De La Rue plc (LSE: DLAR) (“De La Rue” or the “Company”) today announces a trading update for financial year 2020/21 starting 29 March 2020, and developments in its polymer banknote strategy.
The Company has seen positive trading in this financial year, with good progress on the implementation of its Turnaround Plan. As a result, the Board’s expectations for adjusted operating profit for the financial year 2020/21 are in the range of £36 million to £37 million, compared with current market expectations of approximately £34 million.(1)
The Board is confident of these expectations, absent any significant unforeseen COVID-19 related event. The Company remains diligent on its COVID-19 safety measures and has year-to-date effectively mitigated the challenges of the pandemic.
The improved expectations are largely driven by a strong Currency division performance. De La Rue recognises that the pandemic is causing some delays in securing new government revenue solutions contracts with overseas governments by its Authentication division, due to disruption in procurement processes.
De La Rue also announces that it has decided on a UK location for the expansion of manufacturing capacity for its SAFEGUARD® polymer substrate. The additional production line will be located in a recently acquired building adjacent to its existing premises in Westhoughton, near Bolton, creating operational efficiencies. The Company expects the new line to be fully operational before the end of calendar year 2021 and that it will more than double current polymer production capacity. De La Rue plans to recruit up to an additional 70 people during the next two and a half years as part of this investment.
As a result of the continued positive momentum of customers switching to De La Rue’s SAFEGUARD® polymer substrate, and to create more possibilities in relation to future expansion, the Company now plans to spend approximately £20 million on its polymer strategy, an increase on the approximately £15 million previously indicated. Total aggregate 3-year investment for the Turnaround Plan remains unchanged at £79.8 million.
Clive Vacher, CEO of De La Rue, said, “I am pleased that we are able to report increased adjusted operating profit expectations for the year, due to positive trading. We remain focused on delivering shareholder value through the successful execution of our Turnaround Plan.
“In addition, I am delighted to announce further investment in manufacturing and job creation in the North West of the UK, as we continue to increase our polymer market share globally. The Currency team has done a remarkable job in bringing De La Rue’s SAFEGUARD® polymer substrate to a position of industry leadership.
“It is a fitting endorsement of the technical and operational capabilities of our Westhoughton site, that we have made the decision to concentrate our polymer substrate manufacturing into this Centre of Excellence.”
De La Rue expects to announce its results for the full year ended 27 March 2021 on 26 May 2021.
De La Rue plc's LEI code is 213800DH741LZWIJXP78.
(1). Market expectations are based on the average of published notes from Investec and Numis Securities.
De La Rue plc
+44 (0) 7387 122645
Clive Vacher, Chief Executive Officer
Rob Harding, Chief Financial Officer
Matthew Rose, Director of Tax, Treasury and Investor Relations
Brunswick Group LLP
+44 (0)207 404 5959
Stuart Donnelly/Imran Jina
Cautionary note regarding forward-looking statements
This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”, “expects”, “intends”, “plans”, “may”, “will”, “could”, “shall”, “risk”, “aims”, “predicts”, “continues”, “assumes”, “positioned” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of the directors, De La Rue or the Group concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth and strategies of De La Rue and the industry in which it operates.
By their nature, forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of the Company. Past performance cannot be relied upon as a guide to future performance and should not be taken as a representation or assurance that trends or activities underlying past performance will continue in the future. Accordingly, investors or potential investors should not place undue reliance on these forward-looking statements. The Group's actual results of operations, financial condition, liquidity and the development of the industry in which it operates may differ materially from the impression created by the forward-looking statements contained in this announcement. In addition, even if the results of operations, financial condition and liquidity of the Group and the development of the industry in which it operates, are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods.
Other than in accordance with its legal or regulatory obligations, De La Rue does not undertake any obligation to update these forward-looking statements, which speak only as at the date of this announcement, and will not publicly release any revisions that may be made to these forward-looking statements, which may result from events or circumstances arising after the date of this announcement.