REG - De La Rue PLC - Trading and Turnaround Plan Update

De La RueAnnouncement

24/01/2022 07:05

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RNS Number : 2995Z  De La Rue PLC  24 January 2022

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated by the Market Abuse Regulation
(EU) No.596/2014, as it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement, this
inside information is now considered to be in the public domain.

 

24 January
2022

 

DE LA RUE PLC

 TRADING AND TURNAROUND PLAN UPDATE

 

De La Rue plc (LSE: DLAR) ("De La Rue", the "Group" or the "Company") today
announces a trading update on the Financial Year ending March 26, 2022, and an
update of progress on the Turnaround Plan.

At the time of the Half Year results, the Group referenced the increased
commodity and energy costs, and challenges in the supply chain. Since then,
the significant headwinds, primarily relating to the Covid-19 pandemic, have
become more pronounced.  The Omicron and Delta variants have caused
substantially increased employee absences in our manufacturing facilities
globally, which will result in lower total operational output for the full
year.  More recently, the Group has also been affected by supply chain
shortages in chips and other process raw materials and has experienced a
degree of supply chain cost inflation.

As a result of these external factors, the Company now expects adjusted
operating profit for the full year to be broadly similar to last financial
year, in the £36-40 million range, versus market expectations of
approximately £45-47 million(()(1)).  However, net debt expectations remain
unchanged.

This revised outlook still demonstrates substantial year-on-year growth in our
two core businesses.  The outlook for Currency and Authentication represents
adjusted operating profit growth in the range of 35-45%, from the £27.5
million delivered by the two businesses in FY2020-21.

The global impacts that were not present at the time the Turnaround Plan was
announced in February 2020, can be described as manifesting approximately a
12-month delay to the Turnaround Plan results, as the Company's leadership
work to mitigate them.  In addition, we see these factors continuing as
incremental headwinds into financial year 2022-23, with the effect of slowing
the Company's adjusted operating profit growth profile.  However, we do
expect to continue to deliver significant growth year on year, despite this
external environment.

The Board retains full confidence both in the Turnaround Plan and in its
execution.  There is no change to the elements of the plan: the growth areas
of Currency, driven by the continuing and accelerating trend of conversion to
polymer, and Authentication, driven by increasing demand for digital and
physical solutions for governments and corporations, remain strong and in line
with the Plan's expectations.  The Company is also intensifying its efforts
to deliver further efficiencies and cost reductions, to mitigate some of the
factors described above.

Clive Vacher, CEO said "Despite the macro challenges that are delaying aspects
of the Turnaround Plan, De La Rue continues to increase adjusted operating
profit in both divisions year on year, and the Plan anticipates this to
continue going forward.  While this trading update is disappointing, it
should be seen as a delay to reaching our Turnaround Plan objectives, rather
than indicating that a change of direction is required.  The Company's
leadership has worked hard to mitigate many of these external effects, with
the cost reduction activities we have implemented since early 2020 having a
significant impact in supporting our underlying performance while we navigate
these external factors.  The markets in which we operate, and our position in
them, remain strong, and we continue to execute substantial investment for the
future."

 

De La Rue expects to announce its results for the full year ending 26 March
2022 on 25 May 2022.

De La Rue plc's LEI code is 213800DH741LZWIJXP78.

((1). )Market expectations are based on the average of published notes from
Investec and Numis Securities.

 

 

Enquiries:

 

 De La Rue plc       +44 (0) 7387 122645
 Clive Vacher        Chief Executive Officer
 Rob Harding         Chief Financial Officer
 Matthew Rose        Director of Tax, Treasury, Investor Relations

 Brunswick           +44 (0)207 404 5959
 Stuart Donnelly

 Ed Brown

The person responsible for the release of this announcement on behalf of De La
Rue for the purposes of MAR is Jane Hyde (General Counsel and Company
Secretary).

Cautionary note regarding forward-looking statements

 

This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "plans", "may",
"will", "could", "shall", "risk", "aims", "predicts", "continues", "assumes",
"positioned" or "should" or, in each case, their negative or other variations
or comparable terminology. These forward-looking statements include all
matters that are not historical facts. They appear in a number of places
throughout this announcement and include statements regarding the intentions,
beliefs or current expectations of the directors, De La Rue or the Group
concerning, amongst other things, the results of operations, financial
condition, liquidity, prospects, growth and strategies of De La Rue and the
industry in which it operates.

By their nature, forward-looking statements involve known and unknown risks,
uncertainties, assumptions and other factors because they relate to events and
depend on circumstances that will occur in the future whether or not outside
the control of the Company. Past performance cannot be relied upon as a guide
to future performance and should not be taken as a representation or assurance
that trends or activities underlying past performance will continue in the
future. Accordingly, investors or potential investors should not place undue
reliance on these forward-looking statements. The Group's actual results of
operations, financial condition, liquidity and the development of the industry
in which it operates may differ materially from the impression created by the
forward-looking statements contained in this announcement. In addition, even
if the results of operations, financial condition and liquidity of the Group
and the development of the industry in which it operates, are consistent with
the forward-looking statements contained in this announcement, those results
or developments may not be indicative of results or developments in subsequent
periods.

Other than in accordance with its legal or regulatory obligations, De La Rue
does not undertake any obligation to update these forward-looking statements,
which speak only as at the date of this announcement, and will not publicly
release any revisions that may be made to these forward-looking statements,
which may result from events or circumstances arising after the date of this
announcement.

 

 

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