CPP Group (LSE:CPP) — Half year results for the six months ending 30 June 2021

0:01 Good afternoon, ladies and gentlemen. Welcome to the CPP Group PLC Investor Presentation for the Half Year Results for the six months ended 06/30/2021. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Just click Q and A, scroll to the bottom, type your question and press send. The company may not be in a position to answer every question that is submitted today, but it will review all questions and publish responses where appropriate to do so. These will be available via our Investor Meet company dashboard, and you'll be notified once they're ready for your review. I'd also like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Jason Walsh, CEO and Oliver Laird, CFO of CPPGROUP PLC. Good afternoon.

0:48 Hi there. Thanks very much. Thanks very much and nice to

0:52 speak to everybody and present CPP's results for the first half of this year through to the end of June twenty twenty one. Just to say who we are myself I'm Jason Walsh, I'm the CEO of CPP. I've been with the business in this role for just over five years And I'm joined by Oliver Laird, who's the CFO, who's been with the company for just over four years. So we're gonna take around thirty five to forty minutes to run through the presentation, and then we're going to be able to open up for any Q and As. So in terms of the agenda, what I'll do is I'll run through the introduction to the company, give you some background on who we are and what we do.

1:45 Oliver will then take you through a closer look at some of the financial detail for the first half of this year and then he'll hand back to me so I can take you through an overview of our strategy, the current trading future outlook and to take you through the investment case for the organization. So in terms of CPP, so who are we and what is it we do? So in a nutshell, our products and services are all about making people's lives easier, reducing disruptions in those everyday lives. Our business model is exclusively through partner relationships.

2:32 We source, create, and help market protection, insurance, and assistance products, which are sold alongside our partners' core products. And we create differentiation through providing assistance plus insurance. Our products and services are created through a mixture of in house NPD and innovation as well as through external third party sources and partners. Effectively we help our partners grow their revenue, help them increase loyalty from their base of customers or help them remove cost out of their operations. Our key markets are India, The UK, Turkey and The EU, although we operate across 11 markets specializing in the broader financial services and insurance sectors.

3:28 So some key stats on the right hand side of this slide. The group has over 12,000,000 customers. We have over forty years history. We started in the early 1980s in The UK and built in the financial services market with card protection, a product primarily in the eighties through banks and card issuers. We then expanded into Mainland Europe in the nineteen nineties, opening up operations in France, Spain, Italy, Germany, Portugal. And then we moved further afield in the mid 2000s onwards into Turkey, India, Mexico and China.

4:15 And our growth initially from the 1980s and 1990s and through to the mid 2000s was all accomplished through organic growth. And then more recently, we've added to our portfolio of companies and investments through acquisition and investments, and I'll talk a little bit more about those later. We have strong renewal rates across the company for our annuity products. As you can see there, 67%. We have over 3,300 people in the organization. Just over 2,700 of those are contained within our Glabiva business process outsourcing business that we made a majority stake investment in in India and around two sorry, around four fifty employees across the rest of the organization.

5:14 It varies from country to country in terms of how many people we directly employ versus how many outsourced resource we use. So for example, in Turkey, Spain, in The UK and The EU we have predominantly in source call centre operations as well as office people. They are obviously of a higher number than in our operations in in India, Mexico, and China where we use a principally outsourced model where we outsource our sales and service processes. So of the 3,300 people, as I said, around 2,700 in Glabiva and between four fifty and five hundred from the rest of the group's operations.

6:04 We have over 65 business partners who we work with across our group and we define those partners as those that we actively work with to generate new revenue. We have many more partners from historic back book operations and processes, but we have over 65 partners who are actively driving new revenue, new business. And we have over 40 service and product partners. So we don't create all the products that we provide to our partners ourselves. We create some of the content ourselves, but we in source some of it from third party providers and act as an aggregator of third party product features. In terms of our purpose and our proposition, so our purpose as an organization is all about making consumers' lives easier, reducing disruptions when simple things go wrong such as losing a wallet, losing your keys, losing or breaking a mobile phone, the theft or loss of personal information, the breakdown of a home appliance, a canceled flight, etcetera. These are all very simple things, but all of which require a lot of sorting out, and that's what we do as an organization. That's our differentiator.

7:25 That's our USP. Our products are primarily assistance and insurance based and are sold to the end consumer of our partners as a secondary or ancillary product, which augments those partners' core product sets. So for example, card protection is sold when a credit card is either sold or reissued. Mobile phone insurance is sold when a finance agreement is set up for the purchase of a new handset. Extended warranty is sold when a finance agreement is set up for the purchase of a home appliance. Flight cancellation cover is sold when travel insurance is sold. So our products sit as a secondary purchase when a customer is buying the primary product of our partners.

8:14 Our proposition for the end consumer is all about providing products which give peace of mind through protect protecting everyday assets and lowering the stress and hassle if things go wrong. Our products are easy to understand, they're easy to purchase, and they're easy to use. The proposition for our partners is that we augment their existing product lines. We provide a one stop shop for partners from product creation, fulfillment, marketing communications, oversight or sometimes ownership of the sales process itself, premium collection where appropriate, management of the customer journey, in life servicing including any service queries and claims, and where appropriate, management of the renewal cycle.

9:04 We give our partners an enormous amount of MI and data analytics. We are ISO and PCI accredited for the handling of sensitive financial information and keeping it secure. And as I've said, our attraction is that we give our partners income, enhanced loyalty, and operational efficiency.

9:28 In terms of the product portfolio itself, our revenue in the first half of this year, which Oliver will talk about in more detail, but our revenue for the first half of this year of just over £66,000,000 is split as shown on this slide here across these different product categories. So card protection, the original product of the group still accounts for almost a third of our group revenue. Extended warranty, which is sold as an add on to a finance agreement for a home appliance, essentially a brown or white good principally in our Indian market, is a growing product sector for us of £7,000,000 for the first half of this year. Cyber and ID as a product category is a growing segment for us, particularly across our UK and Turkish and EU markets, either sold as a standalone retail product or as a wholesale feature within a partner's product.

10:31 And as I said, that's a growing, although small now, a growing segment in terms of revenue for the group. We then have health and well-being, again, sold as an aggregation of product features and principally in our Indian market as an add on to a loan that a consumer takes out to purchase goods and services at point of sale in retail store, 12,200,000. And that's a really a product area which has grown from zero two years ago to being quite a healthy part of the product mix now and one which I think we'll see grow over the short and medium term. You then have device and payments insurance, which is principally made up of mobile phone insurance. And, that's sold as an add on to a finance agreement to fund the purchase of the handset. And again, most of this revenue comes from our Indian market.

11:27 And then in the other segment, 6,600,000 there, that's principally our Glabiva business process outsourcing operation in India, of which we have a 51% majority stake, and there's some revenue in there from travel and some home emergency products. So the trend that we're seeing is an increasing spread of revenues across this portfolio. We will see card protection as a proportion of the overall revenue mix reducing over time and that will be taken up by an increased weighting of business process outsourcing revenue, revenue from travel, revenue from cyber and revenue from the other insurance offerings on that slide.

12:16 I think it's appropriate to talk about our Indian market specifically given the importance of India in terms of our group revenues and how much that has grown over the last four or five years. We've actually seen exceptional growth in the last four or five years from our Indian markets. And that growth trend we expect to see continuing in the medium and longer term. There is a growing appetite for financial services products in the Indian markets, a growing middle class who are purchasing those products, financial services products, mobile phones, home appliances, and all those product lines of our partners fit with CPP's product suite and have enabled us to establish a really important foothold in the Indian market and one which I think we will see grow over time. The customer base in India is over 10,000,000, which includes over 1,500,000 annually renewing customers from the card protection base. So there's an element of annuity income which brings with it increased margins as a mix of that base.

13:34 We have, as you can see there on the slide in the bottom right hand corner, we have multiple big name partner relationships in India. And those are relatively evenly split across the four product lines in India. The addition of Glabiva, as I've mentioned, into the portfolio in 2018 has been a big success for us since its establishment. We invested in Glabiva when it was a start up business process outsourcer of around a 100 seats. That's grown materially in the last three years now to be over two and a half thousand seats. It was knocked a little bit in the first wave of COVID in India in April and May of last year, but has recovered extremely well and has proved very resilient through the second wave of the pandemic in India and has kept on a growth curve throughout the course of this year.

14:34 Over 2,700 people across 2,500 seats. We actually use Glabiva as an important part of our sales and service outsourcing mix in India as well, which was one of the reasons why we made the investment three years ago. The other reason was obviously to see the value appreciation of Glabiva over time. New customer acquisitions in India are in excess of half a million policies per month, which is achieved through, as I said, a mixture of card protection, mobile phone insurance majorly, extended warranty, and health and well-being product called LiveCare.

15:20 And it's done through a mixture of CPP managed and partner managed sales. Although our business in India is relatively lower margin if you look at it versus the rest of the group, it's a very high volume operation and there is some room to grow those margins over time as we build further scale. That will also be augmented in the near term by the creation of a new IT platform, which we are building in India. We've recruited an IT team in India who are building a new platform for us in India, first and foremost, for our Indian business, but which will then see us migrating where appropriate our legacy platforms across to the new platform over time. Talk about this a little bit later on, but in terms of the the move of the business over the last four or five years to decentralize our operations and to move away from a a heavy corporate centre.

16:27 The the fact that our IT estate has always been resided in The UK is something that we've really been looking at over recent months, there's now a move to actually make each of our individual markets effectively stand alone from not only a resource and a functional perspective, but also from an IT perspective as well.

16:55 Okay. In terms of our culture, so this is something that's a really important part of our DNA at CPP. Looking after our people has been the primary objective of myself and the management team throughout COVID. We were able to establish homeworking extremely quickly when the first series of lockdowns appeared eighteen months ago. We mobilized all our teams to remote working. Even our call center colleagues were able to service customers and to sell to customers remotely from their own homes. And we've learned an awful lot over the last eighteen months in terms of what that future business model and what that future operating model will look like. We've been very keen to engage with our people over the course of these last eighteen months to understand what works best for them in terms of working style and in turn what works best for us in terms of an organization. And we're just in the process of establishing and rolling out a hybrid working model.

18:04 I'm sure alongside many other organisations but we feel it's very important to to pitch that at a level which is right for us as an organisation but which is also right for our people as well. Underpinning our culture is a a very strong governance and control framework from from the center. We have assurance oversight, including risk, audit, and compliance. And we work very closely with our country operations who have the local knowledge and the expertise. And as I said, we've evolved to this model over the last three, four years. We've moved away from a large center, thin country resource model to a small center with many, many more resources invested in our overseas market operations. And I think that that's been a real focus of of how we've been able to achieve scale without adding to our administration and our expense overhead base.

19:13 ESG will be a big focus for us in future periods and we're working on a roadmap in respect of this. As I said, our governance is already strong. It's limited in terms of how much of an environmental impact and therefore how much of an environmental improvement we as an organization can make given the nature of what we do. So we will have a natural focus on the social elements of ESG, not just in respect of how we can improve the communities that we work within, but also in terms of how our products and services can have a positive impact in this area, Reducing everyday hassles and disruptions and solving problems for people can and will play a big part in this. At this point, I'm going to hand over to Oliver to take you through the financial detail for the first half of the year.

20:09 Great. Great. Thank you. Thank you, Jason, and hello, everyone. So the next few slides are all on the finances. So I'll briefly take you through our our latest numbers. For your information, our full interim financial statements and the associated notes are available on our corporate website. So, hopefully, you'll be able to get a chance to read those and see some further detail. So moving on to the first on the financial slides. Okay. So against the backdrop of a challenging second quarter for 2021, we've achieved some good growth in our key financial metrics. As you can see here, group revenue is up from from 60,300,000 to 66,400,000 in the first half of this year, and our group EBITDA is up from 2,000,000 to 2,600,000.

20:54 And that's, you can see, is a rise of 37% year on year. So we segment our business into restricted operations and on goal operations. Reshipt operations are formed of our back book one off operations and businesses, and those are mainly in The The UK and The EU. Ongoing On goal operations is really everywhere else. So Jason's already mentioned Turkey, India, Mexico, China, The UK, etcetera. And when we look at ongoing operations, the revenue here grew 22% in the half year to 61,900,000. Importantly, cash has grown between the half year positions from 18,200,000 to 19,600,000, and this has been achieved whilst paying our first dividend in ten years and incurring 1,500,000,000 of exceptional items that impacted cash in the first half of twenty twenty one.

21:44 Traditionally, the second half of the year is more cash generative for us as a business, and that's largely driven by the festival season that we see in India where consumer consumption rises and grows. Resilient renewal revenues in both our ongoing operations and restricted operations continue to be a central element of our financial performance. Last year, we reintroduced a dividend for as I say, for the first time in ten years, and we introduced that at 25 per share. We remain committed to progressive dividend strategy and are pleased to announce a 5 p per share interim dividend.

22:25 So moving on, let's let's look at the business a bit more split into its segments and understand that performance somewhat further. So this slide effectively splits the business in terms of revenue EBITDA into India, the EU hub, Turkey, and the rest of the world, as I mentioned earlier. It It also shows we shipped operations and our central functions as well as the joint venture that we have in kind, which is a tech technology business, which effectively is all about managing, cyber crime and cyber cyber risk. So if we eliminate the effects of constant of currency, we can see a 19% growth in overall group revenue for the year year on year. This has been led by India, which delivered a 26% year on year revenue uplift through sales of our mobile phone and and health and well-being products.

23:14 Turkey has performed very well as well, however, significantly adversely impacted by currency deflation. That was currency deflation of approximately 37%. However, thanks to increasing both its partner base and the product range, it's maintained its growth story. In terms of restricted operations in The UK and The EU, they continue to run off in line with expectations whilst meeting the changing requirements of the regulatory environment within which they operate. In the rest of the world, we can see that losses in our aggressive growth markets continue to decline. This can be seen by the EBITDA for 2021 in the first half of our rest of the world segment, recording loss is naught 700,000 versus 1,900,000 in the comparative first half of twenty twenty.

23:59 If we look at our central functions, I'd like to say that cost control, both in the central function and in our countries, is a major focus for us, and these have remained largely static at the half year when compared to 2020.

24:15 Moving on, this slide that we now look at shows restructuring activities that we planned and then implemented and how they have come through to impact our financial performance alongside the steady state operation performance of our businesses. We can see from the from the pink bar that the group's UK and EU, outlooks, and areas have a falling level of gross profit. And which is this is expected as these are associated with the policy books that are renewal only with no new sales taking place. Renewal rates on these books have remained in line with expectations, and Jason talked about this earlier on in the presentation. Ongoing operations gross profit has increased in comparison to 2020, and that's driven by revenue performance in our Indian markets. That's both for CPP India itself and in our Globe Beaver majority share owned business.

25:04 The reduction in people costs you see here reflects the actions that we have taken in restructuring loss making operations and addressing our cost base during 2020 and further in the first half of twenty twenty one. These are primarily in Mexico, in the Blink, our technology operation, where we brought that further in in house, Malaysia, we've closed operation there, and central central functions where we managed to obtain some operational efficiencies. These actions, the ones that we've taken, will drive further year on year people costs down and reduce also costs in the second half of this year in 2021. Now I'd just like to talk a bit more about, the EBITDA margin and how that's performed over the last three years.

25:49 So our restructuring of the business and strategic direction we have set has seen solid improvements in our EBITDA margins, and this can be seen in these three chart, in these three graph charts. The anticipated shift in product mix in India has underpinned the growth in EBITDA margin in this market. We expect this improvement to continue as we seek to achieve further cost and operational efficiencies. However, in half one twenty twenty, our Spanish business saw very little new business growth, and the high margin that you can see in 2020 reflects the back book in that market. In 2021, we are pleased to see good new business growth in Spain. And it's important to note that it's this acquisition cost associated with that new business that have adversely impacted the margin in the EU hub and in Spain in this half of the year.

26:36 However, this should deliver material returns in the medium term. Action to further improve the financial performance of our loss making markets will see some further restructuring costs incurred in the second half of twenty twenty one. Next, I'd like to give a bit more of an explanation around our tax and our effective tax rate.

26:57 So we continue to develop our provision of information regarding our tax position and our effective tax rate to our stakeholders. You'll see this in the additional notes and detail provided in our latest interim statements, which, as I said, are available on the website. We know we have a high effective tax rate, and this high effective tax rate is driven largely by being unable to take tax credits in our income statement in respect to those businesses that are currently loss making but are moving towards profitability. However, as you can see here, the effective tax rate for our continued operations has continued the trend of reducing at each reporting point. We expect the effective tax rate to reduce year on year in 2021, but to remain above a 100%, moving to sub 100% in 2022.

27:43 For your reference, our actual actual tax charge in respect of our continuing operations for the first half of twenty twenty one was 1,100,000. We made a loss of nought 700,000, and that provides a slight odd position in terms of a negative effective tax rate of a 175%. So moving on in the final slide that I'll go through here before passing back to Jason is a look at our consolidated income statement. The impact of the pandemic, the change in the product mix, and the continued runoff of our back book businesses can be seen here in terms and the effect of those can be seen here in terms of reduction in gross profit. Now whilst we expect the gross profit margin to be stable in the medium term, expected increases in revenue and further operational efficiencies offsetting fixed direct costs to see us grow gross profit in total for the year for the full year picture.

28:37 Our operating loss for the period is naught 500,000. As I say, within this, we have exceptional costs that relate to associated wild scale operational changes, the closure activities in Spain, Mexico, and Malaysia, and Blink. The charges recognized are primarily for redundancy costs.

28:54 So with that being a highlight of the main financials, I'd like to hand back to Jason for the remainder of the presentation. Great. Thanks, Oliver. Just moving on to the strategy and the outlook, and I want to talk about the the progress that we've made, against our strategy in the first half of this year and and really break that up into four main areas. So the first one being the focus on partner relationships. I mentioned at the start that we're a business that does business through partner relationships. So that has to be our principal focus in terms of how we access the market. And over the period, we've seen continued growth in the partner base, particularly in India through extending the relationship with Bijaj, with Tata cards and with SBI cards.

29:48 In Turkey with existing partners such as DenizBank and Bakif Bank, but also with new partnerships with Turkey Sigurta, the new state owned super insurer in the Turkish market and AC Bank as well. In The UK with ClearScore, a new partnership and also extending our existing partnership with RAC. And in Spain, Bisalia, who are an energy company, establishing

30:18 our entrance into the home emergency market there. So a big focus on partner relationships. You saw from one of the earlier slides how we've been growing our partner base over the last two or three years from 60 to 65 up to 70 partners, and that will be a continued focus for us in future periods. The second area is around the tech platform and around product innovation. So a lot of work has been done in the first half of this year and at the end of last year actually on online claims functionalities, on customer processes. We've installed two cloud based call center platforms, one in The UK and one in Spain.

31:08 And we're constantly working with our partners to collaborate and come up with new products and ideas. Already mentioned briefly the new IT team in India. That's been a big step for us in terms of placing an element of our IT estate away from group center and into a local market. India was the most obvious one to do that with. We've extended our parametric platform in Blink to move away from just focusing on flight cancellation

31:41 and the travel product to launch a new lost luggage product, which was announced a few days ago, which, as I said, augments the flight cancellation product we have. And and we've been creating home emergency related products in The UK and Spain and and in Turkey as well. So a big, big focus on our tech and on our product innovation. We've also been, as Oliver mentioned just briefly in his in his section, focusing on furthering our progress in growth markets, which has come with a rethinking in terms of our geographical footprint and where we don't operate. So we've pulled out from Mexico in terms of new business in the market. We are focusing on just managing down our back book, our renewal book in Mexico.

32:29 We've come out of Malaysia altogether. The back book in Malaysia reached a size where it wasn't efficient to operate anymore, so we closed our Malaysian operation at the end of June. That was on top of coming out of Southeast Asia last year. We've continued to restructure in our EU markets as well to bring about further cost savings and efficiencies. We've disposed of our German car protection back book after a proactive approach from a German player. We

33:07 exited Germany actually from an office perspective two or three years ago. We had an operation in Hamburg. We came out of that and we've been in the meantime running the back book out of our Madrid operations hub. But we we seized an opportunity to to sell that book after being approached to further slim down the portfolio and also to generate some cash. That slimming down and readdressing the portfolio has been countered by further investments in our UK market. We've seen in the period a a reemerging of our back book and our new UK operations under a single MD, single leadership.

33:54 We've been investing more resources into our Indian market. We've been supporting Glabiva as as as they've grown, and we've been focusing on Turkey and extending the resource pool within that market.

34:07 So we've been focusing on on areas and investing in areas where we can see future growth and future returns, and we've been taking decisions elsewhere in the group to reduce our footprint and to effectively spend fewer plates and to stop investing in markets where we can't see a short or medium term return. Underpinning all this of course is a relentless focus on culture. As I mentioned previously, we've been continuing with our newly established work practices, investing in our local and centre leadership teams, supporting local cultural initiatives and keeping our best people engaged.

34:56 In terms of current trading and outlook, I think the half year results show good progress resilience under difficult circumstances across all of our key markets. There's been a lot of work, as I've said, spent on reorganizing the group, restructuring, scaling back in some areas, which have has allowed greater focus in others.

35:18 Whilst the backdrop remains relatively uncertain and we can we can take comfort from how we've performed over the last eighteen months, we're seeing very positive recent trading results in June, July, and August so far this year. So post period, post half year, we've seen an encouraging start to q three, which suggests that our second half will be good and that we will show continued progress for the full full year. And we expect that we will be broadly in line with expectations for the full full year. I think our our position really is underpinned by some improved macro trends as well in India in particular. It's been underpinned also by strong existing partner relationships and a track record of signing new partners and ongoing product innovation.

36:09 Internally, we have strong balance sheets and an organizational structure which can efficiently scale. So a positive current trading position and a positive outlook for the second half of this year. In terms of the investment case six, reasons to invest and why CPP presents a good investment position. I think a number of points on this slide, many of which I've already talked about, but to bring onto one slide here as a summary. A growing base of customers 12,300,000 and counting and active and good relationships with partners who have access to many, many more.

36:58 So our big name partners were scratching the surface in terms of the addressable market size. Our partners are big global names who are increasingly looking for products and services such as ours and companies like CPP to be able to generate them additional revenue to take operational complexity out of their organizations and to give them enhanced loyalty. We have an ability to scale revenue and enhance margins. We've already talked about the IT system that we're building in India initially and then for the rest of the group as well will enable us to scale at limited marginal increases in cost. We have a focus on growth markets and those growth markets are producing increasing amounts of cash and we have well managed back books as well.

37:53 As Oliver's mentioned, our effective tax rate whilst high now is increasing or or sorry or will decrease over the short and medium term, which is also a good sign. And we have a strong balance sheet enabling us to commit to growing a dividend over the coming years. We announced a dividend for the first time in nine years in March. We've announced a 5P payment at this half year point, as Oliver's mentioned, but we have a full year aspiration and commitment to grow that dividend over the coming years. So that's the main presentation. There are a few appendices attached with these slides which I'm sure will be sent out and you'll have access to.

38:44 So there's a recent history of the group on a timeline slide. There's some information about the leadership team. There's information about the shareholding structure. There's a a case study slide on the customer journey and how that works and and how how revenue is is created. There's a slide on on main partner logos, and there's just an illustration about how our partnership model works as well, not in this main deck, but in the appendices that you'll be able to see along with the rest of the pack. That's fantastic. Jason, Oliver, you very much indeed for the presentation. Ladies and gentlemen, do please continue to submit your questions using the Q and A tab situated on the right hand corner of the screen. Just click Q and A, scroll to the bottom, type in your question and press send. But just wanted the team to take a few moments to review those investor questions submitted already.

39:39 I'd like to remind you the recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via investor dashboard on the Investor Me company platform. I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide your feedback in order that the company can better understand your views and expectations. Jason, Oliver, perhaps before we come across some of the live questions we've had through, had a number of pre submitted questions. If I may, I'll just read these out. The first one reads as follows, I think one to address to you, Jason, is what is the trend in renewal rates for your products in both India and Turkey? Okay. So renewal rates across both markets are relatively stable at around the mid-60s percent in India and the mid to high 50s percent in Turkey.

40:29 However, the 35% to 45% nonrenewal rate, if you like, is not primarily driven by customer action or customers not being happy with the products themselves. The principal drivers of the nonrenewal rate, if you like, are collections problems caused by customers principally changing their pay cards or by more general attrition or credit issues in those markets. So if you look a flip side of that, the The UK and EU renewal rates are much higher due to a combination of longer term credit card holding by the customers or payment by more reliable payment methods such as by debit card or by direct debit.

41:16 And and I but I think a a constant trend here is that the the nonrenewal rate that you can ascribe to customer action is in the single digits. Fantastic. Thank you so much. Again, I think this one's actually for you as well, Jason, is what percentage of policyholders claim in a given year, and what's the trend you see in both India and Turkey? Yeah. So I I think that this is an interesting question and quite a complex answer because it involves understanding whether or not we we have assistance or a shit insurance products in each of our markets and whether or not there's a genuine claim as such associated with that. Because I think most of our products have multiple features. And as I said, those features are spread across pure insurance and more assistance based services.

42:07 So viewing claims rates through a pure insurance lens is often misleading. I think if you you should also look at it in terms of registration and product usage. So registration for some of the assistance features of our products can be fifty, sixty, 70%, whereas cash claims or lost card claims can be under five. Mobile phone insurance claims are often higher, but we also do work to identify fraud as part of that claims process to enable retailers to improve their sales processes, for example. So trends, if you look at all of those claims rates over assistance and insurance products across our different markets have been relatively stable over time with only small variances per product line.

42:58 Thank you very much. So the next one's around partners. Just asking how many partners do you have this year compared with twelve months ago and twenty four months ago? Yeah. I think I actually inadvertently answered this as as part of the presentation. But I think, you know, whilst we have many partners linked to our historic back books where we pay commission, we've rebased this number recently in terms of and had a new KPI, if you like, in the last two years, which sets it as the number of partners who we are actively writing new business with and actively generating new revenue with. And that number has increased from 60 to 65 up to seven now over these last two two years. Thank you. And the final presubmitted question we have here is, do you see more growth opportunities from developing your Indian operation versus starting in new developing economies?

43:49 Yeah. I I I think I think the short answer is yes. Despite five years of strong growth in our Indian business, we we feel that there's far more upside in the market, which can be achieved through, you know, new relationships and scaling our existing relationships and our existing operations at a much lower marginal cost than establishing new operations in new markets, for example. I guess the the one, aside to that is Bangladesh where we've we've established an operation in Bangladesh three years ago, but that operation is is more of an extension from our Indian business rather than a brand new operational setup. Our successful investment in Glabiva, which provides synergies and efficiencies to our core Indian business as well as valuation upside is another example of where investment in the Indian market can yield better returns and new investments in in new markets.

44:51 We also see the creation of a fully independent IT system in India by mid twenty twenty two is something which will add further value to the one we're creating in in that market and it will also give us margin enhancement opportunities as well as the ability to function independently from the centre. So I think the the short answer is yes. I think, you know, there's much more upside in our Indian business, both from the core Indian business, but also from other opportunities in that market rather than looking to invest in a, you know, in a greenfield market. That's great. Thank you. That concludes the pre submitted question. We had a number of questions submitted during the event itself. And if I may, if I could just hand back to you just to click on that Q and A tab and just start at the top and where appropriate to do so, read out the question and give you a response, that'd be fantastic. Should I do the first one? Yeah. So I'll just give you give you a bit of for the first couple, I'll give you a bit of rest. Thank you, Andy.

45:50 And, yeah, what opportunity is there to reduce the admin costs of circa 60,000,000 as you have a healthy level of turnover and gross profit? Or looking at the other way, what level of turnover can the 60,000,000 admin cost base support? So thanks, Andy. Just a a couple of things on that, really. The 16,200,000, which I think you grabbed from our interim statements, that actually includes 1,500,000 of exceptionals in the first half of the year. So the run rate is is actually near about $1,414,800,000. In terms of how that's changed over the last few years, well, if you split between the countries and the central costs, as Jason mentioned, that we've we've done a lot to actually push resources, opportunities, skills, etcetera, to stand alone units in the countries.

46:37 If you look at that, then approximately of the on an annual basis, just under a third of that is central costs. Those central costs, IT, etcetera, here in the in The UK, they've actually reduced about 40% over the last three and a half three and a half years. And in terms of the countries themselves, they've reduced about 11%. And the reduction is not as great in the countries because if you say we're investing in people, systems, and processes there. We do think there's opportunity to reduce that further. As Jason mentioned also, he talked about the IT platform in India that we believe we can leverage for the rest of the group. So we think there's further opportunity from doing that, and we have some rather old legacy IT systems that we feel once we upgrade those, we'll actually get better, more operational, and lower cost base for the terms of running cost for that. So so hopefully, Andy, that answers that answer that question.

47:31 I'll try to move on to the next one, Jason, which I think I'll read the question, Jason, but I think you might be more a better person to answer the question. Yep. Again, from Andy, great update. Think that's for you, Jason. Can you talk a little, please, about the competitive landscape and who your main competitors are and what what sets you apart from them. So, Jason, if if you pick up and then I might have one or two things to add add at the end. Yeah. I I I think, you know, in some markets, we we don't have anyone that we compete against, Andy. In India, for example, we compete against a company called One Assist in in the the Indian market who offer car protection. They also offer home appliance warranty and mobile phone insurance.

48:20 They are more of a direct to consumer organization, although they do have some partner relationships. So whilst they there's an overlap in terms of product set, their distribution channel is a little bit different from ours, but I would say One Assist in India. There's a business called Tour Assist who are part of MAPFRE in Turkey who are on our radar in that market. But, again, they're more on the insurance side, not on the bank assurance side, and there's a difference in the Turkish market there. So there is some overlap, but not a great deal. In our UK market, well, the card protection, the back books, obviously, they're they're in runoff, there there's no other players in that space. But as we start to move into more of the MGA space, the managing general agent space in The UK, clearly, are, you know, hundreds, if not thousands of MGAs in The UK market. And what we want to try to do to set us apart from that is to own more of the the product and the proposition value chain. So rather than just be a niche aggregator of third party products and services.

49:33 We want to create our own content. We want to if we can offer the insurance element as well as the assistance element. We want to offer operational expertise as well. So try to play a broader part of the spectrum in order to try to do more for our partners than the rest of the market by extending our value chain experience. So I would answer it in that way. There's a good question here from, if I can just address this one, Simon C. Thanks. Do you see M and A playing forming part of your growth moving forward given the cash on the balance sheet? What would you look for in the acquisition?

50:22 And are there any new business areas you would like to expand into? Well, yeah, we we we do see m and a as part of our growth mix. As I said in the first, I guess, thirty years of the company, we we were just focused on organic growth. We would establish, you know, a one man operation in a country and grow from that point onwards. With the exception of the North American business that we acquired in 2003 from Metris Bank, all of our growth up until 2016 really was through organic means. We bought Blink Innovation in Ireland in 2017. We bought a couple of small books in The UK to kick start our UK new business aspirations, and we've obviously invested in Glabiva, which has been, you know, a a good success for us. So yes is the answer. I I I think we absolutely have to keep our eyes open to relevant investments and acquisitions. And by relevant I mean ones which have an obvious part to play in CPP's product portfolio.

51:44 So a business that can help us access new channels, an operation that can provide more product to add to our portfolio. We wouldn't ever buy or acquire or invest in a business which was adjacent to, you know, anything we do now. It would always be with a view to extending the product set to elongating our value chain or to or to help us innovate in the existing products we're in. So those are the criteria that we're using in terms of our m and a approach. Can I cover the next one, Jason? I think parametric. Yep. So Duncan H, can you talk more about parametric insurance? Why is it interesting?

52:32 How important can it be to the group? So parametric insurance is, you know, how I would describe that is it's automating the claims process and making the whole customer journey seamless from point of a claim being appropriate to actually fulfilling that claim. So if I can just bring that to life a little bit and talk about Blink Travel. So Blink Travel is a a product that you as a customer would own. You would buy it alongside travel insurance to effectively if you have a flight that you booked and that flight gets delayed or cancelled, you might not know that's happened until you reach the airport.

53:27 Our parametric platform is hooked into the the airline's systems and knows if your flight is has been canceled or is late and will ping you a message often before you even know that that there's an issue with that flight. It will then present you with a range of options to rebook on another flight or it will give you airport lounge vouchers or it will give you retail vouchers for you to spend in the airport. So it's it's proactive fulfillment of a claim before often you as a customer know that there's a problem or know that you even have a claim, and it's resolving that without any claims process or without any need to submit a claim form or wait to have the claim assessed or wait to have the claim paid out on. It's an automatic process that the system knows is relevant and knows it has happened because it's relying on data it receives from reliable sources which trigger the claim process and trigger the fulfilment of the claim. Really, really important because it's taking cost out of the insurance industry. So we have a business interruption product as well, is on Blink's portfolio, which identifies events which interrupt a business from operating, interrupt its cash flows, interrupt its revenue. So if there's, for example, a crop

54:57 failure because of a storm, the system knows there's been a storm. It knows that there's a crop failure because it accesses the business's bank accounts because it can see as a result of that the the fact that the business has lost money or trading has been has been hindered and it automatically triggers a claim and a fulfillment of the claim without the customer having to submit a claim or to prove that there was a problem or to wait for the claim being paid out. So you can automatically see a number of applications for this parametric nonclaim type of insurance and how that will help the insurance industry on the one hand. But from the customer proposition perspective, very, very user friendly and very neat in terms of that whole product experience.

55:51 On the yeah. And and as I said, I'll add I'll add to that. You know, that that's why it's interesting. You know, you could pick virtually it's event based insurance. You pick an event and you take the history a history around it. So, again, Jason says the crop crop failure, you know, if if you if you know that for a week, the temperatures have been between, you know, for example, thirty five and forty two degrees, you know automatically historically what that does to a crop and therefore the issues it gives. And therefore even before anything happens, you can work out what a what a claim may look like, and you can pick that for any event that's got that's got a history behind it. I'll pick up the the last one from Paul, if if if I may. So can you give further details of Gloviva, revenues, growth rate, margins, what's it worth today versus what you pay for it? Will you look to crystallize value here over the medium term?

56:38 At the moment, Paul, we we can't give you a lot of detail on this because we don't disclose it more widely in our in our in our accounts, in our statements, we can give you some some thoughts around it that we that we believe. It's it's growing significantly year on year in double digits, bearing in mind it's only three years three years old. It's got margins that we feel are in line of comparable with the rest of our our Indian business. In terms of what it's worth today in terms of what was what we was what we paid for it, well, like everyone, we we would hope it's worth it's worth worth more today than what we paid for it. Given that it is it is running now with stronger revenues, we do see it as being as being profitable very, very shortly. So it's gone very quickly, it's gone into breakeven and and profit.

57:25 There, you know, we would we would anticipate that that on the pure discount cash flow basis would say that it's worth more than we pay for it. In terms of we look to crystallize value over the medium term, that's something we we we went to this business, first of all, because as Jason may mentioned from m and a activity, we we look to we look to go into businesses that extend our value chain, that give us more control of the value chain, that that add value to us because it's it's it's part of what we already do. So in this particular case, seats for our business for servicing and sales for our Indian business in terms of mobile phone, etcetera. But Globe Beaver, some of those seats are actually with globe Globe Beaver for various services. So it gives us value in two ways. As long as that continues, we are we are comfortable because that's what we bought the business for. However, like anything, if the value of it because of its profitability goes up and up and up in the medium term, then we will obviously look at that, and we may seek to crystallize value. But But in the medium term, it's not an immediate thing that we are we are looking to do.

58:24 Think all that answers the question as far as we can at this stage. That's fantastic. Look. Thank you so much to you both, Jason and Oliver. You've covered all the questions that we've had through from investment. Of course, if there are any further questions that do come through, the team will be able to review those and we'll publish those back out on the Investor Meet company platform. Jason, if I may just perhaps hand back to you just to wrap up and then we redirect investors to give you some feedback. Yeah. Great. So thanks, everybody, for tuning in and listening and for the questions that you've asked. I think, you know, we've had a good first half of this year. It's great to talk to retail investors and investors more broadly. We hope to be able to do this, much more frequently over the next few periods and look forward to updating the market just as soon as we can. Thank you very much. Fantastic.

59:15 Jason Oliver, thank you for updating investors today. Could I please ask investors not to close this session? It should be automatically redirected for the opportunity to provide your feedback in order the management team can better understand of your views and expectations. This will only take a few minutes to complete and is greatly valued by the company. On behalf of the management team of CPP PLC, we'd like to thank you for attending today's presentation. Thank you, and good afternoon.