Profits take a dive following boardroom chaos at CPP
THE new chief executive at CPP Group blamed “natural decline” for a dip in revenues and profitability less than six months after the launch of a boardroom coup by a major shareholder.
Pre-tax profits at the business reached £2.5m for the six months to 30 June 2016, compared to £19.3m in the same period last year.
Group half year revenues at the York-based credit card insurance group reached £35.4m, down from £38.9m in the same period last year.
This was offset by progress in India, which returned £5.6m in revenues, up from £2.8m in the first half of 2015.
Chief executive Jason Walsh said that this was down to a “natural decline in the UK renewal book” as new sales remain restricted by bans placed on them by the Financial Services Authority after an investigation into their compensation operations.
Mr Walsh has said that the group’s structure will be “redesigned” further and the company is expecting to launch its OwlDetect product this year which has been designed to alert customers if their details are being used on the dark web.
A boardroom coup led by major shareholder Hamish Ogston and investors Schroder saw turnaround chief executive Steve Callaghan replaced with a former employee of the business, Jason Walsh in May 2016.
Mr Walsh was an employee of the business between 2002 and 2014 before moving to EY.
Mr Ogston presided over the company when it was fined £10.5m by the Financial Conduct Authority and was forced to pay out £65.8m in compensation to customers.
CPP has now agreed to pay Mr Ogston’s legal fees in relation to the injunction proceedings which he launched on 11 April 2016, totalling £218,000, to remove Mr Callaghan, the non-executive chairman and three non-executive directors.
CEO Jason Walsh, commented: “CPP delivered a solid underlying performance in the first half of the year, which demonstrated the resilience of the core business.
“Since I was appointed CEO in May we have been developing a strategic plan that will take this core strength and build on it and return the business to sustainable growth.
“Looking ahead it is vital that we return CPP to revenue growth, which will be supported by new product development. For this reason we were very encouraged by the rise in customer numbers to 3.9 million during the first half of the year, although we believe that we are still only scratching the surface of the potential market for our services. Meanwhile we continue to address our cost base, to ensure that the Group has the appropriate resources and tools to support its planned development.”
