Iraq contract boosts De La Rue

BANK note printer De La Rue‘s post-war contract to supply currency to Iraq helped it to a strong start to the financial year, it said today.

De La Rue, which has never disclosed the size or value of the contract to print the new Iraqi dinar, also posted a surge in last year's profits as it benefited from the order.

In an update ahead of its final results, the group said profits before tax, exceptionals and goodwill were £58.7m in the year to 27 March, against £48.7m last year.

The bank note printing business had performed strongly against demanding workloads, given exceptional volumes due mainly to the Iraq contract.

However the group said its currency arm was not expected to repeat last year's 'exceptional' volumes over the course of the current year.

It has also been hit by intense competition caused by the rush to supply safe and secure voting systems for the forthcoming US Presidential election.

The group's Sequoia division, which is providing touch-screen technology to counties at the centre of the automated poll-card fiasco four years ago, is battling a 25% plunge in margins as new entrants flock into the market.

Chairman Sir Brandon Gough said: 'Following the exceptional volumes in currency during the second half, the business starts the year with a strong order book for banknote printing and papermaking.'

This would underpin a stronger first half, although currency volumes were not expected to match those of last year.

The integration of the former Bank of England printing works at Debden, Essex, acquired in March last year, also made a good contribution to the division.

The Basingstoke, Hants-based group, which also has a 20% stake in National Lottery operator Camelot, said an improved performance at its cash systems division had been offset by increased pension charges and currency fluctuations.

Underlying operating profits at the division were £3m lower at £8.8m.

De La Rue's security products business, which makes items such as traveller's cheques, passports and domestic postage stamps, improved its performance after a weak start to the year.

As part of a restructuring the group recently announced it was to close its Byfleet plant in Surrey and its Peterborough factory, after demand for UK personal cheques and vouchers slumped.

Today it said both facilities were expected to be closed by the end of the current financial year.

During the year sales were £682.5m, compared with £582.7m last year. At the bottom line pre-tax profits were £22.5m, against losses of £4.1m.

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