'Confidentiality is quite important in our business,” Tim Cobbold says when we first meet.
For the chief executive of De La Rue , which has worked on the production of 150 different currencies in the past five years, “quite important” is something of an understatement.
Despite talking from the nondescript office campus on the edge of Basingstoke which is the FTSE 250 (FTSE: ^FTMC - news) printing firm’s headquarters, rather than the hi-tech laboratory one might associate with such a business, Cobbold remains tight-lipped on the real tricks of the trade.
“Bank note security operates at different levels. The best ones are the ones you and I can see. Then there’s the teller level, which requires a pen or an ultraviolet light, and then there’s central bank security. And all I can tell you about the last one is that there’s central bank security, and no more.”
This is very much Cobbold’s way. He is caught between wanting to explain and, at times, show off the business he is clearly proud of and the need for tight-lipped security around exactly what they do for their customers or even how much they make from individual contracts.
It is the same with the Bank of England, which, as The Sunday Telegraph revealed a week ago, has fired the starting pistol on a new £1bn, 14-year contract to print its bank notes from 2015 when De La Rue’s current contract expires. The company has fulfilled the Bank’s notes contract the Old Lady’s first foray into outsourcing since 2003. Losing it would be less than ideal.
On this subject, Cobbold, an accountant by training, is careful. “Of course it’s an important customer,” he says. “We’re very proud of a very long relationship with them.”
He indicates that the publication of the tender notice was expected by him and rivals in the industry. “The reason they started so early there’s nothing sinister in it. But, of course, to respect the various rules and regulations that exist they have to start early enough. Were they to choose somebody other than De La Rue, they have to give time for an effective hand-over to take place.”
Does he think, as incumbent, he stands a better chance than rivals, understood to include the Swiss firm Landqart?
“I don’t think I should be talking about chance in that way,” he says. “We are the incumbent and I’m sure, as the Bank would expect . . . you can expect us to participate in the tender in an exceptionally professional and enthusiastic way, of course.”
He won’t discuss what percentage of last year’s £528m annual sales the contract accounted for but does point to rules that public companies must disclose individual contracts which account for more than 10pc of sales. De La Rue does not make any such disclosures.
If not financially important, is it of symbolic significance?
“I think the Bank would be horrified if we thought it was symbolic. It’s an important piece of business,” he says.
Cobbold, who spent most of his career at TI/Smiths Group (LSE: SMIN.L - news) before running secure power systems provider Chloride until its £1bn sale to Emerson Electric (NYSE: EMR - news) in summer 2010, was parachuted in to De La Rue at the start of 2011. His arrival followed a tumultuous period during which the chief executive, James Hussey, resigned over paper quality problems.
The crisis in part caused the company to lose a key notes contract with the Indian government and then sparked a £896m, 935p-a-share bid from Oberthur, a French security specialist.
The Oberthur approach was unsettling for the company and knocked its shares down 15pc after the French firm walked away. Cobbold joined De La Rue in the middle of the battle.
However, since then, through a combination of an improvement plan which includes £100m being invested in the business over three years and a focus on telling the De La Rue story better than it has perhaps been done in the past, Cobbold has managed to stabilise the ship.
He declines to reveal the key issues his investors raise with him but, instead, points to the company share price which closed at 938.83p on Friday night, the same level as before the Oberthur approach as testament to what he is trying to achieve.
Curiously, Oberthur was not as interested in De La Rue’s currency business, which accounted for 67pc of operating profits in the six months to the end of September, as it was in its growing solutions business, which produces for the world’s governments such items as passports, identity cards and driving licences.
Cobbold notes that De La Rue now makes passports for 40 countries, including the UK. The contract began two years ago and its 10 millionth passport was produced last month. “To be provider of your country’s currency and your country’s passport, I think a lot of people at De La Rue, certainly those based in this country, are rightly very proud of that.”
Another growth area he points to is the creation and manufacture of excise stamps for those countries that demand the use of a mark on a bottle of alcoholic drink to ensure duty has been paid. Some critics have suggested the solutions business is the real growth engine of De La Rue but Cobbold is very careful not to fuel such talk.
“We’d very much like to see that part of the business grow,” he says. “But what I would encourage you not to do is confuse that with a lack of commitment to the currency part of the business, which does sit at the core.”
He sidesteps a question on whether the board, chaired by Bunzl (EUREX: BNZF.EX - news) chairman, Philip Rogerson, has looked at separating the two halves of the business and points instead to the 4pc growth he expects from the currency division over the long term.
It is the currency business split between those countries where it just provides the paper and those where it designs and in some cases prints the notes which makes him the most animated, however, despite his constant noting that there are many things he cannot say.
One of those, perhaps unsurprisingly, is whether De La Rue was really commissioned by the Greek government to begin printing drachma were it to be forced out of the euro, a story that appeared in May this year.
“A currency works because people have confidence in it and confidence can be chipped away by surprisingly small events,” he says. “Confidence (BSE: ZCONFIDE.BO - news) is a continuing battle with the counterfeiter.”
To avoid copies, De La Rue aims to remain ahead of the game in security technology and design to prevent imitation.
“Quite deliberately we’ve increased our spend in the past six months in research and development and, during the course of next year, we’re opening a brand new technology centre in one of our facilities [in Overton, Hampshire] so that our teams of scientists absolutely have the best facilities and the right equipment.”
One of those developments is the polymer note.
Laying out the five Fijian notes, which contain pictures of the island’s indigenous plants and animals, before him, he picks up the $5, made from polymer, and bends it.
“If you just think about the life of a bank note, it actually takes quite a hammering. It’s being folded, it’s being crunched, it’s in and out of wallets and it could be in the wet or in the dry.
“There’s a great deal of underlying material science and a lot of know-how in applying that material science in a way that will survive the life of a bank note. You can’t have bits falling off,” he says.
The benefit of the polymer note De La Rue introduced its new polymer substrate last year and the Fijian series is the first to contain it is durability. But it also costs more to produce.
Cobbold refuses to give specifics but does admit “our sense is that the multiple of life extension is about the same as multiple in price”.
Unable to be photographed holding the Fijian notes for security reasons, Cobbold comments on their beauty and proudly boasts that they were put together in the design department on the ground floor of the Basingstoke HQ.
“De La Rue is a high-class business,” Cobbold concludes. “If we can get it delivering its full potential, we can get shareholders to see that and they and customers and employees will see the benefit.”