This article is more than 9 months old

This article is more than 9 months old

The company that prints UK bank notes and passports warned there was “significant doubt” about its future unless a turnaround plan revived its fortunes.

De La Rue, which prints notes for the Bank of England and more than 100 other central banks, said it was suspending its dividend to help tackle mounting debts as it reported a first-half loss following a raft of problems.

Shares in the Basingstoke-based business plunged by a fifth to 140p, wiping £36m off its value, after it said there was “material uncertainty that casts significant doubt on the group’s ability to continue as a going concern.”

The company, which employs more than 2,500 people globally, said the warning was based on a worst-case scenario.

Unite, the union, said it was a “very worrying” development for workers at De La Rue, whose UK locations include Debden in Essex and Gateshead in the north-east.

“The potentially precarious future of De La Rue, a major UK manufacturing company, should be ringing alarm bells across government,” said Unite national officer Louisa Bull.

“Unite will be doing all it can in supporting our members at this very difficult time and will continue to campaign strongly to keep vital printing work in the UK.”

The latest statement follows a series of setbacks including two profit warnings, an investigation into suspected corruption in South Sudan and its failure to win a £490m contract to print the UK’s post-Brexit blue passport. In May, it wrote off £18m after Venezuela’s central bank failed to pay its bills.

De La Rue, produces passports for 40 countries, said its net debt in the six months to 28 September jumped by 59% to £171m compared with the same period a year earlier, as its banknote printing operation struggled with depressed margins amid stiff competition and the growing popularity of digital payments. The company swung to a pre-tax loss of £12.8m in the first half, from a £7.2m profit a year ago.

It also blamed its poor performance on the departure of top bosses, including its chief executive, adding that major changes to its turnaround plan meant the programme was not delivered as originally planned.

It said the business was at risk if it struggles to cut costs, boost profits or was hit by a further downturn in trading conditions.

De La Rue said it was now focused on delivering a turnaround plan under its new chief executive, Clive Vacher, who was appointed last month.

The company parted ways with its former boss Martin Sutherland in May after he lost the battle for the contract to print the post-Brexit passport to Franco-Dutch company Gemalto.

De La Rue said it expected to fare better in the second half, when it expects more favourable currency volumes and benefits from cost cuts.

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Russ Mould, investment director at AJ Bell, said: “Just when you thought it couldn’t get any worse for De La Rue along comes another wave of bad news.

“In an increasingly cashless world one has to wonder just how long De La Rue can survive without a radical change to its business model.

“The business seems to have fallen flat on its face as a result of poor management decisions at a time when it needed superior leadership to navigate difficult market challenges. Sadly shareholders are now suffering the consequences.”