DE LA RUE
2018/19 FULL YEAR RESULTS
De La Rue plc (LSE: DLAR) (De La Rue, the “Group” or the “Company”) announces its full year results for 12 months ended 30 March 2019 (FY19, the period or full year). The comparative period was 12 months ended 31 March 2018 (FY18).
HEADLINES
· Performance excluding paper †
o Revenue increased 12% to £516.6m
o Adjusted operating profit* increased 6% to £60.1m
· Further strategic progress
o Growth in Security Features and PA&T
o PA&T growth accelerated with multiple contract wins; on track to double revenue within 3 years
o Good progress on strategic review of ID business
· Next phase of the Group's transformation underway
o Proposal on operating model reorganisation and transformation programme announced today
o Divisional structure will optimise operations and provide future strategic options
o Expected to deliver annual savings of in excess of £20m by FY22 partially mitigating increasing competitive pressures in Banknote Print
· Balance sheet reflects increased net debt and reduced pension deficit
o Exceptional charge of £18.1m relating to a credit loss associated with the outstanding accounts receivable of a customer in Venezuela currently unable to transfer funds due to non-UK related sanctions
o Net debt of £107.5m (31 March 2018: £49.9m) primarily due to an increase in gross accounts receivable of c£40m driven by the timing of revenue and the balance due from Venezuela.
o IAS 19 UK defined benefit pension deficit reduced to £76.8m (2018: £87.6m)
· Proposed final dividend of 16.7p; full year dividend unchanged at 25.0p
· IFRS operating profit on reported basis was substantially lower as FY18 included the benefit of the £80.5m gain recorded on the change in indexation methodology on the UK defined pension scheme and FY19 included additional exceptional charges
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Excluding Paper† |
Reported |
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FY19 £m |
FY18 £m |
Change % |
FY19 £m |
FY18 £m |
Change % |
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£m |
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Revenue |
516.6 |
461.4 |
+12% |
564.8 |
493.9 |
+14% |
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Currency |
398.9 |
344.1 |
+16% |
447.1 |
371.8 |
+20% |
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Identity Solutions |
78.4 |
78.9 |
-1% |
78.4 |
82.0 |
-4% |
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Product Authentication & Traceability |
39.3 |
38.4 |
+2% |
39.3 |
40.1 |
-2% |
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Adjusted operating profit*(1) |
60.1 |
56.9 |
+6% |
n/a |
n/a |
n/a |
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IFRS operating profit |
n/a |
n/a |
n/a |
31.5 |
123.0 |
-74% |
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EPS basic adjusted*(2) |
42.9p |
38.2p |
+12% |
n/a |
n/a |
n/a |
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EPS basic IFRS |
n/a |
n/a |
n/a |
18.8p |
93.7p |
-80% |
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Dividend per share |
n/a |
n/a |
n/a |
25.0p |
25.0p |
n/a |
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* |
The impact of the adoption of IFRS15 (revenue from contracts with customers) has been a net increase in revenues of £12.2m in FY19 and a net increase in cost of sales of £5.3m, resulting in an £6.9m increase in operating profits (both on an IFRS and adjusted basis). Prior year comparatives are not restated (see note 1 for more details). This is a non-IFRS measure. Amortisation of acquired intangible assets is a non-cash item while exceptional items are non-recurring in nature. By excluding these items from the adjusted operating profit and EPS metrics, the Directors are of the opinion that these measures give a better understanding of the underlying performance of the business. See note 13 for further explanations and reconciliation to the comparable IFRS measure |
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(1) |
Excludes exceptional item net charges of £27.9m (FY18: net gains of £60.9m) and amortisation of acquired intangible assets of £0.7m (FY18: £0.7m) |
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(2) |
Excludes exceptional item net charges of £27.9m (FY18: net gains of £60.9m) and related tax credit of £4.2m (FY18: tax charge of £9.7m) and amortisation of acquired intangible assets of £0.7m and related tax charge of £0.3m (FY18: amortisation of acquired intangible assets of £0.7m and related tax credit of £1.2m). |
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† Reported figures included in this release include the paper business results in FY18 as originally reported and in FY19 they include £48.2m of revenue on non-novated contracts relating to the disposal of the paper business with nil profit margin. Figures reported on the “excluding paper” basis have been adjusted to exclude revenue from non-novated contracts in FY19. In FY18 “excluding paper” figures exclude the results of the paper business and include pro-forma Security Feature sales of £35.0m, which were previously treated as internal, to present the comparative numbers in FY18 on a basis consistent with the IFRS accounting treatment applied in FY19. This is a change in presentation of FY18 results in this release compared to those previously reported in the release in May 2018. This change has been made to provide a more meaningful presentation of the underlying financial performance of the business during the period.
Martin Sutherland, Chief Executive Officer of De La Rue, commented:
“De La Rue has delivered revenue and profit growth in a year of transition and progress for the company. Security Features revenue has increased by 38% year on year, while PA&T revenue is on track to double within three years. We are pleased to have won a number of contracts with strategically important customers including HMRC in the UK and the Kingdom of Saudi Arabia.
“The strategic review of our International Identity Business is ongoing, and we are making good progress.
“As we look ahead, the conclusion of the UK passport contract in 2020 and the growing competitive pressure in the banknote print market present some significant challenges for our business. To partially mitigate against this, today we have set out a three year cost reduction programme intended to deliver in excess of £20m in annual savings by FY22. In addition, we will be proposing a reorganisation of our business over the next twelve months designed to enhance our strategic focus and generate greater efficiencies.
“Together these initiatives will ensure we are best positioned to execute our growth plan and deliver long term shareholder value.”