The Investment Column: De La Rue

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The Independent Online
DE LA Rue, the world's largest independent banknote printer, has found that there is now more money in money. A drastic re-organisation rescued the shares from below 150p last year to back above 300p today. New faces at the top; the forthcoming creation of a services division and widespread cost-cutting have all helped to restore some lustre to its performance. Yesterday, Ian Much, chief executive, promised better times ahead, after unveiling interim profits before tax and exceptionals of pounds 34.7m, up from pounds 19.3m. Should investors buy into the recovery?

De La Rue appears to be back on track. It has benefited from its sharper focus on more profitable operations, a reduced headcount and more aggressive management. Shareholders are in line for about pounds 104m payback, including the pounds 57.4m net gain from the sale of the smart-card operations. This equates to 46p a share, which will be paid via a new company set-up. Security paper and print, which account for about a third of group sales of pounds 338m, has seen a 36 per cent jump in profits this half to pounds 25m. About pounds 100m remains on hand for acquisitions. Much is still to be done, however. Analysts foresee full-year profits of pounds 52m after re-organisation costs. De La Rue is not yet threatening a return to its glory days above 1,000p a share, but with a forward p/e of 14 Mr Much's team should be able to propel the shares above their current 315p. Buy.

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