De La Rue plc

Interim Results25 November 2003

De La Rue plc

Ian MuchChief Executive

De La Rue plc

Stephen KingFinance Director

Trading Summary

* before exceptional charges of £17.9m (2002/2003 £18.7m) and goodwill amortisation of £1.7m (2002/2003 £1.7m)

Underlying trading ahead of last year Turnover increased by 7.6% from £269.6m to £290.1m

Profit before tax, exceptional items and goodwill amortisation of £19.7m* (2002/2003 £19.6m*), achieved despite additional pension costs of £3.7m. Result ahead of the Board’s original expectations at the start of the year

Strong cash flow performance with net cash inflow from operating activities of £35.0m (2002/2003 £2.5m) in the first half (aided by customer prepayments). The Group ended the first half with net cash of £13.9m

Interim dividend 4.4p (2002/2003 : 4.4p)

Trading Summary

Strong first half in Security Paper and Print underpinned by higher levels of activity in the papermaking business and our success in winning the Iraq banknote contract

Operating profits in Cash Systems ahead of our expectations reflecting the benefit of the ongoing cost reduction programmes, although down on last year’s result

Global Services strategic review completed. An exit from low margin and declining product areas announced today. Global Services to cease as a separate division.

1st Half 1st Half

2003/04 2002/03 £m £m

SalesContinuing operations 272.8 269.6 Acquisitions 17.3 - 290.1 269.6

Operating profit*Continuing operations 13.0 14.9 Acquisitions 1.2 -

14.2 14.9

Share of profits of associated companies 5.6 3.6Interest (0.1) 1.1Profit before tax, exceptional items and goodwill amortisation 19.7 19.6 Earnings per share* 8.1p 7.3pDividend per share 4.4p 4.4p Net cash/ (debt) 13.9 (21.0)

Financial Summary

* before exceptional charges of £17.9m (2002/2003 £18.7m) and goodwill amortisation of £1.7m (2002/2003 £1.7m)

Security Paper and Print

Excellent first half in Currency Significantly high level of activity in papermaking business Commencement of deliveries in first half relating to exceptional Iraq banknote contract (completed in second half) Strong order book in Currency going into second half in both papermaking and printing Continuing weak markets in Security Products led to poor first half performance. Some improvement in second half expected due to lower overheads. Completed closure of High Wycombe on schedule.

1st Half

2003/04

£m

1st Half

2002/03

£m

Sales Continuing Operations 97.5 94.3

Acquisitions 17.3 -

114.8 94.3

Operating Profit* Continuing Operations 13.1 12.7

Acquisitions 1.2 -

14.3 12.7

Margins % 12.5 13.5* before exceptional items of £0.8m (2002/2003 : £17.7m) and goodwill amortisation credit of £0.2m (2002/2003 : nil)

Revenues down as tough trading conditions seen in second half of 2002/2003 continued Better than expected operating profits achieved through early benefit of cost reduction programme Weakness of financial institutions markets, particularly in Europe continues to be partially offset by North American business. Strong Teller Cash Dispenser volumes in first half. Self service business formed from Papelaco acquisition also performed well Foreign Exchange - transactional loss largely offset by translation benefit

Cash Systems

1st Half

2003/04

£m

1st Half

2002/03

£m

Sales 142.2 146.6

Operating Profit* 2.2 5.0

*before exceptional items of £1.9m (2002/2003 : £1.0m) and goodwill amortisation of £1.6m (2002/2003 : £1.5m)

Global Services

Revenues up 19% due to inclusion of Sequoia but continuing poor margins Holographics’ revenues were down in the first half due to the timing of banknote order receipts particularly in the first quarter Identity business – volumes down in installed base of contracts. New system sales continue to be deferred Sequoia loss making in first half due to continued margin pressure as a result of competitive pricing. Closure of Exeter and outsourcing of ballot printing facility now complete

1st Half

2003/04

£m

1st Half

2002/03

£m

Sales 35.0 29.4

Operating Profit / loss* (2.3) (2.8)

*before exceptional items of £12.6m (2002/2003) : nil) and goodwill amortisation of £0.3m (2002/2003 : £0.2m)

Associates

Main associated company is Camelot, the UK lottery operator

Strong first half reflects phasing of marketing expenditure. Sales flat on last year

1st Half

2003/04

£m

1st Half

2002/03

£m

Profit before interest and tax 5.6 3.6

Earnings per Share

1st Half

2003/04

p

1st Half

2002/03

p

As calculated under FRS 14 (2.2) (0.6)

Loss on disposal of fixed assets and assets held for resale 1.3 -

Amortisation of goodwill 7.9 0.8

Headline earnings per share as defined by IIMR 7.0 0.2

Reorganisation costs 1.1 7.1

Headline earnings per share before items above 8.1 7.3

The EPS of (2.2)p as calculated under FRS14 is the £3.9m loss for the period divided by 176,792,599 shares in issue

2003/04 2002/03 Half year Half year £m £m

Net free cash flow 46.4 4.8

Exceptional cash flows (11.5) (2.7) Capital expenditure (14.0) (7.6)

Equity dividends paid (16.2) (25.4)Share buy back/ own shares - (32.4) Acquisitions and disposals (4.9) (31.4)Sale of investments - 14.4Associate dividends received 3.5 6.5

Share capital issued 0.6 1.0Exchange 1.8 1.8

Cash inflow / (outflow) 5.7 (71.0)

Net cash / (debt) 13.9 (21.0)

Cash flow / Net Debt

Exceptional Items

Cash Non Cash

Total

£m £m £m

Reorganisation costs Cash Systems (1.9) - (1.9) Security Products (0.8) - (0.8)

Loss on disposal of fixed assets - (2.6) (2.6)

Sequoia goodwill impairment - (12.6) (12.6) _________ _________ _________

Exceptional pre tax costs (2.7) (15.2) (17.9)

Pensions

Triennial review was assessed at 6 April 2003 Reflects poor performance of financial markets during the period Deficit approximately £40m as expected Equity markets improving

Net charge to P&L under SSAP 24 in current year will be £9.5m (2002/2003 £1.9m)

Similar charge to operating profit under FRS 17

Company now reviewing the UK pension scheme arrangements and discussions with key stakeholders under way

At half year, SSAP 24 charge was £4.7m compared with £1.0m in 2002/2003

Currency Volumes

1st Half

2003/04

%

1st Half

2002/03

%

Banknote volumes (underlying) -12.9 -4.5

Overspill 39.0 33.0

Paper volumes +62.0 -18.0

De La Rue plc

Ian MuchChief Executive

Currency

Papermaking business improving as expected Strong order book Return to market of significant overspill customer Knock-on effect for currency components business in second half

Banknote business continues to perform strongly Iraq Good first half at Debden, integration proceeding well Strong order book and earnings visibility underpins second half

Expect both paper and print markets to return to historical ordering patterns and volumes in 2004/2005.

Cash Systems - Markets

As expected, tough market conditions in financial institutions business continues, particularly in Europe Germany and Spain Partially offset elsewhere, particularly North America Papelaco self service offering continues to be rolled out to

developed markets

Investment in enhancing our solutions and service portfolio for Retail market continues Focus on large retailers in Europe and North America

Customer Services business remains significant profit driver of division

Cash Systems - Cost Reduction

Actions to date: Cost reduction programme on track

300 redundancies announced (February 2003) Additional 50 identified in first half Of total, 250 now completed Balance to follow in second half

Specific action taken to reduce cost base in large sorter business

Dallas manufacturing facility Much more encouraging first half

Global Services Strategic Review

Two principal conclusions: Cessation of Global Services division

Exit from low margin and decliningproduct areas in Security Products

Costs

£10m restructuring charge - taken in the second half, substantially cash

12 month completion timescale Savings will benefit the Group by approximately £3.0m

per annum £12.6m goodwill in relation to Sequoia (non-cash)

Security Products

UK site consolidation

Exit from Peterborough and Byfleet

200 redundancies likely, subject to employee consultation Transfer of gravure equipment into Dunstable to support Royal

Mail contract

Consolidate all UK security printing to Dunstable

Does not require significant transfer of equipment or overheads Flexible expansion space available Considerable margin synergies

Reduced inter-plant transportation Increased utilisation of plant and equipment already at Dunstable

Security Products

Security Products will focus on:

Authentication labels Travellers cheques Postage stamps (domestic supply) Passports

Authentication labels contract recently secured with global software company

Exit from:

UK personalised cheques Vouchers Export stamps Coin bags

Global Services Strategic Review

Security Paper and Print division will now comprise:

Banknote printing and papermaking Tapes and Holographics

Intrinsically linked to the banknote market Benefits from their market presence/ reputation

Security Products Principal production at Dunstable, Dulles and Bathford (paper)

All constituent businesses will be profitable in 2004/2005

Global Services Strategic Review

Sequoia reported within Cash Systems

Natural fit with self service and customer service Hardware sales encouraging but competitive pressure

affecting margins Expect profitable second half Fair value assessment accelerated to reflect new

competitive environment resulting in £12.6m non-cash goodwill write-off

Outlook

Continuation into the second half of the favourable conditions that resulted in an improvement in underlying first half performance leads the Board to expect a strong second half result

De La Rue plc