Press | Crystal Amber Fund

Proof that shareholder activism works. When investors ganged up in April to force out chairman Kevin Loosemore, De La Rue had just delivered its fourth profit warning in 16 months. The big worry? That without a change at the top, the banknote printer would loosemore money. In came Clive Whiley. The share price since then? Up from 40½p to 77p, even allowing for a 5 per cent dip on the half-year results.

Yes, the business, in which activist investor Crystal Amber holds a 17 per cent stake, still lost £16.8 million pre-tax. Yet there are clear signs of progress. Net debt of £82 million is better than the £100 million guidance, boosted by an operating cash inflow of £15.4 million versus last time’s £2.8 million outflow. The currency order book has doubled since September to £220 million. And the pension deficit’s actuarial valuation is down to £78 million.

Whiley found a group “struggling to balance conflicting stakeholder objectives”, with £3 million of adviser fees “suffocating” recovery. He says he provided “air cover”, allowing the other Clive — chief executive Clive Vacher — to focus on operations. Whiley also hints at better to come, with the results a “springboard to optimise the underlying intrinsic value of the business”, even if De La Rue denied that was code for luring a bid. Whatever, it has no longer got such as big a licence to lose money.

Source: Daily Mail

De La Rue's chairman has resigned in a dramatic victory for the activist investor that has for months been calling for his head.

Kevin Loosemore's departure from the banknote printer was announced days after a disastrous profit warning that saw the 210-year-old company's share price fall to a record low.

That prompted investor Crystal Amber – the company's third largest shareholder with a near 10 per cent stake – to call for 'immediate change'.

Other investors who had previously backed Loosemore fell in behind Crystal Amber, and Loosemore decided to quit rather than face a humiliating vote, the Mail understands.

De La Rue said in a terse statement issued shortly before the stock market closed that he had resigned 'to draw a line under recent speculation surrounding the leadership of the company'.

Loosemore – who started as chairman in October 2019 – will leave office on May 1 and an 'accelerated recruitment process' has been launched to find a successor, the company said.

The aim is to appoint a new chairman on May 2 – less than three weeks from now – or 'as soon as possible thereafter', the statement added.

De La Rue said private equity veteran Pepyn Dinandt, who has been nominated for the role by Crystal Amber, would be a candidate in the process. Shareholders will be able to vote on the new appointment at the group's annual general meeting in July.

Richard Bernstein, founder of Crystal Amber, told the Mail: 'The focus is now on De La Rue's recovery – and the strategic value of the business is very substantial.'

Shares closed 2.4 per cent lower.

Victoria Scholar, head of investment at broker Interactive Investor, said: 'This is clearly a victory for Crystal Amber which has been desperately trying to oust Loosemore for a while.'

She said the company was in need of 'a drastic shake-up to restore investor confidence'.

Crystal Amber had been publicly calling for Loosemore to go since November.

Speculation is likely to surround the future of De La Rue's chief executive Clive Vacher once Loosemore's replacement takes the reins.

Earlier this week it warned that profits for the year to the end of March would fall short of market expectations and also marked down its outlook for 2023-24 earnings.

The group blamed a slump in demand for bank notes, which it said was at the lowest level for 20 years.

That followed a previous profit warning in November. It has been struggling for years and in 2018 lost out on a lucrative contract to print Britain's post-Brexit passports.

Source: The Times

Money 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.