24th Mar 2014 14:16
LONDON (Alliance News) - CPPGroup PLC Monday said it has completed the sale of its 49% in its former joint venture company with Mapfre Abraxas Software Ltd, but the disposal will end up costing it GBP725,000 over two years.
CPPGroup said it has sold its stake in Home3 Assistance Ltd to Mapfre for GBP275,000. Under the terms of the deal, for CPP to exit the joint venture it has had to "invest" a further GBP1.0 million in order to absorb its share of the unrecognised losses in Home3.
That GBP1.0 million will be reported as part of CPP's discontinued operations in its income statement for 2014.
CPP will make the net cash payment of GBP725,000 to Mapfre over a two-year period.
CPP will recognise a profit on disposal of approximately GBP275,000, less any associated disposal costs, as there are no relevant net assets recorded on the group balance sheet at the date of the transaction.
The loss after tax attributable to CPP's investment in Home3 for 2012 was GBP477,000 and GBP226,000 in the first-half of 2013.
"The sale of our shareholding in Home3 represents further progress in repositioning the business model to provide longer term stability for the group," Brent Escott, Chief Executive, said in a statement.
CPP is aiming to recover from the mis-selling scandal that has left it, as well as a number of high street banks, with a customer redress bill that could total GBP1.3 billion across the industry in UK.
Up to seven million customers, who bought and renewed about 23 million policies, were mis-sold CPP's card protection and identity protection policies, according to UK regulators.
The insurance products cost between GBP30 to GBP80 a year and were "widely mis-sold by CPP," according to the Financial Conduct Authority, which resulted in a GBP10.5 million fine for the company in November 2012.
In December, CPP increased its provision for customer redress and associated costs to GBP65.8 million, but said the final amount it pays out could be "materially" higher or lower than that estimate.
CPP shares were Monday quoted at 12.79 pence, up 6.6%.
By Samuel Agini; [email protected]; @samuelagini
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