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Maker of new £20 polymer note De La Rue to slash £35m in costs

MARGATE, ENGLAND - OCTOBER 10: A detail view of some of the artwork detailing on a large scale sample of the new twenty pound note during the launch event at the Turner Contemporary gallery on October 10, 2019 in Margate, England. The new twenty pound note will be made of polymer rather than paper, also the current portrait of scottish economist Adam Smith on the obverse, will be replaced with one of english artist J.M.W Turner. The new note will start to enter circulation in 2020 as the older note is gradually phased out. (Photo by Leon Neal - WPA Pool/Getty Images)
The new polymer £20 note, which recently entered circulation, is made by De La Rue. (Leon Neal/WPA Pool/Getty Images)

De La Rue (DLAR.L), the embattled manufacturer of the new polymer £20 note, on Tuesday unveiled an “extensive” three-year cost-cutting plan, and said it hoped to save £35m ($45m) per year from the second half of its upcoming financial year.

The company, which has issued four profit warnings in around two years, is currently under investigation for suspected corruption in South Sudan.

De La Rue said that it was targeting cost savings in its currency division. The company, which prints Bank of England banknotes, designed the polymer material and technology used in the new £20 note featuring artist JMW Turner.

The company said that, as part of the “accelerated” cost-cutting plan, it would achieve saving of £35m per year on an annualised basis from the second half of its 2020/21 financial year.

This includes £10m in “already realised” savings from previous measures, but means that the company’s annualised savings target of £20m has been increased significantly.

De La Rue said that it was too early to determine what impact, if any, the plan would have on jobs at the company.

Read more: New £20 polymer notes enter circulation

Clive Vacher, who was appointed as chief executive in October, said the plan would deliver “significant improvement in the operational and financial performance of the company.”

“The plan drives extensive cost reduction and, in parallel, offers a substantial investment opportunity for growth.”

Vacher was appointed to the position in large part because of his extensive experience with company turnarounds.

In July, De La Rue, which last year lost the contract to print UK passports, said that the UK’s Serious Fraud Office had opened an investigation into “suspected corruption” relating to its business in South Sudan.

De La Rue is the largest commercial printer of passports in the world, and has designed around a third of the banknotes in circulation around the world.

In October, the company said that full-year profits would come in “significantly lower” than expectations, giving no explanation for the warning.

In November, it said that profits for the six months to the end of September fell 87% to £2.2m.

The banknote and passport maker announced a suspension of dividend payments and said that there was “significant doubt” over the group’s ability to continue as a business.