REG - CPPGroup Plc - Disposal of Chinese business

CPPGroupAnnouncement

26/01/2022 07:20

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RNS Number : 6804Z  CPPGroup Plc  26 January 2022

26 January 2022

CPPGroup plc

("CPP Group", the "Group" or the "Company")

 

Disposal of Chinese business to focus on growth in core markets

 

CPP Group (AIM: CPP), a provider of assistance and insurance products which
reduce disruptions to everyday life for millions of customers across the
world, announces that, as part of its strategy to focus on its key growth
areas, it is exiting the Chinese market.

A sale and purchase agreement has been entered into for the disposal of CPP
Asia Limited and its wholly-owned Chinese subsidiary, CPP Technology Services
(Shanghai) Co. Limited (collectively "CPP China"), by way of a sale to T-Link
Holdings Limited ("T-Link") for nominal cash consideration of HK$ 1, to take
effect from 27 January 2022 ("Disposal"). As part of the Disposal, CPP Group
has made a working capital cash injection into CPP China of £0.5 million. The
majority shareholder of T-Link is Wilson Chan, the CEO of CPP China.

CPP China was established to capitalise on the demand for protection and
assistance services in the Chinese market. However, progress has been slow and
the business continues to make losses. With no clear pathway to sustainable
returns, together with CPP Group's strategy to focus its resources on the
areas with the strongest prospects, the Board's view is that an exit from the
market is in the best interests of CPP Group.

The terms of the Disposal reflect the ongoing cash losses and investment
requirements of CPP China.  The Board concluded that sale of the business to
T-Link rather than a closure was both the least costly for CPP Group and the
right option for all stakeholders, enabling the Group to focus on its core
markets while ensuring in China the smooth transition of colleagues and
continuity of service to partners and their customers.

CPP China accounted for EBITDA losses of £0.4 million in 2020 against an
overall EBITDA profit of £8.1 million from the Group's Ongoing Operations.
The impact of the Disposal will therefore not be material to the Group.

As Wilson Chan is CEO of CPP China and a majority shareholder in T-Link, the
Disposal constitutes a related party transaction under AIM Rule 13. The
Directors consider, having consulted with the Company's nominated adviser,
Liberum Capital Limited, that the terms of the Disposal are fair and
reasonable insofar as the Company's shareholders are concerned.

Jason Walsh, CEO of CPP Group, commented:

"This disposal is in line with CPP Group's commitment to taking decisive
action in withdrawing from markets where it does not believe its prospects are
sufficiently strong. It follows the steps we took in 2021 to simplify and
focus the Group, through the sale of our German card protection business and
restructuring our operations in Mexico and Malaysia.

The progress we have made on these fronts, together with further actions
planned for 2022, allows us to reduce our ongoing operating expense base and
concentrate on our technology-led strategy in our key markets where we have
the scale and capabilities to generate sustainable growth and deliver greater
value for all our stakeholders."

Enquiries:

 CPPGroup plc
 Jason Walsh, Chief Executive Officer   Tel: +44 (0)77 6437 8580

 Simon Pyper, Chief Financial Officer   Tel: +44 (0)79 1779 5601

 Liberum Capital Limited
 (Nominated Adviser and Sole Broker)    Tel: +44 (0)20 3100 2000
 Richard Lindley
 Lauren Kettle
 Kane Collings
 Christopher Whitaker

 Alma PR
 (Financial PR Adviser)                 Tel: +44 (0)20 3405 0205
 Josh Royston
 David Ison
 Kieran Breheny
 Faye Calow

 

About CPP Group:

CPP Group creates assistance and insurance products which reduce the
disruptions to everyday life for millions of people across the world. These
products are provided through partnerships with leading insurance, banking and
finance companies either as embedded solutions or as relevant add-ons to
enhance their core offering. CPP Group is listed on AIM, operated by
the London Stock Exchange.

 

For more information on CPP Group visit https://international.cppgroup.com/
(https://international.cppgroup.com/)

 

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