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					INTERIM RESULTS
     1999/00
 INTERIM HEADLINES

 Headline earnings per share of 11.7p up 5.4p or 86%
  on comparable period
 Operating profits from continuing activities up £9.7m
  at £25.3m
 Appointed external Managing Director to head up
  new Services and Solutions business
 Approximately £100m from £200m disposal
  proceeds of cards activities to be returned to
  shareholders
 Interim dividend unchanged at 4.0p per share.
PAUL HOLLINGWORTH
   Finance Director
           HIGHLIGHTS
                                                  1999      1998
                                                   £m         £m    Change
           Sales
           Continuing operations                  252.9    261.2      (8.3)
           Discontinued operations                 84.7    109.0

                                                  337.6    370.2

           Operating profit*
           Continuing operations                   25.3     15.6       9.7
           Discontinued operations                  5.1     (3.0)
           PBT*                                    34.7     19.3      15.4
           EPS*                                   11.7p     6.3p      5.4p
           Dividend                                4.0p     4.0p          -
           Net cash/(debt)                         39.3   (133.1)    172.4
* Before exceptional items/reorganisation costs
       SECURITY PAPER & PRINT
        Summary
                                        1st half    1st half
                                       1999/00     1998/99      change
                                             £m         £m          £m

      Sales                              121.9        125.0       (3.1)

      Operating profit                     24.9        18.3         6.6
      (before reorganisation costs)



Margins continue to rise benefiting from reorganisation actions
Reorganisation largely completed
Holding onto gains in banknote prices
Paper volumes down but improved mix largely offsets impact of lower sales
Non banknote security products results benefiting from increased
 holographic usage and higher sales of Microsoft covers
  SECURITY PAPER & PRINT

  Average banknote prices (indexed from 1990)

110


100
                                                 3.7% rise
90


80


70
  1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
                                                Y/E H1
             SECURITY PAPER & PRINT
             Banknote order book

Index        Value per banknote -12 month moving average
110


100


 90


 80


 70


 60


 50
      1995          1996           1997       1998         1999   2000
                                                                   H1

               Net sales value per banknote    Contribution per banknote
SECURITY PAPER & PRINT
Banknote volumes (billions of notes)

7

6

5

4

3

2

1

0
99999999990
99999999990
 01234567890
11111111112

                  sf nl
                  ta d
                   H   H
                       f
                  1 l 2a
       SECURITY PAPER & PRINT
       Banknote sales - segmental analysis

       Percentage of total value

                                                            1st half
                 1995     1996     1997      1998   1999   1999/00


Base               75       80      73        64     82          78


Overspill          25       20      27        36     18          22


Total             100      100     100       100    100        100
         SECURITY PAPER & PRINT

                                        Sales   Profit
                                          £m      £m
      1st half 1998/99                  125.0   18.3

      Exchange effect                   (0.1)        -

      Banknote printing                   2.6     5.9
      Banknote paper                    (6.8)   (0.4)
      Non banknote security printing      4.6     1.1
      Others (inc printing works)       (0.4)       -
      Spanish disposal*                 (3.0)       -

      1st half 1999/00                  121.9   24.9



* Lerchundi (Security print business)
      CASH SYSTEMS
      Summary
                                         1st half     1st half
                                        1999/00      1998/99      change
                                              £m          £m          £m

      Sales                                132.5       138.6         (6.1)

      Operating profit                       0.4        (2.7)         3.1
      (before reorganisation costs)


Sales down as we focused on products and geographical areas which
 were most profitable
New products as a percentage of total product sales now account for
 20% compared to 14% for last year
Breakeven result represents a positive shift in recent trend of results
Reorganisation on track
 CASH SYSTEMS




RESTRUCTURING PROGRESS
        UPDATE
   RESTRUCTURING ANNOUNCED MARCH 1999



Additional £40m P&L charge over 98/99 and 99/00

Cash element £30m

2 year pay back on cash

Progressive benefits over 2 years

500 job losses
     MANUFACTURING UNIT COST REDUCTIONS



More focused organisation and tighter management
 in place
New strategic purchasing manager in place
New strategic freight partnership in place
New flexible labour partnership deal at Portsmouth
Invested to improve manufacturing processes
FACTORY FIXED COSTS REDUCTION


Consolidation of sites in UK and
 Sweden underway and on track

Headcount reduction ahead of schedule
 (120 heads gone to date)

Annualised savings of £3m
 PRODUCT DEVELOPMENT

Radically reviewed organisation

Undertaken „clean-up of pipeline‟

Reduced heads by 50

Spend is in line with budget

Annualised saving of circa £4m
     CASH SYSTEMS
     Product development expenditure (first half)

£m
10                    £9.3m        £9.6m

         £8.0m                                  £7.9m
8


6


4


2


0
         1996         1997         1998         1999
DISTRIBUTION COMPANIES


Office closure and down-sizing


By year end we will have rationalised 8
 sales offices


Not affecting business
  IT SYSTEM


MfgPro implementation at Portsmouth on
 track to go-live April 2000

More cost effective stand alone system
 implementations in several regions

On track for running cost reduction of £3m
 CURRENT STATUS OF RESTRUCTURING

At the half year achieved 436 of 500 targeted
 job reductions

Per Annual Report:
 Total overall charge of £45.9m, of which
 £25.9m booked in 98/99

£20m to be incurred in current financial year

Looking to exit financial year 2000/2001 at 10%
 margins
PROFIT BEFORE TAX & EXCEPTIONAL ITEMS


                                   1999/00     1998/99
                                  Half Year   Half Year   Change
                                        £m          £m        £m

Operating Profit                      30.4        12.6      17.8

Share of profits of associates:
Camelot                                 3.5         6.6     (3.1)
Other (inc De La Rue Giori)             3.2         3.4     (0.2)

                                        6.7       10.0      (3.3)
Interest                              (2.4)       (3.3)       0.9

PBT                                   34.7        19.3      15.4
       EARNINGS PER SHARE
                                                            1999         1998
                                                           st            st
                                                          1 Half        1 Half        Change
                                                              (p)          (p)            (p)

As calculated under FRS 14                                   31.9              2.6       29.3
Loss on the disposal of continuing operations                   -              1.0      (1.0)
Profit on the disposal of discontinued operations          (24.3)                -     (24.3)
Profit on disposal of fixed assets and assets held for
disposal                                                        (0.3)         (0.8)       0.5
Profit on the part disposal of the shareholding in
Camelot                                                            -          (1.0)       1.0
Amortisation of goodwill                                         0.3            0.3         -

Headline earnings per share as defined by the IIMR               7.6           2.1        5.5
Reorganisation costs                                             4.1           4.2      (0.1)

Headline earnings per share before reorganisation costs         11.7           6.3        5.4
   CASHFLOW
                                            Half Year Half Year
                                                 1999      1998    Change
                                                  £m         £m       £m

Cash outflow before items noted below            (10.5)   (21.2)     10.7

Equity dividends paid                            (27.0)   (10.1)    (16.9)
Acquisitions and disposals                       194.5       3.7    190.8
Dividends received from associates                  3.2     18.1    (14.9)

Cash inflow/(outflow)                            160.2     (9.5)    169.7



Normal  seasonal outflow on working capital
Final and interim dividend paid in first half
No dividend paid by Giori
Net cash of £39.3m at half year
REPAYMENT OF CAPITAL


Cards disposal raised £200 million before
 costs

Return of surplus capital:
   tax efficient structure
   re-introduce gearing to the Group
   retains financial strength

Future dividend policy
 REPAYMENT OF CAPITAL

 Proposed return of 46 pence per share (approximately
  £103.7 million)
 Scheme of arrangement:
    New De La Rue “acquires” De La Rue
    Consolidation ratio of 17 new shares for 20 existing shares
    Reduction in number of shares in issue by 15%
 Share repurchase authority
 Expected timetable:
    Documentation in early December
    Court meeting and EGM in second week of January
    Dealings in new shares 1 February
 Board of New De La Rue will be identical to the existing
  board
 CURRENT TRADING & OUTLOOK

Trading in our operations since the half year has
 continued in line with our expectations and above
 last year.

Performance of associated companies is down
 and second half likely to be at similar levels to
 first half.

Major changes that have occurred in first half are
 delivering shareholder value.
 IAN MUCH
Chief Executive
SECURITY PAPER & PRINT: CURRENCY
 KEY TRENDS


Concern from customers about new
 counterfeiting threats leading to the
 introduction of new features

More opportunities to link print and paper
 features with sorting equipment

Competitor consolidation now taking place
OPPORTUNITIES FOR GROWTH

Indications of a slow shift towards more private sector
involvement in State Printing Works
However pace is dictated by political considerations
in individual territories
This presents opportunities for :
 Technology sales
 Facilities management contracts
 Overspill printing
    QUALITY & TECHNOLOGY

 Automatic inspection of banknotes
  during printing is now proven and
  reliable

 Ongoing major investment
  programme in such equipment (eg
  NotaSave)

 Continuing investment in security
  features, such as holographic foils
  and novel iridescent effects

                                        Starwide holographic thread
  COST REDUCTION & EFFICIENCY

Re-allocation of equipment to maximise the
 use of capital assets

Ink usage reduction systems

Improved systems for worldwide production
 scheduling to optimise capacity utilisation

Development of an advanced batch control
 system to enhance physical security and
 reduce cost
THE EURO

De La Rue fully involved in the origination
 process and production trials

Predominance of State Printing Works and
 paper mills

Qualifying process for tapes and holograms

Strategic investment with the Banco de
 Portugal in a state-of-the-art Euro production
 facility in Lisbon
  SECURITY PRODUCTS

 Increased use of holograms, sales up 30%
 Microsoft® cover volumes up 24%
 Planned relocation of Tapes to modern facility in
  second half
 Tapes, Thermotext® product has been well received
 High Wycombe operational performance still needs
  improving
 Just won contract to supply Argos with retail gift
  vouchers
 Brand Protection winning consultancy contracts,
  need to convert into orders
SUMMARY
Profitable ongoing business with modest
 growth opportunities

Leverage strong customer relationships

Continue to target top and middle end of
 market

Value not volume

Continuous improvement in operational
 efficiency
CASH SYSTEMS
ORGANISATION

Cash Systems division is now
focused on:

•   Branch Cash Solutions
•   Cash Processing
•   Desktop Products
•   Service
•   OEM
NEW PRODUCT DEVELOPMENTS/OPPORTUNITIIES:
TCR8000c PROJECT


Teller cash recycler
Product definition
 complete
Launched at recent
 trade shows
Good response from
 customers
Competitive positioning
   Concurrent operation
   Speed and authenticity
   Reliability and service
                              TCR8000c
 6000 SERIES NOTE SORTER

Bulk cash processor
Major customer launch July
 1999
   joint with key customers
   over 40 customers
   from 19 countries
Now installed on 3
 continents
Complete solution and
 integration to customers‟
 back office systems proven
                               New 6000 Sorter
 BRAZIL FACILITIES MANAGEMENT CONTRACT



Building on the De La Rue reputation

A model for the future

Already working with other banks both the
 commercial and state sectors to examine
 opportunities to replicate the experience
    AFTER SALES CUSTOMER SERVICE & SUPPORT



20% of the division‟s turnover
Employs one third of the workforce
Direct service operations in 15 of our direct markets
Supporting a franchised distributor network of over
  200 service partners
20% of our service activity is on non De La Rue
  manufactured products
SUMMARY

The restructuring is on schedule
The streams organisation has proven to
 function and is ready for growth
The product range has been enriched
Cash Systems is now providing solutions not
 only boxes
Cash Systems team is enthusiastic and very
 committed
NEW SERVICES & SOLUTIONS DIVISION
 WORK BEING UNDERTAKEN

Recruited new MD, Chris Chadwick who
 joined on 15 November

Keith Brown heading up internal development
 team

We are identifying potential areas of
 opportunity and defining business logic

Decided on initial internal components for
 new division
NEW SERVICES & SOLUTIONS DIVISION


      Identity Systems
      Transaction Services
      Holographics
      Brand Protection
      Royal Mint Services


Annual sales for year ended 31 March 1999
                   £48m
   CORE AREAS FOR NEW DIVISION

                   Related Services
                  to Core Customers

  Existing
Core Product      Brand Protection
 Businesses           Services

                 Electronic Security
                      Services
      NEXT STEPS

  Action                            Timing          Status

 Develop business plan              Ongoing          Done
 Complete market study              Autumn 1999      Done
 Identify existing businesses for  Autumn 1999       Done
  new division
 Identify skills gap and recruit    Autumn/end 1999  Ongoing
 Appoint new MD                     End 1999         Done
 Create new division                End 1999         Ongoing
 Consider small acquisitions        Early 2000       Ongoing
SUMMARY
    STRATEGIC FOCUS



 “OPERATE IN AREAS WHERE OUR CORE VALUES AND
CAPABILITIES OF SECURITY, INTEGRITY & TRUST CAN
  BE LEVERAGED PROFITABLY TO THE BENEFIT OF
  OUR CUSTOMERS AND WHERE WE HAVE, OR ARE
  ABLE TO DEVELOP, WORLD LEADING POSITIONS”
  KEY OPERATIONAL ISSUES

Complete reorganisation of Cash Systems and
 deliver targeted returns
Achieve substantial improvement in working
 capital performance
Build on strong product base with service
 approach
Get closer to customer base to leverage our core
 strengths/values
Progress on new Services & Solutions division
INTERIM RESULTS
     1999/00

				
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