De La Rue H1 2025 Earnings Report

De La Rue EPS Results

• Actual EPS: -GBX 1.50
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

De La Rue Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

De La Rue Announcement Details

• Quarter: H1 2025
• Date: 12/12/2024
• Time: Before Market Opens
• Conference Call Date: Thursday, December 12, 2024
• Conference Call Time: 4:00AM ET

Our purpose is to secure trust between people, businesses and governments Our Authentication and Currency divisions provide governments and commercial organisations with products and services that underpin the integrity of trade, personal identity and the movement of goods. The Authentication division provides a range of physical and digital solutions such as tax stamps and supporting software solutions, authentication labels and associated brand protection digital solutions. The Currency division provides market-leading end-to-end currency solutions, from fully finished banknotes, to secure polymer substrate and banknote security features, to over half the central banks and issuing authorities around the world

De La Rue H1 2025 Earnings Call Transcript

Key Takeaways

• Delivered H1 adjusted operating profit of £7.3 M—just £0.6 M below prior year—and recorded the first IFRS operating profit in a traditionally weaker half.
• Achieved a record €338 M order book at end-November, tripling backlog in 14 months and setting up H2 revenue to match FY24 levels with strong double-digit EBITDA growth expected in FY26.
• Agreed the £300 M sale of the authentication division to Crane NXT, due to complete H1 2025, which will deliver net cash, full revolving credit repayment and a £30 M pension deficit reduction.
• Currency division sustained a >66% win rate on tenders, expanded market share in polymer and security features, and is leveraging upgraded, efficient manufacturing capacity.
• H1 saw a £17.9 M working capital outflow as inventories and receivables built ahead of a planned H2 production surge, with significant cash collections expected early in the second half.

Presentation

[Louise Rich, Head of Investor Relations at De La Rue]

Good morning, everyone. Welcome to the De La Rue Results Presentations for the period ended 28 September 2024. Thank you for joining us today, whether in the room with us or via the webcasts. The results were announced this morning and are available on our website, delarue.com. I'm Louise Rich, Head of Investor Relations, and our CEO, Clive Vacher, and interim CFO, Dean Moore, will present on the results for the first half to you shortly. After the presentation, there will be an opportunity to ask questions.

[Louise Rich, Head of Investor Relations at De La Rue]

For those in the room, please wait until you have a microphone before asking the question. For those on the line, if you wish to ask a question, please submit these through the message system via the website. Importantly, before we start, I would like to draw your attention to the cautionary wording on forward-looking statements within the results announcement and on slide two of the presentation, and now I would like to pass over to Clive.

[Clive Vacher, CEO at De La Rue]

Great. Thank you, Louise, and welcome to De La Rue's results for the first half of the 2024 to 2025 financial year. I'm Clive Vacher, CEO. Today, I'll be giving an overview of the performance of the company for the period to September 2024. I will also be taking the opportunity to give you an overview of the currency market, as well as an update on progress with the separation of authentication prior to disposal. I will then hand over to Dean Moore to give you more detail on the financial performance. In the first eight months of the current financial year, we've made substantial progress.

[Clive Vacher, CEO at De La Rue]

Firstly, and importantly, we have achieved first-half profits ahead of guidance, with an adjusted operating profit of GBP 7.3 million, down just GBP 0.6 million on the prior period, despite the schedule of deliveries within our currency business leading to a fall in group revenue of over GBP 16 million period on period. At an IFRS level, we moved into operating profit in our traditionally weaker first half. This financial performance reflects the transformation that we have achieved over the last five years to create a streamlined, efficient business.

[Clive Vacher, CEO at De La Rue]

The recovery in the currency market that we first remarked upon a year ago is continuing. Our order book at the end of November 2024 stood at GBP 338 million, the highest level we have seen for at least the last five years. This represents a tripling of backlog in the last 14 months and has transformed the prospects for our currency business. I'll talk in more detail in a minute about how we expect this order book to translate into EBITDA over the months to come.

[Clive Vacher, CEO at De La Rue]

I'm delighted with the progress in our currency division, which is the culmination of significant transformation of the business over the past five years. We have created the strongest player in the currency industry, with a market-leading win rate, the deepest and widest customer relationships globally, a highly competitive cost base, excellent operational execution, and cutting-edge technology covering the whole spectrum of paper and polymer banknotes. We have weathered the unprecedented deep downturn of the past two to three years and stayed true to our strategy during this period. As we have previously messaged, we knew that the market would recover strongly, which it is now doing.

[Clive Vacher, CEO at De La Rue]

We positioned ourselves to come out the strongest from this downturn, and going forward, the results will show in significant earnings growth. In our authentication division, in October, as you will have seen, we announced that we had agreed the sale of the division to Crane NXT for cash at a value reflecting an enterprise value of GBP 300 million. This transaction will realize significant capital for the benefit of all stakeholders. It crystallized the broad strategic review that followed the appointment of Clive Whiley as chairman last year. I'll talk about our progress with the sale since our October announcement in a moment. The sale is due to complete in the first half of next calendar year. It will transform our financial position.

[Clive Vacher, CEO at De La Rue]

Completion will enable us to pay off our existing revolving credit facility in full ahead of its maturity, leaving us with net cash on the balance sheet, and at the same time, greatly reduce the remaining deficit on our legacy defined benefit pension scheme. All these achievements would not be possible without the hard work and commitment of all our employees. Getting to where we are now has taken many long hours undertaken by our dedicated teams. I would like to take the opportunity to thank all the De La Rue staff, many of whom I know will be on the call this morning, for all their hard work in getting to this point. Turning now to look at the currency division in more detail.

[Clive Vacher, CEO at De La Rue]

The currency division continued to be profitable during its traditionally weaker first half, and despite considerably lower revenue, given the difference in delivery schedule profile when comparing the first half of this year with the comparative period last year. During the first half, we continued to win over two-thirds of the currency tenders in which we bid. In addition, we won banknote contracts from six territories where we have not printed notes for many years at least. Nearly all of these will incorporate De La Rue polymer or security features or both, increasing our share of the value chain. The strategy that we have pursued is therefore starting to deliver strongly. We not only have the best win rate in the industry, but we are increasing our wins in territories formerly dominated by our competitors.

[Clive Vacher, CEO at De La Rue]

This is partly due to our competitive cost base, but it is driven further by other value-creating factors. For example, since 2020, De La Rue has designed more than half of all new commercially produced banknotes that have been launched into circulation, more than four times our nearest competitor. We have positioned ourselves for market leadership in polymer, both in terms of the quality of the substrate itself and the range of features available. And we have introduced to the market a broad range of value-enhancing, technologically advanced security features that are capturing market share on both paper and polymer. Of particular note over the last few months is the increase in polymer demand, either for notes which we print ourselves or notes produced for onward processing by others.

[Clive Vacher, CEO at De La Rue]

Production in H1 2025 was substantially higher than the same period last year, with a further doubling of production expected in the second half, followed by a further significant step up next year. Our investment in doubling polymer capacity is starting to pay off, and we will be utilizing both polymer lines strongly in the coming months and years. We continue to see customers move from paper to polymer notes, whether by way of initial conversions, increasing the number of denominations on polymer, or deciding to go for a full conversion of all notes in a series in one go. Expansion of Westhoughton to create a second polymer line was a wise strategic move to address this long-term increase in demand for polymer substrate. Our order book rose during the first half to GBP 251 million at the end of September.

[Clive Vacher, CEO at De La Rue]

Since then, following some significant wins in the third quarter, it has risen further to reach GBP 338 million at the end of November, a record level for at least the last five years. The lead time to convert orders into finished product within banknote print typically runs around six to 12 months. Turnaround times for security features and polymer substrate orders are a little shorter, but it is banknote print that still makes up most of our currency revenue and our order book. Consequently, we expect the build in our order book that we've experienced over the last year to translate into increased sales from the second half of this year onwards. We expect currency revenue to accelerate in H2 to bring revenue for the full year in line with that achieved in FY 2024.

[Clive Vacher, CEO at De La Rue]

We should then see a further acceleration in revenue in FY 2026, where we expect to see strong double-digit growth in EBITDA before central costs. I would now like to take a moment to remind you of some of the dynamics of the currency market on which De La Rue will be completely focused post-completion of the sale of authentication. Globally, banknotes in circulation grew 5% from 2022 to 2023, the most recent year for which we have comprehensive data. Multiple factors, including inflation and economic uncertainty, can drive the demand for banknotes. Three-quarters of our sales are to countries where cash offers financial inclusion as the main method of payment or even the only method of payment. About one-third of the global population don't have access to the internet, and another one-third don't have access to a good internet connection.

[Clive Vacher, CEO at De La Rue]

This is a digital inequality that will require substantial time and huge investment to resolve. Cash has an incredibly important role to play here, and also where people value it for budgeting reasons or because it protects their fundamental right to privacy. The commercial banknote print market in which we operate represents about 10% of the total volume of around 180 billion banknotes printed each year. In this sector, De La Rue is the long-established market leader and continues to retain this position. Our strategy to print high-quality banknotes as efficiently as possible has brought success, enabling us to remain profitable throughout the recent post-COVID downturn. The other 90% of banknotes issued every year are printed by state print works, which are run by governments of the most populous countries.

[Clive Vacher, CEO at De La Rue]

This is an area that offers huge growth potential to De La Rue via supply both of our Safeguard polymer substrate and our broad portfolio of security features. This growth strategy has already started to show success, with major wins to supply our components into countries like Egypt and Thailand and other opportunities well progressed. Our portfolio of security features is broad, offering something to suit every cash cycle. Our polymer is designed to be easy to print on and to have a low environmental impact. We are extremely well set up to meet the market demand and to support central banks with our award-winning and industry-leading banknote design team. Our manufacturing facilities have been a core part of our transformation of the currency business over the last five years.

[Clive Vacher, CEO at De La Rue]

We have invested to give a more flexible, efficient, and upgraded manufacturing footprint, rationalizing our banknote print sites at the same time from five to three. With our expanded super site in Malta nearing completion and the last notes now removed from storage in Gateshead, our major investments are now all complete or nearly complete. As part of that investment program, we have expanded our Westhoughton site to more than double our capacity for producing polymer substrate and to expand our capability for making cutting-edge security features at scale. We now have a modern asset base which can satisfy demand in an efficient and agile way in the growing markets addressed by our strategy. Turning to authentication.

[Clive Vacher, CEO at De La Rue]

While we have announced the potential sale of our authentication division for GBP 300 million, until the sale completes, De La Rue benefits from its performance. In the first half, authentication produced solid results, with revenue slightly up on the same period last year and operating profits broadly flat. During the period, we announced that we had renewed the final of four significant multi-year contracts with a combined expected contract value of over GBP 150 million. In addition, we won a multi-year passport data page program for a different country to run alongside the Australian passport.

[Clive Vacher, CEO at De La Rue]

The separation work to deliver the authentication division to Crane NXT is well underway. We have completed the staff consultation with a good crew heading with authentication to Crane NXT and an equally strong set of employees staying with the remaining business. Detailed discussions with customers are now underway about the novation of contracts. In Malta, a site that manufactures both for authentication and currency, we have a clear plan to achieve a physical separation within the timeframe needed.

[Clive Vacher, CEO at De La Rue]

So we remain on track to complete the sale in the first half of 2025. The sale of authentication for cash at an enterprise value of GBP 300 million is a truly transformative deal which realizes significant capital that will benefit all De La Rue stakeholders. The sale to Crane NXT, a strong buyer with a strategy that provides an excellent fit for both the division and its customers, follows an extensive and broad process conducted by the board. The application of the sale proceeds to repay our revolving credit facility ahead of its maturity will leave a net cash position on the balance sheet and create a much more resilient group.

[Clive Vacher, CEO at De La Rue]

At the same time, we will significantly reduce the remaining deficit on the legacy defined benefit pension scheme by paying GBP 30 million on completion as an accelerated contribution. This will bring us one significant step closer to finding a long-term solution to complete the de-risking of the remaining gap on this scheme. I will now pass you to Dean, who will provide more detail on the financial performance in the first half.

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

Thank you, Clive. Good morning, everyone. Firstly, I'll take you through the key highlights from our income statement. Revenue for the period came in at GBP 145.1 million, down GBP 16.4 million, or 10.2% on the first half of last year. Gross profit fell in absolute terms, down 3.2%, or GBP 1.3 million, but gross margin rose substantially, given the move in relative contribution from currency to authentication and improved margins within the currency division. Adjusted operating profit of GBP 7.3 million is down GBP 0.6 million, or 7.6%, versus the comparative period. I'll cover the key drivers for these year-on-year movements for both revenue and profit in the following slides.

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

As Clive said earlier on, on an IFRS basis, the group moved from an operating loss to a profit of GBP 1.3 million. Pre-tax exceptional items totaling GBP 5.5 million before tax were significantly lower than the GBP 10.8 million posted in the same period last year. Again, I have a slide that breaks this exceptional charge down further on. Moving on to the revenue walk slide, this slide shows the divisional drivers for the period-on-period movement in revenue. Overall revenue in the ongoing business fell with a GBP 18.5 million fall within the currency revenue, and authentication showing a marginal rise in revenue of GBP 2.1 million. Currency saw a fall in sales as some deliveries moved into the second half.

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

In contrast, the comparative benefit from banknotes that were manufactured in financial year 2023 but sold in the first half of last year. Authentication saw strong sales to certain GRS territories, though Sudanese sales were weak given the unrest there. The ID business added an additional multi-year contract to produce passport data pages which will run alongside the Australian passport.

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

The next slide covers adjusted operating profit, showing the GBP 0.6 million drop in profits to GBP 7.3 million. In the case of the currency division, profits dropped by just GBP 0.3 million despite an GBP 18.5 million fall in divisional revenue, reflecting better mix of sales with higher margin contracts. In relation to authentication, the division was allocated a larger proportion of central costs given its higher contribution to overall revenue than in the comparative period last year. Moving on to exceptionals, the GBP 5.5 million of pre-tax exceptional costs incurred in the first half of the year principally relate to costs incurred in separating the authentication business prior to sale. We incurred GBP 4.5 million here.

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

Most of the remaining exceptional charge related to costs relating to site restructuring, where we incurred GBP 0.9 million of further costs in relation to the closure of Gateshead. In the same period last year, we incurred a substantial GBP 7.9 million winding down our operations in Kenya and restructuring the UK sites. Moving briefly to the tax line, this period's exceptional tax charge represents the tax impact of the exceptional items in the period as well as some beneficial foreign exchange movements on our tax provision. Moving now to the cash flow and looking at the key movements here. With an operating cash flow, the most notable move is the GBP 17.9 million cash outflow from working capital.

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

The main elements of this are GBP 7.3 million of net investment in inventory as the currency business prepared for orders completed in the second half of this year and an GBP 8.1 million increase in trade debtors. This last item reversed soon after the half year as we received GBP 28 million in cash to settle receivables from currency customers in the first three weeks of October. We also restarted pension payments in the first half following the end of the moratorium we enjoyed last year and paid GBP 3 million in the first half.

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

Our net interest payment for the half was GBP 6.9 million, down on GBP 8.3 million paid in the same period last year. Within investing activities, CapEx spend, net of grant income, was kept to GBP 3.8 million by careful cost control and continuing to match the CapEx to grant income receipts in Malta. CapEx spend is expected to increase in the second half as we incur costs in Malta to physically separate the authentication and currency facilities ahead of the completion of the authentication sale.

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

Now looking at net debt and covenants, the slide says that cash conservation and generation remains a core focus. Actually, it is the core focus for us and has been for quite a while. As we pointed out at the time of the AGM, net debt rose in the first half, largely due to the movement in working capital that was talked to on the previous slide. However, we met our interest cover and year-end covenant tests at both the end of the first quarter and at the end of September and kept within our liquidity headroom tests throughout the period.

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

That debt at the time of the year ending March will depend on the exact timing of the authentication sale. So at the moment, we're not going to give specific guidance on this. However, we are expecting a net investment in working capital over the course of the second half as we prepare for higher production in currency to meet orders towards the back end of this financial year and into next. Added to this, the cash cost of separation of authentication will accelerate as we move through the second half. I'll now pass you back to Clive for his summary remarks and guidance on our outlook.

[Clive Vacher, CEO at De La Rue]

Thank you, Dean. In summary, the actions we've taken to improve the efficiency of the business and to remove legacy issues should show tangible financial benefits as we move into the second half of FY 2025 and into FY 2026. The proposed sale of the authentication business in the first half of next calendar year will transform De La Rue's finances, allowing us to pay off our revolving credit facility and become net cash positive, and at the same time, will greatly reduce the remaining deficit on our legacy pension fund.

[Clive Vacher, CEO at De La Rue]

Added to this, the currency business is looking at significant top-line growth over the next 18 months as it builds out the order book that has been built to record levels over the past year. The division is now organized with the capability and manufacturing footprint to capitalize fully on the strength we are currently experiencing in our markets. As a result, we are guiding that the ongoing currency business will see revenue bounce back in the second half to bring divisional revenue for the year back to a similar level that was seen in FY 2024.

[Clive Vacher, CEO at De La Rue]

Therefore, the expectation is that when taken together with authentication, the group will reach adjusted operating profit for the current year in the mid- to high-GBP 20 million range that we have previously guided. Next year, we expect the translation of the currency order book into sales to continue, leading to strong double-digit growth in EBITDA before central costs in that division. With the expectation of a significantly enhanced balance sheet, an improving top-line performance in currency, and an efficient and agile operational base, we look forward into 2025 and beyond with confidence, and now I'll pass over to Louise to manage the Q&A. Thank you.

[Louise Rich, Head of Investor Relations at De La Rue]

Thank you, Clive. Now, if you can move on to questions, we'll start by taking questions from the room and then cover the questions that have been submitted via the website. For those in the room, could I remind you to wait until you've been handed the roving microphone, allowing those listening via the webcast to hear you?

[Thomas Ransom, EVP and President of the Virginia Region at Truist]

Good morning, Thomas Ransom, Davy, thank you for taking my questions. Three questions, first two. Hello? Yep, there we go, back. First two are kind of linked, so I'll ask them separately and then come on to the third. Just around currency, kind of order book and the pricing dynamics that you're seeing in the market. Obviously, the high win rate is very encouraging, but how does that kind of relate to pricing that you're seeing in the market? Appreciate it's commercially sensitive to kind of talk about your pricing, but if we can that's about the industry. And then just about the pipeline, how active is the pipeline given the strong win rate in the last two months? How does that look for the kind of coming kind of period? Thank you.

[Clive Vacher, CEO at De La Rue]

Great. Thanks, Tom. Good morning. So to answer the question on pricing, pricing is very good at the moment. Partly, there's a lot of factors that go into that. There is significant market demand, which is a positive factor in pricing. But I think from our perspective, there's a couple of other key things. One is that we have built exceptional relationships with key customers, key high-value customers who have high specification of notes. And secondly, that we are capturing now a greater part of the value chain with two factors. One is the continuing trend from paper to polymer banknotes, which allows us to capture the value of the polymer substrate in addition to any other print activity, for example.

[Clive Vacher, CEO at De La Rue]

And secondly, that our feature set on both paper and polymer, which we have been developing the technologies over the last five years, is really starting to pay off. And so whereas previously we may have been basing a lot of our sales and order book growth on just the print side of the equation, we're now seeing that the substrate and the features are contributing very strongly. So good pricing and an increase in capture of the value chain. And then to your second question, which is on pipeline, it's still very good.

[Clive Vacher, CEO at De La Rue]

There is some really significant business behind what we have already secured. And our outlook takes us very positively throughout FY 2026 in terms of good quality work filling our capacity. And now we're starting to see a similar trend for FY 2027. So we're seeing a nice, call it two-year, two to two-and-a-half-year future picture emerging for currency based on where we are today, which is already a record order book.

[Thomas Ransom, EVP and President of the Virginia Region at Truist]

Great. Thank you. That's very encouraging. The second, sorry, third question, just around the polymer kind of capacity, you mentioned that there's going to be a doubling in the second half and then a further step up in the March 2026 year. How does that kind of align with your kind of current utilization of Westhoughton and the second-line investment? When will it be full? Kind of I'm not assuming you're going to add any more capacity to that given the time it takes to add it, but that will certainly help pricing dynamics kind of going forward within the polymer kind of offering.

[Clive Vacher, CEO at De La Rue]

Yeah. So if I take you back to when we made the decision to double our polymer capacity, that seemed to be the right decision back in 2021. We had about a two-year lead time to build that capacity. And certainly, we believed at that time that as soon as the capacity was available, it would be utilized. We've had, as you know, a very significant downturn in the currency market. And it's really important to understand that downturn is not related to the rise of digital. It was purely the post-COVID effects where central banks were burning off stocks.

[Clive Vacher, CEO at De La Rue]

And then when they hit normal reordering levels, they were not ordering at the time we expected them to due to a lack of public finances and a lack of foreign exchange availability. That is fixing itself now. There is very significant and strong demand from central banks worldwide. With it, the conversions that we were expecting to happen into polymer are certainly happening, perhaps offset about 18 months to two years from where we believed they would be previously. We are absolutely kept the faith. We believed it was the right thing to do in any event.

[Clive Vacher, CEO at De La Rue]

But now we are seeing that our capacity is going to be utilized and the capacity that we've built. In terms of utilization, we have recruited significant people for Westhoughton. And imminently, we will be running both lines consistently. We expect that to continue throughout FY 2026 and into FY 2027. And we will probably still have enough capacity in FY 2027 that we wouldn't need to invest in further. But there will be a decision point, my guess, somewhere in the FY 2027, FY 2028 time period as to whether further capacity would be needed.

[Louise Rich, Head of Investor Relations at De La Rue]

Okay. We have a couple of questions from the webcast. First couple of questions from Edmund Truell from PSF Capital.

[Edmund Truell, Chairman at PSF Capital]

Please can you expand please can you break down expected level for authentication, separation, and sales cost?

[Clive Vacher, CEO at De La Rue]

Sorry, can you just repeat? Authentication, separation cost was.

[Edmund Truell, Chairman at PSF Capital]

So please break down expected level of the authentication, separation, and sales cost.

[Clive Vacher, CEO at De La Rue]

Yeah. I think the question is around the GBP 12 million of separation costs that we've specified and what the break of that is between the various facets. I think we don't really want to go into considerable detail on that as we sit here, but suffice to say, I would imagine something like 70% to 80% of that cost is to do with the actual physical separation of the facilities in Malta between currency and authentication. So I think that's probably a fair reflection of how that breaks down. The other cost is basically fees, different fees.

[Edmund Truell, Chairman at PSF Capital]

And following, can you please expand on the working capital cash outflow?

[Clive Vacher, CEO at De La Rue]

At what point? At the half year or at the year-end? The year-end, I think, probably is more specific. We are actually expecting working capital to be an outflow at the year-end because we're gearing up for the increase in activity, sales activity through the back half of the year and also into the following year. So we will be building up our working capital accordingly for that. So I think that's probably and in terms of the half-year, major issue on working capital was the increase in receivables, which actually will pay down within three weeks. As I said in my presentation, we had GBP 28 million of cash come in the first three weeks of the second half, which basically was a timing issue and sorted itself out. I'm not sure there's much else.

[Louise Rich, Head of Investor Relations at De La Rue]

Okay. We have another question from Bobby.

[Louise Rich, Head of Investor Relations at De La Rue]

Two questions, please. Please could you give further details on your normalized earnings expectations for FY 2026 for the standalone currency division or after-sale of authentication, given remaining central costs and new debt-free cap structure? When do you expect to be able to conclude the solution to fully de-risk the pension liability?

[Dean Moore, Interim CFO and Director Executive Board at De La Rue]

I think at this stage, I mean, where we sit here now, I think I'd prefer to probably deal with that as we close in on the year-end. We'll have far more granularity in terms of where that's going to be. Rather than going to specifics at this stage, I'd prefer to leave that till closer to the time we get to that point when currency is indeed standalone.

[Clive Vacher, CEO at De La Rue]

Yeah. I agree with you, Dean. We're not going to guide specific numbers. What we are saying is that the currency division will experience strong double-digit earnings growth, FY 2024 to FY 2025 and FY 2025 to FY 2026 again. So it's a very positive picture that we will provide more color on at the year-end results. In relation to the pension scheme, the GBP 30 million payment will leave a fairly manageable amount to pay off.

[Clive Vacher, CEO at De La Rue]

We have committed GBP 30 million immediately on the sale of authentication. And then the remaining 40-ish that would need to be paid into the scheme is committed over the next three years as deficit repair contributions. So that gives you a feel that within a three-year period, all other things being equal, that pension deficit will be brought down to zero. However, we are also looking at options to accelerate the full solution for the pension. I cannot guarantee that any of those will come to fruition, but we are exploring a number of options to get that behind us earlier than that time period.

[Louise Rich, Head of Investor Relations at De La Rue]

There are no further questions on the webcast. I'll hand back to the room for closing remarks.

[Clive Vacher, CEO at De La Rue]

Just to conclude then, this is a very encouraging position that we find ourselves in, and I really want to stress that obviously the last five years have been quite a journey at De La Rue. It's been a journey of significant transformation, and I take my hat off to the teams at De La Rue because we have set out a strategy in 2020. We have remained true to that strategy. We have believed in this business throughout. All of the challenges that we face, particularly the currency downturn, we knew that it would come good, and we are starting to see that now. So I'm incredibly encouraged by the position we find ourselves in today. Thank you.

Participants

Executives

• Louise Rich, Head of Investor Relations
• Clive Vacher, CEO
• Dean Moore, Interim CFO and Director Executive Board

Analysts

• Thomas Ransom, EVP and President of the Virginia Region at Truist
• Analyst
• Edmund Truell, Chairman at PSF Capital