CPP Group (LSE:CPP) — Investor Presentation

0:00 Good afternoon, and welcome to the CPP Group PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated in the right hand corner of your screen. To click Q and A, scroll to the bottom, type your question and press send. Company may not be in a position to answer every question received during the meeting itself. However, review all questions submitted today and must publish responses where appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Simon Piper, CEO. Good afternoon, sir.

0:29 Hi. Good afternoon. Thanks for the handover. Welcome, everybody. So, quick, quick deck through our interim results. I have with me, Sid, who is our chief executive at Blink, and he'll have a little section take you through Blink, is our Insurtech Parametric business. And I also have David with me who's the CFO. So get through so what we're gonna cover, financial highlights of the first half, reminder about what we do and where we operate and what we're doing moving forward. Then I'll hand over to Blinks on the Blinks to sit, sorry, talk about Blink Parametric and a little bit on the on the financial performance. And then, hopefully, at the end, we'll have time to answer some questions.

1:16 Pretty much the first half results are pretty much as we expected with good revenue growth from our core businesses. And what we mean by core is, you know, our Indian operations include Gloveva, Turkey, big parametric, and our central functions. We grew over 25%. And legacy, you know, continues its revenue decline, and and this kind of supports further the reason why we need to close that business and migrate away from it over time. So, generally, good reported revenue numbers. Very no surprise to the city. I mean, in terms of what we were expecting in as we started the year, we expected to see some margin change. A number of reasons for that. Fundamentally, as the legacy business declines at group level, that's a high margin product. So you and then, obviously, the low margin products in India takes a little bit more prominence. And then with India, there's been growth in one of the products, which is slightly lower margin, and that's actually driven a lot of the revenue growth.

2:13 We also knew that Blink was very much gonna be an investment proposition for us this year and into next year, so that's pretty much performed very much in our expectations. The surprise, if there is any, was the softening in the currency exchange rates, our largest source of revenues in India. So the Indian rupee, that's seen a weakening since compared to last year. And, also, the Turkish lira has continued to depreciate. And that will have an impact in the second half, but, you know, obviously, we've maintained our earnings forecast this year. And what that's saying is that we're managing that kind of impact to our profitability, you know, as we are just a little bit best should we say, we are a a little bit better than expected in terms of management of our cost line. Cash decreased decreased due to some working capital movements, but, again, it was a planned investment in Blink, and there's some issues a little bit of issues in the Indian times of working capital, but nothing really of surprise. For those of you who are unfamiliar with the business, historically, the group only ever showed its reported balance sheet cash at 16.

3:16 And that always masks a bit of an issue, which is that we have a number a bit of restricted capital or cash. And what that means is we have about £2,000,000 of cash in The UK, which sits in our insurance business, and we have to keep it there as, you know, as a regulatory requirement to keep minimum capital there in the event there are a number of claims that needs to be paid. Over time, as we unwind that business, that cash will come back into the group, but not so not in any time in the short term forecasts. The largest largest chunk of the restricted cash relates to cash receipts in India. So we can freely distribute cash in India within India, but it's a little bit more difficult to repatriate all of that funds back directly back to The UK. We have to keep certain amounts of cash there, and there's a reserve. So there's just a little bit of technical reasons why we have to keep cash there.

4:02 So it's not free to move or repatriate back to The UK, leaving us at around 10, which is readily available any one time for working capital management.

4:15 I think one one thing this is an interesting slide for some. It really trying to explain where we, as CPP, see ourselves. In insurance value chain, you you have one side of it is when the underwriters, and they have the risk and the pricing. They have these are large companies like AXA, Zurich, Sharp, and so on and so forth. And they have, know, they're large multinational companies, and and they have very strong balance sheets. And then on the right hand side, you have the distributors of companies that will sell over the counter travel insurance policies or credit card companies. Banks have direct relationships with customers. We have need. We don't have a balance sheet that we can leverage to any degree and write policies and to look to try and protect margin. The previous management did try and invest in an MGA to try and leverage the balance sheet a little bit. It just didn't it couldn't do it.

5:02 You have to do that at scale, and we never were gonna have the scale for that. And we don't have direct access to consumers, and so we have to find a role for ourselves in the value chain. And through happenstance and through a bit of design, you know, where we've ended up is we are now building suites of of products and services which wrap around underwriters' products. So underwriters is give us our route to the consumer to the end mark consumer market, and they will work multiple geographies and have multiple routes to consumers. And I actually wouldn't think so it talks about Blink. That's the route we're taking with to distribute the Blink product. Partner up with a larger multinational. Once they adopt the product, they will then distribute that on part of the new business or a newer book in multiple geographies. Now it's not a quick process, but it's a cost efficient process, and it gives us geographic footprint that we just wouldn't be able to do on our own.

6:00 So what do we do? Well, it's quite a nice little sidebar, the narrative. You know, our products and services are only ever used by end consumers when they're having a bad day. You know, no one ever uses a CPP product or an insurance product when they're having a good day. Something's gone wrong in their day, and we try to develop products and services which make a bad day better. And it's not gonna make the day as good as it would have been if the incident didn't happen, but it certainly that's that's kind of the mantra that the way we think about products. We're trying to make a bad day better for the consumer, Products that add real value to the consumer, but also a point of differentiation for those underwriting firms. We have six or seven categories. The largest one at the moment is My Health. That is largely an Indian based product sourced through Bajaj, and that's pretty much you buy a Bajaj product or a loan. You take out this lift this health care product, and that'll give you access to online GP appointments and reduce costs for drugs and and so on and so forth.

7:03 My finances is very much the old car protection. We're not writing and haven't written any new car protection policies in Europe since 2012, but there is still quite an active car protection business in India and in Turkey. And in Turkey, for example, they have a number of good relationships across broad spectrum of the banks. It gives the bank something more to offer to their credit card and debit cardholders. And then we have things like MyTech, again, largely an Indian product, which is around gadget, you know, mobile phone protection gadget from and then MyHome and so on and so forth. And then you have MyTravel, really, which is the flight it's our smallest revenue stream at the moment, but is is the our largest source of our point of focus in terms of trying to grow this business, and that's the flight disruption, the lost luggage business. Motion detected at the front door.

7:54 Excuse me. In terms of revenue, you can see these are half year results. You can see the size of some of these businesses we have or revenue streams or product streams that we have. In My Health, 30,200,000 of revenue. Significant growth from prior year. Why has it grown so much? Well, it's it's a low margin product for us, but a high margin product for. So they have got behind this in a big way. In terms of my finances, again, good growth. Growth driven through India and through Turkey, but good growth out there. And so those top three, you know, are the my health, my finance, and my tech currently generates majority of the group's revenues. You then have a second tier at the moment, my home, and then you have the sub 3,000,000 revenue streams.

8:42 And then you Globe Beaver, which we have 50 which is a BPO, a call center business in India, that generated about 7,500,000 revenues. Now the thing with Globe Beaver, it's not it's a non core business for us. There's not a right time to to realize some value from that just yet. The tech most of the clients it serves are local Indian clients. If you have nondomestic clients, then you get a premium on the sale. And most of their clients face the tech, it's kind of like they would they would service companies equipment over here like Just Eat and so on and so forth. Then they've seen a bit of a tech crunch out there. So probably not the best time to look to realize value. And, also, we just require a huge amount of management time to to exit that business, and there's other things, for us to focus on, in in the near term.

9:35 So this again shows you the importance of India. You know? So when you look at the products and our product suite, and you can see LiftCare is huge for us, and you can see where it's generated for most of our revenues come from India. So the capital light business. But it's a volume business. You know? It's a low margin, but high volume. It's very profitable part of the group. It's got good prospects. We've just delivered a new platform, IT platform, which helps service its customers at a lower cost. Then we've another part of the platform, which is on the card business, which will be delivering by the end of the year starting next year. Turkey, now on a cons on a reported basis, it looks level on last year, but I think on a constant currency basis, it's more me wrong, baby, about 70% up. So what's happened is the micro and macro issues in Turkey and and the and the decline in rupee not rupee to a Turkish lira, has seen that has offset the volume benefit that we've seen in Turkey. But a really good business, good diversified product suite, and a very established business with, you know, the kind of the banks and insurance and the underwriters in Turkey.

10:39 And the legacy, 6,500,000 of revenue in the first half, but that's a declining business for us. And, you know, if you were to roll if you were to do nothing on the legacy business, you know, that would lose 5 or £6,000,000 in around 2026 because the revenues are declining, has a very high fixed cost base, which we're attacking and addressing as part of this change management program. In some respects, I should have started this with this slide because what are we trying to do here? You know, where are we trying to get to? You know, we're not you know, these are the results are fine. You know, our progress through the change management program is fine. We've got proof points, in terms of Blink is working, and that's great. But, you know, what's the story here? What are we trying to build?

11:25 Fundamentally, when I joined at the start of '23 and 2022, we had a business that was in terminal decline, is the legacy business. And that hadn't there were no plans in place to address it. We had a start up in effect, business and Blink, that had been acquired in 2017, been left to one side to be run by the founders who came over as part of the acquisition. And then in 2021, Sid was moved over as CEO initially to try and look to sell it, which there was clearly no market for it during COVID. And there was the Indian business, which was growing very strongly but with two large partners, being the largest. But there was no there was no cohesion to them. And that when we get to the end of it, there will be some inconsistent parts of the business here. So the journey we're undertaking is really to exit the legacy business.

12:13 That will allow us, as we migrate onto new IT platforms and into this year into next year, to reduce essential overheads by a couple of, you know, £2,500,000 on an annualized basis. We then spend a million pounds on the new IT platform in India, and that and that should improve the EBITDA margin in India. It also allows us then to start closing the legacy as we as part of close the legacy businesses as we migrate all those policies onto new platforms, be it Turkey or another third party sorry, Turkey, India or another third party. But that transition, again, will take, you know, a couple of years. So we won't exit fully from the legacy business until the end of twenty five. And we'll still have some service commitments beyond that, but it'd be tiny. And what you get to in 2026 is you'll have a Blink business, you know, which we hope which we hope will have revenues somewhere north of £6,000,000 at that time.

13:05 It'll be a business that has high operator high operational gearing, high margins. And the key thing, a little bit similar to my background in business information and subscription based products, it'll have high recurring revenue. So Blink, for example, this year has achieved a 100% renewal rates on its existing customer base, but more importantly, has increased the length of those contracts on average from three to from three to five years and increased the volume parameters. We've had a number of new business wins this year, and we had a couple more which we signed off today, which we'll announce another couple of wins, which we'll preannounce later this week or next week. And the pipeline is getting more and more robust. But you get to the end of that, you've got a business. We've got high visibility of earnings, high margin, high operational gear, and that will generate a lot of value in that one business unit.

13:57 You'll have India, which is a little bit like CPP evolve, but in a very important fast growing market with a new IT platform, which we hopefully develop new products for. And you'll have, at the center, a lower cost margin a lower cost model, which is really just around allocation of capital, investor relations, and so forth. So you'll have three kind of business units. You'll have Blink, which is a group wide product with a product that we can take in multiple geographies at relatively low incremental cost. You'll have India, and even if it stays the same as it is now, it will be a very large part of the business. And then and then you'll have our Turkish business. And then, as I said, a much smaller central overhead. And that's what we're trying to do. Everything we do do and work towards is trying to build out Blink business, maintain and grow our engine and Turkish business, and execute this change management program.

14:46 But we are towards the end of '23, we have all the '24 and '25 to deliver this change management program. So there's a lot to of work to be done between now and the end of twenty five. One of the things we aim to achieve as we do these rote investor road shows and presentations like today is to keep coming back with more proof points, more customer wins to Blink, further progress on the change management program, you know, and meeting our earnings forecast, know, each each half and each year. And so it's just about being consistent as we get through to the end of or the end of '25 and into 2026. So probably a little bit loquacious at the narrative, but this is quite important. This is our kind of guiding sort of picture we work to in CPP.

15:35 The change management program, often referred to as the CNPs, is the how we get there. You know? How do we get from one part of the business, legacy business in decline, to where we want to get to in 2026? So we had a full year 2022 of the planning, and I joined in January. You know? Undertook a big review review of the business and the strategy and what we could afford and set the strategy with the management team. But we spent a good part of 2022 planning for 2023 and the change management program. We came with, so the way the business runs itself, we have a management committee, which is with EMC, which meets every week, and that's kind of the main decision making body. Once decisions are made, you then go into operational board, which is all about, execution and delivery of the change management programs. And then alongside that, then you'll have a number of project management offices. And I sit in all of these meetings whereby we look at the, you know, dev development and delivery plan for each of these programs.

16:27 So 2023, the key objectives for this year was to deliver phase one and two of the Indian platform. Phase one was to migrate the to build a new platform for the Bajaj, our biggest business in India, part of business in India. We currently that was launched at the early September, so just after these results talk about. And we currently have half a million live policies on that. That's a good platform. By the end of this year, early end of January next year, we'll have the second and final part of the India platform build completed, and that will allow us then to put the card business onto the India platform. Then at that stage, India's platform will be completely independent of the group. It's all Amazon Web Services, based, and it gives them a good point to be more flexible in terms of how they deal with their, you know, customers and and their clients and also for future product development.

17:19 We started the legacy, runoff now, on legacy business. So we communicated to staff in Spain. It's about 70 of them are going through redundancy process. We've talked to a number of The UK staff, particularly around IT, in consultation now around their. There's about 25 staff that actually done the redundancy consultation. And then we continue to build out the capability around Blink. You then move into 2024, another year of implementation. You'll decommission of two platforms that we have, which manage all the cards and policies at the moment, say, for what's in India. They will be closed in first quarter twenty twenty four. That's internally, they're called as MPP and Protector. That then will allow us to save significant amount of costs around licensing costs from Oracle, and then we release the headcount. The I we have around 24 people in IT in The UK just supporting these two platforms.

18:15 And then we'll migrate some of the legacy policies onto a third party platform because we still have to service them, but it'd be at much greatly reduced costs, and we don't have to maintain the software. We just we'll have third party that maintains the platforms for us at a much lower cost. 25, again, into the implementation. Legacy book run books continue to run off. We then go into reducing the central overhead. So, for example, we have a headcount in finance that will reduce as we close the legacy businesses. We'll have people in the risk and compliance department start to reduce as we have less exposure to the risk and client closed products. HR will change. Legal change. So we've already got plans in place around what the target operating model looks like. And we complete in 2025 then the change management. And by 2026, then we are what we set out to be, which is an Insurtech business with a global proposition with Flink supported by India and supported by Turkey.

19:12 You know, it all looks great on a graph like this, and it looks really easy. And I remember once one of my very good managers saying to me, Simon, simple doesn't always equate to easy. This is conceptually very simple to get our heads around. There's a lot of complexity in this. There's a lot of interrelationships with, you know, certain you know, how the business currently operates with business, you know, sort of for over forty years old. But we're currently on track, and, you know, we we are highly confident that we have as, as much information as we need and and visibility as we as we need to execute the change management program. But my point being is there will be hiccups. We will make mistakes, but we are agile enough to adapt to them. There's nothing at the moment we see here that we think there's a problem that can't be surmounted, with the resources and the capabilities we currently have in the house. So and we will talk about this as we come back every six and twelve months say how we are progressing in each of these key milestones. It forms a part of the annual report.

20:13 It forms part of our, you know, six month interim report and our all our investor presentations. I think David wanted me to come back to this at the end as a kind of a sign off, I could leave that to to the end. And I'll hand over to Sid, who's our chief executive officer for Blink Parametric.

20:38 Hi, everybody. So I'll I'll just start by just giving a quick overview of what Blink is, how it operates, and the value we create with our target market, which is the large global insurance market. So Blink is an Insurtech platform. We use third party datasets to identify when claim events have happened, which allows us to automate the claims decision making process for insurers and deliver claims, payments, or resolutions in real time to customers when things go wrong. Our lead products, which I'll I'll come on to in a minute, focuses on flight disruption. But, basically, with that solution, we track individual's flight details. And if those flights, are delayed or canceled by two, three hours, whatever's been agreed with an insurer, we would then notify the consumer that the flight's been delayed.

21:35 We would then send them, either an airport lounge voucher direct to their phones so they can go and use that whilst they're in the airport, or we would send some cash straight to their phone. Again, so they're not spending their own money. They're using cash paid from their insurance policy whilst having the disruption in the airport. It's obviously a significant issue for consumers, flight disruption. The the regrowth of travel, since COVID has led to increased disruption across airports around the world, and we operate services across flight delay, cancellation, and luggage as well. The the way Blink operates is we operate off our own proprietary technology solution. So we have a technology platform which allows us to, yes, focus on travel, but in the future, look at a range of different product areas within the insurance sector.

22:22 We're not limited to single product sets. Anywhere we can identify third party data sets, which allow us to determine whether a claim should be paid or not proactively without the customer having to tell us that they need to make a claim, then we can utilize that to speed up, improve, and enhance claims processes for consumers and insurers alike. We operate on a white label basis, so you'll never see Blink Parametric in any consumer literature or on any websites. Everything we do is behind an insurer, and we either operate with our own a white label service where we manage the whole user experience for that brand, or we operate directly, via APIs into their own ecosystem. As as a business, we we operate in 10 markets, including The US, UK, Korea, and our largest market at moment, which is Canada.

23:16 And we're we're growing quickly, as an organization with our client list. And I'll talk about the the types of clients we're looking to bring on and we brought on already this year in a minute. But our route to market for the business is to create excellent, technology solutions, which can be embedded into the core insurance policies of large regional or global insurers. So our current focus, and it will be for the foreseeable, is in the travel markets. We've got a very strong pipeline and existing partners in travel insurance, and our solution embeds within their core policies so that they would provide real time support for their customers when things go wrong, if flights are delayed, flights are canceled, our luggage is delayed.

24:06 And we power that whole claims process for them in the background, which allows an insurer to be able to create differentiation in the market by offering a a truly different solution to what's out there currently. It allows them to deliver really fantastic customer experience so that customers are getting helped, generally helped by their insurer or the retail

24:29 brand that's selling the insurance to them at their time of needs, not having to dig around looking for paperwork and make manual claims back to the insurance company, which can take weeks to to handle. They get cash or support when the issue occurs. All both of those things allows them to increase sales performance. So we've got strong evidence points from our existing partners that they see increases in sales of their core products when they include our real time parametric services. And we also have good evidence points that increases the stickiness, the renewal of the policies, which, allows them to maintain their existing customer base, their customers renew, and stay with them for longer periods. I think that's also evidenced by, as Simon said, we've got a a very strong 100% renewal rate of our existing client list, and we we are we're we're in we're signing renewal contracts for, as Simon said, three to five years with our clients, which is a really good, support of the kind of value that we bring to insurers in the market.

25:36 So the the solutions that we are focused on currently, the first one is parametric flight disruption. So parametric is really is real time claims handling using third party datasets. So the data tells Blink and our system has has a flight been delayed, has luggage been delayed, or has something else happened that's part of an insurance event?

25:56 And then our our technology engine will automatically trigger a payment or a resolution to the customer based on what they've agreed with an insurer. So the as I said, the most simple, solution that we have in market is flight delay, and this is our most, used solution currently in market. And the benefit for this product is that we're able to we we handle for cost we handle for insurers. The the customers will inform us when they're flying, who they're flying with, where they're flying to,

26:26 and then we're able to track that flight from that point forward. And as I say, if if we identify delays or cancellations, we're able to inform the customer and make payments. Now you you you can also see there is enormous amount of data being captured, and that data is something that we as a business believe will be a significantly valuable asset both to Blink in the future, but also to our insurers and their insurance partners, due to, to give them better decision making tools, the ability to upsell, cross sell, and engage better with our end customers. We also operate a luggage solution. So if your buyers don't turn up at an airport, you're going to, we're able to send some cash to you so you can buy some ancillary goods and services whilst you're waiting for your luggage. And then if it doesn't turn up after forty eight seventy two hours, give you a large amount of cash depending on the insurance coverage to to to replace items that you have taken away with you.

27:23 So it might be a suit for business travel

27:25 and other items for kind of family travel when you're on leisure. An important thing with Blink is we're not we we don't operate in a regulatory value chain. So we're purely a technology provider. We're enabling insurance companies to deliver real time claims resolution, claims support, helping our customers and driving differentiation. We do not carry insurance risks on our business. We we've purposely designed this business to operate outside of the kind of core regulatory landscape so we can deploy these solutions globally.

27:55 And, we're able to deploy them into large global insurers, allowing them to focus on things that they do well, which is write policies, distribute products, and handle the regulatory side of the business whilst we enable them through technology. Our other solution that we we have in market is focused on cyber risk. So we work with third party data providers to identify where consumers' data has been compromised or put at risk. That allows us to then trigger communications to those customers to to inform them that there's a significant risk to their personal sensitive data and to allow insurance claims to be paid. As an example, if your passport's been, if your passport's been compromised, you might want to replace your passport so we can trigger insurance claims to them to cover the cost of that passport, but also to provide help, support, and advice from third parties that we work with to operate and help that customer generally improve their cyber risk position.

28:55 Both of those product areas, cyber and travel, both the same distribution path, large insurers. And then when we distribute for insurers, those insurers will then distribute their products through to banks, telcos, online travel agency, airlines. So our distribution path is into the insurer,

29:15 work with large insurance partners to embed our solutions, and then work with those insurance partners to broaden that distribution out to a much wider network where you would normally buy home insurance, travel insurance, and a ring online gadget insurance, for example, where these products fit nicely. Our our product strategy is we we're as as Simon talked to earlier, we're we're very focused on the bills and ensuring that the solutions that we operate are operated in a very robust way. They're very scalable, and they're market leading for what when we operate a product. We're not we're not looking to design hundreds of products to bring to market. We're focused on scaling the products we have, ensuring those products are the best that they can be in markets, and that they generally deliver value and scale within the organization.

30:06 But we obviously have a product development road map going into 2024, which you'll see us broaden out the kind of range of solutions that we operate in travel. And we've just recently deployed a new user experience for all of our travel solutions, which will obviously roll onto our cyber products

30:22 as well. So we're looking to modernize and continue to improve the product sets that we offer to ensure they're scalable and still relevant in market for the future. It's been a busy first half for Blink. So we've we've launched in three new markets. US. The US market was a a big launch for us early this year. And that's important because The US is the largest travel market in the world.

30:50 So we've launched with one of our target insurers in that market. We've also launched in Italy and, in The UK market. In Italy, we've launched with Europe Assistance, and we're looking to work with Europe Assistance to 40% of the travel insurance markets in Italy to kind of scale into other parts of, their business, again, in line with our core strategies and organization. What what we're seeing in the first half, though, we've seen a significant increase in the pipeline for Blink as we developed our pipeline across 2022 and 2023. We're now starting to see that pipeline come through the ever end into contracts and revenue. Never assignment again, so not not not as fast as we we we would hope and they were coming through, but the the scale and size of the organizations we're working with, it takes time to work with multiple parts of those organizations and get to a commercial contract and get live. But once you're in, you've you've you've got a significant opportunity to scale and grow with those businesses.

31:51 As Simon said, we launched two two clients already in September, which we we will be talking about in PR soon, and we've got another one due to go live in September. So we're starting to see a faster throughput of new clients coming through now based on the pipeline that we've developed over the last year and a half. We've got some good progress with in The US with a couple more insurers, and we are now really seeing a a strong opportunity in the banking sector driven from direct engagement by ourselves, but predominantly via insurance partnerships that we've developed with existing partners and new clients to operate travel insurance into a sector which is looking to differentiate heavily in travel. When when you look also to the side away from new business, we've seen strong operational cover within the organization.

32:43 We we've been through a process in 2022 and '23 about ensuring that with that Blink is able to genuinely scale at the pace we wanted to scale with the types of clients we're looking to bring into the business that have now already.

32:57 We've seen some good improvements in the engagement and adoption of our technology in 2023. I've got some stats on this slide of 250% increase in claims that are paid using that technology, another 150% increase in policy sold, which include our technology in the first half versus a year ago. Now the these are large numbers now running through our technology platform within Blink, and we're very confident from the work we've been doing in the last year, year and a half that we're in a position where we can genuinely scale this business with the large growth that we're anticipating.

33:29 I won't go into awards, but we've we've won lots of awards in the last in the first half of this year as we did in 2022. But the awards help us build credibility in market, educate the market, the sleepers we operate, and it's great to be recognized for the disruption we're bringing to the to the travel insurance market, globally.

33:49 I've I've talked about some of this already, but the it's it's a primary importance that as we scale Blink with the types of clients that we're working with. So the types of clients we already have on books such as Assurance, very large multinational insurance business operating in 40 markets, Europe Assistance, Blue Cross, Money Life, some of the kind of brands that we already operate with. We need to ensure that the technology solution that we operate scales, is robust, can deliver what we say it's going to do, and we've made a significant strides on that process in the last year and a half. We're now very confident about the as we for this year, the the solidity of the platform, the scalability of it. And, one of the big achievements in the first half of this year was deploying a brand new user experience.

34:37 There'd been no investment in user experience in Blink since the, business was set up in 2017, very little. And we recognize that was a key differentiated requirement for our organization to be able to deliver brand experiences in line with our our clients' needs. So

34:53 we've developed, deployed, and launched brand new user experience. That will give us over time the ability to significantly broaden the services we can offer to our existing clients and new clients, including the ability to leverage the datasets I mentioned earlier to be able to bring other services to consumers as that we know when they're traveling, where they're traveling to, and who they're traveling with so we can broaden the service opportunity that we provide and give to our insurance partners and their end clients. We've bolstered our team as an organization. So we've we've grown the team within Blink to ensure that we've got the right skills to be able to scale this business effectively. And we've we've moved into a new operating office in Corp, which is the HQ for Blink, which again gives this business, a really great baseline in The EU to be able to leverage distribution opportunities across that market.

35:51 I think I've covered most of the highlights, within the slide that there's a highlight slide, I think I would just say that we work with some very excellent large insurers. Our pipeline is is growing quickly with large multinational insurers, and we would expect in 2024 a number of those, clients to drop into, contract deals and new revenue generation as we go forward. Thanks a lot, Sid. I'm David Bowling, the group CFO, and I'm just gonna quickly run you through some of the key financial highlights from the first half. Now Simon's touched on some of these earlier in the presentation, but what I'll try and do is just provide a little bit more color about the key drivers, especially around the revenue movements and and the EBITDA performance.

36:47 So we reported revenue of 93,500,000 in the first half, which is a 21% increase on prior year or 25% increase on a constant currency basis. Because as we talked about earlier, our main trading currencies have just slightly worked against us during the first half. Most of that revenue growth has been generated through from India, which has increased by just over 19,000,000 in the first half compared to last year. Now that is really across a number of product sets, majorly live care, which we talked about, which is the health and wellness product that we sell in India, which has increased by over 12,000,000 compared to prior year. We've also seen a resurgence in our card business during the first half. So the card business was particularly hit last year following some changes by the RBI in late twenty twenty one, but the banks have now adopted the change that required them. We've seen a real resurgence in the in the card business during the the first half of this year, we expect that to continue into into the second half and beyond.

37:54 And we've also seen an increase in our mobile sales, which have increased by 3,000,000 in the first half. Move to Turkey, I mean, it's it's a much smaller number than India, but it has increased 600,000 on a local currency basis. So a combination of new business the growth in the new business partner base, but also the fact that we are seeing a growing renewal book out there, which return which gives good returns. We have we have seen greater sales with Turkey insurance. That's really what's driven the the increase in in Turkey in the first half as the Turkey Insurance is a super insurer that was created during the during 2022, and we now partner into three other banks that's through Turkey Insurance. We've seen good growth there. As ever, the the challenge in Turkey is keeping up with inflation, but we are managing to do that at the moment through both volume growth and also the good relationships we have with our partners, which has enabled us to also recognize some price increases, which, again, will aid us through the second half of the year.

39:02 As Simon touched on, in Turkey, on a local basis, revenues grown 70% compared to the prior year. But because of the depreciation in the lira during the first half, that's actually flat on a reported basis. So all the good work that's been done out there on a reported perspective is is eroded. Blink, I'll just touch on that, has grown has increased by 9,200,000 as well, which, you know, doesn't look a lot. It's not growing as fast as we might have hoped for, but that does represent an 82% increase on the prior year in in revenue. But as Sid talked about, we do have a strong pipeline in Blink. It gives us a lot of confidence. And in reality, that pipeline now is six months further advanced, and therefore, the economic contracts we expect to be that little bit nearer to landing.

39:53 On you know, we will focus very much on this business. I mean, we've got the positive revenue here, but we'll focus very much on annual recurring revenue as a technology business. And the annual recurring revenue for Blink has increased to not by 8,000,000 at June through new partner launches. And today, that's probably nearer to 1,000,000. So, you know, we do expect that to grow further, but, you know, we're seeing some good progress in our annual recurring revenue. The legacy business is declining as we expected, and that's reduced by 1,400,000 in the year. And as I just touched on the last block in the chart here, we have had our main trading currencies work against us. So we've had a negative foreign exchange impact of 2,900,000 on that reported revenue number, which is through a combination of India and the rupee, which has impacted by 2,400,000, and Turkey by 9,600,000.

40:51 From an EBITDA perspective, at a group level, we're flat on prior year at 2,900,000, but there's a number of moving parts in there as this as this walk really shows here. In India, it's probably worth touching on first where we've got a flat performance. What we've really seen here is the benefit of strong revenue growth being lost through margin erosion, which has largely come through changes in mix in the product sales. So we talked about the fact that LiftCare sales have increased, but LiftCare actually represents our lowest margin products in in India. We've also seen a shift in our mobile sales, in the mix of our mobile sales towards higher value handsets. So whilst this actually carries a higher revenue, it's, again, a lower margin product for us within mobile.

41:39 And, also, I talked about resurgence in the card business, which is a very positive note for us. However, what it does do in the first year is that you have high acquisition costs in terms of acquiring that business. And so actually, card is loss making in year one, but then what you really do is you benefit on the renewal streams from much, much higher margin, and you're building a book with some recurring value. Blinks losses have increased by 9,600,000 compared to prior year, which really just reflects the investment in the headcount that we've that we've put in to scale this business. So it's ready to really notice when the when the new business is gained. Encouragingly, central costs continue to reduce, so they're not point 2,000,000 lower than last year, which is a reflection of headcount reductions and cost control and scrutiny, which is pleasing when as we all recognize, we are currently operating in an inflationary environment, and this will continue into 2024 and beyond.

42:43 Our legacy business, the revenue is down as we expected, actually, EBITDA has increased in the first half, which is really a quirk of exiting businesses. We're particularly seeing this in Spain, which has increased on the prior year. That's probably down to two factors. First is the terms that we agreed with our main underwriter in Spain to transfer the book to them. So this is on a beneficial basis, and it's actually provided us some some additional profit whilst that book remains with us, but that will transfer over in its entirety in q four this year. And, also, as a result of winding down the business, we've seen some early headcount reduction as well, particularly around the sales team, which is an expensive function, which we were able to remove at the end of last year. And, also, we've seen some improvements in our MGA UK MGA performance, which, again, is just the fact that we made the decision to exit the MGA during the first half of last year.

43:39 We went through the process of reducing the headcount last year, so the cost was still in the first half. But we have the benefit of that not being there in this half. And from an FX perspective, we've had negative not for 2,000,000 impact on the reported EBITDA. I think probably a lot of the margin chart has been explained through my explanation of EBITDA performance and and revenue. What we have seen is India's margin reduce from last year from last year to this from 5.1% to 3.9%, which is a reflection of the the mix I talked about on EBITDA with live care sales, mobile, and the increase in the card book.

44:28 Turkey has seen a good increase in its EBITDA margin, up 4.8 percentage points. And what this really reflects is an increasing sales mix trend towards outsourced sales. So outsourced sales actually reps a lower revenue for policy sales for us, but actually represents a higher margin. So we've seen the benefit of that coming through in the margin there. And legacy has improved by 7.1%, which is just the quirk of the improvements in Spain and The UK MGA that I'm referring to. But what that has done because, you know, as our mix continues to move toward our group mix continues to move towards India, what we're seeing is some continued pressure on the group's EBITDA margin, which has reduced from 3.8% to 3.1 in this half.

45:21 As we move through the change program, cash is gonna be crucially important to Toys R but will become ever more so. And what we have seen is that cash has reduced by 5,000,000 since the end of the year, since December to 16,000,000. Now that reduction has really come through some working capital factors in India. A legislative change has meant that we've had a change in timing, an adverse change in timing with some of our payments to partners. Although we do expect that impact to reduce at the second half into 2024 as the as the mix in sales changes and actually reduce that impact. As you can see there, we've had a CapEx spend of 1,800,000.

46:07 So that is primarily on our Indian IT platform that we've been talking about. So phase one is now operational, and phase two is underway, and we expect the expenditure on that to be largely complete by the end of the year. As as we keep saying, the change management program will consume cash over the next eighteen to twenty four months through a combination of redundancy payments. You know, we have significant liabilities in in Spain, and we'll also have liabilities in The UK. And we will also have the cost of continuing to service our policies in The UK even once the revenue is turned off and the revenue will be turned off and income will be turned off at the at the end of this year, but we will continue to service the policies for up to three years.

46:56 And, certainly, over the next twelve months or so, we will have continued investment in Blink to ensure that it rises its potential and and the IT platform too. But what we do have and in the first half is that we renewed our loan facility, our 5,000,000 loan facility for a further three years. So what that will do is as we go through this change, it will provide us some working capital flexibility, which will enable us to you know, we see being able to manage this change program with the existing resources that we have. Okay. That is the presentation for me. I'll pass back to Simon. I'll just send some of them. David, so, I mean, just to check-in the formal part of the presentation.

47:48 Business pretty much performing as we expected. Now we were expecting sort of the margin movement in India and at a group level. I guess the surprise was really the FX impact. You know? As Dave showed, it's 200,000 of the EBITDA as well as that. Change management program is progressing well. It's it's it's, you know, it's just gonna take time to fully execute it Now we have some proof points now around delivering the phase one IT platform in India that's now delivered, you know, on track to deliver the second phase and the final phase by the end of this year, early next year, or January. And we continue to build scalability for Blink, and that should be done by the first quarter twenty twenty four. And Blink's making good progress. You know, we are you know, as David said, we got, you know, annualized contract, and that's the minimum values of these contract. They're not volume related.

48:37 Minimum values in these contracts, 800,000 to a million, expected to be up to, you know, 1.2, 1,400,000 at the end of the year. Really, for us, each test will be that that each reporting period, you know, that annualized contract value has increased. So, overall, it's it's a satisfactory state of affairs. There's just a lot of work to be done between now and, hopefully, getting this business to where it needs to be as we come into 2026. Thank you. That's fantastic. Simon, thank you very much indeed. David said as well, thank you very much for your presentation. Ladies and gentlemen, do please continue to submit your questions using the q and a tab situated in the right hand corner of your screen. Just click q and a type, scroll to the bottom, type your question and press send. I just want the team to take a few moments to review those questions submitted today. I'd like to remind you that the recording of the presentation and with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

49:27 As you can see, we received a number of questions, both pre submit and throughout today's presentation. And thanks to all the investors for submitting those. David, perhaps I could turn to you just to ask you to read out those questions where appropriate to do so and either give a response or directed to a member of the team. I'll pick up from you at the end. Okay. Thanks, Paul. As Paul says, we've got a few questions here. Just run through them in turn. First one, although Glovea is categorized within core, as previously stated, it operates separately from the group, albeit with some CPP India business relationship. Surely, there is shareholder value to be derived from cashing in on this investment. What is the medium, long term plan for Kuriba, and how do management anticipate maximizing this value for shareholders? Simon, do you wanna start?

50:12 Sure. Sure. Yeah. Alright. So is non core for us as a business. We will look to exit from that relationship at some stage. By the end of I think the end of twenty twenty five in their purchase agreement, they can they've got a call option to bring us down to around 41, 42%. The issue with it's it's not a question of if. It's a question of when. You know? At the moment, it's it's has no international clients. They're all local tech businesses in India that tracks less of a a premium on on a sale as if it had it higher, more a blue chip, say, multinational firms. And they're largely tech focused. They are which are going through a bit of a crunch at the moment. So it's business still profitable, but you won't get a you won't get a a premium for it.

51:03 So and then I said earlier in my presentation, you know, if we look to go down that route now, it'll just be distracting, shall we say, for management because Dave and I have to get heavily involved in that exit. You know? So it's on the list of our strategic objectives to exit from that relationship at a time, really, where we think we'll get a little bit more value out from them. But, you know, this is not a business that's gonna deliver £50,000,000 sale per proceeds to us, you know, or in total, which we'd give a a share. You know, this is not that sort of sort of transaction. Okay. Thanks, Simon. Second question, margin erosion in CPPG's operation has been a long standing trend. Rather than grow strengthening its position as the revenues grow, the business needs to be more beholden to Bijaj.

51:50 What is the plan to turn this around? The delivery of the first phase of the IT platform is encouraging, but unless it's a large business pivot, either entirely developing a direct consumer publishing or unable to tell them our leverage overcharge, then it appears to be nothing on a cost. Sometimes you just have to step off the treadmill. What is management's view on their margins and CP and D can get to over the medium to long term? The honest answer is not a lot you can do about the gross profit margin. You know? If you were even if we started a a new business in the January 1, that was gonna do 10,000,000 of annualized revenue annual revenues a year in year one at margins of, say, 20%. You know, even after five years, it's not moved the dial because of the size that has now become.

52:38 It's just you just it just even compound growth of 10%, you know, on on a £10,000,000 new revenue stream, you're not gonna materially change the margin margin percentage at all in this one. So our focus is couple of things. One is to try and improve the EBITDA margin by reducing their cost base, and that's one of the reasons why we've got the IT platform. Originally, they were being charged £2,500,000 a year for their share of MPP and percent legacy costs into IT. Their charge their annual cost will come down by about 1,000,000, so their EBITDA margin improved. And then it's to build other products, a slightly higher margin products than selling them into a place like Tata and others. But they again, those ones, it'll be about, you know, EBITDA margin, but they'll be fractional just because of the size of it. But, intrinsically, India creates a lot of interest in the business because there was an e y e y report that came out a few months ago where based on current expectations, India will be the third or fourth largest economy in the next twenty to thirty years, you know, sitting behind China, The United States, and then there will be India.

53:48 And that probably, if we were ever subject to an acquisition or a target, that may well be one of the attractive the attractive features to us is, as I said, as we get to end of twenty twenty six or in 2026, we still have a business that seems a little inconsistent. We've got a little bit of the old business in India and Turkey, and then we've got the parametric business. And you might want to sell it or look at that, say, do something m and a. But in terms of near term ability to improve the gross profit margin, there isn't a lot of scope to do that. Thanks, Sam. I don't think I've got anything to add on that. Blinks revenue growth period on period is encouraging, albeit this is from a very low starting point. Cost growth still appears to be materially outrunning revenue growth. When do management expect all this to turn around or turn the corner?

54:37 Oh, no. Fair enough. And how how can shareholders be assured that this money is being well spent, and what do management expect the future value returns? I mean, it's always hard to give assurances. Life's not as perfect for that. But they attract the so simple questions. Once Once we get to about 2,500,000 revenue on Blink, we basically, this current cost base, we break even. And so that it'll be self funding. The decision at that stage then is how do we further accelerate the investment in Blink, put more infrastructure in, put more software engineers in all which gets spent through the p and l, and and we'll make the decision as and when we come to it.

55:25 But if it gets half rise, as I said earlier, if we get to £6,000,000 of EBITDA, you know, 6 sorry. £6,000,000 of revenue, by the on an annualized basis at the end of twenty twenty six with some inflation on the cost base, you'll be looking at a business which is generating 50% EBITDA margins, highly cash generative, annualized contracts, and it looks like annuity business. And that you know, I know we have a bit of a revision on pricing at the moment. But even if that 6,000,000 revenue was valued at 10,000,000, you know, that's £60,000,000 of value. And if I'm only half right in the valuations, that's 30,000,000 million. It's double the current market cap of CPP. It's the only product that we can launch globally, And it's the future of of assistance products, which have an insurance element into them. This is the future. It's CS and AI. It's you know, your traditional insurance business is rapidly changing, and it's changing in our direction. I mean, I can't give you any insurances. I'm I'll you my best my endeavors to get there. You know? We have a good management team. We know we're doing clear plans.

56:31 It may take a little bit longer than we're hoping. May actually, one of these whales may turn around and and deliver super returns faster than we expected. But I would have thought by the end of on annual at some point during 2026, we will be closer to that 5 to 6,000,000 of annualized revenues. And that for me will be a real a a real real benchmark. You know, we we expect on the existing portfolio, there's a market for £20,000,000 over, you know, several years, but we don't have the infrastructure to kinda leverage all of that at this period. So I would thought, as progress each quarter, we wanna see a nice tick up on those on those average transaction of annualized country values. You know? And I'd rather and I've got the same folks who are delivering a quote you know, it's easy to chase revenue, but revenue doesn't repeat itself. It has has no no real intrinsic value. What we're trying to build is a quality business. And I can give you a really bad business and give you a great return. I'll do it quickly, but it won't last.

57:26 So that's what we're trying to create this big business here that's that's got got legs and has got quality engineered through it. Thanks, Sam. We we then have another question, actually, just on a on a similar vein, just about the the new incentive plans that we're putting in shortly, how they're attached to to share price targets, which is good to see. However, it's difficult to see that in the absence of a coherent inorganic growth plan, how we can achieve some of those targets. That's the aspiration about how realistic is this. Think that really ties into the blink. Yeah. I guess. I'll just go through it on the slightly different start on that one. We don't have firepower to go through a buy and build strategy. So we have to have an organic strategy.

58:13 You know, we now need our cash resources to fund the group and the work capital as we exit the legacy business. And there's no investor appetite to for me to write a pry you know, know, to cover rights issues and try and raise x million. I mean, what could I raise at the moment? 3 or 4,000,000. There's a not lot you can buy at the moment, but that doesn't really get to the heart of the question here. But how I mean, when I was in global data and data months before and people were asking, and those businesses were seeing rapid share price growth, asking what our aspirations were as managing. I always pointed them to the LTIP. And I said, so, look. Now this is what we've been incented once on. This is the period that is and can I see us getting to six pounds? Yes. Okay. And, you know, let's get twenty twenty six. And you got numbers out there that, you know, banks are doing 6,000,000 Indians as current you see what it's currently doing. Turkey's doing what it's currently doing. And the sense has come down to, you know, $45,000,000 overhead.

59:07 You can easily see that business being worth around the 60,000,000 mark. It could attract a 30,000,000 valuation of Blink. I'll I'll say even on 6,000,000 revenues, and that's a quite low multiple. India, as yeah. On an EV EV or an EBITDA multiple, we get you another 30 plus. You know? You're sitting at 60,000,000. Well, I know that's not how I manage the business, but, like, you know, that's we set the £6 target because that's what we're trying to get to. We we no. No. We had our valuation assumptions and some parts tested and, you know, checked by third parties and and our advisers. They just look ambitious because our share price is so low. But in '19 not that's what's in '19. In 2017, the market the share price is, what, $13.13 pound a share.

59:55 Now we won't get back to that, and it's been a downward trajectory since then. But I would be disappointed if we couldn't get to that £6 mark. You know? It's we've got a five year period to get there. Last two or three. How much investment needs to go into the main revenue generating operations? And you can you launch the offerings into other countries? Yeah. I mean, the the Blink, for example, is we expense the cost we go. So all software and IP, it's all global data. You create it, and you just it largely run it through your p and l. We have enough resources at the moment to launch our travel product into multiple geographies alongside our partners. As I said, it's built once and delivered electronically globally. So we don't need techies in each of these jurisdictions.

1:00:46 On the dark web monitoring side, partnering up with certain large firms, say TransUnion, they have asked us they are aware that we won't want to incur a huge amount of additional costs pre pre revenue, so they will help fund our investment in overhead and through margin to take on additional headcount so we can do continuous improvement in the cyber product. But as we get more visibility on on Blink's revenues, we'll take decisions in this about what's the next wave of products and what's the next and what's the investment to go with that. You know, if we start to get some significant traction in The United States, you might think, actually, we want a couple of account directors to sit there with the large underwriters and and travel companies just to make because they're, you know, they're five hours, six hours ahead of us. But it's not so at the moment, we have enough resources in the budget and and spend for next year to deliver the numbers we're aiming for.

1:01:40 But if we start to get towards towards those numbers, it look like we're overachieving them, then we'll take a view as to whether we want to invest further. But I think what we want to do before we get too excited and try and build out this wonderful insurance businesses is come back to our shareholders and say, look. We told you this. That's what we've delivered, and then keep doing that for six reporting cycles until shareholders who have suffered for a long time and huge people who are interested in the business are confident with doing what we're paid to do. Okay. At this stage of the plan, what does near term success look like? I think we we don't know. We haven't got 25 numbers 26 numbers published in yet through our break. But I would have thought 6,000,000 I mean, you could pick up the I would have thought 6,000,000 $56,000,000 revenue number on annual is based in '26.

1:02:35 The Blink, which is, you know, another 5,000,000 on their reports in now, that would be good to very good performance. And then just say India and Turkey, pretty much, you know, similar sort of numbers they are plus some inflation, but essential costs down by a couple of million pounds because of the change management program and all the legacy businesses closed. So that's what I kind of think over my head where we get to. I mean, ironically, our when you go to brief flip room, they they their spreadsheets only go to x number of months or years ahead, and it stops at 25. But, actually, our upswing, because we've exited the change management program, comes out at 26. I can't give you the numbers because they're not out in the market. But if you're asking in a kind of net loose conversation, that's how it would look to me. 5 to 6,000,000 revenue in Blink lowest to group central cost, and you could just desktop what we put in there for India and and Turkey, and you kinda get to where we think 2026 will be.

1:03:31 And final one, will the exceptional cash item in India unwind itself with the Bajaj contract length? I think I'll pick this one up, Simon. So the impact of it will reduce. I mean, the the the factor that is leading to this change in timing will remain. It's a legislative change in in India around particularly around incentive payments. But what so that has, you know, accelerated the timing of payment from our perspective. What we expect to see over the next six, nine, twelve months is that actually the the sales mix on which those incentive payments will change, and that will actually mean that there is a lower a lower element of sales that's attached to these where these incentives actually land.

1:04:24 So it it's not directly linked to the budget contract length. The the fact that they won't go away, but we do expect the impact on us to reduce. That's fantastic. Look, thank you very much indeed. You've covered off all the questions we've had. And of course, any further questions that come through, the team will have the ability to review those and we'll publish responses where appropriate to do so. Simon, perhaps just before redirecting investors to provide you their feedback, know it's particularly important to you and the team, could just ask you just for a few final closing comments, please. Yeah. I I think first half results in this year will be pretty much what we expect to do as we set out. You know, we do have some currency headwinds that we're expecting to last, obviously, to the end of the year and to next year. But we you know, because of tight cost control, we accept to absorb all that impact next year.

1:05:15 Change management progressing well. I mean, and Blink's, you know, not working in terms of converting contracts as fast as I like, but all the proof points are positive. There's no contradictionary messages. No one's run off and scream, don't darken my store in the doorstep anymore with this product. So it's been well received. So, you know, it's I'm I'm probably the most impatient man in the group, but we are pragmatists before we are optimists. And so, I mean, if I was looking at it, you know, it's a b. We can also have grading system a to c or d. It's a b result. You know? I'll never ever grade ourselves a because that breeds complacency, but we set that out and delivered everything we set to in the first half. We're two, you know, we're two months, three months away from the end of the year.

1:06:04 Well, I think we'll deliver everything again. We said, you know, there might be a bit of movement in terms of when we sign contracts on Blink and delivering face of that's done. 2024 is gonna be a tough year. Lots of the change management program, being implemented. Lots of staff leaving. They're always a bit dynamic. And, again, more contracts and work to do with Blink. But it's just small steps in the right direction, and I guess the criticism will be more about speed rather than direction. That's fantastic. So I'm David Sid. Thanks indeed for updating investors today. Can I please ask investors not to close the sessions? We automatically redirect to to provide your feedback, and all the team can better understand your views and expectations. This will only take a few moments to complete, and that is greatly valued by the company. On behalf of the management team of CPPGROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.