CPPGroup : Disposal of German card protection legacy business

Rationale and use of proceeds

The Disposal is in line with the Group's commitment to maximising value from its assets and focusing on the areas of the business that have the strongest prospects for delivering sustainable and profitable medium to long-term growth.

In line with the Group's capital allocation priorities, the proceeds will be used to strengthen the Group's working capital base, provide additional financial flexibility to deliver its growth strategy, and ultimately enhance returns for shareholders.

CPP will retain a presence in the German market managed through its UK operation, continuing to offer innovative, digital-led products to meet demand from its business partners in the market. This includes the potential for further distribution arrangements via Mehrwerk.

Background

CPP Germany is a non-core book of card protection business that was placed in runoff, which included closure of the company's operation in Hamburg, following a strategic decision to restructure the Group's EU markets in 2018.

CPP Germany accounted for £1.1 million of the £8.1 million contribution to Group EBITDA from the Group's Ongoing Operations in 2020. The impact of the Disposal will therefore be to reduce the revenue and profit contribution of that operating segment in the future. As at the date of the sale, the unaudited net liabilities being disposed of are approximately £0.8 million.

Terms

The sale and purchase agreement contains warranties and indemnities by the Group usual for a transaction of this nature and an agreement that the Group will refrain from any activity in the card protection market that places it in competition with Mehrwerk in Germany and Austria for a period of two years. The Group has granted Mehrwerk a five-year licence to use the CPP name for marketing and the provision of CPP Germany's existing services.