"Firm foundations" for future growth

De La Rue delivers turnaround despite lagging revenues

De La Rue: banknote demand is at its lowest level for more than 20 years
Despite a 16% drop in currency revenues, H1's profits improved on last year

De La Rue appears to have turned the tide on a difficult few years with a return to profit in H1, and the strongest order book it has seen in at least five years, despite a short-term slip in revenues.

The group, which has been struggling with a slump in demand for cash following the pandemic, today (12 December) posted H1 results, to 20 September 2024, that show “firm foundations” for growth, according to Clive Vacher, the group’s CEO.

Despite a 16% tumble in currency printing revenues year-on-year, to £94.9m – itself the cause of a five-point slip on the London exchange to 105p at the time of writing – the company has now appeared to stabilise with an adjusted operating profit of £7.3m on 2024’s H1 profit of £7.9m, ahead of guidance.

On an IFRS basis, the company has now returned to profit, and is up to £1.3m from H1 2024’s loss of £3.4m.

More promisingly for the firm, however, is its growing order book, swollen by “significant orders” in Q3 to £338m, the highest level in at least five years.

“We have made substantial progress in 2024 both operationally and strategically,” Vacher said, adding that October’s agreed sale of the company’s Authentication division to US giant Crane NXT for £300m had put the company in a much stronger position.

“Completion of the Authentication sale will allow us to repay both our existing banking facilities in full and materially reduce the remaining deficit on our legacy defined benefit pension scheme,” he said.

De La Rue has said it will put £30m of the sale proceeds towards reducing the deficit on its legacy defined benefit pension scheme, with the rest allowing the group to pay off its existing revolving credit facility in full, putting it in a net positive cash position.

De La Rue has an upcoming obligation to repay its £235m revolving credit facility on or before 1 July 2025. The company's net debt grew £20m to £109m in the first half.

Vacher added: “We have also built up the Currency order book to the highest levels seen for at least the last five years. The material new orders that we have won in recent months will begin to convert into increased revenue as we move into the next financial year and solidly underpin our growth expectations.

“With these firm foundations, our ongoing Currency business is now well positioned to take full advantage of an improving market, with a substantial upward step change in activity in 2025 and beyond.”