TIDMDLAR
RNS Number : 6956G
De La Rue PLC
24 November 2015
DE LA RUE PLC
INTERIM STATEMENT
SIX MONTHS TO 26 SEPTEMBER 2015
KEY FINANCIALS
Half Year Half Year
2015/16 2014/15 Change
GBPm GBPm
Revenue 204.8 214.9 (5%)
Underlying operating profit
* 18.9 26.6 (29%)
Underlying operating margin* 9.2% 12.4%
Underlying profit before tax
* 12.8 20.6 (38%)
Reported profit before tax 19.6 18.1 8%
Underlying earnings per share
** 9.5p 15.9p (40%)
Reported earnings per share 19.2p 13.5p 42%
Dividend per share 8.3p 8.3p (0%)
* Before net exceptional income of GBP6.8m (H1 2014/15: GBP2.5m
charge).
** Underlying EPS is calculated before the exceptional income / (charge)
noted above and exceptional tax credits of GBP3.1m (H1 2014/15:
GBP0.1m).
The Directors are of the opinion that these measures give a better
indication of underlying performance.
HEADLINES
-- Half year results slightly ahead of expectations - full year expectations unchanged
-- Group 12 month order book up 37% year-on-year at GBP405m,
though market conditions remain volatile
-- Print and Paper volumes better than expected, benefited from large overspill contracts
-- Progress on Polymer marked by significant three-year contract
-- Launched first software solution for both Identity and
Security Products, and secured first customers
-- Reorganisation complete with new CFO on board; functional
structure in place to support delivery of strategy; net headcount
reduction of 6%
-- Manufacturing footprint review near completion, expect more
than GBP13m of annual savings from 2018/19, <GBP30m capex
investment and GBP8m restructuring cost over next two years
-- 'Root and branch' review initiated to address CPS poor performance
-- Interim dividend maintained at 8.3p
Martin Sutherland, Chief Executive Officer, commented:
"De La Rue's half year performance has been better than
expected. The Currency business has shown strength and resilience
against the ongoing volatile market conditions. Identity and
Security Products have also progressed well with the launch of the
first digital solutions. However, the overall performance was
dampened by the poor results in CPS. Our success in winning large
overspill orders in the period has strengthened the Group's order
book, which gives us confidence and visibility for our full year
performance.
Implementation of the five year plan we set out in May is now
well underway. We have restructured the business to support the
delivery of the strategy and increased investment in product
development and new technologies. Our review of the manufacturing
footprint to improve efficiency and reduce costs is near completion
and we will provide more details in the coming weeks. Whilst it
will, of course, take time to deliver the full potential of the
strategy, we are pleased with the progress made at this early
stage."
Enquiries:
De La Rue plc +44 (0)1256 605000
Martin Sutherland Chief Executive Officer
Jitesh Sodha Chief Financial Officer
Lili Huang Head of Investor Relations
Brunswick +44 (0)207 404 5959
Jon Coles
Oliver Hughes
A presentation to analysts will take place at 9:00 am on 24 November 2015
at the Lincoln Centre, 18 Lincoln's Inn Fields, WC2A 3ED. This will also
be accessible via a conference call and an audio webcast. Dial-ins for
the conference call are +44 (0) 20 3059 8125, passcode: De La Rue. An
archive of the conference call is also available for a week from midday
24 November 2015, which is accessible via +44 (0) 121 260 4861, passcode:
2142 945#. For the live webcast, please register at www.delarue.com where
a replay will also be available subsequently.
24 November 2015
Notes to editors
De La Rue is a leading commercial banknote printer, security paper maker
and provider of security products and software solutions and, as a trusted
partner of governments, central banks and commercial organisations around
the world, is at the forefront of the battle against the counterfeiter.
De La Rue, as the world's largest commercial banknote printer, provides
customers with a fully integrated range of sophisticated products and
services which are available either individually or as a whole. This includes
a leading design capability, production of innovative security components,
manufacture of security paper and polymer substrates and sophisticated
printing of banknotes, all contributing to trust in the integrity of currencies.
De La Rue is the world's largest commercial passport manufacturer in an
environment of increasing global concern over security at national boundaries
and border control. De La Rue also produces a wide range of other security
products, including tax stamps for governments who are seeking to combat
illicit trade and collect excise duties. Other products include authentication
labels, assuring purchasers of product validity, and government identity
documents. In addition the Group manufactures high speed cash sorting
and banknote inspection equipment.
De La Rue also provides a range of specialist services and software solutions
including government identity schemes, product authentication systems
and cash management processing solutions.
De La Rue is listed on the London Stock Exchange (LON:DLAR). For further
information visit www.delarue.com
Cautionary note regarding forward-looking statements
These results include statements that are, or may be deemed to
be, "forward-looking statements". These forward-looking statements
can be identified by the use of forward-looking terminology,
including the terms "believes", "estimates", "anticipates",
"expects", "intends", "plans", "goal", "target", "aim", "may",
"will", "would", "could" or "should" or, in each case, their
negative or other variations or comparable terminology. These
forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout
these results and the information incorporated by reference into
these results and include statements regarding the intentions,
beliefs or current expectations of the directors, De La Rue or the
Group concerning, amongst other things, the results of operations,
financial condition, liquidity, prospects, growth, strategies and
dividend policy of De La Rue and the industry in which it
operates.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may be
beyond De La Rue's ability to control or predict. Forward-looking
statements are not guarantees of future performance. The Group's
actual results of operations, financial condition, liquidity,
dividend policy and the development of the industry in which it
operates may differ materially from the impression created by the
forward-looking statements contained in these results and/or the
information incorporated by reference into these results. In
addition, even if the results of operations, financial condition,
liquidity and dividend policy of the Group and the development of
the industry in which it operates, are consistent with the
forward-looking statements contained in these results and/or the
information incorporated by reference into these results, those
results or developments may not be indicative of results or
developments in subsequent periods.
Other than in accordance with its legal or regulatory
obligations, De La Rue does not undertake any obligation to update
or revise publicly any forward-looking statement, whether as a
result of new information, future events or otherwise.
INTERIM STATEMENT
De La Rue's half year results were slightly ahead of
expectations in spite of challenging market conditions. We have
made good early progress with the implementation of our strategy,
including a reorganisation of the business. The Group has
strengthened the 12 month order book to GBP405m as at the end of
the period, with the Currency business' closing order book up 56%
year-on-year.
During the period, there was modest revenue growth in the
Currency business, which benefited from successful bids in large
state overspill orders. However, overcapacity in the industry
continues to put pressure on margins. Our manufacturing footprint
review has progressed well and is expected to generate more than
GBP13m of annual cost savings from FY19 with less than GBP30m of
investment and GBP8m of restructuring costs. We will announce more
details in the coming weeks.
The Identity business has performed as expected with lower
revenue and margins due to a structural reduction in contribution
from a large contract. Security Products has performed better than
expected with higher volumes of good margin business. However, the
performance in Cash Processing Solutions (CPS) has been poor and a
'root and branch' review is now underway.
FINANCIAL RESULTS
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Group revenue fell by 5% to GBP204.8m (H1 2014/15: GBP214.9m) in
the first half. Underlying operating profit reduced by 29% to
GBP18.9m (H1 2014/15: GBP26.6m), primarily driven by the poor CPS
performance and the reduced margins in Currency. Underlying profit
before tax fell by 38% to GBP12.8m (H1 2014/15: GBP20.6m) and
consequently, underlying earnings per share decreased by 40% to
9.5p (H1 2014/15: 15.9p). Exceptional net income in the period was
GBP6.8m (H1 2014/15: exceptional charge of GBP2.5m), consisting of
GBP9.5m gain from the sale of surplus land, GBP1.1m from surplus
warranty provisions, less GBP3.8m expenses relating to site
relocation and staff restructuring. This resulted in profit before
tax of GBP19.6m (H1 2014/15: GBP18.1m), up 8% year-on-year.
Underlying operating cash flow, comprising underlying operating
profit adjusted for depreciation and the movement in working
capital, was GBP61.1m (H1 2014/15: GBP25.4m). Net debt at 26
September 2015 was GBP103.3m down GBP7.7m since the year end mainly
due to favourable working capital movement.
DIVIDEND
An interim dividend of 8.3p has been declared for the half year
ended 26 September 2015 (H1 2014/15: 8.3p), payable on 6 January
2016 to shareholders on the register on 4 December 2015.
STRATEGIC PROGRESS
In May 2015, we set out a clear strategic plan to revitalise and
continue to grow the De La Rue business in the next five years. We
stated that we would Optimise and Flex the businesses that are
facing downward pressure on pricing, and Invest and Build the
businesses that are operating in high growth markets. In the past
six months, we have put in place the foundations for delivering our
strategy by restructuring the business by function. Whilst it will
take time to deliver the full potential of the strategy, we are
making good progress at this early stage.
Optimise and Flex
As the key part of our Optimise and Flex strategy, we have
undertaken an extensive review of our Print business. The key
objectives of the review are to restructure the manufacturing
footprint to deliver optimum capability and capacity in order to
reduce costs and improve efficiency. The restructuring will require
less than GBP30m of capital investment and incur GBP8m of
restructuring costs over the next two years. Approximately one half
of this capital investment is incremental to the normal run rate.
It will deliver more than GBP13m per annum of cost savings from
FY19 and will also reduce excess print capacity. A separate
announcement on the footprint review will be made in the coming
weeks.
We continue to improve efficiency and productivity in both Print
and Paper through our ongoing operational excellence programme,
which has yielded a further GBP3m cost savings in the first
half.
Invest and Build
In order to capture high growth opportunities, we continue to
invest in product development and new technologies. R&D
investment in the first half increased by GBP2m. Our renewed focus
on security features and innovation resulted in the doubling of
patent applications in the first half compared with the full year
2014/15.
We aim to continue to increase our Polymer market share and have
achieved good momentum in the first half, marked by a significant
three-year contract with a large customer. We will continue to
invest in developing new security features for polymer substrate.
As one of only two polymer providers in the world, and the only one
with integrated manufacturing and print capability, we are well
placed to grow this business.
Identity and Security Products have also progressed well, with
the launch of the first digital solutions for each of their
respective markets. We have reorganised our sales force for
Identity to maximise internal synergies, as well as refocused our
efforts on a smaller number of market opportunities to improve
further our track record for Security Products.
OPERATING REVIEWS
Currency
Half Year Half Year
2015/16 2014/15 Change
Banknote print volume (bn notes) 2.7 2.7 0%
Banknote paper volume ('000 tonnes) 4.9 4.5 9%
GBPm GBPm
Revenue 139.8 136.8 2%
Operating profit* 13.9 17.2 (19%)
*Segmental operating profit is stated before exceptional items
Banknote Print volume was maintained at 2.7bn notes (H1 2014/15:
2.7bn), while paper volume was up 9% year-on-year at 4,900 tonnes.
The better than expected volumes were predominantly due to our
success in winning large overspill orders.
Revenue increased by 2% to GBP139.8m (H1 2014/15: GBP136.8m),
reflecting a favourable exchange movement as well as the higher
volume but lower pricing in Paper. Operating profit reduced to
GBP13.9m (H1 2014/15: GBP17.2m), primarily driven by the shift in
business mix caused by the reduced volume from an important
contract. As expected, this contract will conclude in the second
half of the year.
Polymer has demonstrated encouraging momentum in the first half.
We won a three-year contract with a value of cGBP25m with a large
customer. In addition, the first family of banknotes on our Polymer
substrate Safeguard(R) was launched successfully with the Maldives
Monetary Authority on 1 November. De La Rue now supplies Polymer
banknotes to 11 note issuing authorities, including all three note
issuing Scottish banks.
In Banknote Print, extensive trials with the Bank of England on
the new GBP5 banknote were completed in October and production is
now underway.
In order to increase flexibility and access to surge capacity in
Banknote Print, we continued to work on building external
partnerships. In the first half, we successfully outsourced
printing of 500m banknotes to third parties.
At the period end the 12 month order book for Currency, on a
like for like basis, was up 56% at GBP318m (H1 2014/15: GBP204m).
The significant increase was predominantly driven by large
overspill orders.
Identity Systems
Half Year Half Year
2015/16 2014/15 Change
GBPm GBPm
Revenue 31.5 34.0 (7%)
Operating profit* 4.6 5.9 (22%)
*Segmental operating profit is stated before exceptional items
Revenue fell by 7% to GBP31.5m (H1 2014/15: GBP34.0m) while
operating profit fell to GBP4.6m (H1 2014/15: GBP5.9m). This was
primarily due to structural reduction in contribution from a large
contract and the timing of order closure from a number of
customers.
In July, we launched our first software solution for the
Identity market DLR Identify(TM). This web based platform, combined
with three newly launched physical security features SkyLight(TM),
Continuous Bio-Data Page(TM), and Spectrum(TM) provides a full
identity management solution to our clients. We continue to
optimise our supply chain and have established a laminates
partnership with Dai Nippon. On 3 November HM Passport Office
announced a new UK passport design which was developed in
conjunction with De La Rue.
We will continue to focus on higher value, longer term ePassport
and ID schemes and the development of our digital and service
offering as border security becomes an increasing concern for
governments.
Security Products
Half Year Half Year
2015/16 2014/15 Change
GBPm GBPm
Revenue 19.6 20.8 (6%)
Operating profit* 5.1 4.5 13%
*Segmental operating profit is stated before exceptional items
Revenue was down marginally to GBP19.6m (H1 2014/15: GBP20.8m),
while operating profit increased by 13% to GBP5.1m (H1 2014/15:
GBP4.5m), chiefly due to cost savings from the closure of the
Dulles facility.
In April, we launched our first digital solution for the
security products market, DLR Certify(TM). The system enables
customers to authenticate and validate their products and therefore
protect revenues. The first order was successfully delivered in
November.
Cash Processing Solutions
Half Year Half Year
2015/16 2014/15 Change
GBPm GBPm
Revenue 16.1 25.5 (37%)
Operating profit* (4.7) (1.0) (370%)
*Segmental operating profit is stated before exceptional items
CPS performance was poor, with revenue down 37% to GBP16.1m (H1
2014/15: GBP25.5m) and an operating loss of GBP4.7m (H1 2014/15:
GBP1.0m). Sales volume was adversely impacted by increased pricing
pressure in the market.
We have initiated a 'root and branch' review which will complete
by the end of this financial year.
INTEREST
The Group's net interest charge was unchanged at GBP2.4m (H1
2014/15: GBP2.4m). The IAS19 related finance cost, which represents
the difference between the interest on pension liabilities and
assets, was GBP3.7m (H1 2014/15: GBP3.6m).
EXCEPTIONAL ITEMS
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Net exceptional income in the period was GBP6.8m, predominantly
from the gain of GBP9.5m on the sale of surplus land in Overton.
Surplus warranty provisions of GBP1.1m (previously charged as
exceptional items) were released in the period. Restructuring costs
of GBP3.8m were incurred in the period as part of the redesign of
the organisation structure. The cash cost of exceptional items was
GBP10.8m in the period predominantly due to the invocation of
guarantees provided for as a post balance sheet event in 2014/15
and the settlement of restructuring charges. Tax credits relating
to exceptional items arising in the period were GBP0.6m.
PENSION SCHEME
Pension deficit
The valuation of the pension scheme under IAS19 indicates a
scheme pre tax deficit at 26 September 2015 of GBP212.4m (2014/15
full year: GBP236.7m). The decrease of GBP24.3m since the year end
reflects an increase in the discount rate used to value the scheme
liabilities partly offset by lower asset values as a result of a
fall in equity values. In common with other final salary schemes,
the scheme valuation is very sensitive to any movement in the
discount rate and hence the deficit would reduce should interest
and discount rates increase in the future.
Recognition of the current deficit in accordance with IFRS
results in the negative net assets shown on the balance sheet. The
results of the latest triennial funding valuation as at April 2015
are still to be concluded. The special funding arrangements, agreed
in 2012, remain unchanged and are aimed to eliminate the deficit by
2022.
BOARD CHANGES
On 10 August 2015, Jitesh Sodha was appointed Chief Financial
Officer and an Executive Director of the Company to replace Colin
Child, who stepped down from the Board at the conclusion of the
Annual General Meeting. We would like to thank Colin for his
contribution to the business.
Jitesh brings to the Company strong financial skills and
commercial experience gained as CFO of a number of international
businesses. He is a qualified Chartered Management Accountant.
We are pleased to welcome Maria Da Cunha and Sabri Challah as
Non-executive Directors with effect from 23 July 2015 and we would
like to thank Gill Rider and Warren East, who have retired from the
Board as Non-executive Directors after serving nine and eight years
respectively.
OUTLOOK
The Board is encouraged by the increased order book, the good
progress made at this early stage of the strategy implementation
and the resilience of the Currency business. It remains confident
of the Group's prospects for the year.
Despite the conclusion of an important contract, our
expectations for next year remain unchanged.
Martin Sutherland Jitesh Sodha
Chief Executive Officer Chief Financial Officer
24 November 2015
-ends-
DIRECTORS REPORT
Principal risks and uncertainties
Throughout its global operations De La Rue faces various risks,
both internal and external, which could have a material impact on
the Group's performance. The Group manages the risks inherent in
its operations in order to mitigate exposure to all forms of risks,
where practical, and to transfer risk to insurers, where cost
effective.
The Group analyses the risks that it faces under the following
broad headings: strategic risks (technological revolution, strategy
implementation, changes to the market environment and economic
conditions), operational risks, legal/ regulatory, information
risks and financial risks (currency risk, credit risk, liquidity
risk, interest rate risk and commodity price risk).
As described in the 2015 Annual Report, the principal risks
include failure to innovate, timing of contract awards and
political factors, loss of a key customer or contract, product
security, product integrity, reputational damage, supplier failure,
health and safety failure, environmental breach, loss of a key
site, contract issues, breach of competition regulations, loss of
core IT systems, information security and actions of its employees
and third parties. These risks, along with the risk management
systems and processes used to manage them remain unchanged since
the Annual Report was published.
The main risks and uncertainties faced by the Group for the
remaining six months of the year and the risk management systems
and processes used to manage them are unchanged from those
described further in the 2015 Annual Report, a copy of which is
available on request from the Company's registered office at De La
Rue House, Jays Close, Viables, Basingstoke, Hampshire, RG22
4BS.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out on pages 6 to 23 of the strategic report in the 2015
Annual Report. In addition, pages 87 to 90 of the 2015 Annual
Report include the Group's objectives, policies and processes for
financial risk management, details of its financial instruments and
hedging activities and its exposure to credit risk, liquidity risk
and commodity pricing risk. The financial position of the Group,
its liquidity position and borrowing facilities are described on
page 18 of the 2015 Annual Report. As described on page 18 of the
2015 Annual Report, the Group meets its funding requirements
through cash generated from operations and a revolving credit
facility which expires in December 2019.
The Group's updated forecasts and projections, which cover a
period of more than twelve months from the date of the interim
statement, taking into account reasonably possible changes in
normal trading performance, show that the Group should be able to
operate within its currently available facilities. The Group has
sufficient financial resources together with assets that are
expected to generate cash flow in the normal course of business. As
a consequence and notwithstanding the net liability position being
reported in the consolidated balance sheet, which has primarily
arisen due to the value of the deficit in the retirement benefit
obligations, the Directors have a reasonable expectation that the
Company and the Group are well placed to manage their business
risks and to continue in operational existence for the foreseeable
future. Accordingly, the Directors continue to adopt the going
concern basis in preparing the condensed interim financial
statements.
A copy of the 2015 Annual Report is available at www.delarue.com
or on request from the Company's registered office at De La Rue
House, Jays Close, Viables, Basingstoke, Hampshire, RG22 4BS.
Responsibility Statement of the Directors in respect of the
Interim Statement
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been
prepared in accordance with IAS34 'Interim Financial
Reporting' as adopted by the EU;
* the Interim Management Statement includes a fair
review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of
the financial year and their impact on the condensed interim financial
statement; and a description of the principal risks and uncertainties
for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes
in the related party transactions to those described in the last Annual
Report that could do so.
The Board
The Board of Directors of De La Rue plc at 28 March 2015 and
their respective responsibilities can be found on pages 28 and 29
of the De La Rue plc Annual Report 2015. Since that date the
following changes have taken place:
-- Colin Child retired as Chief Financial Officer on 23 July
2015 and was succeeded by Jitesh Sodha who joined the Company on 10
August 2015
-- Warren East and Gill Rider retired as Non-executive Directors
at the conclusion of the AGM on 23 July 2015
-- Sabri Challah and Maria da Cunha were appointed as Non-executive Directors on 23 July 2015
For and on behalf of the Board
Philip Rogerson
Chairman
24 November 2015
INDEPENDENT REVIEW REPORT TO DE LA RUE PLC
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 26 September 2015 which comprises Group condensed
consolidated Interim Income Statement, the Group condensed
consolidated interim statement of comprehensive income, the Group
condensed consolidated interim balance sheet, the Group condensed
consolidated interim statement of cash flows, the Group condensed
consolidated interim statement of changes in equity and the related
explanatory notes. We have read the other information contained in
the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). Our review
has been undertaken so that we might state to the company those
matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we
have reached.
Directors' responsibilities
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The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the EU.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 26
September 2015 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the EU and the DTR of the UK
FCA.
Ian Bone
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
Canary Wharf,
London, E14 5GL
24 November 2015
GROUP CONDENSED CONSOLIDATED INTERIM
INCOME STATEMENT - UNAUDITED
FOR THE HALF YEAR ENDED 26 SEPTEMBER 2015
---------------------------------------------------------------------------------------------------------
2015/16 2014/15 2014/15
Half Year Half Year Full Year
Notes GBPm GBPm GBPm
Revenue 2 204.8 214.9 472.1
---------- ---------- -----------
Operating expenses - ordinary (185.9) (188.3) (402.6)
Operating income/(expenses) - exceptional 3 6.8 (2.5) (18.8)
---------- ---------- -----------
Total operating expenses (179.1) (190.8) (421.4)
Operating profit 25.7 24.1 50.7
Comprising:
---------- ---------- -----------
Underlying operating profit 2 18.9 26.6 69.5
Exceptional items 3 6.8 (2.5) (18.8)
---------- ---------- -----------
Profit before interest and taxation 25.7 24.1 50.7
Interest income 0.1 0.1 0.2
Interest expense (2.5) (2.5) (5.0)
Net retirement benefit obligation finance
cost (3.7) (3.6) (7.0)
------------------------------------------------------ ------ ---------- ---------- -----------
Net finance expense (6.1) (6.0) (11.8)
------------------------------------------------------ ------ ---------- ---------- -----------
Profit before taxation 19.6 18.1 38.9
Comprising:
---------- ---------- -----------
Underlying profit before tax 12.8 20.6 57.7
Exceptional items 6.8 (2.5) (18.8)
---------- ---------- -----------
Taxation - UK 4 (1.4) (2.4) (4.9)
- Overseas 4 2.0 (1.5) 1.1
---------- ---------- -----------
Total taxation 0.6 (3.9) (3.8)
Comprising:
---------- ---------- -----------
Underlying tax on profit before tax (2.5) (4.0) (11.1)
Tax on exceptional items 3 3.1 0.1 7.3
---------- ---------- -----------
Profit for the period 20.2 14.2 35.1
------------------------------------------------------ ------ ---------- ---------- -----------
Comprising:
---------- ---------- -----------
Underlying profit for the period 10.3 16.6 46.6
Profit/(loss) for the period on exceptional
items 3 9.9 (2.4) (11.5)
---------- ---------- -----------
Profit attributable to equity shareholders
of the Company 19.4 13.6 34.3
Profit attributable to non-controlling
interests 0.8 0.6 0.8
------------------------------------------------------ ------ ---------- ---------- -----------
20.2 14.2 35.1
------------------------------------------------------ ------ ---------- ---------- -----------
Basic earnings per ordinary share 5 19.2p 13.5p 34.0p
Diluted earnings per ordinary share 5 18.8p 13.4p 33.4p
------------------------------------------------------ ------ ---------- ---------- -----------
GROUP CONDENSED CONSOLIDATED INTERIM
STATEMENT OF COMPREHENSIVE INCOME - UNAUDITED
FOR THE HALF YEAR ENDED 26 SEPTEMBER 2015
2015/16 2014/15 2014/15
Half Year Half Year Full Year
GBPm GBPm GBPm
Profit for the financial period 20.2 14.2 35.1
------------------------------------------------------------------ ---------- ---------- -------------
Other comprehensive income
Items that are not reclassified subsequently
to profit or loss:
Re-measurement gains/(losses) on retirement
benefit obligations 20.1 (35.3) (79.1)
Tax related to remeasurement of net defined
benefit liability (4.0) 7.1 16.0
Items that may be reclassified subsequently
to profit or loss:
Foreign currency translation difference for
foreign operations (2.1) (3.6) (10.4)
Change in fair value of cash flow hedges (0.5) (2.7) (7.3)
Change in fair value of cash flow hedges transferred
to profit or loss 2.8 3.3 6.9
Income tax relating to components of other
comprehensive income (0.5) (0.1) (0.1)
Other comprehensive income for the period,
net of tax 15.8 (31.3) (74.0)
------------------------------------------------------------------ ---------- ---------- -------------
Total comprehensive income for the period 36.0 (17.1) (38.9)
------------------------------------------------------------------ ---------- ---------- -------------
Total comprehensive income for the period
attributable to:
Equity shareholders of the Company 35.2 (17.7) (39.7)
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Non-controlling interests 0.8 0.6 0.8
------------------------------------------------------------------ ---------- ---------- -------------
36.0 (17.1) (38.9)
------------------------------------------------------------------ ---------- ---------- -------------
GROUP CONDENSED CONSOLIDATED INTERIM
BALANCE SHEET - UNAUDITED
AT 26 SEPTEMBER 2015
----------------------------------------------------------------------------------------
2015/16 2014/15 2014/15
Half Year Half Year Full Year
Notes GBPm GBPm GBPm
ASSETS
Non-current assets
Property, plant and equipment 175.3 180.3 179.3
Intangible assets 16.8 19.8 16.6
Investments in associates 0.1 0.1 0.1
Deferred tax assets 43.2 43.0 47.7
Derivative financial instruments 7 0.5 0.3 0.3
235.9 243.5 244.0
------------------------------------------- ------ ---------- ---------- ----------
Current assets
Inventories 83.0 91.6 71.2
Trade and other receivables 82.7 91.3 105.4
Current tax assets 1.1 0.4 2.2
Derivative financial instruments 7 6.1 5.3 7.8
Cash and cash equivalents 8 52.4 32.5 30.8
225.3 221.1 217.4
------------------------------------------- ------ ---------- ---------- ----------
Total assets 461.2 464.6 461.4
------------------------------------------- ------ ---------- ---------- ----------
LIABILITIES
Current Liabilities
Borrowings 8 (155.7) (159.3) (141.8)
Trade and other payables (179.1) (158.7) (159.1)
Current tax liabilities (17.2) (26.3) (19.6)
Derivative financial instruments 7 (7.9) (9.4) (12.0)
Provisions for liabilities and charges (9.9) (21.6) (26.6)
------------------------------------------- ------ ---------- ---------- ----------
(369.8) (375.3) (359.1)
------------------------------------------- ------ ---------- ---------- ----------
Non-current liabilities
Retirement benefit obligations 9 (212.4) (199.6) (236.7)
Deferred tax liabilities (1.5) (1.5) (1.1)
Derivative financial instruments 7 (1.0) (0.3) (1.0)
Provisions for liabilities and charges (1.6) (0.5) (3.5)
Other non-current liabilities (1.0) (5.3) (6.9)
------------------------------------------- ------ ---------- ---------- ----------
(217.5) (207.2) (249.2)
------------------------------------------- ------ ---------- ---------- ----------
Total liabilities (587.3) (582.5) (608.3)
------------------------------------------- ------ ---------- ---------- ----------
Net liabilities (126.1) (117.9) (146.9)
------------------------------------------- ------ ---------- ---------- ----------
EQUITY
Ordinary share capital 46.6 46.5 46.5
Share premium account 35.6 35.4 35.5
Capital redemption reserve 5.9 5.9 5.9
Hedge reserve (1.7) (2.7) (3.5)
Cumulative translation adjustment (15.9) (7.0) (13.8)
Other reserves (83.8) (83.8) (83.8)
Retained earnings (119.3) (117.6) (139.4)
------------------------------------------- ------ ---------- ---------- ----------
Total equity attributable to shareholders
of the Company (132.6) (123.3) (152.6)
Non-controlling interests 6.5 5.4 5.7
------------------------------------------- ------ ---------- ---------- ----------
Total equity (126.1) (117.9) (146.9)
------------------------------------------- ------ ---------- ---------- ----------
GROUP CONDENSED CONSOLIDATED INTERIM
STATEMENT OF CASH FLOWS - UNAUDITED
FOR THE HALF YEAR ENDED 26 SEPTEMBER 2015
2015/16 2014/15 2014/15
Half Year Half Year Full Year
Notes GBPm GBPm GBPm
Cash flows from operating activities
Profit before tax 19.6 18.1 38.9
Adjustments for:
Finance income and expense 6.1 6.0 11.9
Depreciation and amortisation 12.9 12.4 24.8
(Increase)/decrease in inventories (12.5) (15.1) 5.7
Decrease in trade and other receivables 19.4 15.0 0.1
Decrease/(increase) in trade and other
payables 9.2 (13.5) (5.4)
Decrease in reorganisation provisions (3.2) (0.2) (0.3)
Special pension fund contribution (8.4) (7.7) (18.6)
(Gain)/loss on disposal of property, plant
and equipment (9.4) 0.4 2.2
Asset impairment - - 3.8
Other non-cash movements (3.6) (0.8) 0.5
--------------------------------------------- ------ ---------- ---------- ----------
Cash generated from operations 30.1 14.6 63.6
Tax paid (1.0) (5.1) (9.3)
Net cash flows from operating activities 29.1 9.5 54.3
--------------------------------------------- ------ ---------- ---------- ----------
Cash flows from investing activities
Purchases of property, plant and equipment
(PP&E) & software intangibles (10.8) (13.1) (28.8)
Development expenditure capitalised (0.9) (2.6) (5.1)
Proceeds from sale of PP&E 9.7 0.1 0.2
Net cash flows from investing activities (2.0) (15.6) (33.7)
Net cash flows before financing activities 27.1 (6.1) 20.6
--------------------------------------------- ------ ---------- ---------- ----------
Cash flows from financing activities
Proceeds from issue of share capital 0.1 0.3 0.4
Proceeds from borrowing 14.1 10.3 (6.8)
Interest received 0.1 0.1 0.2
Interest paid (1.8) (2.2) (4.8)
Dividends paid to shareholders (16.9) (28.5) (36.8)
Dividends paid to non-controlling interests - (0.3) (0.2)
--------------------------------------------- ------ ---------- ---------- ----------
Net cash flows from financing activities (4.4) (20.3) (48.0)
--------------------------------------------- ------ ---------- ---------- ----------
Net increase/(decrease) in cash and cash
equivalents in the period 22.7 (26.4) (27.4)
Cash and cash equivalents at the beginning
of the year 28.9 56.2 56.2
Exchange rate effects (0.7) 0.1 0.1
--------------------------------------------- ------ ---------- ---------- ----------
Cash and cash equivalents at the end of
the period 8 50.9 29.9 28.9
--------------------------------------------- ------ ---------- ---------- ----------
Cash and cash equivalents consist of:
Cash at bank and in hand 50.2 30.2 28.6
Short term bank deposits 2.2 2.3 2.2
Bank overdrafts (1.5) (2.6) (1.9)
--------------------------------------------- ------ ---------- ---------- ----------
8 50.9 29.9 28.9
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--------------------------------------------- ------ ---------- ---------- ----------
GROUP CONDENSED CONSOLIDATED INTERIM
STATEMENT OF CHANGES IN EQUITY - UNAUDITED
FOR THE HALF YEAR ENDED 26 SEPTEMBER 2015
---------------------------------------------------------------------------------------------------------------------------
Attributable to equity shareholders Non-controlling
interest Total
equity
-----------------------------------------------------------------------------
Share Capital Cumulative
Share premium redemption Hedge translation Other Retained
capital account reserve reserve adjustment reserve earnings
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 29
March
2014 46.3 35.3 5.9 (3.2) (3.4) (83.8) (72.6) 5.1 (70.4)
Profit for the
period - - - - - - 13.6 0.6 14.2
Other
comprehensive
income, net
of tax - - - 0.5 (3.6) - (28.2) - (31.3)
--------------- -------- -------- ----------- -------- ------------ -------- ---------- ---------------- ---------
Total
comprehensive
income - - - 0.5 (3.6) - (14.6) 0.6 (17.1)
Transactions
with owners
of the company
recognised
directly in
equity:
Share capital
issued 0.2 0.1 - - - - - - 0.3
Employee share
scheme:
- value of
services
provided - - - - - - (1.0) - (1.0)
Income tax on
income
and expenses
recognised
directly in
equity - - - - - - (0.9) - (0.9)
Dividends paid - - - - - - (28.5) (0.3) (28.8)
--------------- -------- -------- ----------- -------- ------------ -------- ---------- ---------------- ---------
Balance at 27
September
2014 46.5 35.4 5.9 (2.7) (7.0) (83.8) (117.6) 5.4 (117.9)
Profit for the
period - - - - - - 20.7 0.2 20.9
Other
comprehensive
income, net
of tax - - - (0.8) (6.8) - (35.1) - (42.7)
--------------- -------- -------- ----------- -------- ------------ -------- ---------- ---------------- ---------
Total
comprehensive
income - - - (0.8) (6.8) - (14.4) 0.2 (21.8)
Transactions
with owners
of the company
recognised
directly in
equity:
Share capital
issued - 0.1 - - - - - - 0.1
Employee share
scheme:
- value of
services
provided - - - - - - 0.5 - 0.5
Income tax on
income
and expenses
recognised
directly in
equity - - - - - - 0.4 - 0.4
Dividends paid - - - - - - (8.3) 0.1 (8.2)
--------------- -------- -------- ----------- -------- ------------ -------- ---------- ---------------- ---------
Balance at 28
March
2015 46.5 35.5 5.9 (3.5) (13.8) (83.8) (139.4) 5.7 (146.9)
Profit for the
period - - - - - - 19.4 0.8 20.2
Other
comprehensive
income, net
of tax - - - 1.8 (2.1) - 16.1 - 15.8
-------- -------- ----------- -------- ------------ -------- ---------- ---------------- ---------
Total
comprehensive
income - - - 1.8 (2.1) - 35.5 0.8 36.0
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 - - - - - - 1.7 - 1.7
Income tax on
income
and expenses
recognised
directly in
equity - - - - - - (0.2) - (0.2)
Dividends paid - - - - - - (16.9) - (16.9)
--------------- -------- -------- ----------- -------- ------------ -------- ---------- ---------------- ---------
Balance at 26
September
2015 46.6 35.6 5.9 (1.7) (15.9) (83.8) (119.3) 6.5 (126.1)
--------------- -------- -------- ----------- -------- ------------ -------- ---------- ---------------- ---------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS - UNAUDITED
1 Basis of preparation and accounting policies
This statement is the condensed consolidated financial information
of the Company and its subsidiaries (together referred to as the
'Group') and the Group's interests in associates and jointly controlled
entities as at and for the half year ended 26 September 2015. It
has been prepared in accordance with the requirements of IAS34 Interim
Financial Reporting as adopted by the European Union.
The condensed consolidated interim financial statements have been
prepared as at 26 September 2015, being the last Saturday in September.
The comparatives for 2014/15 financial year are for the half year
ended 27 September 2014 and the full year ended 28 March 2015. The
condensed consolidated financial statements were approved by the
Board of Directors on 24 November 2015.
The condensed consolidated financial statements do not constitute
financial statements as defined in section 434 of the Companies Act
2006 and do not include all of the information and disclosures required
for the full annual financial statements. They should be read in
conjunction with the Group's Annual Report 2015 which is available
on request from the Company's registered office at De La Rue House,
Jays Close, Viables, Basingstoke, Hampshire, RG22 4BS or at www.delarue.com
The comparative figures for the financial period ended 28 March 2015
are not the Company's statutory accounts for that financial period.
Those accounts have been reported on by the Group's auditors and
delivered to the Registrar of Companies. The auditor's report was
(i) unqualified, (ii) did not include a reference to any matters
to which the auditors 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.
The half yearly results for the current and comparative periods are
unaudited. The auditors have carried out a review of the interim
statement 2015/16 and their report is set out on page 10.
These condensed financial statements have been prepared using the
same accounting policies as used in the preparation of the Group's
annual financial statements for the period ended 28 March 2015, which
were prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the EU.
During the period the Group has adopted a number of amended standards
and interpretations, none of which has had an impact on the Groups
net cash flows, financial position, total comprehensive income or
earnings per share.
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 year ended 28 March 2015.
2 Segmental analysis
The Group has four main business units, Currency, Identity Systems,
Security Products and Cash Processing Solutions. The Board, which
is the Group's Chief Operating Decision Maker, monitors the performance
of the Group at an operating unit level and there are therefore four
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reportable segments. The principal financial information reviewed
by the Board, is revenue and operating profit before exceptional
items, measured on an IFRS basis.
The Group's segments are:
-- Currency - provides banknote paper, printed banknotes and banknote
security features
-- Identity Systems - involved in the provision of passport, ePassport,
national ID and eID, driving licence and voter registration schemes
-- Security Products - produces security documents, including authentication
labels, brand licensing products, government documents, cheques and
postage stamps
-- Cash Processing Solutions - primarily focused on the production of
large banknote sorters and authentication machines for central banks,
complementing the Currency business
Analysis by operating segment
2015/16 2014/15 2014/15
Half Year Half Year Full Year
GBPm GBPm GBPm
Revenue by operating segment
Currency 139.8 136.8 317.9
Identity Systems 31.5 34.0 69.0
Security Products 19.6 20.8 39.6
Cash Processing Solutions 16.1 25.5 50.7
Eliminations (2.2) (2.2) (5.1)
204.8 214.9 472.1
----------------------------------------- ---------- -------------- -----------
Operating profit by operating segment
Currency 13.9 17.2 50.5
Identity Systems 4.6 5.9 11.1
Security Products 5.1 4.5 7.5
Cash Processing Solutions (4.7) (1.0) 0.4
--------------------------------------- ------ ------ -------
Operating profit before exceptional
items 18.9 26.6 69.5
Exceptional items - Currency (2.1) - (10.7)
Exceptional items - Security Products (0.2) (1.6) (6.2)
Exceptional items - Cash Processing
Systems (0.7) (0.9) (1.9)
Exceptional items - unallocated 9.8 - -
--------------------------------------- ------ ------ -------
Operating profit 25.7 24.1 50.7
Net finance expense (2.4) (2.4) (4.8)
Retirement benefit obligations net
finance expense (3.7) (3.6) (7.0)
--------------------------------------- ------ ------ -------
Profit before taxation 19.6 18.1 38.9
--------------------------------------- ------ ------ -------
2015/16 2014/15 2014/15
Half Year Half Year Full Year
GBPm GBPm GBPm
Assets by operating segment
Currency 230.4 252.0 241.7
Identity Systems 39.7 37.5 38.8
Security Products 19.8 23.6 19.8
Cash Processing Solutions 32.8 34.8 33.1
Unallocated assets 138.5 116.7 128.0
--------------------------- ------ ------ ------
461.2 464.6 461.4
--------------------------- ------ ------ ------
Liabilities by operating segment
Currency (128.5) (120.7) (128.8)
Identity Systems (22.0) (20.3) (21.6)
Security Products (6.6) (8.9) (9.1)
Cash Processing Solutions (10.8) (11.5) (11.1)
Unallocated liabilities (419.4) (421.1) (437.7)
--------------------------- -------- -------- --------
(587.3) (582.5) (608.3)
--------------------------- -------- -------- --------
3 Exceptional items
2015/16 2014/15 2014/15
Half Year Half Year Full year
GBPm GBPm GBPm
Site relocation and restructuring (3.8) (2.5) (4.7)
Invocation of guarantees - - (13.3)
Warranty provisions 1.1 - 3.0
Sale of land 9.5 - -
Asset impairment - - (3.8)
----------------------------------------------- ------------- ------------ ------------
Total exceptional items 6.8 (2.5) (18.8)
----------------------------------------------- ------------- ------------ ------------
Exceptional items - tax 3.1 0.1 7.3
----------------------------------------------- ------------- ------------ ------------
Net exceptional income in the period was GBP6.8m (H1 2014/15: GBP2.5m
charge, Full Year 2014/15: GBP18.8m charge) predominantly in relation
to the gain on the sale of surplus land in Overton. Surplus warranty
provisions of GBP1.1m (previously charged as exceptional items) have
been released in the period. Restructuring costs of GBP3.8m were incurred
in the period as part of the redesign of the organisation structure
and the optimisation of manufacturing capabilities. The cash cost
of exceptional items in the period was GBP10.8m (H1 2014/15: GBP2.7m)
predominantly reflecting the invocation of guarantees provided for
as a post balance sheet event in 2014/15 and settlement of restructuring
charges.
Tax credits relating to exceptional items arising in the period were
GBP0.6m (H1 2014/15: GBP0.1m, Full Year 2014/15: GBP2.6m). There was
a prior year tax credit of GBP2.5m recognised for exceptional items
in the period (H1 2014/15: GBPnil, Full Year 2014/15: GBP4.7m). Included
within the prior year exceptional movement is GBP2.6m credits relating
to tax matters retained by the Group following the disposal of a discontinued
operation a number of years ago (H1 2014/15: GBPnil, Full Year 2014/15:
GBP4.5m).
4 Taxation
A tax charge of 19.1% (H1 2014/15: 19.3%, Full Year 2014/15: 19.3%)
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 GBP2.5m. This is offset
by tax credits of GBP3.1m on exceptional items recognised in the period
as described in note 3, resulting in an overall tax credit for the
period of GBP0.6m.
Reductions in the UK corporation tax rate from 20% to 19% (effective
from 1 April 2017) and to 18% (effective 1 April 2020) were substantively
enacted on 26 October 2015. This will reduce the company's future
current tax charge accordingly and reduce the deferred tax asset at
26 September 2015 (which has been calculated based on the rate of
20% substantively enacted at the balance sheet date).
5 Earnings per share
2015/16 2014/15 2014/15
Half Year Half Year Full year
pence per pence per pence
share share per share
Earnings per share
Basic earnings per share 19.2 13.5 34.0
Diluted earnings per share 18.8 13.4 33.4
Underlying earnings per share
Basic earnings per share 9.5 15.9 45.3
Diluted earnings per share 9.2 15.8 44.7
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 101,235,799 (H1 2014/15: 100,887,825) for basic
earnings per share and 102,988,888 (H1 2014/15: 101,249,385) for diluted
earnings per share after adjusting for dilutive share options.
The Directors are of the opinion that the publication of the underlying
earnings per share is useful as it gives a better indication of underlying
business performance.
Reconciliations of the earnings used in the calculations are set out
below.
2015/16 2014/15 2014/15
Half Year Half Year Full year
GBPm GBPm GBPm
Earnings for basic earnings per share 19.4 13.6 34.3
Exceptional items (excluding non-controlling
interests) (6.7) 2.5 18.8
Tax on exceptional items (3.1) (0.1) (7.3)
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Earnings for underlying earnings per share 9.6 16.0 45.8
------------------------------------------------------ ------------ ------------ -------------
6 Equity dividends
2015/16 2014/15 2014/15
Half Year Half Year Full year
GBPm GBPm GBPm
Final dividend for the year ended 29 March
2014 of 28.2p paid on
1 August 2014 28.5 28.5
Interim dividend for the period ended 27
September 2014 of 8.3p paid on 7 January
2015 - 8.3
Final dividend for the year ended 28 March 16.9 - -
2015 of 16.7p paid on
1 August 2015
16.9 28.5 36.8
------------------------------------------------ ---------- ---------- ----------
The Directors declared a dividend of 8.3p per share for the half year
ended 26 September 2015 which will be paid on 6 January 2016 and will
utilise GBP8.4m of shareholders' funds. In accordance with IFRS the
interim dividend has not been accrued in these condensed consolidated
interim financial statements.
7 Financial instruments
Carrying amounts versus fair values
The fair value of financial assets and liabilities, together with
the carrying amounts shown in the balance sheet, are as follows:
Total Carrying Total Carrying
fair amount fair amount
value Sep 2015 value Mar 2015
Financial assets Sep 2015 GBPm Mar 2015 GBPm
GBPm GBPm
Derivative financial instruments:
- Forward exchange contracts designated
as cash flow hedges 2.1 2.1 3.3 3.3
- Short duration swap contracts designated
as fair value hedges 0.4 0.4 0.1 0.1
- Foreign exchange fair value hedges -
other economic hedges 0.6 0.6 2.0 2.0
- Embedded derivatives 3.5 3.5 2.7 2.7
----------------------------------------------- ---------- ---------- ---------- ----------
Total financial assets 6.6 6.6 8.1 8.1
----------------------------------------------- ---------- ---------- ---------- ----------
Financial liabilities
Derivative financial instruments:
- Interest rate swaps (0.2) (0.2) - -
- Forward exchange contracts designated
as cash flow hedges (4.4) (4.4) (7.7) (7.7)
- Short duration swap contracts designated
as fair value hedges (0.2) (0.2) (0.2) (0.2)
- Foreign exchange fair value hedges -
other economic hedges (3.3) (3.3) (3.4) (3.4)
- Embedded derivatives (0.8) (0.8) (1.7) (1.7)
Total financial liabilities (8.9) (8.9) (13.0) (13.0)
----------------------------------------------- ---------- ---------- ---------- ----------
Fair value measurement basis for derivative financial instruments
Fair value is calculated based on the present value of future principal
and interest cash flows, discounted at the market rate of interest
at the reporting date.
The valuation bases are classified according to the degree of estimation
required in arriving at the fair values. Level 1 valuations 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. The financial assets and liabilities detailed in the above
table are level 2 valuations. The details of how the fair value of
each class of financial instrument is determined are covered on pages
89 and 90 of the Group's Annual Report 2015.
Financial risk management
The Group's financial risk management objectives and policies are
consistent with those disclosed in the Group's Annual Report 2015.
8 Analysis of net debt
2015/16 2014/15 2014/15
Half Year Half Year Full year
GBPm GBPm GBPm
Cash at bank and in hand 50.2 30.2 28.6
Short term bank deposits 2.2 2.3 2.2
Bank overdrafts (1.5) (2.6) (1.9)
------------------------------------------------ ----------- ---------- --------------
Cash and cash equivalents 50.9 29.9 28.9
Other debt due within one year (154.2) (156.7) (139.9)
Borrowings due after one year - - -
------------------------------------------------ ----------- ---------- --------------
Net debt at end of period (103.3) (126.8) (111.0)
------------------------------------------------ ----------- ---------- --------------
The Group has a revolving credit facility of GBP250m. 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 2019.
As at 26 September 2015, the Group has a total of undrawn committed
borrowing facilities, all maturing in more than one year, of GBP95.8m
(27 September 2014: GBP43.3m, 28 March 2015: GBP110.1m, all maturing
in more than one year). The amount of loans drawn on the GBP250m facility
is GBP154.2m.
9 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.
2015/16 2014/15 2014/15
Half Year Half Year Full year
GBPm GBPm GBPm
UK retirement benefit obligations (209.8) (197.3) (234.1)
Overseas retirement benefit obligations (2.6) (2.3) (2.6)
----------------------------------------------- ----------- ---------- --------------
Retirement benefit obligations (212.4) (199.6) (236.7)
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 825.7 813.2 891.6
Present value of funded obligations (1,028.1) (1,002.7) (1,117.6)
----------------------------------------------- ----------- ---------- --------------
Funded defined benefit pension plans (202.4) (189.5) (226.0)
Present value of unfunded obligations (7.4) (7.8) (8.1)
----------------------------------------------- ----------- ---------- --------------
Net liability (209.8) (197.3) (234.1)
----------------------------------------------- ----------- ---------- --------------
Amounts recognised in the consolidated
Income Statement:
Included in employee benefits expense:
Administrative expenses (0.5) (0.5) (1.1)
Included in net finance cost:
Net retirement benefit obligation finance
cost (3.7) (3.6) (7.0)
Total recognised in the consolidated Income
Statement (4.2) (4.1) (8.1)
----------------------------------------------- ----------- ---------- --------------
Principal actuarial assumptions: 2015/16 2014/15 2014/15
Half Year Half Year Full year
UK UK UK
% % %
Future salary increases - -
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