De La Rue (DLAR) reported flat first-half revenue and underlying operating profit that were up just 2 per cent to £24m, but the banknote and security specialist remains on track with its a five-year overhaul plan. The small increase in adjusted profit was achieved despite the conclusion of a £30m contract, and the forward order book at £409m provides decent forward earnings visibility.
On the currency note side, print volume rose by 22 per cent to 3.3bn notes, and revenue from polymer notes rose by 70 per cent, with gross profit doubling. Following the successful launch of the Bank of England polymer £5 note, printing of the polymer £10 note is already under way. The identity solutions division (passports) pushed revenue ahead by 6 per cent, securing epassport contracts with Barbados and Qatar, although profit slipped by a quarter to £3.4m as a result of closure of a large contract.
With more than 80 per cent of all revenue generated outside of the UK, sterling's recent weakness may attract further business from overseas. Revenue from product authentication and traceability rose by 10 per cent, lifting operating profit by almost a quarter to £6.3m.
Analysts at broker Investec are forecasting normalised pre-tax profit for the year to March 2017 of £50.6m and EPS of 39.7p (from £58.5m and 47.5p in FY2016).
| DE LA RUE (DLAR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 577p | MARKET VALUE: | £586m | |
| TOUCH: | 575.5-577p | 12-MONTH HIGH: | 647p | LOW: 396p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 16 | |
| NET ASSET VALUE: | * | NET DEBT: | £116m | |
| Half-year to 24 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 189 | 25.1 | 25.0 | 8.3 |
| 2016 | 190 | 17.2 | 13.2 | 8.3 |
| % change | +0 | -31 | -47 | - |
Ex-div: 8 Dec Payment: 11 Jan *Negative shareholders' equity | ||||
