De La Rue (DLAR) H1 2025 earnings summary

Executive summary

• Achieved H1 25 adjusted operating profit of £7.3m, ahead of guidance, with IFRS operating profit improving to £1.3m from a prior loss.

• Revenue declined 10.2% year-over-year to £145.1m, mainly due to timing of Currency deliveries; Authentication revenue grew 4.4%.

• Announced sale of Authentication division to Crane NXT for £300m, expected to complete in H1 2025, enabling full repayment of revolving credit facility and significant pension deficit reduction.

• Currency order book reached £338m by November 2024, tripling in 14 months and at a five-year high, supporting future growth.

• Major progress in streamlining Currency operations and resolving legacy issues.

Financial highlights

• H1 25 revenue was £145.1m (H1 24: £161.5m); gross profit: £38.9m (H1 24: £40.2m); gross margin improved to 26.8%.

• Adjusted operating profit: £7.3m (H1 24: £7.9m); IFRS operating profit: £1.3m (H1 24: £-3.4m); adjusted basic EPS: -1.5p (H1 24: -2.6p).

• Net debt increased to £109.4m from £89.4m at FY24, mainly due to inventory build and timing of collections.

• Free cash flow was negative £18.4m (H1 24: positive £4.1m), reflecting working capital investment.

• Pre-tax exceptional items were £5.5m, mainly for Authentication separation.

Outlook and guidance

• Expect substantial top-line growth in Currency in H2, with full-year FY25 adjusted operating profit guided to mid to high £20m.

• Strong double-digit EBITDA growth in Currency anticipated for FY26 as order book converts to sales.

• Completion of Authentication sale will result in net cash position and reduced pension deficit.