De La Rue Plc - Trading Statement
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DE LA RUE PLC
De La Rue plc (LSE: DLAR) ("De La Rue" or the "Company") today announces a trading update for financial year 2020/21 starting 29 March 2020, and developments in its polymer banknote strategy.
The Company has seen positive trading in this financial year, with good progress on the implementation of its Turnaround Plan. As a result, the Board's expectations for adjusted operating profit for the financial year 2020/21 are in the range of £36 million to £37 million, compared with current market expectations of approximately £34 million. ( 1)
The Board is confident of these expectations, absent any significant unforeseen COVID-19 related event. The Company remains diligent on its COVID-19 safety measures and has year-to-date effectively mitigated the challenges of the pandemic.
The improved expectations are largely driven by a strong Currency division performance. De La Rue recognises that the pandemic is causing some delays in securing new government revenue solutions contracts with overseas governments by its Authentication division, due to disruption in procurement processes.
De La Rue also announces that it has decided on a UK location for the expansion of manufacturing capacity for its SAFEGUARD® polymer substrate. The additional production line will be located in a recently acquired building adjacent to its existing premises in Westhoughton, near Bolton, creating operational efficiencies. The Company expects the new line to be fully operational before the end of calendar year 2021 and that it will more than double current polymer production capacity. De La Rue plans to recruit up to an additional 70 people during the next two and a half years as part of this investment.
As a result of the continued positive momentum of customers switching to De La Rue's SAFEGUARD® polymer substrate, and to create more possibilities in relation to future expansion, the Company now plans to spend approximately £20 million on its polymer strategy, an increase on the approximately £15 million previously indicated. Total aggregate 3-year investment for the Turnaround Plan remains unchanged at £79.8 million.
Clive Vacher, CEO of De La Rue, said, "I am pleased that we are able to report increased adjusted operating profit expectations for the year, due to positive trading. We remain focused on delivering shareholder value through the successful execution of our Turnaround Plan.
"In addition, I am delighted to announce further investment in manufacturing and job creation in the North West of the UK, as we continue to increase our polymer market share globally. The Currency team has done a remarkable job in bringing De La Rue's SAFEGUARD® polymer substrate to a position of industry leadership.
"It is a fitting endorsement of the technical and operational capabilities of our Westhoughton site, that we have made the decision to concentrate our polymer substrate manufacturing into this Centre of Excellence."
De La Rue expects to announce its results for the full year ended 27 March 2021 on 26 May 2021.