TIDMDLAR
RNS Number : 6006D
De La Rue PLC
01 February 2018
DE LA RUE PLC
De La Rue secures strategic relationship for its paper
business
1 February 2018
-- Significant milestone in delivering our strategy to transform
De La Rue into a less capital intensive, technology-led product and
service provider
-- Strengthens De La Rue's balance sheet and enables further
investment in innovative technology solutions for the currency,
identity and brand protection markets
-- Secures long term paper supply for De La Rue's print
requirements with a ten year supply contract
-- Limits De La Rue's exposure to the external paper market
De La Rue plc ("De La Rue" or the "Group"), the world's leading
security and anti-counterfeiting provider for banknotes and
personal identity, today announces that it has entered into a
strategic agreement with Epiris Fund II ("Epiris") for the Group's
paper business, comprising the Overton paper mill and the Bathford
paper mill, and to be named Portals De La Rue Limited ("Portals De
La Rue").
Under the terms of the agreement, Epiris, together with
management, will acquire a 90% shareholding in Portals De La Rue
through a newly formed company WhickerCo Limited, for a cash
consideration of cGBP61m payable upon completion. This equates to
an enterprise value of GBP68m and a multiple of 12.8x average
adjusted EBIT 2015-18. De La Rue will retain the remaining 10%
interest.
De La Rue's paper business has a capacity of c13,000 tonnes per
year which is split approximately equally between internal use and
external sales. As part of the transaction, Portals De La Rue will
commit to supply pre-agreed volumes of paper to De La Rue with a
pre-agreed price mechanism for the next ten years. This will meet
most of the Group's anticipated internal requirements for finished
banknotes and security documents. In addition, De La Rue will be
Portals De La Rue's preferred supplier for security features.
Following completion, the existing management team of De La Rue's
paper business will remain with Portals De La Rue.
This transaction will limit De La Rue's exposure to the external
paper market, while securing paper supplies and maintaining the
Group's position as the world's leading integrated banknote
supplier. It will also enable the Group to strengthen its balance
sheet and to focus on providing innovative technology solutions for
the currency, identity and brand protection markets.
In the financial year to March 2018, De La Rue's paper business
is expected to generate sales of cGBP120m, of which cGBP50m is
intra-group transactions, and an EBIT of cGBP10m. Following the
transaction, De La Rue expects to reduce its ongoing overhead costs
by cGBP4m by FY2019/20.
De La Rue expects to incur approximately cGBP4m exceptional cost
in relation to the transaction in FY 2017/18. In addition, the
Group expects to take a non cash provision of GBP4m for the
possibility that certain prescribed conditions may not be met. The
transaction is expected to complete within the first half of this
calendar year.
Commenting on the transaction, Chief Executive Officer of De La
Rue Martin Sutherland said:
"We are pleased to have found the right partner for our paper
business. It is another significant milestone as we transform De La
Rue into a less capital intensive, technology-led product and
service provider.
"This transaction strengthens our balance sheet and enables us
to invest further in technology and the strategic growth areas of
Security Features, Polymer, Identity Solutions and Product
Authentication.
"De La Rue has been supplying banknotes for central and
commercial banks around the world for over 200 years, and will
continue to do so supported by Portals De La Rue. As the world's
largest commercial banknote supplier, we remain committed to
providing the best integrated currency solutions to our customers.
Meanwhile, we are also diversifying our business by strengthening
our offerings for the identity and brand protection markets.
"In Epiris, we have found a strong partner with extensive
experience in the banknote substrate market that will have a
singular focus on growing the paper business for the long term.
This is good for De La Rue and its customers, as well as for
Portals De La Rue, its customers and employees."
An analyst call will be held at 8:30am GMT on 1 February 2018.
Dial-in for the conference call is 0844 800 3850, passcode: 370
700. An archive of the call is available for a week from 2 February
2018. Dial-in for the archive call is 0800 032 9687, passcode: 7603
9129. The call can be accessible via an audio webcast on our
website www.delarue.com.
De La Rue plc's LEI code is 213800DH741LZWIJXP78.
The person responsible for the release of this announcement on
behalf of De La Rue plc is Ed Peppiatt (General Counsel and Company
Secretary)
Enquiries:
De La Rue plc +44 (0)1256 605000
Martin Sutherland Chief Executive Officer
Jitesh Sodha Chief Financial Officer
Lili Huang Head of Investor Relations
Brunswick +44 (0)207 404 5959
Katharine Spence
Stuart Donnelly
Notes:
In the financial year ending 25 March 2017, De La Rue's paper
business generated EBIT of GBP12.0m. The gross assets of the
business were GBP91.5m as at 30 September 2017.
About De La Rue
De La Rue's purpose is to enable every citizen to participate
securely in the global economy. As a trusted partner of
governments, central banks and commercial organisations, De La Rue
provides products and services that underpin the integrity of
trade, personal identity and the movement of goods.
As the world's largest designer and commercial printer of
banknotes, De La Rue designs, manufactures and delivers banknotes,
banknote substrates and security features to customers in a world
where currency will continue to be a key part of the developing
payments eco-system. De La Rue is the only integrated supplier of
both paper and polymer banknotes, and creates security features
that ensure banknotes are protected against counterfeiting.
De La Rue is the world's largest commercial designer and printer
of passports, delivering national and international identity tokens
and software solutions for governments in a world that is
increasingly focused on the importance of a legal and secure
identity for every individual.
De La Rue also creates and delivers secure product identifiers
and 'track and trace' software for governments and commercial
customers alike to help to tackle the challenge of illicit or
counterfeit goods and the collection of revenue and excise
duties.
De La Rue is listed on the London Stock Exchange (LSE:DLAR). For
further information visit www.delarue.com
Cautionary note regarding forward-looking statements
This announcement may contain statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "plans", "goal", "target",
"aim", "may", "will", "would", "could" or "should" or, in each
case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not
historical facts and include statements regarding the intentions,
beliefs or current expectations of the directors of De La Rue or
the Group concerning, amongst other things, the results of
operations, financial condition, prospects and strategies of De La
Rue.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may be
beyond De La Rue's ability to control or predict. Forward-looking
statements are not guarantees of future performance. The Group's
actual results of operations and financial condition may differ
materially from the impression created by the forward-looking
statements contained in this announcement.
Other than in accordance with its legal or regulatory
obligations, De La Rue does not undertake any obligation to update
or revise publicly any forward-looking statement, whether as a
result of new information, future events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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