CPPGroup Plc Disposal of Chinese business (6804Z)
26 January 2022 - 6:18PM
UK Regulatory
TIDMCPP
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 GBP0.5 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 GBP0.4 million in 2020
against an overall EBITDA profit of GBP8.1 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 Tel: +44 (0)77 6437 8580
Officer Tel: +44 (0)79 1779 5601
Simon Pyper, Chief Financial
Officer
Liberum Capital Limited
(Nominated Adviser and Sole Tel: +44 (0)20 3100 2000
Broker)
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/
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