NORTH-EAST banknote designer and printer De La Rue has revealed it will report a £13.5m charge in its results next month, as part of a long-running probe into production issues.

The firm, whose Gateshead site is the largest commercial banknote factory in the world, said the pay-out has arisen from one of De La Rue's major customers invoking a performance bond, which are used in a wide range of industries as a guarantee against the failure of one party to meet obligations specified in a contract.

De La Rue declined to confirm the name of the client but it is understood to be the Bank of India.

In the firm’s last set of accounts De La Rue drew attention to an investigation by external lawyers, commissioned by the board, which looked into issues at its banknote paper mill in Overton, Hampshire dating from 2010. The investigation was said to have found “nothing of substance”, although it was established that certain paper specification test certificates had been deliberately falsified.

De La Rue then reported what it had learned from the investigation to authorities.

According to the annual report, De La Rue implemented a number of measures arising from the findings of the investigation.

A note to shareholders this week said De La Rue would account for the £13.5m charge as an exceptional item in its next annual accounts due to be published on May 27.

The statement said: “The Board considers this is a material step towards resolution of this issue and discussions continue with this important customer.”

The move followed a warning in January that company profits were expected to be about £20m less than last year.

De La Rue prints banknotes, passports, stamps and security documents at two plants in Gateshead, as well as sites overseas and the Overton factory. The firm told shareholders that the sale of surplus land at the latter site will yield £9m.

Earlier this month it emerged that De La Rue was making about 40 people redundant at Overton to help reduce costs, but no job cuts have been announced among the firm's 600-strong North-East workforce.

The 201-year-old firm runs two factories on Team Valley, producing passports and postage stamps, as well as about ten million foreign notes a day. Despite cutting back at other factories De La Rue has invested about £5.5m in Gateshead over the last three years.

In addition, the firm this month started a 10 year contract to make Sterling banknotes for the Bank of England.