THE world's largest banknote printer claims its volumes are likely to drop by a fifth this year after a production crisis which involved staff allegedly fudging quality-control paperwork.

Hampshire-based De La Rue, which prints notes for the Bank of England and more than 150 national currencies, said the production problems cost the group £35 million.

The group claimed earlier this year some employees falsified paper specification test certificates for some banknote customers after an investigation into failures at a plant in Overton.

While De La Rue has concluded its own inquiry, an investigation by the Serious Fraud Office is ongoing and the company said it was not in a position to comment further.

The group posted a 57% rise in pre-tax profits to £69.4 million in the six months to September 25, after the hit from the production issues was offset by the sale of assets and the closure of a pension scheme.

Shares slumped 12% after today's update.