De La Rue hit by costs as it restructures

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