Interim Results
De La Rue PLC
02 December 2004
INTERIM STATEMENT
SIX MONTHS TO 25 SEPTEMBER 2004
Key Financials
Half Year Half Year
2004/2005 2003/2004**
£m £m
Sales 318.3 290.1
Profit before tax, exceptional items and goodwill
amortisation* 25.8 19.8
Profit before tax 12.0 0.2
Headline earnings per share* 10.1p 8.1p
Earnings per share 2.8p (2.2)p
Cash inflow from operating activities 39.5 35.0
Net cash at end of period 61.6 13.9
Dividends per share 4.7p 4.4p
* before exceptional charges of £13.1m (2003/2004 £17.9m) and goodwill
amortisation of £0.7m (2003/2004 £1.7m)
** restated for the adoption of UITF Abstract 38 (Accounting for ESOP Trusts).
This has resulted in an increase in the previously reported operating profit by
£0.1m.
Trading highlights
• Strong half year performance underpinned by the exceptionally strong
Currency order book at the beginning of the year.
• Continued excellent cash flow generation with a net cash inflow from
operating activities of £39.5m (2003/2004 £35.0m) aided by good working
capital management. The Group ended the first half with net cash of £61.6m.
• An increase in the Interim dividend of 6.8 per cent to 4.7p per share.
Strategic Review
A strategy to deliver enhanced value to shareholders through:
• Simplifying the Group structure
• Focusing De La Rue on businesses where we have a strong competitive
advantage
• Lowering the Group's cost base - annualised cost savings of £8m in Cash
Systems targeted from restructuring costs of £17.5m (including severance
costs of £14.0m)
• Driving productivity improvement
• Eliminating current year losses in the Sequoia Voting Systems business from
2005/2006 at an anticipated cost of £6.0m (including deferred
consideration of £2.0m)
• At the appropriate time, surplus cash to be returned to shareholders.
Nicholas Brookes, Chairman of De La Rue plc, commented on the results:
'De La Rue is pleased to report excellent first half results showing a strong
performance in the Currency division and the benefits of the continuing
reorganisation programmes. We are announcing today further actions to focus the
Group on those businesses where we have a strong competitive advantage.
Generating efficiencies and overhead savings will also be a major objective in
order to improve year on year performance, our competitiveness and the returns
on our assets.'
'The Board is confident of the cash generative nature of our businesses, which
will be significantly enhanced by the actions we are now taking. This will
provide an opportunity to return surplus cash to shareholders but our first
priority will be to deliver on the restructuring programme announced today.
Given the strong first half and good visibility in our principal markets, the
Board remains confident of the full year outlook for the Group.'
For further information please contact:
Stephen King Group Finance Director +44 (0)1256 605307
Mark Fearon Head of Corporate Affairs +44 (0)1256 605303
Richard Mountain Financial Dynamics +44 (0)20 7269 7291
2 December 2004
A STRATEGY TO DELIVER ENHANCED VALUE TO SHAREHOLDERS
The Board is today outlining its strategy to deliver enhanced value to
shareholders. The strategic review undertaken in the first half of 2004/2005 has
allowed us to define those areas where we have a strong competitive advantage
and can simplify the Group. These activities, we believe, can also deliver
superior and sustained cash generation. The focus of our activities going
forward will be on products and services for which we can establish, or maintain
and build upon our strong competitive position.
Future strategy
Following the restructuring actions identified below, De La Rue will comprise
two principal areas of activity, Security Paper and Print and Cash Systems, with
strong market positions and attractive cash generation characteristics. The
Group's principal efforts will be in generating organic growth and operational
improvements.
It is the Board's intention that surplus cash will be returned to shareholders
through a combination of progressive dividends and, at the appropriate time,
capital returns.
Outcome of the Strategic Review
The Board's principal conclusions and the consequent future strategic focus of
the Group's activities are summarised below:
• Build on the Currency business - by maintaining its market leadership
position through selective investment in R&D. The Currency business,
while mature, provides attractive returns, is cash generative and has a
strong competitive position.
• Continue to improve the quality of earnings in Security Products -
following the consolidation of the business around a core manufacturing base
and high value added products, the Board believes there is further potential
to develop this business. The focus will be on the authentication labels,
passport and fiscal stamps markets and a broadening of the current customer
base.
• Support and develop strong position in Teller Automation - De La Rue
has a strong market position as the global market leader in Teller
Automation products serving the retail bank sector. The Board believes there
is further potential to develop this business through a greater focus on the
key growth markets, particularly North America, together with driving
further operational productivity improvements.
• Revitalise the Sorter business - there are attractive segments of
this market where De La Rue can compete successfully and which complement
the Group's Currency operations.
• Optimising earnings for the OEM Mechanisms and Desktop Products businesses -
through the rationalisation of the manufacturing capacity and optimising the
supply chain.
In line with this strategy the Board is today announcing the following immediate
actions:
• A streamlining of Cash Systems;
- Removing a layer of management
- Implement a simplified organisation structure
- A cessation of trials / support to large retail stores
- A phased exit from Portsmouth UK manufacturing site by 2006
- Implementation of a cost reduction programme - annualised cost savings
of approximately £8m are targeted from cash restructuring costs in the
order of £17.5m (primarily severance costs of £14.0m) from 350
redundancies, subject to employee consultation.
- The majority of the costs are anticipated to be charged in the second
half of 2004/2005 and are expected to be incurred over the next 18
months.
In addition to the cash costs identified above, the goodwill of £11.5m relating
to the acquisition of the Portuguese ATM business, acquired from Papelaco in
2002, has been written off in the first half. This arises from an anticipated
loss of a significant portion of service revenue in 2005/2006 following a recent
tender from a key customer. Steps will now be taken to ensure the business
trades at broadly a break even position in 2005/2006 and the costs associated
with these actions are included in the restructuring costs outlined above.
• Eliminate Sequoia Voting Systems losses by financial year end;
- The Board has decided to exit the Sequoia business by the year end
2004/2005, which will be achieved either through a sale or a significant
repositioning and downsizing of its activities.
- Total costs of £6.0m are anticipated to be charged in the second half.
This includes an amount for the acquisition of the remaining 15 per cent
of the business from Jefferson Smurfit Group Ltd in accordance with the
original purchase agreement. These proposals are subject to employee
consultation, which has now begun. In the event a sale is not
successfully completed, the operating losses in Sequoia are expected to
be substantially eliminated from 2005/2006.
• Group Actions;
In addition to the immediate actions announced today, steps are being taken to
simplify De La Rue's structure and to further invigorate management throughout
the Group. In particular:
- Accountability for business units will be clearly defined;
- Productivity improvements will become an area of key focus; and
- Controls over working capital and capital expenditure will be further
emphasised.
Group Results
Turnover increased by 9.7 per cent from £290.1m to £318.3m and profit before
tax, exceptional items and goodwill amortisation, was also strongly ahead at
£25.8m* (2003/2004 : £19.8m*). The excellent first half result shows the benefit
of an exceptional opening order book in Currency and, importantly, the benefits
of previous reorganisation programmes.
Headline earnings per share increased by 2.0p to 10.1p. Basic earnings per share
were 2.8p compared with a loss per share of 2.2p last year.
An excellent first half in Currency was the key contributor to the strong
operating result in the Security Paper and Print activities, where operating
profits (before exceptional income of £0.4m and goodwill amortisation credit of
£0.3m) were up £7.1m to £20.9m. This was primarily due to the benefit from the
unwinding of an exceptionally good Currency order book at the beginning of the
year. The business goes into the second half with a strong order book in both
papermaking and print. The successful implementation of the rationalisation
programme in the Security Print business, initiated last year and now largely
complete, coupled with strong volumes of authentication labels and fiscal stamps
also contributed to a significantly improved first half performance in the
Security Products business.
In Cash Systems, first half revenues of £142.0m and operating profit of £2.4m**
were in line with our expectations and last year. The impact of foreign
exchange, in particular a weakening US Dollar, had a negative impact of £3m on
operating profit compared to the first half of 2003/2004. The result reflected g
ood teller automation volumes in the first half, offset by lower than
anticipated large sorter volumes. Overall, revenues continue to reflect low
growth outside North America, but cost reduction and productivity benefits are
expected to make an impact on bottom line margins in the second half. We are
announcing today a reorganisation of the division, which will result in a lower
cost base and a clear focus on those profitable products and services.
Cash flow remains a key strength of the Group with a net cash inflow from
operating activities of £39.5m representing a further improvement on the good
performance achieved in the first half of last year (2003/2004 : £35.0m) and
reflecting increased profits and improved working capital management,
principally debtors and stock. The unusually high level of customer advance
payments did not unwind as quickly as had been anticipated and was at £33.6m
compared to £33.1m at the start of the year. This is now expected to return to
more historical trading levels over the course of the second half. The Group
ended the half-year with net cash of £61.6m, compared with net cash of £41.1m at
the start of the year.
* before exceptional charges of £13.1m (2003/2004 £17.9m) and goodwill
amortisation of £0.7m (2003/2004 £1.7m)
** before exceptional charges of £13.5m and goodwill amortisation of £1.0m
Dividend
In line with the Group's progressive dividend policy and the Board's continued
confidence in the cash generation of the business, an increased interim dividend
of 4.7p will be paid on 19 January 2005 to shareholders on the register on 17
December 2004, representing an increase of 6.8 per cent on the interim 2003/
2004.
Board Changes
As previously announced, Nicholas Brookes succeeded Sir Brandon Gough as
non-executive Chairman after the Annual General Meeting on 22 July 2004. Leo
Quinn was appointed as Group Chief Executive on 31 May 2004. In addition,
following these changes, Michael Jeffries became Chairman of the Remuneration
Committee and the Company's senior independent non-executive director.
UK Pension Scheme
The Group accounts for pensions in accordance with SSAP24. The charge in the
first half of this year was £5.4m compared with £5.0m in 2003/2004.
As previously announced, the Company is introducing a series of structural
changes to the UK Pension Scheme. This includes a revised investment strategy to
increase progressively the proportion of Scheme investments in bonds. The
Company closed the final salary section of the Scheme to new entrants from 1
July 2004. Company contribution rates were increased from 6.1 per cent of
pensionable salaries in 2002/2003 to 17 per cent from January 2004 onwards.
Members' contributions will also increase from 5 per cent to 7 per cent of
pensionable salary by 1 April 2005, with Company cash contributions reducing
accordingly. In addition, the Company made a lump sum contribution to the
Pension Scheme of £6.5m in 2003/2004.
We believe that these actions will continue to ensure the ongoing financial
strength of De La Rue's pension Scheme. The improvement in equity markets over
the course of 2003/2004, combined with the changes outlined above has resulted
in the Scheme being broadly fully funded on an ongoing actuarial basis.
OPERATING REVIEWS
Security Paper and Print
2004/05 2003/04 2003/04
Half Year Half Year Full Year
£m £m £m
-------- ---------- ----------
Sales 167.8 130.0 335.7
Operating profit* 20.9 13.8 42.4
* before exceptional income of £0.4m (2003/2004 : £(0.8)m) and goodwill
amortisation credit of £0.3m (2003/2004 : £0.2m).
Currency
Operating profits in the Currency business were significantly ahead of the
equivalent period last year, driven by a 51 per cent increase in banknote
volumes. This reflected the strong order book, with which the banknote business
began the financial year and a continued high level of overspill activity. The
high order book reflected a backlog of orders arising from the processing of the
exceptional Iraq contract during the second half of last year. The banknote
paper business, which benefited significantly during the first half of last year
from the Iraq order, in contrast had a weaker first half in the current year,
volumes down 11 per cent and some pressure on input prices.
Responsibility for the De La Rue Tapes business located in West Houghton, UK,
was transferred to Currency division in April 2004. The trading name has been
changed to De La Rue Security Threads to reflect the new strategic emphasis on
threads for currency and high security documents. The business has exited its
non-security markets over the past six months. The former Bank of England
printing works at Debden continues to perform in line with our expectations.
After the initial integration and restructuring phase, the focus is now on
driving operational performance while continuing to meet the Bank of England's
banknote requirements.
The Currency business enters the second half with a good order book,
particularly in banknotes where there has been a steady order input to the
business in the first half. The business therefore has good visibility for the
second half and anticipates a performance in line with historic phasing, but
well down on last year's exceptional second half result.
Security Products
The key actions announced in November 2003, are now largely complete. The
closure of the Peterborough cheque printing operation was completed during the
first half and the closure of the Byfleet site is on course to complete before
the end of the calendar year. Operational cost savings and a focus on higher
margin products are now starting to show through and, together with strong
volumes of authentication labels and fiscal stamps and passports, resulted in a
year on year improvement in Security Products performance at the half year.
Cash Systems
2004/05 2003/04 2003/04
Half Year Half Year Full Year
£m £m £m
-------- ---------- ----------
Sales 142.0 142.2 302.6
Operating profit* 2.4 2.2 8.8
* before exceptional items of £13.5m (2003/2004 : £1.9m) and goodwill
amortisation of £1.0m (2003/2004 : £1.6m)
In Cash Systems, first half revenues of £142.0m were in line with last year. O
perating profits of £2.4m (before exceptional charges of £13.5m and goodwill
amortisation of £1.0m) were marginally ahead of last year's result of £2.2m and
in line with our expectations. This primarily reflected savings from the ongoing
cost reductions and was achieved despite the negative impact of foreign exchange
on operating profit, which was £3m higher in the first half compared with 2003/
2004. Divisional revenues continue to reflect low growth outside North America,
but cost reduction and productivity benefits are expected to make a positive
impact on bottom line margins in the second half. Delays in ordering decisions
for several major projects by commercial banks affected volumes in the sorter
business. The OEM, Desktop Products and service businesses performed in line
with our expectations. We are announcing today a major reorganisation of the
division, which will result in a lower cost base and a clear focus on profitable
products and services.
Sequoia Voting Systems
2004/05 2003/04 2003/04
Half Year Half Year Full Year
£m £m £m
-------- ---------- ----------
Sales 8.5 17.9 44.2
Operating loss* (2.7) (1.7) (1.9)
* before exceptional items of £nil (2003/2004 : £12.6m) and goodwill
amortisation of £nil (2003/2004 : £0.3m)
As expected, the Sequoia Voting Systems business saw significantly reduced sales
volumes in the run up to the US Presidential Election on 2 November 2004.
Consequently, the business reported a first half operating loss of £2.7m
reflecting the lower sales volumes and the need to provide higher levels of
support to our customers during the November election process. However, the loss
was smaller than the Board had anticipated at the start of the year, and
reflects tighter cost control across the business.
Associates
Profit from associates before interest and tax was £4.2m in the first half of
2003/2004 compared with £5.6m in the prior period. The main associated company
is Camelot, the UK lottery operator, which reported an improved sales
performance up 5 per cent on the previous half year, reflecting the introduction
of new games and sales channels. Profits were lower due to the phasing of
marketing expenditure in 2003/2004.
Interest
The Group's net interest income of £1.0m reflected the Group's strong cash
position and compared with a net charge of £0.1m last year.
Taxation
The underlying effective tax rate excluding exceptional items and goodwill
amortisation was 27.4 per cent (2003/04 : 26.0 per cent). We expect that, in the
absence of unforeseen events, the tax rate for the full year will be at a
similar level.
Exceptional Items
Cash Non Cash Total
£m £m £m
Reorganisation costs - Cash Systems 2.0 - 2.0
Income from investment previously impaired (0.4) - (0.4)
Goodwill impairment - Portuguese ATM business - 11.5 11.5
------- ------- -------
Exceptional pre-tax costs 1.6 11.5 13.1
------- ------- -------
Cash flow
The net cash inflow from operating activities was £39.5m in the first half,
compared with £35.0m in the first half of 2003/04 due to increased profits and
favourable working capital movements. Capital expenditure of £8.7m was £4.4m
lower than last year.
During the first half the Company completed the disposal of the freehold of its
High Wycombe facility in the UK. This follows the previously announced
restructuring of manufacturing facilities in Security Products, as a result of
which the company ceased production at the site last year. The net proceeds,
including the sale of a small amount of land at Overton also completed in the
first half, were £6.2m in cash and serve to reduce the net cost of the
restructuring programme
The overall net cash flow was positive by £20.5m (2003/2004 : £5.7m inflow),
resulting in closing net cash of £61.6m at the end of the period compared with
£13.9m net cash at the end of the first half of last year, and £41.1m at the
start of the year.
Outlook
Given the strong first half and good visibility in our principal markets the
Board remains confident of the full year outlook for the Group.
-ends-
Notes to Editors
1. High resolution images can be downloaded from NewsCast at www.newscast.co.uk
2. De La Rue is the world's largest commercial security printer and papermaker,
involved in the production of over 150 national currencies and a wide range
of security documents such as travellers cheques and vouchers. The Company
is pioneering new technologies worldwide in government identity solutions
for national identification, drivers licence, passport issuing schemes and
election systems. Employing over 6,500 people across 31 countries, it is
also a leading provider of cash handling equipment and software solutions to
banks and retailers worldwide, helping them to reduce the cost of handling
cash.
GROUP PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED 25 SEPTEMBER 2004
2004/05 2003/04 2003/04
(restated)
Half Half Full
Year Year Year
Notes £m £m £m
Turnover
---------- ---------- ----------
1 Continuing operations 318.3 290.1 682.5
---------- ---------- ----------
----------------------------------------------------------------------------
Operating profit
---------- ---------- ----------
1 Continuing operations 20.6 14.3 49.3
2 - Exceptional costs (2.0) (2.7) (15.2)
2 - Income from investments previously 0.4 - -
impaired ---------- ---------- ----------
---------- ---------- ----------
Operating profit before goodwill 19.0 11.6 34.1
amortisation
Goodwill amortisation
2 - Exceptional costs (11.5) (12.6) (18.7)
- Other (0.7) (1.7) (2.5)
---------- ---------- ----------
1 Group operating profit/(loss) 6.8 (2.7) 12.9
Share of profits of associated companies 4.2 5.6 10.0
---------- ---------- ----------
Total operating profit 11.0 2.9 22.9
2 (Loss)/profit on disposal of fixed assets - (2.6) 0.2
----------------------------------------------------------------------------
Profit on ordinary activities before 11.0 0.3 23.1
interest ---------- ---------- ----------
Net interest: Group 1.0 (0.2) (0.6)
Associates - 0.1 -
---------- ---------- ----------
1.0 (0.1) (0.6)
----------------------------------------------------------------------------
Profit on ordinary activities before 12.0 0.2 22.5
taxation
Tax on profit on ordinary activities (6.3) (3.7) (10.0)
----------------------------------------------------------------------------
Profit/(loss) on ordinary activities after 5.7 (3.5) 12.5
taxation
Equity minority interest (0.8) (0.3) (0.4)
----------------------------------------------------------------------------
Profit/(loss) for the period 4.9 (3.8) 12.1
Dividends (8.4) (7.5) (24.8)
----------------------------------------------------------------------------
Transferred from reserves (3.5) (11.3) (12.7)
----------------------------------------------------------------------------
3 Earnings per ordinary share 2.8p (2.2)p 6.8p
Diluted earnings per ordinary share 2.8p (2.2)p 6.8p
3 Headline earnings per ordinary share 10.1p 8.1p 24.2p
before exceptional items & goodwill
amortisation
----------------------------------------------------------------------------
Dividends per ordinary share 4.7p 4.4p 14.2p
----------------------------------------------------------------------------
GROUP BALANCE SHEET
AT 25 SEPTEMBER 2004
2004/05 2003/04 2003/04
(restated)
Half Half Full
Year Year Year
£m £m £m
Fixed assets
Intangible assets 16.4 36.1 28.2
Tangible assets 160.2 164.5 164.4
Investments : Associates 13.5 13.9 13.2
Other investments 0.2 0.2 0.2
--------------------------------------------------------------------------------
190.3 214.7 206.0
--------------------------------------------------------------------------------
Current assets
Stocks 96.5 112.1 99.7
Debtors 96.0 118.7 116.6
Deferred taxation 35.2 31.1 33.1
Cash at bank and in hand 101.9 57.3 85.5
--------------------------------------------------------------------------------
329.6 319.2 334.9
Creditors: amounts falling due within one year
Short term borrowings (5.3) (2.1) (8.3)
Other creditors (200.8) (227.2) (214.5)
--------------------------------------------------------------------------------
Net current assets 123.5 89.9 112.1
--------------------------------------------------------------------------------
Total assets less current liabilities 313.8 304.6 318.1
Creditors: amounts falling due after more than
one year
Long term borrowings (35.0) (41.3) (36.1)
Other creditors (11.0) (0.5) (13.6)
Provisions for liabilities and charges (50.7) (44.7) (50.8)
--------------------------------------------------------------------------------
217.1 218.1 217.6
--------------------------------------------------------------------------------
Capital and reserves
Called up share capital 45.8 45.5 45.8
Share premium account 14.8 13.0 14.6
Revaluation reserve 1.8 1.8 1.8
Capital redemption reserve 3.5 3.5 3.5
Other reserve (83.8) (83.8) (83.8)
Profit and loss account 230.8 234.4 232.2
--------------------------------------------------------------------------------
Shareholders' funds 212.9 214.4 214.1
Equity minority interests 4.2 3.7 3.5
--------------------------------------------------------------------------------
217.1 218.1 217.6
--------------------------------------------------------------------------------
GROUP CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 25 SEPTEMBER 2004
2004/05 2003/04 2003/04
Half Half Full
Year Year Year
Notes £m £m £m
4a Net cash inflow from operating 39.5 35.0 92.1
activities
Dividends received from associated 2.7 3.5 7.2
companies
4b Returns on investments and servicing of 0.5 (0.1) (1.5)
finance
Taxation (3.7) (0.5) (11.2)
4c Capital expenditure and financial (1.4) (13.5) (31.8)
investment
4d Acquisitions and disposals - (4.9) (5.1)
Equity dividends paid (17.4) (16.2) (24.1)
---------------------------------------------------------------------------
Net cash inflow before use of liquid 20.2 3.3 25.6
resources and financing
4e Management of liquid resources (17.2) (1.2) (30.3)
4f Financing (5.8) (0.8) 7.6
---------------------------------------------------------------------------
(Decrease)/increase in cash in the (2.8) 1.3 2.9
period
---------------------------------------------------------------------------
Reconciliation of net cash flow to
movement in net funds
(Decrease)/increase in cash in the (2.8) 1.3 2.9
period
Cash outflow from increase in liquid 17.2 1.2 30.3
resources
Cash outflow/(inflow) from decrease/ 6.0 1.4 (5.1)
(increase) in debt
---------------------------------------------------------------------------
Change in net funds resulting from cash 20.4 3.9 28.1
flows
Translation difference 0.1 1.8 4.8
---------------------------------------------------------------------------
Movement in net cash in the period 20.5 5.7 32.9
Net funds at start of period 41.1 8.2 8.2
---------------------------------------------------------------------------
Net funds at end of period 61.6 13.9 41.1
---------------------------------------------------------------------------
Analysis of net funds
Cash 27.2 28.8 28.0
Liquid resources 74.7 28.5 57.5
Overdrafts (2.4) (2.1) (1.0)
Other debt due within one year (2.9) - (7.3)
Other debt due after one year (35.0) (41.3) (36.1)
---------------------------------------------------------------------------
Net funds at end of period 61.6 13.9 41.1
---------------------------------------------------------------------------
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE HALF YEAR ENDED 25 SEPTEMBER 2004
2004/05 2003/04 2003/04
(restated)
Half Half Full
Year Year Year
£m £m £m
---------- ---------- ----------
Profit/(loss) for the period: Group 2.0 (8.3) 5.0
Associates 2.9 4.5 7.1
---------- ---------- ----------
4.9 (3.8) 12.1
Currency translation differences on foreign
currency net investments 2.1 0.3 (0.5)
------------------------------------------------------------------------------
Total recognised gains/(losses) for the 7.0 (3.5) 11.6
period
Prior year adjustment - - 0.6
------------------------------------------------------------------------------
Total recognised gains/(losses) since last 7.0 (3.5) 12.2
annual report
------------------------------------------------------------------------------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE HALF YEAR ENDED 25 SEPTEMBER 2004
2004/05 2003/04 2003/04
(restated)
Half Year Half Year Full Year
£m £m £m
Profit/(loss) for the period 4.9 (3.8) 12.1
Dividends (8.4) (7.5) (24.8)
--------------------------------------------------------------------------------
(3.5) (11.3) (12.7)
Share capital issued 0.2 0.6 2.5
Currency translation differences on
foreign
currency net investments 2.1 0.3 (0.5)
--------------------------------------------------------------------------------
Net decrease in shareholders' funds (1.2) (10.4) (10.7)
Opening shareholders' funds 214.1 224.8 224.8
--------------------------------------------------------------------------------
Closing shareholders' funds 212.9 214.4 214.1
--------------------------------------------------------------------------------
The opening shareholders' funds of £224.8m in 2003/2004 includes a prior year
adjustment of £19.1m relating to own shares held.
The Group adopted the requirements of the Urgent Issues Task Force Abstract 38
in the financial statements for the year ended 27 March 2004 and own shares held
by the De La Rue employee share ownership trusts were classified from fixed
asset investments to a reduction in shareholders' funds. Prior half year
comparatives have been restated to reflect the change of accounting policy,
leading to an increase in the previously reported operating profit for the
period ended 27 September 2003 by £0.1m
NOTES TO THE INTERIM STATEMENT
1 Segmental analysis 2004/05 2003/04 2003/04
(restated) (restated)
Half Year Half Year Full Year
£m £m £m
Turnover by class of business
---------- ---------- ----------
Continuing Cash Systems 142.0 142.2 302.6
operations
Security Paper and 167.8 130.0 335.7
Print
Voting Systems 8.5 17.9 44.2
-------------------------------------------------------------------------------------
318.3 290.1 682.5
---------- ---------- ----------
Operating profit/(loss) by class of
business ---------- ---------- ----------
Continuing Cash Systems 2.4 2.2 8.8
operations
Security Paper and 20.9 13.8 42.4
Print
Voting Systems (2.7) (1.7) (1.9)
---------- ---------- ----------
20.6 14.3 49.3
---------- ---------- ----------
- Reorganisation Cash Systems (2.0) (1.9) (5.2)
costs
Security Paper and - (0.8) (10.0)
Print ---------- ---------- ----------
(2.0) (2.7) (15.2)
- Income from investments previously
impaired
Security Paper and 0.4 - -
Print ---------- ---------- ----------
19.0 11.6 34.1
---------- ---------- ----------
Goodwill Cash Systems (12.5) (1.6) (8.7)
amortisation
Security Paper and 0.3 0.2 0.5
Print
Voting Systems - (12.9) (13.0)
---------- ---------- ----------
(12.2) (14.3) (21.2)
-------------------------------------------------------------------------------------
6.8 (2.7) 12.9
---------- ---------- ----------
Turnover by geographical area of
operation
United Kingdom and Ireland 198.4 161.8 406.1
Rest of Europe 116.3 112.9 232.8
The Americas 66.3 77.1 161.8
Rest of world 22.8 14.3 39.3
Less inter-area sales (85.5) (76.0) (157.5)
-------------------------------------------------------------------------------------
318.3 290.1 682.5
---------- ---------- ----------
Operating profit/(loss) by geographical
area of operation
United Kingdom and Ireland 6.0 (3.8) 9.7
Rest of Europe 1.5 13.9 20.7
The Americas (2.4) (11.7) (18.3)
Rest of world 1.7 (1.1) 0.8
-------------------------------------------------------------------------------------
6.8 (2.7) 12.9
---------- ---------- ----------
Turnover by geographical area of
destination
United Kingdom and Ireland 35.4 41.4 83.1
Rest of Europe 88.3 84.4 179.0
The Americas 81.1 79.9 178.9
Rest of world 113.5 84.4 241.5
-------------------------------------------------------------------------------------
318.3 290.1 682.5
---------- ---------- ----------
2 Exceptional items
2004/05 2003/04 2003/04
Half Year Half Year Full Year
Reorganisation costs - Cash Systems (2.0) (1.9) (5.2)
- Security Products - (0.8) (10.0)
Income from investments previously 0.4 - -
impaired
Loss on disposal of fixed assets - (2.6) 0.2
Goodwill impairment (11.5) (12.6) (18.7)
-------------------------------------------------------------------------------------
(13.1) (17.9) (33.7)
-------------------------------------------------------------------------------------
Reorganisation costs in Cash Systems relate to restructuring of the retail
business.
Income from investments relates to a £0.4m loan repayment from the Group's
associate holding in Valora.
As a result of reassessment of future prospects, the carrying value of the
goodwill relating to De La Rue Systems - Automatizacao SA has been impaired
by an exceptional charge of £11.5m.
3 Reconciliation of earnings per share 2004/05 2003/04 2003/04
Half Half Full
Year Year Year
pence pence pence
per per per
share share Share
As calculated under FRS 14 2.8 (2.2) 6.8
Income from investment previously (0.2) - -
impaired
(Loss)/profit on disposal of fixed assets - 1.3 (0.1)
and assets held for resale
Amortisation of goodwill 6.6 7.9 11.7
----------------------------------------------------------------------------
Headline earnings per share as defined by 9.2 7.0 18.4
the IIMR
Reorganisation costs 0.9 1.1 5.8
----------------------------------------------------------------------------
Headline earnings per share before items 10.1 8.1 24.2
above
----------------------------------------------------------------------------
The earnings per share of 2.8p as calculated under FRS 14 is the £4.9m
profit for the period divided by the average number of shares in issue
(178,051,608). The prior year adjustment described above has not changed the
prior half year earnings per share figure.
4 Notes to Group cash flow statement 2004/05 2003/04 2003/04
(restated)
Half Half Full
Year Year Year
£m £m £m
a Reconciliation of operating profit to net
cash
inflow from operating activities
Operating profit/(loss) 6.8 (2.7) 12.9
Depreciation and amortisation 24.8 26.7 45.3
Decrease/(increase) in stocks 3.5 (11.3) (3.8)
Decrease in debtors 14.6 0.6 10.2
(Decrease)/increase in creditors (6.9) 30.5 30.0
Decrease in reorganisation provisions (2.8) (8.1) (2.5)
Other items (0.5) (0.7) -
----------------------------------------------------------------------------
Net cash inflow from operating activities 39.5 35.0 92.1
----------------------------------------------------------------------------
b Returns on investments and servicing of
finance
Interest received 2.4 0.8 2.0
Interest paid (1.6) (0.9) (2.4)
Dividends paid to minority shareholders (0.3) - (1.1)
----------------------------------------------------------------------------
Net cash inflow/(outflow) from returns on 0.5 (0.1) (1.5)
investments and
servicing of finance
----------------------------------------------------------------------------
c Capital expenditure and financial
investment
Purchase of tangible fixed assets (8.7) (13.1) (33.3)
Purchase of intangible fixed assets - (0.9) -
Sale of tangible fixed assets 6.9 0.5 1.5
Income from investments 0.4 - -
----------------------------------------------------------------------------
Net cash outflow for capital expenditure
and financial investment (1.4) (13.5) (31.8)
----------------------------------------------------------------------------
d Acquisitions and disposals
Purchase of subsidiary undertakings - (9.3) (0.9)
Net (overdraft)/cash acquired with - (1.2) (9.8)
subsidiary undertakings
Sale of subsidiary undertakings - 6.4 6.4
Net cash sold with subsidiary undertaking - (0.8) (0.8)
----------------------------------------------------------------------------
Net cash outflow for acquisitions and - (4.9) (5.1)
disposals
----------------------------------------------------------------------------
e Management of liquid resources
Net increase in short term deposits (17.2) (1.2) (30.3)
----------------------------------------------------------------------------
f Financing
Debt due within one year:
Loans raised - - 7.9
Loans repaid (3.9) - -
Debt due beyond one year:
Loans raised 0.1 - 17.1
Loans repaid - (1.4) (19.0)
Capital element of finance lease rental (2.2) - (0.9)
repayments
Share capital issued 0.2 0.6 2.5
----------------------------------------------------------------------------
Net cash (outflow)/inflow from financing (5.8) (0.8) 7.6
----------------------------------------------------------------------------
5 This interim statement has been prepared in accordance with the guidelines
published by the Accounting Standards Board.
6 The statement has been prepared applying the accounting policies described
in pages 42 and 43 of the 2004 Annual Report and Accounts, and should be
read in conjunction with the Report and Accounts.
7 The results for the half years to 25 September 2004 and 27 September 2003
are unaudited and do not constitute the Group's statutory accounts.
8 The statutory accounts for the year ended 27 March 2004 have been delivered
to the Registrar of Companies. The report of the auditors on those accounts
was unqualified and did not contain a statement under either section 237(2)
or 237(3) of the Companies Act 1985.
9 This interim statement was approved by the Board on 1 December 2004 and is
being posted to all shareholders. Copies are available from the Company
Secretary, De La Rue plc, De La Rue House, Jays Close, Viables, Basingstoke,
Hampshire, RG22 4BS.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 21 minutes ago Land Securities Group
- 24 minutes ago VP
- 37 minutes ago Spectris
- 1 hour ago Marks & Spencer Group
- 1 hour ago Investec