interim results 2000/2001 abcabc “cash to secure transactions”
TRANSCRIPT
INTERIM RESULTS2000/2001
“Cash to Secure Transactions”
Highlights for the Period
Operating profit from continuing operations* up 8%
Further improvement in trading position of Cash
Systems
Continue to invest in Global Services
Headline earnings per share* up 13%
Strong operating cashflow
* before reorganisation costs
PAUL HOLLINGWORTHGroup Finance Director
Financial Highlights1st half
2000/01 £m
1st half 1999/00
£m Change
£m SalesContinuing operationsAcquisitions
Discontinued operations
Operating profit*Continuing operationsAcquisitions
Discontinued operations
Profit before tax and exceptional items
Earnings per share*
Dividend per share
Operating cashflow
242.35.3
247.6
-
247.6
29.4(1.8)
27.6
-
27.6
31.3
13.2p
4.0p
18.0
244.9-
244.9
92.7
337.6
25.5-
25.5
4.9
30.4
34.7
11.7p
4.0p
11.1
(2.6)
3.9
(3.4)
1.5p
6.9£337.6
* Before exceptional items/re-organisation costs
Cash Systems1st half
2000/01 £m
1st half 1999/00
£m Change
£m
Sales Continuing Acquisitions
Operating profit Continuing Acquisitions
Margins Continuing
114.95.3
120.2
5.5(1.8)
3.7
4.8%
124.5-
124.5
0.6-
0.6
0.5%
(9.6)
4.9
4.3 pts
Sales down because of slow sales of larger sorters within Cash Processing and withdrawal from unprofitable account in OEM business
Margins well up at 4.8% as benefits of re-organisation continue to come through Strong order books going into second half underpins expected upturn in sales Orders for Ascom Twinsafe II of 700 units received to date and losses should move to profits in
second half
Additional Cash Systems KPIs
New product sales as a % of total product sales
Product development expenditure (£m) (% of product sales)
Sales: product (£m) service/software (£m)
1st half1999/00
20
7.89.3
83.5 41.0
124.5
1st half2000/01
26
7.49.6
77.3 42.9
120.2
On track to exit the final quarter 2000/2001 at 10%operating margin
Security Paper & Print
1st half 2000/01
£m
1st half 1999/00
£m Change
£m
Sales
Operating profit
Margins (%)
103.9
23.8
22.9
95.9
21.1
22.0
+8.0
+2.7
+0.9 pts
Comparatives restated to exclude Global Services Margins improved in banknote business, increased usage of added value
security features Paper volumes down 15% which has impacted profits India overstocked and unlikely to order paper next year (15% of Portals
volumes) Sales and profits up at DLR Tapes on back of strong banknote demand Good performance in a tight market
Security Paper & Print KPIs
Average banknote price (since year end)
Value per banknote (order book)
Banknote volumes
Base/overspill split
Paper volumes
+6.7%
+4.0%
+9.4%
79 / 21
-14.7%
1st half2000/01
+3.7%
+0.7%
0.0%
78 / 22
-20.5%
1st half1999/00
Global Services
1st half 2000/01
£m
1st half 1999/00
£m Change
£m
Sales
Operating profit
26.4
0.1
27.0
3.8
(0.6)
(3.7)
Reported on separately for the first time Change in nature of Microsoft contract depressed sales but not profitability Excluding Microsoft, sales up 10.2% and order book at half year up 20% Decrease in profits is as a result of planned revenue investment which was forecast last
year at a net £5m for the year Medium term focus is on profitable sales growth
Associates
1st half 2000/01
£m
1st half 1999/00
£m Change
£m
Camelot
Other (inc De La Rue Giori)
4.8
(2.4)
2.4
3.2
3.5
6.7
1.6
(5.9)
(4.3)
Camelot has increased sales Licence has been extended to November 2001 - still await outcome
of re-bid Giori order book remains depressed Actions taken to stimulate sales Arbitration is ongoing
Earnings per Share1st half
2000/01 (p)
1st half 1999/00
(p) Change
(p)
As calculated under FRS 14
Loss on disposal of continuing operations
Profit on disposal of discontinued operations
Loss/(Profit) on disposal of fixed assets and assets held for
resale
Amortisation of goodwill
Headline earnings per share as defined by the IIMR
Reorganisation and arbitration costs
Headline earnings per share before reorganisation costs
10.8
1.6
-
0.1
0.5
13.0
0.2
13.2
31.9
-
(24.3)
(0.3)
0.3
7.6
4.1
11.7
(21.1)
5.4
1.5
Cashflow / Borrowings / Interest
1st half 2000/01
£m
1st half 1999/00
£m Change
£m
Operating cashflowCapital expenditure, tax and interest
Cash inflow/(outflow)
Before:Equity dividends paidAssociate dividends receivedAcquisitions and disposals
18.0 (8.5)
9.5
(24.4) 6.2
(3.5)
11.1(21.6)
(10.5)
(27.0) 3.2194.5
6.9
20.0
Cash (outflow)/inflow (12.2) 160.2 (172.4)
Net (debt)/cash (9.7) 39.3 (49.0)
Interest income/(expense) 1.3 (2.4) 3.7
IAN MUCHChief Executive
Cash Systems
Excluding Ascom, first half margins were 4.8%
Second half orderbook well up on comparable period last year
New product sales have risen to 26%
Ascom progressing well with 700 orders on Twinsafe II - exceeding expectations
Cash Systems
TCR8000c - first orders received
Service accounts for 30% of divisional sales and are up 6% compared to first half last year
Well placed to see significant sales pick up in second half and confident of exiting year at 10% margins
Currency
Sustaining high margins
Selling more high value security features
Second paper making machine converted to wide thread
Involved in euro production (JV)
Sales force now fully integrated
Continue to drive sales through differentiated customer and technology strategy
Security Products
Jon Marx appointed MD in February 2000 and making significant operational improvements
New factory for DLR Tapes almost completed
Changing focus away from more traditional markets to newer areas such as e-commerce and solution sales
Going into second half with good order book, particularly for passports
Global Services
Strategy is centred around protection of payment, identity and brand
Global Services well positioned in growth markets utilising shared capabilities of the Group
Orderbook going into the second half is 20% up on comparable period, excluding Microsoft
Global Services
Transaction Services making good progress in mobile phone top-up market
Brand Protection has secured new customers
Holographics has euro accreditation and secured first orders
IDS has won new contracts, Mexico, Macao
InterClear fully operational by first quarter of 2001
Cross Divisional Initiatives
Greater degree of collaboration on number of initiatives around the Group
Group R&D
Regional Sales Directors
Group Procurement
Outlook
Strong orderbook going into second half, underpins expected pick up in sales
Cash Systems on track to achieve 10% exit margins
Some improvement in Giori trading expected in second half but still likely to incur loss
Summary
Global Services up and running
Continue to make progress in Currency, Security Products and Cash Systems
Clearly committed to a growth strategy
INTERIM RESULTS2000/2001
“Cash to Secure Transactions”