TIDMCPP
RNS Number : 6975R
CPPGroup Plc
30 October 2013
CPPGROUP PLC
30 OCTOBER 2013
INTERIM MANAGEMENT STATEMENT
CPPGroup Plc ("CPP" or the "Group") today publishes its Interim
Management Statement ("IMS"), for the period since 30 June 2013 to
the date of publication. Unless stated otherwise, comparative
references are to the equivalent period in 2012 on a continuing
operations basis and exclude the impact of foreign exchange.
Group performance
The Group's performance continues to reflect the challenges of
its operating environment. Group revenue has declined by 38%
primarily due to the trading performance in the UK. Outside of the
UK, performance is consistent with the trends reported at the Half
Year. The Group's reduction in its cost base is on plan.
A further decline in the UK renewal rate has driven a 0.6%
decrease in the annual renewal rate for the Group from the Half
Year to 70.7%, with contributing factors believed to relate to
publicity and communications with customers in connection with the
proposed Scheme of Arrangement ("Scheme"). The UK renewal rate may
continue to decline in the short-term. Live policies are 0.3
million lower than reported at 30 June 2013 at 7.6 million
reflecting a reduction in policyholders in the UK. Outside of the
UK the live policy base has remained stable.
The Group confirms that, as previously announced, the Packaged
Accounts contract with Santander (UK) ceased in October 2013.
Organisational structure and strategy
The Group appointed a new Chief Executive Officer, Brent Escott,
and Chief Financial Officer, Craig Parsons, with effect from 1
September 2013. The new leadership team is focused on developing
the Group's operational capability and controls, realigning the
cost-base and successfully completing the Scheme.
To support the future development of CPP, the Group has made
further appointments to its Board and management. In addition to
the previously announced appointments of Shaun Astley-Stone and
Ruth Evans as Non-Executive Directors, the Group has also appointed
a Group Commercial Director and a Group IT Transformation
Director.
Customer redress
The Group is committed to achieving a fair and reasonable
outcome for customers that may have been affected by historical
issues in the UK business, in and before 2011. Following recent
court approval, the next phase of customer contact in which
customers will be invited to vote on the Scheme will begin in
November. If the requisite majority of customers vote in favour of
the Scheme it then requires approval from the High Court, expected
to be in the first quarter of 2014. Only once the Scheme is
approved by the High Court will the claims review process commence
and redress paid as appropriate to those who are entitled.
In the period, a further GBP1.8 million has been provided for
other redressable items, taking the total amount provided for
customer redress and associated costs to GBP55.8 million.
Financial position
As announced on 31 July 2013, the Group has agreed new financing
arrangements totalling up to GBP36.0 million. The Group's current
borrowings are GBP19.2 million representing GBP13.0 million bank
debt and GBP6.2 million Business Partner deferred commission
currently accrued under this arrangement.(1) There remains a
further nine months over which future commission payments will
continue to accrue.
As expected, the Group's net funds position has increased to
GBP41.7 million(2) from the Half Year position of GBP38.8 million,
due to working capital movements.
Outlook
The Group is in the early stages of repositioning the business
and developing its longer-term strategy. Significant risks and
uncertainties remain in the short to medium term, particularly in
relation to the Scheme, liquidity and the on-going challenges of
the operating environment. In line with previous guidance, the
Group's performance for 2013 is expected to be significantly lower
than 2012.
Brent Escott, Chief Executive Officer, commented:
"Our immediate priority is to strengthen the Group as we enter
the next phase of our development. 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."
(1) As reported at 30 June 2013, the Group cash balance included
GBP12.0 million held in a blocked account in favour of the lenders.
In the period this account has been used in full to reduce the bank
debt from GBP25.0 million to the current level of GBP13.0
million.
(2) Net funds comprises cash and cash equivalents of GBP59.1
million partially offset by bank loans and Business Partner
deferred commission of GBP19.2 million and unamortised debt issue
costs of GBP1.8 million. Cash and cash equivalents includes cash
held for regulatory purposes of GBP21.8 million and cash restricted
by the terms of the Voluntary Variations of Permissions ("VVOPs")
agreed with the FCA within the UK regulated entities of GBP29.1
million. Whilst not available to the wider Group, the restricted
cash is available to the regulated entity in which it exists
including for operational and customer redress purposes.
Note: Financial Conduct Authority (FCA) (or, as the context may
require, the Financial Services Authority as predecessor entity
thereto prior to 1 April 2013).
For enquiries contact:
Investor Relations
CPPGroup Plc
Brent Escott, Chief Executive Officer
Craig Parsons, Chief Financial Officer
Tel: +44 (0)1904 544702
Helen Spivey, Head of Corporate and Investor Communications
Tel: +44 (0)1904 544387
Media
Tulchan Communications: Martin Robinson; David Allchurch
Tel: +44 (0)20 7353 4200
Notes to Editors
CPPGroup Plc (CPP) is an International Assistance business
operating in the UK and overseas with more than 200 Business
Partners worldwide. Via its Business Partners, CPP provides Life
Assistance products to consumers, which includes annually renewed
and packaged products that provide assistance and insurance across
a wide range of market sectors designed to make everyday life
easier to manage.
For more information on CPP visit www.cppgroupplc.com
Cautionary Statement
This IMS has been prepared solely to provide additional
information to shareholders as a body to meet the relevant
requirements of the UK Listing Authority's Disclosure and
Transparency Rules. The IMS should not be relied on by any other
party or for any other purpose.
The IMS contains certain forward-looking statements. These
statements are made by the directors in good faith based on the
information available to them up to the time of approval of the IMS
but such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information. Subject
to the requirements of the UK Listing Authority's Disclosure and
Transparency Rules and Listing Rules, CPP undertakes no obligation
to update these forward-looking statements and it will not publicly
release any revisions it may make to these forward-looking
statements that may result from events or circumstances arising
after the date of this IMS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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