De La Rue Share Discussion Threads

[wigwammer] 13/4/2023 18:06

Yes but the discussion is whether the various risks are priced in at 40p. You aren't going to get prizes for being a consensus hugger, who just repeats verbatim the points that have already sent the shares down. And for the record, I last purchased at sub 50p during covid, and ended up selling at 130p+.. all recorded here on advfn for posterity... quite a few consensus huggers to contend with then too.... ATB

[kooba] 13/4/2023 17:43

The accounts are carrying a risk warning from their accountants with a material uncertainty statement . The company are trying to renegotiate the covenants on their debt ..not because they think there is enough headroom !! The company are trying to renegotiate their agree pension deficit payments ..good luck with that ! The company's debt is back to where it was 3 years ago before they raised £100m of equity . Not sure how you paint a good picture around that ..but well done I guess you are new to this counter. In around s decade they have gone from Ftse100 turning down a 935p bid to s basket case ..what can go wrong hey.

[wigwammer] 13/4/2023 17:26

The company carries about the same level of net debt as it has done for most of the last 10 years. This hasn't stop it winning business historically. In the meantime, the authentication unit is becoming a larger part thus improving the quality of the mix. Valuation near all time lows and at a 60-70% discount to the raise of just a couple of years ago. Looks very interesting IMO.

[kooba] 13/4/2023 17:06

I believe that the parties interested have been sitting and watching the business implode and have been taking market share and are enjoying seeing the company lose their pricing power ..the risk at the moment is that De La Rue can't gain new contracts or can't get renewed contracts because of the state of their balance sheet. What they need urgently is new business and that is in doubt.I put my thoughts on the attractiveness and potential value earlier on of a take out ..but relying on that is not a good investment decision. I can't see how they get through this and get the banks on side without raising equity and i think that CRS will not be the only institutional shareholder that will not give money to the existing management ..they blew the last £100m another roll of the dice they will not get.

[wigwammer] 13/4/2023 16:27

Authentication growing, other areas more cyclical. Not sure there is much management can do about it, but ride out the cycle. In the meantime, large holders may force them to be more active with assets etc... so there may be a few positive surprises along the way for holders at this level. ATB

[wigwammer] 13/4/2023 16:23

Fair enough. But do they have to break in to these industries? Scale of their top line and assets suggests they are are already there. Anyway, best of luck with your other investments.

[lefrene] 13/4/2023 16:17

Sounds a bargain wigwammer, so how come the current clever persons at the helm have blown away £100 millions, in return for profits shrinking by 50% each year?

I don't doubt there are more capable persons on the shareholder list, but they will also know the sorry state to which this once august company has been brought down to.

I nearly bought into it 18 months ago, but amongst other things I realised it was an industry which I have never seen from the inside, and thus unsure of how pricing structures work in it. But I also considered that other high tech companies could make it difficult for DLAR to break into digital tech services, an area in which DLAR had no history of expertise. (ok so you can always buy in the 'brains', but that doesn't make it easy to enter a new area of business)

My guess only insiders of the industry will know what it's really worth, and right now it looks like the jury is out. Too risky for me to try a punt, but best luck to anyone who does understand the industry, and reckons it's worth a go.

[wigwammer] 13/4/2023 16:01

Long list of established shareholders, with deep pockets and knowledge of how to actively extract value from underperforming assets.

[wigwammer] 13/4/2023 15:55

??? ... what you buying? A £350m+ turnover business with a history of making attractive margins, driven by scale, experience and IP.

[lefrene] 13/4/2023 14:51

Hooley, things do change and famous names do disappear at times of stress. No doubt the tape measure has been run over Dlar, but if you're already in the security printing business, just what is it that you would be buying that Dlar has to offer? They've already sold off printing businesses, presumably because they couldn't raise enough new business to make them viable?

There could be a cheeky bid, but 100p would be close to £200 millions, quite a bit of dosh, who would want it that badly?

[hooley] 13/4/2023 14:19

The largest security printer in the World and has been around forever. Expect a cheeky bid soon and for a contest. Smells like 100p target to me for starters.

[cromw3ll] 13/4/2023 10:27

And that environment is set by who?

So much for the post Brexit, small government, dynamic economy...its tax and tax again, and that is killing confidence.

[dealy] 13/4/2023 10:23

I believe the role of management (bad or good) is over rated.The environment sets the conditions

[kaos3] 13/4/2023 10:00

jensen - exactly so imho

[edmondj] 13/4/2023 09:59

Kevin Losemore, more like.

[jensen10] 13/4/2023 09:51

Dealy the issue here is that management credibility is completely shot and the share price reflects that. The long lead times in this business should give management decent visibility over forecasts yet they still issue profit warning after profit warning following repeated denials of reality with a promise of improvement that never materialises. How can the banks be comfortable agreeing to covenant waivers based on forecasts given recent history? Similar for pension trustees. I'm sure there is still a decent underlying business but until the management is shown the door the share price will continue to show zero confidence. Very depressing.

[dealy] 13/4/2023 09:26

In general smaller companies are struggling with profitability. Microsoft Pfizer, LVMH, BP are all doing fine but virtually thr entire sector of smaller companies is suffering. Reduced demand , higher staff and energy costs, more complexity, higher IT costs etc are all causing huge headaches for small companies. Journalists seem to forget this when they are constantly bashing companies. We need these companies to survive

[dealy] 13/4/2023 09:16

Thanks for posting but again this article focuses too much on the share price. Share prices for smaller companies are absolutely in the toilet right now. Just look at Asos, Ocado, Petrofac, Metro Bank, NCC Group etc etc which are basically hovering around all time lows along with hundreds of other companies.The drop in forecasted Ebit from 57m to say 22m is significant but it can be blamed on a number of factors which are likely to ease over time e.g. inflation, operational difficulties, reduced demand.

[kaos3] 13/4/2023 09:11

i consider dlar q as the proverbial jockey and the horse

in this special case both are in the same category. jockey leading

not much debate about horse ... who would win with a monkey on his back.

i tend to think about the horse most

[ny boy] 13/4/2023 09:10

It was a good trade after the pandemic the World was ending lows but now, just not an investment just a basket case.

[kooba] 13/4/2023 08:35

Another piece in the Times..i imagine the CEO has just choked on his cornflakes! Being described as delusional is not a look he was going for!No longer a licence to print money at De La RueAlistair OsborneThursday April 13 2023, 12.01am, The TimesMoney talks. A banknote printer shouldn't need telling that. So how come the De La Rue chief executive sounds so delusional?Clive Vacher has just issued his fourth profits warning in 16 months. The shares, which were around 190p when he took charge in October 2019, are down to 40½p - off another 19 per cent on the latest alert. A company that was valued at £125 million before he tapped investors in July 2020 for £100 million at 110p is now worth just £79 million.Having blown those funds, De La Rue's now admitting to talks with lenders over "an amendment to its banking covenants": a shift of stance from November when Vacher was railing about auditor EY issuing a "material uncertainty" warning over the group's "going concern" status. To boot, he's just asked the pension trustees to defer "£18.75 million of deficit repair contributions".None of that points to a well-run group: one reason near-10 per cent investor Crystal Amber is gunning for De La Rue chairman Kevin Loosemore, calling an EGM in an attempt to oust him. But talk to Vacher and this is the sort of thing he says: "We've spent the last three and a half years making a significant transformation of the company, making it a lot more competitive."Really? Alongside Loosemore, who joined days before him, Vacher says they've "revamped the cost structure", shrunk five printing sites to three, stuck £20 million into a new polymer line and won heaps of contracts. Sales from the passport-printing wing will top £100 million next year for the first time too.So why has the share price tanked? Nothing to do with them, guv - just the post-Covid banknote market. Demand, Vacher says, "has been at the lowest levels for over 20 years", even if he says bid activity has picked up in the past month.On that, seeing is believing. But back in the real world, Crystal Amber's investment adviser Richard Bernstein says he's celebrating a "pyrrhic victory": having his arguments proved right at the cost of another share price plunge. Roll back to January 2022 and consensus adjusted operating profits forecasts for the latest financial year were £56.5 million, a figure that's dropped to £41.4 million, then £35.6 million, then £30.1 million and now, weeks before the publication of the results, to £28.2 million. Worse, De La Rue is now guiding to just £20 million for the 12 months to March 2024 - less than half previous forecasts.This is where things could also get more serious for the board. In December, Crystal Amber's lawyers wrote to each director, reminding them of their fiduciary duties and arguing that, on its analysis of issues in the business that the group hadn't disclosed, the market forecasts were "not achievable". So it has proved. Bernstein cannot believe the board has just discovered the profits miss.Vacher says he is fully aware of his disclosure responsibilities. But he does say some extraordinary stuff, not least that one reason for the endless missed forecasts is that he's had to put "£57 million cash into the pension scheme" to repair a deficit that still tops £90 million. But isn't meeting obligations to 6,770 pensioners a cost of running the business? He also says, "I don't think we need to raise more money" and that he doesn't recognise forecasts that De La Rue's net debt will hit £105 million by 2024. But that's the estimate of house broker Numis.Crystal Amber wants to replace Loosemore with a new chairman to take a view on Vacher. Its nominee, Pepyn Dinandt, an Eberspaecher Group exec, is not well known. But, whoever the candidate, other big investors such as Schroders, with 16 per cent, and Crispin Odey with 6.9 per cent can't be happy.De La Rue is meant to print money, not lose it.

[kooba] 13/4/2023 08:33

Rather optimistic ..its a massive drop on where the company was forecasting last year. They are currently in talks with their banks to ease the banking covenants on their debt and already have a material uncertainty qualification on their accounts.The covenants and the relaxation of their commitment to pay into the underfunded pension are not by any means givens.So i think the position of the company is not as assured as you think I'm afraid.I agree the company could still be of real interest for its IP and position in the markets it addresses as well as the highly recognised global brand De La Rue...whilst one could still see a competitive bid situation up to £1 i rather think that those natural buyers of the company are rather enjoying seeing the once sector leader floundering so badly.If one makes a move likely to result in a competitive bid situation..i think a serious and new independent chair led strategic review considering a formal sale process needs to be prioritised the current management i think has lost all confidence.

[dealy] 13/4/2023 08:25

So what are we talking about here? 10m less Ebit than hoped? Hardly life threatening. Times are tough. The future of thr company is not in doubt. Worst case is a takeover at 80p

[ny boy] 13/4/2023 02:18

If the Bod want to sell any surplus £50 notes, I’ll be happy to take them off their hands @ 10p in the £