De La Rue (DLAR) half-year results

[Breelander]

One I hold in my HYP.

FINANCIAL HIGHLIGHTS

· Half year performance in line with expectations, full year outlook unchanged
· Year on year revenue flat and underlying operating profit up 2% despite the impact of a c£30m contract which concluded in H2 2015/16
· Currency revenue down 2%, underlying operating profit up 3%
· Product Authentication and Traceability revenue up 10% and underlying operating profit up 24%
· Net debt increased by £9.4m to £115.5m
· Group 12 month order book remained strong at £409m, providing good visibility for the rest of the year and beyond
· Concluded pension deficit funding plan with reduced cash contributions in 2017/18 and 2018/19
· Interim dividend maintained at 8.3p

...The Directors declared a dividend of 8.3p per share for the half year ended 24 September 2016 which will be paid on 11 January 2017 and will utilise £8.4m of shareholders' funds...
Ex dividend date for interim dividend 8 December 2016

http://www.investegate.co.uk/de-la-rue- ... 00097604P/

[fisher]

One I hold in my HYP.

me too.

[johnstevens77]

Thanks Bree

I hold it in my non tinkering HYP as well, not a share I would buy now though.

john

[Wizard]

can any holders say how many years has the dividend been flat now? Dividend Data doesn't seem to hold that data for DLAR as they are not in FTSE250. Looks like at least second year the interim has been held at that level.

Terry.

[genou]

can any holders say how many years has the dividend been flat now? Dividend Data doesn't seem to hold that data for DLAR as they are not in FTSE250. Looks like at least second year the interim has been held at that level.

Terry.

Interim is at the same level as Jan 2015, a cut from Jan 2014 ( 14.1p).

[Breelander]

can any holders say how many years has the dividend been flat now? Dividend Data doesn't seem to hold that data for DLAR as they are not in FTSE250. Looks like at least second year the interim has been held at that level.

Most companies provide their dividend history on their Investor Relations pages. De La Rue is no exception. History back to 2007 here...
http://www.delarue.com/investors/shareh ... calculator

[Wizard]

can any holders say how many years has the dividend been flat now? Dividend Data doesn't seem to hold that data for DLAR as they are not in FTSE250. Looks like at least second year the interim has been held at that level.

Most companies provide their dividend history on their Investor Relations pages. De La Rue is no exception. History back to 2007 here...
http://www.delarue.com/investors/shareh ... calculator

Thanks Bree, mental note made.

Terry.

[Gengulphus]

Most companies provide their dividend history on their Investor Relations pages. De La Rue is no exception. History back to 2007 here...
http://www.delarue.com/investors/shareh ... calculator

ADVFN's "Financials" page for the company can also be useful and has the advantage that you find the information in completely standard way rather than having to deal with the myriad of slightly different ways company websites present such information:

http://uk.advfn.com/p.php?pid=financials&btn=s_ok&symbol=dlar&s_ok=OK

But as with all secondary sources, do treat it with some caution. There can be errors, and there can be tricky points, e.g. about whether the "bonus element" adjustment as been done for a rights issue. So what I tend to do is use it as a first port of call, to give me (a) a first impression about whether I might be interested; (b) a list of any oddities that need further investigation. For example, a quick look at the above link says that it shows pretty regular payments, with little sign of anything being missing apart from some missing dates for the dividend declared on 02 Dec 2004 and the only extra being a special in 2007. The amounts of the total dividends for the year rise at a reasonably good pace up until 2008, then almost double in 2009, rise a little bit more in 2010, fall back very slightly in 2011, then remain static until they are cut by somewhere between a third and a half in 2015. There's been a decent 4% rise in 2016, but nothing special.

That would actually be enough to say that I personally am not interested. That's because my HYP is currently on 42 holdings, and while I have no problem adding at another holding in principle, I only have a very weak diversification motive for doing so. As a result, candidates for new holdings really need to be very good: no major failures to 'tick all the boxes', and very few minor failures. De La Rue has a pretty low market cap for a HYP candidate, an uncovered dividend (cover = 0.62 according to the link) and a major cut in its dividend record, and that's really too much for me.

But supposing that my circumstances were different and I decided I was possibly interested, that dividend record would pose three questions:

1) Why the very small cut in 2011? Deliberate cuts of just a few percent are very rare: if a company is paying out just a few percent more than it can really afford, the directors will almost always hold the dividend and hope that business improves. Often it does, and then their reputation for never having cut remains intact - and if it doesn't and they're forced to a more major cut in a few years' time, there's little more damage to that reputation than the minor cut would have produced.

2) Why the big rise in the dividend in 2009, followed quite quickly by a dividend freeze and then a roughly compensating cut several years later in 2015? In particular, does it indicate too much interest by the directors in impressing shareholders with short-term dividend performance at the expense of the long-term future of the business? And if so, are the directors concerned still in place?

3) Why the dividend rise this last year when the dividend is uncovered? Again, does this indicate too much interest in impressing shareholders with short-term dividend performance?

Question 1 is in fact easily answered: a more careful look at the relevant part of the ADVFN table reveals that the 43.2p total for 2010 is apparently the sum of a 14.1p interim and a 28.2p final. I.e. it's pretty clearly a typo in entering the 42.3p sum of those two amounts into the table.

Questions 2 and 3 are more difficult: I would want to take a good look at the annual reports for the years concerned. That's a fairly big bit of work, even with knowledge of which parts of annual reports are worth reading properly, which parts just skimming, and which parts can be reasonably safely ignored. I would do that work if I was interested in purchasing - if the directors have a habit of biting off more than they can chew in terms of dividend payments, that's clearly very relevant to the HYPer's hopes of at-least-maintained-and-preferably-growing dividends. But I'm not, so I'll leave doing that work to those who are...

Gengulphus