Ban­knote printer teeters on brink

New boss warns that De La Rue could go bust Shares dive another 23.5pc £171m debt pile ex­ceeds mar­ket cap

Scottish Daily Mail - - City & Finance - by Lucy White

De La Rue is tee­ter­ing on the brink of col­lapse after post­ing a dis­mal set of half-year re­sults.

The ban­knote maker, which lost the con­tract to print Bri­tain’s post-Brexit blue pass­ports last year, now has a £171m debt pile which is dwarf­ing its £139m mar­ket value.

In an up­date which union Unite called ‘very wor­ry­ing’, De La Rue’s board said there is ‘ma­te­rial un­cer­tainty that casts sig­nif­i­cant doubt on the group’s abil­ity to con­tinue’.

It has now sus­pended its div­i­dend for the fore­see­able fu­ture.

Shares plum­meted 23.5pc, or 41.2p, to 134p, tak­ing losses this year to 68pc and since the peak in 2012 to 87.5pc.

An­a­lysts warned that De La Rue, which has nearly 3,000 staff, is ‘tee­ter­ing on the brink’.

The firm, which is based in Bas­ingstoke and dates back to 1821, blamed its poor per­for­mance on an ‘un­prece­dented pe­riod of change’ dur­ing which its chief ex­ec­u­tive, chair­man and most of its top team left the com­pany.

For­mer boss Martin Suther­land, who lost the pres­ti­gious con­tract to print UK pass­ports, was ousted in May fol­low­ing its third profit warn­ing in two years. The firm’s lat­est prob­lem came after Venezuela’s cen­tral bank failed to pay its bills for print­ing ban­knotes.

Although Suther­land presided over a 34pc de­cline in De La Rue shares dur­ing his five-year ten­ure, he was paid a to­tal of £4.7m – and even handed £50,000 on his de­par­ture to help him find a new job.

In July, the Se­ri­ous Fraud Of­fice (SFO) re­vealed it had launched a probe into De La Rue’s oper­a­tions in South Su­dan, in­ves­ti­gat­ing ‘sus­pected cor­rup­tion’. And chair­man Philip Roger­son re­signed in Oc­to­ber after fac­ing the threat of an in­vestor re­volt.

Neil Wil­son, an an­a­lyst at Mar­kets, said: ‘De La Rue is tee­ter­ing on the brink. Bad man­age­ment and de­ci­sions seems to be the main rea­son for the malaise.’

Rev­enue across the com­pany plunged 14.9pc to £205.9m in the six months to Septem­ber. De La Rue made a first-half loss of £9.2m, com­pared with a profit of £10.1m in the same pe­riod last year, as its cur­rency divi­sion per­formed poorly and it was hit with £12m of costs re­lated to its re­struc­tur­ing.

The Mail re­ported ear­lier this month that pri­vate equity bid­ders are cir­cling De La Rue’s prod­uct au­then­ti­ca­tion arm, which makes tags and soft­ware to help prevent trade in fraud­u­lent goods. It is un­der­stood that one party has ex­pressed in­ter­est in buy­ing the unit, but that De La Rue – which is now un­der the man­age­ment of chief ex­ec­u­tive Clive Vacher and chair­man Kevin Loose­more – is re­luc­tant to sell.

There was good news for this divi­sion, as rev­enue climbed by 70pc to £33m.

But rev­enue from the cur­rency busi­ness slumped 30pc to £128.7m. Russ Mould, in­vest­ment di­rec­tor at AJ Bell, said: ‘In an in­creas­ingly cash­less world, one has to won­der just how long De La Rue can sur­vive with­out a rad­i­cal change to its busi­ness model.’

The ques­tions over De La Rue’s sur­vival raise fears for its near-3,000 em­ploy­ees, more than half of whom are in the UK in­clud­ing at its Gateshead fac­tory and es­sex ban­knote-print­ing plant. Al­ready this sum­mer, the firm has axed 170 jobs in Gateshead, blam­ing the loss of the pass­port con­tract. Unite na­tional of­fi­cer Louisa Bull said: ‘The po­ten­tially pre­car­i­ous fu­ture of De La Rue should be ring­ing alarm bells across Gov­ern­ment.’

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