De La Rue takes £13.5m hit to resolve bank note dispute

LONDON (ShareCast) - Banknote printer De La Rue (Other OTC: DELRF - news) will take a £13.5m non-cash hit from a disputed contract with a major customer and said it felt the long-standing issue was now mostly resolved. Production of paper bank notes for what the company called a "principal customer" had been found to contain some notes which had fallen "marginally short" of specification and certain paper specification test certificates had been deliberately falsified.

De La Rue reported the findings of an internal investigation conducted by external lawyers to the appropriate authorities and now the customer has invoked performance bonds worth roughly £13.5m.

The FTSE 250 company said it expected to classify the charge as a post-balance sheet event and that this amount will be provided for as an exceptional item in the accounts for the year ended 28 March 2015.

"The board considers this is a material step towards resolution of this issue and discussions continue with this important customer," it said in a statement.

Meanwhile, the sale of surplus land at its Overton site has been completed, resulting in proceeds of £9.6m, which will result in an exceptional gain of around £9m in the new 2015/16 financial year.