CPP Group (LSE:CPP) — Investor Presentation

0:01 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 by the q and a tab situated in the right corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review your questions submitted today and help with the responses where it is 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 to you, sir. Afternoon. Just with some introductions, I'm Simon, c o CEO, CPP Group PLC. To my immediate left is Sid, who is chief executive of Blink, will have has a slot to present on progress in Blink, our parametric business.

0:48 And to my further left is David Bolling, group CFO. So we'll go at pace through the presentation because I think it'd be really interesting for you to hear about what we're doing with Blink. As we said previously on this, it's really the future of the group in terms of our investment and in terms of direction of travel and in terms of trying to build. So we're trying to give as much time to that as we possibly can. But we're just gonna go through some key highlights of the results of 2023. So most of you will remember or recall that we set the strategy in 2022. The strategy was to invest in Blink and grow our businesses in India and Turkey and to exit from our legacy car protection businesses, all of which we make good progress on.

1:38 And the objective is by 2026 is to have a business which just really reflects that that change in strategy. Seeing good growth in Blink and good contributions from our Indian and Turkish businesses with a much lower central overhead cost lower cost central functions, all of which we made good progress on. In terms of the results of 2023, operationally, delivered very much on the strategy we set out. There was some observations concerned around execution risk around that strategy that's now largely behind us. We now have India as of today, some two weeks ago went fully live on its own independent platform. Turkish, our Turkish business has its own independent platform, and Blink, our Parametric business, has its own platform.

2:25 All of the legacy policies that we still have to do some fulfillment and service to have now come off the, excuse me, the legacy platforms and onto a low cost SIA platform, allowing us later late April to exit from our legacy IT platforms, MPP and Protective, kind of known internally. And in terms of KPIs, what does that kinda look like in terms of human perspective? When I joined the beginning of 2022, the group employed around 500 employees. As we exit '24, we'll probably be down to 250 employees. And over time, we'll see our central overheads reduce from a peak of 10,000,000 some couple years ago down to $33,500,000 as we go through to 2026, something we couldn't have done without the change management program.

3:16 So as I said, a lot of the executional risk, excuse me, and a lot of the business risk associated with those changes are now underway, so we're now behind us. In terms of trading, business performing well. You know, we we had some you know, with India performing well, Turkey performing well, and Blink seeing some good growth, we've been able to absorb this year around 800,000, 90,000 of currency headwinds. You know, our largest currency exposure is the Indian rupee, which is a little higher than it was the year before and to a lesser extent, the Turkish lira. In terms of our parametric business, Blink, I think we've now moved beyond the kind of concept stage as a strategy and have some real proof points that there's a viable business there. We've seen a 100% renewal rates in our existing customer base, which is, you know, a terrific achievement. You know, these companies such as Blue Cross in Canada don't renew products, so they don't believe deliver some real value to them.

4:13 We've seen we've acquired seven new customers during the course of the second half of last year. We expect to have another two or three logos by the end of this month into maybe a little bit late in in spring. And for some of those who follow the business, you will have seen announcement by Zurich about our launch with them in Singapore. And that really is our first entry into the Asia Pacific market with Zurich, And, hopefully, that will then lead on to other markets such as, you know, Hong Kong, Indonesia, and elsewhere in in Asia Pacific. So positive. So I think the proof points are there. You know, it takes you we exited the year with about a million of what we call annualized revenues or contracted revenues. Excuse me. We are giving guidance for 2024 that we expect to see annualized revenues of about 3,000,000. And when I say annualized, what we call annual recurring revenues, this is where we have contracted revenues, and that is a key metric for us is growing that annualized revenues. We've given guidance that we'll grow from 1,000,000 as we exit 2023, and we hope to expect to exit, sorry, 2024 with 3,000,000 annualized revenues.

5:21 And the guidance that Liberum have, who are a nomad, they've given a revenue number for Blink in 2026 around £6,000,000. That would that would assume annualized revenues, contracted revenues at that time around 8 or £9,000,000. So good progress. Never as fast as I'd like, but that's probably more to do with my inpatients. You know, we are dealing with very large multinational insurers who have complex compliance, regulatory, legal reviews of new products and services they wish to offer. They've got to change terms and conditions. They've got internal systems to go through. But once you're in, you're in for an awfully long time. You know? They you know? And that's why you achieve contract lengths as a minimum of around three years. Moving on.

6:07 I think most of you can read the deck rather than me just going through that. In terms of overall performance, as I said, good performance generally across the group. India was up some 19 percentage points in terms of India. India is our largest business at the moment by revenue. We saw Turkey grow strongly in terms of its revenue growth, and we saw good progress also in Blink. Core business in terms of its EBITDA. Core is really our CPP. So it's it's Turkey, India, Club Eva, which we we probably expect to be exiting in this January, February of next year. And, obviously, so Turkey, Club, India, Blink. EBITDA was muted. Not no real growth against last year, and that was largely reflecting the fact that we had currency headwinds, as I said, which took about £800,000 of EBITDA.

6:56 But we also invested in in Blink. In Blink, in terms of EBITDA, it was a minus £1,800,000 this year, and that was a conscious decision to invest in the business. You know? It needs we've gone from having in 2022, seven people working in Blink to, what, around 30 now. Yep. And that's probably, give or take, one or two heads, the sort of cost base that we'll take through over the next twelve months. Now there are some more investments to make in some technology positions, some in customer services, but it's an appropriate level of of investment. And in fact, we expect a similar sort of loss into next year, again, which we can go into about 1,200,000. So but we're investing for the future. I mean, the you know, we'll come into why is Blink so important to us later on in in Sid's presentation.

7:47 In terms just as a reminder where we operate in the value chain and why and this kind of guide a lot of our decisions, excuse me, decision making. In the insurance value chain where we operate, you have two extremes. In one ex in the far left, you have the insurers. They have the balance sheets. They write the risk. They've got the sort of financial firepower to, you know, take risk onto their balance We don't have that, so we can't underwrite. Previously, the group ventured into doing an MGA, didn't do it with any authority, and, literally, we've, you know, we spent the last eighteen months exiting out of that MGA, which we say mess, is probably the best way to describe it. On the right hand side of the value chain are the customers, people, for example, that buy travel insurance products. We don't have a direct route to those customers. We could create a large sales team, try and do that, try and build some relationship directly with credit card companies as as the business had done previously with this old product offering, but it's inefficient. It costs a awful amount of money. So where we naturally work is we work in this kind of products and services part of the value chain where actually and where Blink fits ideally for this is we create products that augment the offerings of a third party like an insurer.

8:58 So Blink, for example, creates differentiated digitally delivered products that add value to an insurer, say, travel travel policy. Once you have that, it clarifies very much where you want to operate. So we we no longer get distracted by, oh, perhaps we could do an MJ, or perhaps we could either do a lost key policy, or perhaps we could, you know, take CPP credit card or loss card protection business into low regulated markets. We've moved away from that. We are a business that looks to create assistance products that wrap around others. And there seems to be lots of opportunity to do that over the next three to five years. This tells you, really, the next slide, about where our main offerings are in terms of what we do. I mean, our internal strapline, and our which governs our kind of our our thought process around products and services is no one uses an insurance product or products provided by an insurer when they're having a great day.

9:57 Generally speaking, you know, our people use an insurance product when they're having a bad day, and our strapline is to try and correct you know, to make bad days a little bit better for the consumer when they've had their life disrupted. So we've got products, you know, that help people when they miss their flight, when they've lost their luggage, when they've had their broke mobile phone broken, excuse me, needed doctor's consult consultation or have lost their credit cards. And generally speaking, there is still some card card protection business in Turkey where it's a large part of their Turkish mix and in India where it's about ten ten to 20% of their sales mix. But most of our revenue growth now, most of our product offering are in more assistance based products and don't have a regulatory compart a part to them. Fundamentally, what we're building are assistance products that don't have, shall we say, an insurance or a financial part to them and keeping Blink and CPP after that kind of reg regulatory framework. The regulatory risk sits with chain insurer or the distributor, but not with us. We are just providing products and services. So we showed the next slide, which is kind of a little what? My slides go on.

11:16 Which shows a little bit of the history of the group since we took over. 2022 was all about setting up the strategy which we published at September of that year. We had to go and sell it to shareholders at this direction of group. That direct that strategy directly led to the exiting of the CPP legacy businesses and focusing on our three core operation operations with a particular emphasis on Blink. 2023, the year this past, was largely about implementation. You know, as we said in our RNS, we've delivered a a new internally built and developed platform into India, and all of the Indian assistance policies and product services are now fully supported and provided by that platform. As I said earlier, Turkey's got its own platform. Blink now has its own platform. Blink has spent the last year, Mike, consolidating all of its functionality and services onto an a w AWS platform, which is an Amazon Web Services.

12:12 And that allows Sid to deploy his product services globally, you know, so we can have conversations which we're having to provide travel disruption products in Australia, which is eleven hours in funds for us. Or we can deploy them in Ireland, or we can deploy them in Spain, or with Zurich, we can deploy them in Singapore. It gives us a significant op an infrastructure in which can match the market opportunities that we have. So that's a big win. 2024 really is is moving the change management program into a business as as usual kind of model while we continue to focus on building the Blink platform and looking to make progress in India in terms of renewing renewing our relationship with Bijaj. And the '25 and '26 sorry. Let me go back to 2025.

13:01 So when it's '25, that's probably when we we'll lose Glabiva. We'll move to a minority position. They still gotta make that call to to do that, but I suspect we will lose an exit from our relation we will move into a minority position with Glupiva. I think we fully exit them, what, 2026, '27? Early twenty seven. Early twenty seven. And then you get that curve into '26. So one of the key things we've done this year in terms of working with our name is giving guidance of 2026. So if you have the opportunity to look at the broker note, what for the first time, you you get to see the business that we're trying to build, where we've got £6,000,000 roughly of revenue coming out of doing around about 25% margin.

13:49 The reason why it's only doing 25% margin rather than 40% is at that stage, we're still continuing to invest. You know, we think on the two product streams that Blink are currently working with, we think there's an opportunity of around 20,000,000 for the travel disruption product and about 10,000,000 from the cyber cybersecurity products. That's 30,000,000. We're only forecasting around 6,000,000 in revenues at that stage. But that's very much the first year where, you know, there's only a small amount of cost associated with legacy business running through our business. I think we're anticipating around £700,000 of costs just resulting in exiting from our legacy our legacy businesses. And that's not significant really in terms of where we're driving the business. So that's why we've emphasized.

14:34 The other thing that's in the broker note, if you have a chance to look at it, is they've done us some of the some of the parts valuation based on the business as it would be at the as we expect to be at the end of twenty twenty six. And that has a target price of £5.50 on a fully diluted basis. I think they estimate about 9,000,000 shares in circulation. Now that sounds, when you compare it to the current market price, ridiculous. It's a £4 improvement. But we as a management team and and me specifically have always felt this business is intrinsically undervalued and that there is a £60,000,000 business hiding underneath this cloud caused by the legacy business, and that's starting to dissipate. And as that cloud gets thinner and thinner and starts to spear, the business will have shareholders and potential investors have more visibility on the core businesses.

15:28 And aligned to that expectation is our incentive schemes. We haven't got long term incentive scheme in place which pays management out at £2 a share and £2.23. The majority of mine, Sid's, David's share options trigger or half of our options trigger at achieving £6 a share. And the other and the first target is, what, £3.07. £3.70, significantly above the the numbers of the market because we recognize the mark we believe, sorry, that the market doesn't yet fully recognize the value of the business that sits beneath the old change management program and the old legacy business. So so there is not I'm not just picking the £5.50 and saying that's just an aspirational number. You know, we are incentivized to that number, and those incentive targets were set by myself and my colleagues. So there is a real belief that there's some underlying value in the business, which is yet to be reflected in the current share price.

16:28 Gonna focus on Blink now. I'll hand over I'm do one slide on this and then hand over to Sid. I think one of the things that would be useful to share with you is why did I and the board and the management team get behind Blink as part of our strategy program? And, well, fundamentally, my background was with global data founded by Mike Danson, a subscription based business. And Blink has many of those characteristics. It has a higher operational gearing, which means it can build the platform once and deliver the product and solutions at multiple locations. So there's high operational gearing. It's a really attractive economics in terms of once the business matures, you've got a gross profit margin, excuse me, of 80%, a mature EBITDA margin of 40%.

17:16 So it's got some But alongside that, it's got this stickiness in terms of contracts. You know, you've got these three year contracts. We're a 100% renewal rate currently. Probably as we take on more customers and more clients, that will probably average out about 90%. That would be a world class renewal rate. It's got attractive markets, characteristics. There's demand for this product. As a real point of differentiation toward consumers. There's very few competitors in in the space. And there is a question as to why do the insurers not do this themselves? And the answer is they've tried it, and to to and every single company that's tried it has failed to deliver the solution. We've got a viable solution, which is probably the well, it's the best one in the market.

18:05 And operationally, we're able to do it. We've got the resources. We've got the know how. You add those three things together, particularly the market attractiveness and the and the attractive economics, and it's worth pursuing. So our first challenge really was almost proof of concept. Does it is so it's it's a great one thing having a great strategy. The next one is I'll be able to execute it, which we have we're we're in the process of doing. And are there signals indicate the the strategy is robust? And those signals are that we continue to see a 100% renewal rate with companies that are very well regarded, like Blue Cross in Canada. We've taken on seven new logos. We now work with the number one travel insurance provider in Spain, our niche first market, which we announced was in in in Ireland.

18:50 We now launched with Zurich, again, a large multi, you know, multinational insurer in in Asia Pacific, specifically Singapore. We're working with them to launch into the Australian market. We're working with them to go into other Southeast Southeast Asian markets. So all those proof points are moving in the right direction. You know, is it as fast as I like? No. But then I am deeply dissatisfied. I'm never satisfied. You know, once we've got to a goal, I'm already thinking about the second, third, next goals. But this is good progress, and it's confirmation that the strategy is robust. And as I touched upon earlier, one of the things we why progress isn't as fast as I like is not down to, should we say, the supply side, our side of the exchanges, but from the demand side where you are working with very large conservative natured firms that have very complicated internal processes around compliance, legal, products, you know, policy documentation.

19:49 But once that twelve, eighteen month kind of gestation internal review is concluded, you then have what we call these annual recurring revenue contracts, which are the foundation of the business. So I won't bore you anymore. I'll pass you over to Sid, who's our chief executive at Blink, and you'll hopefully get a fuller flavor of what we're trying to do. Perfect. Thank you, Simon. So yeah. Hi. I'm Sid Roundt, c CEO of Blink Parametric. I'll just start with a a really brief overview of what what Blink does and where we sit in the kind of insurance value chain. So Blink is a we're a technology business. We provide white label solutions to, insurers, whereby we embed technology services into their core travel insurance policies through integrating with their core systems, which allows insurers to be able to deliver differentiated, real time resolution and support from claims decision making for their end customers.

20:54 So our our service focuses on it's a parametric business, which really means we deliver real time claims, automated decision making, utilizing third party data, paying out pre agreed payments from a back of a claim to customers, with our core services in market currently focusing on flight disruption. So we have solutions for if your flight is delayed, if it's canceled, or if your luggage is delayed when when you arrive at an airport, whereby we use third party pieces of data to track flights and track luggage so that if, flights are delayed by a pre agreed amount with the insurer, we can immediately send a message to the insurance insurer's customer to let them know your flight is delayed by two hours.

21:43 Here's do you want £50 in cash, or do you want access to an airport lounge? If an airport lounge, we provide an immediate QR code to the phone so you can go and access that lounge. If you take cash, we send money straight to their bank accounts. So they're spending the insurer's money in the airport to whilst they wait for their delay rather than their own cash. That just delivers a fantastic kind of user experience. And from a consumer perspective, those kind of real problems that happen on a day to day basis when you're traveling are kind of supported and resolved by your insurer, giving you some immediate help and support. We also have services in cybersecurity. So we've we've recently relaunched a brand new version of Blink Cyber Protection products that focuses on the tracking and monitoring of personal data online.

22:32 If personal data is compromised, such as credit cards, bank account numbers, email address, passport details, and such, if data is compromised or identified as part of a data breach, again, using third party data sources to identify these breaches. We're able to, again, immediately notify the customer of the insurer, let them know that the data's been compromised, and give them a clear action plan of what they should do. We can also make claims payments on behalf of the insurer to those customers, helping them if their passport's been compromised, for example, to go and purchase the new passport under a cyber insurance or home home insurance policy. So the the key point for Blink is everything we do is fully white labeled.

23:19 We integrate with large global insurers to improve their end user experience and their claims processing. I'll just talk to you about why we follow through with insurers currently and our core strategy. So Blink's core distribution strategy is focused on the targeting and working with large multinational or local insurers. So you'll see on the box on the left just a handful of brands that we're contracted with and we work with across the world to deliver our services. So we work with brands such as Assurance, a Fortune 500 company, Maudi, which is MAPFRE's digital assistance business. With MAPFRE, we have a global arrangement in place which allows us to operate in any markets that MAPFRE wish to deploy our parametric services in.

24:08 And we're live in Ireland and moving into more markets currently. As Simon said, we we've launched recently with Zurich under under a regional framework agreement for the APAC region with our first launch in Singapore. And we have contracts with large brands in Canada, such as Blue Cross and Europe Assistance in Italy. So as a business, we're focused on partnering with top tier insurers, go spend the time going through the due diligence, all the processes that are required to be a partner and integrate with these the core systems of these insurers, and then work with those businesses in one or two markets or or regions to deploy our services into their core policies. So when they sell travel insurance or a cyber policy, our tech wants to be in in embedded within that core service they offer, and then work with the brands to move into more geographies and work with them to attract other distribution clients for their core policies such as online travel agencies, airlines, and other distribution paths.

25:14 And over time, our strategy is to then work with these insurers to develop new real time parametric solutions using technology where outside of travel and outside of cyber to identify with those large insurers where they have high volume claims, which are probably lower value consumer focused claims that we can identify data to automatically decide whether those claims should get paid or not to save insurers having to utilize expensive contact center and management resources to handle these claims and let the insurers focus on the large scale kind of claims that they wish to handle, such as medical repatriation, for example, within travel insurance.

26:01 But we we our aim is to develop a suite of new services in the coming years, which are focused on client needs. We're we're not we're not here to do really lots of blue sky innovation because success rate is is is potentially very low, where we as a business have networks and strong connections with the right people in the large global insurers, and we want to define and design products and services that we can generally help them in their high volume core products. As a business, this slide just talks to kind of what the benefits are for the insurer, the customer, and for Blink as we go through the services we offer. So for insurers, the main benefits that we offer is that we help them differentiate their products. We we provide a fully digital white label solution where we manage the full end to end user experience for those customers within their brands, which helps them create something different and new to sell in market.

27:00 And where other people in market already have the products, we enable them to compete with other people within the markets and respond to RFPs and requirements for customers and brands in market. Now what that does also is we've got good strong evidence points relating to by including our parametric real time solutions, which help their customers when something goes wrong, they increase their sales. So they sell more travel insurance policies. They sell more pack package solutions. And it also improves their renewal rates because you've got customers who engage with the service. They receive real time claim support when it happens. But we we receive we see between 3050% of insurers' customers engaging with our solution when it's embedded in a travel insurance policy.

27:49 These are very high engagement numbers and demonstrates kind of a real appetite for consumers of the travel insurance to engage with these types of service. And that peace of mind of knowing that if something does go wrong on your travel, your insurer is gonna help you immediately when something goes wrong and give you help there and then rather than you as a customer having to wait around, look for forms, try to find your policy terms and conditions to be able to make a claim. This is all done automatically, helping insurer handle the claim of the customer and deliver a fantastic user experience for them. So by doing this, we're taking claims out of the insurer's claims processing system, which, as I said, it allows them to focus on the bigger ticket claims they wanna spend their time on because the cost of handling a a flight delay claim can can be can outweigh the amounts that's paid to a customer for a travel insurance provider through all the forms that typically get handled and contact center support. We all do that digitally, so there's no customer engagement.

28:50 And one other area that we're seeing real appetite for our insurance clients and the value we can bring is the level of data that we can provide back to insurers relating to the customer, how the customer is behaving when they buy a travel insurance policy, as an example. So we are able to for customers who register on our platform, which, as I say, is around usually 30% to 50% for travel insurance customers, we're able to let the insurer know we capture data about where customers are flying to, flying from, when they're traveling, who they're traveling with, which we can then provide back to the insurer to allow them to understand, a, more about their customers to help price insurance risk in a better way, but also to be able to, in the future, target key messages to those customers to have cost containment for for high high risk, such as medical bills in in future markets, but also provide useful information, potential sales activity, such as ancillary services they can provide back to the the consumer of their insurance products as they travel.

29:57 So we we see the data, a part of this business, being a significant side as we move into kind of 2025 onwards for our organization. So the benefits for the customer with this type of product are simple. The customer gets immediate help when something goes wrong. There's no forms, nothing to fill in, and they know that their insurer is there to help them so something goes wrong will happen, which leads to more engaged, more loyal, and satisfied customers for the insurer. So it's a win win for all parties. And for Blink, as as Simon said, we've we're seeing very strong renewal rates, so a 100% renewal rates. We we recently renewed two, like, large volume insurance contracts that we have in our Canadian market for on long term three year contracts, both with premium increases for for Blink as well. So we're able to demonstrate value and increase our fees as we go through renewal processes.

30:49 And we we achieve high gross profit because we we operate a high volume service, fully digitally from a single technology platform within the group. So the the way Blink makes money is we've got three core revenue models. I'm gonna just focus really on model one because that's the primary driver of kind of revenue into Blink. When we contract with an insurer, we we would typically identify the kind of the volume of sales they are likely to make for for insurance policies that our service will be embedded into. And then we would provide them with a fixed or minimum fee structure where they pay us a fixed amount every single month for that for provision of the service. And for that fixed amount every month, they get access to a certain number of credits, which then equates to policy sales or customers that they can allow to utilize the service.

31:43 That typically works where also there's an overage level. So if the insurer sells more policies than we've agreed in the fixed minimum fee amount for, then we get paid per policy for policies sold above that fixed minimum. So that gives benefits to the insurer because it locks the it gives the insurer consistency of what they're paying for our service. They understand what they've got to pay every month, and it makes their their managing modeling more simple. But for Blink, it also gives us guaranteed income for these long term contracts with the ability to earn above their minimum contract value as our insurance clients grow their distribution in market and into more more markets going forward. The other models that we have are some some of our policies are based on a per policy basis whereby we get paid when people sell. They're typically our older contracts, and we've got a small number of books which are an embedded book of customers. It might be a credit card book of customers where the insurer is providing that service to you, a full book of credit card customers.

32:48 We receive a fee a fee per month per life eligible customer. As you'll see, last year, our services were included in a 1,400,000 end customer contracts, which our clients provided insurance contracts. And we we left the year on annual recurring revenues of just over £1,000,000 sterling. This this slide here just talks to the user journey, but I'll I'll just really briefly just talk how this works. So as I said, as a as a baseline, we provide a fully white label service. Someone buys a travel insurance policy from Zurich. That customer then is sent a message to say, please log on and register to track your flights and receive support and help if your flights are delayed.

33:37 They log on to a white label portal that we provide, provide all the data I mentioned earlier to deal with where they're flying to, who they're flying with, and when. It's a very simple process. It takes less than a minute for a customer to do. Once that's done, the customer doesn't need to do anything from that point forward. We work with the largest third party data sets in the world to then start to track that flight. As soon as we see that flight's delayed by the pre agreed amounts delivered by that by the insurer in the insurance policy, we then do everything from that point forward, communicate with a customer, give them access to an airport lounge, or send them some money to their account. Everything is done digitally. And important to note, I think as Simon mentioned, that at no point does Blink be involved in the regulatory chain here. We're we're very careful to design our service in the markets we're launching so that we're not part of the insurance regulatory chain, We're and also not part of any payments regulation.

34:30 We work with third party global payments providers who can deliver fast and real time payments, and they are the ones that hold the regulatory licenses. We never hold the cash of the insurers. We move money from the insurer's cash account to customers. So it means that we're a pure tech provider delivering kind of software services to our clients. The this slide here just talks about kind of the the journey that Blink's on. So we really picked Blink up in 2022. I became CEO in '22, post a restructure of the strategy by Simon and the the board. And the third 2022 and '23 has been really building building capability and scalability within the organization.

35:18 So we've basically rebuilt a lot of the technology platform we operate across within Blink. We've invested heavily in the infrastructure, infosecurity, and the technology team and supporting operations team that supports the delivery of the products. We've revisited the whole end to end user experience for all the products that we have and created what I believe is market leading kind of white labeled user experience solutions. And we've reinvigorated and redeveloped a cyber proposition, which we now see a significant market opportunity for late as we move through 2024 to 2025. So we've we've added to our product roster, we've increased the quality of our products, and we've made them scalable and robust on a global basis. Where we sit now, Blink operates with in 13 different countries around the world, everywhere from, I said, Samson Island, USA, Canada, South Korea, Pakistan. We're in we we've got a truly global offering that we can offer via large scale insurance providers across all of those markets.

36:23 Where we see this moving in 2024? 2024 is about closing additional contracts with the large multinational regional insurers that we're working with actively. We've got a very strong pipeline that we've built up across 2023, and we're now closing out in 2024 in multiple markets and growing where we have launched with global insurers into more markets with those global insurers and help them scale the markets where we're in with them already. We will start additional product development work later in 2024, working with our insurance partners to identify what the best solutions are that's going to really drive value to them and volume for Blink.

37:09 We've got a number of product design ideas, and really we're tied to where can we identify products, services, and data to allow us to generally innovate, automate, and deliver real time support and assistance to insurance customers. I've talked I think we've talked about the commercial highlights across the business, but just to reiterate, we're in a number of markets, 13 markets now, delivered a million of AR at the end of last year. That's a big increase on the year before. It's gonna grow heavily this year, and we've got a 100% renewal rate. We've had a good start to this year. We've we've got some more clients, as Simon mentioned, launching and being launched at the moment. And we continue to focus and grow and relaunch our cyber proposition to market to allow us to capitalize on the opportunity that exists both in travel and in the cyber proposition.

38:05 And that's me from Blink. I will hand over to David Bowling. Thank you, Sid. I'm just gonna very briefly run you through the key drivers of our financial performance for 2023. Sid and Simon have talked a lot about pulling because kind of the highlights, but I'll I'll just run you through the moving parts. So revenue has increased by 14% compared to last year, 293,000,000 for the year. That would actually have been twenty one percent increase on a constant currency basis because we have had some currency headwinds in our major trading currencies, basically rupee and the lira. Most of that growth has been through India, just over 34,000,000 increase in revenue before FX through our Indian business, which is a combination of our Libcare product, which has increased by 15,000,000.

39:02 What we've seen with Libcare in the year is that we've actually shifted to a new variant, or most of the sales have shifted to a new variant, the Libcare product, which is at a higher premium but at a lower volume. So if you look at some of the earlier slides, you'll see that our policy numbers around around health have come down, and that's that's the key driver for that. And then also in India, we've seen an increase in our mobile sales. And, again, there's been a bit of a shift in the mix of our mobile sales towards higher value handsets, some more Apple phones, more Samsung phones, which, whilst that drives revenue, does come at a lower margin due to the increased insurance costs that we have to sit behind. We've also seen an increase in Turkey. Turkey is doing very well given the macroeconomic environment.

39:52 Revenues increased by 2,600,000. Now considering the devaluation of the currency over the years, well, that's a really good performance from our Turkish business. We've seen that through renewals and increasing the renewal base, which is a a function of the business growing, and also an increase in business to our our relatively new relationship with Turkey insurance, particularly around the health products in that market. So good performance in our Turkish business. Blink, we've talked a lot about. In financial terms and revenue, it's still fairly modest if you look at look at it in comparison to India and Turkey, but that's not why we're investing in Blink. Blink is around the margin plan, how we expect that to to really drive additional value in in the medium term. But even even said, revenue has increased 85% in Blink in the year to 800,000.

40:48 And as we talked to those new client wins in late q four, I've also made made that we would leave the year with an annual recurring revenue of 1,000,000. I mentioned FX. There's been a 10 just over a 10,000,000 reduction in performance in effect from FX, and that's driven by the group peers at a negative 9,300,000 in parts and below 1,100,000 on revenue. And then if we look at the legacy business, that's declining as expected. And I think it's worth noting that that's whilst we've seen a 3,600,000 reduction in revenue this year, the reduction in 2024 will be far more marked than that because we've now exited Spain. There will be no future revenue from that where it was in 2023. And also, we have now ceased renewing our policies in The UK. So you will see a far larger drop off in our UK revenues also.

41:45 On EBITDA, as expected, it's declined, and it's declined by 30%. We anticipated that to 4,800,000. Our core EBITDA within that has reduced by 2,000,000, which is primarily, as you look at the kind of the flow there is primarily due to our planned investment in Blink. So there's, you know, a level of deliberateness to that performance. In terms of the the moving parts, India and Turkey have both increased by 700,000, which is the benefit of the additional revenue and volume that's been going through those both those businesses, albeit with India, given there's been a 30,000,000 increase in revenue and a 700,000 improvement in EBITDA, that's demonstrating the relatively low margin at which we're operating at within India.

42:36 Link losses have increased to 1,800,000. We've talked about that. We've talked about the additional investment that we've been making in people, in infrastructure. And what we are now happy and comfortable with is that we have a far more stable platform in that business from which we can scale. Central costs have also increased by a million. That is in part to do with our existing of the legacy businesses. We've had to we've identified and brought on board new third party IT platforms to host our historical data, which will which we need to retain to the closure. We've also seen some inflation impacts in The UK, and there's also been a little bit of play on on LTIP charges where there was a credit in the prior year, but we have a new LTIP scheme in place now, which is results in a charge in the current year.

43:26 I think it's worth noting that's noncash. So that's whilst it's increased the P and L charges, it's a noncash charge. We have seen FX headwinds again that we talked about in the rupee and and lira. That's impacted this year's EBITDA performance by 800,000, with 600,000 up in due to the rupee and a couple of 100,000 due to the lira. Legacy EBITDA is largely flat with the prior year, and that's really just a function of the the exit terms that we agreed with Spain in terms of transferring some of that business, so the majority of that business to a third party underwriter out in Spain and also the rationalization of the cost base as we've entered wind downs of businesses.

44:12 So we've seen a benefit there, and that's why you don't really see the what you might expect is to be expected reduction in EBITDA. And just finally, on margin. So the group margin has reduced. EBITDA margin has reduced to 2.5%. That is a function of of mix with the legacy business kind of declining, but the with also the impact of the Indian margin, the fact that that is a larger proportion of the business and the margin in itself in India has reduced in the year. But also, the increase in Blink losses are a factor on that. I think, interestingly, if we excluded Blink from this year and last, then the margin this year will be 9.7% higher than 2.5, so effectively 3.2%.

45:05 Let's say the Indian margin has reduced naught point 5% in the year to 3.6. That's due to Lidcare and mobile, which have seen additional sales but at lower margins than the prior year. And also, actually, on a on a more positive note, an increase in the car business in India, which have high acquisition costs in the first year, and therefore impacts EBITDA in year one, but then you get the margin benefit and the higher EBITDA from the renewal streams in years two and beyond. I think it's worth noting, you know, our our EBITDA margin has been decreasing. In the medium term, we expect that to stabilize and then begin to improve, mainly through the progress that we expect to see from Blink and also as we move towards a much slimmer central function.

46:02 That's the highlights for me, really, Simon. Well, great. We've discussed some questions here, so we've come through. We're trying to do our best to answer them as we can go through. So the first question is, what are your plans for further innovation? Are there new product developments and market needs the company aims to address in the near future? The the simple answer is yes. There is. But Sid touched upon our approach. You know, I am painfully aware that new products have exceptionally high failure rates. So our approach is going to be to work with our partners, you know, we were large insurers, and develop products which they can deploy across multiple geographies, but largely products which serve a consumer need, where there's a rich data stream and there's a high velocity of claims, which can be automated.

46:55 You know? So it could be lost parcels. It could be train delays. It could be on tarmac, whole range of activities. But our number one priority is to try and leverage our travel disruption product first, which we think, as you said, is about £20,000,000 of Tesla market for us. Our cyber, about 10,000,000. And then during probably 2526, which is why we keep our investment going through the p and l, so quite high levels, is to work with our those partners. We kinda have to say, what other products, what other solutions can we help provide you? We don't want to you know, we we don't have enough muscle on the frame, so to speak, to really take a big risk and say, right. We're gonna spend £56,000,000 developing what we see is a is a is a game changing set of products. Our first in simple terms, our first set of products is great. Something that gives real differentiation to an insurer, is easy to deploy, and is an existing need that needs a solution.

47:48 And in in over time, it'd probably be on my tenure here to get much more ambitious around things like the Internet of Things. So it's a very pragmatic approach to products development over the next two to three years. After that, we can start working on things like the Internet of Things and some thought that you know, and so and so forth. Next question. As you decommission legacy IT systems, what cost savings and operational efficiencies are you anticipating? Well, we are expecting to save somewhere around our cost base, correct me wrong, about £3,000,000 a year. Yep. We're already seeing some of that benefit now. And you see that if you go into the twenty sixth, twenty twenty six profile, you know, our group central costs are sitting around that £33,500,000 mark.

48:33 That really reflects the benefit of the cost saving and and the change management and decommissioning program that we've been collectively known as the change management program. And in terms of efficiencies, the Indian platform, which is AWS, will allow them to deliver so a change request, for example, they wanna make a change for existing product. Previously, they'd have to drop a note up to The UK head office. You get loads of coders doing an NLP, you know, working on MPP or or protector, changing it, then going back, making sure it's tested, and it could take three months before a change process. We can do that in a week. New products can be launched in three months. That's how fast we can deliver new systems products in India. Blink's probably a bit quicker than that in terms of speed to delivery.

49:18 Turkey's pretty slow because they are in country. They're not cloud based services, but that's because it relates because it relates to local legislation. You can't have AWS cloud services in Turkey. So there's lots of benefits there, not just in terms of cost savings, but in terms of delivery and speed of change that we can we can now provide. How do you manage currency exposure diff with with difficulty? It's very hard to to get accept favorable rates and costs to hedge your Indian rupee. We do do a little bit of it. We do. When we first so when we know we got cash repatriation coming through, we will hedge that so that we don't know, we're expecting to receive £3,000,000 dividend up. We've got £3,000,000 coming up net of hedging costs, but we generally have to ride the wave that gives us in terms of currency. But, yeah, as David said, this year, we've absorbed £800,000 worth of currency movements, haven't changed the market expectations.

50:18 Next year, 2024, we you know, it's a a portion of the live care books going to because they can get better tax arbitrage with insurers. We've absorbed that hit through the lower cost in India and elsewhere. So we're already seeing the benefits of the changes that we've implemented. How do you manage with the shift towards lower margin products in CPP, how is the company planning to balance volume growth and profitability? Good question. Look. With Bijaj being 85% of Indians in of CPP and its products, you know, we are never gonna see a material change to that margin in India in the medium term. And I'm talking three to five years. Now we are developing high margin products in the kind of what, you know, sort of mobile app like the field. We are building products around O and R's insurance, you know, where they do a lot of payments using OR codes in India. But even if they and these aren't numbers in the forecast. But even if those two products combined made ten percent £10,000,000 of annual revenues at 20% margin, even if they grew at 10% a year, it would take $78.09 years to have a noticeable difference on the Bajaj stroke Indian margin because of the size of the Bajaj product.

51:34 So what we're trying to do is just extend our range of systems products, extend our range of partners that we operate with, which over time will help to derisk our portfolio risk, weigh the risk of and improve the margin. But there's no shot single shot in the arm margin improvement play in India. If you were doing a two by two NBA matrix, you would see India very much the cash cow. It's it's India's and it's cash resources which are allowing us to fund the investment in over the next couple of years in in Blink. Given the current challenges, the strategic initiatives underway, what is the growth outlook for the company's core operations in India, Turkey, and Blink over the next fiscal year? We have given those guidance to to Liberum, but, I mean, David can quite read out what we our target revenues are for '25 in '24 for the three main units.

52:34 Yeah. So we're we're targeting an overall group revenue of just over 160,000,000. About 165,000,000 is what the target for '24 is. A 100 and 40 of that from India. As Simon says, we've lost the portion of the live care books, that's why you're seeing the Indian revenue reduced compared to what we've just reported in 2023. We still have Klobiva in in 2024, so we're expecting 16,000,000 revenue through Klobiva. Turkey around 4, just over 4,000,000, and 2,200,000 from from Blink, which is obviously a good increase on on the 2023 number. And as I think we said earlier in the presentation, that 2,200,000 would represent an exit ARR of around 3,000,000 for the year.

53:24 From an earnings perspective, we, you know, we have the guidance out there that we expect EBITDA to be around 4,000,000. For the for the year, A good portion of that is still coming from India, so we're still at over 7,000,000 coming from India as we start to see the benefits of the platform. Coming through there, Gloveva is gonna hold steady with where it is this year. We expect Turkey will do so similarly, improving on a local level. But, again, we've we've seen that degradation, seen that devaluation in the Turkish lira, which just tracks it back from a sterling perspective. And and as we said earlier, we still expect Blink to make a loss, although its losses reduce in the current year to in 2024 to about just over 1,000,000, 1,200,000.

54:14 So that's where we anticipate, and we're doing all that from a slimmer central base. So that's where we anticipate 2020 false performance, which is, as Simon says, with the broker. Okay. And I think that's last of the questions that we have on the screen, so hopefully you've answered them as as fully as you were able to. So it just leads me to kinda sum up. I think, overall, very satisfied with the outcome of this year insofar far as we've delivered on the change management program, it's a bit like the old bronze seal advert. You know, we did very much what's said on the tin. The chain risk associated execution risk associated with the change management program, the delivery of new IT platforms, That's now behind us.

55:01 We've got clear proof points around the validity of our Blink proposition. You know, as I said, you know, we're not delivering contracts as quick as I'd like. That's a structural kind of market issue, But the quid pro quo of that is you get long term contracts and relationships in in in for that effort and that time you take. So a good year and a good foundation. '24 looked pretty much like '25. The key thing here is focus of growth on ARR in annual recurring revenues in Blink. And, really, for me, it's driving this business forward to 2026 to to kinda start delivering on its potential. You know, we have my mindset and that of my my EMC, is the manage main management body of the group, is much now more focused on delivering, you know, better outcomes and performance.

55:54 You know, the hard the heavy lifting of the program as it is now behind us. So good progress. '24 looked pretty much the same as '23. '25, we start start seeing that kind of nice tick up into 2026. So thank you all for joining. I hope that's given you a kind of satisfactory summation of what we're trying to do, and, hopefully, we'll speak to many of you again over the next year or so. Perfect. Simon, David said thank you very much for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This then take a few moments to complete, but I'm sure will be greatly valued by the company.

56:39 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.