Preliminary Statement Year to

RNS Number : 0254V

De La Rue PLC

22 May 2008

 

DE LA RUE PLC PRELIMINARY STATEMENT

YEAR TO 29 MARCH 2008

KEY FINANCIALS

	2007/2008 £m	2006/2007 £m	Change %
Revenue	753.6	687.5	9.6%
Profit before tax and exceptionals	124.1	102.4	21.2%
Profit before tax	126.7	102.4	23.7%
Headline earnings per share	58.1p	43.9	32.3%
Basic earnings per share	57.8p	43.9	31.7%
Operating cash flow	124.0	144.5
Net cash at end of year	106.7	137.3
Dividends per share	21.4p	19.1p	12.0%

HIGHLIGHTS

• Revenue up 9.6% to £753.6m

• Profit before tax and exceptionals up 21.2% to £124.1m

• Operating profit margin up 2.1 percentage points to 15.2%

• Headline earnings per share up 32.3% to 58.1p

• Strong operating cash flow of £124.0m, and closing net cash of £106.7m

• Final dividend increase of 12.1% to 14.87p, making a total of 21.4p for the year

• Strategic review conclusions, including capital return and dividend increase

Nicholas Brookes, Chairman of De La Rue plc, commented:

'I am pleased to report another strong year of trading across all our activities, showing once again the firm foundation on which the Group now stands. 

 'In addition, we today set out the conclusions of the strategic review initiated last November. This has assessed both the optimum structure of the Group, and the appropriate balance sheet capitalisation and dividend policy of that structure.

'We enter 2008/2009 with the order books in both divisions at a four year high. In Currency, this is expected to result in the business continuing to operate throughout the current year at the high levels of capacity experienced in 2007/2008. Thus, despite the more uncertain financial environment, we remain confident in the outlook for the year ahead.'

For further information, please contact:

Leo Quinn	Chief Executive	[phone]
Stephen King	Finance Director	[phone]
Gary Williams	Head of Corporate Affairs	[phone]
Richard Mountain	Financial Dynamics	[phone]

22 May 2008

SUMMARY OF GROUP RESULTS  

De La Rue reports another excellent performance for the year ended 29 March 2008. All key performance indicators again showed strong year-on-year improvements, demonstrating the success across the Group in implementing its strategy. 

Revenue increased by £66.1m or 9.6 per cent to £753.6m (2006/2007: £687.5m) and operating profit of £114.7m represented an increase of £24.3m or 26.9 per cent compared with last year (2006/2007: £90.4m).  Profit before tax and exceptionals increased by £21.7m or 21.2 per cent to £124.1m (2006/2007: £102.4m). Headline earnings per share increased by 32.3 per cent to 58.1p (2006/2007: 43.9p) reflecting the improved trading performance and the benefits of the share consolidation carried out in conjunction with the special dividend payment last year. Basic earnings per share were 57.8p compared with 43.9p in 2006/2007 representing an increase of 31.7 per cent.

In Security Paper and Print, strong banknote volumes (up 13.4 per cent on 2006/2007) and paper volumes (up 19.2 per cent on 2006/2007) were reflected in another excellent full year result with the business once again operating at near capacity levels throughout the year. In Cash Systems, both equipment and service volumes remained in line with our expectations, notwithstanding the more uncertain financial environment. We were particularly pleased to see a strong second half-year and increasing order book for the division in these circumstances. Overall Group operating profit margins were 2.1 percentage points higher at 15.2 per cent (2006/2007: 13.1 per cent). 

Cash generation was again strong with operating cash flow of £124.0m (2006/2007: £144.5m). This reflected both higher profits and strong working capital management. Growth in trade working capital reflected the high trading activity in the Currency operations, together with a small reduction in advance payments, following the exceptional inflow in 2006/2007.  The Group ended the year with net cash on the balance sheet of £106.7m (2006/2007 net cash: £137.3m) following returns to shareholders of £109.6m, comprising £105.4m in respect of dividends and the ongoing share buy back programme (£4.2m).  

STRATEGIC REVIEW

The strategic review initiated at the end of 2007 by the Board of De La Rue concluded that:

• As these results demonstrate, the strategy implemented since 2004 has created two market-leading divisions, each with strong management teams, reinvigorated product offerings and excellent prospects.

• De La Rue's historic strength has been its relationships with Central Banks and governments through Security Paper and Print (SPPD) and these remain core to its success.

• Cash Systems has been developed significantly in the last four years and is now a strong business in its own right, serving the retail/commercial banking sector.

• The two divisions are distinct entities operationally and there is little opportunity for synergies. They also serve different customer bases, the exception being Cash Processing Systems (CPS) which develops and supplies banknote sorters and cash optimisation software, largely to Central Banks. CPS is integral to the Currency offering and will become part of that business.

• Subject to achieving appropriate value, the Board has therefore decided to explore the sale of Cash Systems, excluding CPS, as one possible route to crystallise shareholder value. Discussions are ongoing which may or may not lead to a sale. Cash Systems is performing well and the Board will only recommend its sale to shareholders if terms are agreed which reflect its quality and future prospects, and the strength of its customer relationships. 

• The Group's holding in Camelot, the UK national lottery operator, is an investment offering excellent future value and will be retained.

• The financial strength of the Group now provides the Board with the confidence to increase the level of distribution to shareholders by means of the following proposals:

         -     a new dividend policy, which will take effect in respect of the year ending 28 March 2009, for

                a  dividend cover of approximately 1.75 times, based on the underlying earnings for the year. 

                The Board intends to maintain a progressive dividend policy and is prepared to consider different   

                levels of dividend cover as a result of any short term fluctuations in earnings.

 

         -     a return of £160 million to shareholders by way of a special dividend using the surplus cash in   

                hand, appropriately adjusted for advance payments from customers, and a new debt facility that  

                has been arranged.

 

         -      if Cash Systems is sold, a further return to shareholders of the net proceeds.

Going forward, the Group will continue to monitor the shape of the balance sheet and, where appropriate, consider future returns of surplus cash.

Extracts from the Business Review

SECURITY PAPER AND PRINT	2007/2008 £m	2006/2007 £m
Revenue Growth on prior year	408.6 +15.3%	354.5 +11.3%
Operating profit Operating profit margin	79.6 19.5%	61.7 17.4%

The improved divisional result was driven principally by Currency's activities which had another excellent year, with the banknote business operating at near capacity levels throughout the year following our investment to refresh printing assets in the division. Overall, banknote volumes increased by 13.4 per cent (2006/2007: increase of 19.5 per cent) over the prior year. There was a more favourable work mix compared to the corresponding period last year with an average contribution per 1000 notes up 4.7 per cent (2006/07 down 12.6 per cent). The higher overall volumes partly reflected increased overspill which was 29 per cent of the total compared to 26 per cent in the corresponding period last year.  In addition, banknote paper volumes rose by 19.2 per cent (2006/2007: increase of 3.6 per cent) partly driven by the strong print order book. Looking forward, the order book in Currency remains strong, providing good visibility for the majority of 2008/2009.

The Security Products and Identity Systems businesses also performed well, driven in part by demand for authentication labels, with our contract with a leading software vendor recently renewed for a multi-year term, and an increase in passport orders. De La Rue's strength is in machine readable passports and the investment in a new dedicated ePassport manufacturing facility in Malta was completed in the last quarter of 2007/2008.  

CASH SYSTEMS	2007/2008 £m	2006/2007 £m
Revenue	345.0	333.0
Growth on prior year	+3.6%	+13.9%
Operating Profit Operating profit margin	35.1 10.2%	28.7 8.6%

In Cash Systems, revenues of £345.0m grew by 3.6 per cent (2006/2007: £333.0m) and operating profits of £35.1m were ahead of last year (2006/2007: £28.7m) reflecting the benefits of new products, improved mix and our continuing high levels of investment in international expansion. Operating profit margin improved by 1.6 percentage points, to 10.2 per cent, compared with 8.6 per cent last year, reflecting the continued focus on the efficiency of the supply chain and productivity. 

Bank Teller Automation enjoyed a positive year, with profit increasing over last year. The OEM (ATM mechanisms) and Desktop Products (DTP) businesses showed strong volume growth. During the year DTP launched its NVision (2-pocket note counter) and Quickchange (coin sorting) products into the euro zone to extend the scope of its markets, and built on the Evolution product launched last year. Cash Processing Solutions continued to make good progress in volume growth.

RETURNS TO SHAREHOLDERS

Final Dividend 

The Board is recommending an increased final dividend of 14.87p per share, subject to shareholders' approval. This will be paid on 1 August 2008 to shareholders on the register on 11 July 2008. Together with the increased interim dividend paid in January 2008, this will give a total dividend for the year of 21.4p, an overall increase of 12.0 per cent on last year.  

Share Buy Back

During the year the Company acquired 610,000 shares under the share buy back programme at a cost of £4.2m, bringing the total number of shares acquired since the commencement of the programme, in December 2005, to 7.2 million at a cost of £41.2m.  

ASSOCIATES

The main associated company is Camelot, the UK lottery operator. Profit from associates after tax was higher at £7.1m (2006/2007: £6.6m) and dividends received from associates of £7.7m were higher than last year's £6.2m.  During the year Camelot won the third lottery licence, which runs from 2009 to 2019.

INTEREST 

The Group's net interest income was £2.0m, which was £1.6m lower than the previous year. In addition, there was a credit of £0.3m in respect of IAS19 pensions mentioned below (2006/2007: £1.8m credit).

TAXATION

The underlying effective tax rate excluding one-off items was 28.4 per cent (2006/2007: 29.9 per cent), the decrease reflecting the continued improvement in the Group's tax position. In addition, there was a one-off charge of £3.1m arising from the impact on deferred tax assets of a reduction in the German tax rate. 

EXCEPTIONAL ITEMS

Exceptional items comprise £1.7m gain on the sale of the Group's Valora investment and £0.9m profit from the sale of its 50 per cent stake in De La Rue Smurfit. 

CASH FLOW AND BORROWINGS

During the year, operating cash flow was £124.0m compared with £144.5m in 2006/2007. Working capital rose due to the increase in sales, but more efficient management of cash was reflected in better ratios. Advance payments were slightly lower than last year at £72.8m (2006/2007: £76.8m), but continue at exceptional levels. Capital expenditure of £22.3m was lower than depreciation, reflecting the phasing of expenditure between years in the Currency business.  

After payment of the 2006/2007 final dividend (£21.2m), the 2007/2008 interim dividend (£9.8m ), a second special dividend of £74.4m paid in August 2007, and £4.2m in respect of the ongoing share buy back programme, closing net cash was £106.7m compared with £137.3m last year end.  

UK PENSION SCHEME

Funding

The Group's last formal (triennial) funding valuation of the Company's defined benefit pension Scheme took place on 6 April 2006 and identified that the Scheme had a funding deficit of £56m. Thereafter the Group agreed to make additional special contributions of £12m per annum for five years to 2011, or until the deficit is cleared if sooner. The second of those special contributions has now been made.  

IAS 19 Accounting

The valuation of the UK Pension Scheme under IAS 19 principles indicates a scheme deficit after tax at 29 March 2008 of £14.9m (March 2007: £72.7m). This significant reduction in deficit during the year has arisen despite the volatile markets and reflects a combination of the significantly raised AA bond yields used to discount liabilities and the benefit of the Group's special contributions. The charge to operating profits in respect of the UK Pension Scheme for 2007/2008 was £10.0m (2006/2007 : £9.8m). In addition, under IAS 19 there was a finance credit of £0.3m arising from the difference between the expected return on assets and the interest on liabilities (2006/2007: £1.8m credit). This amount is included with the Group interest income in the profit and loss account.

Outlook

We enter 2008/2009 with the order books in both divisions at a four year high. In Currency, this is expected to result in the business continuing to operate throughout the current year at the high levels of capacity experienced in 2007/2008. Thus, despite the more uncertain financial environment, we remain confident in the outlook for the year ahead.

-ends-

Notes to Editors

1	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 passports, authentication labels and fiscal stamps. The Company is also pioneering new technologies worldwide in government identity solutions for national identification, drivers licence and passport issuing schemes. Employing over 6,000 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.
2	A presentation to analysts will take place at 9:00am today at The London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS.
3	High resolution photographs are available to the media free of charge at http://www.newscast.co.uk/  ([phone]).
4	Foreign Exchange Principal exchange rates used in translating the Group's results:

£	2007/2008		2006/2007
	Avg	Year End	Avg	Year End
US dollar	2.01	1.99	1.89	1.96
Euro	1.42	1.26	1.47	1.47
Swedish Krona	13.18	11.85	13.59	13.76
$
Swedish Krona	6.56	5.95	7.19	7.02

When managing foreign exchange transactional risk, protection is taken in the foreign exchange markets whenever a business has a firm expectation of confirming a sale or purchase in a non-domestic currency unless it is impractical or uneconomical to do so. Translation of overseas earnings is not hedged. For the year ended 29 March 2008 adverse foreign exchange impacted the Group profits by £3.9m mostly arising from transaction exposure.

5	De La Rue Financial Calendar:

2008/2009
Ex-dividend date	9 July 2008
Record date (Ordinary Dividend)	11 July 2008
Annual General Meeting	24 July 2008
Payment of 2007/08 final dividend	1 August 2008
2008/09 Interim Results	26 November 2008

GROUP INCOME STATEMENT

FOR THE YEAR ENDED 29 MARCH 2008

		2008	2008	2008	2007
		£m	£m	£m	£m
		Before	Exceptional
	Note	Exceptionals	Items	Total	Total
Continuing Operations
Revenue	2	753.6		753.6	687.5
Operating expenses		(638.9)		(638.9)	(597.1)
Operating profit		114.7	-	114.7	90.4
Share of profits of associated companies after taxation		7.1		7.1	6.6
Profit on the disposal of a business			0.9	0.9
Profit on the disposal of investments			1.7	1.7
Non-operating items	3		2.6	2.6	-
Profit before interest and taxation		121.8	2.6	124.4	97.0
Interest income		4.4		4.4	5.1
Interest expense		(2.4)		(2.4)	(1.5)
Retirement benefit obligation finance income		34.2		34.2	32.4
Retirement benefit obligation finance cost		(33.9)		(33.9)	(30.6)
Profit before taxation		124.1	2.6	126.7	102.4
Taxation	4	(38.3)		(38.3)	(30.6)
Profit for the financial year		85.8	2.6	88.4	71.8
Profit attributable to equity shareholders of the Company		85.5	2.6	88.1	70.2
Profit attributable to minority interests		0.3		0.3	1.6
		85.8	2.6	88.4	71.8
Earnings per share attributable to the Company's equity holders
Basic	5			57.8p	43.9p
Diluted	5			56.7p	42.9p

GROUP BALANCE SHEET

AT 29 MARCH 2008

		2008	2007
	Note	£m	£m
ASSETS
Non-current assets
Property, plant and equipment		143.2	139.4
Intangible assets		33.2	30.3
Investments in associates and joint ventures		22.5	13.1
Available for sale financial assets		0.2	0.4
Deferred tax assets		25.9	51.4
Other receivables		0.8	0.2
Derivative financial instruments		0.4	0.3
		226.2	235.1
Current assets
Inventories		94.9	87.5
Trade and other receivables		114.0	97.0
Current tax assets		0.4	1.4
Derivative financial instruments		19.1	1.0
Cash and cash equivalents		120.3	149.1
		348.7	336.0
Total assets		574.9	571.1
LIABILITIES
Current liabilities
Borrowings		(8.6)	(1.7)
Trade and other payables		(245.3)	(238.7)
Current tax liabilities		(31.7)	(24.9)
Derivative financial instruments		(15.8)	(1.5)
Provisions for other liabilities and charges		(23.1)	(17.8)
		(324.5)	(284.6)
Non-current liabilities
Borrowings		(5.0)	(10.1)
Retirement benefit obligations		(25.3)	(108.1)
Deferred tax liabilities		(0.6)	(2.1)
Derivative financial instruments		(2.1)	(0.3)
Other non-current liabilities		(1.9)	(1.0)
		(34.9)	(121.6)
Total liabilities		(359.4)	(406.2)
Net assets		215.5	164.9
EQUITY
Ordinary share capital	1	44.6	44.7
Share premium account	1	22.5	21.4
Capital redemption reserve	1	5.5	5.3
Fair value reserve	1	0.7	(0.6)
Cumulative translation adjustment	1	13.4	(0.7)
Other reserve	1	(83.8)	(83.8)
Retained earnings	1	210.3	173.6
Total equity attributable to shareholders of the Company		213.2	159.9
Minority interests	1	2.3	5.0
Total equity		215.5	164.9

GROUP CASH FLOW STATEMENT

FOR THE YEAR ENDED 29 MARCH 2008

		2008	2007
	Notes	£m	£m
Cash flows from operating activities
Profit before tax		126.7	102.4
Adjustments for:
Finance income and expense		(2.3)	(5.4)
Depreciation and amortisation		27.1	26.9
Increase in inventory		(3.3)	(18.6)
Increase in trade and other receivables		(13.6)	(9.3)
Increase in trade and other payables		10.3	61.7
Decrease in reorganisation provisions		(0.7)	(3.6)
Special pension fund contribution		(12.0)	(7.0)
Profit on the disposal of a business		(0.9)	-
Profit on the disposal of investments		(1.7)	-
Loss on disposal of property, plant and equipment		0.9	1.0
Share of income from associates after tax		(7.1)	(6.6)
Other non-cash movements		0.6	3.0
Cash generated from operations		124.0	144.5
Tax paid		(27.5)	(28.2)
Net cash flows from operating activities		96.5	116.3
Cash flows from investing activities
Disposal of subsidiary undertaking		2.1	1.0
Investment in associates		(10.0)	-
Proceeds from sale of investment		1.7	-
Purchases of property, plant and equipment (PPE) & software intangibles		(22.3)	(29.7)
Development assets capitalised		(4.7)	(4.1)
Proceeds from sale of PPE		1.3	0.7
Interest received		4.3	5.2
Interest paid		(1.2)	(1.0)
Dividends received from associates		7.7	6.2
Net cash flows from investing activities		(21.1)	(21.7)
Net cash inflow before financing activities		75.4	94.6
Cash flows from financing activities
Proceeds from issue of share capital		5.2	7.1
Own share purchase		(4.2)	(29.2)
Proceeds from/(repayment of) borrowings		2.2	(1.5)
Finance lease principal payments		(4.5)	(3.6)
Dividends paid to shareholders		(105.4)	(28.3)
Dividends paid to minority interests		(0.4)	(0.4)
Net cash flows from financing activities		(107.1)	(55.9)
Net (decrease)/increase in cash and cash equivalents in the year		(31.7)	38.7
Cash and cash equivalents at the beginning of the year		149.0	107.8
Exchange rate effects		(0.6)	2.5
Cash and cash equivalents at the end of the year		116.7	149.0
Cash and cash equivalents consist of:	7
Cash at bank and in hand		49.9	40.3
Short term bank deposits		70.4	108.8
Bank overdrafts		(3.6)	(0.1)
		116.7	149.0

GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE

FOR THE YEAR ENDED 29 MARCH 2008

	2008	2007
	£m	£m
Foreign currency translation differences for foreign operations	10.9	(5.7)
Actuarial gain on retirement benefit obligations	73.5	3.5
Effective portion of changes in fair value of cash flow hedges	1.6	-
Net gains on hedge of net investment in foreign operations	3.3	2.7
Income tax on income and expenses recognised directly in equity	(22.9)	4.0
Net gains recognised directly in equity	66.4	4.5
Profit for the financial year	88.4	71.8
Total recognised income and expense for the year	154.8	76.3
Attributable to:
Equity shareholders of the Company	154.5	74.7
Minority interests	0.3	1.6
Total recognised income and expense for the year	154.8	76.3

RECONCILIATION OF MOVEMENT IN CAPITAL AND RESERVES

FOR THE YEAR ENDED 29 MARCH 2008

Note

1

		Attributable to equity shareholders							Minority interest	Total equity
		Share capital £m	Share premium account £m	Capital redemption reserve £m	Fair value reserve £m	Cumulative translation adjustment £m	Other reserve £m	Retained earnings £m	£m	£m
	Balances at 25 March 2006	45.9	20.6	3.9	(0.5)	2.2	(83.8)	144.2	3.8	136.3
	Foreign currency translation differences for foreign operations	-	-	-	-	(5.7)	-	-	-	(5.7)
	Actuarial gain on retirement benefit obligations	-	-	-	-	-	-	3.5	-	3.5
	Effective portion of changes in fair value of cash flow hedges	-	-	-	-	-	-	-	-	-
	Net gains on hedge of net investment in foreign operations	-	-	-	-	2.7	-	-	-	2.7
	Income tax on income and expenses recognised directly in equity	-	-	-	-	-	-	4.0	-	4.0
	Net gain recognised directly in equity	-	-	-	-	(3.0)	-	7.5	-	4.5
	Profit for the financial year	-	-	-	-	-	-	70.2	1.6	71.8
	Total income recognised for the year	-	-	-	-	(3.0)	-	77.7	1.6	76.3
	Share capital issued	0.2	0.8	-	-	-	-	-	-	1.0
	Purchase of shares for cancellation	(1.4)	-	1.4	-	-	-	(29.2)	-	(29.2)
	Allocation of treasury shares	-	-	-	-	-	-	6.1	-	6.1
	Employee share scheme:
	- value of services provided	-	-	-	-	-	-	3.1	-	3.1
	Dividends paid	-	-	-	-	-	-	(28.3)	(0.4)	(28.7)
	Balance at 31 March 2007	44.7	21.4	5.3	(0.5)	(0.8)	(83.8)	173.6	5.0	164.9
	Foreign currency translation differences for foreign operations	-	-	-	-	10.9	-	-	-	10.9
	Actuarial gain on retirement benefit obligations	-	-	-	-	-	-	73.5		73.5
	Effective portion of changes in fair value of cash flow hedges	-	-	-	1.6	-	-	-	-	1.6
	Net gains on hedge of net investment in foreign operations	-	-	-	-	3.3	-	-	-	3.3
	Income tax on income and expenses recognised directly in equity	-	-	-	(0.4)	-	-	(22.5)	-	(22.9)
	Net gain recognised directly in equity	-	-	-	1.2	14.2	-	51.0	-	66.4
	Profit for the financial year	-	-	-	-	-	-	88.1	0.3	88.4
	Total income recognised for the year	-	-	-	1.2	14.2	-	139.1	0.3	154.8
	Share capital issued	0.1	1.1	-	-	-	-	-	-	1.2
	Purchase of shares for cancellation	(0.2)	-	0.2	-	-	-	(4.2)	-	(4.2)
	Allocation of treasury shares	-	-	-	-	-	-	4.0	-	4.0
	Employee share scheme
	- value of services provided	-	-	-	-	-	-	3.2	-	3.2
	Dividends paid	-	-	-	-	-	-	(105.4)	(0.4)	(105.8)
	Disposal of a business	-	-	-	-	-	-	-	(2.6)	(2.6)
	Balance at 29 March 2008	44.6	22.5	5.5	0.7	13.4	(83.8)	210.3	2.3	215.5

2	SEGMENTAL ANALYSIS
	The Group's primary reporting format is by business segment. The Group is organised on a worldwide basis into two business segments: Cash Systems and Security Paper and Print. The secondary reporting format is by geographical segment. The Cash Systems division is predominantly involved in the provision of cash handling equipment and software solutions to banks and retailers worldwide. Security Paper and Print is involved in the production of national currencies and a wide range of security documents such as authentication labels and identity documents.

Analysis by business segment

	2008 Cash Systems	2008 Security Paper and Print	2008 Group		2007 Cash Systems	2007 Security Paper and Print	2007 Group
Continuing operations	£m	£m	£m		£m	£m	£m
Revenue	345.0	408.6	753.6		333.0	354.5	687.5
Operating profit	35.1	79.6	114.7		28.7	61.7	90.4
Share of post tax profits of associates			7.1				6.6
Non operating items (note 3)			2.6				-
Net interest income			2.0				3.6
Retirement obligations net finance income			0.3				1.8
Profit before taxation			126.7				102.4
Taxation			(38.3)				(30.6)
Profit for the financial year			88.4				71.8
Segment assets	145.9	206.7	352.6		129.4	187.4	316.8
Unallocated assets			222.3				254.3
Total assets			574.9				571.1
Segment liabilities	(111.4)	(128.1)	(239.5)		(107.8)	(128.4)	(236.2)
Unallocated liabilities			(119.9)				(170.0)
Total liabilities			(359.4)				(406.2)
Capital expenditure on property, plant and equipment	7.4	16.8	24.2		3.0	23.3	26.3
Capital expenditure on intangible assets	5.4	0.8	6.2		6.7	1.1	7.8
Depreciation of property, plant and equipment	5.3	16.7	22.0		5.5	16.8	22.3
Amortisation of intangible assets	3.4	1.7	5.1		3.7	0.9	4.6
Analysis by geographical segment 2008			UK & Ireland	Rest of Europe	The Americas	Rest of World	Group
			£m	£m	£m	£m	£m
Revenue by destination			71.2	202.1	188.2	292.1	753.6
Segment assets			151.8	124.7	49.9	26.2	352.6
Unallocated assets							222.3
Total assets							574.9
Capital expenditure on property, plant and equipment			7.8	11.0	3.8	1.6	24.2
Capital expenditure on intangible assets			3.2	1.8	1.2	-	6.2
Analysis by geographical segment 2007			UK & Ireland	Rest of Europe	The Americas	Rest of World	Group
			£m	£m	£m	£m	£m
Revenue by destination			72.1	206.6	160.4	248.4	687.5
Segment assets			148.8	98.3	47.9	21.8	316.8
Unallocated assets							254.3
Total assets							571.1
Capital expenditure on property, plant and equipment			10.0	14.2	1.2	0.9	26.3
Capital expenditure on intangible assets			3.5	3.0	1.3	-	7.8

Unallocated assets principally comprise centrally managed property, plant and equipment, associates and other investments, deferred tax assets, current tax assets, derivative financial instrument assets and cash and cash equivalents which are used as part of the Group's financing offset arrangements. Unallocated liabilities comprise borrowings, derivative financial instrument liabilities, current and non-current tax liabilities, deferred tax liabilities, retirement benefit obligations, and centrally held accruals and provisions.

3	NON OPERATING ITEMS
	The profit on disposal of continuing operations of £0.9m in the year ended 29 March 2008 arose from the disposal of De La Rue Smurfit Limited, one of the Group's Security Printing businesses based in Ireland. The profit on disposal of investments of £1.7m arose from the disposal of the Group's 25% interest in Valora-Servicos de Apoio a Emissao Monitaria SA, a currency printing company based in Portugal  This investment was previously impaired. There were no non operating items in the year ended 31 March 2007.

4

TAXATION

	2008 Total £m	2007 Total £m
Current tax
UK Corporation tax
Current tax	30.8	11.4
Double tax relief	(19.0)	(3.5)
Adjustment in respect of prior years	(0.8)	-
	11.0	7.9
Overseas tax charges
Current year	24.8	16.7
Adjustment in respect of prior years	(1.1)	(0.5)
	23.7	16.2
	34.7	24.1
Deferred tax
UK
Origination and reversal of temporary differences	2.6	3.2
Overseas
Origination and reversal of temporary differences	(2.1)	2.2
Adjustment in respect of prior years	-	1.1
German tax rate adjustment	3.1	-
	3.6	6.5
	38.3	30.6

The tax on the Group's consolidated profit before tax differs from the UK tax rate of 30% as follows:

	2008 Before exceptionals	2008 Exceptional items	2008 Total	2007 Total
	£m	£m	£m	£m
Profit before tax	124.1	2.6	126.7	102.4
Tax calculated at UK tax rate at 30%	37.2	0.8	38.0	30.7
Rate adjustment relating to overseas profits	(1.6)		(1.6)	(1.6)
Overseas dividends	0.9		0.9	1.7
Income not subject to tax	-	(0.8)	(0.8)	-
Expenses not deductible for tax purposes	2.3		2.3	1.0
Adjustment for tax on profits of associate	(2.1)		(2.1)	(2.0)
Prior year adjustments	(1.9)		(1.9)	0.6
Utilisation of previously unrecognised tax losses	(0.2)		(0.2)	(0.7)
Tax losses for which no deferred income tax asset was recognised	0.6		0.6	0.9
German tax rate adjustment	3.1		3.1
Tax charge	38.3		38.3	30.6

No current tax in respect of share option has been recognised directly in reserves (2007: £0.7m). The underlying effective tax rate excluding one-off items was 28.4% (2007: 29.9%), the decrease reflecting the continued improvement in the Group's tax position. In addition, there was a one-off charge of £3.1m arising from the impact on deferred tax assets of a reduction in the German tax rate enacted in July 2007. The recent change to the UK tax rate from 30% to 28% has not had a significant impact on the tax charge.

5	EARNINGS PER SHARE

	2008 pence per share	2007 pence per share
Basic earnings per share	57.8	43.9
Diluted earnings	56.7	42.9
Headline earnings per share	58.1	43.9

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held in the employee share trust which are treated as cancelled. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted for the impact of dilutive share options. During the year the Company paid a special dividend of £74.4m and at the same time carried out a consolidation of its share capital. These transactions were conditional on each other. They were specifically designed to achieve the same overall effect on the Company's capital structure as a buy back of shares in a way in which all shareholders could participate. Accordingly, earnings per share is presented on the basis that in substance a share buy back has occurred. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

	Earnings	2008 Weighted average number of shares	Per-share amount	Earnings	2007 Weighted average number of shares	Per-share amount
	£m	m	pence	£m	m	pence
Basic EPS	88.1	152.5	57.8	70.2	160.0	43.9
Effect of dilutive options	-	2.8	(1.1)	-	3.7	(1.0)
Diluted EPS	88.1	155.3	56.7	70.2	163.7	42.9

The Directors are of the opinion that the publication of the headline earnings is useful to readers of interim statements and annual accounts as they give an indication of underlying business performance.

Reconciliation of headline earnings per share	2008 pence per share	2007 pence per share
Basic earnings per share	57.8	43.9
Profit on the disposal of continuing operations	(0.6)	-
Profit on the disposal of investments	(1.1)	-
Tax charge arising from change in German statutory tax rate (see note 4)	2.0	-
Headline earnings per share	58.1	43.9

6	EQUITY DIVIDENDS

	2008 £m	2007 £m
Final dividend for the year ended 31 March 2007 of 13.27p paid on 3 August 2007	21.2	-
Special dividend of 46.5p paid on 3 August 2007	74.4	-
Interim dividend for the period ended 29 September 2007 of 6.53p paid on 16 January 2008	9.8	-
Final dividend for the year ended 25 March 2006 of 11.8p paid on 4 August 2006	-	19.0
Interim dividend for the period ended 30 September 2006 of 5.83p paid on 17 January 2007	-	9.3
	105.4	28.3

A final dividend per equity share of 14.87 pence has been proposed for the year ended 29 March 2008, payable on 1 August 2008. In accordance with IFRS accounting requirements this dividend has not been accrued in these consolidated financial statements.

7	NOTES TO GROUP CASH FLOW STATEMENT

		2008 £m	2007 £m
	Analysis of net cash
	Cash at bank and in hand	49.9	40.3
	Short-term bank deposits	70.4	108.8
	Bank overdrafts	(3.6)	(0.1)
	Total cash and cash equivalents	116.7	149.0
	Other debt due within one year	(5.0)	(1.6)
	Borrowings due after one year	(5.0)	(10.1)
	Net cash at end of period	106.7	137.3

8	The consolidated accounts have been prepared as at 29 March 2008, being the last Saturday in March. The comparatives for the 2006/2007 financial year are for the year ended 31 March 2007.
9	This statement has been prepared in accordance with the guidelines published by the Accounting Standards Board.
10	The financial information set out above (Group income statement, Group balance sheet, Group cash flow statement, Group statement of recognised income and expense and notes thereto) and extracts from the financial review do not constitute statutory accounts for those years within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 29 March 2008 will be posted to shareholders on 16 June 2008 for subsequent approval at the Annual General Meeting and copies will be available from the Company Secretary at De La Rue plc, De La Rue House, Jays Close, Viables, Hampshire, RG22 4BS. The report of the auditors on these accounts is unqualified and does not contain a statement under either Section 237(2) (accounting records or returns inadequate or accounts not agreeing with records and returns), or 237(3) (failure to obtain necessary information and explanations) of the Companies Act 1985. Financial statements for 2006/07 have been delivered to the Registrar.

 

END

 

 

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