A surge in production of high-specification and high-denomination banknotes boosted sales at De La Rue, the currency and secure document manufacturer, as it announced a share buy-back following the sale of its stake in Camelot, the UK lottery operator.
“We had Camelot for the thick end of 15 years,” said James Hussey, chief executive of De La Rue, who yesterday also announced a slight increase in fullyear pre-tax profits.
“It was clear early last year that after winning the third licence [to operate the UK national lottery], a number of shareholders wished to exit the business.
“We weren’t the drivers in that process, but since it was always a financial not a strategic investment for us, it made sense.”
Camelot was sold in March for £389m and roughly £35m from De La Rue’s £78m stake will be used to pay down the group’s £204m deficit. Part of the remainder – although the group declined to say how much – will be used to buy back shares, starting in September.
For the full year to March, pre-tax profits rose 1 per cent to £97m on revenue ahead 12 per cent to £561m.
Earnings per share from continuing operations jumped from 50.4p to 70.5p and the group raised its full-year dividend 3 per cent from 41.1p to 42.3p via a proposed final of 28.2p.
The group’s currency division, which makes banknotes, was the strongest performer, increasing sales by 13 per cent to £411m, helped by strong demand for high-specification banknotes with numerous security features, volumes of which increased 2 per cent year-on-year.
“The margin swings on banknotes are enormous,” said Mr Hussey.
“To give you an example, take the $1 bill, which we don’t make but is a good example. Making the dollar bill has an enormous volume impact, but has fewer security features than the $100 bill, which is a smaller volume but with many more security features, so the margin swing between those two denominations is vast.”
However, De La Rue’s cash processing division suffered in comparison, with sales falling 19 per cent to £57m – meaning it now comprises about 10 per cent of group revenues.
The division, which makes cash-sorting machines and software for banks and companies, has been hit by companies deferring their plans to purchase machines.
De La Rue has been trying to rationalise its operations, particularly in manufacturing, as it focuses more closely on central bank customers, which resulted in exceptional costs of £4.8m during the year.
Shares in De La Rue closed down 1p at 890p.
source: ft.com
