REG - De La Rue PLC - 2017/18 Half Year Results <Origin Href="QuoteRef">DLAR.L</Origin> - Part 2
21/11/2017 07:05
- Part 2: For the preceding part double click ID:nRSU0372Xa
Foreign currency translation recycled on disposal of discontinued operations - 4.5 -
Change in fair value of cash flow hedges (1.3) 7.1 7.8
Change in fair value of cash flow hedges transferred to income statement (2.6) (3.2) (8.0)
Change in fair value of cash flow hedges transferred to non-current assetsIncome tax relating to components of other comprehensive income 0.10.6 (0.3)1.6 (0.2)0.2
Other comprehensive (loss)/income for the period, net of tax 37.4 (114.1) (20.5)
Total comprehensive (loss)/income for the period 52.8 (105.8) 21.0
Total comprehensive income for the period attributable to:
Equity shareholders of the Company 52.1 (106.9) 19.4
Non-controlling interests 0.7 1.1 1.6
52.8 (105.8) 21.0
GROUP CONDENSED CONSOLIDATED INTERIM BALANCE SHEET - UNAUDITEDAT 30 SEPTEMBER 2017
2017/18 2016/17 2016/17
Half Year Half Year Full Year
Notes £m £m £m
ASSETS
Non-current assets
Property, plant and equipment 164.5 162.7 167.2
Intangible assets 28.1 14.4 30.9
Investments in associates 0.1 0.1 0.1
Deferred tax assets 36.3 67.9 43.7
Derivative financial instruments 8 0.2 0.6 0.6
229.2 245.7 242.5
Current assets
Inventories 73.2 75.2 67.8
Trade and other receivables 133.9 91.1 109.7
Current tax assets - 0.2 -
Derivative financial instruments 8 7.6 31.0 15.3
Cash and cash equivalents 9.0 11.6 15.4
223.7 209.1 208.2
Total assets 452.9 454.8 450.7
LIABILITIES
Current Liabilities
Borrowings (144.7) (127.1) (136.3)
Trade and other payables (181.6) (163.0) (175.1)
Current tax liabilities (17.0) (20.9) (19.6)
Derivative financial instruments 8 (6.2) (22.6) (7.7)
Provisions for liabilities and charges (11.8) (14.7) (10.4)
(361.3) (348.3) (349.1)
Non-current liabilities
Retirement benefit obligations 10 (191.4) (361.1) (239.4)
Deferred tax liabilities (4.9) (2.9) (4.9)
Derivative financial instruments 8 (0.1) (1.0) (0.6)
Provisions for liabilities and charges (1.3) (1.8) (2.0)
Other non-current liabilities (3.7) (7.0) (1.3)
(201.4) (373.8) (248.2)
Total liabilities (562.7) (722.1) (597.3)
Net liabilities (109.8) (267.3) (146.6)
EQUITY
Ordinary share capital 46.9 46.7 46.8
Share premium account 36.8 36.6 36.7
Capital redemption reserve 5.9 5.9 5.9
Hedge reserve 8 (1.2) 5.3 2.0
Cumulative translation adjustment (8.6) (12.4) (9.7)
Other reserves (83.8) (83.8) (83.8)
Retained earnings (114.4) (273.0) (152.4)
Total equity attributable to shareholders of the Company (118.4) (274.7) (154.5)
Non-controlling interests 8.6 7.4 7.9
Total equity (109.8) (267.3) (146.6)
GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS - UNAUDITEDFOR THE HALF YEAR ENDED 30 SEPTEMBER 2017
2017/18 2016/17 2016/17
Half Year Half Year Full Year
Notes £m £m £m
Cash flows from operating activities
Profit before tax* 18.5 11.8 51.8
Adjustments for:
Finance income and expense 5.7 5.8 12.0
Depreciation 11.9 12.0 24.3
Amortisation 1.5 1.5 2.5
(Increase)/decrease in inventories (5.6) (6.6) 3.4
(Increase) in trade and other receivables (26.1) (2.5) (4.6)
Increase/(decrease) in trade and other payables 7.5 (1.8) (11.9)
(Decrease) in reorganisation provisions 0.8 (0.9) (3.6)
Special pension fund contribution (4.2) (4.2) (14.6)
Loss on disposal of property, plant and equipment and software intangibles - 0.8 1.4
Loss on disposal of discontinued operations - - 4.1
Other non-cash movements - 0.8 (0.5)
Cash generated from operations 10.0 16.7 64.3
Tax paid (5.5) (0.8) (5.7)
Net cash flows from operating activities 4.5 15.9 58.6
Cash flows from investing activities
Proceeds from sale of discontinued operation 1.6 2.1 2.1
Transaction costs relating to the sale of discontinued operations - - (2.5)
Purchases of property, plant and equipment and software intangibles (5.9) (6.3) (24.0)
Advanced payment - non trading 5.0 - -
Development expenditure capitalised - (2.5) (2.1)
Proceeds from sale of property, plant and equipment - - 0.2
Acquisition of subsidiary (1.0) - (17.9)
Net cash flows from investing activities (0.3) (6.7) (44.2)
Net cash flows before financing activities 4.2 9.2 14.4
Cash flows from financing activities
Proceeds from issue of share capital 0.2 1.0 1.2
Net drawdown/(repayment) of borrowings 14.0 (17.3) (12.4)
Payment of facility fees (1.1) - -
Interest paid (2.7) (2.0) (4.2)
Dividends paid to shareholders (17.0) (16.9) (25.4)
Dividends paid to non-controlling interests - (0.3) (0.3)
Net cash flows from financing activities (6.6) (35.5) (41.1)
Net (decrease)/increase in cash and cash equivalents in the period (2.4) (26.3) (26.7)
Cash and cash equivalents at the beginning of the period 11.2 37.9 37.9
Exchange rate effects (0.1) (0.1) -
Cash and cash equivalents at the end of the period 9 8.7 11.5 11.2
Cash and cash equivalents consist of:
Cash at bank and in hand 9.0 9.4 13.2
Short term deposits 4 - 2.2 2.2
Bank overdrafts (0.3) (0.1) (4.2)
9 8.7 11.5 11.2
*Profit before tax includes continuing and discontinued operations. The cash
flows relating to discontinued operations are included within Note 3
GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY - UNAUDITEDFOR THE HALF YEAR ENDED 30 SEPTEMBER 2017
Attributable to equity shareholders Non-controllinginterest Totalequity
Sharecapital£m Sharepremiumaccount£m Capitalredemptionreserve£m Hedgereserve£m Cumulativetranslationadjustment£m Otherreserve£m Retained earnings£m £m £m
Balance at 28 March 2016 46.6 35.7 5.9 2.3 (12.3) (83.8) (146.6) 6.6 (145.6)
Profit for the period - - - - - - 7.2 1.1 8.3
Other comprehensive income, net of tax - - - 3.0 (0.1) - (117.0) - (114.1)
Total comprehensive income - - - 3.0 (0.1) - (109.8) 1.1 (105.8)
Transactions with owners of the company recognised directly in equity:
Share capital issued 0.1 0.9 - - - - - - 1.0
Employee share scheme:
- value of services provided - - - - - - (0.5) - (0.5)
Income tax on income and expenses recognised directly in equity - - - - - - 0.8 - 0.8
Dividends paid - - - - - - (16.9) (0.3) (17.2)
Balance at 24 September 2016 46.7 36.6 5.9 5.3 (12.4) (83.8) (273.0) 7.4 (267.3)
Profit for the period - - - - - - 32.7 0.5 33.2
Other comprehensive income, net of tax - - - (3.3) 2.7 - 94.2 - 93.6
Total comprehensive income - - - (3.3) 2.7 - 126.9 0.5 126.8
Transactions with owners of the company recognised directly in equity:
Share capital issued 0.1 0.1 - - - - - - 0.2
Employee share scheme:
- value of services provided - - - - - - 2.0 - 2.0
Income tax on income and expenses recognised directly in equity - - - - - - 0.2 - 0.2
Dividends paid - - - - - - (8.5) - (8.5)
Balance at 25 March 2017 46.8 36.7 5.9 2.0 (9.7) (83.8) (152.4) 7.9 (146.6)
Profit for the period - - - 14.7 0.7 15.4
Other comprehensive income, net of tax - - - (3.2) 1.1 - 39.5 - 37.4
Total comprehensive income - - - (3.2) 1.1 - 54.2 0.7 52.8
Transactions with owners of the company recognised directly in equity: - -
Share capital issued 0.1 0.1 - - - - - - 0.2
Employee share scheme: - - - - - - - - -
- value of services provided - - - - - - 0.9 - 0.9
Income tax on income and expenses recognised directly in equity - - - - - - (0.1) - (0.1)
Dividends paid - - - - - - (17.0) - (17.0)
Balance at 30 September 2017 46.9 36.8 5.9 (1.2) (8.6) (83.8) (114.4) 8.6 (109.8)
Other reserve:
On 1 February 2000, the company issued and credited as fully paid 191,646,873
ordinary shares of 25p each and paid cash of £103.7m to acquire the issued
share capital of De La Rue plc (now De La Rue Holdings Limited), following the
approval of a High Court Scheme of Arrangement. In exchange for every 20
ordinary shares in De La Rue plc, the shareholders received 17 ordinary shares
plus 920p in cash. The other reserve of £83.8m arose as a result of this
transaction and is a permanent adjustment to the consolidated financial
statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - UNAUDITED
1 Statement of compliance These consolidated financial statements have been prepared on the going concern basis and
using the historical cost convention, modified for certain items carried at fair value, as stated in the Group's accounting
policies. The financial information set out above does not constitute the Group's statutory accounts for the periods ended 30
September 2017 or 24 September 2016. The financial information for the period ended 30 September 2017 is derived from the
statutory accounts for the period ended 30 September 2017 which will be delivered to the registrar of companies. The auditor has
reported on the accounts for the period ended 25 March 2017; their report was (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain
a statement under section 498 (2) or (3) of the Companies Act 2006. Significant accounting policies
The preliminary announcement for the period ended 30 September 2017 has been prepared consistently with International Accounting
Standards and International Financial Reporting Standards (collectively "IFRS") as adopted by the European Union (EU) at 30
September 2017. Details of the accounting policies applied are those set out in De La Rue plc's annual report 2017. In applying
the accounting policies, management has made appropriate estimates in many areas, and the actual outcome may differ from those
calculated. The key sources of estimation uncertainty at the balance sheet date were the same as those that applied to the
consolidated financial statements of the Group for the period ended 30 September 2017. During the period a number of amendments
to IFRS became effective and were adopted by the Group, none of which had a material impact on the Group's net cash flows,
financial position, total comprehensive income or earnings per share. Forthcoming accounting standards
IFRS 15 "Revenue from Contracts with Customers" will be effective for accounting periods beginning on or after 1 January
2018 (year-ended 31 March 2019 for De La Rue). It supersedes IAS 18 "Revenue" and establishes a principles-based approach to
revenue recognition and measurement based on the concept of recognizing revenue when performance obligations are satisfied. The
Group has an ongoing project to assess the impact to its financial statements. This project involves reviews of the Group's key
contracts and the use of questionnaires and detailed contract discussions with finance and business teams to identify the most
likely areas of change across the Group's segments and different revenue streams. Based on the Group's preliminary assessment
from work performed to date, the Group believes that areas such as multiple element arrangements and non valued performance
obligations in certain contracts, are areas where there is an anticipated impact from IFRS 15. Once this diagnostic phase is
complete, any relevant transition differences will be calculated and transitional disclosures drafted. Detailed quantitative
analysis of any impact will be provided in the 2017/18 annual report. IFRS 16 Leases was issued by the IASB in January 2016
(effective for the year ending 28 March 2020) replaces IAS 17. Under the new standard all it requires lessees to recognise a
lease liability and a right of use asset for all leases unless the lease term is 12 months or less or the underlying asset has a
low value. Interest expense on the lease liability and depreciation on the right of use asset will be recognised in the income
statement, resulting in a higher total charge to the income statement in the initial years of a lease. IFRS 16 is not expected
at the current time to have a significant impact on the results of the group. The Group continues to assess the impact of the
new standard. IFRS 9 Financial Instruments was issued by the IASB in July 2014. IFRS 9 introduces new requirements for the
classification, measurement and impairment of financial instruments and hedge accounting, and is required to be adopted by 29
March 2019. The Group continues to assess the impact of the new standard.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - UNAUDITED
2 Segmental analysis
The continuing operations of the Group have three main operating units: Currency, Identity Solutions and Product Authentication
and Traceability. The Board, which is the Group's Chief Operating Decision Maker, monitors the performance of the Group at this
level and there are therefore three reportable segments. The principal financial information reviewed by the Board is revenue
and adjusted operating profit, measured on an IFRS basis. The Group's segments are:
· Currency - provides printed banknotes, banknote paper and polymer substrates and banknote security features
· Identity Solutions - involved in the provision of passport, ePassport, national ID and eID, driving licence and voter registration schemes
· Product Authentication and Traceability - produces security documents, including authentication labels, brand licensing products, government documents, cheques and postage stamps
Inter-segmental transactions are eliminated upon consolidation.
Reclassification of results between Product Authentication & Traceability and
Identity Solutions
Historically the results of one of the Group's sites have been included in the
PA&T segment as this segment represented the majority of its business.
However, due to growth in IDS business within this site, the Chief Decision
Maker has started reviewing information including its numbers split between
IDS and PA&T. Therefore, in order to align the Group's external reporting
segments to the information reviewed internally the results of this site have
been split since the Full Year 2016/17 between the IDS and PA&T segment. The
Half Year 2016/17 figures have also been adjusted for comparability.
Prior to restatement amounts reported in Half Year 2016/17 were as follows:
Identity Systems: Revenue (£33.5m), Operating profit (£3.4m), Assets (£35.8m)
and Liabilities (£25.8m). Product Authentication and Traceability: Revenue
(£21.5m), Operating profit (£6.3m), Assets (£22.3m) and Liabilities (£9.6m).
All other amounts are as originally reported.
Analysis by operating segment
2017/18 2016/17Restated 2016/17
Half Year Half Year Full Year
£m £m £m
Revenue by operating segment
Currency 185.3 136.4 350.6
Identity Solutions 39.4 38.1 80.6
Product Authentication and Traceability 20.2 16.9 34.6
Eliminations (0.2) (1.9) (4.1)
Total of Continuing operations 244.7 189.5 461.7
Discontinued operations - 4.9 4.9
Unallocated - discontinued operations - - -
244.7 194.4 466.6
Operating profit by operating segment
Currency 16.6 14.3 50.3
Identity Solutions 5.4 5.4 11.4
Product Authentication and Traceability 4.6 4.3 9.0
Adjusted operating profit 26.6 24.0 70.7
Discontinued operations (0.4) (2.3) (2.3)
Adjusted operating profit (before exceptional items) 26.2 21.7 68.4
Exceptional items - Currency (0.1) 0.1 1.9
Exceptional items - Identity Solutions - - -
Exceptional items - Product Authentication and Traceability (0.4) - (0.9)
Exceptional items - Discontinued operations (3.1) (4.1)
Exceptional items - unallocated (1.3) (1.1) (1.4)
Amortisation of acquired intangibles (0.2) - (0.1)
Operating profit 24.2 17.6 63.8
Net finance expense (2.5) (2.2) (4.6)
Retirement benefit obligations net finance expense (3.2) (3.6) (7.4)
Profit before taxation 18.5 11.8 51.8
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - UNAUDITED
Analysis by operating segment (continued)
2017/18 2016/17Restated 2016/17
Half Year Half Year Full Year
£m £m £m
Assets by operating segment
Currency 256.8 240.0 243.4
Identity Solutions 48.3 40.3 46.3
Product Authentication and Traceability 24.8 17.8 23.1
Unallocated assets 123.0 156.7 137.9
Total Continuing operations 452.9 454.8 450.7
Discontinued operations - - -
452.9 454.8 450.7
Liabilities by operating segment
Currency (109.6) (123.4) (113.0)
Identity Solutions (37.4) (27.4) (30.3)
Product Authentication and Traceability (9.6) (8.0) (10.4)
Unallocated liabilities (406.1) (563.3) (443.6)
Total Continuing operations (562.7) (722.1) (597.3)
Discontinued operations - - -
(562.7) (722.1) (597.3)
3 Discontinued operations
The Group completed the sale of the entire issued share capital of Cash
Processing Solutions Limited and related subsidiaries (together 'CPS') to CPS
Topco Limited, a company owned by Privet Capital on 22 May 2016.
Under the terms of the agreement, De La Rue received £2.1m upon completion of
the transaction. During the half year 2017/18 a contingent consideration
payment of £0.8m has been received which was payable on the first anniversary
of the transaction in addition to £0.8m relating to a closing working capital
adjustment. A further contingent consideration amount of £0.8m is payable on
the second anniversary of the transaction. The Group is entitled to further
contingent consideration following the sale of up to £6m if certain
performance related and event driven milestones are achieved by CPS.
The loss in the period from discontinued operations relates to remaining costs
associated with the closure of the business.
No pension liability was transferred as part of the disposal.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS - UNAUDITED
3 Discontinued operations(continued) Results of the discontinued operation:
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
Revenue 2 - 4.9 4.9
Operating expenses - ordinary (0.4) (7.2) (7.2)
Operating expenses - exceptional - (3.1) (4.1)
Total operating expenses (0.4) (10.3) (11.3)
Operating loss (0.4) (5.4) (6.4)
Comprising:
Adjusted operating profit 2 (0.4) (2.3) (2.3)
Exceptional items - (3.1) (4.1)
Loss before interest and taxation (0.4) (5.4) (6.4)
Interest income - - -
Interest expense - - -
Net finance expense - - -
Loss before taxation (0.4) (5.4) (6.4)
Comprising:
Adjusted profit before tax (0.4) (2.3) (2.3)
Exceptional items - (3.1) (4.1)
Taxation - (0.8) (1.6)
Loss for the period from discontinued operations (0.4) (6.2) (8.0)
Comprising:
Adjusted profit for the period (0.4) (2.3) (2.2)
Loss for the period on exceptional items - (3.9) (5.8)
Cash flows from discontinued operations
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
Net cash from/(used in) operating activitiesNet cash used in investing activities (0.4)1.6 5.1- 5.1 -
Net cash used in financing activities - (0.1) (0.1)
Net cash from/(used in) discontinued operations 1.2 5.0 5.0
Exceptional items on discontinued operations
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
Loss on disposal of discontinued operations - (3.1) (4.1)
Total exceptional items - (3.1) (4.1)
Exceptional items - tax (charge)/credit - (0.8) (1.7)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS -
UNAUDITED
4 Exceptional Items
2017/18 2016/17 2016/17
Half Year Half Year Full Year
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