De la rue profits unchanged after Camelot sale; shares a 'buy'

De la rue, the banknote printer for the Bank of England, has announced that profits remain unchanged despite increase in sales this year from Banknotes and disposal of lottery operator Camelot.

The security printing firm announced pre-tax profits unchanged at £96.6m (2009: 96.1m).

Operating profits before exceptional items was up 13 pct boosted by sales of £512m, however interest payments and 'retirement benefit obligation' meant the group remain unchanged on last year - though net debt was reducedto £11m (2009: 33.1m).

De la rue will also use the proceeds from the sale of Camelot, £78m, to boost its pension fund and buy back shares.

The Pensions Deficit now at £15m per year for the next eleven years, or £204m, is expected to receive £35m from the proceeds of the sale.

Nomura, reporting on the news of the Camelot's sale, said that estimated earnings for the coming year combined with low debt (enterprise value) meant the company was in much better shape than the rest of the Support Services sector.

"We continue to view De La Rue as an undervalued high quality niche operator." they said, giving the shares a 'buy' rating with a target price of 1200p.