{"id":47585,"date":"2019-10-17T15:08:35","date_gmt":"2019-10-17T13:08:35","guid":{"rendered":"https:\/\/www.rudebaguette.com\/?p=47585"},"modified":"2019-10-17T15:08:49","modified_gmt":"2019-10-17T13:08:49","slug":"de-la-rues-bid-to-return-to-circulation","status":"publish","type":"post","link":"https:\/\/www.rudebaguette.com\/en\/2019\/10\/de-la-rues-bid-to-return-to-circulation\/","title":{"rendered":"De La Rue\u2019s Bid to Return to Circulation"},"content":{"rendered":"\n

De La Rue, the British firm which has printed roughly\na third of all banknotes currently in circulation, has recently come to be\nbetter known for its long list of scandals. Last year, the company was left\nred-faced after it was drastically underbid<\/a> by\nEuropean competitor Gemalto to produce UK passports; just months ago, the firm\ncame under fire for poor\nfinancial management.<\/a> Soon thereafter, the Serious\nFraud Office (SFO) announced an investigation<\/a> into\nDe La Rue over possible corruption in its South Sudan operation.<\/p>\n\n\n\n

Now it seems De La Rue is attempting to stage a\ncomeback, having hired \u201cturnaround expert\u201d Clive Vacher as its new chief\nexecutive. Vacher has made salvaging failing businesses the centrepiece<\/a> of\nhis career, previously revitalising firms including Rolls-Royce and American\naerospace group General Dynamics. In the short term, at least, Varcher\u2019s\narrival has lifted spirits at the 200-year-old printing company: De La Rue\nshares rose<\/a>\n1.79 percent by mid-morning on the day of the announcement. <\/p>\n\n\n\n

Dark times for De La Rue <\/strong><\/h2>\n\n\n\n

De La Rue\u2019s new head replaces former chairman Martin Sutherland, who was ousted following what can only be described as a catastrophic period in the company\u2019s history. Last November, the firm reported<\/a> that its operating profit had plunged by more than 35 percent from \u00a326.6 million to \u00a317 million; Sutherland sought to reassure investors by claiming the business would \u201crefocus [its] identity business on the supply of higher margin [services].”<\/p>\n\n\n\n

By April 2019, however, De La Rue executives were\nfighting for their jobs after investor Crystal Amber slammed<\/a>\nthe company\u2019s still-floundering performance as \u201cunacceptable.\u201d The activist fund\nwent on to criticise Sutherland for failing to adopt \u201cspecific proposals\u201d for\nreform in the wake of a dire 2018. <\/p>\n\n\n\n

Sutherland\u2019s headache rapidly worsened from there. In\nJune, the firm was forced to write off \u00a318 million in revenue after Venezuela defaulted<\/a> on\nits bills, and De La Rue had to axe<\/a>\n170 skilled manufacturing jobs at its Gateshead Plant, sparking the ire of\nunion activists. Then, to round out the summer, De La Rue came under investigation<\/a> by\nthe SFO. Its operations in South Sudan, it seems, may be tainted with serious\nfraud, bribery and corruption. <\/p>\n\n\n\n

Still, it was the very public, and ultimately disastrous<\/a>, loss\nof the \u00a3490m contract\u2014De La Rue had proposed a much higher \u00a3610m bid\u2014 to print\nthe post-Brexit blue passport that was the final blow to Sutherland\u2019s five-year\nstint as boss. He announced his exit by claiming that the loss of the passport\ncontract, as well as \u201ccompetitive pressure in the banknote print market,\u201d\npresented major challenges for his then-unnamed predecessor. <\/p>\n\n\n\n

New business sectors to the rescue?<\/strong><\/h2>\n\n\n\n

Vacher appears to agree. Essential to the turnaround\nthe new chief executive is hoping to spearhead is the breaking\naway<\/a> from the firm\u2019s traditional bread and butter,\nespecially its passports divisions. In June, the company announced the sale of its\nInternational Identity Solutions business for more than \u00a340 million. <\/p>\n\n\n\n

\u201cDe La Rue is starting to feel like an analogue stock\nin a digital age,\u201d said<\/a> AJ\nBell investment director Russ Mould before the sale, \u201cafter all, the company\nprints bank notes in an increasingly cashless world.\u201d <\/p>\n\n\n\n

Under Vacher\u2019s new vision, De La Rue will be split\nbetween a currency arm and an authentication arm, the latter dedicated to\nmaking security features for products such as ID cards or registered substances\nlike cigarettes. This new business area has already yielded a few successes, as\nthe embattled company has notched contracts<\/a> to\ntrack and trace tobacco and soft drinks in the UK and in Saudi Arabia. <\/p>\n\n\n\n

Wrinkles in De La Rue\u2019s venture into track and trace<\/strong><\/h2>\n\n\n\n

Even this new scheme, however, is hardly working out\nwithout a hitch. De La Rue recently lost<\/a> a\ntrack and trace tender in Pakistan thanks to a too-high bid. Meanwhile, in a\nbid to fulfil its contract to provide unique identifiers for the UK\u2019s mechanism\nto track and trace tobacco, for which De La Rue does not have a technological\nsolution, it subcontracted<\/a>\nthe work to IT giant Atos. Atos was a problematic choice at best, however: the\nfirm has longstanding ties to the tobacco industry. <\/p>\n\n\n\n

Having been found complicit<\/a> in\nthe smuggling of its own products, the tobacco sector has worked at every turn\nto thwart<\/a>\nthe track and trace schemes which might cut down on this illicit trade. Despite\nthe WHO specifying<\/a> in\nno uncertain terms that the entirety of such systems, from the generation of\nthe unique identifiers to the storage of track and trace data, should be kept\nout of the hands of the untrustworthy tobacco industry, the major tobacco\nmanufacturers have tried every trick in the book to hijack track and trace for\ntheir own ends.<\/p>\n\n\n\n

One of their strategies to do so has been the\ndevelopment of an industry-sponsored \u201csolution\u201d for tracing tobacco products,\nknown as Codentify. Despite having been developed<\/a> by\ntobacco industry giant Philip Morris International (PMI) and licensed to PMI\u2019s\nmain competitors at no cost, Codentify\u2019s backers have insisted that it\u2019s \u201cfully\nindependent from any tobacco company\u201d since it was transferred<\/a> to\nFrench investment company Inexto for a symbolic amount. Public health bodies,\nas well as academics, have warned<\/a>\nthat Codentify is, in fact, deeply linked to the tobacco industry and \u201cnot fit\nfor purpose\u201d, but that hasn\u2019t stopped the tobacco companies from aggressively lobbying<\/a>\nfor its adoption.<\/p>\n\n\n\n

Atos both helped<\/a> develop\nCodentify and served as an \u201cindependent reputable organisation\u201d, in the tobacco\nindustry\u2019s own words, to promote the system\u2014making it a highly problematic\nchoice for De La Rue to subcontract some of its track and trace duties out to. <\/p>\n\n\n\n

Nor is its selection of an untrustworthy partner the\nonly problem De La Rue has faced while trying to comply with its track and\ntrace contracts in the UK. Retailers seeking to enrol in the programme have complained<\/a>\nabout \u201climited help and delayed response times\u201d from De La Rue. More than two\nweeks after track and trace went into effect last May, many British store\nowners said they had yet to receive the codes needed to purchase compliant\ntobacco stock. To make matters worse, De La Rue may soon be forced to fork<\/a>\nover compensation if the UK\u2019s track and trace scheme is abruptly suspended\nfollowing a no-deal Brexit.<\/p>\n\n\n\n

There\u2019s no doubt that Clive Vacher has his work cut\nout for him if he\u2019s hoping to reverse De La Rue\u2019s sinking fortunes.<\/p>\n","protected":false},"excerpt":{"rendered":"

De La Rue, the British firm which has printed roughly a third of all banknotes currently in circulation, has recently come to be better known for its long list of scandals. Last year, the company was left red-faced after it was drastically underbid by European competitor Gemalto to produce UK passports; just months ago, the<\/p>\n","protected":false},"author":77,"featured_media":47589,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"subtitle":"","footnotes":""},"categories":[113],"tags":[],"class_list":["post-47585","post","type-post","status-publish","format-standard","has-post-thumbnail","category-finance"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/posts\/47585","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/users\/77"}],"replies":[{"embeddable":true,"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/comments?post=47585"}],"version-history":[{"count":0,"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/posts\/47585\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/media\/47589"}],"wp:attachment":[{"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/media?parent=47585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/categories?post=47585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.rudebaguette.com\/en\/wp-json\/wp\/v2\/tags?post=47585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}