The World's Biggest Banknote Printer Is Running Short of Money

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The World's Biggest Banknote Printer Is Running Short of Money

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Could this be a problem?

A global currency printing company threatened with bankruptcy ( de la Rue )

 

 

Nov 27 2019

 

British banker de la Rue, a banknote and passport printing company, is in a financial crisis. In the statement, the company lost £ 9.2 million in the last six months of the year (from April to September), and that there is great concern and uncertainty about the possibility of continuing the company's activities.

Following the statement, the company's shares fell by 20.6 percent.

 

The company's debts in the first half of last year amounted to £ 107.5 million, reaching £ 170.7 million in the first half of this year.

 

Currently, De La Rue prints money for 140 central banks around the world, including the Bank of England, employs 2,500 people, prints a third of the world's banknotes and also prints passports for 40 countries.

The company lost the new passport tender, which will be issued after the UK leaves the European Union, to be won by rival Gemalto.

Venezuela has recently been unable to pay its debts to the company, estimated at £ 18 million, and the UK Anti-Corruption Office has launched an investigation into the company's activities in 

 

The company started its first activity by issuing banknotes to the Republic of Mauritius in 1860.

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De La Rue shares plunge on warning about its future

UK group points to ‘material uncertainty’ if a turnround plan does not tackle debt pile Banknote printer De La Rue has warned there is “material uncertainty” about the company’s future if a planned turnround fails to tackle the company’s mounting debt pile. The UK-listed group on Tuesday suspended its dividend as it reported half-year results that showed a sharp increase in its net debt, putting pressure on the company’s banking covenants. Shares in De La Rue dropped 25 per cent to 131.7p, leaving them 71 per cent lower since the end of May. De La Rue, which prints notes for the Bank of England, has faced months of upheaval as it struggles to reverse declines across its business. A management clearout has seen a new chairman, chief executive and finance director installed in recent months, after a profit warning in May compounded an activist campaign for leadership change. Chief executive Clive Vacher, who joined the company barely seven weeks ago, is in the middle of a strategic review that should yield the latest in a series of turnround plans for the business. He said the company was already working to cut costs and boost cash flow, but added that the executive turnover had led to “inconsistency in both quality and speed of execution” in the company’s efforts to overhaul its core currencies business and build up its authentication operations. The group has suffered a torrid two years, including the high-profile loss of the contract to print British passports to a French company last year and an £18m hit after the Venezuelan central bank failed to pay its bills. In July, the Serious Fraud Office opened an investigation into the group over suspected corruption in South Sudan, which is still ongoing. De La Rue’s latest figures showed revenues in the currencies division tumbled almost 30 per cent during the first half of its financial year to £128m. The company said the decline was driven by a fall in cyclical “overspill demand”, contracts from central banks used when state-owned printworks are unable to print money fast enough themselves. Lower demand has resulted in oversupply in the market for banknotes, putting pressure on prices and profits, it said. The group swung to a £12.1m pre-tax loss in the first half from a profit of £7.1m during the same period a year earlier. Net debt increased to £171m in the six months to the end of September, from £108m at the end of March, as inventory built up and the group paid out cash to fund last year’s dividend and its pension deficit. De La Rue said its debt position had improved since the start of October. The sale of its international identity solutions business, which completed in mid-October, brought in £42m. But the company warned that it was heavily dependent on large currency contracts and problems with those could hit earnings and affect the company’s ability to stay within the agreed limits of net debt to earnings required by its lenders. We’ll send you the news Explore our curated emails with crucial insights on global trade, M&A, tech and more. View our newsletters It suspended the dividend as part of plans to manage net debt levels. It paid dividends of 25p per share in the previous financial year, which ended in March. Adjusted operating profits, the group’s preferred measure, tumbled from £17m to £2.2m. The group expects an improved second-half performance, leading to full-year adjusted operating profits of between £20m and £25m.

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Why do some countries print their currency in others?

 

foreign currency

Reports The Economy News - Baghdad: The currency represents the national façade of any country along with its economic importance, and a number of symbols and objects that suggest the history of the country are often printed on these currencies, whether paper or metal . Many countries of the world resort to printing their local currency in other countries, which calls into question about this. Why can't we print our local currency ourselves? What are the risks of this matter ? A small number of countries print their currency within the country's borders. For example, India prints its currency on its territory, while a law in the United States of America requires that the currency be printed within American territory . A number of international companies specialize in currency printing, perhaps the most famous of which is the British company De La Rue , which prints 11 percent of the currency in the market . Where you print about 140 currencies of central banks in the world, and ironically, if we want to accumulate the currencies that you print within a week, you will reach an increase equivalent to the height of the Everest summit . It is mentioned that the major companies specialized in currency printing are distributed in North America and Europe . Why countries do not print their currency The process of printing currencies is considered expensive and complicated, and companies that do this work for hundreds of years have acquired great experience in this field, where they have the necessary equipment in addition to the safety standards that follow . Fsharkp De La Rue began producing leaves cash since 1860, and was Muruiius the first country to ask the company to print its currency, Kamal company produces new plastic banknotes for the Bank of England from class 5 and 10 pounds . It makes sense for small countries to print their currency abroad. For example, the United States of America prints approximately 7 billion banknotes annually . How dangerous is the printing of currency outside the country? The 2011 incident in which Britain detained 1.86 billion Libyan dinars is an example of the seriousness of such matters, as this led to a lack of cash in the last days of Muammar Gaddafi's rule. De La Rue had a share of 140 million banknotes printed by the company . The Russian "Guznak" company is considered one of the largest international companies in this field, as it has customers in more than 20 countries in Asia, Africa and Europe. In 2014, the company produced 1.1 billion banknotes, in addition to the production of passports and coins. . For example, the Russian company issues and prints the Lebanese currency, "the lira", where printing a package containing 1000 Lebanese banknotes costs Lebanon 60 euros, and therefore printing ten packages of the smallest Lebanese paper money category costs 10 percent of its value. As for knowing the amount of Lebanese money printed in Russia, it is difficult due to the presence of strict secrecy . According to Russian company sources, the printing of Lebanese funds in Russia dates back more than 10 years. Lebanon is not the only country that prints and imports its money from Russia, as there are countries such as Syria, Laos, Malaysia, Belarus, Guatemala and other countries . Dealing in cash with technology The use of cash in its various forms is diminishing by the day, especially in the developed countries, where the technology sector witnessed a great revolution, which led to the introduction of payment technologies via mobile phones . In a 2016 statistic of the Chinese Central Bank, only 10 percent of commercial transactions were made in cash, and the rest were electronically via smartphones . But despite new technologies, the demand for banknotes all over the world continues to grow globally, growth is 3.2%, and the market is estimated at $ 10 billion . Views 195   added date 09/12/2019

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Why do countries print their currencies outside their countries?

Tuesday 10 December 2019 50

 

Baghdad / follow up 

 

The currency represents the national facade of any country along with its economic importance, and a number of symbols and objects that suggest to the country's history are often printed on these currencies, whether paper or metal. Many countries of the world resort to printing their local currency in other countries, which calls for asking about this matter. Why can't we print our local currency ourselves? What are the risks of this?

A small number of countries print their currency within the borders of the country. For example, India is printing its currency on its soil, at a time when a law is required in the United States of America to print the currency within American territory.

A number of international companies specialize in printing currency, perhaps the most famous of which is the British company (De La Rue), which prints 11 percent of the currency in the markets, as it prints about 140 currencies for central banks in the world, and, ironically, if we want to accumulate the currencies that By printing it within a week, you will reach an altitude equal to the height of the Everest summit.

It is mentioned that the major companies specialized in currency printing are distributed between North America and Europe.

 

Countries that do not print their currency

Currency printing is costly and complex, and companies that do this work for hundreds of years have acquired great experience in this field, as they have the necessary equipment in addition to the safety standards that follow.

De La Rue started producing banknotes since 1860, and Mauritius was the first country to ask the company to print its currency. The company also produces new plastic banknotes for the Bank of England in the category of 5 and 10 pounds.

It makes sense for small countries to print their currency abroad. For example, the United States of America prints approximately 7 billion banknotes annually.

The risk of printing externally

The 2011 incident in which Britain detained 1.86 billion Libyan dinars is an example of the seriousness of such matters, as this led to a shortage of cash in the last days of Muammar Gaddafi's rule, the share of De La Rue) 140 million banknotes were printed. 

The company.

The Russian "Guznak" company is one of the largest international companies in this field, as it has clients in more than 20 countries in Asia, Africa and Europe. In 2014, the company produced 1.1 billion banknotes, in addition to the production of passports and coins.

For example, the Russian company issues and prints the Lebanese currency, "the lira," since printing a package containing 1000 Lebanese banknotes costs Lebanon 60 euros, and therefore printing ten packages of the smallest Lebanese paper money category costs 10 percent of its value. As for knowing the amount of Lebanese money printed in Russia, it is difficult, given the existence of strict secrecy. According to the Russian company sources, the printing of Lebanese funds in Russia dates back more than 10 years. Lebanon is not the only country that prints and imports its money from Russia. There are countries like Syria, Laos, Malaysia, Belarus, Guatemala, and countries 

Other.

 

Cash handling and technology

The use of cash in its various forms is diminishing day by day, especially in developed countries, as the technology sector witnessed a major revolution, which led to the introduction of payment techniques via mobile phones.

In a 2016 statistic of the Chinese Central Bank, only 10 percent of commercial transactions were made in cash, and the rest were electronically via phones. 

Smart.

But despite new technologies, the demand for banknotes all over the world continues to grow globally, growth is 3.2 percent, and the market is estimated at 10 billion dollars.