The UK’s Serious Fraud Office has closed its investigation into troubled banknote printer De La Rue after almost a year, having concluded it did not meet the sufficient threshold required by prosecutors.
In July 2019 the anti-graft agency opened an investigation focused on De La Rue and “its associated persons in relation to suspected corruption in the conduct of business in South Sudan”.
De La Rue, which manufactures about a third of the world’s banknotes, won the mandate to print South Sudan’s first currency in 2011, when the country was formed.
On Tuesday the SFO said the case had not met the tests required for prosecutors, that evidence was sufficient to secure a reasonable chance of conviction and the case was in the public interest.
De La Rue shares opened at 155p on Tuesday and rose 14.5 per cent in early trading on their previous close. They were trading at 40.75p just a month ago.
The probe is one of a number of investigations the SFO has shut down in the past two years, including large probes into UK drugmaker GlaxoSmithKline and individuals linked to aero engine maker Rolls-Royce last year. Separately, Rolls-Royce signed a plea bargain in 2017.
The decision in relation to De La Rue ends a year of uncertainty for the note printer, whose shares sank to a 21-year low last year in the wake of two profit warnings and the SFO probe. They have since recovered sharply, climbing more than 200 per cent between May 29 and June 2.
The uptick followed a trading update ahead of the company’s full-year results on June 1 in which De La Rue said its currency division was achieving double-digit margins and it had made a “strong” start to the year.
It followed a slew of bad news for shareholders in 2019, when the company lost a £490m contract to print UK passports and issued two profit warnings in five months, blaming heightened competition in the banknote market.
De La Rue has also faced pressure from activist investor Crystal Amber, whose fund manager Richard Bernstein called for the return of executive bonuses in the wake of the SFO probe.
Meanwhile analysts have warned that De La Rue faces long-term structural challenges as the coronavirus pandemic accelerates a shift away from cash to contactless payments.
On Tuesday Russ Mould, investment director at broker AJ Bell, said: “After a decade or pain, investors won’t be getting too carried away but today’s statement from De La Rue makes it three updates in a row where the news is good, rather than bad or plain terrible, as had become the norm.
“The shares have more than tripled from their lows this year to reflect the progress that is being made but there is a long way to go yet.”
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