CPPGroup 2013 Loss Doubles As Challenging Trading Continues

LONDON (Alliance News) - CPPGroup PLC Thursday said its full-year pretax loss from continuing operations more than doubled, capping a hard year for the life-assistance business.

CPP sells products giving customers the around-the-clock ability to cancel and replace lost or stolen credit cards. Amongst other products, it also helps customers detect, prevent and resolve identity fraud.

In a statement, CPP said its pretax loss from continuing operations widened to GBP43.2 million in 2013, from GBP19.5 million a year earlier. Revenue decreased to GBP178.0 million from GBP269.9 million, while administrative expenses fell to GBP105.2 million from GBP124.8 million.

Exceptional items, which fell by GBP6.4 million to GBP37.5 million, still constitute a large proportion of administrative expenses. The exceptionals are mainly made up of customer redress and associated costs, restructuring costs and IT asset impairments.

CPP noted "challenging trading conditions" in 2013.

Renewal rates declined to 69.4%, reflecting a reduction in card protection and identity protection renewal rates in the UK, while the live policy base was 2.0 million lower at 7.1 million, principally due to contract losses and reduced renewals in the UK.

CPP did not pay a dividend.

CPP is still feeling the effects of failings that resulted in its card protection and identity protection products being widely mis-sold to customers. The scandal prompted a GBP10.5 million fine from UK regulators in November 2012. The total redress bill for CPP and the high street banks that sold the products could amount to GBP1.3 billion.

Chief Executive Brent Escott said claims relating to the scheme offering redress to customers have been broadly within expectations.

Since December 20, CPP has increased the provision for customer redress and associated costs by GBP4.0 million, meaning the company has now set aside GBP69.8 million.

Escott said a plan has been developed to stabilise CPP while the scheme is completed.

"The key aspects of our immediate business plan are: rebuild, improve, modernise, and evolve. Our immediate priorities are to complete the scheme whilst we rebuild the business, establishing a robust operational and IT environment, improving our governance and processes and modernising how we operate. This will establish a platform from which we can evolve in the longer term," Escott said in a statement.

"We are taking decisive action and are focused on working hard to deliver against our plans. Nonetheless, material uncertainties remain, particularly in relation to the scheme, liquidity and the execution and delivery of our plans. As a result, the outlook continues to reflect the significant challenges and risks ahead and performance in 2014 will continue to be constrained," Escott added.

CPP shares were Thursday quoted at 10.08 pence, down 6.3%.

By Samuel Agini; samagini@alliancenews.com; @samuelagini

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