ADARE Printing which faces its shareholders on Friday had smitten so many investors that its shares soared from 195p to. 540p in just 16 months. The shock revelation about the lost Microsoft contract put an abrupt stop to that gallop. They are now trading at around 430p, or 22 per cent below their high point.

Shareholders will want to know what progress the company has made in its restructuring plans for Mount Salus, its subsidiary, following the revelation that at least 70 jobs will go, due to the loss of the lucrative printing manual contract with Microsoft. They may also be apprehensive about the recent sale of shares in the company by a former director and by some of its existing directors. Are these sellers by their actions raising questions about Adare's future growth prospects? Or are they Just hedging their bets?

Adare Printing is now holding its annual general meeting on Friday in less comfortable circumstances than on previous occasions. Up to two months ago, the company was one of the darling shares, as it appeared to have made all the right moves. However, at this a.g.m. shareholders may well wonder why the company purchased Mount Salus, for a cool £12 million, in the first place.

Adare has conceded that the lost contract will have a "very serious impact on Mount Salus". The expected sales loss this year will be £4 million and £5 million in a full year.

While Adare, putting it in a group context, said this represented 3.5 per cent of group sales, it still represents 60 per cent of Mount Salus's business and the profit loss will be around £600,000. Also, the latest accounts contain a provision of £500,000 for rationalisation.

Adare has acknowledged that Mount Salus had no contract with Microsoft and that it was aware of the declining market for printed manuals. Further, the price it paid for Mount Salus reflected this, according to Adare.

That, however, is history. Looking to the future, Adare has planned to restructure Mount Salus which may result in the retention of 50 employees. And an "in depth review of the company's options is ongoing". Shareholders will want to know what Mount Salus will contribute in the future. They will also want to be reassured that there are no skeletons in Prontaprint, the British printing company which was acquired in May for £23 million.

It is paying a huge premium on the net assets of just £2.4 million and this includes a value of £4.4 million for Prontaprint trade marks which are stated at cost and based on its directors' valuation. If that were excluded, there would be a negative net worth. Of immediate concern is the need to write off £16.5 million. And gearing will rise to more than 3,000 per cent.

Riada Stockbrokers is projecting an interest cover of 4.6 which is tight enough. However, on the plus side Riada is forecasting earnings per share rise from 48.5p to 51.2p. Also, two of Prontaprint's businesses, Carwin and Fairfield which generate sales of £20 million, are complementary to Adare's businesses.

And importantly, with the British economy improving, the timing could turn out to be opportune.

But what about directors selling some of their shares? That is less negative than it appears.

In June, for example, managing director Mr Nelson Loane made almost £350,000 on a share option deal. But some of the options were converted into shares which were retained and he ended up almost doubling his holding to 6.33 per cent.

Accountant and former director Mr Bernard Somers realised £440,000 after selling 100,000 shares in July. In the past year alone he has sold over £1.25 million in shares. His holding has now gone down from a peak of 25 per cent to 13.7 per cent. However, part of the sales (like the 100,000 on Friday) were probably to Mr Loane who had exercised an option to buy them.

Nevertheless, he still retains a significant shareholding.

Just a week ago, director Jim Coll made a profit of £82,000 after buying shares at an option price and then selling some of these into the market. He exercised options over 100,000 shares at 90p per share costing him £90,000. He then sold 40,000 of these at the market price of 430p to realise £172,000.

What directors, or former directors, do with their shares is often a good barometer of what to expect in the future. Shareholders will obviously monitor future share deals even more closely.