INTERIM RESULTS 199900 a INTERIM HEADLINES 4 Headline

INTERIM RESULTS 1999/00 a

INTERIM HEADLINES 4 Headline earnings per share of 11. 7 p up 5. 4 p or 86% on comparable period 4 Operating profits from continuing activities up £ 9. 7 m at £ 25. 3 m 4 Appointed external Managing Director to head up new Services and Solutions business 4 Approximately £ 100 m from £ 200 m disposal proceeds of cards activities to be returned to shareholders 4 Interim dividend unchanged at 4. 0 p per share.

PAUL HOLLINGWORTH Finance Director a

HIGHLIGHTS * Before exceptional items/reorganisation costs

SECURITY PAPER & PRINT Summary 4 Margins continue to rise benefiting from reorganisation actions 4 Reorganisation largely completed 4 Holding onto gains in banknote prices 4 Paper volumes down but improved mix largely offsets impact of lower sales 4 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 Index Value per banknote -12 month moving average

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 4 Sales down as we focused on products and geographical areas which were most profitable 4 New products as a percentage of total product sales now account for 20% compared to 14% for last year 4 Breakeven result represents a positive shift in recent trend of results 4 Reorganisation on track

CASH SYSTEMS RESTRUCTURING PROGRESS UPDATE

RESTRUCTURING ANNOUNCED MARCH 1999 4 Additional £ 40 m P&L charge over 98/99 and 99/00 4 Cash element £ 30 m 42 year pay back on cash 4 Progressive benefits over 2 years 4500 job losses

MANUFACTURING UNIT COST REDUCTIONS 4 More focused organisation and tighter management in place 4 New strategic purchasing manager in place 4 New strategic freight partnership in place 4 New flexible labour partnership deal at Portsmouth 4 Invested to improve manufacturing processes

FACTORY FIXED COSTS REDUCTION 4 Consolidation of sites in UK and Sweden underway and on track 4 Headcount reduction ahead of schedule (120 heads gone to date) 4 Annualised savings of £ 3 m

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

CASH SYSTEMS Product development expenditure (first half) £m £ 9. 3 m £ 8. 0 m £ 9. 6 m £ 7. 9 m

DISTRIBUTION COMPANIES 4 Office closure and down-sizing 4 By year end we will have rationalised 8 sales offices 4 Not affecting business

IT SYSTEM 4 Mfg. Pro implementation at Portsmouth on track to go-live April 2000 4 More cost effective stand alone system implementations in several regions 4 On track for running cost reduction of £ 3 m

CURRENT STATUS OF RESTRUCTURING 4 At the half year achieved 436 of 500 targeted job reductions 4 Per Annual Report: Total overall charge of £ 45. 9 m, of which £ 25. 9 m booked in 98/99 4£ 20 m to be incurred in current financial year 4 Looking to exit financial year 2000/2001 at 10% margins

PROFIT BEFORE TAX & EXCEPTIONAL ITEMS

EARNINGS PER SHARE

CASHFLOW 4 Normal seasonal outflow on working capital 4 Final and interim dividend paid in first half 4 No dividend paid by Giori 4 Net cash of £ 39. 3 m at half year

REPAYMENT OF CAPITAL 4 Cards disposal raised £ 200 million before costs 4 Return of surplus capital: w tax efficient structure w re-introduce gearing to the Group w retains financial strength 4 Future dividend policy

REPAYMENT OF CAPITAL 4 Proposed return of 46 pence per share (approximately £ 103. 7 million) 4 Scheme of arrangement: w New De La Rue “acquires” De La Rue w Consolidation ratio of 17 new shares for 20 existing shares w Reduction in number of shares in issue by 15% 4 Share repurchase authority 4 Expected timetable: w Documentation in early December w Court meeting and EGM in second week of January w Dealings in new shares 1 February 4 Board of New De La Rue will be identical to the existing board

CURRENT TRADING & OUTLOOK 4 Trading in our operations since the half year has continued in line with our expectations and above last year. 4 Performance of associated companies is down and second half likely to be at similar levels to first half. 4 Major changes that have occurred in first half are delivering shareholder value.

IAN MUCH Chief Executive a

SECURITY PAPER & PRINT: CURRENCY ab

KEY TRENDS 4 Concern from customers about new counterfeiting threats leading to the introduction of new features 4 More opportunities to link print and paper features with sorting equipment 4 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 : 4 Technology sales 4 Facilities management contracts 4 Overspill printing

QUALITY & TECHNOLOGY 4 Automatic inspection of banknotes during printing is now proven and reliable 4 Ongoing major investment programme in such equipment (eg Nota. Save) 4 Continuing investment in security features, such as holographic foils and novel iridescent effects Starwide holographic thread

COST REDUCTION & EFFICIENCY 4 Re-allocation of equipment to maximise the use of capital assets 4 Ink usage reduction systems 4 Improved systems for worldwide production scheduling to optimise capacity utilisation 4 Development of an advanced batch control system to enhance physical security and reduce cost

THE EURO 4 De La Rue fully involved in the origination process and production trials 4 Predominance of State Printing Works and paper mills 4 Qualifying process for tapes and holograms 4 Strategic investment with the Banco de Portugal in a state-of-the-art Euro production facility in Lisbon

SECURITY PRODUCTS 4 Increased use of holograms, sales up 30% 4 Microsoft® cover volumes up 24% 4 Planned relocation of Tapes to modern facility in second half 4 Tapes, Thermotext® product has been well received 4 High Wycombe operational performance still needs improving 4 Just won contract to supply Argos with retail gift vouchers 4 Brand Protection winning consultancy contracts, need to convert into orders

SUMMARY 4 Profitable ongoing business with modest growth opportunities 4 Leverage strong customer relationships 4 Continue to target top and middle end of market 4 Value not volume 4 Continuous improvement in operational efficiency

CASH SYSTEMS ab

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

NEW PRODUCT DEVELOPMENTS/OPPORTUNITIIES: TCR 8000 c PROJECT 4 Teller cash recycler 4 Product definition complete 4 Launched at recent trade shows 4 Good response from customers 4 Competitive positioning w Concurrent operation w Speed and authenticity w Reliability and service TCR 8000 c

6000 SERIES NOTE SORTER 4 Bulk cash processor 4 Major customer launch July 1999 w joint with key customers w over 40 customers w from 19 countries 4 Now installed on 3 continents 4 Complete solution and integration to customers’ back office systems proven New 6000 Sorter

BRAZIL FACILITIES MANAGEMENT CONTRACT 4 Building on the De La Rue reputation 4 A model for the future 4 Already working with other banks both the commercial and state sectors to examine opportunities to replicate the experience

AFTER SALES CUSTOMER SERVICE & SUPPORT 420% of the division’s turnover 4 Employs one third of the workforce 4 Direct service operations in 15 of our direct markets 4 Supporting a franchised distributor network of over 200 service partners 420% of our service activity is on non De La Rue manufactured products

SUMMARY 4 The restructuring is on schedule 4 The streams organisation has proven to function and is ready for growth 4 The product range has been enriched 4 Cash Systems is now providing solutions not only boxes 4 Cash Systems team is enthusiastic and very committed

NEW SERVICES & SOLUTIONS DIVISION ab

WORK BEING UNDERTAKEN 4 Recruited new MD, Chris Chadwick who joined on 15 November 4 Keith Brown heading up internal development team 4 We are identifying potential areas of opportunity and defining business logic 4 Decided on initial internal components for new division

NEW SERVICES & SOLUTIONS DIVISION 4 Identity Systems 4 Transaction Services 4 Holographics 4 Brand Protection 4 Royal Mint Services Annual sales for year ended 31 March 1999 £ 48 m

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

NEXT STEPS Action Timing Status 4 Develop business plan i Ongoing § Done 4 Complete market study i Autumn 1999 § Done 4 Identify existing businesses for i Autumn 1999 new division § Done 4 Identify skills gap and recruit i Autumn/end 1999 § Ongoing 4 Appoint new MD i End 1999 § Done 4 Create new division i End 1999 § Ongoing 4 Consider small acquisitions i Early 2000 § Ongoing

SUMMARY ab

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 4 Complete reorganisation of Cash Systems and deliver targeted returns 4 Achieve substantial improvement in working capital performance 4 Build on strong product base with service approach 4 Get closer to customer base to leverage our core strengths/values 4 Progress on new Services & Solutions division

INTERIM RESULTS 1999/00 a