De La Rue reveals going concern doubts as sale talks progress

The firm revealed a ‘material uncertainty’ over its financial future because of the payment of a loan due in July next year.

Banknote printer De La Rue has said it hopes talks over a sale of its two business divisions would reach a ‘successful conclusion’ in the coming months, but revealed doubts over its ability to continue as a going concern (Peter Byrne/PA) (PA Wire)

Banknote printer De La Rue has said it hopes talks over a sale of its two business divisions would reach a “successful conclusion” in the coming months, but revealed doubts over its ability to continue as a going concern.

The 200-year-old group – which recently put its currency and authentication businesses up for sale – said it had received further interest from suitors in both of its divisions and that negotiations are “progressing”.

However, shares in the group fell 9% on Thursday morning as it revealed a “material uncertainty” over its financial future over the payment of a loan due in July next year.

We are confident that discussions will reach a successful conclusion in the coming months

Clive Vacher, De La Rue chief executive

The group is hoping that the sale of its authentication arm will allow it to repay the loan, but that there is uncertainty over the timing of any potential deal, which is “outside of the board’s control”.

This means that there are doubts over its ability to continue as a going concern through to September 28 next year.

But De La Rue said that it was “confident that the range of strategic options and the progress being made with them will ultimately allow the group to repay the revolving credit facility in full before its expiration”.

It comes after a difficult time for the Basingstoke-based group, which prints banknotes for the Bank of England and other central banks across the world.

Demand for notes has slumped after banks globally stockpiled cash during the pandemic, while online banking and contactless payments have soared in popularity.

It put its divisions up for sale after a strategic review launched at the end of last year, revealing in May that it was in discussions with a number of possible bidders.

Its latest half-year figures laid bare the trading woes, with revenues slumping 11.3% to £310.3 million, dragged down by a 19% fall in its currency division, which offset a 12.5% rise in the authentication business.

Underlying operating losses fell by a quarter to £21 million in the six months to June 30.

Despite this, pre-tax losses narrowed to £15.4 million from £29.6 million a year ago.

Clive Vacher, chief executive of De La Rue, said: “De La Rue’s businesses successfully navigated substantial trading challenges faced in the last financial year.”

He said the currency market has been showing signs of recovery since the end of 2023, while its authentication business had successfully secured contract renewals.

“This stronger trading environment provides an encouraging background with which to progress our strategic priorities,” he added.

“These are progressing well and we are confident that discussions will reach a successful conclusion in the coming months.”