De La Rue Happy with the PAC report and supports the continuation

De La Rue has not as yet received a copy of the report from the Public Account Committee (PAC), however due to the coverage in the media today following the press briefing in Parliament yesterday, we consider it appropriate to respond to the points that have been raised.

Nairobi: August 2, 2012: De La Rue is very pleased with the PAC decision that the joint venture should go ahead. This will secure the jobs of the 260 skilled Kenyan workers employed at the factory in Ruaraka. It should not be forgotten that the De La Rue’s Kenyan operation currently contributes over 1 billion Ksh annually to the Kenyan economy in the form of salaries, taxes and the purchase of goods and services. Thus over the five year period from 2007 to 2011, De La Rue has injected well over 5 billion Ksh into the Kenyan economy, a benefit that would have been lost if production was undertaken overseas. One of the conditions associated with joint venture is a long term agreement to print the Kenyan banknotes at the factory to ensure its economic viability and thus its contribution to the Kenyan economy.

De La Rue is keen to point out that as explained to the PAC the banknote printing equipment in the factory is fit for purpose. The equipment was purchased new by De La Rue directly from the manufacturers. It is regularly maintained and was refurbished and upgraded in 2009. Banknote printing presses are major items of capital equipment and are expected to have a long life as a consequence. It is used to print all Kenyan banknotes – no Kenyan notes are printed abroad – and has also manufactured notes for over 30 other countries.

There has been considerable discussion around the ‘interim’ orders placed by CBK following the cancellation of the New Generation agreement with De La Rue. The cost of banknotes is dependent on a large number of factors, including such things as the detailed specification, security features and the length of the production run.  The New Generation contract was based on a different specification to the existing series of banknotes, including a reduction in size for all denominations, and, was based on a much larger volume (1710 million notes which is 5 times the average size of interim orders placed between 2001 and 2010). The offer for New Generation banknotes was also based on overseas production, not because there was any capacity issues related to the Ruaraka factory, but in order that the De La Rue offer was judged on equal terms with the other overseas based producers. 100% of the costs of the New Generation banknotes produced overseas would have left the Kenyan economy.

Consequently De La Rue believes that any suggestion that the prices for the interim orders compare unfavourably with those quoted for the proposed New Generation is inaccurate, as the two specifications and sets of contractual conditions were totally dissimilar. We strongly believe that continued local production of Kenyan banknotes remains the best option for the Kenyan economy and tax payers. Prices for the current Kenyan banknotes average approximately two-thirds of the average prices paid by other central banks in the region. For reasons of customer confidentiality we cannot reveal prices that are not in the public domain. Kenyan Banknotes average 3,721 Ksh per 1000 notes and this compares favourably for example with a budget price for US banknotes of 7,387 Ksh and 27,000 Ksh for Swiss banknotes.

ENDS

About De La Rue plc:

As the world’s largest integrated commercial banknote printer, De La Rue is a trusted partner of governments, central banks, issuing authorities and commercial organisations around the world.

In the past five years alone, the Group has been involved in the design or production of over 150 national currencies. De La Rue also produces a wide range of security documents including passports, driving licences, authentication labels and tax stamps. In addition, the Group manufactures sophisticated, high speed cash sorting and inspection equipment.

De La Rue also offers a range of specialist services and software solutions including government identity schemes, product authentication systems and cash management processing solutions.

De La Rue employs approximately 4,000 people worldwide and is listed on the London Stock Exchange.