INTERIM RESULTS1999/00

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 HOLLINGWORTHFinance Director

HIGHLIGHTS1999

£m 1998

£m Change SalesContinuing operationsDiscontinued operations

Operating profit*Continuing operationsDiscontinued operations

PBT*

EPS*

Dividend

Net cash/(debt)

252.984.7

337.6

25.35.1

34.7

11.7p

4.0p

39.3

261.2109.0

370.2

15.6(3.0)

19.3

6.3p

4.0p

(133.1)

(8.3)

9.7

15.4

5.4p

-

172.4

£337.6

* Before exceptional items/reorganisation costs

SECURITY PAPER & PRINT

1st half 1999/00

£m

1st half 1998/99

£m change

£m

Sales

Operating profit(before reorganisation costs)

121.9

24.9

125.0

18.3

(3.1)

6.6

Summary

Margins continue to rise benefiting from reorganisation actionsReorganisation largely completedHolding onto gains in banknote pricesPaper volumes down but improved mix largely offsets impact of lower salesNon banknote security products results benefiting from increased holographic usage and higher sales of Microsoft covers

SECURITY PAPER & PRINT

70

80

90

100

110

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999Y/E

2000H1

Average banknote prices (indexed from 1990)

3.7% rise

SECURITY PAPER & PRINT

50

60

70

80

90

100

110

1995 1996 1997 1998 1999 2000H1

Net sales value per banknote Contribution per banknote

Banknote order book

Value per banknote -12 month moving averageIndex

SECURITY PAPER & PRINT

Banknote volumes (billions of notes)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 20000

1

2

3

4

5

6

7

1st Half 2nd Half

SECURITY PAPER & PRINT

1995 1996 1997 1998 1999 1st half

1999/00

Base

Overspill

Total

75

25

100

80

20

100

73

27

100

64

36

100

82

18

100

78

22

100

Banknote sales - segmental analysis

Percentage of total value

SECURITY PAPER & PRINT

Sales £m

Profit £m

1st half 1998/99

Exchange effect

Banknote printingBanknote paperNon banknote security printingOthers (inc printing works)Spanish disposal*

1st half 1999/00

125.0

(0.1)

2.6(6.8)

4.6(0.4)(3.0)

121.9

18.3

-

5.9(0.4)

1.1--

24.9

* Lerchundi (Security print business)

CASH SYSTEMS

1st half 1999/00

£m

1st half 1998/99

£m change

£m

Sales

Operating profit(before reorganisation costs)

132.5

0.4

138.6

(2.7)

(6.1)

3.1

Summary

Sales down as we focused on products and geographical areas which were most profitableNew products as a percentage of total product sales now account for 20% compared to 14% for last yearBreakeven result represents a positive shift in recent trend of resultsReorganisation on track

CASH SYSTEMS

RESTRUCTURING PROGRESSUPDATE

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

0

2

4

6

8

10

1996 1997 1998 1999

£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

1999/00 Half Year

£m

1998/99 Half Year

£m Change

£m

Operating Profit

Share of profits of associates:CamelotOther (inc De La Rue Giori)

Interest

PBT

30.4

3.53.2

6.7(2.4)

34.7

12.6

6.63.4

10.0(3.3)

19.3

17.8

(3.1)(0.2)

(3.3)0.9

15.4

EARNINGS PER SHARE

1999 1st Half

(p)

1998 1st Half

(p) Change

(p)

As calculated under FRS 14Loss on the disposal of continuing operationsProfit on the disposal of discontinued operationsProfit on disposal of fixed assets and assets held fordisposalProfit on the part disposal of the shareholding inCamelotAmortisation of goodwill

Headline earnings per share as defined by the IIMRReorganisation costs

Headline earnings per share before reorganisation costs

31.9-

(24.3)

(0.3)

-0.3

7.64.1

11.7

2.61.0

-

(0.8)

(1.0)0.3

2.14.2

6.3

29.3(1.0)

(24.3)

0.5

1.0-

5.5(0.1)

5.4

CASHFLOW

Half Year 1999

£m

Half Year 1998

£m Change

£m

Cash outflow before items noted below

Equity dividends paidAcquisitions and disposalsDividends received from associates

Cash inflow/(outflow)

(10.5)

(27.0)194.5

3.2

160.2

(21.2)

(10.1)3.7

18.1

(9.5)

10.7

(16.9)190.8(14.9)

169.7

Normal seasonal outflow on working capitalFinal and interim dividend paid in first halfNo 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 MUCHChief Executive

SECURITY PAPER & PRINT: CURRENCY

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 sectorinvolvement in State Printing Works

However pace is dictated by political considerationsin 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

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

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 Servicesto Core Customers

Brand ProtectionServices

Electronic SecurityServices

ExistingCore 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 1999

Autumn/end 1999

End 1999

End 1999

Early 2000

Action Timing

Done

Done

Done

Ongoing

Done

Ongoing

Ongoing

Status

SUMMARY

STRATEGIC FOCUS

“OPERATE IN AREAS WHERE OUR CORE VALUES ANDCAPABILITIES 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 RESULTS1999/00