Preliminary Results 2001/ May 2002 “Cash to Secure Transactions”

Paul Hollingworth Group Finance Director “Cash to Secure Transactions”

Highlights  Profit before tax up 15.7% at £90.6m*  Excellent cash generation : £88.3m of cash inflow from operating activities  Euro benefit estimated at 9% of Group sales  Headline EPS up 3.5p or 11.3%*  Planned share buyback of up to 10% of issued share capital * Before exceptional items, reorganisation costs and goodwill amortisation charged to operating profits

Financial Highlights 2001/ /01Change £m £m £m Sales Continuing operations Discontinued operations Operating profit* Continuing operations Discontinued operations (1.4) (1.5) Profit before tax and exceptional items Earnings per share* 34.4p 30.9p 3.5p Dividend per share 13.4p 12.6p 0.8p Net cash * Before exceptional items, reorganisation costs and goodwill charged to operating profit

Cash Systems 2001/ /01Change £m £m £m Sales Continuing operations Acquisitions Operating profit* Continuing operations Acquisitions Margins (%) Continuing operations %  Sales from continuing operations up 22% and operating profits rise £15.6m to £32.6m. Excellent cash generation  Sales of Teller Cash Recyclers and Teller Cash Dispensers strong  Operating margin target of 10% hit for year  Euro effect 8% of sales (underlying sales growth (exc. euro) still 10%)  CSI better second half, with good order book coverage. Integration almost complete  Revenue target of £400m sales for division in 2003/2004 financial year * Before goodwill and amortisation and reorganisation costs

Security Paper & Print 2001/ /01Change £m £m £m Sales Operating profit (9.3) Margins (%) (5.6%)  Overall operating profits down £9.3m to £41.1m  Strong performance from banknotes offsetting continued weakness in papermaking (India effect)  Singapore banknote printing facility closure announced – main benefit in 2003/2004  Paper volumes down by 5%  Euro banknote order at Gateshead completed in second half  Security Products performance disappointing. Preliminary actions have resulted in 90 redundancies at a cost of c. £1.3m

Security Paper and Print Sales Profits £m £m 2000/ Banknote printing Banknote paper (0.8)(7.7) Non banknote security printing (3.4)(3.1) Security Products redundancy costs - (1.3) Others* 1.8(2.0) ___________________ 2001/ *includes intercompany profit in stock swing of £1.2m

Global Services 2001/ /01Change £m £m £m Sales Operating profit (0.5)  Sales up and first half losses reversed  Contract with Microsoft for Xbox™ has partly offset loss of Windows™ contract – overall Brand Protection has faced difficult trading environment  Transaction Services disposal in October – shown as discontinued  Loss making Digital Security (InterClear) wound up resulting in 20 redundancies and some asset write offs at a total cost of £1.1m  Identity Systems had a good year with strong sales – Mexico / Chile  Holographics had a better second half and has secured euro business  Holographics more closely aligned with Tapes business

Associates 2001/ /01Change £m£m £m Camelot Other (inc De La Rue Giori) 0.1 (2.2)  Giori sale completed in May 2001 for CHF50m (£20m), main associate now Camelot  Rise in profits at Camelot mainly because of absence of CISL losses  Second licence commenced 27 January 2002 when De La Rue’s shareholding decreased from 26.67% to 20%  Reduced contribution during second licence period (0.5p for every £1 collected)  Dividend of £ 28.3m received from associates, mainly from Camelot following release of surpluses from first licence period

Earnings per share 2001/ /01Change (p) (p) (p) As calculated under FRS Loss on disposal of continuing operations (1.6) Profit on the disposal of discontinued operations (0.7) - (0.7) Profit/(Loss) on disposal of fixed assets and assets held for resale ( 0.1) 0.1 (0.2) Profit on sale of investments (12.0) (0.1) (11.9) Amortisation of goodwill ___________________________________ Headline EPS as defined by the IIMR (6.4) Reorganisation and arbitration costs Share of associated exceptional items (1.3) Exceptional release of tax provision - (6.6) 6.6 ___________________________________ Headline EPS before items shown above

2001/ /01Change £m £m £m Cash inflow before items shown below Equity dividends paid (24.1)(24.1) - Associated dividends received Acquisitions and disposals (38.0) (4.2) (33.8) ____________________________________ Cash inflow (13.4) Net Cash Net Interest: Group (0.4) (1.2) 0.8 Associates (1.4) Cashflow/Borrowings/Interest

FRS 17  Transitional arrangements for 2001/2002  Full adoption for 2002/2003  Gross surplus as at 30 March 2002 of £63.6m (net of tax £44.4m)  SSAP 24 charge for 2001/2002 of £2.0m compares to net pre tax credit under FRS 17 of £0.4m

Outlook  Overall priorities for 2002/2003 are:  Realise synergies and potential of CSI  Stabilise Security Products and take further action to secure operational efficiencies  Euro comparator and lower Camelot contribution  Underlying business however, remains strong, particularly Cash Systems  Any earnings progress in 2002/03 will be modest

Ian Much Chief Executive “Cash to Secure Transactions”

 Well placed for sustainable sales growth (6-8%)  Objective set of £400m sales by 2003/2004  Growth drivers:  market, e.g. Retail  geographic, e.g. China, Russia  market penetration e.g. USA  product / sector, e.g. self service banking  Committed to 10% plus margin Cash Systems

 Operating in three market sectors:  Financial Institutions  Currency Systems  Retail Payment Systems  Spent £57.6m on acquisitions in 2002, more bolt-ons likely  CSI integration now complete -integrated sales and marketing -refocused manufacturing base -product integration and development plans finalised -cost base rationalised with 110 redundancies -£5m restructuring cost (£3.6m incurred in 2001/02)  Recent Papelaco acquisition gives full capability for end to end solutions to Financial Institutions Cash Systems

Recent Cash Systems Acquisitions * Based on announcements made at time of acquisition COMPANYDATECONSIDERATION ANNUALISED ACTIVITY £m SALES* £m AscomApril Cash handling Ascom – SwitzerlandApril ATSMay Retail cash management & POS CSIMay Cash processing Haliburton & WhiteAugust Cash transaction processing equipment PapelacoMay Self service banking automation TOTAL

Currency  Continue to enhance our position as world’s leading commercial producer of banknotes  Emphasis on managing the cost base (e.g. Singapore)  Result redundancies  Cost (expensed in 2001/2002) is £7.3m (pre-tax)  Some additional resourcing required and transfer of capital equipment  On track to complete within 9 months  Main benefits show through in 2003/2004  Deliver consistent profits and cashflow  differentiated marketing strategy targeting favourable segments while retaining critical mass  technology differentiation  cash substitutes unlikely to affect the business in medium term  Plus – always prospect of enlarging available market (e.g. euro)

Security Products  Markets are mature and in many cases declining/ fragmented  Review of manufacturing strategy now underway to improve competitiveness and reduce cost base  Results of review to be announced in November  Move emphasis to leaner business with emphasis on differentiation  logistics  substrate  customisation  Prune back to healthier base

Global Services  Reorganised in May 2001; completed in November 2001  Action taken:  management changes  business streams now offer full range of De La Rue capabilities sharing key functional areas  non-core business sold (Transaction Services)  InterClear not commercialised  Objective – achieve sales and profits through both organic growth and acquisitions

Global Services–Key Opportunities Identity Systems  Target De La Rue’s traditional markets offering both products and issuing solutions  September 11  Pipeline good - Mexico - Chile - New York Brand  Serving consumer facing industry sectors so likely to be affected by economic downturn  However some significant opportunities e.g. Microsoft:Xbox   Brand Protection : Brand Enhancement

David Young Director of Strategic Marketing “Cash to Secure Transactions”

US Voting Systems Market  Lots of elections every year  Election Systems market - Ballots, Punch Cards, Scanners, Electronic  Only 4 or 5 small players  Federal and State level Certification  Sales made at the County level  Electronic Voting enables multiple ballots, languages, disabled voters etc  Still need remote/early/postal vote scanners  Voter Registration/ID Software  Security concerns over on-line voting: personal ID, privacy, hacking, vote-buying, etc.

Punched Cards Paper Ballot Scanners Lever- Style Kiosks Touch-Screen Direct Entry

US Elections Recent History  2000 Presidential Elections  38% voted on Punch-Cards … ‘Chads’  Florida  2001: A year of indecision & investment  New entrants disillusioned  Existing players struggling  Diebold purchases #3 player ‘Global’  Electoral Reform Bills in House and Senate  c.$3-4bn Federal Funding, plus State Matching  Selective out-lawing of Punch Cards  2002: Several Major orders for Electronic Terminals

Sequoia Voting Systems  Based in Oakland, CA  140 staff  Product Range  Full suite of election hardware  Direct recording equipment  Optical scanning equipment  Outsourced manufacture  Software  Voter registration, ballot creation and election tabulation  Printing business e.g. Paper ballots  Number 2 or 3 in Market  Strong in West Coast, North East USA, more recently Florida  Financials  Sales (31 December 2001) US$27m, loss of US$10m – but not a typical year

Acquisition of Sequoia  Deal structure  Acquired 85% share capital from Jefferson Smurfit Group (15% retained for 3 years min.)  Consideration US$23m with further payment of up to US$12m performance related (sales growth)  Strategic rationale  Good strategic fit – Security, USA, Government, ID  Electro-mechanical devices with Service Opportunities  Excellent growth potential (short term USA, medium international)  Management  Sequoia Voting Systems brand maintained in USA  Peter Cosgrove (President) to report to Ian Much  Minimal integration short term

Demonstration Unit One of 220 Sequoia AVC Edge® Direct Entry Voting Terminals as used in London Borough of Newham, May 02, A good fit?

Ian Much Chief Executive “Cash to Secure Transactions”

Summary  Well established strategy  Focussed businesses  Opportunities for organic growth  Strong cash generation and balance sheet  Substantial room for acquisitions  Share buy back to enhance shareholder value  2003/2004

Supplementary Slides

Security Paper and Print Percentage of total value Banknote sales - segmental analysis

Average banknote prices Value per banknote (per order book) Banknote volumes Base/overspill split Paper volumes 2001/ / % -1.0% +3.1% 62/ % +7.4% +1.0% -10.0% 81/ % Currency KPIs