30th Oct 2013 09:00
LONDON (Alliance News) - CPP Group PLC Wednesday set aside a further GBP1.8 million to compensate customers mis-sold credit card and identity theft protection and warned that its trading in the UK is continuing to deteriorate.
CPP provides services like identity protection and card insurance, but is having to revamp its business as trading in the UK weakened sharply after the UK financial services regulator ruled the company had mis-sold credit card and identity theft protection. Banks and credit card firms have agreed to help compensate customers who were often sold the protection through bank or credit card accounts.
CPP said it had set aside a further GBP1.8 million to compensate customers in the last four months, bringing its total provisions for the mis-selling to GBP55.8 million.
In a trading update, the company said it was continuing to be hit by weak trading in the UK, with group revenues down 38% on the year in the last four months, meaning it still expects its performance in 2013 to be significantly worse than in 2012.
It said a further fall in UK renewal rates meant the group rate fell a further 0.6% in the four months to end-October, to 70.7%. It thinks publicity about the mis-selling contributed to the drop, and warned that the renewal rate may worsen further in the UK in the short-term.
It said live policies have dropped by a further 300,000 since the end of June to 7.6 million reflecting a fall in the UK, although outside the UK, live policies are stable.
"We are working towards rebuilding CPP's reputation and repositioning our business model to provide longer-term stability, continuing the improvements required to operate in a regulated environment and create a sustainable business proposition for the long-term," Chief Executive Brent Escott said in a statement.
The company warned that there are still significant risks and uncertainties to its business in the short- to medium-term, particularly related to the mis-selling scandal. It agreed GBP36 million in new financing at the end of July, and has current borrowings of GBP19.2 million. Still, it's net fund position improved to GBP41.7 million at the end of October, from GBP38.8 million at the end of June.
CPP Group shares were down 8.9% at 9.906 pence early Wednesday, one of the biggest declines on the London market.
By Steve McGrath; [email protected]; @SteveMcGrath1
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