De La Rue (DLAR) H2 2024 earnings summary

Executive summary

• Adjusted operating profit was £21 million, meeting guidance despite a challenging year for Currency and down from £27.8 million in FY23.

• Authentication division exceeded £100 million in annual revenue for the first time, with all major contracts renewed for 3–5 years.

• Order backlog across both divisions now exceeds £600 million, positioning the business for future growth.

• Strategic review ongoing, with increased interest and due diligence from multiple parties; management confident in repaying RCF before July 2025.

• Currency division saw a recovery in H2 FY24, with order book growth continuing into FY25.

Financial highlights

• Group revenue fell 11.3% year-over-year to £310.3 million, mainly due to an 18.7% drop in Currency revenue.

• Gross profit declined by 6.7% to £86.2 million, but gross margin improved by 135bps to 27.7% due to higher Authentication contribution.

• Adjusted operating profit dropped 24.5% to £21 million; IFRS operating profit was £5.8 million, reversing a prior-year loss.

• Net debt increased to £89.4 million but was better than guidance; £4 million reduction in gross borrowings achieved.

• Net operating cash inflow was £26.2 million, up from £23.8 million in FY23, aided by improved working capital management.

Outlook and guidance

• Both divisions are trading in line with expectations in Q1 FY25, with Currency showing substantial improvement over the prior year.

• Currency division is ahead of FY24 at revenue, gross profit, and operating profit levels as order book converts to trading.

• Management and Board confident RCF will be repaid in full before expiry on 1 July 2025.

• Further update to be provided ahead of AGM on 25 September 2024.