De La Rue: Shares in banknote printer plunge amid 'significant doubt' over its future

Shares in the passport and banknote printer De La Rue plunged by more than a fifth after it warned of "significant doubt" that it can continue as a going concern.

The firm has scrapped dividend payments and is to carry out a review of the business aimed at cutting costs and tackling its soaring debt.

The warning by De La Rue follows a series of setbacks including two profit warnings, the loss of a contract for Britain's new post-Brexit blue passports and an investigation into suspected corruption in South Sudan.

The company, which appointed Clive Vacher as its chief executive last month, said in a statement: "We have concluded there is a material uncertainty that casts significant doubt on the group's ability to continue as a going concern."

It said directors had considered a number of factors in reaching the "going concern" conclusion, including its trading results in the first six months and its impact on future performance, as well as its access to credit.

De La Rue, which produces passports for 40 countries, said its net debt had risen by more than 58% to £170.7m as its banknote printing business struggled in the face of stiff competition and the growing popularity of cashless payments.

The company expects an annual adjusted profit of between £20m and £25m.

Neil Wilson, chief market analyst at Markets.com, said: "De La Rue is teetering on the brink.

"Today's update is worrying for investors because it suggests there's more damage out there to be done to the shares."

Russ Mould, investment director at AJ Bell, said: "We've had two profit warnings this year, the chief executive's gone, there's been a regulatory investigation into activities in South Sudan."

He added: "The big issue is: printing banknotes - does it really have a future? It's about two-thirds of the company's business. With more and more countries and more and more people going cashless, you do wonder whether printing money is in fact a licence to print money."