CPPGroup disposes of Mexico operations for one peso

21st Oct 2022 15:07

(Sharecast News) - Assistance and resolution specialist CPPGroup has disposed of its operations in Mexico, it announced on Friday.

The AIM-traded firm said it had completed the sale of its wholly-owned subsidiaries, Servicios de Asistencia a Tarjehabientes CPP Mexico and Profesionales en Proteccion Individual, which together comprise its legacy business in the country, to Rafael Ortiz Moran and Silvia Daniela Rodriguez Gaona for a nominal cash consideration of one Mexican peso (4.5p).

As part of the disposal, CPPGroup left cash balances of about £0.28m in CPP Mexico to cover initial working capital requirements and other committed liabilities.

Rafael Ortiz Moran is the country manager of CPP Mexico.

CPP Mexico was established to capitalise on the assumed demand for the group's legacy protection and assistance services in the market.

However, after a period of limited new business development and operating losses, CPP Mexico was, in early 2021, placed into run-off.

The board said the natural decline in the book would again see the business become unprofitable during 2023 and beyond.

As a result, and in line with its strategy announced on 19 October to withdraw from its legacy businesses, the board said it believed that an exit from the Mexican market was in the best interests of CPPGroup.

Following a review of its options in the region, the board said it concluded that a sale of the business to the buyers, rather than a closure, was the "least costly option" for CPPGroup, and the best outcome.

For the 2021 financial year, CPP Mexico contributed EBITDA of £0.1m to the group's overall EBITDA from continuing operations of £7.5m, and recorded a loss before tax of £0.3m.

The impact of the disposal would, therefore, not be material to the group.

As at 31 December last year, CPP Mexico had net liabilities of £2.6m.

"The disposal of our Mexican business is consistent with the group's recently-announced strategy to withdraw from its legacy businesses and migrate CPP to an InsurTech business, one with a clear purpose and simplified operating model," said chief executive officer Simon Pyper.

Reporting by Josh White at Sharecast.com.