INTERIM RESULTS 1999/00 abcabc

INTERIM HEADLINES  Headline earnings per share of 11.7p up 5.4p or 86% on comparable period  Operating profits from continuing activities up £9.7m at £25.3m  Appointed external Managing Director to head up new Services and Solutions business  Approximately £100m from £200m disposal proceeds of cards activities to be returned to shareholders  Interim dividend unchanged at 4.0p per share.

PAUL HOLLINGWORTH Finance Director abcabc

HIGHLIGHTS * Before exceptional items/reorganisation costs

SECURITY PAPER & PRINT Summary  Margins continue to rise benefiting from reorganisation actions  Reorganisation largely completed  Holding onto gains in banknote prices  Paper volumes down but improved mix largely offsets impact of lower sales  Non banknote security products results benefiting from increased holographic usage and higher sales of Microsoft covers

SECURITY PAPER & PRINT Average banknote prices (indexed from 1990) 3.7% rise

SECURITY PAPER & PRINT Banknote order book Value per banknote -12 month moving average Index

SECURITY PAPER & PRINT Banknote volumes (billions of notes)

SECURITY PAPER & PRINT Banknote sales - segmental analysis Percentage of total value

SECURITY PAPER & PRINT * Lerchundi (Security print business)

CASH SYSTEMS Summary  Sales down as we focused on products and geographical areas which were most profitable  New products as a percentage of total product sales now account for 20% compared to 14% for last year  Breakeven result represents a positive shift in recent trend of results  Reorganisation on track

CASH SYSTEMS RESTRUCTURING PROGRESS UPDATE

RESTRUCTURING ANNOUNCED MARCH 1999  Additional £40m P&L charge over 98/99 and 99/00  Cash element £30m  2 year pay back on cash  Progressive benefits over 2 years  500 job losses

MANUFACTURING UNIT COST REDUCTIONS  More focused organisation and tighter management in place  New strategic purchasing manager in place  New strategic freight partnership in place  New flexible labour partnership deal at Portsmouth  Invested to improve manufacturing processes

FACTORY FIXED COSTS REDUCTION  Consolidation of sites in UK and Sweden underway and on track  Headcount reduction ahead of schedule (120 heads gone to date)  Annualised savings of £3m

PRODUCT DEVELOPMENT  Radically reviewed organisation  Undertaken ‘clean-up of pipeline’  Reduced heads by 50  Spend is in line with budget  Annualised saving of circa £4m

CASH SYSTEMS Product development expenditure (first half) £m £8.0m £9.6m £9.3m £7.9m

DISTRIBUTION COMPANIES  Office closure and down-sizing  By year end we will have rationalised 8 sales offices  Not affecting business

IT SYSTEM  MfgPro implementation at Portsmouth on track to go-live April 2000  More cost effective stand alone system implementations in several regions  On track for running cost reduction of £3m

CURRENT STATUS OF RESTRUCTURING  At the half year achieved 436 of 500 targeted job reductions  Per Annual Report: Total overall charge of £45.9m, of which £25.9m booked in 98/99  £20m to be incurred in current financial year  Looking to exit financial year 2000/2001 at 10% margins

PROFIT BEFORE TAX & EXCEPTIONAL ITEMS

EARNINGS PER SHARE

CASHFLOW  Normal seasonal outflow on working capital  Final and interim dividend paid in first half  No dividend paid by Giori  Net cash of £39.3m at half year

REPAYMENT OF CAPITAL  Cards disposal raised £200 million before costs  Return of surplus capital:  tax efficient structure  re-introduce gearing to the Group  retains financial strength  Future dividend policy

REPAYMENT OF CAPITAL  Proposed return of 46 pence per share (approximately £103.7 million)  Scheme of arrangement:  New De La Rue “acquires” De La Rue  Consolidation ratio of 17 new shares for 20 existing shares  Reduction in number of shares in issue by 15%  Share repurchase authority  Expected timetable:  Documentation in early December  Court meeting and EGM in second week of January  Dealings in new shares 1 February  Board of New De La Rue will be identical to the existing board

CURRENT TRADING & OUTLOOK  Trading in our operations since the half year has continued in line with our expectations and above last year.  Performance of associated companies is down and second half likely to be at similar levels to first half.  Major changes that have occurred in first half are delivering shareholder value.

IAN MUCH Chief Executive abcabc

SECURITY PAPER & PRINT: CURRENCY abc

KEY TRENDS  Concern from customers about new counterfeiting threats leading to the introduction of new features  More opportunities to link print and paper features with sorting equipment  Competitor consolidation now taking place

OPPORTUNITIES FOR GROWTH Indications of a slow shift towards more private sector involvement in State Printing Works However pace is dictated by political considerations in individual territories This presents opportunities for :  Technology sales  Facilities management contracts  Overspill printing

QUALITY & TECHNOLOGY  Automatic inspection of banknotes during printing is now proven and reliable  Ongoing major investment programme in such equipment (eg NotaSave)  Continuing investment in security features, such as holographic foils and novel iridescent effects Starwide holographic thread

COST REDUCTION & EFFICIENCY  Re-allocation of equipment to maximise the use of capital assets  Ink usage reduction systems  Improved systems for worldwide production scheduling to optimise capacity utilisation  Development of an advanced batch control system to enhance physical security and reduce cost

THE EURO  De La Rue fully involved in the origination process and production trials  Predominance of State Printing Works and paper mills  Qualifying process for tapes and holograms  Strategic investment with the Banco de Portugal in a state-of-the-art Euro production facility in Lisbon

SECURITY PRODUCTS  Increased use of holograms, sales up 30%  Microsoft ® cover volumes up 24%  Planned relocation of Tapes to modern facility in second half  Tapes, Thermotext ® product has been well received  High Wycombe operational performance still needs improving  Just won contract to supply Argos with retail gift vouchers  Brand Protection winning consultancy contracts, need to convert into orders

SUMMARY  Profitable ongoing business with modest growth opportunities  Leverage strong customer relationships  Continue to target top and middle end of market  Value not volume  Continuous improvement in operational efficiency

CASH SYSTEMS abc

ORGANISATION Cash Systems division is now focused on: Branch Cash Solutions Cash Processing Desktop Products Service OEM

NEW PRODUCT DEVELOPMENTS/OPPORTUNITIIES: TCR8000c PROJECT  Teller cash recycler  Product definition complete  Launched at recent trade shows  Good response from customers  Competitive positioning  Concurrent operation  Speed and authenticity  Reliability and service TCR8000c

6000 SERIES NOTE SORTER  Bulk cash processor  Major customer launch July 1999  joint with key customers  over 40 customers  from 19 countries  Now installed on 3 continents  Complete solution and integration to customers’ back office systems proven New 6000 Sorter

BRAZIL FACILITIES MANAGEMENT CONTRACT  Building on the De La Rue reputation  A model for the future  Already working with other banks both the commercial and state sectors to examine opportunities to replicate the experience

AFTER SALES CUSTOMER SERVICE & SUPPORT  20% of the division’s turnover  Employs one third of the workforce  Direct service operations in 15 of our direct markets  Supporting a franchised distributor network of over 200 service partners  20% of our service activity is on non De La Rue manufactured products

SUMMARY  The restructuring is on schedule  The streams organisation has proven to function and is ready for growth  The product range has been enriched  Cash Systems is now providing solutions not only boxes  Cash Systems team is enthusiastic and very committed

NEW SERVICES & SOLUTIONS DIVISION abc

WORK BEING UNDERTAKEN  Recruited new MD, Chris Chadwick who joined on 15 November  Keith Brown heading up internal development team  We are identifying potential areas of opportunity and defining business logic  Decided on initial internal components for new division

NEW SERVICES & SOLUTIONS DIVISION  Identity Systems  Transaction Services  Holographics  Brand Protection  Royal Mint Services Annual sales for year ended 31 March 1999 £48m

CORE AREAS FOR NEW DIVISION Related Services to Core Customers Brand Protection Services Electronic Security Services Existing Core Product Businesses

NEXT STEPS  Develop business plan  Complete market study  Identify existing businesses for new division  Identify skills gap and recruit  Appoint new MD  Create new division  Consider small acquisitions  Ongoing  Autumn 1999  Autumn/end 1999  End 1999  Early 2000 ActionTiming  Done  Ongoing  Done  Ongoing Status

SUMMARY abc

STRATEGIC FOCUS “OPERATE IN AREAS WHERE OUR CORE VALUES AND CAPABILITIES OF SECURITY, INTEGRITY & TRUST CAN BE LEVERAGED PROFITABLY TO THE BENEFIT OF OUR CUSTOMERS AND WHERE WE HAVE, OR ARE ABLE TO DEVELOP, WORLD LEADING POSITIONS”

KEY OPERATIONAL ISSUES  Complete reorganisation of Cash Systems and deliver targeted returns  Achieve substantial improvement in working capital performance  Build on strong product base with service approach  Get closer to customer base to leverage our core strengths/values  Progress on new Services & Solutions division

INTERIM RESULTS 1999/00 abcabc