De La Rue stumped for an answer

David Hellier
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IN the 1930s the bank note manufacturer De la Rue created a number of boardgames, including a cricket game called Stumpz.

Yesterday its chief executive James Hussey was well and truly stumped as he resigned with immediate effect following the discovery last month of serious problems with the group’s paper production operations.

What makes this corporate news so shocking is that De La Rue is anything but a fly by night company.

It was founded in 1813, it has won 11 Queen’s Awards, it’s in the FTSE 250 and it prints currencies for 150 governments (and has many other businesses).

Its investors hold shares in the group because of its consistency, its high dividend payout and over the past few years its decision to exit peripheral investments such as its stake in the lottery owner Camelot. Its current predicament shows that, as with the recent BP problems, there is nothing risk free in investing in individual equities.

Naturally De La Rue investors are pretty shocked by the group’s current problems, which began on 20 July with a revelation that it had identified quality and production irregularities at one of its paper production facilities.

Investor irritation is intensified by the fact that as recently as June the group was giving a presentation to its brokers at JP Morgan?Cazenove at which it was notably upbeat about trading and likely results.

Its shares then traded at the dizzy heights of 943p. By yesterday the shares were down to 711p after falling around 10 per cent.

Analysts, such as Paul Jones at Panmure Gordon and Alex Hugh of UBS, are concerned about the likely effect of Hussey’s resignation on future orders as well as on the group’s reputation.

Hussey, who had been with De La Rue for more than 20 years, had a fantastic contacts book and his departure leaves a void.

In the short term finance director Colin Child will be taking additional responsibilities as chief operating officer but he has only been with the group for a few weeks and his experience beforehand lies in a different field.

De La Rue needs to complete its investigation into the paper problems as soon as possible so that it can inform the market of the financial implications of this unfortunate affair.

The worst thing in these types of situations is if information drips out bit by bit. The fewer leaks and fewer company statements the better, or else investors’ nerves become more frayed.

And by the way, just in case you think the banknotes in your pocket are feeling especially flimsy, the group said yesterday that its problems do not concern either its production of sterling or euro notes. It’s a shame it could not have been equally forthcoming about the financial effect of its recent problems.


I for one can not wait for the start of the football season again tomorrow. It seems ages since the last one finished all those weeks ago (OK. It is only a month since the World Cup).

Just one suggestion for the capital’s top clubs. Why not give over all those unsold corporate seats to local schools or charities? Have a great weekend.

Allister Heath is away