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Banknote Printer: Some Staff Forged Documents

Alistair Gray, Financial Times

Shares in De La Rue resumed their slide after the banknote printer disclosed that some of its employees had falsified documents for more than one customer and that paper production errors would cost it at least 35 million pounds ($53.6 million) in profits.

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Adam Gault | Digital Vision | Getty Images

The shares fell 35.5 pence or 5.1 per cent to 668 pence in mid-morning trading on Tuesday after the company said it was still unable to quantify fully the full-year financial impact of “irregularities” that have already cost its chief executive his job.

In its first update to investors in almost four weeks, the world’s biggest bank note printing company said some employees had “deliberately falsified certain paper specification test certificates for a limited number of customers”.

The Serious Fraud Office said the company had brought concerns to its attention.

In the statement, Nicholas Brookes, executive chairman, added: “The behavior of some of our employees in this matter was totally unacceptable and contravened De La Rue’s rigorous standards. We do not tolerate such behavior and appropriate disciplinary action is being taken.”

The statement did not address persistent and widespread speculation that the errors, which have wiped more than 250 million pounds off its market capitalization, related to work for the Reserve Bank of India, one of the group’s most important clients.

Mr Brookes took on the executive role after James Hussey, chief executive, resigned last month in the latest sign of management turmoil at De La Rue after Simon Webb, finance director, stood down at the end of May.

De La Rue said the recent difficulties had resulted in “increased operating costs and lower volumes”, which would contribute to an initial 35 million pounds hit to first-half pre-tax profits.

The company, which is involved in the production of more than 150 currencies, made pre-tax profits of 97 million pounds in the year to the end of March on revenues of 561 million pounds.

De La Rue, which suspended some production and shipments at facilities in Hampshire in July, added that production was “now within specification” and that it was ready to resume supply.