De La Rue dips as paper problem talks continue

De La Rue dips as paper problem talks continue

Shares in embattled British bank note maker De La Rue dipped this morning after it confirmed business with a major client - widely understood to be the Reserve Bank of India - is still suspended following printing irregularities.

Just days after seeing off a 925 pence a share takeover bid from French suitor Oberthur, the firm confirmed "discussions have not yet concluded" with the customer affected by a suspension of work at a Hampshire plant in the summer over "quality and production irregularities".

Eventually the Serious Fraud Office was called in after it was established that staff "deliberately falsified" paper specification test certificates on banknotes.

In an update, De La Rue says trading for the second half has been in line with the board's expectations and it "has not, to date, seen evidence of an adverse impact of the recent paper production issues on the rest of the business".

However: "In respect of the principal customer affected by these issues, discussions have not yet concluded. While these discussions are ongoing banknote paper supplies for this customer remain suspended."

Tim Cobbold, the company's new CEO, installed in the wake of the paper production scandal, says: "My first month at De La Rue has confirmed the potential to build on the considerable strengths of the business by extending our customer base and improving both how we work and the service we deliver to our customers around the world."

The update seems to have failed to reassure the markets, with shares trading down 12 pence, or 1.7%, at 687 pence, in morning trading.

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