We have a clear plan to transform De La Rue from a banknote and passport manufacturer into a technology-led security product and service provider over the five years to 2020. The plan focuses on six strategic priorities:
Addressing key issues
We face a number of risks that could have material impacts. These include volatility of earnings which is caused by unpredictable demand in the banknote print and paper markets. Outsourcing gives us added flexibility helping reduce risk and manage surge in demand. Meanwhile, we use the insights and analytics we have gathered over decades to help our customers improve their forecasting.
The banknote paper market has been oversupplied for a number of years and we expect this to continue. We continue to explore strategic options for our paper mills, while cutting production costs and driving efficiency at the same time.
Driving down costs enables us to remain price competitive while protecting margins. To optimise our cost base, we are restructuring our manufacturing footprint to ensure it is aligned with long term average demand, while also benefiting from the greater flexibility delivered by changes in working practices.
We are also looking to create a leaner and more agile organisation. In parallel with the reorganisation in 2015/16, we began changing our systems and processes. We are upgrading our finance and management information systems to improve efficiency as well as drive better decision making. Each function has developed and adopted new approaches, including ones that significantly shorten our bid submission time and speed up product launch cycle.
In order to diversify our revenue stream and benefit from a more balanced product mix, we have increased investment in areas with potential for high growth. We also aim to increase recurring revenues from software solutions and services.
We are targeting direct sales of product components to state print works, system integrators and other commercial printers to grow our sales pipeline. We also aim to maximise internal synergies by leveraging our existing products.
Investing in innovation
We plan to double our investment in R&D in the years to 2020. Our platform-based development programme allows us to maximise our technology know-how and create various applications for different products.
We aim to accelerate technology development through partnerships and acquisitions. In addition to our ongoing work to enhance our software solutions, we have initiated a digital strategy with a number of pathfinders, with the objective of modernising the business and improving competitiveness.
Strengthening financial position
One of our key objectives is to focus on further strengthening our financial position by increasing profit and prudent cash management.
We are focused on improving working capital through improvements in our supply chain management. We have also created a joint working group with the pension trustees to explore ways to proactively improve the management of our pension obligations.
Driving culture change
We continue to foster a dynamic, agile and result-focused culture. To encourage a high performing culture, we have implemented performance management and introduced training to upgrade the skillset of our sales team.
We invest in extensive training, development and recognition programmes, including a leadership development programme that helps to build a strong pipeline for succession planning.