|
Shares dropped in CPPGroup PLC on Tuesday as the company lowered its expectations for profit in 2022 and 2023, due to reduced contract benefits and added costs related to the change management programme.
Shares in the Leeds-based products and services for financial services were 23% lower at 186.00 pence on Tuesday in London.
For the first quarter ended March 31, CPPGroup noted that trading was in line with expectations, with revenue from continuing operations being 4% higher from the same period a year prior.
Over the period, CPPGroup said it has concluded negotiations with its largest business partner, leading to an extended contract to December 2024, however due to the business partner securing improved terms, the company has reduced its expectations for annual earnings before interest, tax, depreciation and amortisation.
In addition, CPPGroup said it has also concluding its review of the change management programme, which involves the design and build of a new IT platform for its Indian operations, a new platform for CPP's legacy back book and an exit from the UK Managing General Agent business.
However, the company has identified that these projects will take longer, cost more and produce fewer benefits than initially expected, with the benefits from the platform migration not materialising until the final quarter of 2024, leading to IT costs being significantly higher.
As a result of these two factors, CPPGroup has lowered its expectations for both 2022 and 2023, with the former's Ebitda now set to come between £5.8 million and £6.3 million, with a similar range for 2023.
The guidance range reflects a 16% to 23% decline from £7.5 million in 2021.
‘In the 2021 annual report I said that 'We are, as we exit from the UK MGA and as the renewal book continues to run-down, in need of a clear and executable strategy for the UK, and this is something that the board and I will address during 2022'. We have made good progress, and I expect that we will later this year update shareholders and other stakeholders on our direction of travel and on our plans to build a business which delivers long term profitable growth and increased value to shareholders,’ said Chief Executive Officer Simon Pyper.
Copyright 2022 Alliance News Limited. All Rights Reserved.
|
