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FLASH: De La Rue sells Cash Processing Solutions

23 May 2016 07:20

Banknote printer De La Rue has completed the sale 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 and that 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 totalling £1.5m will be payable in two equal instalments 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.

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