De La Rue flags £13.5m charge following issues with major customer

Banknote maker said it would make an exceptional charge of £13.5m in its 2015 accounts, following an issue which started in 2010

De La Rue products
De La Rue products

Banknote maker De La Rue said it will take a £13.5m charge in its annual accounts next month after a major customer invoked a performance bond.

The manufacturer, which has operations in Gateshead, said unresolved issues with a major customer regarding bank note paper production had been rumbling on since 2010.

The customer has now invoked performance bonds that were in place since the contract was agreed.

In a note to shareholders, which precedes the firm’s 2015 accounts, De La Rue said it would classify the move as an adjusting post balance sheet event — and account for the charge as an exceptional item in the year ended March 28, 2015.

The statement said: “The Board considers this is a material step towards resolution of this issue and discussions continue with this important customer.”

De La Rue issues guarantees and performance bonds in the ordinary course of business.

A passage in the firm’s 2014 accounts pointed to an investigation by external lawyers, commissioned by the board, which looked into “issues” which had been brought to its attention.

The investigation was said to have found “nothing of substance”, although it was established that certain paper specification test certificates had been deliberately falsified.

The Board subsequently reported the findings to the appropriate authorities.

Within the note to shareholders De La Rue also said it had disposed of surplus land at Overton which yielded £9.6m.

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