De La Rue plc (LON:DLAR) shares jumped on Wednesday morning as the company reported a rise in full-year profits, albeit boosted by a one-off gain from the sale of its paper business, and retained its dividend as its revenue also grew
For the year ended 31 March 2018, the FTSE SmallCap firm saw its pre-tax profit rise to £113.6mln, up from £58.2mln a year earlier, swollen by the £60mln exceptional gain, while revenue grew by 7% to £493mln from £461.7mln due to a strong performance from the company’s three segments.
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The group’s operating profit, however, was down 11% to £62.8mln, from £70.7mln a year earlier, due to a significant reduction in the profitability of the paper business.
Martin Sutherland, De La Rue's chief executive officer, said: "The sale of the paper business and the associated long-term paper supply agreement have reduced our exposure to the volatility of the oversupplied paper market, while securing the surety of supply for our print business.”
He added: “Through this, and good cash generation from the business, we have significantly strengthened our balance sheet with net debt now at its lowest in five years. The stronger balance sheet provides the Group with greater flexibility to allocate capital to deliver long-term shareholder value."
De La Rue proposed a final dividend of 16.7p, retaining its full-year payout at 25.0p.
In morning trading, De La Rue's shares were up 3.5% to 251.0p.
Artjom Hatsaturjants, research analyst at Accendo Markets, said: “Markets were rewarding De La Rue’s progressive thinking and overlooking the less-than-stellar financial year guidance. Investors were concentrating on the opportunities lying ahead, valuing long-term sustainable growth over immediate returns.”
He added:” The ball is now in De La Rue’s court to prove that investor 'full faith and credit' is justified and that the company can bounce back from setbacks in its traditional products.”