Earnings of banknote and passport manufacturer De La Rue fell to £2.2 million on Tuesday, as it declared a cessation of dividend payments in the wake of a possible corruption investigation.
Shares were down in early trading by more than 20 percent after the the firm said it had determined that there was "significant doubt" about the group's ability to survive as a corporation in the face of significant risks and "financial instability."
The profit collapse was driven mainly by a roughly 300 percent fall in earnings in its banknote venture, which in the six months to the end of September lost £ 12.5 million.
In the "increasingly competitive" industry, De La Rue blamed "lower volumes and profits due to adverse product mix." Ultimately, during the time, its revenue declined by almost 15 percent to £206 million. The firm reported last month that earnings would come in "significantly lower" than forecast.
The warning came just weeks after De La Rue named former Rolls Royce executive Clive Vacher as chief executive officer, but the organization gave no explanation as to why earnings should be so far below estimates.
The company lost the contract to print UK passports in 2018 and revealed in July that the Serious Fraud Office had opened an investigation of suspected corruption in relation to its South Sudan work.
The firm has updated its estimates for the current financial year substantially, stating that there was a possibility that the business would not be able to make the cost savings required to offer a major the deal that would impair earnings.
Relative to its current debt levels, this "material uncertainty' prompted De La Rue to suspend dividend payments.
By the end of March, the banknote manufacturer planned to conclude its "full review" of the business in order to devise a turnaround strategy.
"We have already identified and started implementing the urgent actions needed to stabilize the business and enable us to complete the review in the meantime," Vacher said on Tuesday.
The authentication segment of the group, where income leaped 114 percent to £7.7 million, continues to show good growth, Vacher said. The company provides sales, product safety, identity verification features, and software solutions.
Nevertheless, the company was at the forefront of several Serious Fraud Office scrutinies, including a 2010 probe of workplace counterfeiting of banknote certificates.
In 2011, the currency of South Sudan, which was then the newest the country in the world was designed and manufactured by De La Rue in just six months.
De La Rue is the world's largest commercial passport printer and has designed around one-third of the world's major circulating banknotes.
