Preliminary Results 28 May 2003

Ian Much Group Chief Executive

Stephen King Group Finance Director

Trading Summary Disappointing Results  Operating profits from continuing operations of £37.5m down from £77.6m in 2001/02  Profit before tax £48.1m*, in line with our February trading statement, but down from £90.6m** last year  Poor performance reflects:  sharply worsening economic markets in Europe  disruption to reordering cycles following significant euro changeover benefit in 2001/02  Increasing worldwide political uncertainty * Before exceptional charge of £49.2m and goodwill amortisation of £3.6m 2002/03 ** Before exceptional gain of £13.1m and goodwill amortisation of £2.8m 2001/02

Trading Summary However, balance sheet remains strong  £72.7m of free cashflow* generated (2001/02 £81.6m*)  Returned a total of £71.3m to shareholders through a combination of three dividends and the share buy back programme  Closing net cash position £8.2m, ahead of recent expectations  Final dividend maintained at 9.2p (full year dividend 13.6p up 1.5% on last year) * Before dividends from associates, exceptional cashflows, capital expenditure, acquisitions, dividend and share buy back costs

Taking Action – closure of Singapore site - completed – annualised cost savings £3.0m, of which £1m benefit achieved in 2002/03 – reduction in European cost base – annualised cost savings circa £7.0m – manufacturing review; closure of High Wycombe site – on track for completion June 2003 (loss of 350 staff) – divisional costs reduced – annualised cost savings circa £7.0m of which £2m benefit achieved in 2002/03 – strategic review of activities  Currency  Cash Systems  Global Services (inc Security Products)

Financial Summary 2002/ /02 £m £m Sales Continuing operations Acquisitions Discontinued operations Operating profit* Continuing operations Acquisitions Discontinued operations - (1.4) Profit before tax, exceptional items and goodwill amortisation Earnings per share* Dividend per share 13.6p 13.4p Net cash * Before exceptional charge of £49.2m (2001/02 - £13.1m gain), and goodwill amortisation of £3.6m (2001/02 £2.8m)

Security Paper and Print  Sales from continuing operations down £15.8m (or 6.9%) to £211.0m and operating profits* down £10.6m to £30.5m  Currency business in line with expectations at beginning of year – good banknote performance offsetting weaker paper markets  Closing order book slightly ahead of previous year  Majority of underlying operating profit reduction from Security Products’ activities - volumes reduction; reorganisation of manufacturing base including closure of High Wycombe 2002/032001/02 £m £m Sales Continuing operations Acquisitions Operating profit Continuing operations 30.5* 41.1 Acquisitions (0.1) Margins (%) 14.2% 18.1% *Before exceptional charge of £19.9m and goodwill amortisation credit of £0.2m

Cash Systems 2002/032001/02 £m £m Sales Continuing operations Acquisitions Operating profit Continuing operations 8.4* 36.0 Acquisitions Margins (%) 3.7% 9.7% *Before exceptional items of £10.5m and goodwill amortisation of £3.3m  Sales from continuing operations down 21% and operating profits down £27.6m to £8.4m  Good contribution from Papelaco acquisition, increased total operating profit to £11.6m  Profit reduction due to  sharply worsening economic markets in Europe  disruption to reordering cycles following on from significant euro changeover benefit in 2001/02  increasing worldwide political uncertainty  Service, OEM, Retail businesses in line with expectations at beginning of year

Global Services  Poor year – Identity and Holographics suffering reduced volumes and delayed orders  Sales from continuing operations down £13.4m to £34.7m and an operating loss of £1.4m reported  Acquisition of Sequoia completed  partial year, with losses in post acquisition period following good profitability in previous 6 months  Exeter, USA ballot printing facility to close in 2003/2004, as anticipated in acquisition plan - 60 redundancies – annualised cost saving circa £1m 2002/032001/02 £m £m Sales Continuing operations Acquisitions Operating (loss)/ profit Continuing operations (1.4)* 0.5 Acquisitions (2.6) - (4.0) 0.5 *Before exceptional charge of £2.8m and goodwill amortisation of £0.5m

Associates 2002/ /02 £m£m Profit before interest and tax  Main associate is Camelot, UK national lottery operator, following disposal of 50% shareholding in De La Rue Giori  Profits down in first half, as expected  New licence conditions  Shareholding decreased to 20% from 26.67%  Contribution per 100p down from 1.0p to 0.5p

Earnings per share 2002/ /02 p p As calculated under FRS14 (4.3) 40.7 Profit on disposal of discontinued operations - (0.7) Profit on sale of investments - (12.0) Loss in impairment of investment (Loss)/Profit on disposal of fixed assets 0.2 (0.1) Amortisation of goodwill - continuing exceptional (CSI) _____________________ Headline earnings per share as defined by the IIMR Reorganisation costs Headline earnings per share before reorganisation costs

2002/032001/02 £m £m Net free cashflow Exceptional cashflows (16.7) (3.9) Capital expenditure (21.3) (22.0) Equity dividends paid (33.3) (24.1) Share buy back/ own shares (38.0) (14.9) Acquisitions and disposals (33.4) (50.8) Sale of investments Associate dividends received Share capital issued Exchange Cash (outflow)/inflow (41.8) 13.9 Net cash Net interest: Group 0.5 (0.4) Associates Cashflow / Net Debt

Exceptional Items Cash Non Total Cash £m £m £m ReorganisationSecurity Products (inc. Global Services) (12.7) (5.9) (18.6) Cash Systems (8.5) (2.0) (10.5) Sequoia (2.8) - (2.8) (24.0) (7.9) (31.9) CSI goodwill write-off - (16.0) (16.0) Loss on impairment of investment in JV - (1.3) (1.3) _________________________ Exceptional pre-tax costs (24.0) (25.2) (49.2) 2002/ /

Pensions  Full implementation of FRS17 deferred (announced Sept 2002)  Net charge to P&L under SSAP 24 for UK share was £1.9m (FRS17: £2.4m)  Amortising surplus following last triennial valuation in April 2002  2002/2003 impact was credit to P&L of £6.1m  Triennial review due later this year - deficit expected - amortisation credit eliminated  Underlying regular pension cost under SSAP 24 of £8.0m may also increase in light of depressed levels of equity markets  Adverse impact on 2003/04 likely to be £7m-£8m. Need to await outcome of triennial review due September 2003

Source: DATASTREAM Foreign Exchange Exchange Rate (WMR)

Ian Much Group Chief Executive

Situation analysis  Several key markets affected by worsening macro economic conditions  Increased concerns about global security added to market weakness But….  Actions in place to improve cost effectiveness and efficiency  Lower cost base will ensure De La Rue well placed whenever markets improve  Strong balance sheet backed by underlying cash generation

Cash Systems Current issues  Division holding market share  Cost base (particularly in Eurozone) too high for current market conditions  Financial Institutions not been able to grow new markets fast enough to offset downturn in Spain and Germany  Currency Systems significantly under-performing - both market and structural issues

Cash Systems Actions  Cost reduction  Germany  Spain  Currency Systems  Manufacturing  Push development of newer FI markets  USA  Central/ Southern Europe  China  Russia  Latin America

Cash Systems Financial Institutions – revenue trend GBPm

Cash Systems 2003/2004 focus  Delivery of cost reduction programme on schedule  Exploit potential of Papelaco acquisition  Opportunities to extend self service offering in most developed markets  Retail opportunities  Successful trials in USA and UK with major retailers – business still in start up mode  Service  Acquired three small service operations in 2002/2003

Currency  Banknote business continues to perform strongly  Market increasingly looking to sophisticated anti-counterfeit solutions to counter increasing threats from technology  Rigorous approach to cost base, e.g. Singapore  Acquired Bank of England banknote printing operations in April 2003  Paper business outlook improving  Expect return to historical ordering patterns in 2003/2004  Knock on effect for Currency components businesses

Global Services (including Security Products)  Management  Peter Cosgrove appointed in March 2003 to lead Security Products and Global Services  Reorganisation of manufacturing operations on track  Capacity reduced through closure of High Wycombe  On track for site closure in June redundancies to date, balance on closure  Cost savings in Security Products and Global Services c. £7m in 2003/2004  Completion by September 2003

Global Services (including Security Products)  Action taken to reduce cost base  Strategic Review underway  Examining long term attractiveness of constituent businesses  Update in November 2003  Development of Sequoia business in line with expectations, on acquisition

Summary  Focus on core technologies and skills  Actions underway to reduce cost base  Strengthened management team  Strong balance sheet

Outlook  Underlying tough market conditions continue in 2003/2004  Priority to complete cost cutting exercises in Cash Systems and Global Services to underpin profitability  Currency business solid  Papermaking business returning to production levels closer to capacity  Banknote printing overspill order levels returning to long term average levels  Adverse impact from foreign exchange and pensions  Underlying performance therefore expected to show some improvement as cost reduction exercises are delivered