De La Rue hit by costs as it restructures
BANKNOTE printer De La Rue yesterday said it would be hit by £7.5m of exceptional costs thanks to a revamp at its cash-processing unit and a one-off tax fee.
The firm, which prints notes in 150 national currencies, has been forced to pump £5m in to overhaul the underperforming unit, which makes banknote-sorting machines and software for central banks.
“These actions will result in exceptional costs of up to £5m this year which we expect to pay back within two years,” the company said.
It said the overhaul would allow it to focus more effectively on the unit’s all-important central bank customers.
And a further exceptional charge of £2.5m will be taken at the half-year point to resolve what the company described as “a legacy overseas tax issue”.
But chief executive James Hussey said the firm’s operating performance is still in-line with management expectations for the six months to September.
This has been aided by a strong performance in the firm’s currency business thanks to favourable exchange rates.
The firm added it continues to operate with “modest” levels of debt on its balance sheet.
“Excluding exceptional items, the board’s expectations for the results for the full year remain unchanged, underpinned by the continued good order book coverage in currency,” the firm said.
Analysts at Panmure Gordon dismissed the problems at De La Rue’s cash processing systems division as “peripheral” and “mininal”.
They added: “We leave our forecasts and ‘Buy’ recommendation unchanged on this update. De La Rue remains a consistent, well-placed, cash generative operation.”