CPP shares slump on profit warning and probe worries

SHARES in CPP Group plunged by nearly a sixth yesterday after the credit card insurer said a regulatory probe would drag down profits.

Its stock closed at 117p last night, down 15.83 per cent, 21 months after listing at 235p. The group said it does not know how long the Financial Services Authority will spend on an investigation into the way it sold protection against identity theft, or the likely outcome. The inquiry, opened in March, is having a “material impact” on its UKā€ˆsales.

CPP said it expects organic revenue growth to be in line with expectations at around six per cent in 2011.

Underlying group operating profit in 2012, however, is likely to be significantly lower than 2011 due to the impact of lower sales this year, and increased regulatory costs and economic pressures in southern Europe.

“The transition to a new Identity Protection product has meant lost sales opportunities and this, combined with challenging trading conditions in Southern Europe, will impact the business in the near term,” the company said.