Maiden full-year results from CPP - the international life assistance company that provides credit card, identity protection and mobile phone insurance - came in marginally ahead of City expectations on the back of 10 per cent underlying revenue growth. In fact, has CPP has only failed to hit this impressive growth rate in two of the past 15 years.
The UK continues to be the key driver, representing 70 per cent of the business, which saw organic revenue growth of 12 per cent. Operating margins grew by 150 basis points, which shows operational gearing coming through. In other regions, the US was the other star performer with operating profits up 12 per cent at constant currency. Southern Europe remained difficult given the macro environment in Spain and Italy and the fledgling Asian business delivered an operating loss of £2.3m, reflecting market entry into China.
Strong operating cash flow, together with the proceeds of the initial public offering (IPO) reduced net debt to £2.2m and the company also benefits from good earnings visibility given its high retention rates of 75.9 per cent. Ongoing strong growth in Northern Europe and North America look achievable, and Southern Europe looks more promising after the challenges of 2010. Asia represents a huge opportunity, albeit it remains early days.
Broker JP Morgan Cazenove forecasts adjusted pre-tax profits of £52m and EPS of 21.2p (2010: £47m and 19.3p).
CPP (CPP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 293p | MARKET VALUE: | £500m | |
| TOUCH: | 290-297p | 12-MONTH HIGH: | 340p | LOW: 220p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 12p | NET DEBT: | 11% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 225 | 16.8 | * | * |
| 2008 | 259 | 16.4 | * | * |
| 2009 | 292 | 24.8 | 11.2 | nil |
| 2010 | 326 | 39.8 | 16.3 | 7.54 |
| % change | +12 | +60 | +45 | - |
Ex-div: 13 Apr Payment: 25 May *Prior to flotation | ||||
