Northern Europe lights way for CPP

The York-based company, whose services include credit card insurance, identity theft protection and mobile phone cover, said most of its revenue growth for the six months to the end of June has been from Northern Europe.

This was driven by developing packaged accounts, growth of identity protection, plus the continued roll out of new card protection and identity protection variants.

CPP, founded 30 years ago by entrepreneur Hamish Ogston, floated on the stock market in March to raise 150m.

It has made international expansion key to its strategy and said recently-launched markets including India, Mexico and Turkey have continued to develop and grow, as it takes advantage of recent business partner wins.

The group added it expects growing sales, together with the roll out of higher-priced products and a better sales mix, will increase half-year underlying operating profits.

"CPP continues to perform well and has made good strategic and operational progress in the first half of 2010," said chief executive Eric Woolley.

"Our addressable market continues to expand as we develop further

growth channels, such as packaged accounts in the UK, and further develop our presence in key emerging markets.

"The year is progressing in line with expectations, demonstrating the strength of our business model.

"Our key financial metrics remain on track and with strong cash generation and a robust balance sheet, we look forward to the second half of the year with confidence."

The group also announced a series of board changes, with non-executive director Tim Kelly departing and Patrick de Smedt replacing him as a non-executive from late August. Les Owen will also join the board as a non-executive from September 21.

Analyst Michael Morris at J.P Morgan Cazenove said he believes the group has "strong prospects, particularly for the continued rollout of identity protection policies both in the UK and internationally".

While CPP made no mention of trading in Southern Europe, where the sovereign debt crisis is weighing heavily, Mr Morris said "we assume that trading remains challenging in countries like Spain and Portugal" – but not enough to warrant a separate mention.

He expects its new Asia Pacific operations, which are forecast to make up two per cent of this year's revenue, will be loss-making this year.

Mr Morris added a one per cent increase in insurance premium tax in the Budget, which comes into effect in January, will have roughly a 2m impact on the group, although he expects this to be offset through deals with business partners.

He said J.P Morgan does not expect an impact on estimates because of the change in VAT.

Looking to the rising economies

CPP Group is keen to expand internationally to tap increasingly

affluent consumers in growing economies.

The York-based group now operates in 15 countries after recently expanding into China, signing a contract with Guangdong Development Bank for the wholesale supply of card protection.

Fast-growing economies, such as China and India, offer CPP a growing source of consumers looking to protect their possessions and credit cards. The group takes between three and five years to build a profitable business in each new country.

UK sales currently make up around 65 per cent of the group's revenues.

Since launching in India in 2008, CPP has grown to nine business partners, including three added this year. It has now started earning renewal sales from India, an important step towards profitability.

In Mexico, CPP started selling to HSBC customers in 2009, where sales are growing well.

CPP recently said Asia Pacific is showing year-on-year revenue growth despite a new credit card tax in Malaysia.