BPP takes a dive after warning: Market value drops a third as cost of provisions rises for Linguarama

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BPP, the training and publishing group, saw a third of its stock market value wiped out after it issued a profits warning.

Problems at its Linguarama language school business and large property write-downs sent the shares spinning from 305p to 190p, although they recovered slightly to close 90p lower at 215p.

Richard Price, the chairman, warned that provisions for rationalisation at Linguarama signalled with the annual report would be higher than expected after a decision to close the company's Japanese business. The initial figure quoted was pounds 650,000 - most of which related to a severe pruning of Linguarama in Japan. But Mr Price said that trading conditions in Japan had continued to deteriorate, causing the business to close. The Brussels office is also to shut.

'We have to balance our long- term hopes with short-term realities,' he said. The two closures are expected to lead to an additional write-off of pounds 300,000.

Mr Price said that trading in the group's other businesses - academic and professional training and publishing - was satisfactory.

Interim results will be affected by a pounds 7.5m write-down against the value of the group's British properties. The impact on pre-tax profits will be pounds 5.3m, with pounds 2.2m being set against the revaluation reserve. The properties - in London, Bath and Cambridge - had a book value of pounds 11.75m at the end of last year.

Mr Price said that profits for the year would exceed pounds 6.3m before tax and exceptional charges. The company was still strongly cash-generative, he said, and had cash and liquid investments of pounds 10m.

Kleinwort Benson, the company's stockbroker, reduced its full- year profits forecast from pounds 7.9m to pounds 6.5m before exceptionals. The board intends to increase the total dividend by 10 per cent to 8.8p despite the problems at Linguarama.

BPP made pounds 7m before tax in 1992, continuing a record of unbroken earnings growth since it came to the stock market in 1986.