REG - De La Rue PLC - 2017/18 Half Year Results <Origin Href="QuoteRef">DLAR.L</Origin> - Part 3
21/11/2017 07:05
- Part 3: For the preceding part double click ID:nRSU0372Xb
£m £m £m
Site relocation and restructuring (1.8) (1.6) (0.2)
Warranty provisions - 0.5 0.5
Sale of land - 0.1 0.2
Asset impairmentAcquisition related -- -- -(0.9)
Total exceptional items (1.8) (1.0) (0.4)
Exceptional items - tax credit 0.2 0.2 0.6
Site relocation and restructuring costsNet exceptional charge in the
period was £1.8m (H1 2016/17: £1.0m charge, Full Year 2016/17: £0.4m
charge) and related to restructuring costs as part of the continuing
redesign of the organisational structure, including investment on our
finance system upgrade, and the optimisation of our manufacturing
capabilities. Warranty provisionsSurplus warranty provisions were
credited to exceptional items in Half Year 2016/17 and Full Year 2016/17
of £0.5m in each period consistent with where the cost of the original
provisions was recorded in the financial statements. No such releases
have been made in Half Year 2017/18. Sale of landThe gains on land sales
in Half Year 2016/17 and Full Year 2016/17 relate to several individual
small land sales. No such sales have been made in Half Year 2017/18. Tax
credit on exceptionals Tax credit relating to exceptional items arising
in the period were £0.2m (H1 2016/17: £0.2m, Full Year 2016/17: £0.6m).
Net cash cost of exceptionalsThe cash cost of exceptional items in the
period was £1.0m (H1 2016/17: £2.4m) predominantly reflecting site
relocation and restructuring costs from the current and prior periods.
5 Taxation
A tax charge of 15.9% (H1 2016/17: 15.8%, Full Year 2016/17: 15.8%) has
been provided based on management's best estimate of the effective rate
of tax for the year arising on the profits before exceptional items
giving rise to tax for the period of £3.3m. This is offset by tax credits
of £0.2m on exceptional items recognised in the period as described in
note 4, resulting in an overall tax charge for the period of £3.1m.
Reductions in the UK corporation tax rate from 20% to 19% (effective from
1 April 2017) and to 17% (effective 1 April 2020) were substantively
enacted as at 6 September 2016. This will reduce the company's future
current tax charge accordingly. The UK deferred tax asset at 30 September
2017 has been calculated based on the rate of 17% substantively enacted
at the balance sheet date. NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS - UNAUDITED
6 Earnings per share
2017/18 2016/17 2016/17
Half Year Half Year Full Year
pence per share pence per share pence per share
Earnings per share
Basic earnings per share from continuing operations 14.8 13.2 47.2
Diluted earnings per share from continuing operations 14.7 12.9 46.6
Basic earnings per share from discontinued operations (0.4) (6.1) (7.9)
Diluted earnings per share from discontinued operations (0.4) (6.0) (7.8)
Basic earnings per share 14.4 7.1 39.3
Diluted earnings per share 14.3 6.9 38.8
Adjusted earnings per share
Basic earnings per share from continuing operations 16.6 14.0 47.1
Diluted earnings per share from continuing operations 16.4 13.7 46.5
Basic earnings per share from discontinued operations (0.4) (2.3) (2.3)
Diluted earnings per share from discontinued operations (0.4) (2.2) (2.2)
Basic earnings per share 16.2 11.7 44.8
Diluted earnings per share 16.0 11.5 44.3
Earnings per share are based on the profit for the period attributable to equity shareholders as shown in the Group condensed consolidated income statement. The weighted average number of ordinary shares used in the calculations is 101,839,970 (H1 2016/17: 101,462,770; FY 2016/17: 101,582,354) for basic earnings per share and 102,883,099 (H1 2016/17: 103,725,369; FY 2016/17: 102,829,946) for diluted earnings per share after adjusting for dilutive share options.
The Directors are of the opinion that the publication of the adjusted earnings per share is useful as it gives a better indication of adjusted business performance.
Reconciliations of the earnings used in the calculations are set out below.
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
Earnings for basic earnings per share - continuing operations 15.1 13.4 47.9
Earnings for basic earnings per share - discontinued operations (0.4) (6.2) (8.0)
Earnings for basic earnings per share 14.7 7.2 39.9
Add: Amortisation of acquired intangibles 0.2 - 0.1
Add: Exceptional items (excluding non-controlling interests) 1.8 4.1 4.4
Less: Tax on exceptional items (0.2) 0.6 1.1
Earnings for adjusted earnings per share 16.5 11.9 45.5
7 Equity dividends
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
Final dividend for the year ended 26 March 2016 of 16.7p paid on 3 August 2016 - 16.9 16.9
Interim dividend for the period ended 24 September 2016 of 8.3p paid on 11 January 2017 - - 8.5
Final dividend for the year ended 25 March 2017 of16.7p paid on 30 June 2017 17.0 - -
17.0 16.9 25.4
The Directors declared a dividend of 8.3p per share for the half year ended 30 September 2017 which will be paid on 3 January 2018 and will utilise £8.5m of shareholders' funds. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - UNAUDITED
8 Financial Instruments Carrying amounts versus the fair values
Financial assets Total fairvalueSep 2017 £m CarryingamountSep 2017 £m Restated total fair valueMar 2017£m Restated carryingamountMar 2017£m
Trade and other receivables1 120.5 120.5 102.6 102.6
Cash and cash equivalents 9.0 9.0 15.4 15.4
Derivative financial instruments:
- Forward exchange contracts designated as cash flow hedges3 1.6 1.6 4.5 4.5
- Short duration swap contracts designated as fair value hedges3 0.2 0.2 0.2 0.2
- Foreign exchange fair value hedges - other economic hedges3 1.9 1.9 0.9 0.9
- Embedded derivatives3 4.1 4.1 10.3 10.3
- Interest rate swaps3 - - - -
Total financial assets 137.3 137.3 133.9 133.9
Financial liabilities
Unsecured bank loans and overdraft (146.4) (146.4) (136.3) (136.3)
Trade and other payables2 (168.3) (168.3) (174.7) (174.7)
Derivative financial instruments:
- Forward exchange contracts designated as cash flow hedges3 (2.9) (2.9) (1.6) (1.6)
- Short duration swap contracts designated as fair value hedges3 (0.1) (0.1) (0.1) (0.1)
- Foreign exchange fair value hedges - other economic hedges3 (2.3) (2.3) (5.5) (5.5)
- Embedded derivatives3 (0.9) (0.9) (0.7) (0.7)
- Interest rate swaps3 (0.1) (0.1) (0.4) (0.4)
Total financial liabilities (321.0) (321.0) (319.3) (319.3)
(1) Excludes prepayments(2) Excludes deferred income. The prior period comparatives have been restated to include accrued expenses, and payments received on account(3) Level 2 valuation
Fair Value measurement for derivative financial instruments
Fair value is calculated based on the future principal and interest cash
flows, discontinued at the market rate of interest at the reporting date. The
valuation bases are classified according to the degree of estimation according
to the degree of estimation required in arriving at the fair values. Level 1
valuation are derived from unadjusted quoted prices for identical assets or
liabilities in active markets, level 2 valuations use observable inputs for
the assets or liabilities other than quoted prices, while level 3 valuations
are not based on observable market data and are subject to management
estimates. There has been no movement between levels during the current or
prior periods.
9 Analysis of net debt
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
Cash at bank and in hand 9.0 9.4 13.2
Short term bank deposits - 2.2 2.2
Bank overdrafts (0.3) (0.1) (4.2)
Cash and cash equivalents 8.7 11.5 11.2
Other debt due within one year (146.1) (127.0) (132.1)
Net debt at end of period (137.4) (115.5) (120.9)
The Group has a revolving credit facility of £275m. As the draw downs on this facility are typically
rolled over on terms of between one and three months the borrowings are disclosed as a current
liability. This is notwithstanding the long term nature of this facility which expires in December
2021. As at 30 September 2017, the Group has a total of undrawn committed borrowing facilities, all
maturing in more than one year, of £129m (24 September 2016: £123m, 25 March 2017: £118m, all maturing
in more than one year). The amount of loans drawn on the £275m facility is £146m. Net debt above is
presented excluding unamortised pre-paid borrowing fees of £1.7m.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - UNAUDITED
10 Retirement benefit obligations
The Group has pension plans, devised in accordance with local conditions and practices in the country concerned, covering the majority of employees. The assets of the Group's plans are generally held in separately administered trusts or are insured.
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
UK retirement benefit obligations (189.1) (358.7) (237.0)
Overseas retirement benefit obligations (2.3) (2.4) (2.4)
Retirement benefit obligations (191.4) (361.1) (239.4)
The majority of the Group's retirement benefit obligations are in the UK:
Amounts recognised in the consolidated Balance Sheet:
Fair value of plan assets 964.7 1,007.8 974.5
Present value of funded obligations (1,147.2) (1,357.9) (1,204.7)
Funded defined benefit pension plans (182.5) (350.1) (230.2)
Present value of unfunded obligations (6.6) (8.6) (6.8)
Net liability (189.1) (358.7) (237.0)
Amounts recognised in the consolidated Income Statement:
Included in employee benefits expense:
Administrative expenses (1.1) (0.6) (1.5)
Included in net finance cost:
Net retirement benefit obligation finance cost (3.2) (3.6) (7.4)
Total recognised in the consolidated Income Statement (4.3) (4.2) (8.9)
Principal actuarial assumptions: 2017/18 2016/17 2016/17
Half Year Half Year Full Year
UK UK UK
% % %
Future pension increases - past service 3.60 3.60 3.65
Discount rate 2.70 2.10 2.75
Inflation rate 3.10 3.10 3.30
At 30 September 2017 mortality assumptions were based on tables issued by Club Vita, with future
improvements in line with the CMI model, CMI_2016 and a long term rate of 1.25 per cent per annum.
Recognition of the deficit in accordance with IFRS results in the negative net assets shown on the
balance sheet. The Group announced on 1 July 2016 that it has agreed a revised funding plan with the
Trustee to eliminate the deficit over a period of 12 years from 31 March 2016. The plan will see the
existing funding payment schedule extended from 2022 to 2028. The cash contributions to the Scheme
will be £13.5m in 2018, increasing to £20.5m in 2019 and increasing by 4% a year to 2022. The amount
of contributions will be frozen at £23.0m per year between 2023 and 2028. The Group will continue to
pay annual fees of £1.6m for managing the Scheme, (excluding the PPF levy) in addition to the cash
contributions. In the year ended 25 March 2017, the Group made funding payments and management fees
totalling £14.8m.The next triennial funding valuation is due in April 2018.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - UNAUDITED
11 Related party transactions
During the year the Group traded on an arms length basis with the associated company Fidink (33.3% owned).The Group's trading activities with Fidink in the period comprise £17.0m (H1 2016/17: £10.2m) for the purchase of ink and other consumables on an arms length basis. At the balance sheet date there was £5.1m (H1 2016/17: £2.5m) owing to this company.
12 Contingent assets and liabilities
De La Rue has extensive international operations and is subject to various legal and regulatory regimes, including those covering taxation matters from which, in the ordinary course of business, contingent liabilities can arise. While the outcome of
litigation, disputes and investigations by regulatory authorities can never be predicted with certainty, having regard to legal advice received and the insurance arrangements of the Company and its subsidiaries, the Directors believe that adequate
provision has been made to cover these matters. The Group also provides guarantees and performance bonds which are issued in the ordinary course of business. In the event that a guarantee or bond is called, provision may be required subject to the
particular circumstances, including an assessment of its recoverability. Contingent assets and liabilities exist in relation to the sale of the CPS business - see Note 3 for further information.
13 Capital commitments
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
The following commitments existed at the balance sheet date:
Contracted but not provided for in the accounts 10.5 16.3 6.5
14 De La Rue financial calendar: 2017/18
Ex dividend date for interim dividend 7 December 2017
Record date for interim dividend 8 December 2017
Payment of interim dividend 3 January 2018
Financial year end 31 March 2018
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS - UNAUDITED
15 Non-IFRS Financial measures
De La Rue plc publishes certain additional information in a non-statutory
format in order to provide readers with an increased insight into the
underlying performance of the business. The Directors are of the opinion that
these measures give a better understanding of the underlying performance of
the business. Amortisation of acquired intangible assets is a non-cash item
and by excluding this from the adjusted operating profit metrics this is
deemed to be a more meaningful metric of the contribution from the underlying
business. The measures the Group uses along with appropriate reconciliations
where applicable are shown below.
Adjusted operating profit
Adjusted operating profit represents earnings from continuing operations
adjusted to exclude exceptional items and amortisation of acquired intangible
assets.
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
Operating profit from continuing operations on an IFRS basis 24.6 23.0 70.2
- Amortisation of intangible assets 0.2 - 0.1
- Exceptional items - operating 1.8 1.0 0.4
Adjusted operating profit from continuing operations 26.6 24.0 70.7
Adjusted basic earnings per share
2017/18 2016/17 2016/17
Half Year Half Year Full Year
£m £m £m
Profit attributable to equity shareholders of the Company from continuing operations on an IFRS basis 15.1 13.4 47.9
- Amortisation of intangible assets 0.2 - 0.1
- Exceptional items - operating 1.8 1.0 0.4
- Tax on exceptional items (0.2) (0.2) (0.6)
Adjusted profit attributable to equity shareholders of the Company from continuing operations 16.9 14.2 47.8
Weighted average number of ordinary shares for basic earnings 101.8 101.5 101.6
2017/18 2016/17 2016/17
Half Year Half Year Full Year
Pence per share Pence per share Pence per share
Basic earnings per ordinary share continuing operations on an IFRS basis 14.8 13.2 47.2
Adjusted basic per ordinary share for continuing operations 16.6 14.0 47.1
This information is provided by RNS
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