Adjust for a £14.8m provision associated with the FSA's investigation into life assistance company,
Chief executive, Paul Stobart, who joined the group October, admits that, until the FSA makes a determination on the issues involved – relating to failings in CPP's sales processes and the design of its card protection product – the group will be unable to fully assess the likely impact. That lack of clarity is understandable given that all customers dating back to 2005 will be reviewed, with those affected offered redress and with any automatic renewal procedures being stopped. With the implications of that probe still unclear, the board also decided to axe the final dividend entirely. Given that backdrop, the group's plans to expand into such potentially promising emerging markets as Brazil is unlikely to grab much attention.
JP Morgan Cazenove has slashed its adjusted EPS estimate for end-2012 by 17 per cent to 13.59p.
|ORD PRICE:||74p||MARKET VALUE:||£127m|
|TOUCH:||74-75p||12-MONTH HIGH:||281p||LOW: 66p|
|DIVIDEND YIELD:||3.3%||PE RATIO:||7|
|NET ASSET VALUE:||16p†||NET CASH:||£11.9m|
The shares – which have only just emerged from a five-week period of suspension – have slumped from about 280p since news of the FSA probe first emerged a year ago. With the dividend gone, and the final outcome of that investigation still uncertain, there are few reasons to hold the shares. Sell.
Last IC view:Fairly priced, 133p, 23 August 2011