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Annual Results

De La Rue revenues up

24 May 2016 07:42

Bank note printer De La Rue reports a solid performance for the year to 26 March and good early strategic progress.

De La Ru e said the full year results were in line with the upgraded expectations announced in the trading update on 13 April.

With a backdrop of challenging market conditions and significant internal changes, the Group has made good progress in the first year of the five year strategic plan which aims to focus the business into growth markets while driving operational efficiency.

The Group has strengthened the 12 month order book to £365m1 (2015: £226m) as at the end of the period. Revenue in Currency product lines, encompassing Banknotes, Banknote Paper, Polymer and Security Features, grew 11% whilst underlying operating profit was up 9%. These increases were primarily driven by higher banknote volumes, partly from overspill orders, and from greater operational efficiencies. As previously announced, a material security features contract which contributed annual revenue of c£30m came to an end during the year. There was encouraging progress in Polymer with the winning of a significant three year contract and the doubling of the number of customers to 14 issuing authorities. The Currency product lines' closing order book was up 85% year on year. Identity Solutions has performed as expected with lower revenue and margin due to a contractual reduction in contribution from a large contract. With the launch of our first identity software solution DLR Identify™, we have strengthened our digital and service offerings which will help us to capture a larger share of the passport value chain. Revenue in Product Authentication & Traceability (PA&T) was flat year on year with higher margins due to cost savings from the Dulles site closure. Cash Processing Solutions (CPS) continued to underperform in the second half. Following the 'root and branch' review of CPS, it has sold the business.

On a pre disposal basis, group revenue grew 3% to £488.2m (2014/15: £472.1m). Underlying operating profit fell by 10% to £62.5m (2014/15: £69.5m), mainly due to a loss of £7.9m in CPS (2014/15: profit £0.4m). Underlying profit before tax was 13% lower at £50.4m (2014/15: £57.7m) and underlying earnings per share decreased to 41.0p (2014/15: 47.9p).

On a continuing operations basis, group revenue was up 7% to £454.5m (2014/15: £422.8m). Underlying operating profit increased by 2% to £70.4m (2014/15: £69.1m). Underlying profit before tax was £58.5m (2014/15: £57.5m) and underlying earnings per share were up 4% to 48.1p (2014/15: 46.1p). On a pre disposal basis, net exceptional charges before tax in the period were £29.6m (2014/15: £18.8m) of which £26.0m related to the CPS discontinued activities (more fully described in notes 3 and 4). As a result, profit before tax was 47% lower at £20.8m (2014/15: £38.9m).On a continuing operations basis, profit before tax was up 35% to £54.9m (2014/15: £40.6m).

Chief executive Martin Sutherland said: "In the last year we have made good progress against our five year strategic plan to transform De La Rue into a technology-led security product and service provider. We have reorganised the business structure, increased investment in product development and new technologies, and successfully completed a manufacturing footprint review.

"Our Currency product lines have performed very well during the year. I am particularly pleased with our progress in Polymer which is a large and growing market. We have doubled our customer base in Polymer over the last year, including securing our first volume customer, and as the only vertically integrated polymer substrate manufacturer, we are well placed to continue to capture this growth opportunity.

"CPS continued to underperform in the second half of the year. Following a 'root and branch' review, we decided to exit the business and have now completed the sale.

"Looking ahead, whilst there is more to do, I am pleased with the progress we have made in the year and I am confident that the right foundations are now in place to develop a more balanced business portfolio and increase profitability. Our 12 month closing order book of £365m provides good visibility for the year ahead. Whilst, as previously announced, a material contract came to an end, we are confident that we can mitigate the impact and our expectations for the current year are unchanged."

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