The group has taken a 3.8m (e5.5m) exceptional charge due to the scheme.

Further diversification could involve the transfer of more capacity at its carbonless mills to meet the groups needs, said Carbonless Operations Europe chief executive Grard Bougniart.

The move was unveiled as ArjoWiggins, its carbonless paper operations and Antalis posted first-half results for 2003.

Sales in carbonless fell 10% to 108m, with a net loss before exceptional items of 200,000 compared to a 1.5m profit in 2002. The carbonless division made a net loss including exceptionals of 4.2m, up from a 400,000 loss in 2002.

Meanwhile, ArjoWiggins Fine Papers chief executive Jean-Pierre Brice has left after just over a year in the job. His temporary replacement is Michelle Durand, who headed the groups industrial division.

Sales in the Fine Papers division fell 11% to 611m, with operating profits down 31% to 53m. Net profit before exceptionals fell 37% to 32m.

Antalis sales fell 7% to 821m, but operating profits rose 5.5% to 9.6m and net losses halved to 5m. Sales dropped 5.6% in the UK.

l ArjoWiggins Fine Papers has developed a revolutionary new type of watermarked wallpaper for manufacturer Cole & Son.

The Watermark Collection is manufactured at its Ivybridge mill in Devon.

Story by Andy Scott