PRELIMINARY RESULTS 1999/2000 abcabc “Cash to Secure Transactions”

PRELIMINARY RESULTS1999/2000

“Cash to Secure Transactions”

IAN MUCHChief Executive

Main Achievements

Creation of a more focused organisation following the Card activities disposal

Recovery in Currency margins

Return to profitability with more to come next year from Cash Systems

Excellent cash generation with an inflow on working capital for the first time since 1994

Main Achievements Continued ...

Business is now more customer facing with the emphasis on service and solutions not just products

Overhaul of the top management team which has seen 75% of the top 60 management positions changed

Strong balance sheet with zero debt provides platform to exploit future growth opportunities

Re-orientation of the Group towards sustainable sales growth, particularly in Cash Systems and the new Global Services

PAUL HOLLINGWORTHFinance Director

Financial Highlights1999/00

£m 1998/99

£m Change

£m SalesContinuing operationsDiscontinued operations

Operating profit*Continuing operationsDiscontinued operations

Profit before tax andexceptional items

Earnings per share*

Dividend per share

Net cash/(debt)

518.998.2

617.1

55.25.1

60.3

75.0

26.5p

12.0p

2.1

526.2211.7

737.9

37.3(0.9)

36.4

57.1

18.8p

12.0p

(126.3)

(7.3)

+17.9

+17.9

+7.7p

-

+128.4£337.6

* Before exceptional items/re-organisation costs

Security Paper & Print

1999/00 £m

1998/99 £m

Change £m

Sales

Operating profit

Margins (%)

263.3

50.8

19.3

263.5

43.1

16.4

(0.2)

+7.7

+2.9

Strong second half performance boosted by overspill business in CurrencyMargins have risen as a result of reorganisation actions and improved mixPaper volumes down by 19% but improved mix partly offsets impact on profitsIncreased holographic usage and higher sales of Microsoft covers have benefited sales of non banknote security productsCosts associated with set up of Global Services and investments made in Transaction Services and Brand ProtectionExcellent cash generation

Currency KPIs

Average banknote prices

Value per banknote (per order book)

Banknote volumes

Base/overspill split

Paper volumes

+7.4%

+6.1%

+5.2%

77/23

-19.0%

1999/00

+7.3%

+11.4%

-11.7%

82/18

-2.6%

1998/99

Cash Systems

1999/00 £m

1998/99 £m

Change £m

Sales

Operating profit

257.3

4.4

268.2

(5.8)

(10.9)

+10.2

Sales down as result of consolidation of distribution but next year should see a return to sales growthSecond half saw a modest return to profitability (£4.0m)Reorganisation is on track to deliver 10% operating margins for final quarter of 2000/2001

Cash Systems KPIs

New product sales as a % of total product sales

Product development expenditure (£m) (% of product sales)

Sales: product (£m) service/software (£m)

1998/99

14

19.410.0

193.4 74.8

268.2

1999/00

20

15.18.4

179.4 77.9

257.3

Reorganisation Summary

1999/00 £m

1998/99 £m

Total £m

Restructuring Charge 19.2 25.9 45.1

Original restructuring complete, but up to £2.5m to be spent integrating Ascom acquisitionHigher non-cash costs then anticipated as a result of asset write-offs mainly with respect to old stockOn track to achieve targeted savingsNew IT system (MFG.Pro) successfully installed at Portsmouth

Global Services

Sales for 1999/2000 of £50.5m up £4.0m or 8.6%

Operating profits for year ended 1 April 2000 were £5.1m

Results included within SPPD division, but will be separately accounted for from 2 April 2000

Holographics and Microsoft were main drivers behind sales growth

Next year’s results will be impacted by £5m net revenue investment to drive top line growth

Associates

Increased marketing spend at Camelot reduced profitsResults of lottery rebid due in June 2000, current licence expires September 2001Second half contribution from DLRG well down as a result of poor order bookGiori arbitration ongoing; arbitration panel still hearing preliminary arguments - case could take 2-3 years to conclude; £2.0m legal fee provision raised to rebut claim

1999/00 £m

1998/99 £m

Change £m

Camelot

Other (inc De La Rue Giori)

10.8

3.9

14.7

14.0

12.7

26.7

(3.2)

(8.8)

(12.0)

Earnings per Share

1999/00 (p)

1998/99 (p)

Change (p)

As calculated under FRS 14Loss on the disposal of continuing operations(Profit)/loss on the disposal of discontinued operationsProfit on disposal of fixed assets and assets held for resaleProfit on sale of investmentsProfit on the part disposal of the shareholding in CamelotScheme of arrangement costsAmortisation of goodwill

Headline earnings per share as defined by the IIMRReorganisation and arbitration costs

Headline earnings per share before reorganisation andarbitration costs

39.9-

(24.3)(0.1)(0.9)

-0.50.7

15.810.7

26.5

(6.2)0.96.5

(0.8)-

(1.0)-

0.7

0.118.7

18.8

46.1

15.7

7.7

Cashflow / Borrowings / Interest

1999/00 £m

1998/99 £m

Change £m

Cash inflow/(outflow) before itemsshown below

Equity dividends paidAssociated dividends receivedAcquisitions and disposals

44.7

(27.0)20.6

185.9

(30.6)

(10.1)21.319.5

+75.3

Cash inflow 224.2 0.1 +224.1

Net Cash/(Debt) 2.1 (126.3) +128.4

Finance charges 0.0 6.0 +6.0

Outlook

Cash Systems re-organisation will continue to deliver benefits into next year

Benefits of large banknote overspill order received in 1998/99 will run down during current year which will limit growth in SPPD. Prospects for non-banknote operations are positive

Weak orderbooks within De La Rue Giori

Current year will benefit from lower number of shares in issue following buyback and benefits of Cash Systems re-organisation

IAN MUCHChief Executive

Currency - Key Achievements

Successful reorganisation and restructuring

Ongoing investment in R&D for differentiating value added technologies:

Intaglio Gold

Starwide®

Cleartext®

Platinum® durable paper

Upgrading second paper machine for wide threads

Valora, JV with Bank of Portugal, for production of Euro banknotes up and running

Clear strategy in place

Currency - Strategic Summary

Low growth businesses (c2-3% per annum)

Strategy is long term ‘finessed’ milk

Optimise profit and cash flow on a sustainable basis

Differentiated customer strategy

Leverage Currency technologies across other parts of the Group

Security Products - Key Achievements

Appointment of new MD in February 2000

UK print operations increased profits

Portals Bathford, security paper plant, at capacity but tougher year ahead

De La Rue Tapes building new high security facility to increase capacity

Centralising sales and marketing functions

Security Products - Strategic Summary

Diverse businesses, common customers and technologies/expertise

Changing emphasis to a service/solution provider

Three markets

Commercial (growing) Invest for Growth Financial (decline) Milk Government (stable) Niche opportunities

Move to centres of process excellence

Cash Systems - Key Achievements Profitability in second half demonstrates business on track

Acquisition of Ascom - market leader in cash recyclers (Twinsafe)

Launch of several new products across all three business streams

NMD OEM Platform - ATM mechanism

6000 Sorter - multi pocket banknote sorter

8000C - compact banknote recycler

Updated 3700E - desktop fitness sorter

1250 Spindle Verifier - banded banknote counter

New MACH coin range - high speed coin sorting solutions

New product sales 20% versus 14% last year

Key Achievements continued ...

Branch Cash Solutions - rejuvenated product range and introduced new solution-orientated connectivity software

Cash Processing forecasting software achieved new high profile installations

Desktop Products ready for Euro

Emphasis on service offering which accounts for over 20% of sales

Cash Systems - Strategic Summary

- customer based transactions

- back office operations

Division To facilitate the secure and cost effective

exchange of value in: primary market secondary market

Emphasis is to offer the customer a total service giving them flexibility, choice and value in order to reduce their cash handling costs


Branch Cash Solutions right products and solutions to facilitate increased

automation of cash dispensing and depositing transactions as traditional bank branches are revamped

Cash Processing Continued modernisation of current range of sorters

Increased emphasis on software where there are significant opportunities

Build on success of our outsourcing contract with the central bank of Brazil


Desktop Products Broaden product range

Build strategic relationship

Exploit Euro opportunity

Ongoing reduction of cost structure in Distribution

Customer Services Expand sales and service offerings in this area

Spread best practice across division

Global Services

Brand Protection Services

Digital & Identity Securing Systems

Related Services to Core Customers Consultancy services and facilities management for Central Banks Royal Mint Services

Holographics Brand Protection

Identity Systems (IDS) Transaction Services InterClear (Digital Security)

Strategic Objectives for Global Services

To develop a world class, customer-facing services and solutions business that leverages De La Rue’s brand, market position and technical strengths

To build a business that is big enough to become an engine of growth for De La Rue and to create real shareholder value

Global Services - Strategic Status Report

Clear view on our overall strategic direction Digital and Brand Protection will be the key growth drivers of the

division Acquired InterClear as our entry into Digital Protection Secured solutions contracts with major brand owners in

Brand Protection Refined our stance on Currency Related Services

Broadened scope of offering to “Consulting Services to Central Banks”

Takeoff longer than anticipated Update to be given in Autumn

Global Services Recent Highlights

Digital Protection

Brand Protection

Services to Central Banks Transaction Services

IDS Holographics

Acquired InterClear Seeking strategic stakes in relevant

technology companies Contracts with major sportswear

manufacturer Good progress with major FMCG group Appointed specialist Sales Director Licences with three major mobile phone

operators Mexico Passport contract Euro security accreditation

We have made progress across the board…..

Global Services - Financial Impact

Net revenue investment of £5m in 2000/2001.

Expect to start delivering strong profits and sales growth in 2001/2002

Targeting annualised sales of circa £150m in3 years

GLOBALSERVICES SPW FM

BPHologs

CASHSYSTEMSCURRENCY

SECURITYPRODUCTS

IDS

PKI services

Trans Svcs

BanknoteSubstrate

BanknotePrinting

Branch CashProducts

OEM mechanisms

ATM Servicing

Desk TopProducts

Cash ProcessProducts

Cash ProcessSoftware

Cash ProcessFM

Tapes Security Paper

Cheque Print / Perso

TC Print

Voucher Print

Passports / IDs, certificates

Post Stamp Print

Fiscal Stamp Print

Fiscal Stamp Solution

Threads

BP Print/ labels

CB Services

ID substrates

E-Business

Current Structure: Current & Potential Links Financial Institution Example

Current relationshipPotential scope for further leverage

FinancialInstitution

Track & Trace / detector solution?

Dispenser solution?

GLOBALSERVICES

SPW FMBP

Hologs

CASHSYSTEMS

CURRENCY

SECURITYPRODUCTS

IDS

PKI services

Trans Svcs

BanknoteSubstrate

BanknotePrinting

Branch CashProducts

OEM mechanisms

ATM Servicing

Desk TopProducts



Cash ProcessFM

Tapes

Security Paper


TC Print

Voucher Print


Post Stamp Print

Fiscal Stamp Print


Threads

BP Print/ labels

CB Services

ID substrates

E-Business

GLOBALSERVICES

SPW FMBP

Hologs

CASHSYSTEMS

CURRENCY

SECURITYPRODUCTS

IDS

PKI services

Trans Svcs

BanknoteSubstrate

BanknotePrinting

Branch CashProducts

OEM mechanisms

ATM Servicing

Desk TopProducts



Cash ProcessFM

Tapes

Security Paper


TC Print

Voucher Print


Post Stamp Print

Fiscal Stamp Print


Threads

BP Print/ labels

CB Services

ID substrates

E-Business

GovGov

Gov

Future

GLOBALSERVICES

SPW FMBP

Hologs

CASHSYSTEMS

CURRENCY

SECURITYPRODUCTS

IDS

PKI services

Trans Svcs

BanknoteSubstrate

BanknotePrinting

Branch CashProducts

OEM mechanisms

ATM Servicing

Desk TopProducts



Cash ProcessFM

Tapes

Security Paper


TC Print

Voucher Print


Post Stamp Print

Fiscal Stamp Print


Threads

BP Print/ labels

CB Services

ID substrates

E-Business

Finance

Future

Fin

GLOBALSERVICES

CASHSYSTEMS

CURRENCY

SECURITYPRODUCTS

Commercial

Future

SPW FMBP

Hologs

IDS

PKI services

Trans Svcs

BanknotePrinting

Branch CashProducts

OEM mechanisms

ATM Servicing

Desk TopProducts



Cash ProcessFM

Tapes

Security Paper


TC Print

Voucher Print


Fiscal Stamp Print


Threads

BP Print/ labels

CB Services

ID substrates

E-Business

Post Stamp Print

BanknoteSubstrate

Comm

GLOBALSERVICES

SPW FMBP

Hologs

CASHSYSTEMS

CURRENCY

SECURITYPRODUCTS

IDS

PKI services

Trans Svcs

BanknoteSubstrate

BanknotePrinting

Branch CashProducts

OEM mechanisms

ATM Servicing

Desk TopProducts



Cash ProcessFM



TC Print

Voucher Print


Post Stamp Print

Fiscal Stamp Print


Threads

BP Print/ labels

CB Services

ID substrates

E-Business

Dependencies

Future

GLOBALSERVICES

SPW FMBP

Hologs

CASHSYSTEMS

CURRENCY

SECURITYPRODUCTS

IDS

PKI services

Trans Svcs

BanknoteSubstrate

BanknotePrinting

Branch CashProducts

OEM mechanisms

ATM Servicing

Desk TopProducts



Cash ProcessFM



TC Print

Voucher Print


Post Stamp Print

Fiscal Stamp Print


Threads

BP Print/ labels

CB Services

ID substrates

E-Business

Dependencies

Future

GovGov

Gov

Future

Finance

Future

Fin

Commercial

Future

Comm

Cross Divisional Links

Common Customers

Common Customer Needs

Common Technologies

Common Competencies

Common Requirements

Cross Divisional Initiatives

1 Internet Business Development Group

2 Technology

3 Key Account Management

4 Regional Selling

5 Purchasing

6 Manufacturing

7 Internal / External Communications

Strategic Direction

Maintain and nurture our high margin Security Paper and Print operations whilst recognising top line growth will be limited

Increased emphasis within Cash Systems on generating sales growth

Invest in new business opportunities within our Global Services division which have the potential to achieve substantial sales and earnings growth

Use the strong balance sheet, where appropriate, to make acquisitions to complement organic growth

Strategic Direction continued ...

Strengthen the cross-divisional links, to better serve our customer base and utilise our resources, through developing a more cohesive operational structure

Continue to develop our e-business strategy to improve efficiency and better meet the needs of our customers

Continue to invest in the development, training and strengthening of the De La Rue management team to deliver on the above

Key Messages

Emphasis now on sales growth

Scope for acquisitions

Ongoing drive for productivity and efficiency

Exploit Group synergies

Improved quality of earnings

Documents

PRELIMINARY RESULTS 1999/2000 abcabc “Cash to Secure Transactions”