Mark Leftly: Mid East turmoil is good news for money printers

Note-maker De La Rue is worth a punt
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The Independent Online

Not since the collapse of the Soviet Union has there been a better time to be in the job of printing money.

Only a handful of companies are involved in this industry, with the UK's De La Rue, Germany's Giesecke & Devrient and France's Oberthur Technologies perhaps the most famous.

And they must be salivating over events in North Africa and the Middle East. With regime change comes big seven-to-eight figure commissions for these guys.

As soon as a dictator is forced out or gets bumped off, his replacement is desperate to get the old despot's mug off the notes to create a new national identity. This has to be done swiftly to ensure economic stability, in effect ruling out the job going to a state printing press that simply won't be up-and-running so quickly after a revolution.

For example, De La Rue flew over 100 tons of Iraq's new notes in Boeing 747s within a month of Saddam Hussein's defeat in 2003. Between 1991 and 1995, inflation in Iraq stood at 250 per cent, so even without Saddam's image the currency was unacceptable because the number of notes in circulation was out-of-control and their value meaningless.

A trawl through The Independent on Sunday's archives shows that, in 1994, De La Rue reported a 20 per cent rise in pre-tax profit to £123.7m largely "because of the company's trade with the rapidly growing emerging economies". The then chief executive, Jeremy Marshall, pointed out that it was doing great business with the newly emerging former Soviet states.

De La Rue ended up creating currencies for Turkmenistan, Azerbaijan and Kyrgyzstan, while Giesecke & Devrient won contracts with the Baltic trio of Estonia, Latvia and Lithuania.

New notes in Egypt and Tunisia seem inevitable, while Libya will not be far behind (De La Rue recently printed £900m-worth of dinar for the existing regime, which was impounded by the Government last week). As the world's leading currency maker with more than 150 countries on its books, De La Rue is almost certainly worth a punt for investors.

The company's stock is in a historically poor place at 740.5p as of the close of business on Friday. Last June it was 984p, but sank after the company admitted staff had faked quality control tests in India, leading to the resignation of its chief executive, James Hussey. This was a huge hit for the company as De La Rue's contract with India's central bank in some years made up a quarter of its profits. The Serious Fraud Office even got involved, wrecking what remained of investor confidence.

Unsurprisingly, De La Rue became a takeover target and Oberthur waded in with an 825p-a-share bid which later rose to 935p. With these new opportunities, it's clear that De La Rue did the right thing in rejecting what is now an obviously opportunistic offer.

Give it 12 months and I suspect that De La Rue will have made a string of significant announcements on chunky new contracts in what is, after all, an incredibly consolidated market.

It should rebrand itself as the stock for democracy: the more dictators lose their jobs, the better the shares should perform.

Spun off: BSkyB deal could spell the end of competitive TV news

News Corporation's concession to spin off Sky News in exchange for the green light to take over BSkyB might not be the great news that the Government is trumpeting. Valuation of the news producer will be difficult, though media bankers are suggesting somewhere between £400m and £600m when it eventually lists. To get to those kind of figures, Sky News will have to become a far more commercially minded organisation.

It will need to sign a long-term contract with News Corporation to guarantee revenue and will also have to pitch for work with other media groups. Essentially, this will put Sky News head-to-head with ITN. This might sound great for the competitive landscape, but few of the media-industry experts I have spoken to believe that both would be able to survive, with one of those two great names of British news disappearing within five years. A move designed to foster competition could, then, spectacularly backfire.

What one graduate's desperation says about the economy

This is Esther Jardim. Tomorrow she finally starts a job worthy of her qualifications and talent.

As a 2009 graduate who took a gap year, Esther has sought a career since May 2010, but in her own words "faced constant rejection". She ended up working as a weekend sales assistant for minimum wage on her local high street.

Forced to take desperate measures, Esther donned a sandwich board and walked around Holborn Tube station in central London a few weeks ago. As you can see, she has a good degree in a traditional course from a top-10 university.

Her brassiness paid off. Film production firms, publishers and consultancies spotted Esther and she was offered a number of interviews. She's decided to join Weber Shandwick, the public relations agency, as an assistant account executive in the technology division. And if there's one industry where you need serious cheek and a thick skin it's PR.

As much as you have to say "well done" to Esther, it's a disgrace that she had to resort to this. But her decision was symptomatic of the age: youth unemployment stands at a staggering 20.3 per cent, and many are graduates. We tell our kids it will take a lifetime to pay off a degree, but we can't guarantee their hard graft at university will get them decent work.

Youth unemployment was going up under Labour, but it has got far worse as the coalition's cuts bite. A high level of joblessness among the under-25s means a whole generation could be lost, as their skills are not developed and they rely more and more on their credit cards.

Time for Plan B.

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