De La Rue loss before tax narrows in difficult market

25th Jul 2024 10:27

(Sharecast News) - Authentication and currency solutions specialist De La Rue reported total revenue of £310.3m in its full-year results on Thursday, marking an 11.3% decline from £349.7m in the prior fiscal year, primarily due to a downturn in the currency industry.

The London-listed firm said that despite the overall revenue drop, it saw significant progress in its authentication division.

Authentication revenue increased 12.5% in the 12 months ended 30 March to £103.2m, surpassing the £100m target.

Adjusted operating profit for that segment rose to £14.6m from £14.3m, while IFRS operating profit jumped to £12.9m from £5.4m.

The company secured four multi-year contract renewals, with expected future revenues of over £150m, contributing to a total contract-backed revenue of over £350m over 11 years.

Its currency division meanwhile experienced an 18.7% decrease in revenue, falling to £207.1m from £254.6m.

Adjusted operating profit in the segment declined to £6.4m from £13.6m, but the IFRS operating loss significantly improved to £1m from a loss of £24.8m in 2023.

The order book had shown a strong recovery, with a value of £239.2m as of 30 March, and £241.4m by the end of June, indicating a positive outlook for the currency industry.

De La Rue reported a gross profit of £85.9m, down 6.7%, and an adjusted operating profit of £21m, a 24.5% decrease from the prior year.

However, the company achieved an IFRS operating profit of £5.8m - a substantial improvement from the loss of £20.3m in the 2023 financial year.

The loss before tax narrowed to £15.4m from £29.6m, and the IFRS basic loss per share improved to 10.2p from 28.6p.

Net debt increased slightly to £89.4m from £82.4m, remaining within the company's guidance.

De La Rue's board said it was confident in addressing its revolving credit facility repayment before its expiration on 1 July 2025.

The company said the strategic update on 30 May had attracted further interest in both of its divisions, with ongoing negotiations and due diligence.

It said it was planning to provide an additional update before its annual general meeting on 25 September.

"De La Rue's businesses successfully navigated substantial trading challenges faced in the last financial year and met all the expectations that were set," said chief executive officer Clive Vacher.

"Both divisions enter the current financial year well positioned to take advantage of the increasing opportunities available to them.

"The recovery in the currency market that we noted at the end of 2023 has continued into 2024, and the division now has a strong order book that has been secured by an excellent win rate."

Vacher said authentication had converted all four substantial contracts that it was targeting for renewal in the last year, safeguarding £150m of future revenue.

"It is now pursuing a number of new potential opportunities to grow revenue further.

"This stronger trading environment provides an encouraging background with which to progress our strategic priorities.

"These are progressing well and we are confident that discussions will reach a successful conclusion in the coming months."

At 1201 BST, shares in De La Rue were down 10.24% at 92p.

Reporting by Josh White for Sharecast.com.