TIDMCPP
RNS Number : 5724U
CPPGroup Plc
08 April 2016
8 April 2016
CPPGroup plc
Publication of Shareholder Circular
CPP responds to the Resolutions proposed by Schroder Investment
Management Limited
Following the announcement made by CPPGroup plc ("CPP" or the
"Company") on 21 March 2016 confirming receipt of a notice
requisitioning a general meeting of the Company from Schroder
Investment Management Limited, the Company is today publishing a
circular to CPP Shareholders containing a letter from the Chairman
to CPP Shareholders. The letter details the Board's response to
Schroders' Requisition and explains the Board's views on the
Requisition in order that CPP Shareholders are fully informed and
able to make their voting decisions on that basis.
The Resolutions will be put before CPP Shareholders at the
Company's forthcoming General Meeting at 2.00p.m. on 5 May 2016 at
the offices of Eversheds LLP, One Wood Street, London, EC2V
7WS.
The Requisition Notice proposes resolutions that four of the
five current Directors of the Company be removed and that the
Requisition Candidates be appointed to the Company's Board.
In summary, the Board considers that it is not in the best
interests of the Company or of CPP Shareholders as a whole for the
Requisition Candidates, who the Board understands are not and have
not in the recent past been approved by the FCA or the PRA to carry
out a controlled function or similar, who have outlined no clear
strategy and who have indicated that they will require time to
carry out a strategic and financial review before they will be able
to formulate a new strategy, to be appointed to the Board in place
of the current Chief Executive Officer and the Existing
Non-Executive Directors.
Accordingly, the Board unanimously recommends that CPP
Shareholders vote against the Resolutions for the reasons set out
below.
-- The risks to the continuation of existing regulated
activities currently carried out by the Company's Regulated
Subsidiaries in the UK
-- The future growth of the Company depends upon its ability to develop and market products
-- Uncertainty arising from the appointment of the Requisition
Candidates may adversely impact the Group's relationship with key
stakeholders
-- A Board with an appropriate balance of skills, independence,
knowledge and experience represents the best corporate governance
structure for CPP Shareholders
-- The Requisition has caused unnecessary disruption to, and
uncertainty within, the operations of the business at a time when
the Board wants to focus wholly on the trading performance of the
Group
For further discussion of the background to the Requisition and
for a detailed explanation of the reasons for the Board's
recommendation that CPP Shareholders vote against the Resolutions,
please refer to the Circular and to the Letter from the Chairman
set out in the Appendix to this announcement
All terms used within this announcement will have the same
meaning as applied within the Circular and are defined at the end
of this announcement.
* * *
The Circular will be posted to CPP Shareholders today, 8 April
2016. A copy of the Circular will be submitted to the National
Storage Mechanism and will shortly be available for inspection at:
www.hemscott.com/nsm.do and on the Company's website at
www.cppgroupplc.com.
The timetable for the General Meeting is as follows:
Event Date
Latest time and date for 2.00 p.m. on 3 May 2016
receipt of Form of Proxy
from CPP Shareholders
Voting Record Time for the 6.00 p.m. on 3 May 2016
General Meeting
Time, date and location 2.00 p.m. on 5 May 2016
of the General Meeting at the offices of Eversheds
LLP, One Wood Street,
London EC2V 7WS
Enquiries:
CPPGroup Plc
Mike Corcoran, Chief Financial Officer
Tel: 01904 544 541
Nominated Adviser and Broker
Numis Securities Limited: Stuart Skinner; Charles Farquhar
Tel: +44 (0)20 7260 1000
Media
Powerscourt Group: Justin Griffiths; Peter Ogden
Tel: +44 (0)20 7250 1446
Notes to Editors:
CPP provides a range of assistance based services to customers
in the UK & Ireland and in a number of international markets
across Asia, Europe and Latin America. The Company's core
propositions provide peace of mind for customers covering a range
of areas including lost and stolen credit cards, identity theft,
insurance of mobile devices, and passport and lost luggage
assistance.
For more information on CPP visit www.cppgroupplc.com
Further Information:
If in any doubt about any of the contents of this announcement,
independent professional advice should be obtained.
Numis Securities Limited ("Numis"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively for the Company, as its nominated adviser and
broker, and no one else in connection with the Requisition and will
not be responsible to anyone other than the Company for providing
the protections afforded to its clients or for providing advice in
relation to the Requisition or any other matters referred to in
this announcement. Numis' responsibilities as the Company's
nominated adviser, under the AIM Rules, are owed solely to the
London Stock Exchange and not to the Company or its Directors or
any other person. Apart from the responsibilities and liabilities,
if any, which may be imposed on Numis by FSMA or the regulatory
regime established thereunder, no responsibilities or liability
(whether arising in tort, contract or otherwise) are or will be
owed to the Company or to any Director, Shareholder or any other
person, in respect of his voting decision in reliance on any part
of this announcement, or otherwise. Numis makes no representation
or warranty, express or implied, concerning the contents or
completeness of this announcement. Numis accepts no liability
whatsoever for the accuracy of any information or opinions
contained in, or for the omission of any material information from,
this announcement. Numis is not responsible for, nor has it
authorized, the contents of any part of this announcement for any
purpose.
This announcement is not an offer to sell or a solicitation of
any offer to buy the securities of CPPGroup Plc (the "Company") in
the United States, Australia, Canada, Japan, the Republic of South
Africa or in any other jurisdiction where such offer or sale would
be unlawful.
This announcement cannot be relied on for any investment
contract or decision. No person has been authorised to give any
information or make any representation and, if given or made, such
information or representation must not be relied upon as having
been so authorised by the Company, the Directors or Numis
Securities.
Note regarding forward-looking statements:
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements" including, without limitation,
those regarding the Company's financial position, business
strategy, plans and objectives of management for future operations
or statements relating to expectations in relation to dividends.
These statements can be identified by the use of forward-looking
terminology, including statements preceded by, followed by or that
include the words "targets", "believes", "expects", "aims",
"estimates", "intends", "plans", "projects", "will", "may",
"anticipates", "would", "could" or similar expressions or the
negative thereof. These forward-looking statements include all
statements that are not matters of historical fact. They appear in
a number of places throughout this announcement and include, but
are not limited to, statements regarding the Directors' and/or the
Group's intentions, beliefs or current expectations concerning,
among other things, the Group's results of operations, financial
position, prospects, growth, strategies and the industry in which
it operates.
By their nature, forward-looking statements involve known and
unknown risks, uncertainties and other important factors beyond the
Company's control that could cause the actual results, performance,
achievements of or dividends paid by the Company to be materially
different from the results, performance or achievements, or
dividend payments expressed or implied by such forward-looking
statements. Such forward-looking statements are not guarantees of
future performance and are based on numerous assumptions regarding
the Company's net asset value, present and future business
strategies and income flows and the environment in which the
Company will operate in the future. In addition, even if the
results of operations, financial position and the development of
the markets and industry in which the Group operates in any given
period are consistent with the forward-looking statements contained
in this announcement, those results or developments may not be
indicative of results or developments in subsequent periods. A
number of factors could cause results and developments to differ
materially from those expressed or implied by forward-looking
statements contained in this announcement, including, without
limitation, general economic and business conditions, industry
trends, competition, changes in regulation, regulatory activity,
currency fluctuations, changes in business strategy, political and
economic uncertainty and other factors. Statements contained in
this announcement regarding past trends or activities should not be
taken as a representation that such trends or activities will
continue or are likely to continue.
(MORE TO FOLLOW) Dow Jones Newswires
April 08, 2016 02:00 ET (06:00 GMT)
Any forward-looking statements speak only as of the date of this
announcement. Subject to the requirements of the FCA, the London
Stock Exchange, the AIM Rules (and/or any other applicable
regulatory requirements) or applicable law, each of the Company,
the Directors and Numis Securities expressly disclaims any
obligation or undertaking to disseminate any updates or revisions
to any forward-looking statements contained herein to reflect any
change in the Company's expectations with regard thereto, any new
information or any change in events, conditions or circumstances
after the date of this announcement on which any such statements
are based, unless required to do so by law or any appropriate
regulatory authority.
This summary should be read in conjunction with the full text of
the announcement which follows.
APPENDIX
LETTER FROM THE CHAIRMAN
1. INTRODUCTION
On 21 March 2016, the Board announced that it had received a
notice (the "Requisition Notice") from Schroder Investment
Management Limited ("Schroders"), requiring the Board to convene a
general meeting of the Company's shareholders to consider
resolutions to remove the Company's Chief Executive Officer, Mr
Stephen Callaghan and all of the Existing Non-Executive Directors
of the Company, being Mr Roger Canham, the Company's chairman, Mr
Shaun Astley-Stone and Mr Abhai Rajguru, and to replace them with
the three Requisition Candidates, being Sir Richard Douglas
Lapthorne, Mr Nicholas Ian Cooper and Mr Mark William Hamlin (the
"Requisition").
The Board is required to convene a general meeting within 21
days of the receipt of the Requisition, with such meeting being
required to be held on a date not more than 28 days after the date
of the notice convening it, and accordingly the Circular contains
the notice of the General Meeting, which is to be held at 2.00 p.m.
on 5 May 2016 at the offices of Eversheds LLP, One Wood Street,
London EC2V 7WS, at which the Resolutions will be considered.
The purpose of the Circular is to explain the Board's views on
the Requisition in order that CPP Shareholders are fully informed
and able to make their voting decision on that basis.
2. BACKGROUND
The Requisition Notice proposes resolutions that four of the
five current Directors of the Company be removed and that the
Requisition Candidates be appointed to the Company's Board. The
Board was surprised by the Requisition given that the Company's
overall performance has been strong and significantly ahead of
previous market expectations and also given that the share price
has risen strongly over the past 12 months, seeing the Company move
from a market capitalisation of approximately GBP9.7 million at 31
December 2014 to a value of GBP106.6 million at the end of 2015.
Adjusting for the net equity capital raise of GBP18.5m in February
2015, this represents an increase of GBP78.4m or approximately 278%
growth.
The Board understands that Schroders (which controls just over
10 per cent. of the CPP Shares) and Sir Richard Lapthorne are
working together with Mr Hamish Ogston (who controls approximately
42 per cent. of the CPP Shares) in connection with the
Requisition.
Mr Ogston is the founder of the Group, was chairman of CPPL from
its inception until 2005, and thereafter a member of the board of
certain holding companies thereof (including the Company) through
to the IPO of the Company in 2010 and throughout the period when
the Company was subject to the FCA investigation and subsequent
censure, until resigning from the board of the Company in June
2013. Mr Ogston, either directly or through his family investment
vehicle, Milton Magna Limited, is a longstanding investment client
of Cazenove Capital Management, a trading name for Schroder &
Co. Limited which is an affiliate of Schroders, having been with
them since 2008.
Mr Ogston sought, in August 2014 and again in August 2015, to
secure his reappointment to the Board by exercising a right granted
to him to appoint a non-executive director, subject to compliance
with applicable laws, under the relationship agreement entered into
between him and the Company date 18 March 2010 in preparation for
the IPO of the Company and subsequently under the current
Relationship Agreement. Any appointment to the Board requires Mr
Ogston, like all other directors of the Company, to first be
approved by the FCA to carry out a controlled function in respect
of the Company's regulated subsidiaries, CPPL and HIL (the
"Regulated Subsidiaries"). Mr Ogston duly submitted applications to
be approved to carry out the controlled function which were
carefully reviewed and considered by the boards of the Regulated
Subsidiaries, who concluded that they were unable to submit the
applications to the FCA or the Prudential Regulation Authority as
the applications did not include certain information and assurances
requested by the respective boards from Mr Ogston and were
therefore considered incomplete. The boards of the Regulated
Subsidiaries concluded that they were not, at that time, satisfied
of Mr Ogston's overall suitability to hold a controlled function.
Mr Ogston has not, to date, attempted to appoint an alternative
candidate to represent his interests on the Board, as he is
entitled to do under the Relationship Agreement.
A copy of the explanatory statement initially provided by
Schroders for circulation to CPP Shareholders in connection with
the Requisition is set out in Schedule I to the Circular. The Board
notes that this explanatory statement provides no explanation of
Schroders' or the Requisition Candidates' strategic vision for CPP,
nor as to how they intend to achieve CPP's full business potential,
stating only that it is intended that a strategic and financial
review be conducted following their appointment, the results of
which will be reported to CPP Shareholders, in order to determine
the best way forward.
On 23 March 2016, a letter was sent to Schroders on behalf of
the Company raising certain questions in order to enable the Board
to understand better the circumstances and concerns that led
Schroders to issue the Requisition Notice. A copy of that letter,
together with Schroders' response to it by email received on 29
March 2016 and an email sent by the Company's solicitors in reply
(to which no response has been received), is set out in Schedule II
to the Circular.
Accordingly, on 31 March 2016, the Board, having sought to
engage with Schroders through the letter sent on 23 March 2016 but
with very limited success, issued a notice to Schroders under
section 793 of the Companies Act 2006 (the "Act"), seeking
disclosure of details of its interest in CPP Shares and in
particular of any arrangements to which Schroders is party in
relation to the exercise of any voting rights conferred by the
holding of CPP Shares. The notice issued to Schroders, together
with Schroders' response to that notice received on 7 April 2016,
is set out in Schedule III to the Circular.
A second notice was issued under section 793 of the Act and
pursuant to the terms of the Relationship Agreement dated 22
December 2014 to Mr Ogston on the same date, seeking disclosure of
details of his interest in CPP Shares and in particular of any
arrangements to which he is party in relation to the exercise of
any voting rights conferred by his holding of CPP Shares, and to
disclose any interaction between the Requisition Candidates and Mr
Ogston. The notice issued to Mr Ogston, together with his response
to that notice received on 7 April 2016, is set out in Schedule IV
to the Circular.
3. REASONS FOR THE BOARD'S RECOMMENDATION TO VOTE AGAINST THE RESOLUTIONS
The Board considers that it is not in the best interests of the
Company or of CPP Shareholders as a whole for the Requisition
Candidates, who the Board understands are not and have not in the
recent past been approved by the FCA or the PRA to carry out a
controlled function or similar, who have outlined no clear strategy
and who have indicated that they will require time to carry out a
strategic and financial review before they will be able to
formulate a new strategy, to be appointed to the Board in place of
the current Chief Executive Officer and the Existing Non-Executive
Directors.
Accordingly, the Board unanimously recommends that CPP
Shareholders vote against the Resolutions for the reasons set out
below.
3.1 The risks to the continuation of existing regulated
activities currently carried out by the Company's Regulated
Subsidiaries in the UK
The Regulated Subsidiaries in the UK, which have branches
internationally (and which in some jurisdictions rely on
passporting of their UK permissions), together currently account
for more than 70 per cent. of the Group's gross profit and more
than 60 per cent. of the Group's total revenue.
Given the Group structure and the crucial importance of the
Regulated Subsidiaries to the Company's operations, the Board has
consistently been advised that all Directors of the Company are
required to be approved to carry out controlled functions in
respect of the Regulated Subsidiaries, because even Non-Executive
Directors' decisions or actions will be regularly taken into
account by the Regulated Subsidiaries, including in relation to
setting and monitoring their business strategy and scrutinising the
approach of executive management and standards of the Regulated
Subsidiaries. Accordingly, at present, all of the Directors are
approved by the FCA to carry out controlled functions in relation
to the Regulated Subsidiaries and it is clear that the FCA expects
this to remain the case going forward where Non-Executive Directors
are influencing the decisions and activities of the Regulated
Subsidiaries in this manner. None of the current Directors took up
their appointment to the Board prior to their approval by the FCA
and, where appropriate, the PRA. The Board believes that this meets
FCA and PRA expectations.
(MORE TO FOLLOW) Dow Jones Newswires
April 08, 2016 02:00 ET (06:00 GMT)
The Board understands that none of the Requisition Candidates is
currently or has in the recent past been approved by the FCA or the
PRA to carry out a controlled function in respect of any regulated
financial services business. Should the Requisition Candidates be
appointed to the Board, they will be unable to carry out any part
of their role as directors that involves the exercise of any
strategic oversight or influence over the core business of the
Company and its Group until such time as they are approved
(assuming that they are able to satisfy the boards of the Regulated
Subsidiaries and the FCA and the PRA that they are fit and proper
persons to be approved to carry out a controlled function). The
Requisition Candidates have given no indication of how they propose
to address this fundamental obstacle to their management of the
Company and its Group in the interests of all CPP Shareholders,
customers, colleagues and other stakeholders.
The Board therefore believes that the appointment of the
Requisition Candidates to the Board would run an unnecessary risk
of causing significant disruption to the governance and operations
of the Regulated Subsidiaries, as well as causing significant
repercussions for the Company's and the Regulated Subsidiaries'
relationship with the FCA and PRA, which may cause the FCA and PRA
to re-evaluate the ongoing governance of the Regulated Subsidiaries
in light of regulatory expectations such that the ongoing renewal
activities of the Regulated Subsidiaries could be challenged.
This risk is increased by virtue of the fact that currently
Shaun Astley-Stone, Abhai Rajguru and Stephen Callaghan are also
Directors of the Regulated Subsidiaries, with Stephen Callaghan
holding the CF3 (Chief Executive) control function for CPPL. The
ongoing regulatory experience, skills and competence of the boards
of the Regulated Subsidiaries are critical to the Regulated
Subsidiaries continuing to meet regulatory requirements of good
governance such that they can continue to carry out their current
regulated activities. It is unclear what impact the removal of
these individuals from the Board would have on their directorships
of the Regulated Subsidiaries and whether they would, or would be
able to, remain in position as approved persons carrying out
controlled functions in respect of the Regulated Subsidiaries.
Given the materiality of the Regulated Subsidiaries to the
Group, any impact on their ability to continue current trading
activities, such as restrictions on or suspension or prohibition of
renewals of existing products (which represent the principal source
of revenue in the UK business), would have a significant adverse
financial impact on the Group.
The Company is in active discussions with the FCA regarding
restoring the Regulated Subsidiaries' full regulatory permissions.
Following discussions with the FCA, the Board is of the view that
the Company must demonstrate the cessation of prior management
practices and significant shareholder influence prior to any
reinstatement of the Regulated Subsidiaries' full regulatory
permissions. Such reinstatement is essential for the Regulated
Subsidiaries to develop and market regulated products, and to
support the free movement of cash around the Group to support
investment. These discussions with the FCA will not, in the Board's
view, be assisted, and indeed are likely to be significantly
adversely affected, by wide-ranging changes to the Company's and
the Group's governance structure, such as would arise if the
Requisition Candidates were to be appointed.
Any inability to regain full regulatory permissions will have a
material impact on the growth of the Group's business and its
longer term prospects. The VVOPs also materially impact the
Company's reputation and the Board believe that being seen to be
fully rehabilitated is a fundamental requirement to enable the
Group to build new relationships and drive further growth.
3.2 The future growth of the Company depends upon its ability to develop and market products
The Board has a clear and established strategy to grow the
Group's business by developing and marketing new products in its
core markets including the UK; to the extent that these include
regulated products, in line with the Group's strategy, this will
require reinstatement of CPPL's full regulatory permissions.
Accordingly, full reinstatement of regulatory permissions is a key
part of the Group's plans and the Group's management has made
significant progress on this journey. The products currently
offered by the Group have been reviewed in the context of customer
and current market needs, and new products have been created, the
first of which is expected to launch in the UK shortly. The
preparations for reinstatement of permissions include the
recruitment of key personnel to fill strategically significant
management roles to address weaknesses in the Regulated
Subsidiaries, and in relation to creating new products in support
of the Group's strategy.
Progress is likely to be impacted if the Company and its
management, as a result of the appointment of the Requisition
Candidates, are unable to create the conditions in the Company's
business necessary to maintain positive momentum with the FCA and
achieve reinstatement of CPPL's regulatory permissions. The
potential disruption to the Group's recovery and growth arising
from an inability to properly implement the Group's strategy would
have an adverse impact on the morale of management and key
employees. In this light the Board understands that all members of
the Company's executive management team, in respect of their
aggregate beneficial holdings of 3,795,000 CPP Shares (representing
approximately 0.44 per cent. of the issued share capital of the
Company), intend to vote against the Resolutions.
The Board's view is that the uncertainty arising from such
disruption will make it difficult to attract, retain and replace
suitably qualified employees, including in particular key members
of management hired to remedy past failings and implement the
current strategy, and will therefore be likely to have a material
adverse effect on both the Group's business and prospects and the
Company's 3.8 million customers worldwide.
3.3 Uncertainty arising from the appointment of the Requisition
Candidates may adversely impact the Group's relationship with key
stakeholders
The uncertainty generated by the Requisition may have a
significant adverse impact on the Group's relationship with its
lender, which in addition to the Group's partially drawn revolving
credit facility also provides settlement, collections and other
services to the Group and the Regulated Subsidiaries. The Group's
lender has been supportive of the Group over a sustained period
whilst it has navigated through the FCA Investigation, various
re-financings, the redress scheme and the very difficult trading
conditions resulting from these events. The Board understands that,
were the FCA to take any actions as a result of the removal of the
current Directors and the election of the Requisition Candidates,
the Group's lender would reassess their relationship with the
Group, the services they are willing to continue providing to the
Group and their assessment of the long term prospects and
creditworthiness of the Group. Additionally, were the FCA to impose
any further restrictions on the ability of the Regulated
Subsidiaries to renew existing regulated products, whether
temporarily or permanently, the resulting material adverse impact
on trading would materially impact the Group's ability to comply
with the covenants under its revolving credit facility.
The Board understands that the third party insurance
underwriters who currently underwrite more than 90 per cent. of the
insurance products held by the Group's UK customers see current
developments as potentially detrimental and are concerned about the
possibility of changes to the Group's senior leadership and the
potential adverse impact on the direction and stability of the
Company and the Regulated Subsidiaries, on the positive cultural
changes that have been made within the Company and on the Company's
and the Regulated Subsidiaries' relationship with the FCA.
Any significant deterioration in the Group's relationships with
key stakeholders may result in the suspension or withdrawal of, or
a significant and unfavourable revision of the terms of,
business-critical services currently provided to the Group, which
could have a material adverse impact on the Group's business and
prospects.
3.4 A Board with an appropriate balance of skills, independence,
knowledge and experience represents the best corporate governance
structure for CPP Shareholders
In the circular published on 24 December 2014 in connection with
the proposed equity capital raising and admission of the Company to
AIM that were completed in February 2015, on the basis of which
Schroders and Mr Ogston participated in the capital raising, the
Company's board (as it was then constituted) stated that it did not
envisage that the implementation of Schroders' proposals would
result in significant alteration to the standards of reporting and
governance that the Company maintained at the time as a
premium-listed company. The UK Corporate Governance Code requires
listed companies to have a formal, rigorous and transparent
procedure for the appointment of new directors and the search for
board candidates should be conducted, and appointments made, on
merit against objective criteria. In addition, it provides that
boards of directors of listed companies should have the appropriate
balance of skills, experience, independence and knowledge to enable
them to discharge their duties and responsibilities as directors
effectively. In particular, matters which might compromise the
independence of a director include where that director (i) holds
cross-directorships or has significant links with other directors
through involvement in other companies or bodies and (ii)
represents a significant shareholder. The Corporate Governance Code
for Small and Mid-size Quoted Companies
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April 08, 2016 02:00 ET (06:00 GMT)
published by the Quoted Companies Alliance, which many AIM
companies follow, contains recommendations that are substantially
similar in effect.
The Board firmly believes in the value of corporate governance,
in maintaining a sound framework for the control and management of
the Company and its subsidiaries and in maintaining an effective
and diverse board of directors in compliance with the UK Corporate
Governance Code.
Two of the Requisition Candidates, Sir Richard Lapthorne and
Mark Hamlin, are currently serving (as Chairman and Deputy Chairman
respectively) on the board of Cable & Wireless Communications
Plc and the third, Nicholas Cooper, was a member of that board
until March 2015. All of the Requisition Candidates are being put
forward for election by Schroders, whom the Board understands to be
working together with Sir Richard Lapthorne and Mr Hamish Ogston to
secure the appointment of the Requisition Candidates. Additionally,
none of the Requisition Candidates is currently or, so far as the
Board is aware, has ever been, approved by the FCA to carry out a
controlled function in respect of any regulated entity and no
approach has ever been made by any Requisition Candidate to the
board of either CPPL or HIL to submit such an application in
respect of any Requisition Candidate, nor, it is believed, do any
of the Requisition Candidates have any recent and relevant
experience of managing a regulated financial services business.
Although the Board has asked Schroders how it identified Sir
Richard Lapthorne, Nicholas Cooper and Mark Hamlin as appropriate
board members, it has to date received no meaningful response and
is unable to determine what rigorous and transparent procedure (if
any) was followed in selection of the Requisition Candidates and on
what objective criteria (if any) the Requisition Candidates were
and apparently remain judged suitable for the Company,
notwithstanding the Board's serious concerns as to their
appropriateness and the other impacts of the Requisition. In the
Board's view, this relative lack of transparency and the
significant and sudden escalation of normal dialogue with
institutional shareholders that the Requisition represents, is a
little surprising in light of the guidance issued by the Financial
Reporting Council in the UK Stewardship Code.
The proposed appointment of the Requisition Candidates in the
absence of a rigorous recruitment process lead by the Board means
the Board's, CPP Shareholders' and key stakeholders' (including the
FCA's) only knowledge of the Requisition Candidates is therefore
based almost entirely on what is publicly available.
The Board currently considers that, in light of publicly
available information and the very limited other evidence that has
been made available to it to date, the Requisition Candidates do
not have the appropriate balance of skills, experience,
independence and knowledge to enable them to discharge their duties
and responsibilities as directors of a regulated financial services
business. There are significant reasons to doubt their suitability
to be proposed as independent non-executive directors for this
reason alone and also in light both of their links to each other
through their long-standing involvement on the board of Cable &
Wireless Communications Plc and the fact that they are being
proposed by Schroders, a significant shareholder whom the Board
also understands to be working together with Mr Hamish Ogston, the
Company's largest single shareholder when his holding is aggregated
with that of Milton Magna Limited, his family investment
vehicle.
The Board considers that the interests of CPP Shareholders are
best served by a Board that is independent of, free from
significant influence from, and does not represent the narrow
interests of, any individual significant CPP Shareholder or
shareholding group. The proposed Resolutions will dramatically
reduce the level of independence on the Board going forward, if not
removing independent voices entirely. Under Schroders' proposals,
the composition of all of the board committees would also no longer
be compliant with the requirements of the UK Corporate Governance
Code.
The Board has always been, and will continue to be, open to
dialogue with all CPP Shareholders. In the Board's opinion,
replacing the Group's Chief Executive Officer and all of the
Existing Non-Executive Directors at this important time is
unnecessary and there is currently no evidence that any of
Schroders' candidates would add any significant new value to, or
would introduce significant enhancements or improvements to, the
Board and governance structure of the Company as it currently
stands. Instead, Schroders' current proposals would reduce the
independence on the Board, damage the Company's compliance with the
UK Corporate Governance Code and provide a voice to one particular
group of CPP Shareholders in preference to other CPP
Shareholders.
3.5 The Requisition has caused unnecessary disruption to, and
uncertainty within, the operations of the business at a time when
the Board wants to focus wholly on the trading performance of the
Group
The Board is focused on delivering the Group's strategy, which
is to focus on development of the Group's customer proposition,
developing new channels to market and performance marketing
underpinned by supporting its existing revenue stream, new income
generation, business transformation and cost control. The Board
remains confident of the direction in which the business is heading
and the progress being made.
As reported in the Group's Full Year Report for the year ended
31 December 2015 published on 24 March 2016, driven by the new
leadership team, the Group made significant financial and
operational progress in 2015. In particular, there has been
substantial improvement in profitability in 2015, with underlying
operating profit from continuing operations at GBP6.9 million (up
from GBP2.8 million in 2014) and underlying operating profit from
continuing and discontinued operations combined at GBP8.9 million
(compared to a GBP0.6 million loss in 2014). This level of
performance has required the leadership team to take decisions
which have materially improved the business in the past 12 months.
Compared to the business plan in place in early 2015, these
underlying operating profits are materially higher than the
forecasts made by the Board and leadership team in place at that
time. The Company's cash position at the end of 2015 was also GBP10
million ahead of the previous budget. The annual financial report
is available on the Group's website at
http://www.cppgroupplc.com/investor-relations/key-financial-data/financial-reports/.
The trading price of the CPP Shares has also benefited with a
significant increase in the market capitalisation of the Company
over the prior twelve month period, with the trading price
increasing to 12.50 pence at 31 December 2015 (resulting in a
market capitalisation of GBP106.6 million), from 5.63 pence at 31
December 2014 (resulting in a market capitalisation of GBP9.7
million) and basic earnings per share from continuing and
discontinued operations has improved to 2.72 pence per CPP Share
(compared to a 3.94 pence loss per CPP Share in 2014). This
substantial increase in shareholder value reflects the significant
progress made by the Board and senior leadership
The Company released its Full Year Report on 24 March 2016
showing significantly higher than forecast operating profit
performance. Since the Requisition was reported, the trading price
of the CPP Shares has moved from a closing price of 12.38 pence on
21 March 2016 to 9.62 pence on 7 April 2016, a decline of more than
22 per cent.
4. RECOMMENDATION
For the reasons set out above, the Board considers that the
Resolutions:
-- to remove Mr Stephen Callaghan, the Company's Chief Executive
Officer and to remove the Existing Non-Executive Directors of the
Company, being Mr Roger Canham, the Company's Chairman, Mr Shaun
Astley-Stone and Mr Abhai Rajguru; and
-- to replace them with the three Requisition Candidates, being
Sir Richard Douglas Lapthorne, Mr Nicholas Ian Cooper and Mr Mark
William Hamlin,
are, in each case, not in the best interests of the Company or
CPP Shareholders, as a whole.
The Board therefore unanimously recommends that all CPP
Shareholders vote against the Resolutions, as all the Directors
intend to do in respect of their aggregate beneficial holdings of
4,875,000 CPP Shares (representing approximately 0.57 per cent. of
the issued share capital of the Company).
5. ACTION TO BE TAKEN
CPP Shareholders will find, set out at the end of the Circular,
a Notice convening the General Meeting, to be held at 2.00 p.m. on
5 May 2016 at the offices of Eversheds LLP. One Wood Street, London
EC2V 7WS, at which the Resolutions will be considered. The full
text of the Resolutions is set out in the Notice. Voting at the
General Meeting will be by poll and not on a show of hands and each
CPP Shareholder entitled to attend and who is present in person or
by proxy will be entitled to one vote for each CPP Share held.
CPP Shareholders will find enclosed with the Circular a Form of
Proxy for use at the General Meeting or any adjournment thereof.
Whether or not CPP Shareholders intend to be present at the General
Meeting, they are requested to complete and sign the Form of Proxy
in accordance with the instructions printed on it so as to be
received by the Company's registrars, Capita Asset Services, at
PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as
soon as possible, and in any event, no later than 2.00 p.m. on 3
May 2016 (or, in the case of an adjournment, not later than 48
hours (excluding non-working days) before the time fixed for the
holding of the adjourned meeting).
(MORE TO FOLLOW) Dow Jones Newswires
April 08, 2016 02:00 ET (06:00 GMT)
If CPP Shareholders hold CPP Shares in CREST and they wish to
appoint a proxy or proxies for the General Meeting or any
adjournment(s) thereof by using the CREST electronic proxy
appointment service, they may do so by using the CREST proxy voting
service in accordance with the procedures set out in the CREST
manual. CREST personal members or other CREST sponsored members,
and those CREST members who have appointed a voting service
provider, should refer to that CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on
their behalf. Proxies submitted via CREST (under CREST ID RA10)
must be sent as soon as possible and, in any event, so as to be
received by the Company's registrars, Capita Asset Services, by no
later than 2.00 p.m. on 3 May 2016 (or, in the case of an
adjournment, not later than 48 hours (excluding non-working days)
before the time fixed for the holding of the adjourned
meeting).
CPP Shareholders wishing to complete their paper Form of Proxy
in line with the Board's recommendations should place an "X" in the
boxes under the heading "Against".
If CPP Shareholders have any questions relating to this
document, the General Meeting and/or the completion and return of
the Form of Proxy, they should please telephone Capita Asset
Services on 0871 664 0300. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. The
helpline is open between 9.00 a.m. and 5.30 p.m., Monday to Friday
(excluding public holidays in England and Wales). Different charges
may apply to calls from mobile telephones and calls may be recorded
and randomly monitored for security and training purposes. The
helpline cannot provide advice on the merits of the Requisition nor
give any financial, legal or tax advice.
The completion and return of a Form of Proxy (or the electronic
appointment of a proxy) will not preclude CPP Shareholders from
attending and voting in person at the General Meeting or any
adjournment thereof, if they wish to do so and are so entitled.
DEFINITIONS
The following definitions apply throughout this announcement
unless the context otherwise
requires:
"Act" the Companies Act 2006
"AIM" the AIM market operated
by the London Stock Exchange
"Board" the current board of directors
of the Company
"Company" or "CPP" CPPGroup Plc, registered
in England and Wales with
registered number 07151159
"CPP Shareholders" holders of CPP Shares
"CPP Shares" the ordinary shares of
1 pence each in the capital
of the Company, having
the rights set out in the
Company's Articles of Association
"CPPL" Card Protection Plan Limited
"CREST" the relevant system (as
defined in the Regulations)
in respect of which Euroclear
is the operator (as defined
in the Regulations)
"CREST Manual" the CREST manual consisting
of the CREST reference
manual; CREST international
manual; CREST central counterparty
service manual; CREST rules;
CCSS operations manual
and CREST glossary of terms
available at http://www.euroclear.com
"CREST Proxy Instruction" a properly authenticated
CREST message appointing
and instructing a proxy
to attend and vote in place
of a shareholder at the
General Meeting and containing
the information required
to be contained in the
CREST Manual
"Directors" the directors of the Company
whose names are set out
on page 4 of the Circular
"Euroclear" Euroclear UK & Ireland
Limited
"Existing Non-Executive Mr Roger Canham, Mr Shaun
Directors" Astley-Stone and Mr Abhai
Rajguru
"FCA" the United Kingdom Financial
Conduct Authority
"Form of Proxy" the Form of Proxy enclosed
with this document, for
use by CPP Shareholders
in connection with the
General Meeting
"General Meeting" the general meeting of
the Company to be held
at 2.00 p.m. on 5 May 2016
(and any adjournment thereof)
for the purposes of considering
and, if thought fit, passing
the Resolutions
"Group" the Company and its Subsidiaries
"HIL" Homecare Insurance Limited
"Notice" the notice of the General
Meeting set out in the
Circular
"PRA" the Prudential Regulation
Authority
"Regulated Subsidiaries" Card Protection Plan Limited
and Homecare Insurance
Limited
"Regulations" the Uncertificated Securities
Regulations 2001 of the
United Kingdom
"Requisition" has the meaning given thereto
on page 4 of the Circular
"Requisition Candidates" Sir Richard Douglas Lapthorne,
Mr Nicholas Ian Cooper
and Mr Mark William Hamlin
"Requisition Notice" has the meaning given on
page 4 of the Circular
"Relationship Agreement" the relationship agreement
entered into between the
Company and Mr Hamish Ogston
dated 22 December 2014
"Resolutions" the ordinary resolutions
to be proposed at the General
Meeting (and set out in
the Notice contained in
the Circular):
* to remove the Company's Chief Executive Officer, Mr
Stephen Callaghan, and to remove the three Existing
Non-Executive Directors of the Company, being Mr
Roger Canham, the Company's chairman, Mr Shaun
Astley-Stone and Mr Abhai Rajguru; and
* to replace them with the three Requisition Candidates,
being Sir Richard Douglas Lapthorne, Mr Nicholas Ian
Cooper and Mr Mark William Hamlin
"Schroders" Schroder Investment Management
Limited
"Subsidiary" has the meaning given thereto
in section 1159 of the
Companies Act 2006
"UK" or "United Kingdom" the United Kingdom of Great
Britain and Northern Ireland
"UK Corporate Governance the UK Corporate Governance
Code" Code as published by the
Financial Reporting Council
"VVOPs" the voluntary variations
of permission of the Regulated
Subsidiaries entered into
on 15 November 2012
"pence", "pounds sterling", the lawful currency of
"sterling", "GBP" or "p" the United Kingdom
All times referred to are London time unless otherwise
stated.
All references to legislation in this document are to the
legislation of England and Wales unless the contrary is indicated.
Any reference to any provision of any legislation shall include any
amendment, modification, re-enactment or extension thereof.
Words importing the singular shall include the plural and vice
versa, and words importing the masculine gender shall include the
feminine or neutral gender.
This information is provided by RNS
The company news service from the London Stock Exchange
END
NOGUBRORNOASRUR
(END) Dow Jones Newswires
April 08, 2016 02:00 ET (06:00 GMT)
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