23 November 2022
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated by the Market Abuse Regulation (EU) No.596/2014, as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 (“MAR”). Upon the publication of this announcement, the inside information is now considered to be in the public domain.
DE LA RUE
2022/23 HALF YEAR RESULTS
De La Rue plc (LSE: DLAR) (“De La Rue”, the “Group” or the “Company”) announces its half year results for the six months ended 24 September 2022 (the “period”, “H1 23” or “half-year”). The comparative period was the six months ended 25 September 2021 (“H1 22”).
Highlights:
· Adjusted operating profit in line with previous guidance given in July, at £9.3m (H1 22: £17.4m)
· IFRS operating loss of £12.6m (H1 22: operating profit £13.8m), after exceptional items charge of £21.4m
· Exceptional charges included £19.3m relating to Portals paper: £16.8m in relation to the termination of the Relationship Agreement (“RA”) and £2.5m of non-cash additional expected credit loss provision on investments
· Exit of Portals going well: orders placed with 5 paper mills at lower aggregate cost. +£4m annual upside reiterated
· Authentication revenue rose 2.5% to £45.5m (H1 22: £44.4m); margin lower due to adverse sales mix and supply chain headwinds, but expected to recover full year to broadly flat versus FY22
· New Managing Director is restructuring Authentication, with renewed focus on sales growth and execution
· GRS in Qatar, Bahrain and Oman now delivering revenue; Australian passport contract extended to 2032
· Currency revenues reduced 12.3% to £116.4m (H1 22: £132.7m) due to subdued market. Margin percentages maintained if £3m Portals shortfall payment (as per previous guidance) excluded
· Second polymer line in Westhoughton built and fully operational within budget; positive outlook for growth
· Net debt increased by 21.1% to £86.5m (FY22: £71.4m); remains on track to full year guidance of £88-92m
· Existing bank facilities extended to 1 January 2025
· Nearing the end of the 3-year turnaround plan, which saved De La Rue and has significantly increased resilience
· Further efficiency actions expected to save an annualised £12m
· Company today outlines its plan for the next 3 years, and is well positioned for the future
· De La Rue expects to be free-cashflow generating, after pension payments, next financial year onwards
· Management guides full-year adjusted operating profit range of £30-33m versus analyst estimates of around £36m
| Financial summary | H1 23 £m | H1 22 £m | Change % | |
| Revenue | 164.3 | 179.2 | -8.3 | |
| Authentication | 45.5 | 44.4 | 2.5 | |
| Currency | 116.4 | 132.7 | -12.3 | |
| Identity Solutions | 2.4 | 2.1 | 14.3 | |
| Gross profit – continuing operations* | 41.8 | 48.5 | -13.8 | |
| Adjusted operating profit*1 | 9.3 | 17.4 | -46.6 | |
| IFRS operating (loss)/ profit- continuing operations | (12.6) | 13.8 | -191.3 | |
| Adjusted basic EPS*2 (p) | 2.0p | 6.4p | -68.8 | |
| IFRS basic EPS (p) | (12.6)p | 4.9p | -357.1 | |
| H1 23 £m | FY22 £m | Change % | ||
| Net debt | 86.5 | 71.4 | 21.1 |
Clive Vacher, Chief Executive Officer of De La Rue, said:
” Over the course of the last two and a half years implementing De La Rue’s Turnaround Plan, we have dealt with significant legacy issues, and created a company that is well positioned to weather the current operating environment. We have made good progress in addressing our pension deficit payments, saving £57m in cash. We have terminated our contract with Portals paper, removing a £119m obligation over six years, for just £16.7m. We have grown our Authentication division revenue by 22% and adjusted operating profit by over 50% in the space of two years. And, in the same timeframe, we have turned a loss-making Currency business into one that is profitable and increasingly stable. Our targeted investment programmes are proceeding well, with the second polymer line completed and operational within budget, and the near-doubling of our Malta factory proceeding at pace.
The first half of this financial year has been challenging, with a number of key headwinds. We continue to face supply chain inflation but have proactively managed this to less than half our initial cost-increase expectations. Our Brand business has been impacted by lower global PC sales and reduced Covid vaccine demand, and, in Currency, the whole market has been subdued as customers use stocks built up over Covid.
Today we have also set out our vision for the next three years, with value-generating plans across the Company, aimed at continuing growth in Authentication and solid returns on the investments made in Currency. We are reiterating that as part of this, next financial year, the Company will generate free cash flow and see an improved EBITDA.”
In these results, we report on the financial performance of the Authentication and Currency divisions, together with the legacy activity of the Identity Solutions division. To provide insight into the underlying performance of our business, we have reported revenue, gross margin and operating loss on an IFRS and an adjusted basis for the Group. We have also reported gross profit, adjusted operating profit and adjusted controllable operating profit for the divisions. The non-IFRS financial measures section of this Interim Statement provides definitions of these non-IFRS financial measures and their reconciliation to the equivalent IFRS measure.
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 £21.4m (H1 22: £3.1m) and pre-tax amortisation of acquired intangible assets £0.5m (H1 22: £0.5m).
2. Adjusted basic EPS excludes post-tax exceptional items of £28.1m (H1 22: £2.5m) and post-tax amortisation of acquired intangible assets £0.4m (H1 22: £0.4m).
3. The definition of net debt can be found in note 8 to the financial statements.
Enquiries:
| De La Rue plc | + 44 (0) 7990 337707 |
| Clive Vacher | Chief Executive Officer |
| Rob Harding | Chief Financial Officer |
| Louise Rich | Head of Investor Relations |
| Brunswick | + 44 (0) 207 404 5959 |
| Stuart Donnelly | |
| Ed Brown |
The person responsible for the release of this announcement on behalf of De La Rue for the purposes of MAR is Rob Bellhouse (Company Secretary).
A briefing to analysts will take place at 9:00 am on 23 November 2022, which will also be accessible via webcast. For the live webcast, please register at www.delarue.com/investors/results-and-reports where a replay will also be available subsequently.
De La Rue plc’s LEI code is 213800DH741LZWIJXP78.