De La Rue plc (De La Rue or the “Company” or the “Group”) has announced that it has completed the sale of the entire issued share capital of Cash Processing Solutions Limited and related subsidiaries (together “CPS”) to CPS Topco Limited, a company owned by Privet Capital.
CPS is one of the market leaders providing cash processing hardware, software and associated services used in banknote processing to manage banknote production, cash in circulation and the maintenance of banknote authenticity, condition and fitness. Following an extensive review of the business, De La Rue has concluded that cash processing is non-core to the Group’s business, hence CPS does not fit in its current product portfolio and growth strategy.
In the year ended 28 March 2015, CPS generated sales of £49.3m and an operating profit of GBP £0.4m. In the year ended 26 March 2016, CPS is expected to generate sales of c£34m and an operating loss of c£8m. The gross assets of CPS were £32.8m at 26 September 2015.
Under the terms of the agreement, De La Rue has received £2.1m upon completion of the transaction. In addition, a deferred consideration totaling £1.5m will be payable in two equal installments on the first and second anniversaries of the transaction. The Group will also be entitled to a further contingent consideration with a maximum payout of £6.5m in the event that certain performance related and event driven milestones are achieved by CPS. Taking account of associated costs, the transaction is anticipated to be cash neutral overall to the Group at completion. Separately, the Group has entered into a strategic partnership with CPS.
In relation to the sale, the Group expects to recognise a £23.4m non-cash exceptional charge in 2015/16.
Commenting on the transaction, De La Rue’s CEO Martin Sutherland said,
“Following a root and branch review, we have concluded that whilst CPS has a good product profile and long term customer relationships, we do not believe that this is a business which should form part of our portfolio. The sale will enable De La Rue to focus on its core business and future growth areas, as well as allow CPS to achieve its full potential under the new ownership.
“We have entered into a strategic partnership with CPS, which will ensure that both De La Rue’s customers and CPS’s customers continue to benefit from each company’s expertise over the long term.”
The transaction constitutes a class 2 transaction for the purposes of the Financial Conduct Authority’s Listing Rules.
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De La Rue plc +44 (0)1256 605000
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About De La Rue
De La Rue is a leading commercial banknote printer, security paper maker and provider of security products and software solutions and, as a trusted partner of governments, central banks and commercial organisations around the world, is at the forefront of the battle against the counterfeiter.
As the world's largest commercial banknote printer, De La Rue provides customers with a fully integrated range of sophisticated products and services which are available either individually or as a whole. This includes a leading design capability, production of innovative security components, manufacture of security paper and polymer substrates and sophisticated printing of banknotes, all contributing to trust in the integrity of currencies.
De La Rue is the world's largest commercial passport manufacturer in an environment of increasing global concern over security at national boundaries and border control. De La Rue also produces a wide range of other security products, including tax stamps for governments who are seeking to combat illicit trade and collect excise duties. Other products include authentication labels, assuring purchasers of product validity, and government identity documents.
The company also provides a range of specialist services and software solutions including government identity schemes, product authentication systems and cash management solutions.
De La Rue is listed on the London Stock Exchange (LSE:DLAR). For further information visit www.delarue.com.