Last checked at 7 Sep 2010 09:51
7 September 2010
DE LA RUE PLC
UPDATE ON PAPER PRODUCTION ISSUES
De La Rue plc (the "Company") announces further developments in its investigation of the irregularities identified at one of its paper production facilities.
The Board continues to carry out its investigations of the irregularities, assisted by its external legal advisers. However, it has now been established that some of the Company's employees have deliberately falsified certain paper specification test certificates for a limited number of customers. Banknote paper specifications have a large number of detailed parameters and the investigation has found in certain cases that a small number of them have fallen marginally short of specification.
The Board stopped shipment of any affected banknote paper as soon as it became aware of the irregularities. All production is now within specification and the Company is ready, subject to customer agreement, to resume supply of fully compliant paper. The Company remains confident that neither the physical security nor the security features in the paper have been compromised.
Furthermore, the Company can now report that these matters have already resulted in increased operating costs and lower volumes. The Board believes that, for the first half of the current financial year, the adverse impact on the group's profit before tax is likely to be at least £35m. This includes some one-off costs such as stock write-offs, professional fees, rectification and production trial costs as well as some slippage of Currency volumes into the second half.
The Company has reported its findings to the relevant law enforcement agencies. Quantification of the financial impact on the group for the full year and subsequent years is not possible at this stage pending the outcome of discussions with customers and the relevant law enforcement bodies.
Nicholas Brookes, Executive Chairman of De La Rue, said:
"The behaviour of some of our employees in this matter was totally unacceptable and contravened De La Rue's rigorous standards. We do not tolerate such behaviour and appropriate disciplinary action is being taken. The Board has put an immediate end to the irregularities that have been identified and has appointed a new Managing Director for the Currency Division.
"We are carrying out a very thorough investigation and are keeping our customers and the legal authorities fully informed. The Company reiterates that it has not found anything to suggest that either the physical security or the security features in the paper have been compromised and that the matters uncovered relate only to the certification of paper specifications at the relevant facility."
Enquiries
Richard Mountain/Andrew Lorenz Financial Dynamics +44 (0)207 269 7291