De La Rue plc (LSE: DLAR) (“De La Rue”, the “Group” or the “Company”) announces its half year results for the six months ended 30 September 2023 (the “period”, “H1 24” or “half-year”). The comparative period was the six months ended 24 September 2022 (“H1 23”).
Highlights
- Adjusted operating profit of £7.9m (H1 23: £9.3m) ahead of previous guidance of breakeven.
IFRS operating loss narrowed to £3.4m (H1 23: £12.6m). - Authentication revenue rose 5.7% to £48.1m (H1 23: £45.5m).
- Currency revenue reduced 2.6% to £113.4m (H1 23: £116.4m).
- Net debt of £82m (H1 23: £82.4m) in line with the October 2023 trading statement and ahead of previous guidance of £100m; Operating cash inflow of £15.4m (H1 23: outflow of £2.8m).
- Banking facilities extended to July 2025; RCF limit reduced to £235m (from £250m).
- Pension situation improved and contributions reduced:
- Deficit per actuarial valuation now £78m (versus previous remaining contributions of £84.7m)
- Deficit repair contributions moratorium continues for FY24; thereafter contributions reduced to £8m annually from FY25-FY27, saving £28m over that period; FY28-FY31 contributions then increase to clear deficit by December 2030 (from March 2029)
- Currency order book increased over 100% since September 2023 period end, to £219.8m, with very high win rate since beginning of FY24, in a recovering market.
- Multi-year Authentication contract extension secured on improved terms; in latter stages of settling a further significant GRS contract extension.
- Authentication guidance of £100m revenue for FY24 reiterated.
- The above underpins the Board’s reiteration of full year guidance: adjusted operating profit of early £20m range and net debt in the mid £90m range.
| Financial Summary | H1 24 £m |
H1 23 £m |
Change % |
|---|---|---|---|
| Revenue | 161.5 | 164.3 | (1.7) |
| Authentication | 48.1 | 45.5 | 5.7 |
| Currency | 113.4 | 116.4 | (2.6) |
| Identity Solutions | - | 2.4 | n/a |
| Gross profit | 40.2 | 41.8 | (3.8) |
| Adjusted operating profit*(1) | 7.9 | 9.3 | (15.1) |
| IFRS operating loss | (3.4) | 12.6 | 73.0 |
| Loss before taxation | (16.8) | (15.9) | (5.7) |
| Adjusted basic EPS (*2) (p) | (2.6)p | 2.0p | (230.0) |
| IFRS basic EPS (p) | (6.2)p | (12.6)p | 50.8 |
| Net debt | 82.0 | 82.4 | (0.5) |
Footnotes:
* These are non-IFRS measures. The definition and reconciliation of adjusted operating profit and adjusted basic EPS can be found in non-IFRS financial measures section of this Interim Statement.
(1) Adjusted operating expenses and adjusted operating profit excludes pre-tax exceptional items of £10.8m (H1 23: £21.4m) and pre-tax amortisation of acquired intangible assets £0.5m (H1 23: £0.5m).
(2) Adjusted basic EPS excludes post-tax exceptional items of £6.7m (H1 23: £28.1m) and post-tax amortisation of acquired intangible assets £0.4m (H1 23: £0.4m).
(3) The definition of net debt can be found in note 8 to the financial statements.
(4) All of the above are reported for continuing operations.
Clive Vacher, Chief Executive Officer of De La Rue, commented:
“De La Rue’s robust performance in the first half reflects the important actions that we have taken since 2020 to make the company resilient to changing market conditions. These actions have allowed us to navigate a downturn over the past 18 months, particularly in Currency, and I am pleased that the market is now showing signs of continuing recovery. We have doubled the Currency order book since September 2023 and are exhibiting a high win rate, with more opportunities in the pipeline.
“Authentication continues on its path to £100m in revenue for the full financial year. We have secured a significant multi-year contract extension, and we are in the late stages of securing another contract extension in GRS. Our Australian passport programme continues apace and is a significant driver of growth this year.
“We continue to focus on the financial progress of the company. In the half year, we demonstrated improved operating cash flow versus H1 FY23 and, as announced in our October trading statement, significantly improved net debt versus previous guidance. We have extended our banking facilities to July 2025 and are comfortable to reduce the size of facility.
“With a new pension deficit valuation of £78m, we have been able to work with the Pension Trustee on an amended schedule of contributions, that saves the company £28m cash contributions between FY25 and FY27. The schedule now runs to December 2030, a modest extension from March 2029, but still a number of years ahead of scheme maturity.
“The progress reported today underpins the Board’s full year guidance of adjusted operating profit in the low £20m range, and net debt in the mid £90m range.”
Clive Whiley, Chairman of De La Rue, added:
“Upon my appointment as Chairman in May this year, it soon became clear that De La Rue was struggling to balance conflicting stakeholder objectives, alongside associated professional fees which were suffocating the nascent recovery emanating from the foundations laid by the Turnaround Plan initiated in 2020, Making a continuation of the deterioration in the market rating almost inevitable.
“Since then I have sought to provide aircover to allow the reinforced executive management team to complete an in-depth review of the fundamentals of De La Rue’s business, designed to arm the Board with the information necessary to gauge the core strategic strengths of the Group, of which there are many.
“The interim results released this morning represent demonstrable progress with adjusted operating profit ahead of guidance, lower net debt, pension deficit repair contributions reduced by £28m over the next three years, significantly enhanced contract win rates and renewed confidence within the management team.
“Accordingly, I would like to thank our core lenders, pension trustees, shareholders and employees alike for their ongoing support to enable us to complete this strategic review. The Board is determined to utilise today’s market update as a springboard to optimise the underlying intrinsic value of the business, for the benefit of all stakeholders, on which the company will provide an update before 31 May 2024.”
The person responsible for the release of this announcement on behalf of De La Rue for the purposes of MAR is Jon Messent (Company Secretary).
Enquiries:
De La Rue plc
+44 (0)7990 337707
Clive Vacher, Chief Executive Officer
Dean Moore, Interim Chief Financial Officer
Louise Rich, Head of Investor Relations
Brunswick
+44 (0)207 404 5959
Stuart Donnell
Ed Brown
