Investors in CPP should head to the exit while they can after the identity theft protection group reported a dire first-half trading performance during which it lost another major customer and continues to face material uncertainties around compensation payments. To compound matters, the group's £80m credit facility is due to expire in March next year.
Underlying pre-tax profits fell 24 per cent from £24.4m to £18.6m before accounting for a further £7.5m charge to compensate UK customers and £4m of restructuring costs. Costs connected to the Financial Services Authority's (FSA) investigation into selling practises of the UK business rose sharply and the group also warned of significantly lower revenues in its mobile phone business next year after T-Mobile decided against renewing its contract.
CPP's chief executive Paul Stobart said it's now increasingly likely that business partners will launch their own customer compensation exercises and this would mean the business would be unable to renew some core card protection and identity protection policies next year. As the FSA investigation continues, CPP increased its compensation fund by a further £7.5m, on top of the £17m put aside in last year's accounts.
There were some areas of growth, with double-digit revenue growth reported in both North America and Asia Pacific, but combined these regions only account for £29.3m of group revenue.
CPP (CPP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 38p | MARKET VALUE: | £65m | |
| TOUCH: | 37.5-40p | 12-MONTH HIGH: | 162p | LOW: 35p |
| DIVIDEND YIELD: | nil | PE RATIO: | 10 | |
| NET ASSET VALUE: | 19p* | NET CASH: | £8m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 172 | 23.1 | 9.34 | 2.42 |
| 2012 | 163 | 6.81 | 2.65 | nil |
| % change | -5 | -71 | -72 | - |
*Includes intangible assets of £36m, or 21p a share | ||||
