Royal Mint's Bumper Year Despite COVID-19 and Fall in Circulating Coins

‘The past year has been an extraordinarily challenging one for the world as a whole, and The Royal Mint has been no exception’. These were the opening words in the Chairman’s Report for 2020/21.

In 2018 the organisation launched its ambition to ‘reinvent the Royal Mint for the 21st century’, the strategy focused on managing the impact of the declining use of cash, growing its consumer division and exploring new profitable ventures.

Three years later, the CEO, Anne Jessopp, was able to state ‘we have successfully reinvented The Royal Mint quicker than expected. with record breaking results and under conditions we could not possibly have envisaged at the start’.

In 2020-21, The Royal Mint (TRM) issued what is believed to be the lowest ever number of UK circulating coins, with no £1 coins issued at all. Despite this, its operating profit for the year (excluding exceptional items) was £12.7 million, compared with £1.1 million in the previous year on sales of £1.1 billion, which virtually doubled from the previous year.

The increase was largely driven by a significant increase in revenue and operating profit in its Consumer and Precious Metals divisions.

Royal Mint’s performance by business 2019/20-2020/21.

Circulating coins

TRM’s Currency Division’s principal activities are the manufacture of UK circulating coins along with the manufacture and supply of circulating coins and blanks for overseas governments, central banks, issuing authorities and mints.

Currency sales declined by 30.6% to £93 million in 2020-21, resulting in an operating loss of £1.4 million compared with sales of £134 million in 2019-20 and an operating profit of £3.4 million.

A significant reason was the decline in demand for UK coins – only 437 million coins were issued in 2020-21 compared with considerable higher volumes in previous years. Not only were no new £1 coins issued at all, but also the quantities of the £2, 50p and 10p were also very low.

The situation for the Mint’s coin issuance could worsen – it has already indicated that it is unlikely to need to produce 2p and £2 coins for the next 10 years and has six years stock of 1p coins. In total it has excess stock worth around £89 million.

The principal reason for the current huge stocks is due to so many coins of all denominations being handed in when the new £1 coin was issued, and the old version demonetised. People took the opportunity to return all coin denominations found, and not just their old £1 coins, in a collective countrywide ‘emptying of piggybanks’.

Whether cash usage regains its level prior to the pandemic remains to be seen. The decline in cash usage was already accelerating prior to the pandemic – 10 years ago it was used in six in 10 transactions, by 2019 this had fallen to under three, and is predicted to be as low as one in 10 by 2028. Digital payments, in particular by mobile phone apps and contactless debit and credit cards, account for most of the decline.

A second reason for the performance of this division was that sales of overseas coins and blanks also declined – deliveries in the year fell from 3 billion pieces to 23 countries in 2019-20 to 1.72 billion pieces to 22 countries in 2020-21.

During the year TRM signed commercial partnerships with Arrandene MFG and Vaultex to share its experience in the sector and expand its presence in coin reclamation and recycling.

The Royal Mint issued what is believed to be its lowest ever number of coins in recent times last year - with no £1s sent out for use.

Consumer and bullion products

The Consumer Division, comprising commemorative coins, precious metals, collector services and ‘The Royal Mint Experience’ purpose-built visitor attraction had it most profitable year to date.

This was mainly due to the production and marketing of highly desirable collector coins.

TRM is also the primary producer of bullion coins and bars in the UK. Record sales were recorded here and, albeit that much of the sales value of these products are in the metal itself, the contribution to operating profit was still a near threefold increase over the previous year.

The increased demand for gold and silver during the pandemic has been seen in the performance of other mints, and also collates with the hoarding of high denomination banknotes as people rush to traditional stores of wealth during times of crisis.