1 / 28

Preliminary Results 28 May 2003

Preliminary Results 28 May 2003. Ian Much Group Chief Executive. Stephen King Group Finance Director. Trading Summary. Disappointing Results Operating profits from continuing operations of £37.5m down from £77.6m in 2001/02

fahim
Télécharger la présentation

Preliminary Results 28 May 2003

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Preliminary Results 28 May 2003

  2. Ian Much Group Chief Executive

  3. Stephen King Group Finance Director

  4. Trading Summary Disappointing Results • Operating profits from continuing operations of £37.5m down from £77.6m in 2001/02 • Profit before tax £48.1m*, in line with our February trading statement, but down from £90.6m** last year • Poor performance reflects: • sharply worsening economic markets in Europe • disruption to reordering cycles following significant euro changeover benefit in 2001/02 • Increasing worldwide political uncertainty * Before exceptional charge of £49.2m and goodwill amortisation of £3.6m 2002/03 ** Before exceptional gain of £13.1m and goodwill amortisation of £2.8m 2001/02

  5. Trading Summary However, balance sheet remains strong • £72.7m of free cashflow* generated (2001/02 £81.6m*) • Returned a total of £71.3m to shareholders through a combination of three dividends and the share buy back programme • Closing net cash position £8.2m, ahead of recent expectations • Final dividend maintained at 9.2p (full year dividend 13.6p up 1.5% on last year) * Before dividends from associates, exceptional cashflows, capital expenditure, acquisitions, dividend and share buy back costs

  6. Taking Action • closure of Singapore site - completed • annualised cost savings £3.0m, of which £1m benefit achieved in 2002/03 • reduction in European cost base • annualised cost savings circa £7.0m • manufacturing review; closure of High Wycombe site – on track for completion June 2003 (loss of 350 staff) • divisional costs reduced • annualised cost savings circa £7.0m of which £2m benefit achieved in 2002/03 • strategic review of activities • Currency • Cash Systems • Global Services(inc Security Products)

  7. Financial Summary 2002/03 2001/02 £m £m Sales Continuing operations 536.6 641.7 Acquisitions 46.1 - Discontinued operations - 9.5 582.7 651.2 Operating profit* Continuing operations 37.5 77.6 Acquisitions 0.5 - Discontinued operations - (1.4) 38.0 76.2 Profit before tax, exceptional items and goodwill amortisation 48.1 90.6 Earnings per share* 18.9 34.4 Dividend per share 13.6p 13.4p Net cash 8.2 50.0 * Before exceptional charge of £49.2m (2001/02 - £13.1m gain), and goodwill amortisation of £3.6m (2001/02 £2.8m)

  8. Security Paper and Print 2002/03 2001/02 £m £m SalesContinuing operations 211.0 226.8 Acquisitions 2.8 -213.8 226.8 Operating profitContinuing operations 30.5* 41.1 Acquisitions (0.1) - 30.4 41.1 Margins (%) 14.2% 18.1% *Before exceptional charge of £19.9m and goodwill amortisation credit of £0.2m • Sales from continuing operations down £15.8m (or 6.9%) to £211.0m and operating profits* down £10.6m to £30.5m • Currency business in line with expectations at beginning of year – good banknote performance offsetting weaker paper markets • Closing order book slightly ahead of previous year • Majority of underlying operating profit reduction from Security Products’ activities - volumes reduction; reorganisation of manufacturing base including closure of High Wycombe

  9. Cash Systems 2002/03 2001/02 £m £m SalesContinuing operations 292.8 370.5 Acquisitions 18.1 -310.9 370.5 Operating profitContinuing operations 8.4* 36.0 Acquisitions 3.2 - 11.6 36.0 Margins (%) 3.7% 9.7% *Before exceptional items of £10.5m and goodwill amortisation of £3.3m • Sales from continuing operations down 21% and operating profits down £27.6m to £8.4m • Good contribution from Papelaco acquisition, increased total operating profit to £11.6m • Profit reduction due to • sharply worsening economic markets in Europe • disruption to reordering cycles following on from significant euro changeover benefit in 2001/02 • increasing worldwide political uncertainty • Service, OEM, Retail businesses in line with expectations at beginning of year

  10. Global Services 2002/03 2001/02 £m £m SalesContinuing operations 34.7 48.1 Acquisitions 25.2 - 59.9 48.1 Operating (loss)/ profit Continuing operations (1.4)* 0.5 Acquisitions (2.6) - (4.0) 0.5 *Before exceptional charge of £2.8m and goodwill amortisation of £0.5m • Poor year – Identity and Holographics suffering reduced volumes and delayed orders • Sales from continuing operations down £13.4m to £34.7m and an operating loss of £1.4m reported • Acquisition of Sequoia completed • partial year, with losses in post acquisition period following good profitability in previous 6 months • Exeter, USA ballot printing facility to close in 2003/2004, as anticipated in acquisition plan - 60 redundancies – annualised cost saving circa £1m

  11. Associates 2002/03 2001/02 £m £m Profit before interest and tax 9.2 11.8 • Main associate is Camelot, UK national lottery operator, following disposal of 50% shareholding in De La Rue Giori • Profits down in first half, as expected • New licence conditions • Shareholding decreased to 20% from 26.67% • Contribution per 100p down from 1.0p to 0.5p

  12. Earnings per share 2002/03 2001/02 p p As calculated under FRS14 (4.3) 40.7 Profit on disposal of discontinued operations - (0.7) Profit on sale of investments- (12.0) Loss in impairment of investment 0.7 - (Loss)/Profit on disposal of fixed assets 0.2 (0.1) Amortisation of goodwill - continuing 1.7 1.5 - exceptional (CSI) 8.7 - _____________________ Headline earnings per share as defined by the IIMR 7.0 29.4 Reorganisation costs 11.9 5.0 Headline earnings per share before reorganisation costs 18.9 34.4

  13. Cashflow / Net Debt 2002/03 2001/02 £m £m Net free cashflow 72.781.6 Exceptional cashflows (16.7) (3.9) Capital expenditure (21.3) (22.0) Equity dividends paid (33.3) (24.1) Share buy back / own shares (38.0) (14.9) Acquisitions and disposals (33.4) (50.8) Sale of investments 15.9 13.3 Associate dividends received 9.0 28.3 Share capital issued 1.1 6.4 Exchange 2.2 - Cash (outflow)/inflow (41.8) 13.9 Net cash 8.2 50.0 Net interest: Group 0.5 (0.4) Associates 0.4 3.0

  14. Exceptional Items Cash Non Total Cash £m £m £m Reorganisation Security Products (inc. Global Services) (12.7) (5.9) (18.6) Cash Systems (8.5) (2.0) (10.5) Sequoia (2.8) - (2.8) (24.0) (7.9) (31.9) CSI goodwill write-off - (16.0) (16.0) Loss on impairment of investment in JV - (1.3) (1.3) _________________________ Exceptional pre-tax costs(24.0) (25.2) (49.2) 2002/03 11.3 2003/04 12.7

  15. Pensions • Full implementation of FRS17 deferred (announced Sept 2002) • Net charge to P&L under SSAP 24 for UK share was £1.9m (FRS17: £2.4m) • Amortising surplus following last triennial valuation in April 2002 • 2002/2003 impact was credit to P&L of £6.1m • Triennial review due later this year - deficit expected - amortisation credit eliminated • Underlying regular pension cost under SSAP 24 of £8.0m may also increase in light of depressed levels of equity markets • Adverse impact on 2003/04 likely to be £7m-£8m. Need to await outcome of triennial review due September 2003

  16. 11.50 HIGH 11.0311/06/01 Swedish Krona to US Dollar 11.00 10.50 10.00 9.50 9.00 8.50 LOW 8.35 07/0/3/03 8.00 A M J J A S O N D J F M A M J J A S O N D J F M 2001 2002 2003 Foreign Exchange Exchange Rate(WMR) Source: DATASTREAM

  17. Ian Much Group Chief Executive

  18. Situation analysis • Several key markets affected by worsening macro economic conditions • Increased concerns about global security added to market weakness But…. • Actions in place to improve cost effectiveness and efficiency • Lower cost base will ensure De La Rue well placed whenever markets improve • Strong balance sheet backed by underlying cash generation

  19. Cash Systems Current issues • Division holding market share • Cost base (particularly in Eurozone) too high for current market conditions • Financial Institutions not been able to grow new markets fast enough to offset downturn in Spain and Germany • Currency Systems significantly under-performing - both market and structural issues

  20. Cash Systems • Actions • Cost reduction • Germany • Spain • Currency Systems • Manufacturing • Push development of newer FI markets • USA • Central/ Southern Europe • China • Russia • Latin America

  21. Cash Systems Financial Institutions – revenue trend GBPm

  22. Cash Systems • 2003/2004 focus • Delivery of cost reduction programme on schedule • Exploit potential of Papelaco acquisition • Opportunities to extend self service offering in most developed markets • Retail opportunities • Successful trials in USA and UK with major retailers – business still in start up mode • Service • Acquired three small service operations in 2002/2003

  23. Currency • Banknote business continues to perform strongly • Market increasingly looking to sophisticated anti-counterfeit solutions to counter increasing threats from technology • Rigorous approach to cost base, e.g. Singapore • Acquired Bank of England banknote printing operations in April 2003 • Paper business outlook improving • Expect return to historical ordering patterns in 2003/2004 • Knock on effect for Currency components businesses

  24. Global Services (including Security Products) • Management • Peter Cosgrove appointed in March 2003 to lead Security Products and Global Services • Reorganisation of manufacturing operations on track • Capacity reduced through closure of High Wycombe • On track for site closure in June 2003 - 225 redundancies to date, balance on closure • Cost savings in Security Products and Global Services c. £7m in 2003/2004 • Completion by September 2003

  25. Global Services (including Security Products) • Action taken to reduce cost base • Strategic Review underway • Examining long term attractiveness of constituent businesses • Update in November 2003 • Development of Sequoia business in line with expectations, on acquisition

  26. Summary • Focus on core technologies and skills • Actions underway to reduce cost base • Strengthened management team • Strong balance sheet

  27. Outlook • Underlying tough market conditions continue in 2003/2004 • Priority to complete cost cutting exercises in Cash Systems and Global Services to underpin profitability • Currency business solid • Papermaking business returning to production levels closer to capacity • Banknote printing overspill order levels returning to long term average levels • Adverse impact from foreign exchange and pensions • Underlying performance therefore expected to show some improvement as cost reduction exercises are delivered

More Related