

Restricted Operations

Central Functions

Tax charge for continuing operations

Discontinued operations

Tax charge for discontinued operations

2021
£’000

(restated*)

£’000

2,889
554
—

107

3,550

—

157

3,707

3,737

2,428
340
—

423

3,191

—

250

3,441

168

3,609

* Restated to reflect Germany and China as discontinued operations. See note 2.

Overall, UK profits chargeable to corporation tax are offset by group relief surrendered from fellow UK entities.

UK corporation tax is calculated at 19% (2020: 19%) of the estimated assessable profit for the year. The March 2021 Budget announced an
increase to the main rate of corporate tax to 25% from April 2023 and this rate has been substantively enacted at the balance sheet date.
Deferred tax is provided at the rate which it is expected to reverse.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions – India 25.2% inclusive of surcharges
(2020: 25.2%), Spain 25% (2020: 25%), Turkey 25% for 2021, which is reducing to 23% in 2022 (2020: 22%), and Italy 27.5% (2020:
27.5%). Non-UK deferred tax is provided at the local prevailing tax rate which is expected to apply to the reversal of the timing difference.

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

12. Taxation continued
The charge for the year can be reconciled to the profit per the consolidated income statement as follows:

Profit before tax from continuing operations

Effects of:

Tax at the UK corporation tax rate of 19% (2020: 19%)

Unprovided deferred tax arising on losses(1)

Other movement in unprovided deferred tax

Recurring expenses not deductible for tax

One-off costs not deductible for tax(2)

Provision for withholding tax on future distributions(3)

Other expense not chargeable for tax purposes

Higher tax rates on overseas earnings(4)

Adjustments in respect of prior years

Impact of change in future tax rates on deferred tax

(Deficit)/surplus of share option charge compared to tax allowable amount

Tax charged to the income statement for continuing operations

Tax charged to the income statement for discontinued operations

2021
£’000

4,225

803

792

164

409

(259)

1,217

250

471

(88)

(36)

(16)

3,707

3,737

2020

(restated*)

£’000

892

170

804

185

243

395

789

171

552

(29)

151

3,441

168

3,609

* Restated to reflect Germany and China as discontinued operations. See note 2.

Effective tax charge
The net tax charge of £3,707,000 on a profit before tax from continuing operations of £4,225,000 gives an effective tax rate of 88% which is
higher than the 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 is a one-off profit arising on KYND which is not taxable and therefore reduces the tax charge. In the prior year there were

one-off consolidation adjustments which were not tax deductible and therefore increased the tax charge, such as the impairment of Blink
goodwill and foreign exchange losses arising on branch closures.

3. There is a withholding tax burden arising on repatriation of funds from overseas countries which is included in the tax charge.

4. Tax is chargeable at the local statutory rates 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 significantly higher than the UK statutory tax rate in future years as withholding taxes are provided
on overseas distributions and deferred tax credits are not taken on losses in markets that are not currently profitable. However, overall, 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 credited to reserves during the year was as follows:

Deferred tax credit

Timing differences on business partner intangible

Timing differences of equity-settled share-based charge

Total deferred tax credit and total tax credited to reserves

13. Dividends

Final dividend paid for the year ended 31 December 2020 of 25 pence per share (2019: nil pence per share)

Interim dividend paid for the year ended 31 December 2021 of 5 pence per share (2020: nil pence per share)

Amounts recognised as distributions to equity holders in the year

2021
£’000

2020
£’000

—

(9)

2021
£’000

2,188

441

2,629

(58)

—

(58)

2020
£’000

—

After 31 December 2021, the Directors have proposed a final dividend of 7.5 pence (2020: 25.0 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 17 May 2022 to all shareholders on the Register of Members on 19 April 2022 with
the ex-dividend date being 14 April 2022. This has not been accrued as a liability as at 31 December 2021, consistent with the prior year,
in accordance with IAS 8.

CPPGroup Plc Annual Report & Accounts 2021

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s

14. Earnings/(loss) per share
Basic and diluted earnings/(loss) per share has been calculated in accordance with IAS 33 Earnings per Share. Underlying earnings/(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.

Profit/(loss)

Profit/(loss) for the purposes of basic and
diluted earnings/(loss) per share

Exceptional items (net of tax)

Profit/(loss) for the purposes of
underlying basic and diluted
earnings/(loss) per share

Continuing operations

Discontinued operations

Total

2021
£’000

(2)

2020

(restated*)

£’000

(2,632)

1,650

2021
£’000

2,490

(2,399)

2020

(restated*)

£’000

2021
£’000

2020
£’000

952

—

2,565

(2,401)

(1,680)

1,650

(982)

952

164

(30)

* Restated to reflect Germany and China as discontinued operations. See note 2.

Number of shares

Weighted average number of ordinary shares for the purposes of basic earnings/(loss) per share
and basic underlying earnings/(loss) per share

Effect of dilutive ordinary shares: share options

Weighted average number of ordinary shares for the purposes of diluted earnings/(loss) per share
and diluted underlying earnings/(loss) per share

2021
Number
(thousands)

2020
Number
(thousands)

8,796

225

8,713

—

9,021

8,713

Basic earnings/(loss) per share

Diluted earnings/(loss) per share

Basic underlying earnings/(loss)
per share

Diluted underlying earnings/(loss)
per share

Continuing operations

Discontinued operations

Total

2021
Pence

0.85

0.83

2020

(restated*)
Pence

(30.21)

0.83

(11.27)

0.81

(11.27)

2021
Pence

28.31

27.60

1.03

1.01

2020

(restated*)
Pence

10.93

2021
Pence

29.16

28.43

1.86

1.82

2020
Pence

(19.28)

(0.34)

* Restated to reflect Germany and China as discontinued operations. See note 2.

The Group has 171,650,000 (2020: 171,650,000) deferred shares which have no rights to receive dividends and only very limited rights on a
return of capital. The deferred shares have not been admitted to trading on AIM or any other stock exchange. Accordingly, these shares have
not been considered in the calculation of earnings/(loss) per share.

15. Discontinued operations and assets and liabilities classified as held for sale
On 17 May 2021, the Group completed the sale of its 100% shareholding in CPP Creating Profitable Partnerships GmbH (Germany). The gross
consideration on disposal was £2,366,000 (€2,744,000).

As at 31 December 2021, the Board was committed to the disposal of CPP Asia Limited and its wholly owned subsidiary (together, China).
A sale process was well underway as at the year end. Subsequent to year end on 27 January 2022, the sale was completed.

In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, Germany and China have been presented as
discontinued operations, and the China assets and liabilities have been reclassified as held for sale.

Operating results for the year ended 31 December 2021 reflect the trading performance of Germany up to the date of disposal on
17 May 2021 and China for the full year. Comparative information reflects a complete year. Both Germany and China were part of the
Ongoing Operations segment.

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

15. Discontinued operations and assets and liabilities classified as held for sale continued
(i) Income statement

Note

Revenue

Cost of sales

Gross profit

Administrative expenses

Operating profit/(loss)

Analysed as:

EBITDA

Depreciation and
amortisation

Exceptional items

Investment revenues

Finance costs

Profit/(loss) before
taxation

Taxation

Profit/(loss) for the year

(ii) Exceptional items

Profit on disposal

Write down of assets on reclassification as
held for sale

Restructuring costs

Exceptional items included in
operating profit

Tax on exceptional items

Total exceptional items after tax

Germany
2021
£’000

1,062

(430)

632

2,654

3,286

China
2021
£’000

1,402

(547)

855

(1,721)

(866)

Total
2021
£’000

2,464

(977)

1,487

933

2,420

Germany
2020
£’000

3,003

(1,127)

1,876

(172)

1,704

China
2020
£’000

1,677

(746)

931

(1,612)

(681)

Total
2020
£’000

4,680

(1,873)

2,807

(1,784)

1,023

628

(322)

306

1,704

(382)

1,322

—

2,658

—

3,319

(30)

3,289

Germany
2021
£’000

2,654

—

2,658

—

2,658

(285)

(259)

(285)

2,399

(799)

2,520

—

(30)

(799)

2,490

China
2021
£’000

(72)

(113)

(74)

Total
2021
£’000

2,582

(113)

(70)

(259)

2,399

—

(259)

2,399

—

1,705

(168)

1,537

Germany
2020
£’000

—

(299)

—

(585)

—

(585)

China
2020
£’000

—

1,120

(168)

952

Total
2020
£’000

—

(iii) Profit on disposal
The Group has recognised a profit on disposal as follows; this includes a working capital adjustment for Germany, which was not finalised at
the half year:

Proceeds

Net liabilities sold

Costs associated with disposal

Currency translation differences on disposal

Profit on disposal

Germany
2021
£’000

2,366

284

—

2,654

China
2021
£’000

—

(72)

—

(72)

Total
2021
£’000

2,366

284

(72)

2,582

CPPGroup Plc Annual Report & Accounts 2021

15. Discontinued operations and assets and liabilities classified as held for sale continued
(iv) Summary of cash flows

Net cash flows from operating activity

Net cash flows from investing activity

Net cash flows from financing activity

Net cash (outflow)/inflow

Germany
2021
£’000

(7,765)

—

7,357

(408)

China
2021
£’000

(85)

(29)

Total
2021
£’000

(7,711)

7,272

(437)

Germany
2020
£’000

1,265

(894)

(132)

239

China
2020
£’000

(500)

(80)

640

(v) Assets and liabilities classified as held for sale

Current assets

Other intangible assets

Property, plant and equipment

Right-of-use assets

Trade and other receivables

Cash and cash equivalents

Total assets held for sale

Current liabilities

Trade and other payables

Contract liabilities

Lease liabilities

Total liabilities held for sale

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

Total
2020
£’000

765

(974)

508

299

2021
£’000

138

142

478

(333)

(68)

(149)

(550)

Following reclassification to held for sale; other intangible assets, property, plant and equipment, and right-of-use assets were impaired by
£58,000 in total. The impairment charge is included within the exceptional charge on write down of assets on reclassification as held for sale.

16. Goodwill

Cost and carrying value

At 1 January

Foreign exchange loss

Impairment charge

At 31 December

2021
£’000

2020
£’000

612

(72)

—

540

1,492

—

(880)

612

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit
from that business combination. The Group’s only remaining goodwill balance is in relation to its acquisition of Globiva. The carrying amount
of goodwill in Globiva is £540,000 (2020: £612,000).

The Group tests goodwill annually for impairment or more frequently if there is indication goodwill may be impaired.

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 2021 is 10% (2020: 11%).

No impairment of goodwill has been recognised in the year. In the prior year, goodwill relating to Blink and Valeos was impaired in full
totalling £880,000.

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

17. Other intangible assets

Cost

At 1 January 2020

Additions

Disposals

Exchange adjustments

At 1 January 2021

Additions

Exchange adjustments

Transfer of assets held for sale

At 31 December 2021

Accumulated amortisation

At 1 January 2020

Provided during the year

Disposals

Exchange adjustments

At 1 January 2021

Provided during the year

Impairment

Exchange adjustments

Transfer of assets held for sale

At 31 December 2021

Carrying amount

At 31 December 2020

At 31 December 2021

Business
partner
relationships
£’000

Internally
generated
software
£’000

Externally
acquired
software
£’000

644

—

644

—

2,761

1,267

—

(79)

3,949

1,192

(55)

—

3,796

141

(265)

(23)

3,649

178

(144)

(792)

Total
£’000

7,201

1,408

(265)

(102)

8,242

1,370

(199)

(792)

644

5,086

2,891

8,621

142

—

(6)

223

125

122

—

470

421

174

837

501

—

(4)

1,334

705

—

(20)

—

2,019

2,615

3,067

2,744

428

(211)

(17)

2,944

325

(100)

(687)

2,529

705

362

3,668

1,071

(211)

(27)

4,501

1,155

169

(120)

(687)

5,018

3,741

3,603

Amortisation of intangible assets totalling £1,155,000 (2020: £1,071,000) is recognised through administrative expenses in the consolidated
income statement.

Internally generated software additions of £1,192,000 (2020: £1,267,000) reflect the capitalisation of staff costs in IT development projects.

Internally generated software includes £1,956,000 (2020: £622,000) relating to assets in development which are not yet operational and are
not amortised. The assets held at 31 December 2021 are expected to become operational in Q4 2022.

CPPGroup Plc Annual Report & Accounts 2021

18. Property, plant and equipment

Leasehold
improvements
£’000

Computer
systems
£’000

Motor
vehicles
£’000

Furniture and
equipment
£’000

Cost

At 1 January 2020

Additions

Disposals

Exchange adjustments

At 1 January 2021

Additions

Disposals

Exchange adjustments

Transfer of assets held for sale

At 31 December 2021

Accumulated depreciation

At 1 January 2020

Provided during the year

Disposals

Exchange adjustments

At 1 January 2021

Provided during the year

Disposals

Exchange adjustments

Transfer of assets held for sale

At 31 December 2021

Carrying amount

At 31 December 2020

At 31 December 2021

1,006

103

(150)

(27)

932

(57)

(106)

—

831

515

222

(136)

(19)

582

138

(32)

(76)

—

612

350

219

4,184

223

(776)

(44)

3,587

274

(107)

(181)

(59)

—

185

—

3,514

185

2,640

582

(761)

2,492

479

(110)

(128)

(46)

2,687

1,095

827

—

175

695

(213)

(33)

479

(106)

(47)

—

330

368

108

(212)

(10)

254

(102)

(25)

—

216

225

114

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

Total
£’000

5,885

356

(1,139)

(104)

4,998

525

(270)

(334)

(59)

4,860

3,523

912

(1,109)

3,328

716

(244)

(229)

(46)

3,525

1,670

1,335

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

19. Leases
The Group’s right-of-use assets are as follows:

Property
£’000

Motor vehicles
£’000

Equipment
£’000

Total
£’000

310

—

(20)

—

290

164

—

(46)

—

408

(12)

—

139

114

—

(15)

—

238

151

170

2021
£’000

1,240

—

528

—

7,748

2,091

(1,393)

(306)

8,140

749

(834)

(223)

(257)

7,575

1,252

1,471

(663)

(58)

2,043

1,240

(656)

(90)

(71)

2,466

6,097

5,109

2020
£’000

1,512

(86)

542

(2)

160

Cost

At 1 January 2020

Additions

Disposals

Exchange adjustments

At 1 January 2021

Additions

Disposals

Exchange adjustments

Transfer to assets held for sale

At 31 December 2021

Accumulated depreciation

At 1 January 2020

Provided during the year

Disposals

Impairment

Exchange adjustments

At 1 January 2021

Provided during the year

Disposals

Exchange adjustments

Transfer of assets held for sale

At 31 December 2021

Carrying amount

At 31 December 2020

At 31 December 2021

7,220

2,062

(1,344)

(297)

7,641

512

(798)

(128)

(257)

6,970

1,091

1,323

(637)

(52)

1,766

1,077

(620)

(51)

(71)

2,101

5,875

4,869

218

(29)

(9)

209

(36)

(49)

—

197

(14)

—

(6)

138

(36)

(24)

—

127

The Group has recognised the following amounts in profit 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 2021, the Group was committed to £65,000 (2020: £101,000) for short-term leases.

The net cash outflow for leases amounts to £1,507,000 (2020: £1,666,000).

CPPGroup Plc Annual Report & Accounts 2021

20. Investment in subsidiaries

Company

Cost

At 1 January

Acquisitions

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

2021
£’000

15,597

902

16,499

677

729

15,545

15,770

On 9 June 2021, the Company acquired 100% of the insurance preference shares in the Windward Insurance PCC Limited – CPP Cell, which
is part of Windward Insurance PCC Limited – a company registered and domiciled in Guernsey for £225,000.

The Company also acquired £677,000 additional share capital in CPP South East Asia Assistance Services Pte. Limited, which was immediately
impaired as part of the closure of Southeast Asia. There have been no other impairments in the year.

Investments in Group entities at 31 December 2021 were as follows:

Investments in subsidiary undertakings held directly

CPP Group Limited

CPP Worldwide Holdings Limited

CPP South East Asia Assistance Services Pte. Limited

Windward Insurance PCC Limited – CPP Cell

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

CPP Secure Limited

CPP Innovation Limited

CPP Technology Services (Shanghai) Co. Limited

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

Country of
incorporation/
registration

Class of
shares held

Percentage
of share
capital held

England & Wales

Ordinary shares

England & Wales

Ordinary shares

Singapore

Ordinary shares

Guernsey

Cell preference
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

England & Wales

Ordinary shares

Ireland

Ordinary shares

China

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

100%

51%

100%

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

20. Investment in subsidiaries continued

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

Country of
incorporation/
registration

Class of
shares held

Percentage
of share
capital held

Spain

Ordinary shares

Turkey

Ordinary shares

Turkey

Ordinary shares

100%

99.99%

The principal activity of all 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 88.

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

21. Investment in joint venture and equity investment
Movement in the Group’s share in joint ventures is as follows:

Carrying amount at 1 January

Acquisitions

Share of losses in the year

Disposals

Carrying amount at 31 December

Company
number

06535283

07154018

04362765

01659493

04543668

03709675

08718589

2021
£’000

450

168

(189)

(429)

—

2020
£’000

714

—

(264)

—

450

Up to 23 December 2021, the Group held a 20% share of KYND Limited (KYND), whose registered office is International House, Canterbury
Crescent, London SW9 7QD. The Group’s shareholding was in the form of preference and deferred shares. KYND incurred losses of £943,000
(2020: £1,316,000) during the year. The Group’s share of loss in the joint venture is £189,000 (2020: £264,000), which has been recognised
in the consolidated income statement. The carrying value of the investment has been adjusted for these losses. In the year, a loan to KYND
was converted into equity, which has been recognised as an addition to the joint venture carrying amount.

The summarised financial information of KYND is as follows:

Revenue

Expenses

Loss for the period

Group’s share of loss for the period

2021
£’000

846

(1,789)

(943)

(189)

2020
£’000

171

(1,487)

(1,316)

(264)

CPPGroup Plc Annual Report & Accounts 2021

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

21. Investment in joint venture and equity investment continued
On 23 December 2021, KYND received additional investment from BGF, which diluted the Group’s shareholding to 14.7% in the form of
A and B shares. Taking into account share options within KYND on a fully diluted basis the Group’s holding will be 13.3%. Following the
investment, the Group could not demonstrate significant influence and joint control and the investment could no longer be equity accounted
as a joint venture. Therefore, the investment in joint venture was derecognised and accounted for as an equity investment. As detailed in the
table below:

Carrying amount at 1 January

Acquisitions

Carrying amount at 31 December

2021
£’000

—

1,889

The equity investment in KYND is accounted for as a non-current asset investment, under IFRS 9. The initial recognition of the equity
investment in KYND is at fair value at the date of acquisition. This will be subsequently revalued at the accounting dates and an election
has been made for any movements in fair value to go through other comprehensive income.

In the year, £1,459,000 (2020: £nil) was recognised as a fair value gain through other gains and losses (note 6) which reflected the net
impact of the disposal of the joint venture and the recognition of the equity investment at fair value.

There have been no dividends received in the year (2020: £nil) from the KYND equity investment.

22. Insurance assets

Amounts due from policyholders and intermediaries

2021
£’000

—

2020
£’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.

23. Inventories

Consumables and supplies

24. 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

2021
£’000

102

2021
£’000

564

4,020

4,584

2020
£’000

145

2020
£’000

426

4,853

5,279

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

2021
£’000

1,200

9,190

10,390

2020
£’000

1,094

10,889

11,983

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.

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

25. Trade and other receivables

Trade receivables

Prepayments and accrued income

Amounts due from Group entities

Other debtors

Total trade and other receivables

Consolidated

Company

2021
£’000

7,501

2,100

—

4,004

13,605

2020
£’000

8,409

4,016

—

3,954

16,379

2021
£’000

—

2020
£’000

—

81,841

79,262

81,941

79,314

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 27 days (2020: 29 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 provided £35,000 (2020: £nil) 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.

Movement in the lifetime expected credit loss

At 1 January

Decrease in expected credit loss recognised in the income statement

At 31 December

2021
£’000

—

2020
£’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 3.75%.

The Company has recognised a provision for non-recoverability of inter-company loans totalling £nil (2020: £774,000).

26. Cash and cash equivalents
Consolidated cash and cash equivalents of £22,319,000 (2020: £21,856,000) comprises cash held on demand by the Group and short-term deposits.
Cash and cash equivalents includes £274,000 (2020: £753,000) 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:

BBB

Rating information not available

2021
£’000

4,239

11,422

413

5,432

813

2020
£’000

3,832

9,155

4,003

4,362

504

22,319

21,856

Ratings are measured using Fitch’s long-term ratings, which are defined such that ratings ‘AAA’ to ‘BB’ 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 £5,368,000 (2020: £12,433,000). The balance has decreased in the year following the payment
of dividends and 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 £5,360,000 (2020: £12,424,000) which is held in a bank
account subject to this arrangement.

CPPGroup Plc Annual Report & Accounts 2021

27. Insurance liabilities

Claims reported

Claims incurred but not reported

Total claims

Unearned premium

Total insurance liabilities

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

2021
£’000

—

2020
£’000

—

935

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

Unearned premiums are released as revenue on a straight line basis over the life of the relevant policy.

Movement in claims provision
Movements in the claims provision, gross and net of reinsurance, are as follows:

2021
£’000

935

539

(1,392)

Gross
£’000

Reinsurance
£’000

(17)

—

2020
£’000

753

2,406

(2,224)

935

Net
£’000

(17)

—

2020
£’000

1,444

157

14,011

15,615

Consolidated

Company

2021
£’000

17,703

1,416

343

—

2020
£’000

18,359

1,650

378

—

19,462

20,387

2021
£’000

1,110

—

14,165

15,275

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 1 January 2021 and 31 December 2021

28. 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

Trade creditors and accruals comprise amounts outstanding for trade purchases and ongoing costs. The average credit period for trade
purchases is 39 days (2020: 35 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 3.75%.

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

29. 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

2021
£’000

1,398

1,326

1,176

1,105

982

1,600

7,587

2020
£’000

1,396

1,317

1,250

1,139

1,132

2,628

8,862

(1,714)

5,873

(2,224)

6,638

2021
£’000

4,936

937

5,873

2020
£’000

5,756

882

6,638

There have been no COVID-19 rent concessions in the current year.

30. 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

2021
£’000

2020
£’000

2021
£’000

2020
£’000

—

(58)

—

(98)

—

The Group’s bank borrowing facility is in the form of a £5,000,000 revolving credit facility (RCF). At 31 December 2021, the Group has
£5,000,000 undrawn committed borrowing facilities (2020: £5,000,000).

The RCF is available until 31 August 2023 and 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 1.7% (2020: 1.2%). The weighted average interest rate
reflects the interest rate charged for the commitment on the undrawn element.

CPPGroup Plc Annual Report & Accounts 2021

31. Provisions

At 1 January

Credited to the income statement

Utilised in the year

At 31 December

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

Onerous lease and
dilapidation costs

2021
£’000

—

2020
£’000

309

(93)

(216)

—

32. 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 2020

(Charged)/credited to income statement

Business partner intangible

Exchange differences

At 1 January 2021

Credited/(charged) to income statement

Charged to equity

Disposal of subsidiary

Exchange differences

At 31 December 2021

Company

At 1 January 2020

Credited to income statement

At 1 January 2021

Credited to income statement

Charged to equity

At 31 December 2021

Withholding
taxes on
future
dividends
£’000

Share-based
payments
£’000

Other
short-term
timing
differences
£’000

Tax losses
£’000

667

(137)

—

(26)

504

—

(520)

—

(250)

(328)

—

(578)

(378)

—

(956)

141

(94)

—

(47)

—

221

306

146

—

(36)

416

Total
£’000

779

(557)

(1)

279

(263)

(520)

(36)

(531)

Share-based
payments
£’000

141

(93)

(47)

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

2021
£’000

396

(927)

(531)

2020
£’000

858

(579)

279

2021
£’000

(47)

2020
£’000

—

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

32. Deferred tax continued
At the balance sheet date the Group has unused tax losses of £44,010,000 (2020: £47,332,000) available for offset against future profits. A
deferred tax asset of £nil (2020: £561,000) 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 £812,000 (2020: £3,964,000) which, if not
used, will expire between one and ten years (2020: 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 £20,471,000 (2020: £18,184,000) 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.

33. 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, which
expires 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 recommenced the dividend programme from the prior year results.
This includes 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 CPP Secure, 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 CPP Secure
CPPL and CPP Secure 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 2021, HIL’s ratio of eligible funds to meet its Solvency Capital Requirement was 147% (2020: 138%) (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

Financial assets at amortised cost

Financial assets at fair value through other comprehensive income

2021
£’000

33,823

1,889

35,712

2020
£’000

34,468

—

34,468

Financial assets at amortised cost comprise cash and cash equivalents, trade and other receivables, insurance assets and taxes receivable.

Financial assets at fair value comprise the non-current asset equity investment, which is held at fair value through other comprehensive income.

There is no significant difference between the fair value and carrying amount of any financial asset.

CPPGroup Plc Annual Report & Accounts 2021

33. Financial instruments continued
Fair value of financial instruments continued
Financial liabilities

Financial liabilities at amortised cost

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

2021
£’000

26,698

2020
£’000

27,996

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 2021 was 91x (2020: 138x).

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

2021
£’000

436

(327)

2020
£’000

415

(310)

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

2021
£’000

1,938

12,080

742

2020
£’000

3,134

9,920

988

2021
£’000

3,361

15,784

1,443

2020
£’000

5,338

14,166

2,127

Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 25% (2020: 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

2021
£’000

(43)

(285)

2020
£’000

(46)

(367)

2021
£’000

—

(741)

2020
£’000

—

(708)

2021
£’000

(187)

(140)

2020
£’000

(218)

(190)

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

33. Financial instruments continued
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 22 and trade and other receivables in note 25.

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 30.

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.

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
%

2020

Non-interest bearing assets

Variable rate instruments

n/a

1.9%

2021

Non-interest bearing assets

Variable rate instruments

n/a

1.0%

Less than
1 month
£’000

6,572

18,353

24,925

7,424

22,099

29,523

1–3
months
£’000

2,380

3,503

5,883

1,486

219

1,705

3 months
to 1 year
£’000

2,828

—

2,828

1,606

1,607

1–5
years
£’000

832

—

832

972

—

972

Over
5 years
£’000

—

1,905

—

1,905

Total
£’000

12,612

21,856

34,468

13,393

22,319

35,712

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.

2020

Non-interest bearing liabilities

Variable rate instruments

Fixed rate instruments

2021

Less than
1 month
£’000

1–3
months
£’000

3 months
to 1 year
£’000

10,291

10,376

3,719

158

3,890

6,458

645

7,159

Non-interest bearing liabilities

12,601

3,561

3,516

Variable rate instruments

Fixed rate instruments

228

635

12,682

3,802

4,207

CPPGroup Plc Annual Report & Accounts 2021

1–5
years
£’000

296

3,453

125

3,874

610

3,487

4,147

Over
5 years
£’000

594

2,303

—

2,897

536

1,449

—

Total
£’000

21,358

6,638

200

28,196

20,824

5,874

125

1,985

26,823

33. Financial instruments continued
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 27.

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.

F
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34. Share capital

Called-up and allotted

At 1 January 2021

Issue of shares in connection with:

Exercise of share options

At 31 December 2021

Called-up and allotted

At 1 January 2021

Issue of shares in connection with:

Exercise of share options

At 31 December 2021

Ordinary
shares of
£1 each
(thousands)

Deferred
shares of
9 pence
each
(thousands)

Total
(thousands)

8,743

171,650

180,393

—

8,833

171,650

180,483

Ordinary
shares of
£1 each
£’000

Deferred
shares of
9 pence
each
£’000

Total
£’000

8,740

15,413

24,153

—

8,830

15,413

24,243

Share capital at 31 December 2021 is £24,243,000 (2020: £24,153,000). To satisfy share option exercises in the year the Company has issued
89,735 £1 ordinary shares for a total equity value of £90,000 and cash consideration of £20,000.

Of the 8,833,198 (2020: 8,743,463) ordinary shares in issue at 31 December 2021, 8,828,198 are fully paid (2020: 8,738,463) and 5,000 (2020: 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.

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

35. Share-based payment
Equity-settled share-based payments
Current share plans
Share-based payment charges comprise a credit relating to the 2016 LTIP of £72,000 (2020: £491,000 charge) which is disclosed within
administrative expenses. No options have been granted in either the current year or prior year as part of the 2016 LTIP.

2016 LTIP

Outstanding at 1 January

Exercised during the year

Lapsed during the year

Forfeited during the year

Share consolidation in the year

Outstanding at 31 December

Exercisable at 31 December

2021

2020

Number
of share
options
(thousands)

Weighted
average
exercise
price
(£)

Number
of share
options
(thousands)

Weighted
average
exercise
price
(£)

329

(70)

(69)

(52)

—

138

—

44,187

(9,487)

(1,602)

—

(32,769)

329

—

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 2021 had no remaining contractual life (2020: one year weighted average) in the 2016 LTIP.

Legacy share plans
Administrative expenses include no charge (2020: £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:

MSP

Outstanding at 1 January

Exercised during the year

Share consolidation in 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

2021

2020

Number
of share
options
(thousands)

Weighted
average
exercise
price
(£)

Number
of share
options
(thousands)

Weighted
average
exercise
price
(£)

(20)

—

1.00

—

1.00

—

2,798

—

(2,798)

(33)

(5)

—

0.01

—

0.01

1.00

—

CPPGroup Plc Annual Report & Accounts 2021

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35. Share-based payment continued
Legacy share plans continued
All outstanding options granted under the MSP have vested and following the share consolidation have an exercise price of £1 (2020: £1).
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 and 20,000 were exercised during the year (2020: nil).

All outstanding RSP share options expired in the year. No further awards can be made under this plan.

The options outstanding in the MSP and RSP had no weighted average remaining contractual life in either the current or prior year.

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 2021, 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
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 2021. The Group has recorded a total expense in relation to cash-settled awards in 2021 of £8,000 (2020: £8,000) which
is disclosed within administrative expenses. The Group has recorded liabilities for its cash-settled awards of £137,000 (2020: £129,000) which
are included in trade creditors and accruals in note 28.

36. Non-controlling interests
The Group holds a 51% majority interest in Globiva, a company incorporated in India.

In the prior year, 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 are detailed below and disclosed before
inter-company 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% (2020: 49%)

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

2021
£’000

4,503

2020
£’000

2,657

(2,310)

(1,635)

2,193

4,365

1,022

4,819

(3,770)

(3,955)

2,788

1,547

2021
£’000

12,263

1,222

(318)

904

(1)

903

442

1,886

1,105

2020
£’000

8,650

266

(67)

199

(116)

CPPGroup Plc Annual Report & Accounts 2021

Notes to the financial statements continued

37. Reconciliation of operating cash flows

Profit/(loss) for the year

Adjustments for:

Depreciation and amortisation

Share-based payment (credit)/charge

Impairment loss on goodwill

Impairment loss on intangible assets

Impairment loss on property, plant and equipment

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

Profit from discontinued operations

Investment revenues

Finance costs

Other gains and losses

Income tax charge

Operating cash flows before movements in working capital

Decrease/(increase) in inventories

Decrease in contract assets

Decrease in receivables

Decrease/(increase) in insurance assets

Increase/(decrease) in payables

Decrease in contract liabilities

(Decrease)/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

Financing activities:

Lease liabilities

Borrowings due outside of one year:

– Unamortised issue costs

Total movement from financing activities

Total net funds

CPPGroup Plc Annual Report & Accounts 2021

2021
£’000

3,008

3,111

(64)

—

176

189

—

(2,582)

(224)

259

(1,459)

3,737

6,228

354

1,626

217

(276)

(853)

—

7,382

(2,820)

4,562

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

Note

At
1 January
2021
£’000

21,856

Cash flow
£’000

953

Foreign
exchange
and other
non-cash
movements
£’000

At
31 December
2021
£’000

(400)

22,409

(6,638)

1,507

(892)

(6,023)

(6,540)

15,316

—

1,507

2,460

(40)

(932)

(5,965)

(1,332)

16,444

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38. Related party transactions
Transactions with associated parties
The Group has a balance receivable from its joint venture, KYND, in the amount of £nil (2020: £150,000). This was converted to equity in the
year (note 21).

In the year, the Group incurred fees of £8,000 plus VAT (2020: £nil) for services rendered from KYND, which was payable under 14-day credit
terms. The creditor balance at the year end was £1,000 (2020: £nil).

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 was 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 2021 was £81,000 plus VAT (2020: £63,000)
and was payable under 30-day credit terms.

Mark Hamlin was the Chairman of Globiva until 31 December 2021. The fees for the role were paid to his consultancy company, ORL.
The fee paid to ORL by the Group in 2021 was £71,000 (2020: £73,000) and was payable under 25-day credit terms.

The Group paid £166,800 to Sosafe Limited (Sosafe) in February 2021 pursuant to a settlement agreement with Sosafe and Mr Hamish Ogston
dated 23 February 2021 (the Settlement). Mr Ogston is a Director and majority shareholder of Sosafe and a substantial shareholder in the
Group and therefore the Settlement constituted a related party transaction pursuant to AIM Rule 13. The Settlement was made in connection
with claims for certain legal and professional costs incurred by Sosafe and Mr Ogston and represents full and final settlement of such claims,
which date back several years and have been fully provided for since 2016. With the exception of David Morrison, the Company’s Non-Executive
Chairman and a representative of Mr Ogston, the independent Directors of the Company consider, having consulted with Liberum, the Company’s
nominated adviser, that the terms of the transaction were fair and reasonable insofar as its shareholders are concerned.

Remuneration of key management personnel
The remuneration of the Directors and senior management team, who are the key management personnel of the Group and Company, is set
out below:

Short-term employee benefits

Post-employment benefits

Termination benefits

Share-based payments

2021
£’000

1,788

203

(65)

2,000

2020
£’000

2,442

—

423

2,954

Required disclosures regarding remuneration of the Directors are included in the Directors’ Remuneration Report on pages 34 to 36.

39. Events after the balance sheet date
The Group completed the sale of China on 27 January 2022 with T-Link for a nominal consideration of HK$1. The terms of the transaction
included a working capital cash injection of £0.5 million immediately prior to completion. The Group expects that the transaction together
with trading losses and a reclassification of cumulative translation adjustments will contribute a profit of approximately £0.6 million in 2022.

The Group is in the process of remodelling its operating structure as a greater focus is placed on the distribution of technology-led propositions
into the UK and Europe. These technology-led solutions will lead to a simplified UK-based operating model. This in conjunction with a smaller
geographic footprint has led to a restructuring process commencing in the UK, which will see a redundancy programme in 2022. The total
costs associated with the restructuring is expected to be in the range £0.2 million to £0.3 million.

CPPGroup Plc Annual Report & Accounts 2021

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 UK IAS.

The Group believes that these APMs, which are not considered to be a substitute for or superior to UK IAS 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; and constant currency measures. Definitions of these are presented in the table below.

Closest equivalent
statutory measurement

Reconciling to
statutory measures

Definition and purposes

Operating profit

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.

APM

EBITDA

Underlying
earnings/(loss)
per share

Adjusted
effective tax rate

Earnings per share

Note 14

Effective tax rate

Page 15

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.

The Group’s profit before tax was impacted by one-off and exceptional events in
2021; removing the impact of these discrete, material one-off events results in
an underlying effective tax rate of 119% (2020 restated: 135%) compared to
the actual effective rate of 88% (2020 restated: 386%). In general, the Group
considers that the adjusted effective tax rate provides a more representative
measure of the underlying effective tax rate of the ongoing business.

The year on year change in revenue and EBITDA from 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.

Constant
currency basis

Revenue,
operating profit

Page 87

Live policies/
customers

Annual
renewal rate

Net funds

None

Not applicable

Cost/income ratio

None

Not applicable

CPPGroup Plc Annual Report & Accounts 2021

Constant currency tables

Ongoing Operations

India

Blink

Turkey

UK & ROW

Restricted
Operations

Central
Functions

Share of joint
venture losses

Total

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3,568

11,676

8,789

—

n/a

143,625

2021 (£’000)

Revenue

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

2020 (restated*) (£’000)

Revenue

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

119,273

n/a

7,830

108,406

n/a

7,644

Foreign exchange movements (£’000)

Revenue

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

(6,214)

n/a

(583)

319

n/a

(254)

174

n/a

(1,275)

(4)

n/a

2020 at 2021 average exchange rates (£’000)

Revenue

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

102,192

n/a

7,061

170

n/a

(1,253)

3,568

11,676

n/a

849

n/a

222

8,789

3,258

3,768

13,048

11,068

3,768

13,048

n/a

882

n/a

(251)

11,068

3,806

(980)

(370)

(980)

(370)

n/a

(326)

n/a

(62)

168

n/a

168

(3)

2,788

12,678

11,236

2,788

12,678

n/a

556

n/a

(313)

11,236

3,803

Year on year movement at constant exchange rates (%)

Revenue

Revenue from
Ongoing Operations

Revenue from
Restricted Operations

EBITDA

17%

n/a

11%

88%

n/a

80%

28%

n/a

53%

(8)%

(22)%

(8)%

n/a

171%

(22)%

(14)%

* Restated to reflect Germany and China as discontinued operations. See note 2.

n/a

(4,192)

—

n/a

(4,704)

—

n/a

—

n/a

(4,704)

n/a

11%

n/a

134,836

n/a

(189)

8,789

7,524

n/a

136,464

n/a

125,396

n/a

(264)

11,068

5,838

n/a

(7,400)

(7,568)

168

(952)

n/a

129,064

n/a

117,828

n/a

(263)

11,236

4,887

n/a

28%

11%

14%

(22)%

54%

CPPGroup Plc Annual Report & Accounts 2021

Company offices

Commercial 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
Registered office address:
Grant Thornton
13–18 City Quay
Dublin 2
Ireland
D02E D70

Tel: + 353 1 680 5805

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
Centro Direzionale Colleoni
Via Paracelso, 26–1º Piano
20864 Agrate Brianza (MB)
Italy

Tel: +39 039 657 801

Portugal
Registered office address:
Avenida da República nº6, 7º Esq.
1050–191 Lisbon
Portugal

Tel: +351 213 228 228

Bangladesh
KA-68 Nodda
Boro Bhari
Dhaka-1212
Bangladesh

Tel: +880 9612 114477

Malaysia
Registered office address:
Unit 30-01, Level 30, Tower A, Vertical
Business Suite
Avenue 3, Bangsar South
No. 8, Jalan Kerinchi
59200
Kuala Lumpur
W.P. Kuala Lumpur
Malaysia

China
Room 1202
Century Link Tower 2, 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

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 3132

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 2021

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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)371 664 0300

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:
PKF Littlejohn LLP
3rd Floor
One Park Row
Leeds
LS1 5HN

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 2021

www.cppgroup.com

CPP Group, 6 East Parade, Leeds LS1 2AD, United Kingdom
Tel: +44 (0)113 487 7350