* Sees H1 profit at least 35 million sterling lower
* Employees falsified paper quality certificates
* SFO says has been informed of investigation's findings
* Shares down 5 percent
(Adds details, background, SFO, analyst comment, shares)
By James Davey and Rhys Jones
LONDON, Sept 7 (Reuters) - British currency printer De La Rue faces a hit of at least 35 million pounds ($53.8 million) to first-half profit and a possible fraud investigation following the falsification of banknote quality certificates by staff.
Updating on its investigation into production errors at its banknote plant in southern England which were first revealed in July, the firm said on Tuesday the behaviour of some of its staff was "totally unacceptable".
"Some of the company's employees have deliberately falsified certain paper specification test certificates for a limited number of customers," it said.
De La Rue has reported its findings to the relevant law enforcement agencies and taken "appropriate disciplinary action".
The spokesman declined to say if any employees had been dismissed but said the managing director of the currency division had left the company.
"If there is any good news from this, it's that they've quantified the extent of the financial hit. The bad news is that it appears to be much larger than anyone anticipated," said Paul Jones, analyst at Panmure Gordon.
A spokesman for the Serious Fraud Office said the agency had been contacted by the company.
"The company has reported some concerns to us. We've noted those concerns, we are alert to them and we will have further discussions with the company," he said.
Banknote paper specifications have a large number of detailed parameters and the company's investigation found in certain cases that a small number of them failed to meet the required standard.
A spokesman for De La Rue, which is involved in the production of over 150 national currencies, declined to name the customers involved, say how many staff were implicated or comment on their motives.
Shares in De La Rue, which have lost nearly a quarter of their value since the production errors were revealed on July 20, were down a further 5.2 percent at 667 pence at 1238 GMT, valuing the business at 662 million pounds ($1 billion).
Executive chairman Nicholas Brookes stressed the firm had not found anything to suggest that either the physical security or the security features in its banknote paper had been compromised.
Brookes took on the executive role last month after the resignation of chief executive James Hussey, who took responsibility for the production issue crisis.
The company, which stopped shipment of the affected banknote paper as soon as it became aware of the irregularities, said all production now met specification and it was ready, subject to customer agreement, to resume supplies.
The 35 million pounds hit relates to stock write-offs, professional fees, rectification and production trial costs, and some slippage of currency volumes into the second half.
De La Rue said it was still too early to assess the financial impact for the full year and future years. (Additional reporting by Golnar Motevalli; Editing by David Cowell) ($1=.6507 Pound)