2019/20 Full Year Results and Publication of Annual Report 2020



De La Rue plc (LSE: DLAR) (“De La Rue”, the “Group” or the “Company”) announces its full year results for the year ended 28 March 2020 (the “period”, “FY” or “full year”). The comparative period was the twelve months ended 30 March 2019.

Financial Summary FY 2019/20
FY 2018/19(4)
Adjusted Revenue(3)*  426.7 516.6  -17.4%
   Currency 281.6 398.9 -29.4%
  Authentication 68.5 42.7 +60.4%
   Identity Solutions 76.6 75.0 +2.1%
IFRS Revenue 466.8 564.8 -17.4%
Gross profit 105.9 162.4 -34.8%
Adjusted operating expenses*(1) (82.2) (102.3) -19.6%
Adjusted operating profit*(1) 23.7 60.1 -60.6%
IFRS operating profit 42.8 31.5 +35.9%
Adjusted EPS basic (p)*(2) 12.1p 42.9p -71.8%
IFRS EPS basic from continuing operations (p) 33.1p 18.8p +76.1%
Dividend per share (p) - 25.0p n/a

(1) Excludes exceptional items net credits of £20.0m (FY 2018/19: net charges of £27.9m) and amortisation of acquired intangible assets of £0.9m (FY 2018/19: £0.7m)

(2) Excludes exceptional items net credits net of tax of £22.5m (FY 2018/19: net charges net of tax £23.7m) and amortisation of acquired intangible assets net of tax of £0.7m (FY 2018/19: £1.0m)

(3) Adjusted revenue figures were labelled as “excluding paper” in the FY 2018/19 release

(4) Comparative Authentication and Identity Solutions results for FY 2018/19 have been restated in line with the adjustment noted in note 2 to present the results of one of the Group’s subsidiaries solely in the Authentication division consistent with where management of the subsidiary’s business now falls. The impact of this has been the transfer of the following amounts from the Identity Solutions results to Authentication: Revenue of £3.4m, gross profit of £2.1m and operating profit and profit before tax of £1.6m that would have been presented in the Identity Solutions division previously.

*This is a non-IFRS measure. Adjusted revenue excludes “pass through revenue” relating to non-novated paper business contracts where the group earns nil margin. See note 13 for reconciliation of non-IFRS measures to comparable IFRS measures.

FY 2019/20 financial performance

  • Adjusted revenue of £426.7m (FY 2018/19: £516.6m) and IFRS revenue (which includes “pass-through” revenue on paper and International Identity Solutions non-novated contracts) of £466.8m (FY 2018/19: £564.8m). Both were lower reflecting a decline in Currency volumes and average price which more than offset the significant increase in Authentication revenue. We saw broadly flat adjusted revenues in Identity Solutions as the impact of the sale of International Identity Solutions in October 2019 was mitigated by higher revenue on the UK Passport production contract during the period.
  • Gross profit of £105.9m (FY 2018/19: £162.4m), due to lower currency volumes and price, the sale of International Identity Solutions and negative manufacturing variances, more than offsetting the growth in Authentication and increased profits on the UK Passport production contract.
  • Adjusted operating expenses declined by £20.1m reflecting cost saving initiatives and the sale of International Identity Solutions.
  • Adjusted operating profit of £23.7m (FY 2018/19: £60.1m), resulting from a loss in Currency, driven by the decline in Currency volumes and margin, offset by increased profits in Authentication due to increased volumes and the benefit of increased profits from the UK Passport production contract.
  • IFRS operating profit of £42.8m (FY 2018/19: profit £31.5m) was higher than adjusted operating profit due mainly to a gain on the sale of International Identity Solutions of £25.3m (excluding associated disposal costs), and a credit of £8.7m relating to the change in revaluation rates for certain UK defined benefit pension deferred scheme members, offset by £9.3m of restructuring charges.
  • Adjusted basic EPS was 12.1p (FY 2018/19: 42.9p) and IFRS basic EPS from continuing operations was 33.1p (FY 2018/19: 18.8p).
  • Net debt of £102.8m (FY 2018/19: £107.5m), down £4.7m year on year, reflecting the proceeds from sale of International Identity Solutions, offset by negative working capital movements, final dividend payment, pension funding contributions and capital expenditure.
  • Net debt reduced by £67.9m since H1 2019/20, reflecting the sale of International Identity Solutions and an improved operating cash flow in H2.
  • The Group’s UK defined benefit pension scheme moved to an IAS 19 accounting net surplus of £64.8m as at 28 March 2020 (30 March 2019: £76.8m deficit).

Business update

  • Three-year Turnaround Plan announced in February 2020, which is focused on growth in both Authentication and Currency, and a cost reduction programme.
  • Already implemented actions expected to deliver £24.8m of annualised savings (out of the total £35.9m of annualised savings targeted under the Turnaround Plan).
  • Today announcing a consultation process in relation to a proposal to cease banknote printing at our Gateshead plant, while retaining current printing capacity.
  • Won two new customers in Currency for our security thread Ignite®, with strong demand for Currency.
  • The Qatar Central Bank will be the first central bank to issue our next generation security feature NEXUSTM.
  • Strong growth in Authentication with good pipeline of upcoming tenders.
  • Mitigating actions taken to protect employees and insulate the business from the impact of the COVID-19 pandemic, with limited disruption experienced to date.

Proposed fully underwritten capital raising

  • Today we are separately announcing a proposed fully underwritten equity capital raising of approximately £100m gross proceeds through a firm placing and placing and open offer of, in aggregate, 90,909,091 new ordinary shares at an issue price of 110 pence per new ordinary share, subject to shareholder approval.
  • The Group intends to use the net proceeds raised from the proposed equity capital raising to fund the necessary investment to implement the Turnaround Plan.

Clive Vacher, Chief Executive Officer of De La Rue, said:

“I am pleased that we have seen increased utilisation of our factory capacity for Currency in the second half, alongside strong growth in Authentication and polymer throughout the year.

“We are now well underway with our plans to turnaround the Company, with opportunities to grow our revenue and reduce our cost base. Our cost cutting initiatives will enable us to compete harder in the currency market, while the development of security features and polymer will drive growth for this division. Authentication and polymer continue to show strong growth and we see an increasing pipeline of new opportunities.

“I would like to thank my colleagues who have worked hard to get the Company where it is today and we all recognise there is much more work to do. The £100m equity capital raising we are announcing today will strengthen the Group’s balance sheet and help us deliver the Turnaround Plan, enabling De La Rue to create value for our employees, customers, suppliers and shareholders.”

Today we are also announcing that Sabri Challah has informed the Board of his intention to step down as a Director due to his other commitments. Sabri will remain on the Board until such time as a successor Independent Non-Executive Director has been appointed, but in any event until no later than the date of the Company’s forthcoming Annual General Meeting. Until then, he will continue as the Senior Independent Director, but accordingly will not be standing for re-election at the Company's forthcoming Annual General Meeting.

De La Rue has today also made available its Annual Report and Accounts for the year ended 28 March 2020 (the “Annual Report 2020”) on the Company's website, www.delarue.com. In accordance with Listing Rule 9.6.1, the Company has today submitted a copy of the Annual Report 2020 to the Financial Conduct Authority via the National Storage Mechanism and the Annual Report 2020 will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. In due course, a hard copy version of the Annual Report 2020 will be sent to those shareholders who have elected to receive paper communications, together with the Notice of Annual General Meeting 2020.

Certain of the information contained in this announcement is extracted from the Annual Report 2020 in accordance with the requirements of the DTR 4.1.3 and DTR 6.3.5.

View the full announcement as a PDF


De La Rue plc

+44 (0)1256 605322
Clive Vacher, CEO
Rob Harding, Interim CFO
Paul Sharma, Head of Investor Relations

+44 (0)207 404 5959
Stuart Donnell
Imran Jina

A conference call will take place at 9:00 am on 17 June 2020, which is also accessible via webcast on www.delarue.com.

For the live webcast, please register at www.delarue.com/investors where a replay will also be available subsequently.

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