[The following is an excerpt from the Reserve Bank of Australia's 2007 Annual report.]

Note Printing Australia

Note Printing Australia Limited (NPA), based at Craigieburn in Victoria, is a wholly owned subsidiary of the Reserve Bank, which produces banknotes for Australia and export and was the first banknote printer in the world to print on polymer substrate. With Securency Pty Ltd, which supplies print-ready polymer substrate, it has led the way in establishing polymer technology as a viable alternative to paper for banknotes.

During 2006/07, NPA produced 245 million notes for the Reserve Bank and 213 million export notes, continuing the high level of production established the previous year. Among its export deliveries were orders for Banco Central de Chile, Bank Negara Malaysia, the Bank of Papua New Guinea, the Brunei Currency and Monetary Board, the Monetary Authority of Singapore and the Reserve Bank of New Zealand. A number of other banknote printers have now taken up the polymer technology, in many cases assisted by technology transfer from NPA.

Investment this year, including upgrades to two Intaglio printing presses and the leasing of a new numbering machine, has tightened process controls, improved print quality and increased productivity. The outlook is for another strong production year in 2007/08, with an order for 280 million notes from the Reserve Bank and confirmed export orders of 177 million notes for countries in the Asia-Pacific region.

NPA was awarded two medals at the 24th National Print Awards in the category of security printing. A gold medal was awarded for the Brunei $10 000 and a silver medal for the Brunei $500.

As the Reserve Bank has undertaken a program to improve the quality of banknotes in circulation, the National Note Processing and Distribution Centre (NNPDC), operated by NPA under contract from the Reserve Bank to reissue or withdraw circulating Australian notes, processed a significantly higher volume of notes than in recent years, achieving higher rates of productivity in the process.

NPA continued to work with Securency in research and development, marketing and customer support for international business. NPA has now printed 56 denominations for 18 countries, including Australia, since 1990. Securency has supplied polymer to overseas printers for a further 27 denominations in 12 countries. In all, 25 countries, covering all continents, have issued polymer notes. As well as Australia, New Zealand, Romania and Vietnam have converted all their denominations to polymer, while Brunei and Papua New Guinea are approaching full conversion.

In addition to banknotes, NPA prints other security documents, including Australia’s passports. During 2006/07, 800 000 Australian passports were printed and assembled for the Department of Foreign Affairs and Trade, of which 780 000 books were of the ‘M’ series electronic chip passports. The new design ‘N’ series passports are expected to be launched during 2008. In recent years NPA has widened the range of security products it offers using polymer note-printing technology, including by producing academic transcripts for a number of universities.

NPA’s Board operates under a charter from the Reserve Bank Board and comprises Graeme Thompson (Chairman), Richard Warburton AO, Les Austin, Mark Bethwaite and Frank Campbell. Mark Bethwaite will leave the Board at the end of September 2007 after 17 years of valuable service, including a brief period as acting Managing Director.

Securency

Securency Pty Ltd is a joint venture between the Reserve Bank and Innovia Films, a global supplier of polypropylene films. Securency sells locally to NPA, and to overseas-based banknote printers, high-security polymer substrates produced by applying unique coatings and security features to the specialised films supplied by Innovia. It currently supplies three types of substrate: Guardian® to high-security printers for banknotes; Sentinel® for other high-security documents such as land titles and academic transcripts; and Sentrii® for secure cards.

Securency produced substrate for 14 countries during the year. These comprised Australia, Brunei, Chile, Guatemala, Hong Kong, Malaysia, Mexico, New Zealand, Nigeria, Papua New Guinea, Romania, Singapore, Taiwan and Vietnam. In excess of 90 per cent of Securency’s revenue comes from exports.

Twelve new denominations were launched on polymer during the year, and two countries were added to the list of polymer issuers. Nigeria issued a 20 naira polymer note and Hong Kong issued a $10 polymer note in mid 2007. The other new denominations comprised the Brunei $20, $500, $1 000 and $10 000; Mexico’s 50 peso; Romania’s 200 lei; Singapore’s $5 and $20; and Vietnam’s 10 000 and 200 000 dong. A redesigned 2 kina was produced for Papua New Guinea as part of its new note series. Significantly, in 2006 Vietnam completed the changeover of all note denominations to polymer. Romania also added the 200 lei denomination to its series of polymer notes. An innovative optically variable security feature called G Switch®, which was launched on the PNG 100 kina, has now been successfully incorporated in banknotes for Brunei, Hong Kong, Mexico, Nigeria and Papua New Guinea.

Securency has now doubled its manufacturing capacity at Craigieburn, with a second line commissioned in early 2007. This major capital investment in new plant and facilities is already enabling Securency to improve its customer service and response times and will be the blueprint for further expansion internationally in the coming few years.

Securency is continuing to invest in technology to stay ahead of counterfeiters, and plans to install a dedicated pilot line press to accelerate its research and development program. Specifications are being finalised and the plant will be commissioned in late 2007 or early 2008. As part of its risk management strategy, Securency will also build a new coating facility at the Craigieburn site in the latter part of 2007, enabling it to be self-sufficient in sourcing this critical raw material.

Polymer notes have been very successful in Mexico and other Latin American countries. Against this background, early in 2007 Securency and Banco de Mexico entered a joint-venture agreement to establish a polymer security substrate manufacturing plant in Mexico. This plant, located in Queretaro, north of Mexico City, will be operational in 2009.

Given the interest in polymer technology in Latin America, Banco de Mexico hosted the Regional Polymer Banknote Symposium in Mexico City in June 2007. The symposium provided a forum for delegates and internationally recognised experts from the banknote industry to exchange experiences in currency issuance. Participants included senior officials of Banco de Mexico and regional central banks and printing agencies from 18 countries.

Securency’s Board comprises three directors appointed by the Reserve Bank, three appointed by Innovia and the company’s Managing Director, Myles Curtis, as a non-voting member. Securency’s offices and plant are located at Craigieburn, on the same site as NPA and adjacent to the Innovia plant that supplies it.