Turnaround Plan Pays Off for De La Rue

De La Rue’s results for 2020-21 were not expected to be easy to understand or compare with the previous year(s) due to all the changes that took place, continued this last year and will continue, albeit to a much lesser extent this coming financial year. However, the main takeaway is that the company is alive and well and positive about its future.

The adjusted revenue for the year (which excludes pass-through revenue from non-novated contacts following the sales of the paper and international ID solutions businesses) was £388.1 million, a fall of 10.2% compared with 2019/20. The Currency Division’s revenue increased by 1.8% from to £286.8 million. The Authentication Division’s adjusted revenue also increased, by 5% to £77.6 million. Revenue from Identity Solutions, as expected, declined substantially (by 69.1%) to £23.7 million following the loss of the British passport contract.

Adjusted operating profit, however, increased by nearly 61% to £38.1 million.

Of specific note was that the Turnaround Plan savings were completed in the year, delivering a cumulative £36 million reduction in annualised costs from the end of the 2020/21 financial year. These savings include the closure of the printworks in Gateshead, which ceased operations in December 2020.

Also of note during the year was the securing of a second polymer production line, which will double capacity, helping the company to achieve its goal to ‘convert the world to polymer and be the market leader’.

Currency revenue grew due to increased banknote volumes – it experienced 100% capacity utilisation in the second half year – and higher security feature sales, with security threads in particular gaining traction, and strong margin progression during the year. The division’s adjusted operating profit increased from a loss of £9.4 million in 2019/20 to a profit of £16.2 million for 2020/21.

Another milestone was the raising of £100 million in equity capital in July 2020, demonstrating shareholders’ support and allowing a net debt reduction from £102.8 million to £52.3 million at the year end.

Commenting on the results, CEO Clive Vacher said: ‘both our ongoing divisions are performing well and the Group has delivered good growth in adjusted operating profits as we complete the first full year of our Turnaround Plan. We saw good growth in adjusted operating margins for Currency in the year and Authentication has secured £195 million of expected multi-year lifetime contracts from April 2020 to date. We have made encouraging progress in our polymer growth plans, securing a new site to double capacity during FY 2021/22.’ ‘We see a strong pipeline of business for FY 2021/22 and continue to expect to deliver the full financial and operational benefits of the Turnaround Plan during the year’, he added.

IFRS Figures

IFRS revenue for the year was £397.4 million compared with £472.1 million in 2019/20, a decline of 15.8%, and IFRS operating profit fell from £42.8 million to £14.5 million, a fall of 66.1%, reflecting significant exceptional item charges of asset impairment and reorganisation charges relating to the cessation of banknote manufacturing at the Gateshead facility.

IFRS operating profit in FY 2019/20 also included the gain on the sale of International Identity Solutions of £25.3 million (excluding associated disposal costs).

The company provides a detailed reconciliation of the two sets of figures in its accounts.