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Banknote printer De La Rue has spent Sh2.7 billion (£15.1 million) to lay off staff, pay lawyers, and write off its assets as it closes down operations at its Nairobi unit due to low currency and cheques printing business.
The multinational firm, which has been printing notes for Kenya through a local joint venture that is 40 per cent owned by the Kenyan government, says in the latest trading update that it has now fully closed its notes printing line and is at the tail end of shutting down the cheques business.
"As a result of the review of the business in Kenya, an exceptional charge of £12.6 million was made in the financial year 2023," says De La Rue.
The firm also incurred £2.5 million (Sh444.15 million) charge for redundancy and legal fees in relation to restructuring initiatives in both the currency and authentication divisions to right-size for future operations.
De La Rue late 2018 won an £85 million (Sh15.1 billion) tender to design and manufacture Kenya’s new currency generation notes as the country moved to remove the faces of individuals from its currency.
The costs associated with shutting down its operations in the country saw De La Rue Kenya post a £7.3 million (Sh1.29 billion) net loss compared with £2.2 million (Sh389.9 million) net profit a year earlier.
The Treasury, with a 40 per cent stake it acquired at £5 million (Sh886.2 million) in 2019, will take a £2.9 million (Sh513.97 million) loss compared with £0.9 million (Sh159.5 million) profit it enjoyed a year earlier.
Revenue from the Kenya operations fell by 45 per cent from £30.5 million (Sh5.41 billion) to £16.8 million (Sh2.98 billion), pointing to the impact of reduced note printing and authentication business.
The winding down of Kenyan operations means De La Rue will now be left with three banknote sites — UK, Malta, and Sri Lanka — down from four at the beginning of the year and five in 2020, highlighting the declining demand for banknotes globally as digital transactions gain traction.
De La Rue Group CEO Clive Vacher said the Malta unit has the potential to replace the Kenya capacity if market conditions are favourable.
De La Rue has been working in Kenya for over 25 years where it served other markets such as Tanzania, Uganda, Zambia, and Rwanda.
The 200-year-old company makes about a third of all of the banknotes in the world but it is facing increased exposure to the rising popularity of digital payments.
The winding down of operations in Kenya is amid a Sh1.1 billion tax it has to pay the Kenya Revenue Authority (KRA) after it in January lost a court case related to taxes it paid on revenues earned in Kenya between 2013 and 2017.
The firm had said in January it was "disappointed with the [High Court] ruling" and that its Kenyan subsidiary was preparing an appeal.
