Annual

Report

De La Rue plc

2022

Our purpose is to

secure trust between

people, businesses

andgovernments.

Our Authentication and Currency

divisions provide highly secure

physical and digital solutions that

underpin the integrity of economies

and trade. They do this by being

the trusted partner of choice for

governments, central banks and

businesses seeking to secure their

global supply chains and cash cycles.

ContentsContents

Financial statements

Independent Auditor’s Report 92

Consolidated income statement 100

Consolidated statement

ofcomprehensive income

101

Consolidated balance sheet 102

Consolidated statement

ofchangesin equity

103

Consolidated cash flow statement 104

Accounting policies 106

Notes to the accounts 113

Company balance sheet 147

Company statement

ofchangesinequity

148

Accounting policies – Company 149

Notes to the accounts – Company 151

Non-IFRS measures 153

Five-year record 156

Shareholder information 157

Featured image glossary 158

Corporate Governance

Chairman’s introduction 50

Board of Directors 52

Corporate Governance report 54

Nomination Committee 60

Audit Committee 62

Ethics Committee 67

Risk Committee 68

Remuneration 69

Directors’ report 85

Directors’ responsibility statement 89

Our purpose IFC

At a glance 2

Our strategy 4

Chairman’s statement 6

CEO review 8

Our markets 12

Our business model 14

Review of operations 18

Financial review 20

Key performance indicators 24

Viability statement 26

Risk and risk management 27

Responsible business 32

Section 172 Statement 46

Strategic report

Strategic report De La Rue plc Annual Report 2022

Our two operating divisions, Authentication

and Currency, offer customers a combined

expertise in secure design and technology,

globalmanufacturing andsoftware solutions.

We work with governments, central banks

andcommercial organisations in more than

140countries.

The shape of

our business

For more information

See Our Markets on pages 12 to 13.

See pages 153 to 155

for a reconciliation of adjusted andIFRS measures.

Government

Revenue Solutions

Brand Protection

Solutions to support excise collection

andthefight against illicit trade.

– Received five new contract awards

– Planned expansion of Malta operations

willmore than double capacity

Solutions to secure commercial supply

chainsand protect consumers.

– Strong demand from technology

andpharmaceutical sectors

ID and Financial

and Secure Documents

Security components for ID; cheques, bank

cards and secure print.

– First supply of polycarbonate ID pages

undermulti-year Australian contract

Authentication

We protect our customers’ revenues and reputations through

the provision of physical and digital solutions to governments

and commercial organisations. We also manufacture financial

documents and ID security components.

Revenue

£90.3m (+16.3%)

UK 68.2%

Asia Pacific 15.3%

Middle East and Africa 13.3%

North America 3.2%

Employees by region (%)

2,311

At a glance

For more information

See Our Markets on pages 12 to 13.

Banknotes Security featuresPolymer

– Production sites fully utilised, despite

Covid-19 challenges

– Provide a range of features to central

banks,state printing works, state paper

millsand other commercial entities

– Sales volumes continue to grow – new line

doubles capacity

Currency

We provide market-leading end-to-end currency solutions,

from fully finished banknotes, to secure polymer substrate

and banknote security features, to over half the central banks

and issuing authorities around the world.

Revenue

£280.9m (-2.1% adjusted basis, -5.0% IFRS basis)

Europe

Head office and

design centre

Polymer substrate

production

Security features

production

Software development

and Authentication

IT operations

Banknote printing and

managed services

Research and

development

Malta

Banknote printing

Tax stamp, brand

protection label and ID

security feature production

North

America

Logan

Brand protection

hologram and

label production

Wilmington

Research and

development

Middle East

and Africa

UAE

Regional office

Customer support

and IT operations

forMiddle East

Saudi Arabia

Regional office

Kenya

Banknote printing

Financial and secure

document production

Asia Pacific

Sri Lanka

Banknote printing

Our global presence

Strategic report De La Rue plc Annual Report 2022

Our vision is to enable every business and

citizen to participate securely in the global

economy and to support a world where

people are protected from the impact of

counterfeiting and illicit trade.

To achieve this we aim to provide highly

secure physical and digital solutions that

underpin the integrity of economies and

trade. We aim to do this by being the trusted

partner of choice for governments, central

banks and businesses seeking to secure

their global supply chains and cash cycles.

Our business principles reflect our long-held

belief that we have a responsibility to operate

in a way that improves the world around us:

for our customers, our employees and the

wider communities in which we work:

– providing governments and commercial

organisations with products and services

that underpin the integrity of economies

and trade;

– leading our industry in sustainability;

– protecting and respecting our people; and

– maintaining the highest ethical and

governance standards in the conduct

ofour business.

Our ways of working

Our business is inherently one where

we build long term relationships with

our customers, working closely with

them as they develop new banknotes or

authentication systems – products which

by their very nature have a life of several

years. This means we have to give careful

consideration to the ways in which our

teams work, and design our internal

systemswith this business model in mind.

Finding such solutions, working with

both state and commercial organisations

around the world, requires a collaborative

approach both internally and with external

partners, respecting diversity of opinion,

culture and approach. Wherever we work,

we need to act ethically and in a way that

engenders trust.

For more information

See our Business Model onpages 14to17.

Business focus

In February 2020 we announced

aTurnaround Plan for the Group.

It has three key pillars:

In Authentication, to deliver

growth through geographical

expansion in government and

commercial contracts;

In Currency, to focus on

the transition to polymer

banknotesand high-tech

securityfeatures; and

To reduce Group costs

to allow usto compete

effectively.

Our CEO, Clive Vacher, discusses the

progress on these three elements during

theyear on pages 8 and 9.

For more information

See Operational Performance of

ourdivisionsonpages 18to19.

De La Rue’s purpose is to secure trust

betweenpeople, businesses and governments.

Our purpose

in practice

Microsoft

We have signed a five-year renewal of

our contract with Microsoft to provide

authentication products – thereby

extending the 25-year relationship

until 2026.

As a Microsoft secure print partner,

DeLa Rue wanted to support Microsoft’s

carbon reduction goals and has designed

the new labels todeliver a lower carbon

footprint thanprevious versions.

Our strategy

Authentication

We recognised that the Authentication

division had opportunities to grow sales

in the areas of both government revenue

schemes and brand authentication.

Within Government Revenue Solutions, tax

stamp schemes to comply with the World

Health Organisation (WHO) Framework

Convention on Tobacco Control were

singled out as a particular opportunity.

We have signed agreements as targeted

withseveral countries each year and

continue to add tothat list. These are

multi-year exclusive supply contracts in

nature with any incremental investment

only required once a contract is signed.

In many instances the use of De La Rue

labels is specified in legislation, providing

anadditional barrier to entry.

Beyond tobacco, we also offer tax stamp

schemes to cover other goods such as

alcohol and soft drinks. Such schemes

areadvantageous to governments as

theyoffer the ability to trace and so

collectexcise revenue efficiently and

alsoprotect consumers from exposure

torisky, unregulated counterfeit goods.

Brand protection is another focus

for growthwith new contracts in

thepharmaceutical, information

technologyandvaping sectors.

In parallel, we continue to invest in

technology, especially in its successful

suiteof software solutions which

combine with our labels to allow efficient

tracking andtracing of the products

to which they areattached throughout

theproduct lifecycle.

Currency

Part of our plan was to support our

customers with the significant trend of

transition from paper to polymer notes.

Polymer notes are generally more durable,

cleaner and easier torecycle than their

paper equivalents.

As one of only two established

manufacturers of polymer substrate

worldwide, De La Rue has established a

leading position in polymer since 2013,

during which time the number of banknote

denominations on polymer has more than

tripled. Despite this growth, only around

4%of the world’s banknotes by volume

and 14% by denomination have moved to

polymer, leaving us with plenty of future

opportunity for expansion in this market.

While there is the potential for additional

market entrants in the future, we believe

ourmanufacturing capabilities represent

aclear barrier to entry.

With established products and recent

innovations, De La Rue has also built

a portfolio of industry-leading security

features for both paper and polymer-

basedbanknotes that are the choice

ofagrowing range of customers.

In the currency printing market, De La Rue

continues to increase its competitiveness

and has the world’s most extensive

experience of security printing, both on

paper and polymer. We therefore have the

flexibility to address a range of customers,

from those who are looking for supply of

one element such as a security thread or

polymer substrate within abanknote that

they produce themselves, to those who

are looking for a turnkey solution including

design and manufacture of all elements

oftheir notes.

As explained further in Our Markets on

page12, we see good growth in polymer

inthe medium term and believe there remain

attractive growth opportunities to move

banknotes from paper to polymer with both

existing customers and state printworks.

For more information

See Our Markets on page 12.

Costs and supply chain

The Turnaround Plan set out a £36m cost

reduction scheme, which we completed

lastyear and saw the full impact of in FY22.

However, as the world moves into a more

inflationary phase as economies bounce

back from the Covid pandemic and

sanctions on Russia cause oil and gas

prices to soar, we are experiencing similar

cost increases to many other businesses.

We are monitoring these increases carefully,

fixing our energy costs in the UK and looking

at other mitigations such as alternative

supply sources.

Where possible we source raw materials

from more than one supplier, and we are

actively working to increase the proportion

of our supply base where multiple sources

of supply are qualified. We are also working

in partnership with our key suppliers to

understand and mitigate risks in their own

supply chains to increase resilience.

14 Award-winning banknotes

De La Rue designed and manufactured

banknotes were recently prize-winners

in the prestigious High Security Print

Regional Banknote & ID Document

oftheYear Awards.

The award-winning banknotes were:

– Bank of England £50 – Best New

Banknote 2021 (EMEA region)

– Reserve Bank of Fiji $50 – Best

NewCommemorative Banknote

2021(Asia region)

– Qatar Central Bank – Best New

Banknote Series 2021 (EMEA region)

– Eastern Caribbean Central Bank –

Best New Banknote Series 2022

(LatAm region)

These awards recognise outstanding

achievement in banknote design,

withthe key judging criteria being that

banknotes should combine visual artistry

and high levels of technical and security

sophistication, with considerable emphasis

placed on reflecting the culturalheritage of

the issuing country.

The banknotes reflect some of the

latestmarket trends, with seven banknotes

on SAFEGUARD

polymer substrate

and the awards for paper banknotes

encompassing De La Rue’s

micro-optic embedded stripe NEXUS™,

next generation holographic thread

PUREIMAGE™ and the latest

combinational thread IGNITE

Strategic report De La Rue plc Annual Report 2022

* These are Non-IFRS measures. The reconciliation of IFRS

to adjusted measures can be found on pages 153 to 155.

Solid progress

Company performance

We continued to see the benefits of the

Turnaround Plan this year as we moved

intothe second year of its implementation.

Authentication revenue grew 16.4% to

£90.3m, driven by strong demand across

all areas of the division, but particularly

in the provision of tax stamps within our

government revenue solutions business.

Multi-year supply contracts withcustomers

give us confidence for the future

performance of this division.

In Currency, adjusted revenue* fell 2.1% to

£280.9m. Polymer substrate production

volumes were up 40% on last year as our

strategy of responding to the growing global

demand for polymer and continued to

bear fruit. Our additional polymer substrate

manufacturing facility at Westhoughton will

allow us to continue to address increasing

demand, as one of only two banknote

polymer substrate manufacturers globally.

As well as the strength in polymer volumes,

a number of factors impacted performance

in the Currency division over the year.

The market for banknotes returned to

lower than normal demand levels following

the high demand experienced during the

Covid-19 pandemic, resulting in lower overall

volumes in banknote printing and security

features. Increased staff absence levels

because of Covid-19 over December 2021

and January 2022 in the UK and Malta

alsohad some impact on production.

The Authentication and Currency divisions

together posted a 30.2% improvement in

adjusted operating profit*. Over the last two

years, since we set out our Turnaround

Plan, adjusted operating profit* generated

by these two divisions has moved from

just above breakeven at £1.4m in FY20

to £35.8m in FY22. This improvement in

profitability in the ongoing business has

largely offset the loss of contribution from

the legacy Identity Solutions business which

continued to contribute strongly to operating

profit for theGroup in the previous financial

year butdid not during FY22.

In the FY22 financial year, De La Rue continued

togrow operating profit in both its ongoing business

divisions. Progress was slowed due to a number

of external factors. While this has resulted in a delay

toreaching the Turnaround Plan’s objectives, we

remain committed to its execution and to building

aneven stronger company going forward.

Kevin Loosemore

Chairman

De La Rue continued to grow

adjustedoperating profit in both

itsbusinessdivisions.”

De La Rue continued to grow

adjustedoperating profit in both

itsbusinessdivisions.”

13.0p

Adjusted basic EPS*

(FY21: 14.7p)

11.0p

IFRS basic EPS

(FY21: 3.4p)

Chairman’s statement

Pension scheme

As well as focusing on operational

performance, the Group continues

to lookproactively to minimise future

cash outflows.

With the agreement of the trustees of the

De La Rue pension scheme, the actuarial

valuation of the defined benefit pension plan

was brought forward from December 2022

to 5 April 2021. This valuation showed a

reduced scheme deficit of £119.5m against

the previous schedule of deficit repair

contributions totalling £177m through to

March 2029. As a result of this new valuation

the scheme actuary confirmed that the

deficit can be funded through a payment

of £15m per year to March 2029. At the

same time the scheme was granted equal

‘pari passu’ status with our banking facility.

The new agreement results in a £57m

reduction in cash payments by De La Rue

over the period from 2023 to 2029, while

preserving the future benefits and enhancing

protections for scheme members.

Responsible business

De La Rue’s purpose of securing

trustbetween people, businesses and

governments reflects the Group’s long-

held belief to operate in a way that benefits

the world around us: for our customers,

our employees, the wider communities

in which we work and the natural

environment. Our strategy encompasses

clear commitments to lead our industry in

sustainability, to protect and respect our

people and to maintain the highest ethical

and governance standards in the conduct

of our business. To that end the Board

approved a new sustainability strategy

inthelast financial year.

De La Rue has taken steps to lead our

industry on environmental sustainability

formany years. We have been certified

for ISO 14001 in the UK since 2003 and

for all our manufacturing sites globally

since 2011. In March 2022 we added

toour suite of ISOcertifications with the

award of ISO 37001 for our anti-bribery

management system.

In early 2022 we submitted targets to

theScience Based Targets Initiative to

ensure our reduction in greenhouse gas

emissions is sufficient to support limiting

global temperature increases to no more

than 1.5°C. We will achieve this by reducing

all our emissions (scope 1, 2 and 3) by 45%

by 2030. In addition, wehave committed

to achieve carbon neutrality for our own

operations by 2030.

Our leadership in energy efficiency

hasbeenrecognised externally as

DeLaRue retained its position among

thetop European Climate Leaders

according to the 2022 Financial Times

Statista survey. This independent

evaluationranksDeLaRue at position

41 out of 400 climate leading European

companies, based on the Group’s

ongoing reduction ingreenhouse

gasemissions intensity.

The Board

We welcomed Ruth Euling, Executive

Director and Managing Director, Currency

tothe Board on 1 April 2021. Maria da

Cunha informed us of her intention to retire

from the Board following the conclusion

of this year’s Annual General Meeting.

We would like to thank Maria for her

contribution and expertise provided to

DeLaRue over the last seven years.

Margaret Rice-Jones took up the position

of Senior Independent Director on

26 May2021 and it is intended that she

will also take on the role of Chairman

oftheRemuneration Committee later

thisyear following Maria’s retirement

fromthe Board.

With a 50:50 gender split at both Board

and Executive Leadership level and four

independent Non-Executive Directors

ontheBoard, we are committed to the

benefits that a diverse organisation brings.

Our stakeholders

This year has again posed many challenges

for our employees, contending with

the myriad of constraints and business

disruptions caused as the Covid-19

pandemic waxed and waned, as well

as the inevitable internal upheaval as

the Group went through reorganisation.

The Board would like to thank all

DeLaRue’s employees for their hard

workanddedication during this time.

We would also like to thank our customers

around the world for their help and

cooperation in this difficult environment,

as well as the suppliers who worked with

us in a flexible way to help us minimise any

disruption in our supply chain often during

challenging circumstances.

Outlook

As Clive sets out in more detail within his

CEO review, the external economic and

geopolitical environment has deteriorated

significantly since the end of our financial

year. We are experiencing both the broad

cost inflation experienced by many, and

specific concerns about the economic

crisis in Sri Lanka given our operations

based there.

With this background, it is only prudent

totake a cautious approach and

consequently we expect adjusted

operatingprofit for FY23 to be at around

thesame level as the year just ended.

As well as risks, there are a number of

significant opportunities, including tackling

some of the remaining legacy issues.

Our objective remains to generate

cashflowscapable of supporting

sustainabledividends to shareholders.

For this to happen, we need stabilisation

ofthe external cost environment and to

resolve some of the outstanding legacy

issues in the business.

Kevin Loosemore

Chairman

24 May 2022

Strategic report De La Rue plc Annual Report 2022

Focused execution

and resilience

Overall performance

We have made progress in our£79.8m

investment programme in FY22, building on

the strengthened financial position achieved

in FY21 as a result of the equity raise and

the performance of the business last year.

Our cost base has been transformed, with

the removal of £36m in costs, and we

continue to look for further efficiencies.

This, along with continued progress in our

operational excellence programmes and

design capability, has transformed our

market position in both divisions. We now

win a high proportion of the contracts

for which we compete, and we are either

number one or a strong number two

challenger inour markets.

The Turnaround Plan, first set out in

February 2020, was designed to stabilise,

and increase efficiency in lower-margin

banknote printing activities, and broaden

the business further into the higher-margin,

technology-led sections of our business.

I am pleased with the progress in this

regard: our four banknote printing facilities

globally have been profitable throughout

FY22, with a strong mix of customers

worldwide. Central banks around the world

have continued to convert their currency

to polymer, and we have announced

some significant new security features to

supplement the growing trend of polymer

banknotes. Our Authentication division

showed strong growth in both Government

Revenue Solutions and Brand Protection,

with GRS receiving five contracts during the

year and with Brand Protection, excluding

Microsoft which remains a strong and stable

customer, up44% versus last year.

Finally, and very importantly, the actions

of the De La Rue teams since 2020 have

significantly de-risked the Company.

Whereas previously the Company was

heavily dependent on a small number of

large customers, now no single customer

accounts for more than 10% of our

revenue annually.

Against this background of strong execution,

we have faced some significant headwinds

that were not anticipated when the

Turnaround Plan was originally designed.

Despite the challenging external environment,

our teams have continued to drive thebusiness

forward. We have become more cost

competitive, enhanced our market positions,

and made substantial progress inourplans

totransform the Company.

£36.4m

Adjusted operating profit*

(FY21: £38.1m)

£29.7m

IFRS operating profit

(FY21: £14.5m)

Clive Vacher

Chief Executive Officer

We are now building on the strong

foundations created by the Turnaround

Plan, looking for further cost and

manufacturing efficiencies, accelerating

research and development to deliver the

innovations of tomorrow, and increasing

our manufacturing capacity and flexibility. ”

We are now building on the strong

foundations created by the Turnaround

Plan, looking for further cost and

manufacturing efficiencies, accelerating

research and development to deliver the

innovations of tomorrow, and increasing

our manufacturing capacity and flexibility. ”

* These are Non-IFRS measures. The reconciliation of IFRS

to adjusted measures can be found on pages 153 to 155.

CEO review

Currency

New colours of NEXUS™

There have been three main effects on our

business: first, as they emerge from the

Covid-19 pandemic, governments have

been slower than anticipated to contract and

implement new GRS schemes or return to

the travel required to enact new banknote

series; second, during the year, we have faced

significant Covid-related factory absences,

most notably with the Omicron variant in

our higher-cost European factories; and

thirdly we have faced supply chain shortages

and inflation. These external effects have

combined to slow our progress, and we grew

adjusted operating profit* for Currency and

Authentication by 30.2% against an original

target of 65%, as communicated to our

stakeholders on 24 January 2022.

That said, we believe the fundamentals

of the strategy set out in the Turnaround

Plan remain solid, and we expect these

to continue to drive stronger financial

performance going forward.

Authentication

The Authentication division has produced

a positive performance in FY22, achieving

revenue growth of 16.4% and an increase

in adjusted operating profit* of 44.2%.

Government Revenue Solutions benefited

from a full year of Ghanaian tax stamp and

HMRC tobacco track and trace revenue.

However, growth here wasnot as strong

as originally predicted. Certain Government

Revenue Solutions contracts took longer

than expected to beimplemented as

countries managed theCovid pandemic

andemerged from itindiffering ways.

The visibility of revenue for 2022 and beyond

was strengthened by recent Government

Revenue Solution contract wins, including

a 100% success rate amongst the Gulf

Cooperation Council states. These contracts

are typically of five year duration, with

DeLaRue providing exclusive supply.

Trading was also strong in the brand

protection area, with excellent growth in

revenue, up 44% excluding sales to Microsoft,

driven by demand from the pharmaceutical,

consumer electronics and vaping sectors.

A new five year contract signed with Microsoft

early in 2021 also helped to deepen our

relationship with this established customer

and we have seen strong sales in this area

since. We have also begun to supply the

polycarbonate data pages for the new

Australian passport under our five year

contract with the Australian government.

We believe that demand for our

Authentication solutions will continue

togrow, particularly as we combine our

long-standing expertise in security printing

techniques with world-leading digital track

and trace systems. To that end we are

investing into the further development

ofourCertify

and Traceology

systems.

Given the continuing growth in demand

for our authentication labels, in September

2021we announced the expansion of

oursite in Malta, to create a 29,000m

state-of-the-art manufacturing site.

The new facility, when completed in 2024,

will create around 100 new jobs across

the business and allow us to double our

production of these labels.

Currency

The Turnaround Plan set out our ambition

toimprove the profitability of banknote printing

by increasing the utilisation rate froma smaller

number of facilities, to support customers

around the world who wish to convert to

polymer withits greater improved recycling

profile, and to develop a portfolio of security

features that are the choice of a growing

range of customers. We have made further

progress in all threeof these areas this year.

We have endeavoured to maximise efficiency

and flexibility throughout this transformation.

Having stopped manufacturing in Gateshead,

we relocated several machines from there

to our other sites to maximise utilisation

of assets.

Our flexibility will be enhanced by the new line

at Westhoughton, which will more than double

our capacity for manufacturing polymer

substrate, as demand for polymer banknotes

continues to rise. In addition, the expansion

of the Malta facility will expand our banknote

printing capacity, aswell as production of

authentication labels.

The market for banknotes in FY22

returnedto lower than normal demand levels

following the high demand experienced

during the Covid-19 pandemic.

As a result, the division produced lower

overall volumes in banknote printing and

security features year on year, which was

partially offset by the continued growth in

polymer substrate sales. Increased staff

absence in the UK and Malta during

December 2021 and January 2022

because of Covid-19 also had some

impacton production.

Conversion to polymer continues as

expected with a number of countries

including Egypt, Libya and Jamaica recently

announcing the introduction of polymer

notes, with De La Rue’s SAFEGUARD

selected, as well as the Bank of England

completing its conversion to polymer with

the launch of the new £50 in summer 2021.

In FY22 our volumes of polymer produced

increased by 40% over the prior year.

The cost reduction plan and the operational

efficiencies that we have gained over

the last two years had a beneficial effect

on divisional adjusted operating profit*,

increasing 20.4% to £19.5m in FY22 with

adjusted operating margin rising 130

basis points to6.9%. Legacy contract

issues continue torepresenta drag

of approximately 2.5% to3% on

Currency margins.

Innovative security features continue to

appeal to our customers and we continue

todevelop new products in this area.

Strategic report De La Rue plc Annual Report 2022

Most recently in February 2022 we launched

SAFEGUARD

ASSURE™, an embedded

covert security feature for polymer which

can be detected by central banks even if no

other aspect of the banknote is remaining.

The launch of ASSURE™ means that

SAFEGUARD

is the most complete banknote

substrate available – no other substrate allows

for customisable windows, durable blind

recognition features and covert embedded

security together in one substrate.

Central bank digital currencies remain an area

of ongoing interest for many central banks.

This is a new area, with the underlying risks,

opportunities and benefits not yet clear in

many instances. There are many questions

still to answer in this space. De La Rue

has been working closely with technology

providers and central banks todevelop our

position in this area.

For more information

See our Review of Operations onpages 18 to 19.

Full year performance

Overall Group adjusted revenue* for the

year was £375.1m, down 3.3% on prior

year. The Authentication division saw a rise

in revenue of 16.4% to £90.3m for the year.

The Currency division saw a slight fall in

adjusted revenue* of 2.1% to £280.9m, lower

than initially expected as described above.

As noted at the time of announcement

of last year’s results, the contribution

from the Identity Solutions business fell

substantially with residual revenues of just

£3.9m, following the end ofthe run off from

theUKPassportcontractduring FY21.

Adjusted operating profit* for the ongoing

businesses of Authentication and Currency

was £35.8m, up 30.2% on last year. For the

Group as a whole, including profits from

the Identity Solutions business, adjusted

operating profit* was down 4.5% at £36.4m.

Identity Solutions only generated £0.6m of

operating profit this year (FY21: £10.4m).

On an IFRS basis, Group revenue was

down5.6% at £375.1m (FY21: £397.4m),

withpass through revenue dropping to

zerothis year, and IFRS operating profit

rose104.8% to £29.7m (FY21: £14.5m),

reflecting substantially lower exceptional

itemcharges of £5.7m (FY21: £22.6m).

Earnings per share from continuing operations

were 10.6p (FY21: 3.7p) on an IFRS basis,

reflecting the higher IFRS profits, and 13.0p

(FY21:14.7p) on an adjusted basis*.

Our net cash flow reflected the bulk of

the cash spend for the expansion at

Westhoughton during the year, offsetting

cash generated from operating activities.

Investing activities will continue next year

asthe expansion of the Malta site continues.

As expected, our net debt rose at year

endto£71.4m (FY21: £52.3m), but net

debt/EBITDA of 1.46 was still comfortably

below its covenant limit of 3.0 times.

For more information

See our Financial Review onpages 20 to 23.

* These are Non-IFRS measures. The reconciliation of IFRS

to adjusted measures can be foundon pages 153 to 155.

Covid-19

De La Rue has approached the Covid-19

pandemic in a risk-based manner from

the outset, building on the general

pandemic business continuity plan which

we drew upin 2018. We have assessed,

and continueto assess, the potential

for disruption caused by the pandemic,

monitoring in detail and implementing

actions to mitigate the impact of it,

includingsteps to protect our employees.

This careful planning has paid off and for

much of FY21 we were able to limit the

direct impact on our business. We have

encouraged vaccination and have high

rates of vaccinated employees at all sites

around the world. We found workarounds

to minimise the impact of an outbreak of

theDelta variant at our Sri Lanka plant

overthe summer of 2021.

As national case levels increased in

December 2021 and January 2022 due

tothe rapid spread of the Omicron variant,

there was a corresponding rise in cases

within our colleagues. This caused some

disruption and loss of production in the UK

and Malta due to elevated levels of staff

absences during this time. Staff absences

have subsequently returned to manageable

levels, but remain elevated compared to

pre-pandemic levels. Our operations remain

resilient and production has only been

impacted in a limited way since then.

There have in addition been a number

of second order impacts of Covid-19

on our business, notably the delay in

implementation of some Government

Revenue Solution contracts noted

above, and some delays to planned new

banknote design introductions as a result

ofcustomers not being able to travel.

In April 2022, in line with the Government’s

‘Living with Covid-19’ guidance, De La

Rue moved from an incident management

process to recovery in line in the UK, while

international sites will continue to follow

the requirements of their own national

government. The Group however, will

maintain resilience, ongoing surveillance,

contingency planning and the ability to

reintroduce key mitigations swiftly and

efficiently if required.

Supply chain

Like many businesses, we have

encountereda number of external supply

chain pressures this year, as supply chains

were affected by a combination of the

Covid-19 pandemic and its aftermath.

Additionally, energy, commodity and

logistics pricesspiked sharply at the

timeofRussia’sinvasion of Ukraine.

We have employed several strategies

tomitigate these pressures where we can.

For example, in the UK, where energy

pricesfor business are not government

controlled, we have fixed our supply

costsuntil September 2024, removing

thisuncertainty from the budgeting

processforover two years.

Authentication

PURE™ Security Labels

Elsewhere we are looking at other cost

inflation mitigations, such as arranging

insurance for cyber tech PI through a

subsidiary company licensed to write

insurance policies or investigating alternative

supply sources, as well as passing on those

costs where appropriate to our customers.

Employees

It has been particularly important to look

out for the welfare of our staff during these

challenging times. We have maintained

high levels of engagement during the

pandemic, including running various forums

and surveys and offering staff a variety

of wellbeing initiatives, including on site

accredited Mental Health First Aiders and

webinars on a range of wellbeing related

subjects. We continue to see learning and

development as an important part of looking

after our staff. We provide content through

our highly flexible Learning Management

System, which this year has focused on

developing an understanding of self and

others and how to lead with inclusion.

Our 2021 employee engagement survey

showed an extremely high satisfaction

rate across the organisation – 83% of our

employees responded to the survey, giving us

a strong data set – 79% of respondees said

that they would recommend De La Rue as a

great place to work, a wonderful endorsement.

With this background, we have reached

apay deal with our UK union that extends

out to July 2023 which was satisfactory

toall parties. We also reached settlements

with our overseas sites that extend until

at least the end of this year. This provides

us with certainty and clarity in this area

forsome time.

CEO review continued

Taking all these uncertainties and headwinds

into account and looking at trading to date

for the current financial year, our prudent

best estimate for adjusted operating profit

for FY23 is at around the same level as for

the year just ended. We also expect to return

to our historic profile of earnings weighted

towards the second half of the year.

The uncertainty of the current economic

environment has necessitated us to

take aprudent approach. As well as

risks, there are a number of significant

opportunities, including incremental sales,

operational efficiencies and tackling some

of the remaining legacy issues within the

business,which may allow us to improve

theoutturn for the current year.

In the two and a half years since I was

appointed as CEO, we have resolved a

number of legacy issues that were facing

the business, including restructuring the

divisions, rightsizing central functions to the

size of the ongoing business, raising funds

to safeguard the future of the business

and minimise future cash payments to

fund the pension plan. Other areas, such

as transforming the manufacturing base,

increasing the speed of uptake of GRS

contracts and meeting customer demand

for polymer banknotes are well on their

way to being resolved, but there remain

further issues that remain unresolved.

These include various legacy supplier

contracts and improvements to the

efficiency of internal systems.

Within De La Rue we are going to

be working tirelessly to make these

opportunities a reality, building on the strong

foundations created by implementing the

Turnaround Plan. We have a business with

the potential to be highly cash generative,

once the external cost environment

stabilises and with certain of the

outstandinglegacy issues resolved.

At the same time we continue to improve

quality and to ensure sound environmental

performance. We do this while practising

the highest ethical business principles and

prioritising staff welfare. I would like to thank

my colleagues for all their hard work over

the last year and our customers, suppliers

and investors for their cooperation and

continued support.

I believe that the actions that we have taken

over the last two years, and the work we are

continuing to do, allow us to address our

markets competitively, flexibly and efficiently,

enabling us to move forward together

with confidence.

Clive Vacher

Chief Executive Officer

24 May 2022

Looking forward

Since the end of our financial year, the

geopolitical and economic environment

around the world has deteriorated

substantially. Russia’s invasion of

Ukraine sparked a spike in oil, gas

and commodity prices, which caused

knock-on rises in energy, raw material

and logistics costs. In April 2022 the

IMF increased its inflation projection for

2022 to 5.7% in advanced economies

and 8.7% in emerging economies.

As explained above, we are working hard

to mitigate the impact of these costs and

pass on those elements which we are

able to our customers but we are still

facing a net supply chain cost increase

ofaround £5m.

In addition to the general inflationary

environment that is challenging all

businesses, De La Rue is also exposed

to the specific uncertainty caused by

the economic crisis in Sri Lanka, where

we have a manufacturing operation.

The monetary impacts of the currency

devaluation and changes to rules

relating to capital flows are being actively

monitored by the Group, in addition to

the overall security situation for our staff.

We recognised an initial exchange loss

of £0.5m (of which £0.4m was classified

as exceptional) in FY22 and the currency

has fallen against GBP since the year

end. However, the net foreign exchange

impact on cash balances held now

should be tempered over the coming

year by the revised GBP equivalent

cost base.

Strategic report De La Rue plc Annual Report 2022

We operate in two markets – Authentication and

Currency. We offer a range of flexible secure solutions

for governments around the world and global brands.

Focusing on

growing markets

Authentication

We protect our customers’ revenues and reputations through the provision of physical and digital solutions to governments

and commercial organisations. We also manufacture financial documents and ID security components.

Authentication is our

fastest-growing division

Most revenues come from government

and commercial contracts in the areas

of government revenue solutions and

brand protection.

The OECD estimates that illicit trade

in goods represents around 2.5% of

global trade and is growing rapidly

with governments, brand owners

and consumers all affected by lost

tax revenues, eroded brand value

and lack ofconsumer confidence

in the marketplace. Ultimately, illicit

trade poseswidespread challenges

toaninnovation-driven society.

Government Revenue

Solutions

Governments across the world have

put in place digital tax stamp schemes

to allow the tracking and tracing of

exercisable goods. DLR Certify™ enables

our partners to monitor the flow of goods

and to protect tax revenue, synergising

physical and digital security. De La Rue

solutions allow governments to comply

with international treaties such as the

World Health Organization Framework

Convention on Tobacco Control (FCTC).

Growth in this market is currently being

driven by the requirement to follow

regulations and to maximise tax collection

for infrastructure and public services.

Typically, these schemes involve multi-

year contracts. As implementation of

thecontract often requires the passing

of legislation, there is often a delay

between a contract being signed and

usrealising revenues. As well as tobacco

products, we are seeing increasing

demand for solutions in alcohol and

soft drinks. De LaRue is number two

by volume among the suppliers of both

physical tokens and end-to-end software

inthismarket so we are well positioned

during this growth phase.

Brand Protection

As e-commerce continues to surge,

so does the spread of fake and often

dangerous products. Brands require

anti-counterfeit solutions to comply with

regulations and protect brand equity.

Now consumers need reassurance that

theproducts they receive are genuine.

The counterfeiters did not go into lockdown

during the pandemic, which has driven

strong growth in the brand protection

market. This highly fragmented market

offers partial solutions – but a growing

demand for integrated solutions is evident.

De La Rue is well placed to address the

demand for end-to-end solutions by

leveraging our expertise in supply chain

track and trace from the Government

Revenue Solutions business, together

with our highly secure brand protection

labels. We expect to see continued growth

as brands look to protect revenues and

improve customer experiences.

Increasingly, brands require visibility and

control in the supply chain – we create

global trust networks with digital tools and

on-product security. De La Rue builds

resilience for global partners, empowering

supply-chain participants and delivering

brand intelligence to fight illicit trade.

ID and Financial and

SecureDocuments

While De La Rue no longer manufactures

complete passports, we do supply

polycarbonate for use in passport

datapages and ID cards, where it can

be personalised to carry the document

holder’s details. We have now started to

supply a polycarbonate data page for the

new Australian passport under a five year

agreement. The datapage construction

enables the integration and layering of

security features protecting the page,

most notably windows, holography and

hinge technology alongside security print

as wellas the passport chip and antenna.

In addition, we manufacture a range

of financial and secure documents

including bank cards, cheques,

vouchers,certificates andballot papers.

For more information

See Our Strategy onpages 4 to 5 and

Review of Operations on pages 18 to 19.

Authentication

Secure hologram

Our markets

Currency

We provide market-leading end-to-end currency solutions, from fully finished banknotes, to secure polymer substrate

andbanknote security features, to over half the central banks and issuing authorities around the world.

Currency is our largest

division by revenue

We estimate that the overall demand

forcash remains strong despite the

growing popularity of digital payments

insome countries. Population growth,

global instability, a desire for privacy and

other macro-economic factors, such as

inflation, are behind this need. During the

last two years the COVID-19 pandemic

has led to a surge in demand as central

banks have maintained high stocks

of cash.

While there is a decline in cash

incirculation for some developed

economies, this is not the case for the

countries to which we supply most of

our banknote production. Cash is useful

in that it is ubiquitous, and it is the only

physical way to pay and transact. It also

has global infrastructure already in place

and therefore it continues to possess

benefits, resilience and functionality

that are not provided by other payment

mechanisms. We expect that cash will

remain central to the global economy

for many years, in parallel to the rise

ofalternative payment systems.

The global market for banknotes is

approximately 175 billion per year,

withthemajority being printed by state

printworks. The commercial banknote

market –the one in which De La Rue

operates for banknote print – represents

around 18-25 billion banknotes per

year. This can be broken down into two

elements – printing for Governments

who do not have a state printworks,

andproviding additional capacity,

known as overspill, for those whodo.

The overspill market historically has

been unpredictable and, combined

with the central banks that place

multi-year ordersinstead of more

frequent orders, creates volatility in

thecommercialprinting market.

Polymer

Polymer banknotes generally have

agreater durability and recyclability

than cotton paper banknotes, lasting

on average two and a half times

longer incirculation and being totally

recyclableatthe end of their life.

In addition, being non-porous, polymer

banknotes are generally cleaner than

theirpaper equivalents.

De La Rue is one of the two global

providers of polymer substrate for

banknotes, with our SAFEGUARD

substrate. This can either be used in

house to create finished banknotes

orsupplied as substrate to another

printerfor further processing.

While polymer represents just 4% of

theglobal market forbanknotes, it

represents around 14% ofbanknote

denominations, both our market

share andthe demand for the

productis increasing.

By March 2022, there were 63

denominations on De La Rue

SAFEGUARD

polymer substrate

and26% of all issuing authorities

now have at least one banknote

denomination on polymer. With many

more denominations expected to move

to this substrate, we expect this market

tocontinue to grow strongly in thenext

few years. The addition ofanextra

production line for SAFEGUARD

ourWesthoughton facility will more

thandouble capacity in this area.

The commercial print market for

banknotes has more suppliers than

thepolymer market and De La Rue

represents the largest market share,

ataround 30%. In addition to two other

companies of size, there are several

smaller suppliers inthis market.

Security features

Security features encompass a range

ofelements that can be added to a

banknote to increase its complexity.

Whilemost banknotes now use

securitythreads, applied features such

as holographic stripes have grown in

popularity as banknotes become more

complex and holographic foils are the

most popular public security feature

forpolymer banknotes.

Almost all countries, including those

thatprint theirbanknotes at state

printworks, buy security features or IP

licences from the commercial market.

The market for security features is

fragmented, with products made

by bothintegrated providers such

as DeLaRue and from companies

whichdonot produce other elements

of banknotes. As banknotes increase

in complexity, they increasingly

incorporate arange of security

features which combine different

technologies. De LaRueaddresses

that trend by offering one of the most

diverse portfoliosof security features

in the market, covering threads,

applied features,print features and

covert features, encompassing

colourshift, holographics and micro-

optics technologies.

For more information

See Our Strategy onpages 4 to 5 and

Review of Operations on pages 18 to 19.

Currency

Royal Bank of Scotland Fresnel – digital holographic effect

Strategic report De La Rue plc Annual Report 2022

net

assets

How we

createvalue

World leaders in our field, De La Rue provides

expertise in secure design, global manufacturing

and software solutions to businesses and

governments worldwide.

2,311 6 #1

Our people Manufacturing capability Suppliers and partners

We have dedicated and passionate

employees across four continents

whowork closely with our customers.

World-class facilities for banknote and

authentication product manufacturing.

We work with suppliers and partners

all over the world to ensure ethical

andreliable delivery to our customers.

1,000+ 200 years £161.8m

Intellectual Property Design capability Strong balance sheet

Our know-how and innovation is

reflectedinour patent portfolio

whichcontinues to grow.

We have over 200 years of creating

bespoke solutions for customers with our

own design studio and software capability.

Our equity capital raise in 2020 catalysed

the implementation ofourTurnaround Plan.

Our unique resources and relationships

Employees

We promote an inclusive culture

that valuesdiversity, the health and

wellbeingofour employees where

theycanachieve their full potential.

Customers

Benefit from our expertise and

ourexperienced global sales team.

Our productshelp protect brands

fromfraud,protect Government tax

revenuesandenable world trade.

The world around us

Our products secure trust between

peoplebusinesses and governments,

enabling trade and social inclusion.

Suppliers

We have healthy relationships with

keysuppliers. We value them highly

andtreatthem with respect.

Community and

the environment

We are conscious of our responsibilities

tothe communities in which we work and

arecommitted to minimising the impact

ofour operations on the environment.

Shareholders

Our Turnaround Plan is making progress

toachieve sustainable profitability and

longterm shareholder value.

The value we create for our stakeholders

For more information

See page 16.

For more information

See page 17.

Our business model

Value proposition

Customers

Government revenue solutions account

for around 54% of revenue while the

remaining 46% is from the brand

protection sector, ID security features

andfinancial and secure documents.

We design, supply and operate highly

secure solutions to protect our customers’

revenues and reputations. Combining a

range of physical and digital solutions

allowing product verification and full track

and trace capability, our products include:

– Tax stamps

– Authentication labels

– ID security components

including polycarbonate

– Cheques and bank cards

Combined with our digital solutions

these provide lifecycle traceability –

DLRCertify

(for Government Revenue

Solutions), Traceology

(for brand

protection) and a dedicated licensing

platform, used for Microsoft.

Authentication Currency

We design, manufacture and deliver

banknotes, polymer substrate and

security features around the world.

We:

– Produce SAFEGUARD

polymer

substrate used for banknotes

– Design bespoke banknotes

withourdesign studio in the UK

– Print currency securely in four

locations worldwide

– Manufacture security features such as

IGNITE

and KINETIC STARCHROME

– Provide analytical software services

which support data analytics of

cashin circulation

Customers

Our Currency division derives its revenues

from central banks, commercial and state

printing worksand paper mills.

An experienced sales

force and technical experts

around the world

A dedicated global

sales force

For more information

See pages 4 to 5 for Our Strategy.

Strategic report De La Rue plc Annual Report 2022

Capabilities

In our Authentication division the main

resources needed are: the design of the

physical token in the UK and secure print,

storage and shipment in Malta; software

design and development; IT support and

customer services providing 24/7 coverage

from our centres in Dubai, Riyadh and the

UK; holographic design and origination in

the UK and the USA; secure international

logistics using full track and trace from

our facility to customer; polycarbonate

production in Malta and cheque and card

printing and personalisation in Kenya.

We have significant capability and capacity

for the tax stamp and secure brand label

market and now supply around 14 billion

physical markers (up from in excess of

9 billion last year) from our sites in Malta

andthe USA, and more than 2 billion

securedigital codes.

The key resources used in our Currency

division include our design studio,

origination and proofing capabilities, our

SAFEGUARD

polymer production facilities

in the UK, banknote print capacity in the

UK, Malta, Sri Lanka and Kenya, security

feature production capabilities in the UK and

software engineering capabilities in the UK.

Increasing Supply

toStatePrintworks

FY22 saw an increase in security feature

and polymer substrate orders to state

print works. Both the Thailand 20 Baht

and the UAE 50 converted to polymer,

with De La Rue supplying SAFEGUARD

for some of the 20 Baht and all of the

UAE 50 requirements.

Furthermore, as part of its new

“GreatSilk Road” series of banknotes,

the Central Bank of Uzbekistan

issued new notes in December 2021.

The banknotes were produced by

the State Unitary Enterprise “Davlat

Belgisi” and featured De La Rue’s

IGNITE

security thread, with the “Drive”

effectinblue to green colourshift.

People

Underlying all these resources are our

people – 2,311 worldwide at 31 March

2022 – who have worked tirelessly through

the past year to deliver for our customers

despite the constraints of the Covid-19

pandemic. Both divisions are supported

byan intellectual legacy with extensive

know-how in the very specialised, technical

area of security printing and more than

1,000 patents to our name.

Customers

Our two divisions have differing customer

relationships due to the variation in product

offering and customer requirements.

Our Authentication division operates in both

government and commercial sectors. In the

main government revenue solutions are

sold to governments and brand protection

solutions are sold directly to commercial

entities. Our sales force interacts directly

with customers around the world such as

government agencies and major brands

andwe endeavour to locate sales forces

inthe markets that they support.

In our Currency division, our sales force

interacts on a continual basis with central

banks and state printworks around the

world, as do our technical and product

teams. We have well-established

customer relationships resulting from

the long experience of De La Rue in

banknote production.

While a major part of our revenue in

Currency is for our integrated banknote

offering, there is demand for customers

towards purchasing security features or

polymer substrate independently and our

sales force is also focused towards selling

these features as standalone products.

Suppliers and partners

We work with a set of key partners and

suppliers in order to deliver products and

solutions to our customers.

Raw materials which we use in our

manufacturing processes include polymer

base films, inks papers and chemicals

used to manufacture polymer film, security

features, banknotes, authentication labels

and polycarbonate. De La Rue sold its

paper business in 2018, but we have a

multi-year partner agreement arising from

that sale to purchase paper in place to

supply our Currency division. In addition we

purchase capital goods which are installed

in our manufacturing facilities, such as our

printing presses.

We have relationships with a number of

service providers. For example we work

with logistics partners to move our products

around the world, professional services

firms to support our Group functions and

software partners to provide flexible capacity

to augment our in-house development

teams, as well as technology partners that

bring capability to enhance the De La Rue

software offer. In addition our in-house

sales force is supplemented by a network

oftrusted sales agents in certain territories.

Value proposition

De La Rue has in-depth experience in the

field of security printing and can offer either

an end-to-end solution and/or individual

components within both divisions. We create

bespoke work for our customers at volume,

together with the digital tools to track and

trace that work.

In Authentication, we protect our customers’

revenue and reputations through the

application of modular physical and

digital solutions which are secure, cost

effective and sufficiently flexible to allow

rapid deployment to deliver the benefits

to our customers. Our products are easily

incorporated into manufacturing processes

and provide labels which work with our

digital solutions to enable complete track

and tracing. We combine De La Rue’s

strong print and holographic heritage with

our software capabilities.

In the Currency division, De La Rue is the

leading commercial printer of banknotes

worldwide and we have retained this

position for many years, due to our ability

to respond flexibly and quickly to customer

needs. We can supply all, or separate parts

of the five elements of printing a banknote,

as outlined above. Our ability to integrate

all parts of the banknote production

successfully is an important value

proposition for many of our customers.

Each banknote is a bespoke product

and is a flagship project for central

banks and governments. As a result,

each banknote needs careful project

management to ensure that it meets the

technical requirements and specifications

of our customers, as well as providing the

desired ‘look and feel’ of the note. We are

concentrating our efforts in developing

security features in the area of polymer

and evolving our paper features using

holographics, colour shift and micro-optics

technologies to respond to customer

demand which is growing substantially

inthese areas.

Our unique resources and relationships

Our business model continued

Employees

– Ensuring the health, wellbeing and fair

treatment of our employees is a top

priorityfor the business.

– We are committed to creating a culture

ofrespect and inclusivity for every

individualwe employ.

– Talent reviews are an important

underpinning activity in the business,

supported with learning and

development interventions, personal

development plans and exposure in the

business tobuild experience.

– We have a global learning and development

policy and actively encourage the use of

the apprenticeship levy in the UK for both

continuous professional development

andfor building skills and capability.

– We give particular emphasis to

supportingthe mental health and

wellbeingof our people.

For more information

See Responsible Business on pages 32to45.

Environment

– Our strategy encompasses clear

commitments to lead our industry

in sustainability.

– We have quantified targets for

reducingemissions and increasing

energyefficiency across the business.

– We aim to be carbon neutral from

ourownoperations by 2030.

For more information

See Responsible Business on pages 32to45.

Community

– We are conscious of our responsibilities

to the wider communities in which our

operations are based and strive to have

a workforce representative of those

communities and support their wider

activities where possible.

– We maintain the highest ethical and

governance standards in the conduct

ofour business.

Investors

– The Board highly values our shareholders

and recognises the importance of

building strong relationships with

them and other key investors. We look

to engage with shareholders, both

institutional and retail,whenever possible.

– We run an active investor relations

programme with our major shareholders,

led by the CEO, CFO and Head of

Investor Relations but in which the

Chairman and the Senior Independent

Director are also active participants.

The value we create for our stakeholders

Oman Tax Stamp Win

We have signed a five year contract with

the Tax Authority of Oman to implement

a Digital Tax Stamp Solution for a

range of excisable goods. This project

complies with the requirements of

the WHO Framework Convention on

Tobacco Control (FCTC).

A spokesperson for the Sultanate of

Oman, commented: “The Oman Tax

Authority are delighted to be working

with one of the world leaders, De La

Rue, on this important project for

driving improved excise tax revenues.”

De La Rue is now responsible for

securing excise revenues across the

five Gulf Cooperation Council (GCC)

countries that have implemented the

common taxation treaty.

Our unique resources and relationships

The world

around us

Our products are designed to:

– Enable everyone’s secure participation

inthe economy.

– Help deliver confidence in the economy

byensuring a secure cash cycle.

– Support social and financial inclusion

by securing legal identities and

providing currency.

– Contribute to economic growth and

stability by protecting tax revenues

andtackling illicit trade.

Customers

– We have long term relationships with

many customers globally and work

collaboratively with them, respecting

theirdiversity of opinion and approach.

– Our customers benefit from the

knowledge of our experienced global

team, helping them to pinpoint and

solve problems they encounter, while

our products enable world trade,

protectGovernment tax revenues

andhelp protect brands from fraud.

– Our customers benefit from our

investment in innovation to remain

atthecutting edge of technical and

digitaldevelopments provide even

moreflexible and secure solutions.

Suppliers

– We value our suppliers highly and

they benefit from doing business

witha customer who looks to

maintainharmonious, long term

andproductive working relationships

andworks in anethical manner.

– We communicate openly with

themand listen to their views

tohelpdrive improvements.

– We work with them to

improve sustainability.

Strategic report De La Rue plc Annual Report 2022

Authentication

FY22 FY21 Change

Non-IFRS financial measures

Adjusted revenue (£m) 90.3 77.6 +16.4%

Adjusted operating profit (£m)* 16.3 11.3 +44.2%

Adjusted operating margin (%)* 18.1 14.6 +350bps

Adjusted controllable operating profit (£m) 23.7 18.3 +29.5%

Adjusted controllable operating margin (%) 26.2 23.6 +260bps

IFRS measures

Revenue (£m) 90.3 77.6 +16.4%

Gross profit (£m) 34.5 29.9 +15. 3%

Gross profit margin (%) 38.2 38.5 -30bps

Operating profit (£m) 15.1 9.9 +52.5%

Operating profit margin (%) 16.7 12.8 +390bps

Note:

* Excludes exceptional item charges of £0.2m (FY21: £0.4m) and amortisation of acquired intangibles of£1.0m (FY21: £1.0m).

Currency

FY22 FY21 Change

Non-IFRS financial measures

Adjusted revenue (£m)* 280.9 286.8 -2.1%

Adjusted operating profit (£m)** 19.5 16.2 +20.4%

Adjusted operating margin (%)** 6.9 5.6 +13 0 bps

Adjusted controllable operating profit (£m) 42.5 41.7 +1.9%

Adjusted controllable operating margin (%) 15.1 14.5 +60bps

IFRS measures

Revenue (£m) 280.9 295.7 -5.0%

Gross profit (£m) 63.2 65.3 -3.2%

Gross profit margin (%) 22.5 2 2.1 -40bps

Operating profit (loss) (£m) 15.0 (4.4) n/a

Operating profit margin (%) 5.3 (1.5) +680bps

Notes:

* Excludes ‘pass through’ revenue of £nil (FY21: £8.9m) related to non-novated paper contracts relating to the Portals DeLa Rue sale.

** Excludes exceptional item net charge of £4.5m (FY21: £20.6m).

A reconciliation of IFRS measures to Non-IFRS financial measures above can be found on pages 153 to 155.

To provide increased insight into the

underlying performance of our business,

we have reported revenue, gross profit and

operating profit on an IFRS and adjusted

basis, together with adjusted controllable

operating profit (adjusted operating profit

before enabling function cost allocation),

forboth ongoing operating divisions.

Our two ongoing operating divisions,

Currency and Authentication delivered

adjusted operating profit of £35.8m

(FY21: £27.5m), an improvement of £8.3m

year on year. This reflects stronger gross

profits of £97.7m (FY21: £95.2m) and a

reduction in operating expenses. In addition,

Identity Solutions generated minimal

adjusted operating profit of just £0.6m in

the current financial year as the remaining

activities have run down (FY21: £10.6m).

Authentication

The Authentication division is focused

onproviding physical and digital solutions

to authenticate products through the

supply chain and to provide tracking of

excisable goods to support compliance

withgovernment regulations.

A number of contracts won during

theprevious financial year became fully

operational, and so revenue producing, for

the current financial year. These included

a major polycarbonate supply contract for

the Australian passport and a Government

Revenue Solutions (GRS) contract with

Ghana for tax stamps used on a range

ofproducts, though levels of supply

of thepassport polycarbonate were

affectedbysemiconductor shortages.

During FY22, our GRS business received

five contracts for the supply of tax

stamps and solutions, including most

recently with the Oman Tax Authority to

implement a digital tax stamp solution

forexcisable goods.

However, we have seen some delays in the

implementation of GRS contracts already

signed due to variability between countries

in the return tonormal work patterns

following the Covidpandemic.

Brand protection also saw healthy sales

growth, notably in the pharmaceutical,

information technology and vaping sectors.

The strong revenue growth seen in the

Authentication division in the first half

continued in to the second half, with revenue

for the year of £90.3m (FY21: £77.6m), up

16.4% on prior year. We expect the signed

GRS contracts to start delivering revenue

during FY23.

In this review, we report on the financial performance

ofthe Authentication and Currencydivisions, together

with the impact ofoperational costs incurred centrally.

A solid

performance

Review of operations

Bank of England completes its

conversion to polymer substrate

The Bank of England completed the

conversion of its banknotes to polymer

with the launch of its new £50, in July

2021. These notes are among the most

technically complex banknotes in the

world and feature the scientist Alan Turing,

best known for his code-breaking work in

the Second World War.

The Bank of England has transitioned

to polymer banknotes as they are more

durable than paper notes, remain in better

condition throughout their life and are

much harder to counterfeit. The series

shares common security features

(holograms and windows).

De La Rue worked collaboratively to

realise the Bank’s vision and direction

of the design. The aesthetic design of

the new £50 was created by the Bank of

England, then passed over to De La Rue

to convert it into a functional, printable

banknote, optimised for security and

manufacturing efficiency.

De La Rue is the sole printer for the

Bankof England, with all denominations

printed in Debden, UK. From July 2021

every Bank of England denomination is

printed on De La Rue’s SAFEGUARD

under theBank’s dual supply strategy.

The increase in sales volumes had a beneficial

effect on gross profit in absolute terms,

although gross profit margin fell slightly by

30basis points to 38.2% (FY21: 38.5%),

reflecting the increasing pressure of rising

rawmaterial and energy costs.

Adjusted operating profit in Authentication

rose 44.2% to £16.3m (FY21: £11.3m),

mostly driven by the additional gross profit

on increased sales, but also because of

the benefit of a full year’s impact of the cost

savings from the Turnaround Plan, despite

a greater proportion of enabling costs being

allocated to the Authentication division, given

its greater contribution to the overall business

this year. Adjusted profit before controllable

costs also increased, up 29.5% to £23.7m

(FY21: £18.3m). On an IFRS basis, operating

profit of £15.1m (FY21: £9.9m) benefited

fromthe higher underlying profits.

Currency

The Currency division is focused on:

improving profitability of banknote production

by increasing the utilisation rate from a

smaller number of facilities, supporting

customers around the world who wish

to convert to polymer with its improved

recycling profile, investing in R&D, and

developing a portfolio of security features

that are the choice of agrowing range of

customers, whether theyuse paper or

polymer substrates.

Adjusted revenue of £280.9m in FY22

(FY21: £286.8m) for the Currency division

was down 2.1% on the previous year.

Lower demand for banknotes following high

demand during the pandemic was tempered

by higher demand for polymer substrate.

In addition, in the second half, production

in the UK and Malta was affected by staff

absences due to Covid-19.

At 26 March 2022, the 12-month order book

for Currency was £163.5m (26 September

2021: £190.7m, 27 March 2021: £225.0m)

and the total order book for Currency was

£170.8m (26 September 2021: £213.6m,

27 March 2021: £265.5m).

Gross profit on adjusted sales fell slightly in

both absolute and margin terms, reflecting

the product mix, with gross profit margin

of22.5% (FY21: 22.1%).

IFRS revenue of £280.9m (FY21: £295.7m)

was equal to adjusted revenue as ‘pass

through’ revenue dropped to zero this year

(FY21: £8.9m) as the contracts covered by

these arrangements completed in FY21.

Despite the lower revenue, adjusted operating

profit from the Currency division grew 20.4%

to £19.5m (FY21: £16.2m), reflecting the cost

reduction measures of theTurnaround Plan.

On an IFRS basis, the division moved

into anoperating profit of £15.0m

(FY21:lossof£4.4m) with a lower level of

exceptional charges as the reorganisation

plans set out in the Turnaround Plan

to remove costs came towards its

completion. Last year’s exceptional

charges included £11.9m of asset

impairments and accelerateddepreciation

charges and £9.5mof restructuring

costs (primarily people-related) due to

the cessation of banknote production

atourGateshead facility.

Putting aside the impact of exceptional items

and the divisional allocation of costs incurred

centrally by enabling functions, we also saw

a slight increase in adjusted controllable

operating profit to £42.5m (FY21: £41.7m) as

the full benefits of the cost savings element

of the Turnaround Plan were experienced

thefirst time.

Again, this performance was achieved

amida background of cost inflation and

equates to a controllable operating profit

margin of 15.1% (FY21: 14.5%).

Enabling function costs

In FY22 enabling function costs of

£30.4m(FY21: £32.5m) represented 8.1%

of adjusted Grouprevenue (FY21: 8.3%).

Overall this cost ratio benefited from

aportion of the additional turnaround

costsavings referred to above.

Strategic report De La Rue plc Annual Report 2022

Building the

business

Revenue and gross profit

Authentication saw an increase in revenue to

£90.3m (FY21: £77.6m), with 16.4% revenue

growth driven by strong demand across all

areas of the division, but particularly in the

provision of digital tax stamps within our

government revenue solutions business.

During FY22 our Government Revenue

Solutions business signed five contracts

for supply of tax stamps and solutions

including, most recently with the Oman Tax

Authority to implement a digital tax stamp

solution for excisable goods. The nature

of this business, with multi-year supply

contracts agreed with customers, gives

usconfidence for the future performance

ofthis division.

During FY22 in Currency we saw good

volume growth in polymer, offset by paper

volume decline as central bank buying

patterns returned to pre-pandemic levels

and second half production was impacted

by Covid-19. This resulted in adjusted*

revenue of £280.9m (FY21: £286.8m).

Currency IFRS revenue was £280.9m and

equal to adjusted revenue (FY21: £295.7m)

as pass-through revenue dropped to

zero as the contracts covered by these

arrangements completed in FY21.

As expected, we also saw a decline in

adjusted* revenue for Identity Solutions

in FY22, due to the completion of the UK

Passport production contract during FY21.

Revenue reported in FY22 relates to the

DSA supply agreement entered into with

HID at the time of the International Identity

Solutions business disposal in October

2019. Identity Solutions IFRS revenue

declined to £3.9m from £24.1m in FY21

andwas equal to adjusted revenue following

the completion of the contracts covered by

this arrangement completing in FY21.

Overall, Group IFRS revenue reduced by

5.6% to £375.1m (FY21: £397.4m), showing

a higher rate of decline than in adjusted*

revenue, due to ‘pass-through’ revenue

on non-novated contracts for Paper and

Identity Solutions which completed in

FY21dropping to zero.

Gross profit was £97.6m (FY21: £107.8m),

reflecting increased Authentication gross

profitability due to higher volumes driven by

growth in GRS, Brand and Authentication ID

products. GRS benefited from the full year

of revenue on the revenue authority contract

which commenced in the FY21 and the

annualisation benefit of the completion of the

software implementation for the HMRC ID

Issuer during the second half of FY21.

* This is a non-IFRS measure, see page 153 to 155 for

the reconciliation of non-IFRS measures to comparable

IFRS measures.

The financial performance of the business has

continued to improve this year, though progress

has been slower than we had originally hoped.

We have continued to work hard to improve

the financial performance of the business,

both at an operational level and from a

financing perspective, to drive future

cashgeneration.”

We have continued to work hard to improve

the financial performance of the business,

both at an operational level and from a

financing perspective, to drive future

cashgeneration.”

Rob Harding

Chief Financial Officer

Financial review

The Authentication ID business has seen

year-on-year increased volumes with the

benefit of the go-live in the fourth quarter

of FY22 of the new ID passport win with

NPA. Offsetting the above growth, Currency

had lower overall volumes in the division

driven by paper banknote printing and

associated paper security features volume

reduction year on year but the impact of

this is partiallyoffset by continued growth

in polymer bank notes. Identity Solutions

grossprofitability declined as expected

following the UK Passport contract

completion in FY21.

Operating profit and

operatingcosts

Adjusted operating profit* in FY22

was£36.4m (FY21: £38.1m) and reflected:

– An adjusted operating profit* of £19.5m

in Currency (FY21: £16.2m) despite

lower overall revenues in the division

driven by an improved mix, along with

the annualised benefit of last year’s cost

outinitiatives andongoing tight control

ofthe cost base of the overall Group

driving operatingprofit growth;

– An adjusted operating profit*

in Authentication of £16.3m

(FY21: £11.3m) reflecting volume

growththrough FY22due to the

implementation ofnewcontracts and

thefull year impactof contracts won

inFY21, alongwith ongoing control

ofthecostbase in FY22;and

– An adjusted operating profit* in Identity

Solutions of £0.6m (FY21: £10.6m).

On an IFRS basis, an operating profit

of£29.7m was recorded in FY22

(FY21: £14.5m) including, in addition

tothefactors referred to above,

net exceptional charges of £5.7m

(FY21: £22.6m), significantly lower than

last year. FY21 included substantial asset

impairment and restructuring charges

associated with cessation of banknote

production at our Gateshead facility, in

addition to charges related to other cost

outinitiatives including the restructuring

ofour central enabling functions and

certaincosts related to the equity capital

raise and debt refinancing completed

inJuly 2020.

Exceptional items in FY22 included costs

ofrelocating assets from the Gateshead

facility to other Group manufacturing

sitesand further cost out initiatives.

For more information

See ‘Exceptional items onpage 22.

Finance charge

The Group’s net interest charge was £5.5m

(FY21: £4.6m). This included interest income

of £0.9m (FY21: £0.8m), interest expense of

£6.2m (FY21: £7.1m) and retirement benefit

expense of £0.2m (FY21: £1.7m income).

Interest income of £0.9m (FY21: £0.8m)

included interest on loan notes and

preference shares held in the Portals

International Limited Group of £0.8m

(FY21: £0.8m), received as part of the of the

consideration for the Portals paper disposal,

in addition to a further amount subscribed

for as part of a pre-emptive offer in the

year. The loan notes and preference shares

are included in the balance sheet as Other

Financial Assets. Interest received on loan

notes and preference shares is excluded

from the Group’s covenant calculations.

Interest expense included interest on

bankloans of £3.1m (FY21: £3.6m), interest

onlease liabilities of £0.6m (FY21: £0.6m)

and other including amortisation of finance

arrangement fees of £2.5m (FY21: £2.9m).

The IAS19 related finance cost, which

represents the difference between the

interest on pension liabilities and assets

wasa charge of £0.2m (FY21: £1.7m

income). The charge in the year was due

tothe opening pension valuation on an

IAS19 basis as at 27 March 2021 being

anet deficit of £18.5m.

Authentication

Enforcement officer authenticating products with DLR Certify™

Strategic report De La Rue plc Annual Report 2022

Exceptional items

Exceptional items during the period

constituted a net charge of £5.7m

(FY21: £22.6m).

Exceptional items included:

– £1.8m (FY21: £21.4m) of site relocation

and restructuring. Of this, £1.3m

(FY21: £1.6m) of restructuring costs

(primarily employee related) due to

further divisional and enabling function

restructuring, and a further £0.9m

(FY21: £7.9m) of charges relating to

machine moves net of grant income

received of £1.0m, offset by a reversal

of£0.4m of the assets impairments

madein FY21 no longer required

(FY21: £11.9m impairment charge).

– £3.1m (FY21: £nil) recognition of expected

credit loss provision on other financial

assets. Other financial assets comprise

securities interests held in the Portals

International Limited group which were

received as part of the consideration for

the paper disposal in 2018. The amount

presented on the balance sheet within

other financial assets as at 26 March 2022

includes the original principal received and

accrued interest amounts. In accordance

with IFRS 9, management has assessed

the recoverability of the carrying value

on the balance sheet and recorded an

expected credit loss provision of £3.1m

inexceptional items.

– £0.4m (FY21: £0.6m) in relation to legal

fees incurred on rectification of certain

discrepancies identified in the pension

Scheme rules net of amounts recovered.

– £0.4m (FY21: £nil) relating to a significant

devaluation of Sri Lankan Rupee versus

the British Pound which occurred in

March 2022 following the decision

on 9 March 2022 by the Sri Lanka

Government to free float the exchange

rate. This period of significant devaluation

is deemed an exceptional item as it is

considered to be non-trading in nature

resulting from of an external event

being the impact of the exchange rate

change triggered by the free-float of

theexchange rate.

The policy for exceptional items described

in the Annual Report and Accounts is used

when calculating our financial covenants

asagreed with our lenders.

For more information

See note 5 to the accounts

‘Exceptional items’ onpages 116to117.

Currency

Polymer window, ARGENTUM

and MASK

on Libyan 5 Dinar

Financial review continued

Taxation

The effective tax rate on continuing

operations before exceptional items and

the amortisation of acquired intangibles

was 11.0% (FY21: 17.9%). This includes

the impact of the UK tax rate change on

deferred tax balances; the effective tax

rateexcluding this was 19.1%.

Including the impact of exceptional

items and the amortisation of acquired

intangibles,the total tax charge in the

Consolidated Income Statement for the

yearwas £1.4m (FY21: £1.3m).

Net tax credits relating to exceptional items

in the period were £1.8m (FY21: tax credit

£4.2m). A tax credit of £0.3m (FY21: tax

credit £0.4m) was recorded in respect of

theamortisation of acquired intangibles.

The underlying effective tax rate for

FY23oncontinuing operations before

exceptional items and amortisation of

acquired intangibles is expected to be

between 17%-19%.

Earnings per share

The full year impact of the equity capital

raise in July 2020 increased the basic

weighted average number of shares for

earnings per share (‘EPS’) purposes with a

year end position of 195.2m (FY21: 172.4m).

Adjusted basic EPS was 13.0p (FY21: 14.7p).

reflecting an increase in basic earnings,

offset by a higher weighted average

numberof shares. IFRS basic EPS

from continuing operationswas 10.6p

(FY21: 3.7p) and washigher than the prior

years reflecting a higher basic earnings

of£20.7m(FY21: £6.3m).

Cash flow and borrowing

Cash flows from operating activities were

a net cash inflow of £18.3m (FY21: £5.6m

outflow). Profits from operating activities

were £25.1m (FY21: £9.4m) were offset by:

– A net working capital outflow of £17.2m

(FY21: £39.8m outflow). This included:

– A decrease in inventory of £3.4m

(FY21:increase £4.0m) driven by

the selling plan profile over the final

monthof the year leading to lower

stocklevels than previous years;

– A decrease in trade and other

receivable and contract assets of

£22.6m (FY21: increase £19.8m)

mainlydue to timing of cash

collectionson certain material

customercontracts; and

– A decrease in trade and other

payables and contract liabilities

of £43.2m (FY21: £16.0m) mainly

due toareduction in payments on

accountand accrued expenses.

– Pension fund contributions of £16.4m

(FY21: £11.4m) including amounts

related toadministrative costs of

runningthe Scheme.

The cash outflow from investing

activities was £25.8m (FY21: £20.2m)

driven by capital expenditure of £26.9m

(FY21: £21.1m) as we continue to invest in

the business. Capital expenditure is stated

after cash receipt from grants received

of£1.5m (FY21: £3.5m).

The cash inflow from financing

activities was£7.7m (FY21: £39.7m),

including £17.0mnet draw down of

borrowings (FY21:repayment £39.3m),

£6.2m (FY21: £5.7m) of interest

payments and£2.2m (FY21: £2.2m)

ofIFRS16leaseliability payments.

As a result of the cash flow items referred

to,Group net debt increased from

£52.3m at27 March 2021 to £71.4m

at26 March 2022.

The Group has Bank facilities of £275.0m

including an RCF cash drawdown

component of up to £175.0m and bond

and guarantee facilities of a minimum

of £100.0m, which currently are due to

maturein December 2023. The Group can

convert (in blocks of £25.0m) up to £50.0m

of the undrawn RCF cash component to the

bond and guarantee component if required

and can elect to convert this back (again in

blocks of £25.0m) in order to draw in cash

if the bond and guarantee component has

not been sufficiently utilised. The Group has

reallocated £25.0m of the cash component

to the bond and guarantee component,

suchthat at present £150.0m in total is

available on theRCF cash component.

As at 26 March 2022, the Group, as part

of the £150.0m RCF cash component, has

a total of undrawn committed borrowing

facilities, all maturing in more than one

year,of £55.0m (27 March 2021: £72.0m

inmore than one year). The amount of

loans drawn at 26 March 2022 on the

£150.0m RCF cash component is £95.0m

(27 March 2021: £78.0m). Guarantees of

£55.6m (27 March 2021: £78.2m) have been

utilised from the £125.0m guarantee facility.

The accrued interest in relation to cash

drawdowns outstanding at 26 March 2022

is £nil (27 March 2021: £nil).

The financial covenants require that the ratio

of EBIT to net interest payable will not be

less than 2.8 times (subsequently increasing

up to 3.0 times for each relevant period

after 31 March 2022) and the net debt to

EBITDA ratio will not exceed three times.

At the period end the specific covenant tests

were as follows: EBIT/net interest payable

of 7.4 times, net debt/EBITDA of 1.46 times.

The covenant tests use earlier accounting

standards and exclude adjustments

including IFRS 16.

Pension deficit and funding

As well as focusing on operational

performance, the Group continues to look

proactively to minimise future cash outflows.

With the agreement of the trustees of the

De La Rue pension scheme, the actuarial

valuation of the defined benefit pension

plan was brought forward from December

2022 to 5 April 2021. This valuation showed

a reduced scheme deficit of £119.5m

against a previous schedule of deficit repair

contributions totalling £177m through

to March 2029. As a result of this new

valuation, the scheme actuary confirmed

that the deficit can be funded though an

annual payment of £15m to March 2029.

The previously agreed schedule included a

step up in the annual payment from £15m

to £24.5m for the period from April 2023 to

March 2029. At the same time the scheme

was granted equal ‘pari passu’ guarantor

recourse ranking to the Group’s banking

facility. The new agreement therefore results

in a £57m reduction in cash payments

by De La Rue over the period from 2023

to 2029, while preserving the future

benefits and enhancing protections for

scheme members.

On 20 November 2020, the High Court

issued its latest ruling in relation to the

equalisation of pension benefits between

men and women relating to Guaranteed

Minimum Pensions (or ‘GMP’). The High

Court ruled that statutory cash equivalent

transfer values (‘CETVs’) paid from defined

benefit pension schemes are subject to

challenge and a top-up payment may be

required if the CETV value insufficiently

reflected the value of an equalised GMP

benefit accrued between 17 May 1990 and

5 April 1997. The Group’s estimate of the

impact of this latest ruling was to increase

the pension liability by £0.1m which was

recorded as an exceptional item in FY21.

Capital structure

At 26 March 2022 the Group had net assets

of £160.7m (27 March 2021: £111.4m).

The movement year-on-year included:

– profit for the year of £23.7m;

– a remeasurement gain on retirement

benefit obligations of £35.7m, offset by

£8.8m of related deferred taxation, as

a result of the movement of IAS 19 UK

defined benefit pension valuation from a

deficit of £18.5m to a surplus of £31.6m.

Strategic report De La Rue plc Annual Report 2022

Definition Performance Historic performance

Authentication adjusted revenue

IFRS revenue from the

Authentication division, less

‘pass through’ revenue relating

to non-novated contracts

following the sales of certain

historic businesses.

Authentication revenues were

driven by strong growth in both

inGovernment Revenue Solutions

and in Brand Protection.

2022

2021

2020

2019

2018

90.3

77.6

73.8

42.7

40.1

£90.3m

+16.4%

Currency adjusted revenue

IFRS revenue from the

Currency division, less ‘pass

through’ revenue relating

to non-novated contracts

following the sales of certain

historic businesses.

Currency revenues were slightly

down on last year. Increased sales,

particularly in polymer, in the first half

saw a slow down as staff shortages

due to Covid and central banks’ return

to pre-pandemic order patterns hit

production volumes later in the year.

2022

2021

2020

2019

2018

280.9

286.8

281.6

398.9

344.1

£280.9m

-2.1%

Adjusted EBITDA

Group IFRS profit before

interest and tax, less

depreciation, amortisation

andexceptional items.

EBITDA increased by 15.4% to

£53.2m in the ongoing Authentication

and Currency divisions. The fall in

adjusted EBITDA for the Group this

year reflects the fall in profit in the

Identity Solutions business.

2022

2021

2020

2019

2018

54.0

56.7

43.6

79.3

87.3

£54.0m

-4.8%

Adjusted EBITDA margin

Adjusted EBITDA divided

byadjusted revenue for

the Group.

EBITDA margin has been impacted

by a combination of improved

contribution from the ongoing

divisions offset by contribution

from the Identity Solutions division

dropping to almost zero this year.

2022

2021

2020

2019

2018

14.4

14.6

10.2

15.4

17.7

14.4%

-20bps

Adjusted operating profit

IFRS operating profit less

exceptional items and

amortisation of acquired

intangible assets.

Adjusted operating profit increased

by 28.0% to £35.7m in the ongoing

Authentication and Currency divisions.

The fall in adjusted operating profit

for the Group reflects the fall in profit

in the Identity Solutions business.

2022

2021

2020

2019

2018

36.4

38.1

23.7

60.1

62.8

£36.4m

-4.5%

Key performance

indicators

We use a balance of financial and non-financial

key performance indicators to measure

ourperformance.

Key performance indicators

Definition Performance Historic performance

Total shareholder return

compared with that of the

FTSE 250 index. Graph shows

the evolution of TSR since

24 February 2020, the day

before the Turnaround Plan

was announced.

This measure has replaced return

on capital employed as a KPI as the

Performance Share Plan awards for

the last two years have used this

metric asaperformance measure.

Source: FactSet

2020 2021 2022

De la Rue FTSE 250

120

160

200

Net debt/EBITDA covenant ratio

This is the ratio between year

end net debt and adjusted

EBITDA, both adjusted in

accordance with the definition

of the covenant within our

banking agreements.

The increase in the covenant ratio

reflects the increase in net debt

aswe invest in additional facilities,

most particularly in Westhoughton

and Malta. It is well within the

limitof3.0.

2022

2021

2020

2019

2018

1.46

0.99

2.24

1.30

0.66

1.46

+47. 5%

Basic and adjusted earnings per share

Adjusted earnings per

share is calculated as the

earnings attributable to equity

shareholders excluding

amortisation and exceptional

items, divided by the average

number of ordinary shares

outstanding during the year.

IFRS basic earnings per share have

risen as profits have risen this year

mostly due to lower exceptional

charges. Adjusted basic earnings

pershare have fallen with lower

adjusted profits and a higher

averagenumber of shares in

issuethis year.

100

93.7

38.2

42.9

11.1

18.8

30.3

3.4

14.8

11.0

13.0

IFRS Adjusted

2018 2019 2020 2021 2022

Gender diversity in management

We monitor our gender diversity

among our management team.

We are targeting a male:female

gender ratio of 60:40 among

our management by the end

of FY23.

During FY22 the proportion

offemalemanagers in the Group

hasremained stable compared

withthe previous year.

Male 64%

Female 36%

Energy used per tonne of good output

We measure our energy

efficiency in terms of the

energy used per tonne of

goodoutput, and targeted

a7.5%fall this year.

We increased our energy efficiency

again to meet this targetedfall in

energy intensity.

2022

2021

2020

2,903

3,139

3,633

2,903kWh

-7.5%

Strategic report De La Rue plc Annual Report 2022

Viability statement and going

concern assessment

Viability statement

The Directors have considered the longer-

term viability of De La Rue Plc in line

with therecommendations under the

UKCorporate Governance code.

The Group has a three-year strategic

planning horizon as the financial

performance of the Group is inherently

lesspredictable beyond this period

becausegood visibility of the order

book is over a shorter-term horizon

andconsequently this period has been

usedin making this Viability Statement.

In assessing the viability of the Group, the

Directors have reviewed the principal risks

as set out in pages 27 to 31 and considered

foreseeable scenarios of one or more of the

principal risks crystallising in the same time

period in the context of its strategic plan.

The main risks modelled to have an impact

on the viability of the Group were:

– Risk 2 (a,b) Quality Management and

Delivery failure (Currency)

– Risk 3 Macroeconomic and geopolitical

– Risk 6 and 8 Breach of Information Security

covering loss of data and ransomware

– Risk 7 Failure of a Key Supplier to deliver

– Risk 9 Breach of Sanctions

The Directors have focused on principal

risks that could plausibly occur and result

in the Group’s future operational results,

financial condition and future prospects to

materially differ from current expectations,

including the ability to pay a dividend in the

future, meet current investment plans and

compliance with covenant ratios. The main

focus has been the impact of these principal

risks to Group EBITDA. The limiting factor

is the Net Debt/EBITDA covenant, not

the absolute value of net debt, as without

a breach of this, the Group maintains

agoodlevel of facility headroom.

Scenarios that the Directors see as

implausible (e.g. a terrorist attack or an

event of nature) have not been modelled,

nor have all potential mitigating responses.

The Directors have assumed that the

currentrevolving credit facility remains in

place with the same covenant requirements

through to December 2023 and that the

Group would either renew the facility

thereafter, or have sufficient time to agree

analternative source of finance, on terms

which are broadly consistent with the

current facility for the remainder of the

threeyear period assessed.

The Directors consider the likelihood

ofall these risks crystallising together

tobe remote. In the event that a number

ofrisks materialise together in a plausible

combination, the Group would be able

tocontinue operating within its covenants

and the Group’s credit facilities would

notbe exhausted.

The result of reviewing plausible downside

scenarios is that the Directors have a

reasonable expectation that the Group is

viable and will be able to meet its obligations

as they fall due up to March 2025.

Going concern

The Group’s business activities, together

with the factors likely to affect its future

development, performance and position

are set out on pages 1 to 15 of the

Strategic report in the 2021 Annual Report.

In addition, pages 135 to 144 of the

2021 Annual Report include the Group’s

objectives, policies and processes for

financial risk management, details of its

financial instruments and hedging activities

and its exposure to credit risk, liquidity risk

and commodity pricing risk.

The Group has prepared and reviewed

profitand cashflow forecasts which cover

aperiod up to 30 June 2023. This base

caseforecast assumes continued delivery

ofthe Turnaround Plan, specifically

protecting market share in Currency,

growing Authentication revenue, and the

benefit of the cost out initiatives already

completed in addition to continued careful

management of costs. These forecasts

show significant headroom and support

thatthe Group will be able to operate

withinits available banking facilities and

covenants throughout this period.

Covenants are calculated on a rolling

12-month basis each quarter and therefore

for all quarters until Q4 of FY23 and Q1

of FY24, a portion of the EBITDA/ EBIT

has already been earned, reducing the

risk of a potential breach. Taking this into

account along with the forecasts reviewed,

it is considered that the net debt/ EBITDA

covenant for the rolling 12 months to Q4 of

FY23 and Q1 of FY24 is the limiting factor,

rather than the overall facility or the EBIT/

net interest payable covenant in this period.

The Directors have therefore completed

a reverse stress test of the forecasts to

determine the magnitude of downturn which

would result in a breach to this covenant in

the going concern period. Management have

included a number of potential downsides

including significant further supply chain cost

pressures and revenue and margin levels

being below current forecasts.

If all of these modelled downside risks

were to materialise in the Going Concern

period, the Group would still just meet

its net debt/EBITDA covenant ratio after

taking into account mitigating actions which

the Director’s considered to be within the

management’s control. This modelling

demonstrated that a cumulative decline

of30% in EBITDA compared with the

base case without any mitigation would

need to occur in the going concern period

for the net debt/EBITDA covenant to

breached. Taking into account mitigating

actions considered to be within the control

of management, a fall in EBITDA of 42%

frombase case would need to occur in the

going concern period before the net debt/

EBITDA covenant would be breached.

These reductions in EBITDA are considered

to be remote by management taking into

account order cover for the same period

(see page 19) and other controllable

mitigating actions available to management.

Additionally, the SONIA rate would need to

rise to 8.0% in FY23 to trigger a breach in

the interest covenant. Management have

assessed this risk as remote given that

the current SONIA rate applicable is less

tha n 1%.

The Directors have assumed that the current

revolving credit facility remains in place with

the same covenant requirements through

to its current expiry date (December 2023),

which is beyond the end of the period

reviewed for Going Concern purposes.

The Directors have assessed that the

Groupwill either renew the facility thereafter

or have sufficient time to agree an alternative

source of finance for the subsequent period.

Accordingly, the Directors are satisfied

thatthe Group is well placed to manage

itsbusiness risks and to continue in

operational existence for the foreseeable

future. Accordingly, the Directors continue

toadopt the going concern basis in

preparing these Consolidated Annual

Financial Statements.

A copy of the 2021 Annual Report is

available at www.delarue.com or on request

from the Company’s registered office at

De La Rue House, Jays Close, Viables,

Basingstoke, Hampshire, RG22 4BS.

Viability statement

How we manage risk

Risk management is the responsibility of the

Board, supported by the Risk Committee

which comprises members of our Executive

Leadership Team (ELT) and is attended by

the Group Director of Security, HSE and

Risk. The Risk Committee is accountable

for identifying, mitigating, and managing

risk. Further details about the Committee

can be found on page 68. Our formal

risk identification process evaluates and

manages our significant risks in accordance

with the requirements of the UK Corporate

Governance Code. Our divisional risk

registers feed into a Group risk structure that

identifies the risks, their potential impact and

likelihood of occurrence, the key controls

and management processes. We then

establish how to mitigate these risks, and

the investment and timescales required

toreduce the risk to an acceptable level

within the Board’s risk appetite.

The Risk Committee meets at least three

times a year to review risk management

and monitor the status of key risks as well

as the actions we have taken to address

these at both Group and functional level.

It also examines possible emerging risks

by considering both internal and external

indicators and challenges and whether it

has identified the principal risks that could

impact the business in the context of the

environment inwhich we operate.

Risk appetite

The Board has reviewed our principal risks

and considered whether they reflect an

acceptable level of risk. Where this is not the

case, the Board has also considered what

further investment is being made to reduce

the likelihood and potential impact of the

risk. The Board either approves the level of

risk being taken or requires management

toreduce the risk exposure.

For core areas of the business, the Board

uses several methods to ensure that

management operates within an accepted

risk appetite. These include delegated

authority levels, the approval of specific

policies and procedures and the approval

of the annual insurance programme.

The Board receives regular feedback on the

degree to which management is operating

within acceptable risk tolerances.

This feedback includes regular operational

and financial management reports, internal

audit reports, external audit reporting and

any reports to the whistleblowing hotline.

All members of the ELT have individual

or joint ownership for one or more of the

principal risks. Management of those risks

forms part of their personal objectives.

The Board receives regular updates on risk

management and material changes to risk,

while the Audit Committee also reviews the

Group’s risk report.

Management is responsible for

implementing and maintaining controls,

which have been designed to manage rather

than eliminate risk. These controls can

only provide reasonable but not absolute

assurance against material misstatement

or loss. See page 36 for further information

regardinginternal controls.

Principal risks

anduncertainties

The following pages set out the principal

risks and uncertainties that could crystallise

over the next three years. The Board has

undertaken a robust risk assessment to

identify these risks. There may be other

risks that we currently believe to be less

material. These could become material,

either individually or simultaneously, and

significantly affect our business and

financial results. We have modelled potential

scenarios of these risks crystallising to

support the disclosures in the Viability

Statement and assess the Group’s risk

capacity. See page 26 for further details.

Due to the nature of risk, the mitigating

factors stated cannot be viewed as

assurance that the actions taken or

plannedwill be wholly effective.

How we manage ourprincipal

risks anduncertainties

De La Rue’s risk management framework

Board of Directors and

CompanySecretary

Audit Committee

– Reviews the effectiveness of internal controls

– Approves the annual internal and external audit plans

– Reviews findings from selected assurance providers

Executive Leadership Team

– Accountable for the design

andimplementation of the risk

management process and the

operation of the control environment

Group policies

– Policies for highlighting

andmanagingrisks

– Procedures and internal controls

Functional management

– Ensures that risk management is

embedded into business culture,

practice and operations

Risk Committee

– Reviews and proposes the business risk profile

– Monitors the management of key risks

– Tracks implementation of actions to mitigate risks

– Examines and considers emerging risks that could

impact the business

Health, Safety and Environment (HSE) Committee

– Sets HSE standards

– Agrees and monitors implementation of HSE strategy

– Monitors HSE performance

Ethics Committee

– Reviews ethical risks, policies and standards

Strategic report De La Rue plc Annual Report 2022

Risk and risk management

How we manage

principal risks

Bribery and Corruption

Risk

The pressure to meet sales targets,

on either a third party or an employee,

could increase the risk of the payment

of a bribe on behalf of De La Rue or

anti-competitive behaviour, leading

to damage to our reputation from

asuccessful prosecution, financial

loss and disbarment from tenders

andsubstantial fines.

Internal Controls

– Whistleblowing policy and associated

procedures are integral aspects

ofthe compliance framework,

whichiscomplemented by a

whistleblowing hotline.

– Mandatory training on anti-bribery

and corruption, and competition law.

– Our rigorous process for the

appointment,management,

andremuneration of third party sales

consultants operating independently

from thesales function.

– We have a focus on raising awareness

through local EthicsChampions.

External Assurance

– We have Level 1 accreditation to the

Banknote Ethics Initiative (BnEI), which

provides governments and central

banks assurance regarding our ethical

standards and business practices.

– In March 2022 we successfully gained

certification to ISO 37001, the anti-

bribery management system, which

assists the organisation to prevent,

detect and address bribery attempts.

– External PwC audit of TPP fee structure.

Oversight Forum

Ethics Committee.

Risk Committee.

Audit Committee.

Change

Quality Management and Delivery Failure

Risk

A failure in our Quality Management

System, including specification,

controls, and enforcement issues,

could lead to a major customer

quality incident, resulting in late

penalty clauses and increased costs.

Internal Controls

– Operational management boards

monitoring KPIs.

– Design approval process.

– Regular reviews of critical suppliers.

– Central quality team inspect and test

regime for all processes and features.

– Service monitoring tools in place to

manage performance and response

times to remain within SLAs.

– 24/7 support and IT coverage

tominimise downtimes.

– In process inspection systems

validatingkey areas.

External Assurance

– All sites are certified to ISO 9001,

qualitymanagement system.

– Regular customer quality audits.

Oversight Forum

Divisional business

reviews.

Business Plan Review

updates.

Risk Committee.

Change

Macroeconomic and Geopolitical Environment

Risk

As an international company, the

Group is exposed to the global

challenges of an unstable macro-

economic environment, inflationary

pressures and supply chain

headwinds which could impact

itsoperations and ability to deliver

theTurnaround Plan.

The Group also maintains both

Authentication and Currency

operations in territories that are

exposed to economic and/or

political instability which can impact

operational efficiency and output.

Internal Controls

– ELT monthly functional reviews with

weekly divisional leadership meetings,

inaddition to site reviews.

– A robust prioritisation process

withregular reviews of programmes

andprojects.

– A robust incident management

framework, including annual exercising.

– Single and sole source supplier reviews

as well as risk assessments on financial

and operational risks from suppliers.

– Regular communication and

consultation with staff, unions

andotherrelevant stakeholders.

– A comprehensive travel risk

management programme for

employees, providing situational

updates and risk alerting.

– A comprehensive insurance

programme, covering all key risks,

including business interruption.

– Regular monitoring of financing and

fiscal matters, seeking early advice,

diversification, longer-term funding

andhedging, if facilities are available.

External Assurance

– External auditing of risk and resilience.

– Provision of multiple third-party

security, supply chain, risk and incident

management alerts relating to De La

Rue countries of interest, to horizon scan

for upcoming issues and implement

mitigation measures as necessary and

as early as reasonably practicable.

Oversight Forum

ELT updates.

Board briefings.

Divisional business

reviews.

Risk Committee.

Change

Risk and risk management continued

Loss of Key Site or Process

Risk

The loss of a key site or process,

due to external threats or internal

system failures, could lead to

reduced operational capacity and

result in disruption to customer

service delivery, brand damage

andincreased costs.

Internal Controls

– We invest in capacity, equipment and

facilities, multiple sources of supply

todrive down single points of failure.

– We hold BCP stock for critical activities.

– Monthly KPI’s monitor BCP

preparedness.

– Internal audit of all manufacturing

sites,including BCP preparedness.

– Supplier strategy and sourcing reviews.

– Business Continuity coordinators

at all sites, supported by a central

coordinator.

External Assurance

– Under a central certification we

are certified at Head Office and all

production and storage sites to ISO

22301:2019 standards, ensuring a

robustbusiness continuity management

system throughout the Group.

– External PwC compliance audits

were conducted in 2021 including

benchmarking to international

standardsand industry best practice.

– The appropriate levels of business

interruption insurance are in place

tosatisfy the needs of the business.

Oversight Forum

Group integrated

security and business

continuity steering

committee.

Risk Committee.

Audit Committee.

Change

Sustainability and Climate Change

Risk

The world is facing unprecedented

challenges in the face of climate

change, sustainable practices

and environmental aspects that

have socialimpact. We recognise

that De LaRue must undergo a

climate change-related transition by

addressing carbon reduction, energy

usage, waste management and use

ofplastics in ouroperations.

Internal Controls

– De La Rue is committed to be carbon

neutral for our own operations by 2030

through using a phased carbon offset

programme for Scope 1 and Scope 2

emissions in our control.

– Our alignment with the TCFD

recommendations is set out in

theResponsible Business section

onpage 35 of this Annual Report.

– Our own internal audit programme

verifies the Group environmental

management system and assure

goodpractices.

– We embarked upon a Transform

Sustainability Project in December

2020, which has 10 workstreams

centred around carbon reduction,

reduced energy usage and waste

management – monitored by

aprojectboard monthly.

– We have mandated environment

andsustainability awareness

trainingatall sites.

External Assurance

– All our manufacturing sites are

certifiedtoISO 14001 standard

whichhelps the organisation

minimisehow our operations

negativelyaffect theenvironment.

– We participate in the CDP and have

submitted data for the past 11 years,

enabling us to review and improve

onourcarbon impact.

– We have submitted our SBTi targets in

support of keeping global temperature

increases below the 1.5°C limit.

Oversight Forum

Risk Committee.

Global HSE Committee.

Monthly ELT updates.

Change

Change in risk levels in FY22 (last 12 months)

Increased Static Decreased New Risk

Strategic report De La Rue plc Annual Report 2022

Breach of Information Security

Risk

Internal

A breakdown in the control

environment, including collusion, non-

compliance could lead to a security

breach/incident resulting in the loss

ofcritical data.

External

A breakdown in the control

environment because of an external

attack, could lead to a cyber security

breach resulting in the compromise

ofconfidentiality, integrity, or

availability of critical data.

Internal Controls

– We have implemented control measures

around customer, company, and

employee data, demonstrating a clear

approach to identify and mitigate

information security risks.

– On an annual basis we conduct a

gap analysis against all customer

and regulatory standards to ensure

compliance at the highest levels and this

year we have completed a legal review

of compliancewith GDPR.

– Due to the pandemic and remote

working practices we have implemented

a zero-trust cyber strategy, ensuring

noreportable data breaches.

– We have cyber awareness training

atalllevels of the business.

– Group policies.

– IT technical controls include security

incident and event management

software (SIEM), event logging and

management. Ensuring information

security is designed in from the

groundup within all deployed

hardwareandsoftware.

External Assurance

– Under a central certification we

are certified across the Group to

ISO 27001 standards, ensuring

wemanageinformation security

underarobust framework.

– The appropriate levels of professional

indemnity and cyber insurance are in

place to satisfy contractual and business

requirements, including internal and

external incident response support.

– External PwC compliance audits are

conducted on a regular basis, including

benchmarking to international standards.

– We have instigated a programme of

bothinternal and external penetration

and vulnerability testing on corporate

and customer facing systems.

– Regular customer compliance

andregulatory audits.

– Both internal controls and external

assurance have ensured the Group

hasnot suffered a significant external

breach within the last three years.

Oversight Forum

Group integrated

security and business

continuity steering

committee.

Monthly ELT updates.

Risk Committee.

Audit Committee.

Board briefings (risk,

particularly IS risk,

isdiscussed several

times yearly).

Change

Failure of a Key Supplier to Deliver

Risk

Failure of a key supplier (on which

we are dependent for specialist

components) to deliver products

on time or to specification could

lead to our inability to fulfil customer

contractual requirements, resulting in

penalties and forfeit of performance

bonds, loss of customer contracts

andreputational damage.

Internal Controls

– Minimum quarterly updates to key

supplier risk assessment and monthly

reporting on risks and mitigations to

ELT, with periodic updates to the Board.

– We have initiated a robust supplier

quality audit programme.

– Key risks are monitored monthly.

– We conduct key supplier risk

assessments, constantly reviewing

therisk of supply failure.

– The use of external databases

andalerting to allow notifications of

degradation in supplier credit scores

across full supply base to a dedicated

procurement team.

External Assurance

– We are externally audited for ISO 14298

(Security Print), ISO 22301 (Business

Continuity) and PwC on procurement

and supply chain controls.

Oversight Forum

Monthly divisional

andELT updates.

Board updates.

Change

Breach of Security – Product Security

Risk

A breakdown in the control

environment, including collusion, non-

compliance, or an external attack,

could lead to a security breach

resulting in the loss of client-sensitive

product and significant damage to

DeLa Rue’s reputation.

Internal Controls

– Monthly security KPI’s monitors

and maintains the holistic security

environment.

– We ensure that all shipment routes

and transit plans are appropriately

risk assessed and have appropriate

mitigations in place, by air, sea, or road.

– Dedicated security professionals at all

sites, supported by a central function.

– Group policies.

External Assurance

– All manufacturing sites certified to

ISO14298 and INTERGRAF Certification

to the highest possible levels, which

ensures an aligned security print

management system across the Group.

– We are subject to regular regulatory

andcustomer compliance audits.

Oversight Forum

Group integrated

security and business

continuity steering

committee.

Risk Committee.

Change

Change in risk levels in FY22 (last 12 months)

Increased Static Decreased New Risk

Risk and risk management continued

Sanctions

Risk

Entering a contract or other

commitment with a customer,

supplier or partner which is subject

to a sanction or trade embargo

could lead DLR to be in breach of

sanctions. Breach could result in

imprisonment and substantial fines

for individuals, the leadership team

(including the Board) and De La Rue.

In addition, it may lead to a withdrawal

of our banking facilities, as well as

disbarment from future tenders.

De La Rue may be unable to effect

payments or to be paid by customers

due to banking compliance

restrictions when operating in higher

risk and sanctioned territories.

Internal Controls

– Sanctions Board met on a

monthlybasis.

– A robust RFA process ensures

commercial bid teams consider

sanctions risk.

– As a responsible business we ensure

the monitoring and due diligence of

customers, suppliers, and partners.

– We conduct internal audits ofsanctions

compliance programmeregularly.

– We mandate sanctions training to

raise awareness of risks and to clarify

escalation routes for concerns.

External Assurance

– We ensure both internal and

externalaudit of sanctions

complianceprogramme.

Oversight Forum

Sanctions Board.

Audit Committee.

Board briefings.

Change

Covid-19

Risk

The Covid-19 pandemic could have a

material adverse effect on the Group’s

supply chain, distribution network,

manufacturing operations and/or

weakening customer demand.

If current measures fail to adequately

mitigate the impact of the Covid-19

pandemic in the countries in which the

Group has a manufacturing presence,

there is also a risk that one or more

of the Group’s manufacturing sites

may be forced to cease operations

partially or fully for a prolonged period

as a result of the introduction of more

stringent restrictions by the relevant

authorities and/or the absence of

asignificant number of employees

forpandemic related reasons.

Internal Controls

– As part of De La Rue’s response to

Covid-19, the business has invoked

a long-standing Pandemic Incident

Management Plan throughout the Group,

and all sites are working towards the

following four key objectives:

1. Ensuring the safety of our

employeesand their families.

2. Playing our part in restricting

thespread of the virus.

3. Continuing to run the business,

serving our customers worldwide

withthe timely provision of high-

qualityproducts and services.

4. Ensuring that De La Rue emerges

resilient to the impact of the pandemic.

Our manufacturing sites are spread

acrossseveral sites in the UK, Malta,

Kenya, North America, and Sri Lanka

which allows us the ability to reprioritise

and potentially relocate production in the

event of a business continuity incident.

A robust incident management framework

has re-aligned the Group from incident

management to a recovery mindset –

focusing on the effective mitigation of

Covid-19 as a business-as-usual task,

rather than a unique incident-based

focusto ensure longevity of compliance.

External Assurance

– Regular due diligence and customer

auditing relating to Covid-19 response.

– External audits of our sites since

the beginning of the pandemic by

public health and health and safety

authorities found minimal or no

areasforimprovement.

Oversight Forum

ELT updates.

Board briefings.

Change

Strategic report De La Rue plc Annual Report 2022

Responsible

business

Our strategy encompasses clear

commitments to lead our industry in

sustainability, to protect and respect

ourpeople and to maintain the highest

ethical and governance standards in

theconduct of our business.

Our Currency and Authentication divisions

enable our customers to deliver sustainable

services underpinning the integrity of

economies and trade. We have supported

central banks globally during the pandemic

to help maintain financial stability through

the provision of banknotes and currency

services. We have authenticated and

tracked more than nine billion products

in FY22 to support economic stability

and prosperity.

De La Rue has been a participant in the

UN Global Compact (UNGC) since 2016

and I am pleased to confirm our ongoing

commitment to the initiative. This responsible

business report demonstrates how De La

Rue is fulfilling itscommitment to uphold

the principles of the UNGC commitments

and progress towards the UN Sustainable

Development Goals.

De La Rue has been independently

assessed and has satisfied the requirements

to remain a constituent of the FTSE4Good

Index Series. This Index is designed to

measure the performance of companies

demonstrating strong Environmental,

Social and Governance (ESG) practices.

The FTSE4Good indices are used by a wide

variety of market participants to create and

assess responsible investment funds and

other products.

Further information demonstrating how

ESG considerations are embedded in our

performance and strategy to support the

long term interests of the business and

its stakeholders can be found throughout

the annual report and on our website

www.delarue.com.

Clive Vacher

Chief Executive Officer

Our business purpose is securing trust between people,

businesses and governments. This reflects our long

held belief that as a business we have a responsibility

to operate in a way that improves the world around

us: for our customers, our employees and the wider

communities in which we work.

Environment

We are committed to leading the industry on environmental sustainability.

To minimise the impact of our operations on the environment we set clear

environmental goals and have recently submitted targets to the Science

BasedTargets Initiative (SBTi) to ensure we are making a meaningful

differencevia a reduction in our greenhouse gas emissions. We have

committedto achieve carbon neutrality in our own operations by 2030.

Find out more

on page 34.

People

We treat everyone in an ethical and respectful way, promoting an inclusive

culture that values diversity. The health, safety and wellbeing of our employees

is a top priority for the business and we take all possible steps to protect human

rights both within our business and in our wider supply chain. We work hard

to maintain regular engagement with our stakeholders including investors,

customers, suppliers and the communities in which we work.

Find out more

on page 38.

Business standards

It is crucial that we uphold the highest ethical standards in the way we conduct

our business and Our Code of Business Principles sets out core principles

which define the way we behave and work on a daily basis. Our governance

system helps us deliver on our responsibilities to stakeholders through the

operation ofrobust policies, processes and monitoring systems.

Find out more

on page 43.

Responsible business

De La Rue’s ESG governance structure

Board

– Considers ESG as part ofstrategy

– Monitoring of strategic ESGtargets/

key performance indicators (KPIs)

– Oversight of public reporting

Audit Committee

– Reviews ESG-related

internalcontrols and risk

management systems

Group HSE Committee

– Monitoring compliance

withHSE obligations

Ethics Committee

– Oversight of ethical matters

Executive Leadership Team

– Implementation of strategy

– Operational responsibility for ensuring

that ESG issues are an integral part of

day-to-day business decision making

– Setting targets and ensuring ongoing

monitoring of performance

– Monthly update and review

Non-executive Director responsible – Kevin Loosemore

– Oversight of all workstreams

– Six monthly updates from Transform Sustainability Programme Board

Risk Committee

– Identification, evaluation

andmonitoring of ESGrisks

Transform Sustainability Programme Board

– Oversight of Carbon reduction and

otherworkstreams (Carbon, Energy,

Waste,Plastics in packaging, End-of-life

product related recycling)

– Suggests targets and ensures

ongoingworkstream monitoring

Social and Governance initiatives

– Human Resources

– Ethics

– Security (data protection,

information,accreditations)

– Ta x

Governance and management

The Board has oversight of all our ESG initiatives through regular reporting, both on a standalone basis and as part of wider strategic

initiatives. Kevin Loosemore, our Chairman, is the nominated Non-executive Director with overall responsibility for our sustainability strategy.

Governance is embedded within our existing Board and Committee structure, with the Executive Leadership Team (ELT) playing a key role.

The diagram below summarises our governance structure for oversight of sustainability and wider ESG matters.

For further information

About environmental governance, see page 35.

Strategic report De La Rue plc Annual Report 2022

We have a responsibility to ensure that

the products and services we offer are

sustainable, and we are committed to

minimising the impact of our operations

onthe environment. As part of the

sustainability strategy approved by the

Board we have submitted ambitious SBTi

targets to reduce our Scope 1, 2 and 3

emissions by over 45% by 2030 in support

of keeping global emissions below the

1.5°Clevel, with 2019 as our base year.

At the date of this report De La Rue is in

the process of obtaining validation with

the SBTi.

De La Rue is also committing to be

carbonneutral for our own operations

by 2030 through using a phased carbon

offset programme for Scope 1 and Scope

2 emissions in our control. We will ensure

that these offsets are aligned to PAS2060,

a carbon neutrality standard. Our targets

havegiven us a distinct competitive

advantage inthe field, and we are leading

the industry in the fight against climate

change with the Financial Times naming

us in the top quartile of European Climate

Leaders for the second year running.

We recognise and acknowledge the risks

associated with climate change and the

need to align our business strategy as part

of our response to transition towards a low

carbon future. Our Transform Sustainability

programme addresses key areas of the

business that can be transformed to

reduceour environmental impact. We are

focusing on energy reduction, increasing

ouruse of renewables, reducing our waste,

and reducing our reliance on the use of

plastics in packaging. End of life for our

polymer banknotes has been an area

of focus. 100% of UK polymer waste is

recycled and our SAFEGUARD

polymer

substrate is fully recyclable.

Environmental initiatives

De La Rue has developed and launched

several environmental initiatives to reduce

our environmental impact.

Working with our Customers: De La Rue

uses a carbon footprint model that aligns

to PAS 2050 to help reduce the embedded

carbon in our products. During the year we

offset some product elements as agreed

with our customers and will continue to

offer this carbon offsetting service where

possible. We have offered a carbon

offsetting service since 2019, allowing

central banks to purchase banknotes

that are overall carbon neutral throughout

their lifecycle.

Products: We are evaluating the carbon

footprint of products in Currency and

Authentication. We are developing a product

elements carbon score card to support

customer decisions. We offer our customers

support and advice on waste segmentation

and end of life recycling for polymer

banknotes and polymer substrate waste

generated in state print works.

Plastics: We are reviewing our plastic

usage and evaluating methods to reduce/

remove plastics used in packaging products.

We understand the importance ofthe

end of life for our products, and we want

to ensure any plastics used in packaging

arerecyclable at their end destination.

Waste: De La Rue uses internal KPIs to

monitor waste generation and we have

reduced waste by improving the efficiency

of our manufacturing processes. We are

actively exploring solutions to reduce our

waste to landfill for several of our sites.

Water: De La Rue’s water consumption

hasbeen significantly reduced by 16% in

the last four years, affected partly by the

stopping of production at out Gateshead

site. We continue to track our water

consumption aiming to reduce our usage

ofthis valuable global resource.

Energy: De La Rue uses 100% renewable

electrical power for all our UK sites and as

a Group we are focusing on increasing our

usage of renewable energy to more than

50%. The commissioning of the solar panel

installation at our second Westhoughton

site this year and in Malta and Sri Lanka

in the upcoming years demonstrates

the actions we are taking to achieve this

ambition. We have set a target to reduce our

absolute energy usage across the business

by 3% for the next financial year through

increasing our energy efficiency. We will

be carrying out energy surveys for sites

and increasing our coverage of metering

to be able to assess where we can make

changestocurrent practices.

Biodiversity: De La Rue recognises the

importance of maintaining natural habitats

and protecting the rich biodiversity of our

planet. During our business developments

and expansions, we consider habitats and

biodiversity and look to maintain these at our

facilities where we can. For our expansion at

Westhoughton, we conducted initial habitat

work and are planting two trees for every

one we had to remove. We will go beyond

compliance for our Malta expansion project

where we will plant 10 trees for every one

wemust remove. In the upcoming year,

DeLa Rue will undertake a review of the

impact of our facilities on biodiversity.

We actively contribute to the International

Currency Association’s Sustainability

Charter and are a member of their

Sustainability Committee. In terms of

external assurance, the business has

a Group Environmental Management

System that is certified to ISO 14001:2015,

a standard first achieved by the business

over 15 years ago which is externally

audited by LRQA. We also carry out internal

Group audits against the requirements of

ourcorporate environmental standards.

Meeting the growing

demand for polymer

Central banks around the world are

converting to polymer banknotes

because of their increased durability and

the ability to recycle the product at end-

of-life. Our expansion into a second site in

Westhoughton is integral to our strategic

commitment to convert our customers to

polymer and implement environmentally

sustainable initiatives that result in lower

carbon products.

Our expansion is designed to create

an environmentally friendly low carbon

factory for the future. All main machinery

is metered – this ensures future

proofing and allows for future carbon

reduction initiatives to be identified.

Our compressed air and vacuum

systems are energy-efficient and we

continue to focus on implementing

additional energy efficient systems.

Environment

Responsible business continued

Energy efficiency

improvements in

SriLanka

At our site in Malwana we have invested in

a more energy-efficient chiller, improving

the capability of our current HVAC system.

The addition of this chiller aligns with De

La Rue’s sustainability goals enabling

us to save c.100,000kWh on our annual

energy consumption and reduce carbon

emissions by 637 tonnes per year.

Furthermore, the new air compressor

at site will reduce the energy costs for

compressed air by 14% and our GHG

emissions by 23 tonnes per year.

Carbon Disclosure Project (CDP)

The CDP is a not-for-profit charity that has

run a global disclosure system for investors,

companies, cities, states, and regions

tomanage their environmental impact for

morethan 20 years. De La Rue participates

in the CDP and has submitted data for the

past 11 years, which has required us to

build an in-depth understanding of climate

related risk, enabling us to review and

improve on our carbon impact. We have

steadily improved our CDP score each

year and duringFY22 achieved a score

ofBbasedondata submitted for FY21.

Risks and opportunities

We look at environmental sustainability in

a balanced way. We strive to manage our

environmental impact to manage risk and

to harness opportunities to achieve cost

savings for our business, secure competitive

advantage and enhance our partnerships

with customers and other stakeholders.

Significant risks are identified through the

Group Risk Register which covers Group

strategic risks and site tactical risks.

We consider other climate related risks

andopportunities using the CDP categories.

HSE risks and opportunities including climate

related risks are reviewed twice annually

at the Group HSE Committee and at the

management reviews for the environment.

Any risks and potential opportunities are

compared and aligned with the annual

climate related risk assessment process

and assessed for significance using our

riskmatrix. Sustainability and climate

changeis now one of the principal risks

reviewed by the Risk Committee.

Task Force on Climate related

Financial Disclosures (TCFD)

De La Rue supports the recommendations

of the Task Force on Climate related Financial

Disclosures (TCFD), which was established

by the Financial Stability Board with the aim

of improving the reporting of climate related

risks and opportunities. De La Rue has

publicly declared our support for the TCFD

recommendations and has joined the TCFD

Supporters Group to work with like-minded

organisations on acknowledging that climate

change represents a financial risk.

In meeting the requirements of Listing Rule

9.8.6.R we have concluded that we are aligned

with recommended TCFD disclosures

regarding governance, and partially aligned with

recommended disclosures regarding strategy,

risk management and metrics and targets.

We expect to achieve alignment across all four

pillars as we carry out climate scenario analysis

(CSA) and refine our plans following validation

of SBTi targets. Further comments and plans

toachieve full alignment are detailed below.

Governance

The overall governance structure for ESG

matters is shown on page 33.

The De La Rue Board has responsibility for

agreeing and monitoring objectives for the

business, including the high-level targets

for energy efficiency and carbon reduction

targets. In addition, the Board retains overall

responsibility for identifying, evaluating,

managing and mitigating the principal

risksfaced by the Group.

The Risk Committee meets at least three times

each year. It reports to the Audit Committee

after each meeting and to the Board once a

year. It has identified sustainability and climate

change as a principal risk and currently

supports the assessment of climate related risk

and opportunities and strategy in the short term

(up to 18 months), medium term (18 months to

three years), and long term (between three and

five years) time horizons. The risk management

process is integrated into a multi-disciplinary

company-wide riskmanagement framework

which isdescribed in more detail on page 27.

The Group HSE Committee sets

HSE standards, agrees and monitors

implementation of the HSE strategy, and

monitors HSE performance. The Committee

cascades down any decisions, objectives, and

targets to site level, including individual site

action plans and targets. Climate related risks

are reviewed twice yearly at the Group HSE

Committee, and any risks and opportunities

are compared and aligned with the annual

climate related risk review processand

assessed for significance using our risk

matrix. At present, a substantive risk would

have an impact that is equivalent to a 5-10%

loss of Group operating profit and a30-50%

likelihood of occurring.

Any substantive risks identified by the Group

HSE Committee are reported to the Risk

Committee. This is expanded on in further

detail in our Risk and Risk Management

section on pages 27 to 31.

Strategy

At De La Rue, we consider a variety of

risk types including current and emerging

regulation, acute and chronic risks, as well as

physical and transitional risks as part of our

risk management process. Identifying these

risks enables De La Rue to embed climate

change related strategies into our business

plan and actions. This is expanded on

in further detail in our Risk and Risk

Management section onpages 27 to 31.

A transitional opportunity highlighted by

ourclimate related risk assessment is the

change from paper to polymer notes, following

customers’ requests for more sustainable

banknotes with a lower carbon footprint.

The lifetime of a polymer banknote is much

longer due to improved technology in printing

and manufacture, leading to a lower carbon

footprint of the product and enabling end of

life recycling. Using our criteria, this was found

to be a substantive opportunity, that we have

since built upon inour Turnaround Plan.

Submitting our SBTi targets as mentioned

on page 34, has helped us to build resilience

against climate-related risks. We intend to use

CSA to develop our strategy and this will be

carried out in the next two years. The CSA

will consider two temperature scenarios with

the scope of the assessment to cover our

facilities globally and the associated physical

and transitional risks for the business. The CSA

will inform De La Rue’s strategy on building

resilience and the potential risks, opportunities

and impacts that may arise in the future for

the specific climate related issues and the

appropriate time horizons to be considered.

The impact of climate related issues on our

business and strategy remains under review

and while we have identified a few key climate

related risks such as flooding at our sites and

the associated financial implications, the CSA

will better inform DeLa Rue’s financial planning

in response to climate related risks and

opportunities and help to make our strategy

more resilient. We will ensure that progress

against our low carbon transition plans is

communicated annually to shareholders.

Risk management

The Risk and Risk Management section on

pages 27 to 31 describes our risk framework

and how we identify, assess andmanage all

principal risks. This includes sustainability

and climate-related risk whichis mentioned

on page 29.

Market, reputation, acute physical and

acute chronic risks are assessed under the

sustainability and climate change principal

risk mentioned on page 29. Current and

emerging regulation as well as legal risks

are assessed on an ongoing basis at all

sites. The table on page 36 provides a

list of key risks identified by De La Rue as

being substantive for each type of risk we

consider. These are the risks identified through

our current risk management framework

and we expect to identify further risks and

opportunities, as well as their prioritisation

andrelative significance, through the CSA.

Strategic report De La Rue plc Annual Report 2022

As mentioned above in our strategy

disclosures, the CSA will help us determine

the specific climate-related issues potentially

arising in each time horizon (short, medium

and long term) that could have a material

financial impact on the organisation.

Metrics and targets

De La Rue monitors the carbon emissions

for our own operations, which have been

measured in accordance with the GHG

Protocol Standard. The Group remains firm

in our commitment to reduce GHG emissions

by reducing the carbon footprint of our

products, our business operations and our

supply chain. As such we have submitted

our SBTi absolute carbon reduction targets

for Scope 1, 2 and 3 emissions, which are

aligned with the Paris Agreement’s aspiration

to limit global warming to 1.5°C by 2030.

This strengthens our ability to align with the

UK Government’s Net Zero target by 2050

inrespect of our UK operations in particular.

We review and set targets for key focus

areas identified in our risk management

process. These targets will help us reduce

our environmental impact in areas of concern

and they align with our SBTi targets as we

await validation, supporting our transition

towards a low carbon future. For example,

wemeasure and track our water usage with

an aim of reducing our annual consumption

by 2% each year to get our consumption

below 75,000 m

Environmental objectives for FY23 are

detailed on page 37.

We identify and evaluate other metrics and

targets opportunities through our Transform

Sustainability Programme and through an

internal carbon pricing mechanism we are

able to evaluate the financial impact of climate

related risks and opportunities. We have set

an internal carbon price of £37/tCO

e, which

we use to estimate carbon cost savings when

investing in resource efficiency measures

across the business to guide decision making.

We incorporate climate-related targets

into executive objectives which determine

bonuses awarded. See the Remuneration

Report on page 78 for further information.

Greenhouse gas emissions

De La Rue reports on all the mandatory non-financial disclosures required by the UKCompanies Act including our Greenhouse Gas (GHG)

emissions requiredby the Streamlined Emissions andCarbon Reporting (SECR) regulation.

Type of emissions

FY22 FY21 FY20

UK and

offshore Global*

% of

total

UK and

offshore Global*

% of

total

UK and

offshore Global*

% of

totaltCO

e tCO

Direct (Scope 1) 3,949 570 2.6% 4,073 754 3.4% 4,262 842 2.3%

Indirect (Scope 2 – market-based) 0 6,111 3.6% 329 8,009 5.8% 1,210 10,244 5.2%

Scope 1 + 2 3,949 6,681 6.2% 4,401 8,763 9.2% 5,471 11,08 6 7.5%

Indirect other (Scope 3)** 160,603 93.8% 130,576 90.8% 204,774 92.5%

Purchased goods and services 111,098 64.9% 101,742 70.8% 158,871 71.8%

Upstream transport and distribution 28,676 16.7% 14,606 10.2% 28,960 13.1%

End of life treatment of sold products 9,607 5.6% 7,129 5.0% 5,837 2.6%

All other categories 11,222 6.6% 7,10 0 4.9% 11,106 5.0%

Total gross emissions (tCO

e) 171,232 100.0% 143,740 100.0% 221,332 100.0%

Indirect (Scope 2 – location-based) 4,036 9,742 3,889 9,038 5,304 10,244

Intensity ratio UK and Global: Tonnes

of gross CO

e per £m turnover 457 370 512

Energy consumption used

to calculate Scope 1 and 2

emissions/kWh 32,350,448 25,396,356 31,6 97, 918 24,152,529 35,208,116 25,613,721

Notes:

* Global includes all sites out of the UK.

** Three most material Scope 3 categories reported individually.

Key climate related risks identified by De La Rue

Risk Internal Controls

Current and

emergingregulation

Legislation change. An example is the

banon single-use plastics in Kenya

whichcame into effect in 2020.

De La Rue switched from plastic bags to netting for our waste in Kenya,

and we are now evaluating our usage of plastics across the Group with

adedicated procurement team.

Technology

Customer expectations on carbon

reductions need to be met by De La Rue.

De La Rue is working to introduce low-carbon technologies within our

manufacturing process to reduce our manufactured product emissions

andexceed our customers’ expectations.

Legal

Failure to react to the introduction ofnew

legislation could impact us bothfinancially

and reputationally.

Legal risks are assessed on an ongoing basis and annually by

ourISO14001:2015 management review. All sites are certified to

ISO14001:2015 and hold legal registers and we review compliance

annuallyand audit againstcompliance.

Market

Customers prefer more sustainable

banknotes with a lowercarbon footprint.

De La Rue identified an opportunity to focus on polymer banknotes

astheyhave a lower carbon footprint.

Reputation

Environmental sustainability and climate

change risks include failures of our

management system or internal controls that

cause a major environmental incident, which

could damage De La Rue’s reputation.

We review our compliance annually and hold scheduled audits to

minimisethelikelihood of suchan incident.

Acute physical

Climate related flooding risks

atourUKsites.

This has been identified as a particular risk for our Gateshead site

andafullrisk assessment of the flooding risk has been conducted.

Chronic physical

Long term change in precipitation

patternsdue to climate change.

This would pose a risk in particular to our Sri Lanka site and an

assessmentofthe risks associated with this change was carried out.

Responsible business continued

Performance against FY22 environmental objectives

Objective Progress

the SBTi and set

appropriate targets

During this financial year, we have set and submitted our SBTi targets,

andwe are now awaiting approval from the organisation.

Scope 3 and supply

chain review

We carried out a Scope 3 analysis this year and have identified key

categories which we aim to review further this year.

We have partnered with EcoVadis to evaluate the sustainability ratings

ofour supply chain to inform our future roadmap of decisions this year.

Energy used per

tonne of good output

We have achieved our target of reducing our energy used per tonne

ofoutput by 7.5% over the year.

Environmental objectives for FY23

We will be submitting our CDP response for

2022 and through this submission we aim

toreview our risk management to align more

closely with the TCFD recommendations.

We are aiming to conduct a review of

the impact of our facilities on biodiversity

beginning with internal ecological surveys

thatwill be carried out at sites.

We aim to complete an initial review ofthe

plastics we use in our organisation in the

move to offer low carbon alternatives to

ourcustomers.

We will work with our customers to develop

low carbon product offerings.

We are aiming to reduce our absolute energy

usage across sites by 3% and our energy used

per good tonne of output by 7.5% by the end

of the year. We are also aiming to reduce waste

generated per good tonne of output by5.5%

by the end of the year.

In FY22, total gross GHG emissions

increased by 19% compared to FY21

due to an increase in Scope 3 emissions.

That increase was driven by several

factors. Firstly, as we refine our approach

to calculating Scope 3 emissions, we

have updated the methodology used for

calculating Category 12 – End-of-Life

Treatment of Sold Products to reflect more

data being collected from each facility and

the application of more accurate emission

factors. This has resulted in that category

being included as one of the most material

in Scope 3 this financial year and prior

year figures have been adjusted to reflect

the updated methodology. In addition,

emissions from Purchased Goods and

Services increased, a significant part of

which was ‘direct’ spend, as a result of

increased production at our Westhoughton

site. The increase in emissions from

upstream transport and distribution

compared with the previous year was due

to global shipping supply chain issues,

meaning more air transportation had to be

used. In other Scope 3 categories, increases

of note included business travel due to

the easing of Covid-related global travel

restrictions and well to tank emissions due

to an increase in electricity consumption

andglobal business travel.

Despite an increase in emissions, we

continue to make progress in reducing

ouroverall carbon footprint, which is down

23% since FY20 and we have reduced our

Scope 1 and Scope 2 emissions by 19%

compared with FY21.

In FY22, we purchased renewable energy

at all our UK sites. This, combined with

production in Gateshead stopping during

the year, has enabled us to report a 100%

decrease in emissions from electricity

consumption at our UK sites under the

GHG Protocol Scope 2 market-based

method. Furthermore, De La Rue has

expanded the use of renewable energy to

its global operations by retiring 7,000MWh

of high-quality Guarantees of Origin (GoOs).

This has partially offset the electricity

consumed at the Malta facility.

In addition to the energy efficiency

improvements in Sri Lanka detailed on

page 35, further future energy improvement

projects have been identified such as the

installation of solar panels at Westhoughton,

Sri Lanka and Malta, and purchasing more

GoOs to offset electricity consumption in

Malta. Reducing Scope 3 emissions is key

to achieving our SBTi target. Through our

partnership with EcoVadis, we will gain a

wider understanding of our supply chain

and increase engagement with suppliers

to develop an action plan to improve data

quality and reduce emissions in our most

material categories.

Methodology

As a large, listed company, De La Rue is required to report its energy use and carbon

emissions in accordance with the Companies (Directors’ Report) and Limited Liability

Partnerships (Energy and Carbon Report) Regulations 2018. The data detailed above

represents emissions and energy use for which De La Rue is responsible, including

electricity, gas use, process, and fugitive emissions in offices.

The main requirements of the Greenhouse Gas Protocol Corporate Standard were used

tocalculate De La Rue’s emissions, along with the UK Government GHG Conversion

Factorsfor Company Reporting 2021.

Strategic report De La Rue plc Annual Report 2022

We are committed to creating a culture of

respect and inclusivity for every individual

we employ, prioritising their health, wellbeing

and fair treatment. We fully support the

principles set out in the UN Declaration

of Human Rights and we have effective

management systems in place to protect

human rights. De La Rue has been a

participant in the UN Global Compact

(UNGC) since 2016 and is committed to

itsprinciples which include human rights

andlabour issues.

Meaningful engagement with our

employees, customers, suppliers and

shareholders – as well as the communities

inwhich we operate – enables us to react

and respond to their needs and feedback.

Diversity, equity and inclusion

Inclusivity is at the core of our ways

of working. We believe in treating our

colleagues, suppliers, customers and the

communities in which we operate in an

ethical and respectful way. Our principle

of‘Be heard, be valued, be you’ underpins

the way in which we build the strength of

diversity of the people within De La Rue.

It articulates our focus on demographic,

organisational and cognitive diversity.

We are proud of our 50:50 male/female ratio

at both Board and Executive Leadership

Team level. At De La Rue we believe that

diversity in itsbroadest sense is a key factor

in our future success. We recognise that

everyone is unique and we are working hard

to create anenvironment where everyone

can thrive andfeel included and to achieve

aculture oftrust and respect.

Our commitments to diversity, equity and

inclusion are centred around three areas

offocus detailed in the diagram below.

We believe every one of us is personally

and collectively responsible for creating an

inclusive environment and we ask everyone

to make their own commitment to this.

While we have an active focus on diversity,

equity and inclusion we realise there is more

we can do and so continue to make this a

priority area during FY23 and beyond.

Our employees are treated fairly and

equally irrespective of any factor

including gender, transgender status,

sexual orientation, religion or belief,

marital status, civil partnership status,

age, colour, nationality, national

origin,disabilityortradeunion affiliation.

We publish information in line with our

obligations under the UK Equality Act

2010 (Gender Pay Gap Information)

Regulations 2017.

People

Demographic diversity – be you

As a global business we believe it is important to understand, represent

andsupport the communities where our people live and work.

We address diversity

atthehiring stage by:

– Training our managers in hiring best practice

– Using inclusive language inourjob adverts

– Measuring the diversity of our applicant pool

We promote the importance

and the value of diversity

inthe workplace by:

– Proactively educating our workforce on the

value of diversity and inclusion

We challenge our teams

toreflect diversity by:

– Embedding performance and talent

processes that promote diversity

– Targeting a 60/40 male:female gender ratio

among our management by the end of FY23

Organisational diversity – be heard

We will only truly improve what we do by listening to the views of others,

both internally and externally.

We give our people

avoicethrough:

– Forums and networks and mechanisms

to share ideas, views and opinions and

raise concerns

– Using engagement surveys to gather

feedback (target >85% response rate)

We keep people informed

about the business and

encourage feedback:

– Global announcements, CEO calls

and Divisional updates

– Site briefings and

communications cascade

– Feedback channels between all levels

We benchmark ourselves

externally byparticipating in:

– UNGC Target Gender Equality initiative

(see case study on page40for

more information)

– Our supplier fairness and respect forum

Cognitive diversity – be valued

We focus on creating engagement through a culture of trust and respect.

We care about our people’s physical and mental wellbeing

and provide both internal and external professional support

We equip our people with the skills to understand and develop

themselves and others with access to a wide range of training

programmes and materials

We value the behaviours that encourage collaboration and teamwork

We actively manage these behaviours through our appraisal

andperformance processes

Responsible business continued

3. At the time of running the survey we did not include

ourSriLanka site due to the impact of Covid-19 at

thattime. However, the same survey will take place

forthese employees during 2022.

Employee engagement

and culture

Meaningful engagement with our

employees, as well as with customers,

suppliers and shareholders and the

communities in which we operate,

considered later in this report, enables

us to react and respond to their needs

and feedback.

One of the ways we do this is by seeking

employee feedback in many ways including

various forums and surveys.

We have maintained high levels of

engagement during the pandemic

and in FY22 we ran a global employee

engagement survey

83% of our employees responded to the

survey, giving us a strong and representative

set of data to work from. Overall, the scores

to the questions we asked were extremely

high, with an average agreement score

across all questions of 85%. To provide

context to that metric, it is considered

that organisations that achieve over 75%

agreement are deemed to have highly

engaged employees.

In addition 79% of our employees told us

that they would recommend De La Rue

asagreat place to work.

Understanding the views and perspectives of

our employees is crucial to determining how

we progress as a business. The feedback

received through the survey enables us

to identify strengths, as well as areas for

improvement, at team, departmental, site,

divisional and Group level. Each line manager

received a report for their team and was

encouraged to hold workshops to agree

priorities and an action plan.

Certain questions are asked every time we

run a survey – for example around ethics,

health and safety and diversity and inclusion

– in order to identify changes or trends and

in 2021 also included a new set of questions

around cultural norms to help us understand

what it feels like to work at De La Rue

particularly under the divisional structure

weimplemented in 2020.

In FY22 we also continued our Employee

Engagement Forums where agroup of

employees from each site was able to talk with

Maria Da Cunha, our Non-executive Director

responsible for workforce engagement.

As well as site specific matters which we

can address quickly, a summary of the main

themes that come out of these discussions

isshared with the Board. Further information

can be found on page 55.

During the year we successfully and safely

onboarded more than 350 new colleagues

despite the restrictions as a result of the

pandemic such as periods oflockdown

andremote working.

UK gender pay gap

We publish information in line with

our obligations under UK Equality Act

2010 (Gender Pay Gap Information)

Regulations 2017. This year we believe

our report reflects the positive effect

ofour diversity initiatives, as more and

more women are being appointed to

senior roles from both internal and

external candidate pools.

In 2020, the proportion of women in the

highest paid roles (upper quartile) was

23%, shifting to 28% in 2021. As at the

April 2021 snapshot date, De La Rue

International Limited has a male to female

ratio of 72:28 meaning that women are

now represented in the most senior

positions in keeping with their overall

representation in the workforce.

The Gender Pay Gap for the snapshot

date of April 2021 was 4.6% (median)

and5.2% (mean) while the industry

average is currently 15% (median) and

9.8% (mean) (ONS, Manufacturing, 2020).

Our gender ratio on the Executive

Committee remains at 50:50 and the

appointment of Ruth Euling to the

Boardof Directors in April 2021 saw

ourgender ratio for Directors also

moveto 50:50 (Female:Male).

We are pleased with the progress

we are making in relation to gender

diversity and remain confident that

we do not have issues of equal pay.

We will continue to focus on increasing

diversity of all types through proactive

initiatives including training and continued

robust recruitment, succession and

development practices. We are confident

that this will help maintain the low

genderpay gap we have achieved.

The gender breakdown of our Board

and workforce as at 26 March 2022

isillustrated in the graphics (right).

Gender diversity

(as at 26 March 2022)

All employees

1,638 male (71%)

673 female (29%)

Management

185 male (64%)

105 female (36%)

Senior managers

34 male (69%)

15 female (31%)

Executive

3 male (50%)

3 female (50%)

Board

4 male (50%)

4 female (50%)

Notes:

1. All managerial employees including senior managers.

2. Includes executive management.

Strategic report De La Rue plc Annual Report 2022

Training and development

Learning and development continues to be

an important and underpinning element of

our journey. Ensuring we have relevant and

timely content available to help our people

take ownership of their development and

growth enables De La Rue to continue

togrow and succeed.

Content is available through our Learning

Management System (LMS) and through

virtual classroom which gives people

flexibility in learning approach. The LMS

hosts a broad range of content covering

compliance, skills and behaviours in bite

sized format they can read or watch on

the go. The virtual classroom provides

therichness of conversation and

discoverywith others.

This year we have maintained a focus

on developing an understanding of self

and others and leading with inclusion.

This empowers everyone in our business

to bring their whole self to work and

contributes to a culture of being valued

and heard, driving faster decision making

and innovation. We actively promote

learning through others’ experience with

our mentoring scheme which is open to

everyone in the business, and through

sharing content and experience in clubs

wemanage on the LMS. We encourage

the use of the apprenticeship levy for both

continuous professional development and

for building skills and capability across all

sites in the UK.

Performance against FY22 health and safety objectives

Objective Outcome

Aiming for zero lost time accidental injuries

and to achieve a lost time injury frequency

rate (LTIFR) per 200,000 worked hours of

≤0.32 over 12 months.

Our goal is always zero. Our 12 month

rolling LTIFR reverted to 0.32 at the year

end, having been higher than this for

much of the period.

To ensure that greater or equal to 90% of

all operational line managers and process

leaders are trained to IOSH managing

safely level, or an equivalent or higher

qualification within 12 weeks of starting

anew role.

We achieved an average of 88% versus

our target of 90% to train supervisors

and other line managers to IOSH

Managing Safely, its equivalent level or

higher by introducing some online IOSH

managing safely certified training, a good

achievement during Covid-19.

To increase the numbers of reported

nearmiss/my safety concerns and

achieve afive day closure rate of greater

or equal to 85% at all facilities.

The numbers of near misses reported

reduced from 3,600 to 3,000. This was

due to the stopping of production in

Gateshead and the reduced number of

employees across several sites. The near

miss reporting levels are still good and

help reduce the hazards and risks.

Closure rates exceeded 85% consistently.

To achieve greater or equal to 95%

ofcompliance to our zone safe and

secure inspection programmes.

During the year we took the opportunity to

update our Safe & Secure area inspection

process to include sustainability.

Following the relaunch with additional

criteria we achieved 80%.

To increase the volume, quality and

variety of online health and safety

trainingavailable for employees.

We increased our online training

overthe year, introduced several new

courses on two platforms which has

proved to be very beneficial during

theCovid-19 pandemic.

To maintain our strong HSE training

delivery performance of over 1,500

persondays per year.

We increased our training days to 2,024

during the year which included covering

homeworking risks during the hybrid

working programme.

Target Gender Equality

Target Gender Equality is a gender

equality accelerator programme for

participating companies of the UN

Global Compact. Through facilitated

performance analysis, capacity building

workshops, peer to peer learning and

multi-stakeholder dialogue at the country

level, Target Gender Equality support

companies engaged with the UN

Global Compact in setting and reaching

ambitious corporate targets for women’s

representation and leadership.

As an active participant in the UNGC

Target Gender Equality initiative in

FY22, we have been able to benchmark

ourselves and share learnings and best

practice around diversity and inclusion

with other companies.

Responsible business continued

Health, safety and wellbeing

Occupational health and safety

We continued to prioritise health and safety

during the global pandemic. Through our

robust internal controls using our business

pandemic incident plan involving a bronze,

silver and gold communications structure,

we succeeded in limiting the impact on

production and our delivery commitments.

Going forward, the health, safety and

wellbeing of our employees continues to

be of paramount importance. All our main

manufacturing sites have transitioned to ISO

45001:2018 the international standard for

occupational health and safety management

systems which is externally audited by

accredited providers. We ensure all our

health and safety processes are robust

and meet our responsibility to keep our

employees and everyone visiting our sites

safe and secure. This is done through clearly

defined responsibilities, good communication

and training, risk assessment and the

implementation of appropriate controls.

We continue to track several key metrics

regarding health and safety including

government reportable incidents, lost time

accidents, near miss reporting and corrective

actions and minor first aid incidents.

This takes place alongside more proactive

measures such as HSE training, compliance

to our safe, secure and sustainable inspection

programme and byproviding specific health

and safety training for managers.

All significant incidents are reported to the

Executive Leadership Team on a monthly

basis to support and agree any corrective

actions required.

Objectives for FY23

Our health and safety objectives for FY23 are:

– Aiming for zero lost time accidental

injuries and to achieve a lost time injury

Frequency rate (LTIFR) per 200,000

worked hours of ≤0.32 over 12 months.

– To ensure that greater or equal to 80%

ofall operational line managers and

process leaders are trained to IOSH

managing safely level, or an equivalent

or higher qualification within 12 weeks

ofstarting a new role. Despite this target

being lower than previous years, following

organisational changes and Covid it is

considered more realistic.

– To increase the numbers of reported near

miss/my safety concerns and achieve a five

day closure rate of ≥85%atall facilities.

– To achieve ≥90% compliance to

ourarea Safe, Secure & Sustainable

inspection programmes.

– To continue to increase the volume,

quality and variety of online health and

safety training available for employees

and reintroduce some face to face

trainingpost Covid-19.

– To achieve good HSE training delivery

performance of over 1,700 person

daysper year.

Wellbeing

The health and safety of our people

remains a top priority and we give particular

emphasis and support to their mental health

and wellbeing.

We hold regular events and communications

around topics such as sleep, stress

awareness and nutrition.

All our sites have accredited Mental Health

First Aiders (or equivalent) and we ensure

they receive regular training and support.

Other help and support available in different

sites includes weekly fitness classes and

webinars provided by medical professionals.

For our office based staff, following

18 months of working from home, September

2021 saw the introduction of our pilot hybrid

working policy. This came about after asking

our employees about their experience of

working from home and their expectations

going forward. This enables us to give

teams the flexibility to work where best suits

their specific needswhile also benefiting

the business interms of engagement,

productivity, retention and recruitment.

All sites have access to occupational health

support and in the UK all employees have

access to a free 24/7 virtual GP service as

well as a mental wellbeing app.

In addition to physical and mental wellbeing

we recognise the need to support

financial wellbeing – this is done through

access to financial advice, support and

modelling tools.

Human rights

We fully support the principles set out in

the UN Declaration of Human Rights and

we have effective management systems in

place to protect human rights. Our Code

of Business Principles covers human rights

issues including employment principles,

health and safety, anti-bribery and

corruption and the protection of personal

information. The Code also highlights

that we seek to provide an environment

where employees can raise any concerns

via a variety of mechanisms, including a

whistleblowing hotline known as CodeLine

which is managed by an external third

party, and a network of Ethics Champions

across the Group so issues can be raised

in confidence.

The business has remedial processes

in place should there be any human

rights infringements. These include

claims procedures and trade union

engagement procedures.

Modern slavery

De La Rue directly employs more than

2,000 people and provides livelihoods to

thousands more indirectly. We are committed

to preventing slavery and human trafficking

in our operations and in our supply chain and

our modern slavery statement, available on

our website, details the preventative steps

we take and how we comply with the UK

Modern Slavery Act 2015.

During the year we have extended

ouronline modern slavery training module

toadditional colleagues.

Suppliers are obliged to abide by the United

Nations Convention on the Rights of the

Child and International Labour Conventions

138 and 182. Our new supplier onboarding

process takes into account modern

slavery risk.

Working with our unions

We continue to have long-established,

strong and productive relationships with

the unions in the countries where we

have manufacturing operations and we

recognise the following unions: UK (UNITE),

Malta (General Workers Union), Kenya

(Kenya Union of Printing, Publishing, Paper

Manufacture, Pulp & Packaging Industries)

and Sri Lanka (De La Rue Branch – Internal

Company Employees Union). Overall,

around 60% of our employees globally are

part ofacollective agreement.

During the year some of the key areas where

we worked closely with our unions were:

– Successful consultation in our Debden

and Westhoughton sites to align shift

patterns in order to meet changing

business requirements.

– Signing a new two-year collective

bargaining agreement in Sri Lanka and a

two-year pay deal agreement in the UK.

– Continued successful management

through Covid-19 to minimise risks

and impact on production contributing

to delivering on production plans and

safeguarding jobs across all sites.

– Reviewing the health and safety of

employees globally in relation to Covid-19

and post pandemic management.

– Successful conclusion of UK

pension consultation to change

employer contributions.

– Attendance from UNITE UK external

official at our annual UK and European

Employee Forum.

Raising concerns

We encourage our employees to speak up

about any concerns regarding behaviours

or business practices. Internal reporting

via line managers, senior management,

Ethics Champions or our Human Resource

teams are encouraged, but our CodeLine

whistleblowing service, operated by an

independent third party, is available for

all employees to use and gives them

the opportunity to report anonymously.

Regular communications are issued, as

well as ensuring posters are on display at

sites to ensure awareness of the service

is maintained. Further information about

the service can be found in the Ethics

Committee report on page 67.

Strategic report De La Rue plc Annual Report 2022

External stakeholder

engagement

Engagement with our customers,

suppliers and shareholders, as well as

the communities in which we operate,

iscrucial to the success of our business.

Some of the ways we interact with

themaresummarised below.

Investors

The Board values the importance of building

strong relationships with shareholders and

investors. Further detail can be found in

theSection 172 statement on pages 46 and

47 and in the corporate governance report

on page 55.

Customers

De La Rue has maintained an adaptable and

flexible approach to customer engagement

during Covid-19.

In Authentication we held our first virtual

expo – ‘Technology Day’ and further

information can be found below.

In Currency we completed the sixth and

final webinar in the ‘Sustainable Confidence’

series as the industry returned to physical

conference. The Banknote and Currency

Conference in February 2022 was the first

global physical event joined since before

the pandemic. May 2022 saw the inaugural

Global Currency Forum and the rest of

FY23will have a regular series of regional

and global events in currency.

We have expanded on our digital marketing,

introducing an augmented reality app that

allows central banks to explore our content

and interact with our product collateral in

away not previously possible.

Suppliers

Our Supplier Code of Conduct clearly

setsout the ethical standards to which

weexpect our suppliers to adhere.

Good progress has been made with the

rollout of our online onboarding system for

new suppliers and the cyclical screening

of existing suppliers – 80% of our spend

with third party suppliers is now with

suppliers who have been qualified and

approved through our onboarding and

screening platform.

We have been working in close partnership

with our key suppliers across the past year

to mitigate and manage the impact of the

current global supply chain challenges

associated with the ongoing pandemic.

We have continued with our Scope 3

analysis work, recognising this significant

carbon impact and are currently engaging

with a subset of our key suppliers for our

polymer banknote substrate. In FY23 we are

looking forward to widening this approach

across all our keysuppliers through our

EcoVadis subscription to driveimproved

understanding and visibility of our suppliers’

ESG impacts and to drive sustainability

improvements across our supply chain.

Charitable and

communityactivities

We are conscious of our responsibilities

to the wider communities in which our

operations are based. We focus our

charitable activities on the local community

to ensure we are having a positive impact.

Recent examples include:

To mark International Women’s Day 2022

our head office and Malta site employees

donated essential items to women and

children escaping domestic violence.

At Christmas head office colleagues also

donated educational toys to a local school

for children with special educational and

medical needs.

Our Westhoughton site ran a competition

for children of employees to brighten up

the site by creating artwork to express

their experience of living through the

Covid-19 pandemic.

Technology Day

Our first virtual expo – ‘Technology Day’

commemorated the achievements of

De La Rue’s scientists, researchers,

engineers and designers that have

contributed towards authentication

andtraceability solutions.

We welcomed brands, governments,

and enforcement agencies from all

overthe world. Four interactive sessions

showcased the latest innovations

madeacross a few of our technology

platforms in the pursuit of anti-counterfeit

solutions, supply chain transparency,

and the latest tools available to verify

genuine products.

Session 1: The Latest Innovations

in Holography

Session 2: The Vision for Security

Digital Print

Session 3: New Developments

inTraceability Software

Session 4: The Future of Brand Protection

In Sri Lanka employees visited a local hospital

todonate much needed supplies and equipment

totheCovid-19 ward.

Colleagues in Kenya collected and donated food

andclothing to a local home for the elderly which

wasdelivered in person in order to be able to

interactwith the home’s residents.

Responsible business continued

Business standards

It is vital that we treat our colleagues,

suppliers, customers and communities in

an ethical and respectful way and conduct

our business with integrity, honesty and

transparency. The risks of unethical conduct

are recognised and managed through

a robust governance and compliance

structure, underpinned by our Code of

Business Principles, and comprising

internal policies, process and oversight

and compliance assurance standards.

The graphic on page 45 summarises

ourethical governance framework.

The Board encourages a culture of

strong governance across the business.

Our ethical credentials are monitored

by the Ethics Committee and via formal

internal and external audits. In addition to

the governance activities described earlier

in this responsible business report, further

details about the activities of the Board

and its various committees can be found

inthe Corporate Governance section of

thisAnnual Report.

Code of Business Principles

Our Code of Business Principles focuses on

nine core principles which define the way in

which we conduct ourselves and work on a

daily basis. On joining the business, and at

regular intervals, all employees are required

to confirm that they understand and abide

by the Code. In summer 2021 employees

were asked to reaffirm their understanding

of and compliance with the Code.

If an employee is found to have acted

in breach of the Code, the Group takes

appropriate action to address that breach

including disciplinary action and ultimately

terminating employment in the most serious

cases. Contractors and all those acting

onour behalf are also expected to adhere

tothese standards.

Ethics Champions

The Group’s network of Ethics Champions

ensures that each site has local support

and representation for Code of Business

Principles matters and continues to play an

integral part in ensuring that strong ethical

values are embedded across the business.

All new Ethics Champions receive one-to-

one training and regular sessions are held

to provide ongoing interactions with our

Ethics Champions as a group. During the

year these sessions included a refresher

and update on our CodeLine whistleblowing

service and the kick-off of a review of

our current Code of Business Principles.

Where possible Ethics Champions also get

involved with employee induction to ensure

new starters know who they can approach

with questions around ethical practices.

Anti-bribery and corruption

We are committed to preventing our

employees, contractors, third party partners,

consultants and other representatives

from engaging in bribery or other corrupt

practices and have implemented a robust

framework of anti-bribery polices and

processes, some of which are described in

more detail below. All employees are made

aware of our zero tolerance stance through

their acknowledgement of our Code of

Business Principles and those in relevant

roles are required to complete detailed

mandatory online training.

De La Rue is one of the founding members

of the Banknote Ethics Initiative (BnEI)

which was established to promote ethical

business practice in the banknote industry.

The initiative sets out a robust framework

for promoting high ethical standards with

a focus on the prevention of corruption

and on compliance with anti-trust law.

Members are required to commit to

the Code of Ethical Business Practice

developed in partnership with the Institute

of Business Ethics. Compliance with the

code through processes, procedures and

controls is rigorously tested through an

audit framework developed in conjunction

with GoodCorporation, recognised as a

leading company in the field of corporate

responsibility assurance and business

ethics. De La Rue is accredited at Level 1,

the highest level.

In March 2022 we also achieved ISO 37001

(anti-bribery management system)

accreditation for our head office site.

We have a clear approval process for

gifts,entertainment and hospitality

offeredby orgiven to our employees.

All employees are required to comply

withthe gifts and hospitality policy which

requires all gifts, entertainment and

hospitality above a nominal value which

are given or received to be recorded on

a central gift register which is regularly

reviewed by senior management.

During the year colleagues who have

regularcontact with customers and

suppliers were asked to acknowledge

theirunderstanding of and adherence

toourgifts and hospitality policy.

Third party partner sales

consultants (TPPs)

We recognise that as well as our employees,

TPPs who represent us or act on our

behalf around the world could be exposed

to ethical risks. There is a continuing

requirement for TPPs to undergo our

mandatory training programme and to

conduct business in compliance with our

expected ethical standards. Due diligence

is undertaken on all our TPPs before they

are engaged and this process is reviewed

on a regular basis. TPPs are given regular

training to ensure they remain alert to

potential risks. We have risk management

measures and controls in place including in

relation to remuneration of TPPs. Fees are

based on time and effort and milestone

deliverables to ensure accountability and

transparency. Activities are monitored

through regular reporting and weensure

that theremuneration structure does not

incentivise unethical behaviour.

Strategic report De La Rue plc Annual Report 2022

Training

Regular, relevant and focused training is

important to ensure the highest standards

of business behaviours. During the period,

we ran mandatory online training to raise

awareness about the Criminal Finances

Act 2017, continued to allocate anti-bribery

and corruption and competition law training

to new joiners and extended training to

promote awareness of modern slavery

issues. The Ethics Committee reviews

compliance training completion information.

Tax transparency

It is important that the Group pays the right

amount of tax at the right time, complying

with all relevant tax laws and regulations in

the jurisdictions in which we do business

while both respecting existing arrangements

or seeking to reach agreements with

tax authorities. De La Rue’s tax strategy

is reviewed annually by the Board and

published on our website.

Cyber security

anddataprivacy

De La Rue takes the protection and security

of its internal and customer information

very seriously; the information security and

assurance team who perform the internal

governance and audit function have a

separate reporting line to both the customer

and corporate IT teams to ensure there is

noconflict of interest and clear segregation

of duties. Further information can be found

in the risk report on page 30.

A review of De La Rue’s data protection

policies, procedures and documents by

external experts has been completed and

recommendations are being implemented

to ensure they are fully compliant with all

applicable legislation and regulation and

arein line with current best practice.

Accreditations and

certifications

In addition to the BnEI accreditation,

De La Rue maintains ISO standards for

anti-bribery (ISO 37001), health and safety

(ISO 45001), environment management

(ISO 14001), information security (ISO

27001), security printing (ISO 14298),

quality management (ISO 9001) and

business continuity management systems

(ISO 22301). Our ISO standards are all

certified by a UKAS, INTERGRAF or

international equivalent certified auditing

body. Further information on the auditing

and scope of each standard can be

foundonour website.

To complement our existing BnEI certification,

in March 2022 we were pleased to achieve

ISO 37001:2016 (anti-bribery management

systems) accreditation, further underlining

our commitment to maintaining the

highest ethical standards in the conduct

ofour business.

Non-financial

informationstatement

This section (pages 34 to 44)

providesinformation as required

byregulation in relation to:

– Environmental matters

– Our employees

– Social matters

– Human rights

– Bribery and corruption

Other related information

canbefoundas follows:

– Chairman’s

statement

See pages

6 to 7.

– Our business

model

See pages

14 to 17.

– Key performance

indicators

See pages

24 to 25.

– Non-financial

key performance

indicators

See page

25.

– Risk and risk

management

See pages

27 to 31.

– Corporate

governance

See pages

54 and 58.

– Ethics Committee

See page

67.

– Directors’ report

See page

85 to 88.

Strategic Report

This Strategic Report (comprising pages 1to47 inclusive) was approved by the Board

on24 May 2022.

By order of the Board

Jane Hyde

Company Secretary

24 May 2022

Responsible business continued

Backed up by policies

Code of Business Principles

Supported by processes

Underpinned by oversight, controls and communication

Specialist audits Benchmarking CodeLine

Employee surveys Ethics Committee External audit

Internal audits Training/induction Risk reviews

SharePoint BnEI and ISO accreditations UN Global Compact

Bribery and

corruption

Competition

and anti-trust

laws

Gifts and

hospitality

Health, safety

and the

environment

Fairness and

respect

Records and

reports

Protecting

personal

information

Insider

trading and

confidential

information

Conflicts of

interest

– Anti-bribery

and corruption

– Gifts and

entertainment

– Charitable

giving

– Recruitment

ofPEPs

– Prevention

oftax evasion

– Competition

and anti-trust

– Gifts and

entertainment

– Expenses

– Anti-bribery

and corruption

– Conflict of

interest

– Group

sustainability

– Inclusivity

– Modern

slavery

– Operational

delegation

ofauthority

– Group

Finance

Manual

– Data

protection

– Information

security

– Clear desk/

clear screen

– Document

retention

– Confidential

information

and dealing

– Securities

Dealing Code

– Conflicts

ofinterest

– Gifts and

entertainment

– Recruitment

of PEPs

– TPP

onboarding

– Gift register

– Expenses

vetting

– Legal

department

guidelines

– Gift register

– Expenses

vetting

– Monthly

reporting

– Global HSE

standards

– ISO

management

systems

– Safe & Secure

audits

– Grievance

procedure

– Disciplinary

procedure

– Compliance

declarations

– External

monitoring

– Separation

ofduties

– Annual data

protection

returns

– Procedures

for managing

confidential

and inside

information

– Controls over

share dealing

– Gifts

Strategic report De La Rue plc Annual Report 2022

During the year the Board adopted a

newsustainability strategy, building on

our sector-leading approach to climate

change. The Directors have adopted action

plans to achieve carbon neutrality for our

own operations by 2030 and set a target

of reaching net zero across out business

by 2050.

This year we have also implemented the

recommendations of the Task Force on

Climate-related Financial Disclosures (TCFD).

See page 35 for our response to TCFD.

The desirability of maintaining

a reputation for high standards

of business conduct:

The Board acknowledges its responsibility

for establishing the purpose, values and

strategy of the Company and ensuring

that the culture, including adhering to high

standards of business conduct, is aligned

with these goals. The Directors and Board

recognise that trust has to be earned over

years and can be lost in minutes.

The Ethics Committee monitors the work

being done to drive a healthy corporate

culture, including monitoring reports made

to our CodeLine whistleblowing service.

During the year the Board reviewed

supplier risk which included ethical risk

considerations (including modern slavery

risks). They also considered and approved

an updated anti-bribery policy, and progress

made with the roll-out of a new fee model for

Third Party Partner sales consultants (TPPs)

who represent us in certain countries.

The Ethics Committee reviewed the control

environment in relation to TPP appointment,

including terms of engagement and

incentivisation, to assess potential risks

andthe mitigations in place to ensure

thatwe do business in the right way.

The need to act fairly as

between our shareholders:

Our shareholders collectively provide the core

funding for our business. Every share carries

equal rights, whether held by an institutional

investor or a retail shareholder. The views

of all of our investors are an important

consideration and are regularly summarised

and presented to the Board. Over 90% of

our shares are held by institutional investors.

We engage proactively with the fund

managers who control these shares and

discuss a range of strategic and operational

issues though, importantly, they are given no

privileged access to information. The balance

of our shares are held by employees or

retail shareholders, being just under 5,000

shareholders. While it is more challenging to

deal directly with this audience, we use the

AGM as our primary means of engagement

but will also listen and, where necessary,

respond whenever views are expressed

to us. We provided a Q&A facility on our

website in advance of the 2021 AGM and

an audio webcast for those unable to attend

inperson because of Covid restrictions.

In their discussions and decision-making during the

yearto 26 March 2022, the Directors have acted in

the way that they consider, in good faith, would be

most likely to promote the success of the Company

for the benefit of its members as a whole. In doing so,

they have had regard to stakeholders’ interests and

specifically each of the matters set out in section 172(1)

(a)-(f) of the Companies Act 2006. That includes:

The Board has also reviewed the results

ofourannual Group-wide employee survey

during the year, details of which can be

foundon page 41.

The Board and its Committees have had

numerous other discussions in relation to

people matters with the CEO and other

members of the Executive Leadership

Teamduring the year.

The need to foster business

relationships with our

suppliers, customers and

otherkey stakeholders:

We are proud that we have served many

of our customers for many years and, in

some cases, decades. We have similarly

longstanding relationships with many

key suppliers of goods and services.

The Directors and Board understand

the strategic importance of these and

other stakeholders to our business.

We strive todevelop and maintain

businessrelationships based on mutual

understanding, respect and trust.

While most of the engagement with

customers and suppliers is led by executive

management, the Board reviewed the

status of our entire supply chain during the

year, recognising the pressures that many

suppliers were experiencing due to global

macro-economic conditions. The Board also

considered the potential impact of these

issues on our ability to continue to meet

ourcommitments to our customers.

The impact of our operations

on the community and

environment:

The Directors and Board understand the

importance of De La Rue being a ‘good

neighbour’. Specifically, they recognise our

responsibilities and obligations in relation

toclimate change and the environment.

Engaging with

our stakeholders

The likely consequence of any

decision in the long term:

The Directors recognise that the many of the

decisions they make can influence or drive

our long-term success. The principal focus

for the Board and executive management

in the year was on delivering the longer-

term outcomes set out in our business

strategy, the Turnaround Plan. As well as

in-year results, this also involves significant

transformational change and capital

expenditure to re-position the Group’s

manufacturing base for the long term.

The Directors have also considered longer

term sustainability goals, including setting

targets for 2030 and 2050, in each case

supported by action plans.

The interests of our employees

and wider workforce:

While we are a relatively capital-intensive

business, we also rely on our highly skilled

workforce to deliver our business results.

The Directors and Board understand the

strategic importance of these important

stakeholders to our future and always have

due regard to the interests of our employees,

contractors and other members of the

workforce. There is always the necessity

of balancing competing interests and not

every decision we make will necessarily

result in a positive outcome foreach of

these stakeholders.

Maria da Cunha acted as the independent

Non-executive Director designated to lead

on workforce engagement during the year

and held a series of Employee Voice Forum

meetings with workers at the substantial

majority of our sites globally, relaying her

findings and recommendations to the Board.

Keeping our people safe, especially through

the Covid-19 pandemic, has been a material

concern for the Board throughout the year.

Section 172 Statement

Malta Phase 2 investment

The decision to expand the capacity of

our production site in Malta is a hugely

important part of the Group’s strategic

development, that will enhance both

capacity and capability across our

Authentication and Currency businesses.

We identified the key stakeholders at

an early stage, including our existing

employees and wider workforce locally

as well as the Government of Malta and

certain of its agencies. The decision to

expand in Malta also recognised the

potential for the use of solar power at the

site, which helps to minimise the carbon

footprint of the expanded production

capacity. As Malta is one of our lower

cost operational facilities but inan

EU member state with a robust legal

system, the interests of our investors

andlending banks were also recognised

and addressed.

We engaged heavily with the Government

and Malta Enterprises, despite the

challenges of Covid-19, to maximise

thefinancial benefit of our decision

toinvest in the country.

The Board considered the interests of

our workforce, present and future, in

Malta when approving the investment.

The potential to fit the factory roof with solar

panels at a relatively low cost and secure

our own supply of renewable energy (and

so de-couple the site from the market

price of electricity) was an important

consideration. We have also committed to

plant 10 trees for each one removed in the

site development. The financial partnership

and structure that we agreed with the

government was also a material part

oftheBoard’s decision-making.

For more information see page 9.

Pension Scheme funding

Agreement was reached with the

trustees of the UK defined benefit

pension scheme during the year to revise

the funding plan for the pension scheme,

avoiding the ‘step up’ in contributions

from £15m to £24.5m for the period

April 2023 to March 2029. This reduces

the Group’s cash contributions to the

scheme by £57m, with a clear benefit

forour long-term cash generation.

The stakeholders in this decision were

the trustees, representing the interests

of the pension scheme and, indirectly,

those employees and ex-employees

with DB pension benefits. To provide

additional comfort for the trustees, we

agreed that the trustees could be offered

equal ‘pari passu’ recourse ranking,

by way of guarantees from the same

Group companies that guarantee the

Group’s borrowings. By reducing the

cash outflow to the pension scheme,

the interests of the Group’s shareholders

were recognised.

In reaching its decision, the Board was

essentially balancing the interests of

the trustees and employees against

those of the Company’s shareholders.

The position of the Group’s lending banks

was another important consideration

and we are pleased that we were able

to implement our agreement with

the trustees with the support of our

lenders. The Board is confident that the

overall outcome is beneficial for all the

parties involved.

Key decisions made in FY22

The three examples below show how the Board followed the principles described

opposite when dealing with three of the major decisions taken during the year:

Sustainability strategy

The Board approved a new sustainability

strategy, which recognised the interests

of our customers, lending banks and

shareholders, who all want assurance

that we are meeting our responsibilities

in helping to address climate change.

Being able to demonstrate our industry-

leading sustainability credentials and plans

is a crucial part of our marketing strategy

and should help us retain and win customer

contracts that could run for multiple years.

The same plans will also secure access to

sources of finance, including lending banks,

debt and equity capital markets, as well as

satisfying our existing shareholders, whose

expectations of investee companies are

ever-increasing.

The Board considered the costs associated

with implementing the sustainability

strategy, which are more than compensated

by the benefits that are expected to accrue

from strong customer relationships and

protecting our access to finance and

capital markets. The Board also took

into account the direct environmental

benefits of a reduced carbon footprint

and lower amounts of waste, including

that sent to landfill. Additional intangible

benefits identified by the Board include

our ability to retain and attract employees

and other members of our workforce, who

increasingly want to see that their employer

does business responsibly and ethically.

Strategic report De La Rue plc Annual Report 2022

Chairman’s introduction 50

Board of Directors 52

Corporate Governance report 54

Nomination Committee 60

Audit Committee 62

Ethics Committee 67

Risk Committee 68

Remuneration 69

Directors’ report 85

Directors’ responsibility statement 89

Corporate Governance

Corporate

Governance

De La Rue plc Annual Report 2022

Corporate Governance De La Rue plc Annual Report 2022

De La Rue’s purpose is securing trust between

people,businesses and governments. We operate

globally in markets where security, integrity and

accountability are paramount. To earn and repay

our stakeholders’ trust, we are forging an innovative,

responsive and high-performing culture.

Kevin Loosemore

Chairman

The Board believes that good corporate

governance is essential to the Group’s

ongoing transformation and long term

sustainable success.”

The Board believes that good corporate

governance is essential to the Group’s

ongoing transformation and long term

sustainable success.”

Chairman’s

introduction

Dear Shareholder,

Our purpose requires that we maintain

high ethical standards and behaviour.

This commitment is implemented through

our Code of Business Principles, which

all employees and contractors, business

partners and other third party suppliers

must follow.

The Board considers leadership, culture

and good governance as essential factors

in the Group’s ongoing transformation and

in maintaining the trust of our customers,

suppliers and employees. Through a

divisional structure with clear goals and

accountabilities, we have the management

and cultural attributes to succeed.

Our divisional leadership teams play an

integral role in our governance framework by

exhibiting and promoting positive behaviour.

As a Board, we closely monitor the culture,

practices and behaviour within the Company

to ensure that they are aligned with our

values and strategy and will support the

delivery of the long term sustainable

success of the Group.

The section 172 statement on pages 46

and 47 describes how the Board took its

wider responsibilities into account during

the year. While our primary duty remains to

deliver economic returns to shareholders

sustainably over the long term, we recognise

that this cannot be done unless we also

understand and respect the interests of

amuch wider range of stakeholders.

Our workforce is a vitally important

stakeholder. To enable the Board to

understand the views of the workforce at all

levels of the organisation and to inform its

decision making, there is a designated Non-

executive Director responsible for workforce

engagement. For the last three years this

role has been performed by Maria da

Cunha. This responsibility will be assumed

by Catherine Ashton when Maria leaves the

board. For further information on how we

engage with our workforce and other key

stakeholders, please see the Responsible

Business section on pages 32 to 42.

The Board continues to work closely

with the executive management team,

offering support and robust challenge as

appropriate. All Directors play an active

role in overseeing the management of

the business.

Corporate Governance

The Board has implemented an annual

workprogramme to enable it to maintain

oversight and governance of all aspects

of the Group’s business and also dedicate

time to debating and examining forward-

looking strategy. We are operating in very

volatile times and the Group is transforming

at a significant rate. At the same time, we

are seeing rapid changes in the business

environment and the markets in which

weoperate and compete.

We have implemented a robust governance

framework, including defined roles for

the Board and its Committees, with the

aim of best supporting the delivery of

our business goals. This framework was

developed in line with the requirements

andrecommendations of the July 2018

edition of the UK Corporate Governance

Code (the Code). During the year, we

adopted a new sustainability strategy

aspartof how we do business.

Board changes and

successionplanning

On 1 April 2021 we appointed Ruth

Euling,MD of the Currency business, as

an Executive Director and Ruth has further

strengthened the executive contribution to

the Board’s deliberations, drawing on her

vast experience of the currency industry.

After 7 years as a Non-executive Director,

Maria da Cunha has decided not to seek

re-election this year and will retire from

the Board at the 2022 AGM. I would

like to thank Maria for her unwavering

commitment and the significant contribution

she has made to De La Rue during her

time as a Director. Maria will be replaced

in her role asRemuneration Committee

Chair by Margaret Rice-Jones and as

the Non-executive Director responsible

for leading workforce engagement by

Catherine Ashton.

As at 26 March 2022 the Board had eight

Directors, four of whom are women. This will

reduce to seven Directors following the

AGM, and we continue to keep the blendof

backgrounds, skills, experience available

at our Board table and the diversityof our

Board Directors under review.

Whilst the composition of the Board

andExecutive Leadership Team has

remained stable during the year, succession

planning is important, to ensure that we

are fully prepared for planned or sudden

departures from key positions. This remains

an ongoing focus for the Board and

Nomination Committee. Our shared goal

is the development of a diverse pipeline

of talented and experienced people

supportingthe Board and our ELT in

delivering the Turnaround Plan.

Board effectiveness

An evaluation of the Board and its

Committees has been undertaken in 2022,

using an external facilitator from Lintstock.

As a result of the evaluation, the Board

concluded that both it and its Committees

are currently operating effectively. The Board

felt that two changes should be made

to its future ways of working, relating

to succession planning and its visible

leadership of the Group. For details of the

process followed and the changes we are

implementing, please see pages 58 and 59.

Kevin Loosemore

Chairman

24 May 2022

Compliance statement

The Board encourages a culture of

strong governance across the business

and continues to apply theprinciples of

good governance set out in the Financial

Reporting Council’s (FRC) July 2018

edition ofthe UK Corporate Governance

Code (the Code), which is available

onthe FRC’s website, frc.org.uk.

The Board considers that it and the

Company have, throughout the period to

26 March 2022, complied with all of the

provisions of the Code, save in relation

to Provision 12. As noted in last year’s

Annual Report, we did not have a Senior

Independent Director (SID) from the start

of the year until theBoard meeting on

25 May 2021, when Margaret Rice-Jones

was appointed as the new SID.

The Board does not believe that this

temporary and limited non-compliance

with the Code has had any detrimental

impact on the Company’s governance

or performance.

Corporate Governance De La Rue plc Annual Report 2022

A successful Company led by an effective and efficient

Board. Brief biographies of the Directors and the

Company Secretary, together with details of their

otherbusiness interests and the Board committees

onwhich they serve, are set out below:

Appointed to the Board on

2 September 2019 and became

Chairman on 1 October 2019

Current directorships

andbusinessinterests

– Iris Group, non-executive director

Career, skills and experience

Kevin has served on the boards of a

broadspectrum of businesses, including

aschairman of both Morse plc, Micro

FocusInternational plc and as a non-

executive director of Big Food Group plc

and Nationwide Building Society. He has

also held senior executive positions,

including as Chief Operating Officer of

Cable & Wireless plc and senior positions

in Motorola and IBM. He was Managing

Director of De La Rue Card Systems

between 1997 and 1999.

Appointed to the Board

on22 September 2020

Current directorships

andbusinessinterests

– Origami Energy Limited, Chair

– Holiday Extras Limited,

non-executive director

– Calnex Solutions plc,

non-executive director

Career, skills and experience

Margaret has extensive experience within

innovative technology businesses, bringing

particular expertise in software and

digital platforms. She has an engineering

background and has operated at board

level in a number of executive and non-

executive roles. Margaret was Chair of

Skyscanner Limited from 2013 to 2016,

when it was sold to CTrip for £1.4 bn, Chair

of Confused.com until its sale in 2021, and

a director of Xaar plc from 2015 to 2020,

where she was the Senior Independent

Director and Chair of the Remuneration

Committee. Margaret was previously CEO

of Aircom International Limited, a global

software and services company and held

senior executive positions at Motorola Inc.

and Psion UK plc.

Appointed to the Board

on1 October 2020

Career, skills and experience

Rob has more than 10 years experience

of managing finance functions in complex

organisations. Throughout this time, he

has also held additional responsibilities

for strategic development, risk, debt

andcapital raising.

Rob joined De La Rue as Interim Chief

Financial Officer in March 2020 and played

a key role as the business successfully

raised £100m equity capital, refinanced

its debt, and delivered its cost reduction

programme. In October 2020, Rob took

onthe permanent role and was appointed

to the Board.

Prior to joining De La Rue, Rob was Interim

Chief Financial Officer of Co-Op Insurance,

where he supported the refinancing and

sale of the business. Before this, Rob

served as Chief Financial Officer and

Strategy and Risk Director at Swinton

Insurance, where he transformed its cost

base and played a key role in its successful

sale of the business back in 2018.

Rob has also held senior roles with

Aviva, Standard Life and Ageas. He is

a qualified Chartered Accountant with

Arthur Andersen.

Appointed to the Board

on7 October 2019

Career, skills and experience

Clive has extensive experience in running

complex P&Ls for global industrial

companies in both the commercial and

government/defence sectors. He has a

track record of turnarounds, international

business transformation and strategic

development, including leading divisions of

international corporations and standalone

listed companies.

Clive was a director, president and Chief

Executive Officer of Canadian-listed Dynex

Power, leading its privatisation sale to the

Chinese Rail and Rolling Stock Company

in March 2019. Previously, he held senior

leadership positions with Pratt and

Whitney, Rolls-Royce, General Dynamics

Corporation and B/E Aerospace.

Clive is an alumnus of MIT, Stanford,

Columbia and the LSE and currently

sits on the advisory board of the Lincoln

International Business School at the

University of Lincoln, UK.

Kevin Loosemore

Chairman

Rob Harding

Chief Financial Officer

Margaret Rice-Jones

Senior Independent Director

Clive Vacher

Chief Executive Officer

Board of Directors

Corporate Governance continued

Appointed to the Board

on 21 July 2016

Current directorships

andbusinessinterests

– Travelport Worldwide Ltd, CFO and EVP

Career, skills and experience

Nick has extensive international experience

in the technology and information security

industries. In 2019, he was appointed as

Chief Financial Officer of travel technology

company, Travelport. Before joining

Travelport, he served as Chief Financial

Officer of security software firm, Sophos

Group plc, for over nine years. Nick was

also Chief Financial Officer at Micro Focus

International plc, having previously held

CFO roles at Fibernet Group plc and Gentia

Software plc. Prior to that, he held various

senior financial positions at Comshare Inc.

and Lotus Software.

Appointed to the Board

on 1 April 2021

Career, skills and experience

Ruth has spent over 30 years working in the

international government sector, living and

working in Mexico, Colombia, Spain and

Malaysia. She speaks Spanish, Portuguese

and French.

During her career at De La Rue Ruth

has managed complex international

manufacturing businesses and change

initiatives, with experience across multiple

disciplines and functions including

Sales, Human Resources, Marketing,

Manufacturing and General Management.

Ruth sits on the advisory board of the

International Currency Association, helping

lead the currency industry in creating a

single, cohesive voice. She also sits on

the advisory council for Commonwealth

Enterprise and Investment Council.

The Rt Hon Baroness

Catherine Ashton of

Upholland GCMG, PC

Independent

Non-executive Director

Nick Bray

Independent

Non-executive Director

Ruth Euling

Executive Director

& MD, Currency

Jane Hyde

General Counsel &

CompanySecretary

Maria da Cunha

Independent

Non-executive Director

Appointed to the Board

on22 September 2020

Current directorships

andbusinessinterests

– Project Associates Limited, non-

executive director and member ofthe

Global Advisory Council

– Chancellor of Warwick University

– Non-affiliated Peer, House of Lords

(onleave of absence)

Career, skills and experience

Catherine is a former British EU Trade

Commissioner, representing the EU in

global trade negotiations. As EU High

Representative she created the European

External Action Service overseeing its

140Diplomatic Missions and eight military

operations and she chaired the EU

Foreign Affairs, Defence and Development

Councils and was responsible for high-

profile negotiations on behalf of the UN

Security Council. Catherine also held

a non-executive position at AS Citadel

Bankabetween 2016 and 2018.

Appointed as General Counsel

on20 January 2020 and as

Company Secretary with effect

from22 January 2020

Career, skills and experience

Jane has many years of experience as a

general counsel and an adviser to publicly

quoted businesses, with a particular

focus on strategic projects and risk

management. Her previous role was with

Hikma Pharmaceuticals plc where she was

Head of Corporate and European Legal.

Prior to that, she spent a number of years in

investment banking, with corporate broking

and corporate finance roles at JP Morgan

Cazenove and in regulatory compliance

at Nomura International. She trained

and practised as a corporate lawyer at

Freshfields and is a qualified solicitor.

Appointed to the Board

on 23 July 2015

Current directorships

andbusinessinterests

– Royal Mail plc, non-executive director

– Competition and Markets Authority,

Panel Member

– London & Quadrant Housing Trust,

non-executive director

Career, skills and experience

Maria is a former senior executive of

BritishAirways (BA) where she worked

for 18 years until 2018. She was BA’s

General Counsel and Head of Government

and Industry Affairs for four years before

becoming Director of People in 2011,

responsible for Human Resource, Legal,

Risk and Compliance. Prior to joining BA,

Maria held various positions at Lloyd’s of

London, Lovells LLP and the College of

Europe. Maria has extensive experience

inworking with international regulators

andgovernments, transformation

programmes, post-merger integration,

employee experience, industrial relations,

compliance and operational risk.

Audit

Committee

Nomination

Committee

Risk

Committee

Ethics

Committee

Remuneration

Committee

Chair

Key for committees

Corporate Governance De La Rue plc Annual Report 2022

The Board has also established a framework

of prudent and effective controls, which

enable risk to be assessed and managed

which, as noted above, are overseen and

monitored with the support of the Audit

Committee and Risk Committee.

Effective engagement

withshareholders and

otherstakeholders

While their primary duty is to deliver

a sustainable, long term return to

shareholders, the Directors are aware

of their wider obligations, both to direct

stakeholders and to society more generally.

The section 172 statement on pages 46 and

47 explains how the Board took the interests

of key stakeholders into account in its

discussions and decision making on the key

topics considered during the year.

During the year, Maria da Cunha has

continued in her role as the Non-executive

Director responsible for workforce

engagement. In this capacity, Maria gathers

the views of the workforce at all levels

throughout the organisation and shares

these views with the Board at relevant

points in its discussions and decision

making. During FY22 she held ‘Employee

Voice Forum’ sessions with employees

at all of the Group’s major employment

locations in the UK, Dubai, Kenya, Malta,

Saudi Arabia, Sri Lanka and the USA.

Due to Covid restrictions, most of these

sessions were conducted remotely.

The feedback from these was presented

to the Board in October 2021. In addition,

Maria attended a two-day in-person

meeting of our UK/European Employee

Forum in November 2021. This comprises

elected representatives from our workforce

in the UK and EU countries and enables

management to present business updates

and issues while listening and responding

to questions and concerns the attendees

may raise. The EEF enables the general

sentiment of our workforce to be assessed,

which Maria then reports back to the Board.

These activities complement the data and

information gathered through formal surveys

and working groups as part of the normal

management process. Where appropriate,

actions to address concerns raised

by employees are then resolved and

communicated to employees via various

internal newsletters and direct all-employee

communications by the Chief Executive

Officer. Further details of progress made

thisyear are set out in the Responsible

Business report on pages 32 to 44.

Board leadership and

company purpose

An effective and efficient

Board

The Board is committed to pursuing the

highest standards of corporate governance,

which it believes are critical to creating and

preserving value for shareholders and other

stakeholders. The Company’s purpose is

securing trust between people, businesses

and governments and our business model

and strategy are explained on pages 12

to 17. The Board believes that its business

model is sustainable on a long term basis as

we expect there to be resilient demand for

the Currency and Authentication products

and services we offer. The Company’s

strategy pre-empts market changes in

some areas, for example the transition

we expect to see over time from paper to

polymer banknotes within our Currency

business. Where new risks emerge or

existing risks evolve, the Board’s processes

for the governance of risk should enable

us to identify these on a timely basis and

adapt our strategies and plans accordingly.

In this way, the Board seeks to balance its

leadership of the Group’s business with a

clear focus on risk and control.

Establishing the purpose,

values and strategy and

promoting the right culture

The Board sets the Group’s purpose,

strategy and goals and monitors the

delivery of these. The Company’s purpose

is clear – that of securing trust between

people, businesses and governments –

and the medium term strategy is similarly

clear; delivery of the Turnaround Plan in

which our shareholders and lending banks

invested. The strategy is explained on

pages 4 and 5. Business is about taking

considered risks to earn a return, and a key

responsibility of the Board is in overseeing

and monitoring (with the support of the

Audit Committee and Risk Committee) our

risk management programme and internal

control environment.

For further details of our risk management

programme and the principal risks that the

Group faces, please see pages 27 to 30.

For further information on our internal control

environment, please see pages 59 and 66.

Having the right corporate culture is a

critical enabler for both the delivery of

profits and the maintenance of effective

risk management and internal control.

The Board continues to develop a

framework through the Executive

Leadership Team (ELT) for regular oversight

of the culture within the Group. In so doing,

the Directors are aware that they must

lead by example, setting tone from the top,

promoting integrity and ethical behaviour in

line with the Company’s standards. One of

the essential components of the Turnaround

Plan is building a high-performance culture

across the business to support the delivery

of our strategy. The intention is to ensure

De La Rue’s values are integral to the

performance management of the senior

leadership group and other employees, and

that the incentive structure in place supports

and encourages behaviours consistent with

those values. Training and development

activities, including in relation to so-called

soft skills, are provided for our employees

onan ongoing basis.

Put resources in place

andmeasure performance

The diverse range of skills and experience

that the Chairman and the Non-executive

Directors bring to the Company means

that they are well-qualified to understand

the resources needed to run the business

properly and sustainably. As ‘critical friends’,

they scrutinise performance and provide

support and constructive challenge to the

Executive Directors and wider leadership

team as appropriate.

The Turnaround Plan included a re-

positioning of the resources that the

Group needed to deliver on its objectives,

both locally in our production sites and

sales offices and centrally. The Board and

its Committees continue to monitor the

effectiveness of the management structure

in delivering operating and financial results.

This report provides an overview of the work

undertakenby the Board and its Committees

infulfillingtheir governance responsibilities and

describes how the principles of the Code have

beenapplied during the period to 26 March 2022.

Corporate

Governancereport

Corporate Governance continued

We believe that this approach works well

for the Company and Catherine Ashton

has agreed to replace Maria da Cunha as

the Non-executive Director responsible for

workforce engagement after Maria retires

from the Board at the 2022 AGM.

The interests of employees, suppliers

andcustomers are regularly discussed by

the Board, which also considers ethical,

environmental and social impacts wherever

relevant. The importance of fostering strong

relationships and developing a positive

reputation for high standards of business

conduct underpins the Board’s work, all of

which is aimed at sustaining De La Rue’s

standing as a successful business over

thelong term.

We look to engage with shareholders

whenever possible. We run an active

investor relations programme with our

major shareholders, led by the CEO and

CFO but in which the Chairman and the

Senior Independent Director are also

active participants.

While our principal engagement with the

retail shareholder base is at the AGM,

we also welcome contacts from them

throughout the year. All Directors attend

the AGM, where the Committee Chairs

are available to take questions. All votes

are taken on a poll to enable the proxy

votes cast by those unable to attend the

meetingare counted.

The Board keeps under review the ways

in which it engages with stakeholders or

otherwise ascertains and understands

their views. This will always be an iterative

process, as the nature and interests of

thosegroups change over time.

Workforce policies and

practices to support long

termsustainable success

Every business depends on a skilled,

dedicated and motivated workforce to

deliver the business results it seeks. It is

critical that the way in which the Company

manages its workforce supports the long

term sustainable success of the Group and

we have adopted a range of policies and

practices with this aim. Our values inform

much of this and establishing two-way

communications with our workforce and,

where relevant, their elected representatives,

is an important factor in achieving that

success. The work undertaken by Maria

da Cunha during the year to undertake

direct workforce engagement on behalf

of the Board is an important bolstering of

our existing processes. This work will be

continued by Maria’s successor, Catherine

Ashton, when Maria retires from the Board

at this year’s AGM.

A dedicated whistleblowing hotline allows our

workforce to raise concerns about ethical

breaches confidentially, or anonymously if

preferred, by a range of methods. For further

information, please see the Ethics Committee

report on page 67.

An effective Board with clearresponsibilities

The role of the Chairman

The Chairman is responsible for leadership of the Board, including its overall effectiveness

indirecting the Company’s affairs. While he is not regarded as an independent Director

under the Code, he demonstrates independent and objective judgement. His role at

the Board is to facilitate constructive Board relations and the effective contribution of all

Directors, and to promote a culture of openness and debate. He has primary accountability,

with the support of the Company Secretary, for ensuring that the Directors receive accurate,

timely, clear and complete information.

Chairman

– Providing leadership to the Board, setting its agenda, style and tone to

promoteconstructive debate and challenge between Executive Directors

andNon-executive Directors.

– Taking overall responsibility for the composition and capability of the Board

andits Committees.

– Ensuring good information flows from the Executive Directors to the Board,

andfrom the Board to its key stakeholders.

– Chairing the Nomination Committee and building an effective and

complementary Board, regularly considering its composition and balance,

diversity and succession planning.

– Chairing the Ethics Committee.

– Ensuring that high standards of corporate governance and probity are

established and maintained throughout the Group.

Chief

Executive

Officer

– Maintaining a senior management team with the appropriate knowledge,

experience, skills, attitude and motivation to manage the Group’s day-to-

dayactivities.

– Exercising personal leadership and developing a management style

whichencourages excellent and open working relationships at all levels

withinthe Group.

– Ensuring, through the Chief Financial Officer, the implementation, control

andcoordination of the Group’s financial and funding policies approved

bytheBoard.

– Ensuring that the Group has in place appropriate risk management and

controlmechanisms.

– Setting the operating plans and budgets required to deliver the agreed

strategyfor growth in shareholder value.

– Implementing and reviewing HSE policy and, supported by the ELT,

overseeingimprovements and performance.

– Identifying strategic transactions and monitoring competitive forces.

– Communicating with the Company’s shareholders and briefing the

Chairmanon any material points arising from those conversations.

Senior

Independent

Director

– A key role of the Senior Independent Director is to be available to shareholders

if they have concerns which contact through the normal channels of Chairman,

Chief Executive Officer or Chief Financial Officer has failed to resolve, or for

which such contact is inappropriate. The Senior Independent Director is also

available to the other Directors should they have any concerns which are not

appropriate to raise with the Chairman or which have not been satisfactorily

resolved by the Chairman. The Senior Independent Director will also lead the

recruitment of a new Chairman other than when being considered for the

position herself or himself.

Other

Executive

Directors

– The Chief Financial Officer supports the Chief Executive Officer and is

responsible for managing the Group’s finance strategy, financial reporting,

risk management and internal controls, investor relations programme and

theleadership of the Finance function.

– The MD, Currency reports to the CEO and has executive responsibility for

delivery of her division’s operational and financial performance. As a member

of the ELT and as a Director of the Company, she has a wider responsibility

formonitoring the delivery of intended goals across the entire business,

andforimplementing and maintaining appropriate risk management

andinternal controls.

Independent

Non-executive

Directors

– The Non-executive Directors play a key role in corporate governance

and accountability through their attendance at Board meetings and their

membership of Board Committees. The Non-executive Directors bring

a broadrange of business and financial expertise to the Board which

complements and supplements the experience of the Executive Directors.

Meetings of the Non-executive Directors including the Chairman are held

whereExecutive Directors are not present.

General Counsel

and Company

Secretary

– The General Counsel and Company Secretary advises the Board on matters

of corporate governance and supports the Chairman and Non-executive

Directors. She is also the point of contact for investors on matters of corporate

governance and ensures good governance practices at Board level and

throughout the Group.

Corporate Governance De La Rue plc Annual Report 2022

An appropriate

Boardcomposition

As at 26 March 2022 the Board had

eight members, being the Chairman,

three Executive Directors (the CEO, the

CFO andthe MD, Currency) and four

independentNon-executive Directors.

Biographies setting out the skills and

experience of the Directors are set out

onpages 52 and 53.

All of the Non-executive Directors

are considered by the Board to be

independent,both in thought and

relative to the criteria set out in the Code.

Kevin Loosemore worked for the Company

from 1997 to 1999 and now receives a

small pension from the Company’s defined

benefitpension scheme. Margaret Rice-

Jones worked for the Company from

1997 to 2000 and has a deferred pension

entitlement in the same scheme, as does

Ruth Euling, whose accrual of benefits

ceased in March 2013. These potential

conflicts of interest have been declared

to and authorised by the Board, under

itsnormal processes.

The Chairman and each of the Non-

executive Directors have a breadth of

strategic, management and financial

experience gained in each of their

own fields in a range of multinational

businesses. No one individual or small

group of individuals dominates the

Board’sdecision making.

The Board has established a process

to review at least annually any actual

or potential conflict of interest.

The most recentreview was in March

2022.Any transactional conflicts are

required to be notified, and would be

reviewed, asthey arise.

There is a clear division of responsibilities

between the Chairman and the Chief

Executive Officer, which is set out in

writingand has been agreed by the

Board,and is available on the Company’s

website, www.delarue.com. The table

ontheprevious page summarises the

roleand responsibilities ofthe different

members ofthe Board.

The Directors are, individually and

collectively as a Board, accountable

to shareholders for their performance.

Each Director will retire from office at

theAGM on 27 July 2022 and offer

themselves for re-election, other than

Mariada Cunha, who has decided

not toseek re-election thisyear and

will therefore retire from theBoard

atthe2022 AGM.

The role and contribution of

the Non-executive Directors

The basis on which the Board identifies the

skills, experience and personal attributes

required of the Non-executive Directors is

described in the Nomination Committee

report on pages 60 and 61. As part of the

selection process, candidates are asked to

confirm that they will have sufficient time to

meet their responsibilities as Directors and

undertake not to accept further appointments

without first clearing this with the Chairman.

The role of the Non-executive Directors is

described in the table on page 55 but is

essentially to provide constructive challenge,

strategic guidance, offer specialist input and

hold management to account. The Non-

executive Directors come from diverse

backgrounds and have a wide range of skills

and experience. We believe that there is a

distinct synergy benefit from this diversity

and that the Board’s discussions benefit

from the range of perspectives it provides.

An effective and efficient Board

The Board is satisfied that it has the policies,

processes, information, time and resources

it needs to perform its role both effectively

and efficiently.

The Board meets regularly throughout the

year and follows a formal work programme

to ensure that all matters are considered on

a timely basis. To ensure that the Directors

maintain overall control over strategic

and other material issues, the Board has

adopted a schedule of matters which are

required to be brought to it for decision.

The key areas for the Board’s sole

decision are:

– Group strategy, long term objectives,

annual budgets

– The Group’s values, culture and key

Group-wide policies that support these

– Approval of the annual and interim results

– Acquisitions, disposals and material

business changes

– Ensuring that a sound system of internal

control and risk management is maintained

and approval of the risk appetite

– Changes to the Group’s capital structure

– Dividend policy and the declaration

orrecommendation of dividends

Where the Board’s oversight responsibilities

require dedicated focus on specific areas,

the Board has established Committees to

provide the relevant insight, whose roles and

activities are explained on pages 60 to 85.

The matters reserved to the Board and

the terms of reference for each of its

Committees, which are reviewed regularly,

can be found on the Company website at

www.delarue.com. These were last reviewed

in March 2021 and are compliant with the

recommendations of the Code.

The Board met formally on six occasions

during the period ended 26 March 2022.

Five of these meetings were held in person

and one was held by video-conference call

due to Covid-related precautionary measures

that were in force at the time.

Attendance at those meetings and at those of

the Committees is shown in the table below.

Where a Director is unable to participate in a

Board or Committee meeting they will review

the meeting materials and communicate their

opinions and comments on the matters to

beconsidered to the Chairman of the Board

or the relevant Board Committee Chair.

The Chief Executive Officer has

responsibility for matters relating to the

Company or its business that are not

reserved to shareholders, the Board or

one of its Committees. To empower the

wider management team, there is a formal

schedule of delegations of authority through

him to members of the ELT and other levels

of management, which is reviewed and

approved by the Board.

The ELT meets regularly to communicate,

review and agree on issues and actions

of Group-wide significance. It develops,

implements and monitors strategic and

operational plans, and considers the

continuing applicability, appropriateness

and impact of risk. It leads the Group’s

culture and aids decision making of the

Chief Executive Officer and other Executive

Directors in managing the business in the

performance of their duties.

The Chief Executive Officer leads the

reporting on the Group’s activities to the

Board, who receive regular reports from him

and the Chief Financial Officer and have the

opportunity to ask questions or seek further

clarification as necessary.

Directors’ attendance

Board

Audit

Committee

Nomination

Committee

Remuneration

Committee

Ethics

Committee

Catherine Ashton 6 (6) 4 (4) 3 (3) 4 (4) 2 (2)

Nick Bray 6 (6) 4 (4) 3 (3) 4 (4) 2 (2)

Maria da Cunha 6 (6) 4 (4) 3 (3) 4 (4) 2 (2)

Ruth Euling

6 (6) n/a n/a n/a n/a

Rob Harding 6 (6) 4 (4) n/a n/a 2 (2)

Kevin Loosemore 6 (6) 4 (4) 3 (3) 4 (4) 2 (2)

Margaret Rice-Jones 6 (6) 4 (4) 3 (3) 4 (4) 2 (2)

Clive Vacher 6 (6) 4 (4) 3 (3) 4 (4) 2 (2)

Notes:

1. Figures in brackets denote the maximum number of meetings that could have been attended.

2. In addition to the meetings detailed within the table above, there were a further six ad hoc Board calls and meetings that did

not require the participation of the full Board. These generally dealt with matters that had been previously discussed and largely

agreed, but where formal final authorisation was required in accordance with the Group’s internal approvals process.

3. Ruth Euling joined the Board on 1 April 2021.

Corporate Governance continued

Board of Directors and Company Secretary

Kevin Loosemore

Chairman

Our governance framework

Certain Board responsibilities are delegated to formal Board Committees which play an important governance role through the work

they carry out:

Remuneration Committee

Sets the remuneration policy for the Chairman

and Executive Directors and monitors the

policies and practices applied to senior

management remuneration.

Nomination Committee

Reviews the structure, size and composition

of the Board and its Committees with regard

to diversity and ensuring a balance of skills,

knowledge and experience.

Executive Leadership Team

– Operates under the direction and authority of the Chief Executive Officer

– Manages the day-to-day running of the Group and its business

– Develops and implements strategy, monitoring the operating and financial

performance and the prioritisation and allocation of resources

Group Health, Safety and

EnvironmentCommittee

– Makes recommendations on HSE strategy

– Monitors compliance with HSE obligations

– Tracks key HSE KPIs

– Recommends appropriate training and actions to maintain

HSEimprovements and performance

Ethics Committee

Makes recommendations to the Board on ethical

matters and reinforces the Group’s commitment

to ensuring business ethics are a fundamental

andenduring part of the Group’s culture.

Audit Committee

Reviews and monitors the integrity of the

Company’s financial reports, risk management

systems and internal controls and the effectiveness

of the internal audit function and external auditors.

Disclosure Committee

Oversees the implementation of the governance

procedures associated with the assessment,

control and disclosure of inside information in

accordance with the Market Abuse Regulation.

For more information

see pages 69 to 84.

For more information

see pages 60 and 61.

For more information

see page 56.

For more information

see page 67.

For more information

see pages 32 to 35 and page 38.

For more information

see pages 62 to 66.

Chief Executive Officer

Clive Vacher

CEO

Ruth Euling

Executive

Director

Rob Harding

CFO

Risk Committee

Oversees the risk management framework

for the Group. Identifies, evaluates and

monitors the principal risksfacing the Group.

For more information

see page 68.

Margaret Rice-Jones

Senior Independent Director

Jane Hyde

General Counsel and

CompanySecretary

Maria da Cunha

Independent

Non-executive Director

Nick Bray

Independent

Non-executive Director

Catherine Ashton

Independent

Non-executive Director

Corporate Governance De La Rue plc Annual Report 2022

Board activity during the year

During the period ended 26 March 2022, the Board continued to focus on the execution and delivery of the strategic objectives contained

inthe Turnaround Plan, while also addressing the wider responsibilities that fell within its remit. For details of how stakeholders’ interests

were identified and considered, please see the section 172 statement on pages 46 and 47.

The material matters considered by the Board during the period were:

Strategy

– Received presentations from different parts of the business on product portfolios, progress with

agreedstrategy and potential business opportunities

– Held the annual strategy review meeting in July 2021

– Approved the FY23 budget and medium term plans in the context of the Turnaround Plan and agreedstrategy

– Reviewed progress on implementation of the Turnaround Plan through regular reports from the

ChiefExecutive Officer

– Approved implementation of the projects underpinning the Turnaround Plan, including the phase

2investmentat the Westhoughton and Malta sites

– Adopted a Sustainability strategy

For more information

see page 4.

Shareholder

engagement

– Reviewed reports from brokers on shareholder feedback and market perceptions of De La Rue

– Consulted with shareholders and proxy voting bodieson resolutions put to the AGM

For more information

see pages 46 to 47

andpage 54.

Performance

monitoring

– Reviewed reports on the Group’s operating performance from the Chief Executive Officer

– Reviewed reports on the Group’s financial position from the Chief Financial Officer

– Reviewed the year end and interim results and tradingupdates

For more information

see pages 18 to 25.

People

– Received an update from the Group Director of Human Resources on people capability, employee

engagement and progress on the culture change journey

– Succession planning including in relation to Maria daCunha retiring from the Board at this year’s AGM

– Reviewed the results of the 2021 employee survey

– Reviewed workforce engagement across the business

– Received reports from Maria da Cunha on the views ofthe workforce

– Considered the views of employees and their representatives on changes to terms and conditions

ofemployment and the restructuring of our central enabling functions and operational sites

– Considered the views of the trustees of the Group’s pension schemes and agreed a revised actuarial

valuationof the De La Rue Pension Scheme and deficitcontribution plan

For more information

see pages 38 to 41.

Governance

and risk

– Assessed the Group’s principal risks and risk appetite

– Monitored the management of risk within the business

– Monitored the Group’s response to the Covid-19 pandemic

– Monitored the management of HSE risks generally, including those in relation to the implementation

oftheTurnaround Plan

– Approved changes to the composition of the Board

– Discussed the results of the Board performance evaluation

For more information

on principal risks

seepages 27 to 31.

on our Board

Committees see

pages60 to 89.

Accountability

– Approved the 2021 annual report and accounts andthe 2021 notice of AGM

Board composition,

succession and evaluation

Appointing the right people

inthe right way

Securing the best possible candidate for every

role is critical. The Nomination Committee

report on pages 60 to 61 provides more

information on how we create the candidate

specification for a Director appointment,

including diversity considerations, and then

identify and appoint candidates.

All new Directors receive a tailored induction

on joining the Board, including meetings with

senior management and visits to key Group

locations. They also receive a detailed

briefing which includes details of their duties

and responsibilities as a Director and a

number of other governance-related issues.

Directors are continually updated on the

Group’s businesses, the markets in which

the Group operates and changes to the

competitive and regulatory environments.

All Directors are encouraged to undertake

additional training where it is considered

appropriate for them to do so and to visit

theGroup’s facilities on an ongoing basis.

The Board recognises the importance of

having an inclusive culture and the value

that diversity brings to De La Rue and

aims to reflect this within the composition

of the Board. For more information on

our approach to diversity generally and

data onthe gender diversity of the Board,

pleaserefer to the Nomination Committee

report onpages 60 to 61.

Skills, experience and

knowledge of the Board

The Chairman seeks to ensure that

the composition of the Board includes

individuals whose varied backgrounds,

experience, knowledge and expertise

bring a wide range of perspectives to

its discussions and decision making.

This helpsto mitigate the risk of

‘group-think’ with the intention of best

supportingthe delivery of the Group’s

operational andfinancial results.

Our approach to the tenure of the Non-

executive Directors is described in the

Nomination Committee report on pages

60to 61.

Annual evaluation of

theBoard’s effectiveness

The Chairman is responsible, with the

support of the Nomination Committee,

for ensuring that the Company has an

effective Board with a suitable range of

skills, knowledge, experience and diversity.

The Company conducts a formal annual

performance evaluation process for the

Board, its Committees and individual

Directors. A performance evaluation was

conducted in 2022, using an external

independent facilitator, Lintstock Limited,

which has no other connection with the

Company or individual Directors.

The review process involved interviews with

each Board member and focused on Board

composition, expertise and dynamics,

quality of decisions made, Board support

and processes, structure, behaviours and

other key issues such as strategy and

succession. The review also addressed

delivery of the Board’s objectives and any

issues identified during the previous review

or which became relevant during the year.

Corporate Governance continued

The results of the effectiveness review of the

Board and each of the principal Committees

were compiled by Lintstock and presented

to the Board in May 2022. The conclusions

were that the performance of the Board,

its Committees and individual Directors

was effective but the Board felt that two

changes should be made to its future ways

of working. The first of these relates to

succession planning. After a period of rapid

and fundamental change in management

two years ago, the Board believes that

it should now devote more attention to

developing a longer-term succession plan

for roles in the executive leadership team

and senior management. The second area

is increasing the Board’s visibility to the

wider Group. The Board is conscious of

the importance of regular contact with the

business and operational management but,

due to the Covid 19 pandemic, the previous

pattern of site visits was unavoidably

disrupted. The Board will reintroduce

a regular programme of site visits and

meetings, commencing with a visit to the

polymer production site at Westhoughton

inJuly 2022.

The Chairman and each Committee

Chairman have discussions with each

Director or Committee member based on

the report. During the period in 2021 when

there was no formally appointed SID, the

Chairman of the Remuneration Committee

appraised the Chairman’s performance

in discussions with the Non-executive

Directors and the Executive Directors, in

his absence. The Chairman holds one-to-

one meetings with all Directors to review

their contribution to the Board. All of these

processes were carried out satisfactorily

during the year.

Audit, risk and

internalcontrol

Internal and external

auditandthe integrity

offinancial reporting

The Board has delegated power to the

Audit Committee so that it has primary

responsibility for providing oversight of the

integrity of the Group’s financial statements

and associated narrative reporting and

acting as guardians of the independence

and effectiveness of the internal audit

function and external audit process.

For further details, please refer to the Audit

Committee report on pages 62 to 66.

Fair, balanced and

understandable reporting

The Directors believe that the annual report

and accounts, taken as a whole, is fair,

balanced and understandable and provides

the information necessary for shareholders

to assess the Group’s financial position,

performance, business model and strategy.

For details of the process that was followed

to enable the Board to make this statement,

please refer to the Audit Committee report

on pages 62 to 66.

Management of risk and

oversight of internal control

The Board retains overall responsibility

for identifying, evaluating, managing and

mitigating the principal risks faced by the

Group and for monitoring the Group’s risk

management and internal control systems.

Such systems are designed to manage

rather than eliminate the risk of failure to

business objectives and can only provide

reasonable and not absolute assurance

against material misstatement or loss.

The Board has determined the Company’s

risk appetite, being the nature and extent

of the principal risks it is willing to take in

order to achieve its long term strategic

objectives. The most recent assessment

of this was in March 2022. The Board has

carried out a robust assessment of the

Company’s principal and emerging risks.

Further details of the principal risks and the

Group’s approach to risk management can

be found in the risk management section

onpages 27 to 31, with a description ofhow

this isoverseen by the Risk Committee on

page68.

The Board oversees the Group’s

internalcontrol framework, with the Audit

Committee taking a leading role in this work.

The Board has carried out a review of the

effectiveness of the Company’s systems

of risk management and internal control,

covering all material controls, including

financial, operational and compliance

controls. For further details, please refer

tothe Audit Committee report on pages

62to 66.

This Board’s responsibility does not

extend to associated companies or joint

ventures where the Group does not

havemanagement control.

Appropriate remuneration

Linkage of remuneration to

strategy and performance

Our remuneration policies and practices

are designed to support the delivery of the

Group’s strategy, in particular the delivery of

the Turnaround Plan. They are also intended

to promote the sustainable success of the

Company through the delivery of operational

and financial results over the long term.

The Annual Incentive Plan provides an

incentive to deliver in year financial results

and stretching personal objectives, and

aportion of any bonus earned is delivered

(through our Deferred Bonus Plan) in shares

which are only released 12 or 24 months

after the end of the financial year.

Our long term incentive arrangement, the

Performance Share Plan (PSP), incentivises

the delivery of outcomes to shareholders

(assessed in terms of growth in EPS and

Total Shareholder Return relative to FTSE

250 companies, in each case measured

over three years). Any value derived from

thePSP is only available after five years

andis settled in shares.

The remuneration arrangements we

have put in place are clearly aligned

withthe Company’s purpose and values.

For further information, please refer to

theRemuneration Committee report

onpages 69 to 84.

Procedures for developing

policy and determining pay

While management has the primary role

in developing proposals on executive

remuneration, at Director level this must

be done within the limits set out in the

Directors’ remuneration policy which was

approved by shareholders at the 2020 AGM.

The remuneration arrangements for the

first layer of management reporting to the

CEO are scrutinised by the Remuneration

Committee, which is comprised solely

of independent Non-executive Directors.

Pay outcomes are reviewed by the

Remuneration Committee, who retain

discretion to adjust formulaic outcomes

where appropriate. All of our processes

are formal and transparent. Save for the

Chairman, whose fees are determined by

the Remuneration Committee, the fees for

the Non-executive Directors are determined

by the Board, and the NEDs absent

themselves from any discussion or decision

making on this. No Director is involved in

deciding their own remuneration outcome.

For further information, please refer to

theRemuneration Committee report

onpages 69 to 84.

Exercise of independent

judgement and discretion

Each of the Remuneration Committee

members is an independent Non-

executive Director. They exercise their

independence and personal judgement

when considering pay arrangements

and remuneration outcomes and will

exercise discretion whenever and wherever

warranted. The Committee members

have regard to Company performance

and wider circumstances, as well as

individual performance, in determining

pay. For further information, please refer

to theRemuneration Committee report

onpages 69 to 84.

Corporate Governance De La Rue plc Annual Report 2022

Corporate Governance continued

Nomination

Committee

Members & attendance

Member Directors’ attendance

Kevin Loosemore (Chairman) 3 (3)

Clive Vacher 3 (3)

Nick Bray 3 (3)

Maria da Cunha 3 (3)

Catherine Ashton 3 (3)

Margaret Rice-Jones 3 (3)

Notes:

Figures in brackets denote the maximum number of meetings that could have been attended.

Where a Director is unable to participate in a Committee meeting they will review the meeting

materials and communicate their opinions and comments on the matters to be considered to

theCommittee Chairman.

Biographical details of the members of the Board who held office up to the date of this report

canbefound on pages 52 and 53.

Principal responsibilities

Board composition

– To review the structure, size and composition of the Board and

itsCommittees, to ensure they remain appropriate, aiming to

maintainabalance of skills, experience, knowledge and diversity

– Ensure that all Board appointments are made on a formal,

rigorousandtransparent basis

Succession

– To consider succession plans for the Board and senior management,

anticipating the challenges and opportunities facing the Company

andthe need for a diverse pipeline of talent

– To oversee the Board’s diversity policy and its implementation

Effectiveness

– To review the independence and time commitment of the

Non-executive Directors

– To act on the results of effectiveness reviews in relation

toindividual Directors

Dear Shareholder,

I am pleased to present the Nomination

Committee report for the period ended

26 March 2022.

Operation of the Committee

The Committee considers the composition

of the Board and succession planning for

Directors and senior management (being

broadly the first layer of executives reporting

to the CEO). Where Board change is

warranted, the Committee leads the process

for nominations, making recommendations

to the Board as appropriate. In performing

its duties, the Committee has full regard

tothe benefits of diversity, in all its forms.

The Chairman, the independent Non-

executive Directors and the Chief Executive

Officer are the members of the Committee.

The Group HR Director attends by invitation

when appropriate.

Activities during the period

The Committee met three times during the

period ended 26 March 2022. The principal

matters considered at its meetings were:

– A recommendation to the Board to

appoint Margaret Rice-Jones as the

Senior Independent Director

– A recommendation to the Board to

extendNick Bray’s tenure as a Non-

executive Director by a further year

beyond the end ofhissecond three-

year term

– Considering the potential recruitment

of an additional Non-executive Director,

to ensure that the skills and experience

available at the Board table remain

appropriate and taking into account

external expectations inrelation to

diversity considerations

– A recommendation to the Board to

extendthe Chairman’s term of office

forasecond three year term

– Recommending the appointment of

Margaret Rice-Jones as Chair of the

Remuneration Committee and Catherine

Ashton as the Non-executive Director

responsible for employee engagement,

in each case following Maria da Cunha’s

retirement from the Board at the

2022 AGM

– Review of the commitment, contribution

and effectiveness of the Non-executive

Directors seeking re-election at the

AGM, following a formal performance

appraisal process.

The Committee’s annual evaluation

concluded that the Committee continues

tooperate effectively.

It is important that we have an inclusive

and diverse culture, and we aim to reflect

this in the Board’s composition.”

It is important that we have an inclusive

and diverse culture, and we aim to reflect

this in the Board’s composition.”

Male 19

Female 16

Male 3

Female 3

Male 4

Female 4

Gender balance

(As at the date of this report)

Direct reports

to ELT

members

Executive

Leadership

Tea m

At Board

level

Non-executive Directors’ tenure

Director 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Beyond

Kevin Loosemore

Maria da Cunha

Nick Bray

Catherine Ashton

Margaret Rice-Jones

First three year term Second three year term Additional term beyond six years

Non-executive Directors are appointed for an initial period of three years with the expectation of serving one further three year

term, subject to satisfactory performance and annual re-election by shareholders. Terms beyond this period are considered

onacase by case basis and only following rigorous review, taking account of performance and ability to contribute to the

Boardinlight of the knowledge, skills, experience and diversity required.

Approach to succession

planningand talent

The Committee recognises that having the

right Directors and senior management is

crucial for the Group’s success. A key task

of the Committee is to ensure that there is

a robust and rigorous succession process

to ensure that there is the right mix of skills

and experience available to the Group as

its business evolves. The Committee’s

approach to succession planning is

linked to the Company’s overall strategy,

values and mission and includes diversity

considerations. Our policy is to appoint

the best people available for each role

and ensuring that the Board members are

able to provide the range of perspectives,

insights and constructive challenge required

to deliver effective decision making.

Appointments are therefore made on merit

by assessing candidates against objective

criteria, including considerations reflecting

the benefits of greater diversity.

To ensure that we identify candidates

from the widest pool, the Committee may

instruct search consultants or consider

open advertising.

The Board meets the ELT members and

other key managers both formally and

informally to exchange views and ideas.

During the period, the Board undertook a

succession planning review which included

considerations in relation to diversity.

Board diversity policy

and practice

Diversity, equality and inclusion continue

tobe areas of focus for the Committee

and the Board. The Board’s diversity policy

is aligned with that of the wider Group,

which is to strive to have a workforce

representative of the communities that

hostour operations. The Company has

adopted a clear and simple strapline for

allour employees reflecting that aspiration:

Be Heard, Be Valued, Be You.

While the primary objective and

responsibility when making new

appointments is to ensure the strength of

the Board, we are committed to promoting

a culture of respect and inclusivity for every

single unique individual involved in our

business. We continue to promote a culture

that values and thrives on diversity in all

areas, including an inclusive and diverse

culture in terms of ideas, skills, knowledge,

experience, education, gender, social and

ethnic backgrounds, cognitive and personal

strengths and other factors.

The Committee and Board are satisfied

with the progress being made in achieving

objectives in relation to gender diversity,

as illustrated in the charts opposite,

butrecognises that more remains to be

done inrelation to other facets of diversity.

Board appointments and

processfollowed

The Committee considered and

recommended to the Board the

appointment of Ruth Euling, the Company’s

MD, Currency as an Executive Director.

She has been with De La Rue for over 30

years in a variety of roles and is one of the

most respected figures in the currency

industry globally, so no competitive process

was followed. The Board appointed

Ruthasa Director on 1 April 2021.

Re-election of Directors

All Directors will stand for re-election at

the2022 AGM with the exception of Maria

da Cunha, who has decided not to seek

re-election after seven years’ service as

aNon-executive Director.

The Board has carried out a formal

performance evaluation (details of which

can be found on page 58) and considers

each of the Directors to be effective in

their respective roles. It judges that they

demonstrate commitment and is of the

opinion that all Directors continue to

provide valuable contributions to the long

term success of the Company. The Board

strongly supports their re-election to the

Board and recommends that shareholders

vote in favour of the resolutions at the AGM.

Kevin Loosemore

Chairman of the Nomination Committee

24 May 2022

Corporate Governance De La Rue plc Annual Report 2022

Audit

Committee

Members & attendance

Member Directors’ attendance

Nick Bray (Chairman) 4 (4)

Maria da Cunha 4 (4)

Catherine Ashton 4 (4)

Margaret Rice-Jones 4 (4)

Notes:

Figures in brackets denote the maximum number of meetings that could have been attended.

Where a Director is unable to participate in a Committee meeting they will review the meeting

materials and communicate their opinions and comments on the matters to be considered

totheCommittee Chairman.

Principal responsibilities

Financial reporting

– Reviewing the integrity of the interim and full year financial statements

– Reviewing significant financial reporting issues and judgements

– Reviewing the adoption of new accounting standards

External audit

– Overseeing the relationship with the external auditors including

thescope and extent of the external audit and the fees payable

– Reviewing and monitoring the external auditor’s effectiveness,

independence and objectivity including the nature and

appropriatenessof any non-audit work and the associated fees

Internal audit

– Overseeing the relationship with the internal auditors including the

internal audit charter, annual work programme and fees and their

independence and effectiveness

– Monitoring management’s response to internal audit findings and

whether these are being implemented in a manner that supports

thework of the internal auditors

Risk management and internal control

– Monitoring and reviewing the effectiveness of the systems

ofinternalcontrol and risk management

Dear Shareholder,

I am pleased to present the Audit

Committee report for the period ended

26 March 2022.

All members of the Committee are

independent Non-executive Directors.

Nick Bray is a chartered accountant and is

regarded by the Board as having relevant

and recent financial experience by virtue

of his long career as a senior finance

professional and his current position

as Chief Financial Officer of Travelport.

The Board is also satisfied that the

Committee as a whole has competence

relevant to the sector in which the Group

operates. No member of the Committee has

any connections with the external auditors.

Biographical details of the members of the

Board who held office up to the date of this

report can be found on pages 52 and 53.

Operation of the Committee

The Committee provides independent

oversight of the Group’s financial reporting

processes. In support of that overarching

objective, it oversees the relationships

with the internal and external auditors, it

monitors the development and effectiveness

of the Group’s internal financial controls

and the internal controls more generally,

and it reviews the Group’s principal risks

and the effectiveness of its systems of

risk management.

Committee meetings are attended, by

invitation, by the Chairman of the Board,

Chief Executive Officer, Chief Financial

Officer, General Counsel and Company

Secretary and the Group Financial Controller

as well as the internal and external auditors.

The Group Director of Security, HSE and

Risk and the Group Director of Tax and

Treasury also attend Committee meetings

as required. The internal auditors and

external auditors each meet the Committee

members without Executive Directors

orother employees being present.

The Committee’s effectiveness

was reviewed as part of the

overall Board effectiveness review.

For further informationover how this

wasconducted,please see page 58.

The integrity of the Company’s financial

reporting is of critical importance.”

The integrity of the Company’s financial

reporting is of critical importance.”

Corporate Governance continued

Activities during the period

The Committee met four times during the

period ended 26 March 2022. The principal

matters considered at its meetings were:

– The half and full year financial statements,

including any key accounting matters

and the annual report and other

narrative reporting

– The external auditors’ reviews of the

financial statements and the annual report

– Plans and fees for the external audit and

the auditors’ review of the half year results

– The effectiveness, independence

andobjectivity of the external auditors

– The use of the going concern basis

of accounting

– The basis of preparation of the long

termviability statement

– The internal audit programme and

the alignment of this with the Group’s

principalrisks and the interaction with

thework of the external auditors

– The Group’s principal risks

and uncertainties

– The assurance available in relation

totheGroup’s risks, including:

– Internal audit findings and

recommended improvement actions

– Review of the effectiveness of the

systems of internal control and

risk management

– Business continuity planning

– Review of the annual policy and

controlself-assessment declarations

– The results of other compliance audits

– The Committee also considered the UK

government’s consultation document

Restoring Trust in Audit and Corporate

Governance and the evolution of risk in

the Company’s supply chain.

Financial Reporting

The integrity of the Group’s financial

reporting is of critical importance and it

is a core responsibility of the Committee

to review this reporting and the key

accounting judgements contained in

thefinancial statements.

Key accounting matters

inrelation to FY22

The Committee reviews whether suitable

accounting policies have been adopted

and applied consistently and assesses

if management has made appropriate

estimates and judgements in the preparation

of the financial statements. In addition, the

Committee has reviewed and considered

and challenged a number of key accounting

areas and judgements in preparing the

financial statements, as set out below:

Revenue recognition

The Committee considered the Group’s

revenue recognition policies and procedures

to ensure that they remained appropriate

and that the Group’s internal controls

were operating effectively in this area.

Feedback was also sought from the external

auditors over the application of the revenue

recognition policy including ongoing

compliance with IFRS 15. Specific focus

was given to revenue recognised on a ‘bill

and hold’ basis and where revenue on

new contracts entered into in the year was

being accounted for on an ‘over time basis’.

Following a review of the varied sources

of information received, the Committee

concluded that the accounting treatments

and judgements were reasonable

and appropriate.

UK post-retirement

benefitobligations

The Committee received and considered

reports from management based on

analysis prepared by independent actuaries

and the external auditors in relation to

the valuation of the UK defined benefit

pension scheme and challenged the key

actuarial assumptions used in calculating

the scheme liabilities, especially in relation

to discount rates, RPI and CPI inflation rates

and mortality. The Committee discussed

the reasons for the movement on the IAS

19 valuation from a net deficit to a net

surplus. The Committee was satisfied that

the assumptions used were appropriate and

were supported by independent actuarial

specialists. Details of the key assumptions

used are set out in note 24. The Committee

also noted that approximately £63m of the

UK defined benefit pension scheme assets

were valued at 31 March 2022 as opposed

to the year end date of 26 March 2022 as

for these investments a valuation at the year

end date was not available. The Committee

considered reports presented by

management, with support from actuarial

specialists, which estimated the impact of

the difference in valuation date to be less

than £1m. The Committee considered this

to not be significant when compared to

total UK defined benefit pension scheme

assets of circa £1bn and that no better

valuation than that at 31 March 2022 was

available. However, the Committee decided

that acritical accounting judgement on this

should be disclosed – see page 112.

Accounting implications of

the cessation of banknote

production at Gateshead

The Committee reviewed management’s

updated judgement on the property, plant

and equipment at the Gateshead facility that

no further impairment charges were needed

in FY22 based on current expectations

for the ongoing use of these assets within

the business.

The Committee carefully considered

management’s future plans for the

expansion in certain locations based on

future business needs and concluded that

for the remaining assets not impaired in the

prior period, their value could be supported

based on their anticipated ongoing use after

a period of relocation.

The Committee concluded that it was

comfortable with the accounting judgements

and treatments applied in the financial

statements. However, in light of the

judgements made and the materiality of

the balances, concluded that disclosure of

a critical accounting judgement should be

included in the annual report and accounts

(se e page 111).

Recoverability of Other

Financial Assets

The committee noted that in accordance

with IFRS 9, management had assessed the

recoverability of the other financial assets

on the balance sheet as at 26 March 2022

based on information available to them and

performed probability weighted modelling

against three scenarios. As a result, an

expected credit loss provision of £3.1m

was calculated. The committee challenged

the scenarios modelled and the probability

weightings assigned to each and concluded

that management’s judgements and level

of expected credit loss provision posted

was reasonable.

The committee noted that if factors change

in the future, this may alter the judgements

made as to the probabilities to be assigned

to each scenario in the modelling, resulting

in a revision to the value of expected

credit loss provision to be recognised.

For this reason, it was agreed that a critical

accounting estimate would be disclosed

in the annual report and accounts, refer to

page 111.

Estimation of accruals

andprovisions

The Group holds a number of provisions

relating to warranties for defective products

and contract penalties. The Committee

reviewed and discussed reports from

management and the external auditors

concerning the significant provisions held

for such matters including any provisions

with notable movements and challenged

management over the judgements applied in

determining the value of provisions required.

The financial statements also included a

small number of onerous contract provisions

for loss-making contracts. The Committee

reviewed management’s judgements in

arriving at the required level of provisioning

including how, in accordance with IAS 37,

the lowest unavoidable costs of exiting or

fulfilling the contract have been calculated.

Corporate Governance De La Rue plc Annual Report 2022

The Committee enquired of management

and the external auditors as to the existence

of other matters potentially requiring a

provision to be made. The Committee

concluded that it was satisfied with the

valueof provisions held.

The Group is subject to income taxes

innumerous jurisdictions and significant

judgement is required in determining

the worldwide provision for those taxes.

The level of current and deferred tax

recognised is dependent on subjective

judgements as to the outcome of decisions

to be made by the tax authorities in the

various tax jurisdictions around the world

inwhich the Group operates.

It is necessary to consider which deferred

tax assets should be recognised based on

an assessment of the extent to which they

are regarded as recoverable, which involves

assessment of the future trading prospects

of individual statutory entities.

The actual outcome may vary from that

anticipated. Where the final tax outcomes

differ from the amounts initially recorded,

there will be impacts upon income tax and

deferred tax provisions and on the income

statement in the period in which such

determination is made.

The Group has current tax provisions

recorded within current tax liabilities,

in respect of uncertain tax positions.

In accordance with IFRIC 23, tax provisions

are recognised for uncertain tax positions

where it is considered probable that the

position in the filed tax return will not be

sustained and that there will be a future

outflow of funds to a taxing authority.

Tax provisions are measured either based

on the most likely amount (the single

most likely amount in a range of possible

outcomes) or the expected value (the sum

of the probability weighted amounts in a

range of possible outcomes) depending

on management’s judgement on how the

uncertainty may be resolved.

The Group is disputing a number of

tax assessments received from the tax

authority of a country in which the Group

operates. The disputed tax assessments

are at various stages in the local appeal

process, but the Group believes it has a

supportable and defendable position (based

upon local accounting and legal advice),

and is appealing previous judgements and

communicating with the tax authority in

relation to the disputed tax assessments.

The Company’s expected outcome of

disputed tax assessments is held within

the relevant provisions in the 2022 financial

statements. The Group has also recorded

provisions for taxes other than income

taxeswhich are recorded under IAS 37.

The Committee has considered the

latest available information provided by

management including the latest view of

external advisers and is confident with the

judgements made in preparing the financial

statements in the current period.

Valuation of inventory

The Committee reviewed the Group’s

policies and procedures over the valuation

and recoverability of inventory (£50.2m).

The Committee received confirmation

that the valuation principles had been

consistently applied and noted that the

majority of inventory items were made to

order rather than held for generic stock

andhence the recoverability risk was low.

Accordingly, the Committee concluded

thatthe accounting treatments were

reasonable and appropriate.

Classification of

exceptionalitems

As part of the Committee’s deliberations

over whether the annual report and

accounts, taken as a whole, is fair, balanced

and understandable, the Committee also

considered the amounts disclosed as

exceptional items. The nature of the items

classified as operating exceptional items

during the period is described in note 5.

The Committee considered the accounting

treatment and disclosure of these items

in the financial statements including

seeking the views of the external auditors.

On the basis of this review, the Committee

concluded that the accounting treatment

and disclosures in relation to these items

were appropriate.

Going concern

The Committee gave careful consideration

to the going concern statements made in

the half and full year financial statements.

The Committee conducted rigorous

reviews of the Group’s financial forecasts,

challenging key assumptions and giving

careful consideration to the plausible

downside scenarios modelled, when

assessing the impact these would have

onthe going concern status of the Group.

The Committee concluded that the Group

had adequate resources to continue in

operational existence for the required

period and that it was appropriate for the

Directors to use the going concern basis

of accounting.

Fair, balanced and

understandable view

At its May 2021 meeting, at the Board’s

request, the Committee reviewed the

content of the 2021 Annual Report and

Accounts and advised the Board that, in its

view, when taken as a whole that document

is fair, balanced and understandable

and provides the information necessary

for shareholders to assess the Group’s

position and performance, business

modeland strategy.

The same process has been followed by

theCommittee in relation to the Annual

Report for FY22.

In making its recommendation to

theBoard the Committee drew on its

experience during FY22 and prior years,

supplemented by:

– Reviews of the monthly management

accounts, enabling trends and key

business dynamics to be monitored

through the year

– Clear guidance provided to all section

authors on the requirement to draft in a

fair, balanced and understandable way

– Reviews of the annual report undertaken

at different levels of the Group and by

the Executive Leadership Team, with

an opinion that the reporting meets the

required standards confirmed in writing

tothe Committee

– The review of the narrative reporting

conducted by the external auditors’

aspart of their review

– Reviews of the narrative reporting by the

Audit Committee Chairman and other

Directors prior to formal consideration

ofthe draft Annual Report by the Board.

Corporate Governance continued

External audit

Relationship with the

externalauditors

Ernst & Young LLP (EY) have been the

Company’s auditors since June 2017, when

they were appointed by the Board following

a competitive tender that was led by the

Committee. They have been re-appointed

by shareholders at each subsequent

AGM. The lead audit engagement partner,

Kevin Harkin, has been in this role since

EY’s tenure commenced and this year’s

audit willbe his last in this capacity.

The Committee is grateful for his approach

to the external audit and management of

the process throughout his time as the

signing partner. An orderly handover to his

successor is underway to mitigate the risk

ofany loss of knowledge in the transition.

The EY audit partner attends each

Committee meeting to ensure two-way

communication of matters relating to the

audit and also has regular contacts with

both the Committee Chairman and the CFO.

The scope and key focus of the forthcoming

year’s audit is discussed with and approved

by the Committee, who also review and

approve the fees for that audit and the

review of the half year financial statements.

The Committee has regular discussions

with the auditors, without management

being present, covering a range of financial

reporting, accounting, internal control and

risk matters and receives and reviews the

auditors’ reports and management letters,

which are one of the main outputs from

theexternal audit.

Independence and objectivity

of external auditors

The Committee places great emphasis on

the objectivity of the Company’s auditors,

EY, in reviewing the financial statements

that are issued to shareholders. In all of

their dealings with key members of the audit

team, the Committee looks for evidence that

their work is being done from a position of

independence, with an entirely objective eye

and appropriate professional scepticism.

In turn, EY put safeguards in place to

avoid compromising their objectivity and

independence. They provide a written report

to the Committee on how they comply with

professional and regulatory requirements

and best practice designed to ensure their

independence. Key members of the EY

audit team rotate and the firm ensures,

where appropriate, that confidentiality is

maintained between different parts of the

firm providing services to the Group.

Use of the auditors to

providenon-audit services

In certain limited circumstances it may be

cost effective or otherwise advantageous for

EY to provide certain non-audit services, in

particular where their skills, experience and

familiarity with the Group make that firm the

most suitable supplier.

An important safeguard on the

independence of the external auditors is that

they do not earn disproportionate fees from

the provision of non-audit services which

could, or could give the appearance, of

compromising that independence.

To maintain this position, the Committee

has adopted a detailed policy, most recently

reviewed in March 2021, which requires that

no non-audit services may beundertaken

by the external auditors unless all the

requirements of that policy have been

fulfilled. The policy sets out:

The circumstances in which it may be

appropriate to procure non-audit services

from the external auditors and a list of

permitted services:

– A list of prohibited services including,

but not limited to, tax advisory work,

services where EY would audit or rely on

their own work, where they would act in

an advocacy role for the Group or where

they would provide management, payroll,

valuation, legal, internal audit, financing

orunderwriting or HR services;

– The procedures for approval of proposed

fees, which required the approval of:

– For fees of up to £25,000, the CFO;

– For fees between £25,000 and

£50,000, the CFO and Committee

Chairman; and

– For fees of more than £50,000, the

CFO, Committee Chairman and Board.

– A cap on the fees for permitted services,

which must not exceed 70% of the

average of the fees paid for such services

in the last three consecutive financial

years; and

– Regular reporting of any such fees

payable to the external auditors and

annual certifications by the external

auditors and CFO that they are satisfied

that the independence of the external

auditors has been maintained.

Over the last three financial years, the fees

paid to EY and its associates and the non-

audit fees included within these, were:

£’000 FY22 FY21 FY20

Audit fees 740 778 1,027

Audit-related

fees (review of

interim financial

statements) 80 77 74

Non-audit services – – 3

Total fees paid 820 855 1,10 4

Non-audit fees

relative to audit

fees (%) 11% 10% 7%

Over the three financial years non-audit fees

have averaged 9% of the audit fee.

None of the non-audit services provided

by the external auditors was regarded as a

significant engagement by the Committee.

Effectiveness of the

externalauditors and

proposedre-election

The Committee assesses annually the

qualification, expertise, resources and

independence of the external auditors,

aswell as the effectiveness of the

externalaudit process.

The Committee’s assessment is performed

by an audit satisfaction questionnaire

completed by the Chairman, Committee

members and relevant members of

senior management.

The Committee is satisfied that the external

auditors remain fully independent, objective

and effective and has recommended to

the Board that a resolution for the re-

appointment of Ernst & Young LLP should

be put to shareholders at the 2022 AGM.

Corporate Governance De La Rue plc Annual Report 2022

Internal audit

Internal auditors

The internal audit function provides

an important assurance role and is

complementary to the work of the external

auditors. PricewaterhouseCoopers LLP

(PwC) have provided internal audit

services to the Group since FY2013/14.

The personnel involved in the internal audit

team have changed over PwC’s tenure and

the Committee is satisfied that they have

maintained their independence.

The appointment of the internal auditors

is overseen by the Committee, which also

reviews and approves the internal audit

charter and annual programme of audit

assignments, as well as the fees payable.

The annual internal audit plan is aligned

with the Company’s risk register and forms

part of a medium term rolling programme of

audit assignments, predicated on a risk-led

basis. The Committee meets regularly with

the internal auditors, without management

being present, to discuss their findings, the

implementation of remedial actions and

the Group’s internal control environment

more generally.

The FY22 internal audit plan was approved

by the Committee in March 2021 and kept

under review during the year. All internal

audit assignments were completed during

the period. In March 2022 the Committee

reviewed and approved the internal audit

charter and plan for FY23.

A review of the effectiveness of the internal

auditors was completed and presented to

the Committee in March 2021. This was

undertaken by means of a questionnaire

circulated to those audited in the year,

senior members of the Finance function

and the Committee, and supplemented

the Committee’s ongoing monitoring of

PwC’s work. The Committee concluded

that the quality, experience and expertise

of the internal auditors was appropriate

for the business and were also satisfied

that the actions management has taken

toimplement agreed improvement

actionssupport the effective working

oftheinternal audit function.

Internal control and

riskmanagement

Internal control

The Committee oversees the

implementation and maintenance of the

Group’s internal controls, with a particular

focus on internal financial controls. It does

so through reports received from the

internal audit function and any reports from

the external auditors on internal control

mattersnoted as part of their audit work.

In addition, the Group operates a system

of annual self-assessment internal policy

and control declarations. These are made

at various levels of management and detail

and certify that the control environment

in their business area is appropriate and

functioning. Any non-conformances are

notified as part of this process and, where

remedial actions are appropriate, these

are followed up by senior management

toensure that a satisfactory internal

controlenvironment is maintained.

These controls and procedures are

designed to manage, but not eliminate,

the risk of failure of the Group to meet its

business objectives and, as such, provide

reasonable but not absolute assurance

against material misstatement or loss.

Internal controls over

financialreporting

Management is responsible for establishing

and maintaining adequate internal controls

over financial reporting, including over

the Group’s consolidation process.

Internal controls over financial reporting

are designed to provide reasonable

assurance regarding the reliability of

financial reporting and the preparation of

financial statements for external reporting

purposes. A comprehensive strategic

planning, budgeting and forecasting

system is in place. Monthly financial

information, including trading results and

cash flow statements are reviewed by senior

management and reported to the Board.

The ELT reviews performance against

budget and forecast on a monthly basis

andsenior financial managers regularly

carry out Group consolidation reviews

andanalysis of material variances.

Risk management

The key elements of the Group’s risk

management framework and procedures

are set out on pages 26 to 31. At each

meeting the Committee reviews the

principal risks facing the Group and reviews

the emerging risks throughout the year,

receiving reports from the Risk Committee

on the matters they have considered.

In addition, each of the principal risks is

discussed by the Board at various points

during the year.

Combined assurance model

The Group’s internal control environment

operates a ‘three lines of defence’ model,

which is monitored by the Committee.

The first line of assurance is the work

of operational and line management,

supported by local operating procedures

and systems. The second line of assurance

comes from checks by central functions

against Group policies and standards, and

senior management assurance, reporting

and monitoring. This work is bolstered by

the independent audits that take place

across a range of areas as part of our

programme of BnEI and ISO accreditations

and certifications. The third line of assurance

is provided by the internal audit function,

which primarily focuses on the processes

and procedures followed both locally and

Group-wide.

By reviewing the collective outputs from

these various sources of assurance the

Committee and Board gain assurance over

the design and operation of internal controls

across the Group on an ongoing basis.

Effectiveness review

The Committee is responsible for reviewing,

on behalf of the Board, the effectiveness

of the Group’s internal control and risk

management systems, which covers

all material controls, including financial,

operational and compliance controls.

A formal effectiveness review was

performed during the year and considered

by the Committee, which concluded that

none of the areas identified for enhancement

constituted a significant failing or weakness

for the Group.

Nick Bray

Chairman of the Audit Committee

24 May 2022

Corporate Governance continued

Members & attendance

Member Directors’ attendance

Kevin Loosemore (Chairman) 2 (2)

Nick Bray 2 (2)

Maria da Cunha 2 (2)

Catherine Ashton 2 (2)

Margaret Rice-Jones 2 (2)

Notes:

Figures in brackets denote the maximum number

ofmeetings that could have been attended.

Where a Director is unable to participate in a Committee

meeting they will review the meeting materials and

communicate their opinions and comments on the

matters to be considered to the Committee Chairman.

Principal responsibilities

– Assist the Board in fulfilling its

oversight responsibilities in respect

of ethical matters, with the aim that

the Group conducts its business

withintegrity and honesty

– Advise the Board on the identification

of ethical risk and the development of

strategy and policy on ethical matters

– Monitor compliance with the

Company’s policies and procedures

on ethical matters, including the

operation of its whistleblowing hotline

– Oversee the investigation of any

material irregularities identified or

reported and review any subsequent

findings and recommendations

Dear Shareholder,

I am pleased to present the Ethics

Committee report for the period

ended26 March 2022.

Operation of the Committee

The Committee oversees, on the Board’s

behalf, the Group’s compliance with

ethical business practices including the

appointment and remuneration of our Third

Party Partner sales consultants (TPPs),

our Code of Business Principles (CBP) and

compliance with its provisions and any

whistleblowing reports. The Committee

makes recommendations to the Board on

how these matters should be addressed,

reinforcing the Group’s commitment to

ensuring that sound ethical practices are

embedded in the way we do business.

The Committee comprises all of the

Non-executive Directors. The CEO,

CFOand other senior management may

attend meetings at the invitation of the

Committee. Members of the ELT and other

employees, including senior members of

divisional leadership teams, may be asked

to attend from time-to-time to address

specific matters.

Activities during the period

During the period to 26 March 2022,

the Committee focused on the

following activities:

CBP-related initiatives, including:

– Monitoring the launch of online

compliance training modules including

anti-bribery and corruption, competition

law and sanctions awareness

– Ongoing and planned awareness-

raising initiatives and training to

ensure expected ethical standards

are maintained and further embedded

throughout the organisation

– Review and approval of the anti-bribery

and corruption policy

The management of the TPP

programme including:

– Reviewing progress with the rollout

ofa new fee model and the findings

of an internal audit into the monitoring

of partner activity reports and

invoice payments

Oversight of other business ethics matters:

– Update on activities related to the

ISO 37001 anti-bribery management

systems and the Banknotes Ethics

Initiative (BnEI) accreditations

– Review of sanctions risks and actions

undertaken or planned to manage

those risks, including updates regarding

sanctions monitoring

– Review of the gift register for

Executive Directors

– Review of reports on issues raised

through the whistleblowing hotline –

CodeLine – and other channels and

review of results of any investigations

into ethical or compliance breaches

orallegations of misconduct

Ethical risks

It is vital that we uphold the highest ethical

standards in the way we conduct our

business in order to maintain the trust and

confidence of customers and everyone we

deal with. We recognise that our business

is exposed to risks of unethical conduct

because of the nature and value of many

of our contracts, and because standards

of integrity may not be consistent across all

the countries in which we operate. We have

a robust compliance programme in place

to manage these risks. Further information,

including a description of our ethical

framework can be found in the Responsible

Business report on pages 32 to 45.

Training

Regular, relevant and focused training

on ethics-related subjects is important

and the Committee receives regular

reports about our ethics and compliance

training programme. Training during the

period included:

– Confirmation by colleagues that they

understand and continue to comply

withthe Code of Business Principles

– Anti-bribery and competition law training

where relevant for new starters and those

changing roles

– Sanctions awareness training

– Online training modules for TPPs

andrelevant employees

– One-to-one training for new site

Ethics Champions

– Criminal Finance Act awareness training

– Modern slavery awareness training

– Confirmation of understanding of and

adherence to gifts and hospitality policy

Whistleblowing

We encourage all employees and people

acting on our behalf to speak up if they

have any concerns. Ethical questions

or concerns can be raised through an

externally operated confidential reporting

service. All reports are taken seriously

and investigated as appropriate and all

findings and remedial actions are reported

in detail to, and reviewed by, the Ethics

Committee. During the year a change in

our whistleblowing service provider was

supported by an awareness campaign to

remind colleagues about the service and

to promote confidence in the integrity of

the process.

Kevin Loosemore

Chairman of the Ethics Committee

24 May 2022

We must uphold

the highest ethical

standards in the

way we conduct

ourbusiness.”

We must uphold

the highest ethical

standards in the

way we conduct

ourbusiness.”

Corporate Governance De La Rue plc Annual Report 2022

Ethics

Committee

Dear Shareholder,

I am pleased to present the Risk

Committee report for the period ended

26 March 2022.

Operation of the Committee

The Directors have overall responsibility

for the Group’s systems of internal control

and risk management, which includes

the identification of the Group’s principal

and emerging risks. Details of how the

Directors fulfil this responsibility and the

principal risksthe Group faces can be

found on pages 27 to 31.

The primary responsibility of the Risk

Committee is supporting the Board by

leading oversight of the identification and

evaluation of the risks facing the Group

andmonitoring how these are managed.

The Committee comprises all of the

Executive Directors and the rest of the

ELTmembers. The Group Director

of Security, HSE and Risk attends

the Committee’s meetings and other

managerswith operational or functional

ownership ofriskswill attend by invitation.

Any Director may attend meetings

and theBoard may appoint any other

individualas they determine.

Activities during the period

The Committee met four times during

the period and considered the following

material items:

As routine items considered at

every meeting:

– The Group’s principal risks and

uncertainties (for details of these risks,

please refer to pages 27 to 31) and

the status of the mitigating actions

andcontrols relating to those risks

– Reviews of emerging risks not included

inthe Group risk register, including

‘horizon scanning’ sessions

In addition the following matters were also

considered during the period:

– Review of the risk disclosures and

theCommittee’s report within the

2021Annual Report

– ‘Deep dive’ sessions with operational

orfunctional risk owners:

– Breach of Security or Product Security

– Quality management in

our Authentication and

Currency businesses

– Failure of a Key Supplier

– Sustainability and Climate Change

– Sanctions

– The disclosure of risk inthe

interim statement

– Insurance market conditions in relation

toterrorism aspects of our material

damage and business interruption

insurance, and the cyber-risk market.

The Committee also reviewed the

statusof the Group’s information

securityarrangements in readiness

fortheinsurance renewal

– Review of our risk management policy

and framework

The Committee’s work interfaces

with thatofa number of other Board

Committees, most notably the Audit

Committee. The Committee Chairman

reports on the material matters discussed

at each Committee meeting to the

next meeting of the Audit Committee.

The minutes of meetings of the Risk

Committee are shared with the

Directors. Feedback from the Board

orAudit Committee is shared at the

nextfollowingCommittee meeting.

The Committee is supported in its

work by other management meetings

and committees, including divisional

and centralenabling functions risk

committees and other meetings and

bodiesdealing withspecific risk areas

suchas sanctions,HSE and security

andtheEthics Committee.

Jane Hyde

Chair of the Risk Committee

24 May 2022

Members & attendance

Member Members’ attendance

Jane Hyde (Chairman) 4 (4)

Clive Vacher 4 (4)

Natasha Bishop 4 (4)

Andrew Clint 3 (4)

Ruth Euling 4 (4)

Rob Harding 4 (4)

Notes:

Figures in brackets denote the maximum number

ofmeetings that could have been attended.

Where a Director is unable to participate in a Committee

meeting they will review the meeting materials and

communicate their opinions and comments on the

matters to be considered to the Committee Chairman.

Principal responsibilities

– Developing and monitoring the risk

management policy and overseeing

the implementation of the Group-

wide risk management framework

foridentifying and managing risks

– Identifying and keeping under review

the principal risks faced by the Group,

and reviewing the mitigations and

controls relating to those risks

– Identifying and assessing any

emerging or developing risks

– Providing appropriate reporting

onthe status of risk management

within the Group

– Promoting a risk management

cultureand control environment

– Reviewing the effectiveness of the

Group’s system of risk management

The Risk Committee

supports the Board

by identifying and

evaluating the risks

facing the Group.”

The Risk Committee

supports the Board

by identifying and

evaluating the risks

facing the Group.”

Risk

Committee

Corporate Governance continued

Remuneration

Chair’s

introduction

Members & attendance

Member Directors’ attendance

Maria da Cunha (Chair) 4 (4)

Nick Bray 4 (4)

Catherine Ashton 4 (4)

Margaret Rice-Jones 4 (4)

Note:

Figures in brackets denote the maximum number of meetings that could have been attended.

Principal responsibilities

Remuneration

– Setting and reviewing the remuneration of the Chairman, Executive

Directors and senior executives who report to the Chief Executive Officer

– Ensuring that all remuneration paid to Directors is in accordance

withthe Company’s previously approved remuneration policy

– Ensuring that all contractual terms on termination, and any payments

made, are fair to the individual and the Company

– Monitoring the reward policies and practices throughout the business

Incentive plans

– Determination of the design, conditions and coverage of annual

andlong-term incentive plans for Directors and senior executives

andapproval of total and individual awards under the plans

– Determination of targets for any performance-related pay plans

Governance and compliance

– Ensuring that provisions relating to disclosure of remuneration

assetoutin the relevant legislation, the UK Listing Rules and

theUKCorporate Governance Code are fulfilled

This report is presented in three main

sections: an annual statement from

the Chair of the Committee; the annual

report on remuneration for FY22; and

the Directors’ remuneration policy.

The Directors’ remuneration policy was

approved by shareholders at the AGM

on 6 August 2020 and had a binding

effect at that date. The policy is not

subject to a vote at the 2022 AGM.

Dear Shareholder,

On behalf of the Board, I am pleased to

present the Directors’ remuneration report

for the period ended 26 March 2022.

This will be my third and last report as

Chair of the Remuneration Committee.

I amdelighted that Margaret Rice-Jones

who has been a member of the committee

since 22 September 2020 will succeed me.

This has been another challenging year

when the Company has faced significant

headwinds from increased supply chain

costs and the production impacts resulting

from increased absence due to Covid 19.

Management took action to tackle these

challenges by focusing on proactive cash

management and delivering further cost and

operational efficiencies across the business,

while continuing to target market growth in

all product areas. The pension valuation was

brought forward reducing the schedule of

contributions by £57m over the period from

2023 to 2029, while preserving all future

benefits and providing enhanced protection

for scheme members. The business has

continued to take further steps to invest in

the right production capacity through the

new polymer line in Westhoughton and

the Malta expansion. These investments

will double our Polymer, tax stamps and

brand protection labels capacity and

create the largest banknote facility in our

portfolio. Throughout the year, Management

remained focused on employees with a

continued emphasis on building a culture of

respect and inclusivity for every individual,

prioritisation of our employees’ health,

wellbeing and fair treatment, resulting in

strong employee engagement levels globally.

We believe that it is critical that executive

remuneration is fair and competitive so that

the Group continues to attract, motivate

andretain the highly talented people

required to deliver the challenging targets

towhich we have committed.

Above all, the Committee’s objective is

toensure that our Directors’ remuneration

policy incentivises and rewards the delivery

of sustainable shareholder value.

This year, I would like to focus on three

themes: the performance of the Group in

the financial year that ended on 26 March

2022; the inclusion of ESG metrics into

incentives and the application of the

remuneration policy for FY23 with reference

to the remuneration principles tothe

wider workforce.

We have made progress on delivery of the

Turnaround Plan and our remuneration

policy remains critical to thedelivery

ofboth planned performance each year

andthe longer-termtransformation of

DeLa Rue.”

We have made progress on delivery of the

Turnaround Plan and our remuneration

policy remains critical to thedelivery

ofboth planned performance each year

andthe longer-termtransformation of

DeLa Rue.”

Corporate Governance De La Rue plc Annual Report 2022

Committee meetings

The Remuneration Committee consists

exclusively of Non-executive Directors,

allof whom are regarded as independent.

The Committee met four times during

theperiod and details of attendance can

be found overleaf. The Chief Executive

Officer and the Group Director of Human

Resources also attended meetings

by invitation. The General Counsel

and Company Secretary, who is also

secretary to the Committee, advised

ongovernance issues.

No Executive Director or employee is

present for or takes part in discussions

inrespect of matters relating directly

totheirown remuneration.

Activities in the period

– Approval of the Executive Leadership

Team (ELT) group and strategic

individualobjectives for the year

– Review of performance targets for

short- and long-term incentive plans

– Approval of pay awards for Executive

Directors and the ELT and Chairman

– Review and approval of the Directors’

remuneration report

– Review of market trends and latest

developments in governance

– Review of market trends in relation to

treatment of executive remuneration

inlight of COVID-19

– Review of inclusion principles for ESG

in incentives

– Awards under the UK Sharesave scheme

– Review broader workforce remuneration

in consideration of executive remuneration

– Review of the report on gender pay gap

and action plan

Government support

No Government Covid-19 support

wasutilisedduring the period.

Application of

remunerationpolicy

Our remuneration policy is key to delivering

both in year performance and the longer

term transformation of De La Rue.

The current policy is not due for review

until next year and continues to support

the delivery of the Turnaround Plan in its

ambition to return to progressive margin

growth in Currency and strong year on

yeargrowth in Authentication.

The primary focus for the business

duringthe FY22 financial year has been:

– Increased focus on driving efficiency

andgreater cost competitiveness to help

offset the challenges faced throughout

the year, helping to mitigate supply

chaincost inflation

– Proactive procurement strategies

tomanage raw material shortages

– Targeted profitable growth and

conversionof customers, in key

productsegments of Polymer,

Featuresand both Brand and GRS

– Ongoing footprint and capacity review

adding production capability and flexibility

with Malta expansion and new polymer

line at Westhoughton

– Positive cash management

– Continuing to mitigate and manage the

impacts of Covid and protecting both the

health and wellbeing of the workforce

andthe financial security of the business

– Releasing a clearly articulated ESG

strategy outlining the key priorities

andtargets set out under all areas

– Supporting high levels of employee

engagement and communication

– Creating certainty on potential future

cost pressures by securing structured

pay awards while maintaining focus on

balanced rewards and wellbeing for

all employees

– Continuing to align executive

andshareholder interests

No changes were made to the application

ofthe policy this year.

Employee experience

During FY22, our operating sites in the

UK, Malta, Kenya and the US remained

operational. We experienced Covid related

disruption in Sri Lanka which was carefully

managed. Our employees worked tirelessly

throughout the period, and despite

significant Covid-related factory absences,

our factories remained full and we delivered

as promised to customers with minimal

disruption across both Divisions.

The impact on the overall business

performance is reflected appropriately in the

outturn of the Annual Bonus Plan. However,

we are pleased that, as a result of the strong

focus on cost management, growth and

transformation activity completed during the

year, we will be making a bonus payment

to all eligible employees under theAnnual

Bonus Plan for FY22 year.

We also conducted a salary review during

the year for all eligible employees. This was

deferred to October 2021 for the majority

of employees. For those employees in

Collectively bargained areas eligible for

review we were able to secure certainty

forboth employees and the business

negotiatingmulti-year pay deals into

FY23. These changes in wider workforce

remuneration were taken into account in

ourdecisions on executive remuneration.

We also took steps to ensure appropriate

wellbeing benefits and support in all

locations, including provision of specific

Covid support such as testing and

vaccinations to those employees unable to

receive that support locally.

There were no extensive redundancies

during the year. However, ongoing steps

were taken to ensure the cost base was

appropriate and activity flows were optimal,

including relevant shift and other working

patterns across all our sites.

The engagement of our workforce remained

high despite the challenges experienced

through the year. Our 2021 employee

engagement survey showed improved

engagement scores in all areas vsprior

surveys and 79% of respondees would

recommend De La Rue as a great place

to work.

Shareholder experience

We entered the second year of the

Turnaround Plan with strong profile

of ongoing growth, an improved cost

base, and competitive product portfolio.

The business was impacted by the

significant headwinds as a result of supply

chain cost inflation, increased absence

levels, materials shortages in key areas

and governments being slower than

anticipated to contract and implement

new GRS schemes. This resulted in slower

progress against our original plan with

adjusted operating profit for Currency and

Authentication combined growing by 28.9%.

Over the last two years, since we set out our

Turnaround Plan, adjusted operating profit

generated by these two divisions has moved

from just above breakeven at £1.4m in FY20

to £35.8m in FY22.

The Board does not expect to pay dividends

unless and until the Company is generating

sustainable positive free cash flow.

Remuneration outcomes

As reported elsewhere in this annual report,

the business continued to prioritise focus

on the key elements of the Turnaround

Plan. The significant disruption and

pressure described above, combined

to slow our progress as announced on

24 January 2022.

Our Currency business benefited from the

cost reduction and operation efficiencies

reporting an increase in divisional adjusted

operating profit of 20.4%. Conversion to

polymer continues to grow with Polymer

volumes produced in FY22 up 40% on

prior year.

Authentication has delivered positive

performance in FY22, further expanding

its customer base in GRS and improving

performance in Brand. They have achieved

revenue growth of 16.4% and an increase

inadjusted operating profit of44.2%.

The committee reviewed all remuneration

outcomes in context of the business

outcomes and the experience of the

shareholders and the wider workforce.

Remuneration continued

Revenue 20

Profit 30

Net Debt 30

ESG 10

Strategic personal objectives 10

Current ABP structure

andweighting %

In order to address the continued

headwinds, a further cost out programme

delivered additional improvements to

the overall cost base of the organisation.

Strong cash management has led to

an improved net debt position despite

significant investment in the business

in both our Westhoughton and Malta

sites to support future growth inboth

Currencyand Authentication.

In reviewing the outcome of the ABP

againstthe targets set for Executive

Directors, the Committee considered

the broad aspects of the Company’s

performance during the year, including

theoutcomes forshareholders, customers

and employeesas described above.

ABP scorecard financial measures

account for 80% of maximum ABP with

the remaining 20% based on achievement

against strategic personal objectives.

Under the plan structure, both revenue

and adjusted operating targets were not

met while average net debt was achieved.

Executives will be awarded 30% of the

maximum 80% available under the ABP.

The Committee considered that the

formulaic outcomes under the scorecards

for Executive Directors were reflective of

the underlying performance and decided

against exercising discretion (positive

or negative).

Further details on our performance against

bonus measures is set out on page 75.

The performance period for the 2019

PSPperiod concluded March 2022.

No Executive Directors were made an award

under the Performance Share Plan (PSP)

in 2019 therefore no payments will be due

for award under any plan for this period.

The performance period for 2020 PSP

willconclude in 2023 and will be measured

accordingly against its performance over

theperiod at that time.

We still think the measures for ABP are

theright ones and believe that the balance

of both short and long term incentives is

appropriate in a turnaround situation.

The Committee has been reviewing

emerging best practice on inclusion of

ESG performance measures in incentive

plans. During the year, the Company’s ESG

strategy was updated and approved by the

Board in January 2022. In the coming year,

as part of the broad review of Directors

remuneration policy, the Committee will

consider whether to amend the plans to

align with the refreshed strategy.

For FY23, ESG will form part of the

strategicpersonal component, with

Executive Directors having a 10% weighting

attached to a target reduction of solid waste

per good output.

The Committee is pleased with the

performance of the remuneration policy

and the impact it has had on driving

focus and delivery against the Turnaround

Plan. Our aim is to continue to deliver an

appropriate balance between incentivising

Executive Directors to deliver what remains

a challenging plan and ensuring that

variable remuneration remains payable

on performance that continues to deliver

sustainable value to shareholders.

We believe that structure of remuneration

provides the right balance of these elements

and therefore we will continue to apply this

model into the forthcoming year with no

material change, while maintaining the rigour

in setting and cascading targeted objectives

designed to deliver growth in line with the

long-term aims of the business.

We remain committed to maintaining

open and transparent engagement on

remuneration with our shareholders.

We are very pleased that our previous

Remuneration report was strongly endorsed

by shareholders at the AGM on 29 July

2021, with over 98% of votes cast in favour.

We welcome the constructive feedback

our shareholders have provided in the

last year, which will continue to inform our

deliberations and shape our approach

to remuneration.

In accordance with the regulations we

will beasking shareholders to provide

an advisory vote on the annual report on

remuneration as set out on pages 74 to 84

which provides details of the remuneration

earned by Directors for performance in the

period to26 March 2022.

A full copy of the remuneration policy can

be found in the 2020 Annual Report on the

Company’s website: www.delarue.com

andon page 83.

Executive Director changes

As indicated in last year’s annual report,

Ruth Euling, MD Currency, was appointed

as an Executive Director on 1 April 2021

and is subject to the requirements of

the remuneration policy. There were

nofurtherchanges to the Executive

Directors inthe last year.

Priorities for 2022/23

Work of the Committee in FY23 will continue

to focus on ensuring that executives are

fairly rewarded for their contribution to the

Group and incentivised to deliver returns

forshareholders while driving a strong

culture aligned to its ESG strategy.

The Committee is supportive of the

adoption of specific Environment, Social

and Governance (ESG) measures in

remuneration during FY23. Key metrics

onHealth and Safety, diversity and

specificsteps to support the environmental

sustainability journey will also continue to

form part of personal strategic objectives

for Executive Directors and the wider

management population.

I trust you will find the implementation

reportclear and informative and the

Committee has your support for the

reportat this year’s AGM.

Maria da Cunha

Chair of the Remuneration Committee

24 May 2022

Compliance statement

This report has been prepared on behalf

of, and has been approved by, the

Board. It complies with the Large and

Medium-sized Companies and Groups

(Accounts and Reports) Regulations

2008 (SI 2008/410) as amended, the

UK Corporate Governance Code and

the FCA’s Listing Rules and takes into

account the policies of shareholder

representative bodies. The Companies

Act 2006 and the Listing Rules require

the Company’s auditor to report on the

audited information in their report on

pages 90 to 99 and to state that this

section has been properly prepared

inaccordance with these regulations.

Corporate Governance De La Rue plc Annual Report 2022

Remuneration continued

Summary of remuneration policy

The overriding objective continues to be ensuring that the executive remuneration policy encourages, reinforces and rewards the delivery

ofsustainable shareholder value and aligning Executive Directors interests with those of shareholders.

The Remuneration Committee believes that performance-related pay and incentives should account for a significant proportion of the

overallremuneration package of our executive team, so that their reward is aligned with shareholder interests and the performance of

theGroup, without encouraging excessive risk taking. Performance-related elements of the remuneration therefore form a significant

proportion of the total remuneration packages.

The Committee has decided to add an additional metric in relation to ESG accounting for 10% of the maximum 20% strategic personal

objectives. The decision was taken to ensure that ESG has appropriate focus in the outcomes of the business.

Illustration of the application of remuneration policy

The following charts illustrate the potential value of the Executive Directors’ remuneration package in various scenarios in a typical year.

Salary levels are as at 26 March 2022.

Chief Executive

Minimum

Target

Maximum

Maximum with

50% growth

100%

55.1%

32.6%

26.7%

19.7% 13.1%12.1%

23.2% 15.5%

19.0% 19.0%

28.7%

35.2%

531,686

964,753

1,631,909

1,992,408

Chief Financial Officer

Minimum

Target

Maximum

100%

57.3%

34.0%

27.8%

17.8% 11.9%12.9%

21.2% 14.1%

17.3% 17.3%

30.7%

37.6%

317,074

553,114

932,210

1,141,071

Maximum with

50% growth

Managing Director, Currency

Minimum

Target

Maximum

100%

58.0%

34.6%

28.3%

17.6% 11.7%12.7%

21.0% 14.0%

17.2% 17.2%

30.4%

37.3%

296,129

510,629

855,129

1,044,929

Maximum with

50% growth

Directors’

Remuneration Policy

Fixed Pay

Base Salary

Benefits

Pension

Variable Pay

Annual Bonus Plan Performance Share Plan

80% Group

financial

performance*

20% strategic

personal

objectives*

50% EPS* 50% TSR*

60% cash

40% deferred shares

Performance-tested vesting after 3 years

2-year post-vesting holding period

Malus and clawback and shareholding requirements

Fixed remuneration Annual Incentive Plan (Cash) Annual Incentive Plan (Deferred Shares) Performance Share Plan

Illustrative scenario charts

Performance scenarios for the ABP and PSP assume the following:

Minimum Target Maximum Maximum with share growth of 50%

There is no cash bonus or

deferred share award under the

ABP or vesting under the PSP

Target cash bonus and deferred

shares under the ABP, target

vesting under PSP

Maximum cash bonus,

maximum deferred shares

underthe ABP, maximum

vesting under the PSP

 Maximum cash bonus,

maximum deferred shares

underABP, maximum vesting

under PSP with share price

growth of 50%

Assumptions for the scenario charts

Minimum Target Maximum Maximum with share growth of 50%

Fixed pay (base salary,

benefitsand pension)

Fixed pay (base salary,

benefitsand pension)

Fixed pay (base salary,

benefitsand pension)

Fixed pay (base salary,

benefitsand pension)

No bonus payout 50% of maximum bonus

opportunity (67.5% of salary for

CEO, 57.5% of salary for CFO

and other Executive Directors)

100% of maximum bonus

opportunity (135% of salary for

CEO, 115% of salary for CFO

and other Executive Directors

100% of maximum bonus

opportunity (135% of salary for

CEO, 115% of salary for CFO

and other Executive Directors

No vesting under ABP or PSP 60% will be payable immediately

in cash and 40% will be deferred

in shares

60% will be payable immediately

in cash and 40% will be deferred

in shares

60% will be payable immediately

in cash and 40% will be deferred

in shares. 40% of ABP deferred

shares vesting valued at 60%

25% of PSP shares vesting (25%

of salary for CEO and CFO and

other Executive Directors)

100% of PSP shares vesting

(100% of salary for CEO, CFO

and other Executive Directors)

100% of PSP shares vesting

valued at 150%

Executive Director remuneration mix FY23

Based on the above performance scenarios the table below illustrates that a significant proportion of Executive Directors’ remuneration

isbiased towards variable pay at maximum:

% of pay at

minimum achieved

% of pay at

target achieved

% of pay at

maximum achieved

CEO Fixed 100 55 33

Variable – 45 67

CFO Fixed 100 57 34

Variable – 43 66

MD, Currency Fixed 100 58 35

Variable – 42 65

The remuneration mix above is based on the remuneration policy as it is intended to be operated for FY23. For further information onthe

Director’s Remuneration Policy please see page 83.

Corporate Governance De La Rue plc Annual Report 2022

Remuneration continued

This section of the Directors’ remuneration report

showshow the Remuneration Committee implemented

the policy on Directors’ remuneration for the financial

year 2021/22 including all elements of remuneration

received by Executive Directors and the incentive

outturns for FY22.

Single figure of remuneration for each Director (audited)

The table below shows how we have applied the current remuneration policy during FY22. It discloses all the elements ofremuneration

received by the Directors during the period.

Fixed

Total

Fixed

Variable

Total

Variable Total

Salary

and fees

Benefits (excluding

pensions)

Pensions

Bonus

Long term

incentive (PSP)

(vested)

2022

£’000

2021

£’000

2022

£’000

2021

£’000

2022

£’000

2021

£’000

2022

£’000

2022

£’000

2021

£’000

2022

£’000

2021

£’000

2022

£’000

2022

£’000

2021

£’000

Executive Directors

Clive Vacher 464 450 17 17 46 46 527 265 593 – – 265 792 1,106

Rob Harding

(Appointed to the

board 1 October 2020)

283 138 17 7 17 8 317 138 160 – – 138 455 313

Ruth Euling (

Appointed to the

board 1 April 2021)

260 – 36 – 0 – 296 126 – – – 126 422 –

1,007 588 70 24 63 54 1,140 529 753 – – 529 1,669 1,419

Chairman

Kevin Loosemore

(Became Chairman on

1 October 2019)

202 200 – – – – 202 – – – – – 202 200

Non-executive Directors

Nick Bray 59 58 – – – – 59 – – – – – 59 58

Maria da Cunha 59 62 – – – – 59 – – – – – 59 62

Margaret Rice-Jones

(Appointed to the board

22 September 2020)

57 26 – – – – 57 – – – – – 57 26

Catherine Ashton

(Appointed to the Board

22 September 2020)

51 26 – – – – 51 – – – – – 51 26

Aggregate emoluments 1,435 980 47 24 86 54 1,568 529 753 – – 529 2,097 1,811

Notes:

The figures in the single figure table above are derived from the following:

a. Base salary and fees: the actual salary and fees received during the period.

b. Benefits (excluding pensions): the gross value of all taxable benefits received in the period, including for example car or car allowance and private medical and permanent health insurance.

c. Bonus: A description of the performance measures that applied for the year FY22 is provided on page 75 and 76.

d. PSP: no PSP awards have vested for current Executive Directors since appointment.

e. See page 79 for further details of pension arrangements.

Base salary and fees, Benefits (excluding pension) and Pensions are fixed pay elements. Bonus and Long term incentives (PSP) (vested) are variable pay elements.

Annual Report

on Remuneration

Changes in Executive Directors during the year

Ruth Euling appointment

Ruth Euling, Managing Director of the Currency Division, joined the Board as an Executive Director on 1 April 2021. Ruth was appointed

onabase salary of £260,000 and was not eligible for inclusion in the salary review in October 2021.

Ruth Euling received pay and remuneration awards in line with our remuneration policy. Pension was set at 10% company contribution

subject to a 6% employee contribution, in line with contributions available to the wider UK workforce. Ruth is eligible for awards under

theGroup ABP at a maximum target of 115% of base salary effective from her appointment date.

Individual elements of remuneration

Base salary and fees (audited)

Base salaries for Executive Directors are normally reviewed annually by the Remuneration Committee and are set with reference

toindividualperformance, experience and responsibilities, Group performance, affordability and market competitiveness.

Executive Directors, Clive Vacher and Rob Harding were both awarded a 2% increase in line with the wider workforce in October 2021.

They will remain eligible for the salary review related to the FY23 in July 2022.

Base salary level

October 2021

£’000

Base salary level April

2021

£’000

Increase

Clive Vacher 468 459 2

Rob Harding 286 280 2

Ruth Euling

260 N/A N/A

Note:

1. Ruth Euling’s salary increased to reflect her appointment to Executive Director on 1 April 2021. Ruth had no further increase to pay in FY22.

The Directors’ remuneration policy approved by shareholders at the 2020 AGM sets out an expectation that increases in salary for Executive

Directors will not normally exceed the range of increases awarded to other employees in the Group except in the specific circumstances

listed in the remuneration policy.

During FY22 Clive Vacher’s pension contributions remained in line with those available to the workforce, he will receive a pension

contribution of 10% on the basis of a 6% individual contribution. All other Executive Directors also received a pension contribution in line

withlevels available to the workforce no greater than 10% employer contribution.

The remuneration policy for Non-executive Directors, other than the Chairman, is determined by the Board. The Remuneration Committee

determines the Chairman’s fee. Fees reflect the responsibilities and duties of Non-executive Directors while also having regard to the

marketplace. The Non-executive Directors do not participate in any of the Group’s share incentive plans nor do they receive any benefits or

pension contributions. It is the intention that consistent with the policy for Executive Directors, increases for Non-executive Directors would

not normally exceed the range of increases awarded to the wider workforce.

Fees payable to Non-executive Directors had remained unchanged since FY18 and we reviewed fees for Non-executive Directors in

October 2021 aligned with the timing of a review of salary levels for the wider workforce. Fees payable were increased by 2% in line

withthewider workforce.

The fees for 2022 are as follows:

Non-executive Director fees

October 2022

£’000

April 2021

£’000

Basic fee 51 50

Additional fee for chairmanship of Audit and Remuneration Committees and Senior Independent Director 8 8

The Chairman’s fee was reviewed in October 2021 and increased by 2% in line with the wider workforce to £204,000. Both the fees for the

Non-executive Directors and the Chairman will be increased by 1.5% effective in July 2022 aligned with the timing of a review of salary levels

for the wider workforce.

External directorships of Executive Directors

The Board considers whether it is appropriate for an Executive Director to serve as a non-executive director of another company.

Clive Vacher, Rob Harding and Ruth Euling hold no remunerated external directorship appointments.

Corporate Governance De La Rue plc Annual Report 2022

Remuneration continued

Variable remuneration (audited)

Annual bonus for FY22

The Annual Bonus Plan for FY22 was issued with the following financial structure and targets:

Measure Threshold Target Maximum Actual

% of maximum

achieved

Group adjusted revenue £388.4m £399.0m £416.6m £375.1m 0%

Group adjusted operating profit £38.0m £4 6.1m £47. 3 m £36.4m 0%

Average net debt £100.0m £91.1m £7 7.4 m £57.4m 100%

Under the Group adjusted revenue metric, the target award under the plan was based on the market consensus expectation with Maximum

award at stretch above expectations to prioritise strong focus on revenue generation through increased sales of higher margin product.

Operating profit and average net debt metrics were equally based on target award at market consensus and maximum award being

achieved at published turnaround targets. Payout was achieved only under the Average Net Debt metric as outlined above.

Twenty per cent of the Executive Directors’ bonus is based on achievement of personal objectives. Personal strategic objectives were

aligned to the delivery of the Turnaround Plan and comprised of both tactical and transformational targets focused on the achievement

ofcore strategic priorities. The detail of the objectives, for all Executive Directors, which were consistently aligned, are outlined below:

Summary of personal strategicobjectives Summary of performance

Currency Market Leadership

– Deliver target revenue and Divisional operating profit levels.

– Deliver significant polymer growth converting 4 more customer

denominations to polymer.

– Secure 4 new foil on polymer customers.

– Develop commercialisation and strong returns from product

development.

Partially achieved

– Divisional OP and Revenue were not achieved to plan however polymer

growth targets achieved and new foil on polymer target achieved in full.

– R&D roadmap completed and new products launched to market

(shouldwename them).

Authentication Growth

Deliver target revenue and Divisional operating profit levels.

– Deliver GRS expansion with a further 5new customers.

– Deliver Brand growth setting path for mid-teens operating

profitbyendof FY22.

Partially achieved

– Revenue and operating profit were not achieved in line with plan but

GRS expansion to a further 5 new customers achieved and Brand

growth achieved.

Transformation

– Deliver Malta expansion phase 1 andPhase 2 milestones.

– Deliver milestones for second polymer linein Westhougton.

Achieved in full

– Malta expansion on track, Polymer line inplace in Westhoughton

fullyoperation in FY23.

Value Stream Excellence

– Deliver further cost our programme.

– Ensure the ESG strategy can be clearly articulated to internal

andexternal stakeholders.

Achieved in full

Component 20%of maximum award Award achieved 12%

In reaching its decision on ABP outcome, the Committee reviewed the formulaic outcome of the targets as well as the Company’s underlying

financial, operational and strategic progress during the year, as set out in the Committee Chair’s letter on page 70 and also took into

account wider stakeholder perspectives. The Committee considered that the formulaic outcomes for Executive Directors were reflective

ofthe underlying business performance and decided not to apply discretion (positive or negative). Executive Directors will therefore receive

an award of 30% of the maximum bonus based on achievement of financial targets and 12% ofmaximum bonus based on strategic

personalobjectives. 60% of the bonus is settled in cash, with the remaining 40% settled in shares under the Deferred Bonus Plan vesting in

two equal tranches, one after 12 months and the other after 24 months. DBP awards are not subject to a post-grant performance condition.

Long term incentive – Performance Share Plan (PSP)

The PSP is a share settled long-term incentive aligned closely with business strategy and the interests of shareholders through the

performance measures chosen and the link to share price. The PSP is designed to provide Executive Directors and selected senior

managers with a long-term incentive that promotes sustainable and long-term performance and reinforces alignment between

participantsand shareholders.

Performance measures applying to PSP awards

As noted in last year’s report the awards made under the PSP 2016-2019 were subject to a combination of average annual cumulative

growth in adjusted basic EPS and cumulative growth in ROCE, in each case measured over three financial years. In 2020 the PSP measures

were revised and RTSR (Total Shareholder Return relative to FTSE 250 companies, measured over three years) was used instead ofROCE

alongside the previous EPS metric, which the Committee believes will ensure that appropriate focus is placed on the key business imperative

of restoring value to shareholders.

The performance condition target targets for 2020 and 2021 are aligned to the challenging growth objectives of the Turnaround Plan.

All awards are made as conditional shares based on a percentage of salary and the value is divided by the average share price over a period

before the date of grant, in accordance with the rules of the PSP. In addition, the Remuneration Committee must be satisfied that the vesting

reflects the underlying performance of the Group and retains the flexibility to adjust the vesting amount to ensure it remains appropriate.

Any adjustments will depend on the nature, timing and materiality of any contributory factors.

PSP award vesting in 2022

No Executive Director received an award under the PSP in 2019 and therefore no awards vested under the PSP in FY22 for any current

orformer Executive Director.

PSP awards made in June 2021 (audited)

The Remuneration Committee gave detailed consideration to the most appropriate PSP performance measures that provide a strong

link between the Turnaround Plan execution, business performance and executive reward. For awards made in FY22 the Remuneration

Committee concluded that PSP would remain at the same target levels, and that performance would be measured against two Group

targets: EPS (50% weighting) and RTSR (50% weighting). The measures and targets were confirmed at the time of grant via a Regulatory

News Service announcement.

The 2021 award remains aligned to the Turnaround growth plans over the three-year performance period recognising that we expect

toseethe accelerated growth of both revenue and operating profit under the Turnaround Plan to stabilise by FY24. This means that the

growth targets for the 2021 award were lower in percentage growth than for the 2020 award. This is as a result of the 2021 plan being

basedoff ofahigher growth achievement against the Turnaround Plan as reported in our year end results.

A summary of the performance levels and award vesting levels that apply to awards under the 2021 PSP are shown in the table below:

Year of award Measure

Vesting % of

element at threshold

Vesting % of

element at maximum

EPS Growth %

required for threshold

EPS Growth %

required for maximum

2021 EPS

25 100 8.5 16.7

RTSR 25 100 Median Upper Quartile

2020 EPS

25 100 11 19.2

RTSR 25 100 Median Upper Quartile

Note:

1. Underlying earnings per share. Based on average annual cumulative growth during the performance period.

Executive Directors received PSP awards during FY22 in line with the existing Directors’ remuneration policy as follows:

Number of

shares awarded

Date of

award

of salary

Face value

£’000

Vesting at threshold

(as a % of maximum)

Performance period

end date

Clive Vacher 239,361 30 June 2021 97 459 25 May 2024

Rob Harding 146,276 30 June 2021 97 280 25 May 2024

Ruth Euling 135,586 30 June 2021 97 260 25 May 2024

All awards were granted as nil-cost options, with the number of shares based on a percentage of salary and the average share price over

a five-day period prior to the date of grant, being 191.76p. Face value is the maximum number of shares that could vest multiplied by the

closing share price of 186.2p on the date of grant. The Remuneration Committee may add dividend shares that would have accrued during

the performance period and extended vesting period on that part of the award that may ultimately vest.

Implementation of the remuneration policy in FY23

The remuneration arrangements in FY23 will operate in line our current remuneration policy.

Salary and benefits

As noted in last years remuneration report, the Committee decided to appoint Clive at a salary below market median, with an intent that

should Turnaround Plan strategic objectives and performance be delivered as planned in FY22, a review of Clive Vacher’s base pay based

on all relevant factors including scope and performance in role. The decision has been made to defer that review but to award Clive a

salaryincrease effective 1 July 2022 of 2.5% in line with the wider workforce.

Ruth Euling and Rob Harding will also be awarded a 2.5% increase effective 1 July 2022 in line with increases in the wider workforce.

The Committee remain aware of the need for salary levels to continue to be competitive and commensurate with performance.

ABP FY23

The Remuneration Committee has carefully considered bonus performance measures for FY23, taking into account the delay in the delivery

of the Turnaround Plan announced in trading update in January 2022. The Committee concluded that the current measures set out in the

table on page 78 remain highly relevant. Cost competitiveness, improved efficiency and strong cash management remain key to support

growth in both Currency and Authentication.

Adjusted revenue, profit and net debt targets ensure focus remains on maintaining profitable growth and strong cash management.

Financial targets will remain in line with the adjusted Turnaround Plan financials to ensure that executives remain incentivised and rewarded

for the delivery of the adjusted growth plans. In prior years a 20% weighting on personal strategic targets has been applied ensuring

that Executive Directors are incentivised on the delivery of clear financial metrics and good management of the business in line with the

Turnaround Plan.

Corporate Governance De La Rue plc Annual Report 2022

Remuneration continued

The current maximum entitlement of the Chief Executive Officer under the ABP remains 135% of salary and the Chief Financial Officer and

the other Executive Directors remains at 115% of salary. An additional metric for ESG has been added in FY23 accounting for 10% weighting

while strategic personal objective has been reduced to 10%. to ensure focus continues in this important area and Executives are incentivised

accordingly. As a result an adjustment has been made to the weightings. The structure and weightings will be as follows:

Structure & weighting Weighting

Adjusted revenue 20%

Adjusted operating profit 30%

Average net debt

30%

ESG 10%

Group strategic personal objectives 10%

Note:

1. Average of the 12-month end net debt positions over the course of the year.

No payment will be made on any element of bonus (including the personal element) if a minimum adjusted operating profit is not achieved.

Personal strategic objectives for the Chief Executive Officer and other Executive Directors are focused again on the key strategic priorities

aligned to the Turnaround Plan and will include the following items:

– Deliver profitable growth for the Currency Division through continued delivery of transformation and a focus on operational improvements

and efficiencies. Securing targeted Polymer and features volume growth and deliver targeted FY23 revenue and divisional adjusted

operating profit.

– Achieve sustained growth in Authentication through targeted GRS expansion, delivering Brand revenues and margins in line with the

planned targets and maximising delivery of key contracts. Deliver targeted FY23 revenue and divisional adjusted operating profit.

– Continue to prioritise all areas of value stream excellence including efficiencies in ways of working and delivering in line with our ESG

strategy with a focus on environmental and sustainability targets, maintaining high standards of HSE and improved organisational diversity.

The Committee is committed to assessing the achievement of these objectives on a quantifiable and objective basis and to clear

retrospective disclosure in the Directors’ remuneration report.

The Committee will rigorously review incentive outturns and will consider the overall performance of the business, not just the outcome

ofeach measure.

The specific performance targets are not disclosed while still commercially sensitive but will be disclosed the following year.

Performance measures applying to PSP awards to be made in 2022

The Remuneration Committee has given detailed consideration to the most appropriate PSP performance measures that provide a strong

link between the Turnaround Plan execution, business performance and executive reward. For awards to be made in FY23 under the share

plans rules approved at the 2020 AGM, it was felt that the same metrics as used in 2021 (absolute EPS growth and relative TSR compared

to the constituents of the FTSE 250 index) will provide appropriate incentivisation and will ensure that sufficient focus is placed on the key

business imperative of restoring value to shareholders.

The EPS performance targets applicable to 2022 awards will take into account both internal business plans and market expectations

over the three-year performance period, recognising the FY22 performance outturn and ongoing challenges in market conditions that

the business will face in the coming years. To take into account recent shareholder experience of a fall in the share price and to avoid

the potential for windfall gains if the share price recovers over the vesting period, the Remuneration Committee has determined that the

face value of awards will be scaled back compared to 2021 award levels. Further work is underway to calibrate performance targets and

determine the level of scale back. Full details of these points will be disclosed via an RNS announcement at the time of award.

The award will vest on the third anniversary of award, subject to meeting performance criteria, but any shares which vest will be subject to a

further two-year holding period and only become capable of exercise on the fifth anniversary of the grant of the award.

Shareholding requirements

Executive Directors are required to build up a shareholding equivalent to 200% of salary over a five-year period. It is intended that this

ismet by Executive Directors retaining 100% of vested post-tax Deferred Bonus shares, restricted shares and performance shares until

therequirement is met in full.

The policy has a post-employment shareholding requirement of 200% of salary (or the actual shareholding if lower) for the first year

followingexit and 50% of this guideline level for the second year following exit.

Executive Directors’ service contracts

The table below summarises the notice periods contained in the service contracts for Executive Directors in office as at 26 March 2022.

Date of contract Date of appointment Notice from Company Notice from Director

Clive Vacher 6 October 2019 7 October 2019 6 months 6 months

Rob Harding 1 October 2020 1 October 2020 6 months 6 months

Ruth Euling 1 April 2021 1 April 2021 6 months 6 months

Non-executive Directors’ letters of appointment

The Chairman and Non-executive Directors have letters of appointment rather than service contracts.

Non-executive Director Date of appointment Current letter of appointment end date

Catherine Ashton 22 September 2020 22 September 2023

Nick Bray 21 July 2016 20 July 2022

Maria da Cunha 23 July 2015 27 July 2022

Kevin Loosemore 1 October 2019 30 September 2022

Margaret Rice-Jones 22 September 2020 22 September 2023

Total pension entitlements (audited)

The Group’s UK pension schemes are funded, HMRC registered and approved schemes. They include both defined contribution

anddefined benefit pension schemes, with the DB plans being closed to new entrants and to future accrual.

None of the Executive Directors in the period were a member of the legacy defined benefit schemes. All the Executive Directors have

optedout of the defined contribution plan and receive a cash allowance in lieu of a pension contribution.

Clive Vacher received a pension contribution of 10% of salary on the basis of a 6% individual contribution, in line with levels available

to UK-based employees.

Rob Harding received a pension contribution of 9% of salary on the basis of 6% individual contribution in line with levels available to

newlyappointed UK-based employees. Any new Executive Director will likewise receive pension contributions in line with levels available

tothe workforce.

Ruth Euling received a pension contribution of 10% of salary based on 6% individual contribution, in line with levels available to the wider

UKbased employees.

Payments for loss of office (audited)

There were no payments for loss of office during the period.

Directors’ interests in shares (audited)

The Directors and their connected persons had the following interests in the ordinary shares of the Company at 26 March 2022:

Current

shareholding

ordinary Shares

(held outright)

Current

shareholding as

% of salary

Unvested awards

Vested shares

Subject to

performance

conditions

Not subject to

performance conditions

SAYE

Performance

Share Plan

Performance

Share Plan

Deferred

Bonus Plan

Vested

unexercised

during the

period

Vested

exercised

during the

period

Executive Directors

Clive Vacher 201,049 47 93 6,197 – 127, 4 0 0 12,851 – –

Rob Harding – – 3 5 4,16 8 – 34,435 11,393 – –

Ruth Euling 35,977 15 317, 019 – 51,337 – 21,15 4

Non-executive Chairman

Kevin Loosemore 9 47, 8 4 0 N/A – – – – – –

Non-executive Directors

Catherine Ashton – N/A – – – – – –

Nick Bray 26,375 N/A – – – – – –

Maria da Cunha 29,533 N/A – – – – – –

Margaret Rice-Jones – N/A – – – – – –

There have been no changes in Directors’ interests in ordinary shares in the period from 27 March 2022 to 24 May 2022. All interests of the

Directors and their families are beneficial.

The current shareholdings as a percentage of salary during the period are calculated using the closing De La Rue plc share price of 109p

on25 March 2022.

Corporate Governance De La Rue plc Annual Report 2022

Remuneration continued

Directors’ interests in vested and unvested share awards (unaudited)

The awards over De La Rue plc shares held by Executive Directors under the DBP and PSP and Sharesave scheme during the period

aredetailed below:

Date of

award

Total

award as at

27 March

2021

Awarded

during the

year

Exercised

during the

year

Lapsed

during the

year

Awards

held at

26 March

2022

Awards

vested

(unexercised)

during the

year

Strike

price

(pence)

Market price

per share at

exercise date

(pence)

Date of

vesting

Expiry

date

Clive Vacher

Deferred Bonus

Plan

Jul 21 – 63,700 – – 63,700 – 18 6.16

– Jul 22 Jul 22

Jul 21 – 63,700 – – 63,700 – 18 6.16

– Jul 23 Jul 23

Performance

Share Plan

Jan 20 356,649 – – – 356,649 – 131.80

– Jan 25 Jan 30

Jul 20 340,187 – – – 340,187 – 132.28

– Jul 25 Jul 30

Jun 21 – 239,361 – – 239,361 – 191.76

– Jun 26 Jun 31

Total 696,836 366,761 1,063,597

Sharesave options

Jan 20 1,458 – – – 1,458 – 118.67

– Mar 23 Aug 23

Jan 21 8,704 – – – 8,704 – 131.10

– Mar 24 Aug 24

Jan 22 – 2,689 – – 2,689 – 112.43

– Mar 25 Aug 25

Rob Harding

Deferred Bonus

Plan

Jul 21 – 17, 218 – – 17, 218 – 186.16

– Jul 22 Jul 22

Jul 21 – 17,217 – – 17,217 – 186.16

– Jul 23 Jul 23

Performance

Share Plan

Jul 20 207,892 – – – 207,892 – 132.28

– Jul 25 Jul 30

Jun 21 – 146,276 – – 146,276 – 191.76

– Jun 26 Jun 31

Total 207,892 180,711 388,603

Sharesave options

Jan 21 8,704 – – – 8,704 – 131.10

Mar 24 Aug 24

Jan 22 – 2,689 – – 2,689 – 112.43

– Mar 25 Aug 25

Ruth Euling (appointed to the Board on 1 April 2021)

Deferred Bonus

Plan

Jul 21 – 25,669 – – 25,669 – 186.16

– Jul 22 Jul 22

Jul 21 – 25,668 – – 25,668 – 186.16

– Jul 23 Jul 23

Performance

Share Plan

Dec 13

11,023 – – – 11,023 11,023 892.90

– Dec 16 Dec 23

Jun 15 2,531 – – – 2,531 2,531 541.00

– Jun 18 Jun 25

Jun 15 1,799 – – – 1,799 1,799 541.00

– Jun 19 Jun 25

Jun 16 2,655 – – – 2,655 2,655 520.85

– Jun 19 Jun 26

Jun 16 1,858 – – – 1,858 1,858 520.85

– Jun 20 Jun 26

Jun 17 773 – – – 773 773 680.10

– Jun 20 Jun 27

Jun 17 515 – – – 515 515 6 8 0.10

– Jun 21 Jun 27

Jun 17 116

– 116 – – – 680.10

186.60 Jun 21 Jun 27

Jul 20 181,433 – – – 181,433 – 132.28

– Jul 25 Jul 30

Jun 21 – 135,586 – – 135,586 – 191.76

– Jun 26 Jun 31

Total 202,703 186,923 389,510

Sharesave options – – – – – – –

– – – –

Notes:

1. These awards do not have any performance conditions attached.

2. Mid-market share value of a De La Rue plc ordinary share as at 6 January 2020.

3. Mid-market share value of a De La Rue plc ordinary share averaged over the five dealing days immediately preceding award date.

4. For Sharesave options the share price shown is the exercise price which was 80% of mid-market value of an ordinary share averaged over the three dealing days immediately preceding

award date.

5. Vesting and exercise of an award granted under the PSP on 27 June 2017 by Ms Euling’s spouse.

Chief Executive Officer pay, Total Shareholder Return (TSR) and all employee pay

This section of the report enables our remuneration arrangements to be seen in context by providing:

– De La Rue’s TSR performance for the 10 years to 26 March 2022

– A history of De La Rue’s Chief Executive Officer’s remuneration for the current and previous nine years

– A comparison of the year on year change in De La Rue’s Chief Executive Officer’s remuneration with the change in the average

remuneration across the Group

– A year on year comparison of the total amount spent on pay across the Group with profit before tax and dividends paid

Chief Executive Officer’s Pay

Period ended March 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2021 2022

Chief Executive Officer

Tim

Cobbold

Tim

Cobbold

Tim

Cobbold

Martin

Sutherland

Martin

Sutherland

Martin

Sutherland

Martin

Sutherland

Martin

Sutherland

Martin

Sutherland

Clive

Vacher

Clive

Vacher

Clive

Vacher

Single figure of total

remuneration £’000 1,053 634 1,071 1,107 998 899 783 954 340 249 1,106 792

Annual bonus payout

as a % of maximum

opportunity 80 Nil Nil 14 57 40 Nil 29 Nil Nil 97.6 42

LTIP vesting against

maximum opportunity

(%) Nil Nil 60 Nil Nil Nil 25 25 Nil Nil Nil Nil

Notes:

1. Appointed Chief Executive Officer on 1 January 2011 and resigned on 29 March 2014. Includes award to the value of £450,000 at the date of award under the Recruitment Share Award

(which vested on 31 January 2014).

2. Appointed 13 October 2014, resigned on 7 October 2019.

3. Appointed 7 October 2019.

TSR performance

This graph shows the value, by 26 March 2022, of £100 invested in De La Rue plc on 26 March 2012, compared with the value of £100

invested in the FTSE 250 Index (excl. Investment Trusts) on the same date, assuming that all dividends paid are reinvested and on the other

normal principles for assessing Total Shareholder Return (TSR). The other points plotted are the values at intervening financial year ends.

De La Rue was a constituent of the FTSE 250 Index for the majority of the period under review.

Total shareholder return

Source: FactSet

2012 2013 2014 201720162015 2018 2019 20212020

TSR

De La Rue plc FTSE 250 (excluding Investment Trusts)

100

150

200

250

300

Chief Executive Officer pay ratio

The table below sets out the CEO pay ratios from the FY22 comparing the single total figure of the remuneration with the equivalent figures

for lower quartile, median and upper quartile UK employees. UK employees were chosen as a comparator group to avoid the impact of

exchange rate movements over the year. UK employees make up approximately 44.1% of the total employee population.

As the quartile individuals are representative of the companies pay distribution the ratios presented are consistent with the pay, reward and

progression policies for the UK employees. A significant portion of the CEO remuneration is delivered through variable incentives where

awards are linked to business performance over a longer term. This means that ratios may fluctuate year to year.

Year Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio

2021/2022 Option A 21:1 16:1 13:1

2020/2021 Option A 30:1 24:1 18:1

Total pay and benefits amounts used to calculate ratio.

Financial year

25th percentile ratio 50th percentile ratio 75th percentile ratio

Method

Total pay

and benefits

Total

salary

Total pay

and benefits

Total

salary

Total pay

and benefits

Total

salary

2021/2022 Option A £36,996.54 £28,375.97 £49,614.40 £44,232.96 £62,553.96 £54,285.00

2020/2021 Option A £ 37,017. 3 4 £32,584.92 £45,423.49 £41,795.49 £62,770.89 £53,918.64

Corporate Governance De La Rue plc Annual Report 2022

Remuneration continued

Percentage change in Directors’ remuneration

The table below compares the percentage change in the Directors’ salary, bonus and benefits to the average change in salary, bonus and

benefits for all UK employees between FY21 and FY22. ABP and Sales Incentive Plans were paid in both financial years. The table shows

the UK employee average which includes changes to shift patterns across the UK workforce, lowering the overall average increase to salary.

Rob Harding became and Executive Director in October 2020 therefore receiving a lower benefit amount compared to FY22 as shown in the

signal figure table on page 74. The ABP outcome in FY22 is lower compared to FY21.

2021/22 2020/21

Salary/fees Benefits Annual bonus Salary/fees Benefits Annual bonus

Clive Vacher 2.0% 0% -55.0% 104.6% 113.0% –

Rob Harding 2.0% 148.6% -14% – – –

Ruth Euling – – – – – –

Kevin Loosemore 2.0% – – 92.3% – –

Maria da Cunha -4.6% – – 14.8% – –

Nick Bray 2.0% – – 0% – –

Margaret Rice-Jones 18.3% – – – – –

Catherine Ashton 2.0% – – – – –

UK employee average 1.5% 0% -146.0% 3.8% 0% –

Relative spend on pay

The following table sets out the percentage change in payments to shareholders and the overall expenditure on pay across the Group.

2021/22

£m

2020/21

£m

Change

Dividends (note 10 to the financial statements) – – N/A

Overall expenditure on pay (note 4 to the financial statements) 97.6 107.7 -9.4

Statement of shareholder voting

The Directors’ remuneration report were approved by shareholders at our AGM on 29 July 2021. Details of the poll voting result on the

relevant resolutions are shown below:

Total votes cast For

(%) Against (%) Votes withheld

Approval of remuneration report 155,638,332 152,694,360 98.11 2,943,972 1.89 180,480

Notes:

1. The votes ‘For’ include votes given at the Chairman’s discretion.

2. A vote withheld is not legally a vote cast and, as such, is not counted in the calculation of the proportion of votes ‘For’ and ‘Against’.

De La Rue carefully monitors shareholder voting on the remuneration policy and implementation and the Company recognises the

importance of ensuring that shareholders continue to support the remuneration arrangements. All voting at the AGM is undertaken by poll.

Remuneration advice

The Remuneration Committee consults with the Chief Executive Officer on the remuneration of executives directly reporting to him and other

senior executives and seeks to ensure a consistent approach across the Group taking account of seniority and market practice and the key

remuneration policies outlined in this report. During FY22, the Committee also received advice from Willis Towers Watson who have no other

connection with the Company or individual Directors. Willis Towers Watson has been formally appointed by the Remuneration Committee

and advised on the structure, measures and target setting for incentive plans, executive remuneration levels and trends, corporate

governance developments and Directors’ remuneration report preparation. The Remuneration Committee requests Willis Towers Watson

toattend meetings periodically during the year.

Willis Towers Watson is a member of the Remuneration Consultants’ Group and has signed up to the code of conduct relating to the

provision of executive remuneration advice in the UK. In light of this, and the level and nature of the service received, the Committee remains

satisfied that the advice has been objective and independent.

Total fees for advice provided to the Remuneration Committee during the year by Willis Towers Watson were £22,867.

Dilution limits

The share incentives operated by the Company comply with the institutional investors’ share dilution guidelines. The Directors’ remuneration

report was approved by the Board on 24 May 2022 and signed on its behalf.

Maria da Cunha

Chair of the Remuneration Committee

24 May 2022

The remuneration package for Executive Directors consists of fixed base salary,

pension and other benefits and a significant proportion of variable pay including

annual bonus and long term share based incentives. The following table summarises

each element of the proposed remuneration policy for the Executive Directors and

explains how each works and is linked to the corporate strategy.

Purpose and

linktostrategy Operation

Maximum potential

opportunity

Performance

metrics

Annual Bonus Plan (ABP)

To incentivise and reward

delivery of financial and

personal performance targets

that address the distinct

commercial and strategic

needs of the business, and

align with shareholder interests.

To ensure a consistent

andstable reward structure

throughout the management

group that will remain fit

forpurpose.

To support a pay for

performance philosophy.

To help attract and retain top

talent and be cost effective.

Compulsory deferral of shares

supports alignment with

shareholder interests and also

provides a retention element.

The Remuneration Committee sets Group

financial targets and agrees personal objectives

for each Executive Director at the start of each

year. Reference is made to the prior year and to

budgets and business plans while ensuring the

levels set are appropriately challenging but do

not encourage excessive risk-taking.

Payments are determined by the Remuneration

Committee after the year end. The bonus plan

is non-contractual and may be offered on a

yearby year basis.

Sixty per cent of annual bonus is payable

immediately in cash. Forty per cent of annual

bonus is payable in deferred shares (deferred

bonus plan) and released in tranches, subject

to continued employment (with early release

in certain circumstances). There are no further

performance conditions.

Fifty per cent of deferred shares are released

one year after cash payout and the remaining

50% two years after cash payout.

The Remuneration Committee may increase

thenumber of shares subject to a deferred

share award to reflect dividends that would

have been paid over the deferral period on

shares that vest.

The deferred share element (DBP) will be

disclosed in the annual report on remuneration.

The cash and deferred share element are

subject to malus and clawback provisions

to allow the Company to recoup three years

from award in the event of material financial

misstatement of results, gross misconduct,

other acts or omissions that could bring

the business into disrepute and or cause

reputational damage or corporate failure.

The Committee may also make discretionary

adjustments, up and down, to the formulaic

outcome of short- and long-term plans if there

is misalignment with the Group’s strategic

goalsor shareholder interests.

The current annual maximum

bonus opportunity of 135% of

salary for the Chief Executive

Officer and 115% of salary for any

other Executive Director linked

to business performance will

continue to apply.

The Remuneration Committee

has the discretion to increase

theoverall maximum bonus level

to 150% of salary, subject to this

not being above the competitive

market range.

The bonus payout level is

determined by achievement of

Group financial performance

measures with an element

basedon personal objectives.

The metrics, while stretching,

donot encourage inappropriate

risks to be taken.

The Remuneration Committee

will maintain discretion to

consider the financial underpin in

respect of awards under the ABP.

Financial targets and weightings

will be disclosed in the annual

report on remuneration.

Appendix: Directors’

Remuneration Policy

Corporate Governance De La Rue plc Annual Report 2022

Remuneration continued

Purpose and

linktostrategy Operation

Maximum potential

opportunity

Performance

metrics

Performance Share Plan (PSP)

A share-based long term

incentive is aligned closely

withbusiness strategy and

interests of shareholders

through the performance

measures chosen.

Under the new policy,

consistent with market practice,

awards will vest, subject to

group performance, at the end

of a three-year performance

period, and will be subject to

atwo year post-vesting holding

period. This supports a pay

forperformance philosophy.

To retain key executives over

a longer-term measurement

period.

To ensure a consistent

andstable reward structure

throughout the management

group that will remain fit

forpurpose.

To attract and retain top

talentand continue to be

cost-effective.

To ensure overall cost-

efficiency.

To ensure any payout

is supported by sound

profitability.

To support the strategic focus

on growth and margins.

Directors receive share awards in respect

of each financial year with a three year

performance period and performance

metricswhich, while challenging, will not

encourage excessive risk-taking.

Awards will vest after three years provided

Group performance criteria are met. This

will be followed by an additional two-year

holding period before awards are released

toparticipants.

The Remuneration Committee may determine

that the award holder will receive additional

shares equal to the value of any dividends

which would have been paid (by reference

tothe period beginning on the grant date and

ending at the end of the holding period) on

theshares subject to an award which vest.

Vesting of awards is subject to continued

employment until the vesting date but, as

described on page 73, PSP awards may also

vest in ‘good leaver’ circumstances. Awards

under the PSP will vest early on a change

of control (or other similar event) subject to

satisfaction of the performance conditions

and, unless the Remuneration Committee

determines otherwise, pro-rating for time in

theperformance period.

The Remuneration Committee has the right to

claw back any PSP awards within three years of

the vesting of an award to the extent there has

been material financial misstatement of results,

gross misconduct, any act or omission that

could bring the business into disrepute and or

cause reputational damage or corporate failure.

Malus provision also applies.

The Committee may also make discretionary

adjustments, up and down, to the formulaic

outcome of short- and long-term plans if there

is misalignment with the Group’s strategic goals

or shareholder interests.

The maximum number of

shares which may be subject

to an award granted to eligible

employees in respect of any

financial year will not have a

value (as determined by the

Remuneration Committee)

exceeding 100% of salary

asatthe award date.

The Committee retains discretion

in exceptional circumstances to

grant awards with a face value

ofup to 150% of salary.

Awards will normally vest subject

to the achievement of Group

performance over a period of

three years against key metrics

set by the Remuneration

Committee which are aligned

tocommercial business needs

and strategy.

The Remuneration Committee

must be satisfied that vesting

reflects the underlying

performance of the Group and

retains the flexibility to adjust

the vesting amount to ensure

it remains appropriate to the

business performance achieved.

The Remuneration Committee

regularly reviews the

performance conditions and

targets to ensure they continue

to be aligned with the Group’s

business objectives and strategy

and retains the discretion to

change the measures and their

respective weightings to ensure

continuing alignment with such

objectives and strategy.

The Remuneration Committee

maintains the ability to adjust

or set different performance

measures if events occur or

circumstances arise which cause

the Committee to determine

that the performance conditions

have ceased to be appropriate. If

varied or replaced, the amended

performance conditions must,

in the opinion of the Committee,

be materially no more or less

difficult than the original condition

when set and these will be

disclosed in the annual report

onremuneration.

All employee Share Plans

To encourage employees

including the Executive

Directors to build a

shareholding through the

operation of all employee

share plans such as the

HMRCapproved De La Rue

Sharesave scheme in the UK.

Executive Directors may participate in the

Sharesave scheme on the same terms as

otheremployees.

Under the UK Sharesave scheme, the

optionprice may be discounted by up to 20%.

Accumulated savings through payroll may be

used to exercise an option to acquire shares.

Under the Employee Share Purchase Plan,

employees in the US may be offered the

opportunity to purchase the Company’s

sharesat a 15% discount to the market

price. Any purchases are funded through

accumulated payroll deductions.

Shareholders approved the Rules of

Sharesaveand the ESPP at the 2012 AGM.

The maximum savings is in

line with the legislative limit

which is currently £500 per

month over a three- or five-year

period under the Company’s

Sharesave scheme. The rules

ofthe schemeprovide for savings

uptothe legislative limit of

£500per month.

No performance measures but

employment conditions apply.

Introduction

De La Rue plc is a public limited company,

registered in England and Wales as

company number 3834125 and has its

registered office at De La Rue House, Jays

Close, Viables, Basingstoke, Hampshire

RG22 4BS. As such, it is subject to

the reporting requirements set out in

the Companies Act 2006. In addition,

the Company is listed in theUK and is

therefore subject to the additional reporting

requirements of the Financial Conduct

Authority’s Listing Rules (LR) andDisclosure

Guidance and Transparency Rules (DTR).

Our reporting to shareholders

The Strategic Report and this Directors’

Report, when read together with the rest of

this annual report, taken as a whole form

the management report required for the

purposes of DTR 4.1.5 R.

The Strategic Report provides an overview

of the development and performance

of the Group’s business for the period

ended 26 March 2022 and likely future

developments in the Group. The various

sections of that report, from page 1 to

47 of this annual report, together provide

information which the Directors consider

tobe of strategic importance to the Group.

The following disclosures are hereby

incorporated by reference into, and form

part of, this Directors’ Report:

– The reporting on corporate governance

on pages 48 to 84 and page 89;

– Data on greenhouse gas emissions and

other climate change-related disclosures

on page 36. This information was included

in the Strategic Report as the Directors

consider those matters to be ofstrategic

importance to the Group;

– Details of Directors’ interests in the

sharesof the Company, within the

Directors’ remuneration report on

pages79 and 80;

– Information relating to financial

instruments and financial risk

management, as provided in note 14

tothe financial statements; and

– Related party transactions as set out

innote 28 to the financial statements.

Dividends

In November 2019, the Board decided

to suspend future dividend payments.

In the Turnaround Plan, first announced in

February 2020 and subsequently expanded

upon in the prospectus published in

June 2020, the Board explained that the

resumption of dividends would only occur

when restrictions agreed with our lending

banks fell away and the Company was

generating sustainable positive free cash

flow. No interim dividend was paid or final

dividend recommended in respect of the

2020/21 financial year. The Directors did

not declare an interim dividend and do

not recommend a final dividend to be paid

in respect of FY22. See the Chairman’s

statement onpage 6 and the Financial

Review onpage 20 for further details.

Directors

The names and biographical details of the

Directors of the Company at the date of this

report are provided on pages 52 and 53.

Subject to the Company’s articles of

association, the Companies Act 2006 and

any directions given by the Company in

general meeting by a special resolution,

the business of the Company is managed

by the Board who may exercise all the

powers of the Company, whether relating

to the management of the business of the

Company or not. The powers of the Board

are described in the corporate governance

statement on pages 54 to 59.

The Directors recognise their duty to

have regard to the Company’s business

relationships with suppliers, customers

and others and to consider the long

term, environmental and reputational

impacts of their decisions. Details of how

these considerations were factored into

the principal decisions taken during the

periodcan be found in the section 172

statement on pages 46 and 47.

The rules governing the appointment

andremoval of Directors are set out in

theCompany’s articles of association.

Each of the Directors in office at the date

of this report will, save for Maria da Cunha,

retire at the AGM on 27 July 2022 and,

being eligible, offers himself or herself for

re-election. After seven years’ service as

aNon-executive Director, Maria da Cunha

has decided not to seek re-election at the

2022 AGM and will retire from the Board

atthe conclusion of that meeting.

Details of the Company’s contracts of

service with its Executive Directors can

be found on page 79 and details of the

Company’s letters of appointment for the

Non-executive Directors are on page 79.

Details of Directors’ remuneration are

provided in the Directors’ remuneration

report on pages 69 to 84. The interests of

the Directors and their families in the share

capital of the Company are shown in the

Directors’ remuneration report on page 79.

At the date of this report, the Company

has agreed, to the extent permitted by

the law and the Company’s articles of

association, to indemnify its Directors and

officers in respect of all costs, charges,

losses, damages and expenses arising

out of claims made against them in the

course of the execution of their duties as a

Director or officer of the Company or any

associated company. The Company may

advance defence costs in civil or regulatory

proceedings on such terms as the Board

may reasonably determine, but any advance

must be refunded if the Director orofficer

issubsequently convicted or found against.

The indemnity will not provide cover where

the Director or officer has acted fraudulently

or dishonestly.

The Group also maintains Directors’ and

officers’ liability insurance cover for the

Directors and officers of the Company

andof all Group subsidiary companies.

The Directors present their annual report

ontheaffairs of the Group for theperiod

ended26 March 2022.

Corporate Governance De La Rue plc Annual Report 2022

Directors’ report

Shares and major

shareholdings

Structure of the Company’s

sharecapital

As at 26 March 2022, the share capital

of the Company comprised 195,157,352

ordinary shares of 44

152

⁄

175

p each and

111,673,300 deferred shares of 1p nominal

value, all of which are credited as fully paid.

The ordinary shares therefore comprise

approximately 99%, and the deferred

shares approximately 1%, of the issued

share capital.

The ordinary shares are listed in the UK and

admitted to trading on the London Stock

Exchange. The rights attaching to these

shares are described in the next section

ofthis report.

Deferred shares carry no voting or other

participation rights and extremely limited

economic rights. They are not listed or

admitted to trading on any market and are

not transferable except in accordance with

the articles of association. Any or all of the

deferred shares can be repurchased at

anytime by the Company without notice

fora total consideration of one penny,

following which they may be cancelled.

Rights of holders of

ordinaryshares and

restrictionson transfer

The rights and obligations attaching to the

Company’s ordinary shares, in addition to

those conferred on their holders by law,

are set out in the Company’s articles of

association, a copy of which is available on

the Company’s website www.delarue.com.

The key rights are summarised below:

– Voting – on a show of hands at a general

meeting of the Company, each holder of

ordinary shares present in person or by

proxy and entitled to vote shall have one

vote and, on a poll, shall have one vote for

every ordinary share held. Electronic and

paper proxy appointments and voting

instructions must be received by the

Company’s registrar no later than 48

hours before a general meeting.

– Dividends and distributions to

shareholders on winding up – holders

of ordinary shares may receive interim

dividends approved byDirectors and

dividends declared in general meetings.

On a liquidation and subject to a special

resolution of the Company the liquidator

may divide amongmembers in specie

the whole or any part of the assets of the

Company andmay, for such purpose,

value any assets and may determine

howsuch division shall be carried out.

– Transfer of shares – the Company’s

articles of association place no

restrictions on the transfer of ordinary

shares or on the exercise of voting rights

attached to them except in very limited

circumstances. Certain restrictions,

however, may from time to time be

imposed by law or regulation.

The articles of association may only be

amended by special resolution of the

holders of the Company’s ordinary shares.

Special rights attaching

to shares

There are no shares issued by the Company

which confer any special voting or other

rights regarding the control of the Company.

Shareholder agreements

andconsent requirements

There are no known arrangements under

which financial rights conferred by any ofthe

shares in the Company are held by a person

other than the holders of those shares.

The Company is not aware of any

agreements between shareholders that

mayresult in any restriction on the transfer

of shares or exercise of voting rights.

Rights attaching to shares

underemployee share schemes

Options and awards held by relevant

participants under the Company’s various

share plans carry no voting rights until the

shares are issued. The trustee of the De La

Rue Employee Share Ownership Trust does

not seek to exercise voting rights on existing

shares held in the employee trust. No shares

are currently held in trust.

Major shareholdings

As at 26 March 2022, the Company had

received formal notification of the following

holdings in its shares under DTR 5.

It should be noted that these holdings, or

the percentage of the issued share capital

they represent, may have changed since

the Company was notified, butnotification

of any change is not required until the next

notifiable threshold is crossed:

Persons notifying

Date of last

notification

Nature

of interest

% of issued ordinary

share capital held

at notification date

Schroders plc 10/03/2022 Indirect 15.03

Brandes Investment Partners, L.P. 27/01//2021 Indirect 9.97

Crystal Amber Fund Limited 14/10/2021 Direct 9.95

Jupiter Fund Management PLC 28/06/2021 Indirect 5.46

Aberforth Partners LLP 09/04/2018 Indirect 5.11

Royal London Asset Management Limited 22/08/2019 Direct 4.98

Neptune Investment Management Limited 13/09/2019 Direct 4.98

The Wellcome Trust Limited 26/01/2022 Direct 4.29

There were no changes notified between the end of the period under review and

23 May 2022.

Directors’ report continued

Directors’ authorities in

relation to share capital

Power to issue and allot

At the AGM held on 29 July 2021 the

Directors were generally and unconditionally

authorised to allot shares in the Company

up to an aggregate nominal value of

£29,174,732 (being approximately one third

of the Company’s then issued share capital)

or up to an aggregate nominal value of

£58,349,465 (being approximately two thirds

of the Company’s then issued share capital)

in respect of a strictly pro-rata rights issue.

At the 2021 AGM the Directors were also

granted additional powers to allot ordinary

shares for cash (i) up to a nominal value of

£4,376,210 (being approximately 5% of the

Company’s then issued share capital) and (ii)

up to a further nominal value of £4,376,210,

in each case without regard to the pre-

emption provisions of the Companies Act

2006, provided that the authority under

(ii) can only be used in connection with an

acquisition or specified capital investment.

These authorities are valid until the

conclusion of the next following AGM.

The Directors propose to seek equivalent

authorities at the 2022 AGM. The Directors

have no current intention of exercising

these authorities, if granted, other than to

satisfy the exercise of options or vesting

ofawards under the Company’s employee

share schemes.

92,972 shares were issued for cash during

the period to satisfy the vesting of awards or

the exercise of options under the Company’s

employee share schemes. Details of shares

issued during the year and outstanding

options and awards are given in notes 20

and 21 to the financial statements, and

those notes are incorporated by reference

into this report. Details of the share-settled

long term incentive schemes are provided

inthe Directors’ remuneration report on

pages 69 to 84.

Authority to purchase

ownshares

At the 2021 AGM, shareholders gave

the Company authority to make market

purchases of up to 19,506,794 of its own

ordinary shares (being approximately 10%

ofthe Company’s then issued ordinary share

capital). Any shares purchased in this way

could either be cancelled or held in treasury

(or a combination of these). No purchases

have been made under this authority.

The Directors propose to seek an equivalent

authority at the 2022 AGM, but have no

current intention of using this authority,

if granted.

Change of control

Contracts

There are a number of contracts which

allow the counterparties to alter or

terminate those arrangements in the event

of a change of control of the Company.

These arrangements are commercially

sensitive and confidential and their

disclosure could be seriously prejudicial

tothe Group.

Banking facilities

The credit facility between the Company

and its key relationship banks contains a

provision such that, in the event of a change

of control, unless agreement is reached to

the contrary, the facility will be immediately

cancelled and shall cease to be available

for any further utilisation and all outstanding

loans, together with accrued interest

and certain other charges, will become

immediately due and payable.

Employees

In the event of a change of control, vesting of

awards would occur in accordance with the

relevant scheme or plan rules. There are no

agreements in force that would provide any

Directors or employees with compensation

for any loss of office or employment that

occurs because of a change of control.

Our employees and

workforcegenerally

Employment of disabled persons

The Group gives full and fair consideration to

applications for employment from disabled

persons, where the requirements of the job

can be adequately fulfilled by that person.

Where existing employees become disabled

it is the Group’s policy, wherever practicable,

to provide continuing employment under

normal terms and conditions and to

provide training, career development

and promotion to disabled employees

wherever appropriate.

Employee communications

andengagement

The Group provides its entire workforce

(including employees) with information on

matters that could be of concern to them

as our workforce. This includes building

common awareness of the financial and

economic factors affecting the Group’s

performance through newsletters,

all-employee emails and conference

calls with the CEO on the day that our

results are announced to the market or

there is a material development in the

Group’s business.

Where appropriate, we consult members

of our workforce or their representatives

on a regular basis so that their views can

be taken into account in making decisions

which are likely to affect their interests.

We encourage involvement in the

Company’s performance by our employees

and workforce and offer awards under our

discretionary share schemes to those more

senior employees who are best placed to

influence that performance, and through

options granted under our Sharesave

scheme to all eligible employees in the UK.

The views of our employees and contractors

are important. To make sure that these

views are heard and are taken into account,

the Board has designated an independent

Non-executive Director, Maria da Cunha, to

oversee its engagement with the workforce.

For further details of how she fulfilled

this role and how it informed the Board’s

discussions during the year, please see

pages 39 and 55. Maria will retire from the

Board at the 2022 AGM and will be replaced

in this role byCatherine Ashton.

Other statutory disclosures

Branches

De La Rue is a global business and our

activities and interests are operated through

subsidiaries, branches of subsidiaries and

associates which are subject to the laws and

regulations of many different jurisdictions.

Our subsidiaries and associates are listed

in note 29 to the financial statements.

There were no branches of the Company

in existence during the period ended

26 March 2022.

Essential contracts or

otherarrangements

The Group has a number of suppliers of key

goods and services, the loss of any of which

could disrupt the Group’s ability to deliver

on time, in full or at all. For further details,

please refer to the discussion of this risk

onpages 27 to 31.

Financial risk management

Please refer to the disclosures in note 14

tothe financial statements.

Going concern

As described on pages 26 and 106, the

Directors continue to adopt the going

concern basis of accounting (in accordance

with the ‘Guidance on Risk Management,

Internal Control and Related Financial

and Business Reporting’ issued by the

FRC in September 2014) in preparing the

consolidated financial statements.

Corporate Governance De La Rue plc Annual Report 2022

Listing Rules compliance

In relation to the disclosures required byLR9.8.4 R:

(1) Interest capitalised and any related tax relief Not applicable

(2) Publication of unaudited financial information or a profit forecast or estimate Not applicable

(4) Details of any long term incentive schemes Not applicable

(5) Details of any waiver of emoluments by a Director Not applicable

(6) Any waiver of future emoluments by a Director Not applicable

(7) Non pre-emptive issues of equity securities for cash Not applicable

(8) Non pre-emptive issues of equity securities for cash by major subsidiary undertakings Not applicable

(9) Parent company participation in a placing Not applicable

(10) Any contract of significance in which a Director or controlling shareholder is interested Not applicable

(11) Any contract for the provision of services by a controlling shareholder Not applicable

(12) Any waiver of dividends Not applicable

(13) Any waiver of future dividends and details of current dividends waived Not applicable

(14) Agreements with controlling shareholders Not applicable

As required by LR 9.8.6(8) R, this annual report includes climate-related financial disclosures consistent with the TCFD Recommendations

and Recommended Disclosures, which can be found on page 35.

Political donations

The Group’s policy is not to make any

political donations and none were made

during the period. However, the definitions

of political donations and expenditure in

the Companies Act 2006 are very widely

drawn, and it is possible that certain routine

activities may unintentionally fall within the

scope of the law. The Company is therefore

seeking shareholders’ renewal ofthe

authority to make political donations at the

2022 AGM, in line with that sought and

granted in all recent years.

Research and development

The Group’s business is underpinned

by a significant amount of intellectual

property. The Group holds over 150 families

of patents which support its business.

There are around 1,300 patents and patent

applications, of which over 880 have been

granted and circa 420 applications are

pending. During the year the Group had 33

patents granted in Europe, UK and the US.

The Group’s key activity in the field of

research and development is discussed

in the CEO review on page 8, the strategy

discussion on pages 4 and 5 and in

thereview of operations on page 18.

Post-balance sheet events

There were no material post-balance sheet

events that were required to be disclosed.

Annual General Meeting

The AGM will be held at 10.45am on

Wednesday 27 July 2022 at the Marriott

Worsley Park Hotel & Country Club, Walkden

Road, Worsley Park, ManchesterM28 2QT.

We value our engagement with all our

shareholders and shareholders will once

again be able to ask questions relating to

the business of the meeting via our website,

www.delarue.com, in advance of the AGM.

Full details of how to use the Q&A facility

areset out in the AGM Circular sent to you

with this annual report.

Auditor

Ernst & Young LLP have expressed

their willingness to be re-appointed as

auditor of the Company. A resolution

to re-appoint Ernst & Young LLP as the

Company’s auditor will be proposed at

theforthcoming AGM.

Disclosure of information

tothe external auditor

Each of the persons who is a Director at the

date of approval of this report confirms that:

– So far as the Director is aware, there is

no relevant audit information of which

theCompany’s auditor is unaware; and

– The Director has taken all the steps

that he or she ought to have taken as a

Director in order to make himself or herself

aware of any relevant audit information

and to establish that the Company’s

auditor is aware of that information.

This confirmation is given, and should

be interpreted, in accordance with

the provisions of section 418 of the

CompaniesAct 2006.

This directors’ report was approved

bytheBoard on 24 May 2022.

By order of the Board

Jane Hyde

Company Secretary

24 May 2022

Directors’ report continued

Directors’ responsibility

statement

Directors’ responsibilities in

respectof the annual report

andthe financial statements

The Directors are responsible for preparing

the annual report and the Group and

Parent Company financial statements

in accordance with applicable UK law

and regulations.

Company law requires the Directors to

prepare financial statements for each

financial year. Under that law the Directors

have elected to prepare the Group financial

statements in accordance with UK-

adopted international accounting standards

(IFRSs) and have elected to prepare the

Parent Company financial statements in

accordance with UK Generally Accepted

Accounting Practice (UK Accounting

Standards, including FRS 102 The Financial

Reporting Standard applicable in the UK

and Republic of Ireland(FRS102)), and

applicable law.

Under company law the Directors must

notapprove the financial statements unless

they are satisfied that they give a true and

fair view of the state of affairs of the Group

and the Company and of their profit or

lossfor the period.

In preparing each of the Group and

ParentCompany financial statements,

theDirectors are required to:

– Select suitable accounting policies

inaccordance with IAS 8 Accounting

Policies, Changes in Accounting

Estimates and Errors (and, in respect of

the Parent Company financial statements,

Section 10 of FRS 102) and then apply

them consistently;

– Make judgements and estimates

thatarereasonable and prudent;

– Present information, including accounting

policies, in a manner that provides

relevant, reliable, comparable and

understandable information;

– Provide additional disclosures when

compliance with the specific requirements

in IFRSs (and, in respect of the Parent

Company financial statements, FRS

102) is insufficient to enable users to

understand the impact of particular

transactions, other events and conditions

on the Group and Company financial

position and financial performance;

– In respect of the Group financial

statements, state whether UK-adopted

international accounting standards have

been followed, subject to any material

departures disclosed and explained in

thefinancial statements;

– In respect of the Parent Company financial

statements, state whether FRS 102 has

been followed, subject to any material

departures disclosed and explained in

those financial statements; and

– Prepare the financial statements on

the going concern basis unless it is

inappropriate to presume that the

Groupand the Parent Company

willcontinue in business.

The Directors are responsible for keeping

adequate accounting records that are

sufficient to show and explain the Company

and Group’s transactions and disclose

with reasonable accuracy at any time the

financial position of the Company and the

Group and enable them to ensure that

those financial statements comply with

the Companies Act 2006. They are also

responsible for safeguarding the assets of

the Group and Parent Company and group

and hence for taking reasonable steps for

the prevention and detection of fraud and

other irregularities.

Under applicable law and regulations,

theDirectors are also responsible for

preparing a Strategic Report, Directors’

Report, Directors’ remuneration

report and corporate governance

statement thatcomply with that law and

those regulations.

The Directors are responsible for

the maintenance and integrity of the

corporateand financial information

includedon the Group’s website.

Legislation in the UK governing the

preparation and dissemination of

financialstatements may differ from

legislation in other jurisdictions.

Responsibility Statement

Each of the Directors at the date of

approvalof this statement confirms that,

tothe best of his or her knowledge:

– The Group financial statements,

prepared in accordance with UK-adopted

international accounting standards give a

true and fair view of the assets, liabilities,

financial position and profit of the

Company and the undertakings included

in the consolidation taken as a whole; and

– The annual report, including the

Strategic Report on pages 1 to 47 and

the directors’ report on pages 85 to 89,

includes a fair review of the development

and performance of the business and

the position of the Company and the

undertakings included in the consolidation

taken as a whole, together with a

description of the principal risks and

uncertainties that they face.

For and on behalf of the Board of Directors

Kevin Loosemore

Chairman

Rob Harding

Chief Financial Officer

24 May 2022

Corporate Governance De La Rue plc Annual Report 2022

Directors’ responsibility statement

Financial statements

Independent Auditor’s Report 92

Consolidated income statement 100

Consolidated statement

ofcomprehensive income

101

Consolidated balance sheet 102

Consolidated statement of changes in equity 103

Consolidated cash flow statement 104

Accounting policies 106

Notes to the accounts 113

Company balance sheet 147

Company statement ofchangesin equity 148

Accounting policies – Company 149

Notes to the accounts – Company 151

Non-IFRS measures 153

Five-year record 156

Shareholder information 157

Featured image glossary 158

Financial

statements

De La Rue plc Annual Report 2022

De La Rue Annual Report 2022

Financial statements De La Rue plc Annual Report 2022

Independent Auditor’s Report

to the members of De La Rue plc

Opinion

In our opinion:

– De La Rue plc’s group financial

statements and parent company financial

statements (the “financial statements”)

give a true and fair view of the state of

the group’s and of the parent company’s

affairs as at 26 March 2022 and of the

group’s profit for the year then ended;

– the Group financial statements have

been properly prepared in accordance

with UK adopted international

accounting standards;

– the parent company financial statements

have been properly prepared in accordance

with United Kingdom Generally Accepted

Accounting Practice; and

– the financial statements have been

prepared in accordance with the

requirements of the Companies Act 2006.

We have audited the financial statements of De La Rue plc (the ‘parent company’)

anditssubsidiaries (the ‘group’) for the year ended 26 March 2022 which comprise:

Group Parent company

Consolidated balance sheet

asat26March2022.

Company balance sheet as at

26March2022

Consolidated income statement for

theperiod ended 26 March 2022

Company statement of changes in equity

forthe period ended 26 March 2022

Consolidated statement of

comprehensiveincome for the

periodended26 March 2022

Related notes 1a to 8a to the financial

statements including a summary of

significant accounting policies

Consolidated statement of changes in

equityfor the period ended 26 March 2022



Consolidated cash flow statement for

theperiod ended 26 March 2022

Related notes 1 to 31 to the financial

statements, including a summary of

significant accounting policies

The financial reporting framework that

has been applied in the preparation of the

group financial statements is applicable law

and UK adopted international accounting

standards. The financial reporting

framework that has been applied in the

preparation of the parent company financial

statements is applicable law and United

Kingdom Accounting Standards, including

FRS 102 “The Financial Reporting Standard

applicable in the UK and Republic ofIreland”

(United Kingdom Generally Accepted

Accounting Practice).

Basis for opinion

We conducted our audit in accordance

with International Standards on Auditing

(UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards

are further described in the Auditor’s

responsibilities for the audit of the financial

statements section of our report. We believe

that the audit evidence we have obtained

issufficient and appropriate to provide

abasis for our opinion.

Independence

We are independent of the group and parent

in accordance with the ethical requirements

that are relevant to our audit of the financial

statements in the UK, including the FRC’s

Ethical Standard as applied to listed public

interest entities, and we have fulfilled our

other ethical responsibilities in accordance

with these requirements.

The non-audit services prohibited by the

FRC’s Ethical Standard were not provided

to the group or the parent company and we

remain independent of the group and the

parent company in conducting the audit.

Conclusions relating to

goingconcern

In auditing the financial statements, we

have concluded that the directors use of the

going concern basis of accounting in the

preparation of the financial statements is

appropriate. Our evaluation of the directors’

assessment of the group and parent

company’s ability to continue to adopt the

going concern basis of accounting included:

– We confirmed our understanding

of management’s going concern

assessment process as well as the review

controls in place over the preparation

of the group’s going concern model

and thememoranda on going concern

presented to the board of directors.

– We obtained the cash flow, covenant

forecasts and sensitivities prepared by

management and tested for arithmetical

accuracy of the models as well as

checking the net debt position at the year-

end date which is the starting point for the

model. We assessed the reasonableness

of the cashflow forecast by analysing

management’s historical forecasting

accuracy and understanding how any

anticipated continued impact of COVID-19

has been modelled. We assessed the

reasonableness of the forecasts with

reference to the level of secured orders

and the status of cost-out initiatives.

– We evaluated the key assumptions

underpinning the Group’s assessment

by challenging the measurement and

completeness of downside scenarios

modelled by management and how

these compare with principal risks and

uncertainties of the Group. The key

sensitivity in management’s assessment

is the group’s ability to continue operating

within its bank covenants during the

period (specifically the EBITDA/net

debt covenant). We therefore ensured

Independent Auditor’s Report

that management performed reverse

stress testing scenarios which quantified

the downside required to breach the

covenants (by modelling both decreased

earnings and increased net debt) and

evaluated whether the downside in cash

flows required for such a scenario to

materialise was plausible during the going

concern period considering the analysis of

fixed versus variable costs, the proportion

of revenue secured through orderbook

coverage, and recent forecast accuracy.

– We challenged each of the available

mitigating actions (e.g. reduced capital

expenditure and reductions in discretionary

spend) and obtained analysis to determine

if these were in the control of management

and evaluated the expected impact of the

mitigation in the light of our understanding

of the business and its cost structures.

– We considered the extent to which

emerging climate-related risks may

affect the Group’s assessment and the

assumptions around the costs anticipated

in meeting the Group’s target to become

carbon neutral for its own operations by

2030. This includes the capital expenditure

required to enable the Group to reduce

its carbon footprint, energy usage, waste,

and reliance on plastics. Additionally, we

considered other macroeconomic factors

such as the rising cost of materials, energy

and labour which are critical parts of the

Group’s operations.

– We considered whether the Group’s

forecasts in the going concern assessment

were consistent with other forecasts used

by the Group in its accounting estimates,

including non-current asset impairment

and deferred taxasset recognition.

– We independently confirmed the continued

availability of debt facilities through the

going concern period and reviewed their

underlying terms, including covenants, by

examination ofexecuted documentation.

– We held discussions with the Audit

Committee and full board of Directors

tocorroborate the forecasts and their basis

as prepared by management.

– We considered whether management’s

disclosures in the financial statements

sufficiently and appropriately reflect the

going concern assessment and outcomes.

The audit procedures performed in evaluating

the director’s assessment were performed

by the Group audit team, however we also

considered the financial and non-financial

information communicated to us from our

component teams of overseas locations as

sources of potential contrary indicators which

may cast doubt over the going concern

assessment. We determined going concern

to be a key audit matter.

Our key observations

In line with the group’s Turnaround plan, the

Group is forecast to continue to be profitable

and generate positive cashflows during the

going concern period. The Group is forecast

to maintain adequate liquidity and headroom

with its covenants and the reverse stress

test scenario suggests that the group would

need to be exposed to significant downside

events impacting profitability and cash flows

in order to breach its covenants. In this

remote scenario, management still consider

that that impact can be mitigated by further

cash and cost saving measures which

are within their control during the going

concern period.

The group’s principal source of funding

(the revolving credit facility) is set to expire

in December 2023, beyond the period of

management’s assessment (being the

period through to 30 June 2023.

Conclusion

Based on the work we have performed,

we have not identified any material

uncertainties relating to events or conditions

that, individually or collectively, may

cast significant doubt on the group and

parent company’s ability to continue as a

going concern over the period through to

30 June2023, a period of at least 12 months

from when the financial statements are

authorisedfor issue.

In relation to the group and parent

company’s reporting on how they have

applied the UK Corporate Governance

Code, we have nothing material to add or

draw attention to in relation to the directors’

statement in the financial statements

about whether the directors considered

it appropriate to adopt the going concern

basis of accounting.

Our responsibilities and the responsibilities

of the directors with respect to going

concern are described in the relevant

sections of this report. However, because

not all future events or conditions can be

predicted, this statement is not a guarantee

as to the Group’s ability to continue as

agoing concern.

An overview of the scope

oftheparent company

andgroup audits

Tailoring the scope

Our assessment of audit risk, our

evaluation of materiality and our allocation

of performance materiality determine our

audit scope for each company within the

Group. Taken together, this enables us to

form an opinion on the consolidated financial

statements. We take into account size,

risk profile, the organisation of the group

and effectiveness of group-wide controls,

changes in the business when assessing the

level of work to be performed at each entity.

In assessing the risk of material

misstatement to the Group financial

statements, and to ensure we had adequate

quantitative coverage of significant accounts

in the financial statements, of the 50

reporting components of the Group, we

selected six components as full or specific

scope covering entities within United

Kingdom, Malta, Sri Lanka, Kenya and

Group consolidation adjustments, which

represent the principal business units

withinthe Group.

The table below sets out the coverage

obtained from the work performed by

ouraudit teams.

Adjusted

EBITDA

(%)

Revenue

(%)

Total

Assets

(%)

Full Scope

(3 Locations) 100.3 88.8 64.2

Specific Scope

(3 Locations) 11.9 2.2 21.1

Specified

Procedures

(7 Locations) (1.1) 9.0 13.0

Significant

Components Total 111.1 100.0 98.3

Other Procedures

(37 Locations) (11.1) 0.0 1.7

Group Total 100.0 100.0 100.0

Overview of our audit approach

Audit scope

– We performed an audit of the complete financial information of

3components, an audit of specific balances of 3 components

andperformed specified procedures for a further 7 components.

– The components where we performed full, specific or specified

auditprocedures accounted for 111% of adjusted EBITDA (being

EBITDA adjusted for exceptional items), 100% of Revenue and

98%ofTotal assets.

Key audit matters

– Revenue recognition

– Post-retirement benefits – liabilities

– Recoverability of long-term assets relating to Portals Going concern

Materiality

– Overall Group materiality of £1.1m which represents 2% of adjusted

EBITDA.

Financial statements De La Rue plc Annual Report 2022

Of the 6 components selected, we

performed an audit of the complete financial

information of 3 components (“full scope

components”) which were selected based

on their size or risk characteristics.

For the remaining 3 components (“specific

scope components”), we performed audit

procedures on specific accounts within

that component that we considered had

the potential for the greatest impact on

the significant accounts in the financial

statements either because of the size

ofthese accounts or their risk profile.

The remaining coverage (being (1.1%)

ofadjusted EBITDA) related to specified

procedures performed through centralised

testing by the group team in 7 further

locations. These locations typically

represent other small revenue generating

entities, overseas cost centres, or holding

companies and not the principal business

units of the Group. We extend our scope

to these entities in order to add an element

of unpredictability into our scoping.

Specifically, we performed specified

procedures on certain aspects of Revenue;

Other operating expenses; interest income

and expense, provisions, intangible assets

and amortisation, in response to our risk

assessment for these individual financial

statement captions. The audit scope of the

components in specific scope or specified

procedures may not have included testing

of all significant accounts of the component

but will have contributed to the metrics

provided above for the Group.

Of the remaining 37 components that

together represent (11.1%) of the Group’s

adjusted EBITDA, none are individually

greater than (3%) of the Group’s adjusted

EBITDA. For these components, we

performed other procedures, including

cash and borrowings verification testing

on all material balances and a random

selection of additional immaterial

balances, analytical review, testing of

consolidation journals and intercompany

eliminations and foreign currency translation

recalculations to respond to any potential

risks of material misstatement to the

Groupfinancial statements.

Changes from the prior year

In previous periods, we identified the

reporting entity which recorded the

transactions relating to the Group’s UK

passport contract as Full Scope. As this

contract was completed in the previous

period and there has been no further trade,

we have no longer included this entity within

our audit scope. There have been no other

significant changes in the scoping of our

Group audit.

Involvement with

componentteams

In establishing our overall approach to the

Group audit, we determined the type of

work that needed to be undertaken at each

of the components by us, as the primary

audit engagement team, or by component

auditors from other EY global network

firms operating under our instruction.

The audit procedures on the three full scope

components (all of which comprise parts of

the UK operating business) were performed

directly by the primary audit team. For the

three specific scope components, where

the work was performed by component

auditors, we determined the appropriate

level of involvement to enable us to

determine that sufficient audit evidence

hadbeen obtained as a basis for our

opinionon the Group as a whole.

During the year the Group audit team

determined not to undertake any planned

visits to the specific scope overseas

locations. This decision was taken based

on the relative contribution of the full scope

UK locations to the overall Group (100.3%

of the Group’s adjusted EBITDA, 88.8%

of the Group’s Revenue and 64.2% of the

Group’s Total assets). Detailed instructions

were sent to all specific scope overseas

locations which covered the significant areas

that should be addressed by the component

team auditors and the information which

should be reported by to the Group

audit team. Furthermore, the number of

misstatements identified in recent periods

across the three locations continues to be

low. The primary team interacted regularly

with the component teams during various

stages of the audit including attending

planning, update and closing meetings via

conference calls. The primary team reviewed

key working papers and were responsible

for the scope and direction of the audit

process. This, together with the additional

procedures performed at Group level, gave

us appropriate evidence for our opinion on

the Group financial statements.

Climate change

There has been increasing interest from

stakeholders as to how climate change

will impact the group. The Group has

determined that the most significant

future impacts from climate change on its

operations will be from: emerging regulation

changes and the Group’s ability to react

to such changes (for example, the ban

onsingle use plastics in Kenya); the risk

of flooding of key sites as a result of rising

water levels and precipitation patterns;

and the risk of being unable to execute

thetransition of operations required to

effectively reduce its carbon footprint,

energy usage, waste, and reliance on

plastics inits operations.

These are explained on pages 34-37

in the Task Force for Climate related

Financial Disclosures and on page 29 in

the principal risks and uncertainties, which

form part of the “Other information,” rather

than the audited financial statements.

Our procedures on these disclosures

therefore consisted solely of considering

whether they are materially inconsistent with

the financial statements or our knowledge

obtained in the course of the audit or

otherwise appear to be materially misstated.

As explained in the strategic report, the

Group have started the journey to implement

the short, medium and long-term actions

required to achieve a number of global and

local initiatives aligned to the UN Sustainable

Development Goals (SDGs). It is also stated

that the Group have also started to report

against the requirements set out in the

Task Force for Climate-Related Financial

Disclosures; however, understanding the

costs and opportunities of climate change to

their business will take some time and they

are actively progressing this understanding

over the course of the next financial year.

The degree of uncertainty of these changes

may also mean that they cannot be taken

into account when determining asset and

liability valuations and the timing of future

cash flows under the requirements of UK

adopted international accounting standards.

Our audit effort in considering climate

change was focused on ensuring that the

effects of material climate risks disclosed

on pages 29 and 34-37 have been

appropriately reflected in the going concern

and viability considerations of the Group,

and other key assessments where values

are determined through modelling future

cash flows including the assumptions

around the costs anticipated in meeting the

Group’s target to become carbon neutral for

its own operations by 2030. This includes

the capital expenditure required to enable

the Group to reduce its carbon footprint,

energy usage, waste, and reliance on

plastics. We also challenged the Directors’

considerations of climate change in their

assessment of going concern and viability

and associated disclosures.

Whilst the Group have stated their

sustainability commitments in becoming

carbon natural from its own operations by

2030 and to align with the aspirations of

the Paris Agreement to achieve net zero

emissions by 2050, the Group are currently

unable to determine the full future economic

impact on their business model, operational

plans and customers to achieve this and

therefore the potential impacts are not fully

incorporated in these financial statements.

Independent Auditor’s Report continued

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements

of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we

identified. These matters included those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit;

and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements

asawhole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

Risk Our response to the risk

Key observations communicated

totheAuditCommittee

Revenue Recognition – £375.1m

(FY21–£397.4m)

Refer to the Audit Committee Report

(page62);Accounting policies (page 108);

andNote 2 ofthe Consolidated Financial

Statements (page115])

We have identified that there is a risk that

revenue is manipulated at or near to the period

end to meet income statement targets through

management override of controls. This cut-off

risk manifests itself in different ways based on

the terms of the contract and the associated

accounting policy under IFRS 15.

For contracts where revenue is recognised at

a ‘point in time’ the risk relates to evidencing

that control has passed to the customer. In

particular, certain contracts include specific

terms, for example, complex acceptance criteria

or “bill andhold” criteria which adds to the risk

that revenue may be recorded in the incorrect

reportingperiod.

For contracts where revenue is recognised ‘over

time’ the risk relates to the judgements made

in relation to evidencing; an enforceable right

to payment in the contract; and completion of

inventory or costs incurred compared to total

estimated cost to complete.

Misstatements that occur in relation to this

riskwould impact the revenue recognised in

theincome statement as well as any revenue

related balance sheet account such as trade

debtors, deferred income and accrued income.

We have performed testing using the lowest end

of theperformance materiality range applicable for

addressing the occurrence assertion impacted by

asignificant risk.

At each full, and specific scope component with

significant revenue streams (5 components) including

(where relevant) consolidation adjustments, we performed

audit procedures which covered 91.0% of the Group’s

Revenue. We also performed specified procedures

onmaterial revenue amounts earned in the remainder

ofthegroup, including amounts in the USA and

DeLaRue Buck Press Limited.

The primary audit team and specific scope

componentteams performed the audit procedures

overthe Group’s revenue.

Our procedures included, among others, obtaining an

understanding of the revenue recognition process and

evaluating the design of internal controls over revenue

recognised. We also evaluated the appropriateness

ofthe Group’s revenue recognition policy.

To address the risk on inappropriate cut-off, we selected

a sample of revenue transactions around the period end

date and for our sample selected, we tested to ensure

there is appropriate evidence to support that control has

passed to the customer and this reflected in the period

the revenue was recognised. This included checking

tothird party evidence of delivery, where applicable.

For ‘bill and hold’ contracts we ensured that this

arrangement was stipulated in the contractual terms,

that the related goods had been manufactured at

theyear-end date, including physically verifying a

sampleof these items, and that control had passed

tothe customer.

For over time revenue contracts, we performed a review

of all new material underlying agreements to determine

that over time revenue recognition is appropriate,

including an assessment of performance obligations and

any judgements made by management in concluding

that the company has an enforceable right to payment,

enquiring with external legal counsel where relevant.

The group uses the input method to record revenue over

time. For all material contracts, we have tested actual

costs incurred to underlying supporting documents and

challenged the appropriateness of the estimated cost

to complete the performance obligation. We have also

tested the appropriateness of the margin applied by

agreeing the calculations through to contractual terms

(e.g. unit prices and total contract value). We have also

checked that the correct percentage of completion

(POC) has been applied in determining the amount

ofrevenue to be recognised.

We performed journal entry testing, applying particular

focus to significant manual or unusual journal entries

to ensure each entry is supported by an appropriate,

underlying business rationale, is properly authorised

and accounted for correctly in the correct period.

Weobtained supporting audit evidence including

invoices and credit notes for unusual and/or material

revenue journals.

Based on our audit procedures we have

concluded that revenue is appropriately

recognised in the period and appropriately

accrued or deferred at 26 March 2022.

Financial statements De La Rue plc Annual Report 2022

Risk Our response to the risk

Key observations communicated

totheAuditCommittee

Post-retirement benefit liabilities –

£957.1m (FY21: £1,071.8m)

Refer to the Audit Committee Report (page62);

Accounting policies (page 112); andNote 24

of the Consolidated Financial Statements

(page140).

The valuation of the pension liabilities requires

significant levels of judgement andtechnical

expertise in choosing appropriate assumptions.

Anumber of the key assumptions (including

salaryincreases, inflation, discount rates and

mortality) can have a material impact onthe

calculation of the liability.

Misstatements that occur in relation to this risk

would affect the retirement benefit obligations

account in the balance sheet as well as

related accounts in the income statement and

statementof othercomprehensive income.

We utilised EY pension specialists to assist

theprimaryteam in testing the valuation of post-

retirement benefit liabilities.

Together with our EY pension specialists, we have

discussed with the actuaries of the pension scheme to

understand the valuation process. Wechallenged the

basis and methodology for setting key assumptions,

including, salary increases and mortality rates by

comparing themto national and industry averages.

We independently checked the discount andinflation

rates used in the valuation of thepension liability

againstour internally developed benchmarks.

We assessed the competency of management’s

expertused in determining theactuarial valuation.

We verified the basis of recognition of the UK pension

surplus by obtaining Management’s legal advice in

respect of the scheme rules andconsidered this

againstthe requirements ofIFRIC 14.

We assessed the appropriateness of Management’s

retirement benefit obligation disclosure by reference to

the requirements ofapplicable accounting standards.

Based on our audit procedures, we have

concluded that the actuarial assumptions

appliedwithin the valuation of post-retirement

benefits atperiod-end are appropriate.

Recoverability of long-term assets relating

to Portals £10.3m (gross amount); (FY21:

£8.6m) including the appropriateness of

theexpected creditloss provision £3.1m

(FY21: £nil):

As part of the disposal of the paper business

to Portals De La Rue Ltd in 2018, a portion

ofthe consideration received by the company

was deferred in the form of preference shares

and loan notes, with interest accruing annually

on these amounts and added to the value

of the asset. These amounts are repayable

at theearliest (in the absence of a triggering

event)in 2028.

The assessment of the recoverability of these

financial assets includes significant judgement.

Misstatements could occur where inappropriate

judgements have been made in determining

the Expected Credit Loss provision required

inrelation tothese financial assets.

We have assessed management’s judgement

(basedona number of factors) that while there

has beena significant increase in credit risk

sincerecognition, theasset is not credit impaired

andassuch a life timecredit loss provisions has

beenrecorded.

We audited management’s expected credit loss

assessment, including the assumptions utilised with

regards to the unbiased and probability weighted

analysis required by IFRS 9, taking into account

all available information on the counterparty and

evaluatinga range ofpossibleoutcomes.

We challenged management’s assumptions utilised

intheir assessment, including the relative weighting

of each possible outcome and whether any

contra-indicators existed which would change the

assumptionsused. In doing this, we also assessed

thecurrent financial position of the counterparty,

DeLaRue’s position in thecreditor’s hierarchy in

regardto their totalcreditors, and other factors

considered bymanagement.

We challenged management’s disclosures

includingtherequirement to include the methods,

inputs and assumptions as well as sensitivity

analysisperformed.

We concur with management’s conclusion

thatbased on available information, the

amountsdue are not credit impaired but a

life-time expected credit loss provisions has

been recorded to reflect thesignificantincrease

incredit risk sinceinitial recognition.

Based on our audit procedures on the

probability weighted assessment performed

by management, we have concluded that the

assessment considers all information available

to management and the life-time expected

creditloss recorded is reasonable.

We have reviewed management’s disclosures

relating to the expected credit loss provision.

We have determined the disclosures to

beappropriate.

Independent Auditor’s Report continued

Our application of materiality

We apply the concept of materiality

in planning and performing the audit,

in evaluating the effect of identified

misstatements on the audit and in

formingour audit opinion.

Materiality

The magnitude of an omission or

misstatement that, individually or in

the aggregate, could reasonably be

expected to influence the economic

decisions of the users of the financial

statements. Materiality provides a basis

fordetermining the nature and extent

ofouraudit procedures.

– We determined materiality for the Group

to be £1.1m (FY21: £1.1m), which is 2%

(FY21: 2%) of adjusted EBITDA. Given the

focus on the Group’s ability to continue

operating as a going concern in recent

periods which has been addressed

through management’s execution of the

equity raise and ongoing Turnaround plan,

we believe that there remains a pivotal

focus on the banking covenants applicable

to the Company which are based on

adjusted EBITDA. As such, webelieve

that adjusted EBITDA providesus with a

reasonable basis for determining materiality

and is the most relevant performance

measure to the stakeholders of the entity.

We determined materiality for the

Parent Company to be £5.3 million

(FY21: £5.3 million), which is 2% (FY21: 2%)

of equity.

Our materiality is based on the Group’s

EBITDA adjusted for exceptional items

inorder to exclude items which are non-

recurring in nature. We have determined

thefinal materiality amount applied in

ouraudit procedures below:

Starting basis

– Group EBITDA

£48.3m

Adjustments

– Add back net

exceptional items of

£5.7m as disclosed

on the Group

Income statement

Materiality

– Totals £54m

– Materiality of £1.1m

(2% of adjusted

EBITDA)

Performance materiality

The application of materiality at the individual

account or balance level. It is set at an

amount to reduce to an appropriately low

level the probability that the aggregate of

uncorrected and undetected misstatements

exceeds materiality.

On the basis of our risk assessments,

together with our assessment of the Group’s

overall control environment, our judgement

was that performance materiality was 50%

(FY21: 50%) of our planning materiality,

namely £0.5m (FY21: £0.5m). We have set

performance materiality at this percentage

due to an expectation of possible audit

misstatements in the current year driven

by the volume and quantum of audit

misstatements identified in the prior year.

Audit work at component locations for the

purpose of obtaining audit coverage over

significant financial statement accounts is

undertaken based on a percentage of total

performance materiality. The performance

materiality set for each component is

based on the relative scale and risk of the

component to the Group as a whole and

our assessment of the risk of misstatement

at that component. In the current year, the

range of performance materiality allocated

to components was £0.1m to £0.5m

(FY21: £0.1m to £0.5m).

Reporting threshold

An amount below which identified

misstatements are considered as being

clearly trivial.

We agreed with the Audit Committee that

we would report to them all uncorrected

audit differences in excess of £54,000

(FY21: £56,000), which is set at 5% of

planning materiality, as well as differences

below that threshold that, in our view,

warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements

against both the quantitative measures of

materiality discussed above and in light of

other relevant qualitative considerations in

forming our opinion.

Other information

The other information comprises the

information included in the annual report

set out on pages 1 to 89, other than the

financial statements and our auditor’s report

thereon. The directors are responsible for

the other information contained within the

annual report.

Our opinion on the financial statements does

not cover the other information and, except

to the extent otherwise explicitly stated in

this report, we do not express any form of

assurance conclusion thereon.

Our responsibility is to read the other

information and, in doing so, consider

whether the other information is materially

inconsistent with the financial statements

or our knowledge obtained in the course

of the audit or otherwise appears to be

materially misstated. If we identify such

material inconsistencies or apparent material

misstatements, we are required to determine

whether there is a material misstatement

in the financial statements themselves. If,

based on the work we have performed,

we conclude that there is a material

misstatement of the other information, we

are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters

prescribed by the Companies

Act 2006

In our opinion, the part of the directors’

remuneration report to be audited has been

properly prepared in accordance with the

Companies Act 2006.

In our opinion, based on the work

undertaken in the course of the audit:

– the information given in the strategic

report and the directors’ report for the

financial year for which the financial

statements are prepared is consistent

with the financial statements; and

– the strategic report and the directors’

report have been prepared in accordance

with applicable legal requirements.

Financial statements De La Rue plc Annual Report 2022

Matters on which we are

required to report by exception

In the light of the knowledge and

understanding of the group and the parent

company and its environment obtained

in the course of the audit, we have not

identified material misstatements in the

strategic report or the directors’ report.

We have nothing to report in respect of the

following matters in relation to which the

Companies Act 2006 requires us to report

to you if, in our opinion:

– adequate accounting records have not

been kept by the parent company, or

returns adequate for our audit have

notbeen received from branches

notvisited by us; or

– the parent company financial

statements and the part of the Directors’

Remuneration Report to be audited are

not in agreement with the accounting

records and returns; or

– certain disclosures of directors’

remuneration specified by law are

notmade; or

– we have not received all the

informationand explanations

werequirefor our audit

Corporate Governance

Statement

The Listing Rules require us to review

the directors’ statement in relation to

going concern, longer-term viability and

that part of the Corporate Governance

Statement relating to the group and

company’s compliance with the provisions

of the UKCorporate Governance Code

specifiedfor our review.

Based on the work undertaken as part of

our audit, we have concluded that each

of the following elements of the Corporate

Governance Statement is materially

consistent with the financial statements or

our knowledge obtained during the audit:

– Directors’ statement with regards to the

appropriateness of adopting the going

concern basis of accounting andany

material uncertainties identified set

outonpage 89;

– Directors’ explanation as to its

assessment of the company’s prospects,

the period this assessment covers and

why the period is appropriate set out

onpage 32;

– Directors’ statement on fair, balanced

andunderstandable set out on page 89;

– Board’s confirmation that it has carried

out a robust assessment of the emerging

and principal risks set out on page 89;

– The section of the annual report that

describes the review of effectiveness of

risk management and internal control

systems set out on page 27; and;

– The section describing the work of the

audit committee set out on page 62.

Responsibilities of directors

As explained more fully in the directors’

responsibilities statement set out on page

89, the directors are responsible for the

preparation of the financial statements and

for being satisfied that they give a true and

fair view, and for such internal control as the

directors determine is necessary to enable

the preparation of financial statements that

are free from material misstatement, whether

due to fraud or error.

In preparing the financial statements, the

directors are responsible for assessing

the group and parent company’s ability to

continue as a going concern, disclosing, as

applicable, matters related to going concern

and using the going concern basis of

accounting unless the directors either intend

to liquidate the group or the parent company

or to cease operations, or have no realistic

alternative but to do so.

Auditor’s responsibilities

for the audit of the financial

statements

Our objectives are to obtain reasonable

assurance about whether the financial

statements as a whole are free from material

misstatement, whether due to fraud or

error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance

is a high level of assurance but is not a

guarantee that an audit conducted in

accordance with ISAs (UK) will always detect

a material misstatement when it exists.

Misstatements can arise from fraud or error

and are considered material if, individually

or in the aggregate, they could reasonably

be expected to influence the economic

decisions of users taken on the basis of

these financial statements.

Explanation as to what extent

the audit was considered capable

of detecting irregularities,

including fraud

Irregularities, including fraud, are instances

of non-compliance with laws and

regulations. We design procedures in line

with our responsibilities, outlined above, to

detect irregularities, including fraud. The risk

of not detecting a material misstatement

due to fraud is higher than the risk of not

detecting one resulting from error, as

fraud may involve deliberate concealment

by, for example, forgery or intentional

misrepresentations, or through collusion.

The extent to which our procedures are

capable of detecting irregularities, including

fraud is detailed below. However, the

primary responsibility for the prevention

and detection of fraud rests with both those

charged with governance of the company

and management.

– We obtained an understanding of

the legal and regulatory frameworks

that are applicable to the group and

determined that the most significant

are those that relate to the reporting

framework (UK adopted international

accounting standards for the Group

financial statements and FRS 102 for the

parent company stand alone accounts, in

addition to abiding by the Companies Act

2006) and the relevant direct and indirect

tax regulations in the United Kingdom.

In addition, the Company has to comply

with laws and regulations relating to its

operations, including exports of product

and service regulations, offset terms

on foreign contracts, UK Anti-bribery

act, procurement regulations, Proceeds

of Crime Act 2002 and The Money

Laundering (Amendment) Regulations

2012, Health and Safety and GDPR.

Furthermore, the company must comply

with Listing Rules (LR requirements,

Disclosure & Transparency Rules (DTR)

requirements and ESMA Guidelines on

Alternative Performance measures, UK

Corporate Governance Code (2014 Code).

– We understood how De La Rue plc

is complying with those frameworks

by making enquiries of management

including internal legal counsel to

understand how the Company

maintains and communicates its

policies and procedures in these areas

and corroborated this by reviewing

supporting documentation. Specifically,

we inspected the code of conduct and

employee handbook issued to each

employee, we also verified that specific

training on the above frameworks were

offered to employees throughout the

year; obtaining and inspecting the

training compliance report held by the

company. Where relevant we liaised with

external legal counsel to understand

the potential impact of claims brought

against the company. We also reviewed

correspondence with relevant authorities,

including HMRC.

– We assessed the susceptibility of the

company’s financial statements to

material misstatement, including how

fraud might occur by considering the risk

of management override and through

assessing revenue as a fraud risk through

recognising revenue in the incorrect

period. Our procedures to address

this involved:

– Understanding the revenue recognition

process, policy and how it is applied,

including relevant controls;

– Selecting a sample of key contracts

to test based on various risk criteria.

For the same contracts we performed

detailed contract reviews, including

challenging management assumptions

on the revenue recognition process.

Independent Auditor’s Report continued

– For those contracts where revenue

has been recognised over time, our

procedures focussed on testing

management’s underlying assumptions

in determining revenue recognised in

the period, specifically the judgements

made at the year-end date relating

to the completion of inventory on

those contracts or cost incurred to

date compared to estimated cost

to complete.

– For point in time revenue, we tested

revenue cut-off at the year-end

by selecting a sample of revenue

transactions and testing whether

revenue was recorded in the correct

period through agreement to proof of

delivery to confirm the period that the

revenue relates to; and

– We incorporated data analytics

into our testing of manual journals,

including segregation of duties, and

into our testing of revenue recognition,

investigating journals posted to revenue

as part of our journal entry testing work,

with focus on manual transactions

recorded at or close to the year-

end date.

– Furthermore, given the territories

the company operates in, we have

applied forensic techniques to review

commissions paid to third party agents

acting on behalf of the group by

obtaining data related to commission

invoices during the year and performing

a range of tests seeking to highlight

any unusual transactions, including

an analysis of whether commission

payments were aggregated around

specific dates (i.e. post year end or

month ends) or if unusually large

payments were made.

– Based on this understanding we

designed our audit procedures to

identify non-compliance with such laws

and regulations. Our procedures had a

focus on compliance with the reporting

framework set out above through our

walkthrough testing.

– If any instance of non-compliance with

laws and regulations were identified,

these were communicated to the relevant

local EY teams who performed sufficient

and appropriate audit procedures

supplemented by audit procedures

performed at the group level.

A further description of our responsibilities

for the audit of the financial statements

is located on the Financial Reporting

Council’s website at https://www.frc.org.uk/

auditorsresponsibilities. This description

forms part of our auditor’s report.

Other matters we are required

to address

– Following the recommendation from the

audit committee we were appointed by

the company on 21 September 2017 to

audit the financial statements for the year

ending 31 March 2018 and subsequent

financial periods. We signed an updated

engagement letter on 24 May 2021.

– The period of total uninterrupted

engagement including previous renewals

and reappointments is five years, covering

the years ending 31 March 2018 to

26 March 2022.

– The non-audit services prohibited by the

FRC’s Ethical Standard were not provided

to the group or the parent company and

we remain independent of the group

and the parent company in conducting

the audit.

– The audit opinion is consistent with the

additional report to the audit committee.

Use of our report

This report is made solely to the company’s

members, as a body, in accordance with

Chapter 3 of Part 16 of the Companies Act

2006. Our audit work has been undertaken

so that we might state to the company’s

members those matters we are required

to state to them in an auditor’s report and

for no other purpose. To the fullest extent

permitted by law, we do not accept or

assume responsibility to anyone other than

the company and the company’s members

as a body, for our audit work, for this report,

or for the opinions we have formed.

Kevin Harkin

(Senior statutory auditor)

for and on behalf of Ernst & Young LLP,

Statutory Auditor

Reading

25 May 2022

Financial statements De La Rue plc Annual Report 2022

Notes

2022

£m

2021

£m

Revenue from customer contracts 2 3 75 .1 3 9 7. 4

Cost of sales (2 7 7. 5) (289. 6)

Gross Profit 9 7. 6 1 0 7. 8

Adjusted operating expenses 4 (6 1. 2) (6 9.7)

Adjusted operating profit 36.4 3 8 .1

Adjusted Items

– Amortisation of acquired intangibles 10 (1. 0) (1. 0)

– Net exceptional items – expected credit loss 5 (3 .1) –

– Net exceptional items – other 5 (2 .6) (22. 6)

– Net exceptional items – Total 5 (5 .7) (22. 6)

Operating profit 2 9 .7 14. 5

Interest income 6 0.9 0.8

Interest expense 6 (6. 2) ( 7.1)

Net retirement benefit obligation finance income/(expense) 6, 24 (0. 2) 1.7

Net finance expense (5.5) (4. 6)

Profit before taxation from continuing operations 24.2 9. 9

Taxation 7 (1. 3) (1. 4)

Profit from continuing operations 22 .9 8.5

Profit/(loss) from discontinued operations 3 0.8 (0.4)

Profit for the year 2 3 .7 8 .1

Attributable to:

– Owners of the parent 21. 5 5.9

– Non-controlling interests 30 2.2 2. 2

Profit for the year 2 3 .7 8 .1

Earnings per ordinary share

Basic 8

Basic EPS continuing operations 10 .6p 3 . 7p

Basic EPS discontinued operations 0.4p (0.3)p

Total Basic EPS 11 . 0p 3.4p

Diluted 8

Diluted EPS continuing operations 10 . 5p 3 .7p

Diluted EPS discontinued operations 0.4p (0.3)p

Total Diluted EPS 10 . 9p 3.4p

Note:

1. For adjusting Items, the cash flow Impact of exceptional Items can be found in note 5 and there was no cash flow Impact for the amortisation of acquired Intangible assets.

100

Consolidated income statement

for the period ended 26 March 2022

Notes

2022

£m

2021

£m

Profit for the year 2 3 .7 8 .1

Other comprehensive income

Items that are not reclassified subsequently to profit or loss:

Remeasurement gain/(loss) on retirement benefit obligations 24 3 5 .7 (9 5.6)

Tax related to remeasurement of net defined benefit liability 7 (8. 8) 18 . 2

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation differences for foreign operations (1. 5) (3.9)

Foreign currency translation differences for foreign operations – non-controlling interests 0 .1 –

Change in fair value of cash flow hedges 14(a) (0.6) (0.3)

Change in fair value of cash flow hedges transferred to profit or loss 14(a) 0. 8 (0.4)

Tax related to cash flow hedge movements 7 0 .1 (0. 2)

Tax related to components of other comprehensive income 7 0.2 –

Other comprehensive income/(loss) for the year, net of tax 26.0 (8 2. 2)

Total comprehensive income/(loss) for the year 4 9.7 (74 .1)

Comprehensive income for the year attributable to:

Equity shareholders of the Company 4 7. 4 (76 . 3)

Non-controlling interests 2 .3 2. 2

4 9 .7 (74 .1)

101

Financial statements De La Rue plc Annual Report 2022

Consolidated statement of comprehensive income

for the period ended 26 March 2022

Notes

2022

£m

2021

£m

ASSETS

Non-current assets

Property, plant and equipment 9 10 2 .7 10 0 . 0

Intangible assets 10 3 7. 5 3 2. 3

Right-of-use assets 23 12 . 9 14 . 6

Retirement benefit obligations 24 31. 6 –

Other financial assets 11 7. 4 8.8

Deferred tax assets 16 11. 2 19 . 7

Derivative financial assets 14 0 .1 0 .1

20 3.4 175 . 5

Current assets

Inventories 12 5 0 .1 5 4.5

Trade and other receivables 13 89.0 98.8

Contract assets 2 8.0 14 . 8

Current tax assets 0.4 0.4

Derivative financial assets 14 3.3 7. 4

Cash and cash equivalents 15 24.3 25 .7

17 5 .1 2 0 1. 6

Total assets 378. 5 3 7 7.1

LIABILITIES

Current liabilities

Trade and other payables 17 (80.0) (1 20.5)

Current tax liabilities (13 . 9) (13 .6)

Derivative financial liabilities 14 (4. 8) (8. 2)

Lease liabilities 23 (2 .7) (2 .7)

Provisions for liabilities and charges 19 (5.9) (9.6)

(1 0 7. 3) (15 4. 6)

Non-current liabilities

Borrowings 18 (9 2 .6) (74 . 2)

Retirement benefit obligations 24 (1. 8) (20.5)

Deferred tax liabilities 16 (2 .4) (2. 6)

Derivative financial liabilities 14 – (0 .1)

Lease liabilities 23 (11. 5) (13 . 0)

Other non-current liabilities (1 .1) (0 .7)

(10 9 . 4) (111.1)

Total liabilities (216 .7) (26 5.7)

Net assets 161. 8 111 . 4

EQUITY

Share capital 20 8 8.8 88.8

Share premium account 42 .2 42. 2

Capital redemption reserve 5.9 5.9

Hedge reserve (0.5) (0.8)

Cumulative translation adjustment 4.2 5 .7

Other reserve (31. 9) (3 1. 9)

Retained earnings 3 5 .1 (14 . 9)

Total equity attributable to shareholders of the Company 14 3. 8 9 5.0

Non-controlling interests 18 .0 16. 4

Total equity 1 61. 8 111 . 4

Approved by the Board on 24 May 2022.

Kevin Loosemore Clive Vacher

Chairman Chief Executive Officer

Registered number: 3834125

102

Consolidated balance sheet

at 26 March 2022

Attributable to

equity shareholders

Non-

controlling

Interests

Total

equity

capital

£m

premium

account

£m

Capital

redemption

reserve

£m

Hedge

reserve

£m

Cumulative

translation

adjustment

£m

Other

reserve

£m

Retained

earnings

£m £m £m

Balance at 28 March 2020 4 7. 8 42. 2 5.9 0 .1 9.6 (8 3.8) 56.2 15 . 2 9 3.2

Profit for the year – – – – – – 5.9 2. 2 8 .1

Other comprehensive income for the year, net of tax – – – (0.9) (3.9) – ( 7 7. 4) – (8 2. 2)

Total comprehensive income for the year – – – (0.9) (3.9) – (7 1 .5) 2. 2 (74 .1)

Transactions with owners of the Company

recognised directly in equity:

Share capital issued 0.2 – – – – – – – 0.2

Employee capital raised 40.8 – – – – 51. 9 – – 9 2 .7

Employee share scheme:

– value of services provided – – – – – – 0.2 – 0. 2

Income tax on income and expenses

recogniseddirectlyin equity – – – – – – 0.2 – 0. 2

Dividends paid – – – – – – – (1. 0) (1. 0)

Balance at 27 March 2021 88.8 42 . 2 5.9 (0. 8) 5 .7 (31. 9) (14 . 9) 16. 4 111 . 4

Profit for the year – – – – – – 2 1. 5 2.2 2 3 .7

Other comprehensive income for the year, net of tax – – – 0.3 (1. 5) – 2 7. 1 0 .1 26.0

Total comprehensive income for the year – – – 0.3 (1. 5) – 4 8.6 2.3 4 9 .7

Transactions with owners of the Company

recognised directly in equity:

Share capital issued – – – – – – – 0.2 0.2

Employee share scheme:

– value of services provided – – – – – – 1. 7 – 1.7

Income tax on income and expenses

recogniseddirectlyin equity – – – – – – (0.3) – (0.3)

Dividends paid – – – – – – – (0.9) (0.9)

Balance at 26 March 2022 88.8 42. 2 5.9 (0.5) 4. 2 (3 1. 9) 3 5 .1 18 . 0 161. 8

Notes:

Share premium account – This reserve arises from the issuance of shares for consideration in excess of their nominal value.

Capital redemption reserve – This reserve represents the nominal value of shares redeemed by the Company.

Hedge reserve – This reserve records the portion of any gain or loss on hedging instruments that are determined to be effective cash flow hedges. When the hedged transaction occurs, the gain

or loss on the hedging instrument is transferred out of equity to the income statement. If a forecast transaction is no longer expected to occur, the gain or loss on the related hedging instrument

previously recognised in equity is transferred to the income statement.

Cumulative translation adjustment (CTA) – This reserve records cumulative exchange differences arising from the translation of the financial statements of foreign entities since transition to

IFRS. Upon disposal of foreign operations, the related accumulated exchange differences are recycled to the income statement. This reserve also records the effect of hedging net investments

inforeign operations.

Other reserves – On 1 February 2000, the Company issued and credited as fully paid 191,646,873 ordinary shares of 25p each and paid cash of £103.7m to acquire the issued share capital

ofDeLa Rue plc (now De La Rue Holdings Limited), following the approval of a High Court Scheme of Arrangement. In exchange for every 20 ordinary shares in De La Rue plc, shareholders

received17ordinary shares plus 920p in cash. The other reserve of £8 3.8m arose as a result of this transaction and is a permanent adjustment to the consolidated financial statements.

On 17 June 2020 the Group announced that it would issue new ordinary shares via a “cash box” structure to raise gross proceeds of £100m, in order to provide the Company and its management

with operational and financial flexibility to implement De La Rue’s turnaround plan, which was first announced by the Company earlier in the year. The cashbox completed on 7 July 2020 and

consisted of a firm placing, placing and open offer. The Group issued 90.9m new ordinary shares each with a nominal value of 44 152/175p, at a price of 110p per share (giving gross proceeds of

£100m). A “cash box” structure was used in such a way that merger relief was available under Companies Act 2006, section 612 and thus no share premium needed to be recorded and instead

an ‘other reserve’ of £5 1 .9m was recorded. This section applies to shares which are issued to acquire non-equity shares (such as the Preference Shares) issued as part of the same arrangement.

The Group recorded share capital equal to the aggregate nominal value of the ordinary shares issued (£40.8m) and merger reserve equal to the difference between the total proceeds net of costs

and share capital. As the cash proceeds received by DLR plc where loaned via intercompany account to a subsidiary company to enable a substantial repayment of the RCF, the increase to other

reserves of £51 .9m was treated as an unrealised profit and hence not currently considered distributable as at 26 March 2022. This judgement might be revised in future periods, subject to certain

internal transactions enabling the settlement of intercompany positions.

103

Financial statements De La Rue plc Annual Report 2022

Consolidated statement of changes in equity

for the period ended 26 March 2022

Notes

2022

£m

2021

£m

Cash flows from operating activities

Profit before tax – continuing operations 24.2 9.9

Profit/(loss) before tax – discontinued operations 0.9 (0.5)

2 5 .1 9.4

Adjustments for:

Finance income and expense 6 5.5 4. 6

Depreciation of property plant and equipment 9 12 . 0 12 . 9

Depreciation of right-of-use assets 23 2 .3 2. 5

Amortisation of intangible assets 10 4.3 4. 2

Gain on sale of property plant and equipment (0.5) (2 .7)

(Impairment reversal)/impairment of property, plant and equipment and intangible assets and

accelerateddepreciationcharges included within exceptional items 9 (0 .1) 11. 8

Share based payment expense 21 1. 8 0.4

Pension Recovery Plan and administration cost payments

(16 . 4) (11 . 4)

Decrease in provisions 19 (3. 7) (0.9)

Loss on disposal of subsidiary (net of associated costs) – 0.3

Non-cash credit loss provision – other financial assets 5, 11 3 .1 –

Non-cash credit loss provision – other (0. 2) 0.8

Other non-cash movements 2.3 2. 3

Cash generated from operations before working capital 35.5 34. 2

Changes in working capital:

Decrease/(increase) in inventory 3.4 (4 .0)

Decrease/(increase) in trade and other receivables and contract assets 22 .6 (19 . 8)

Decrease in trade and other payables and contract liabilities (4 3 . 2) (16 .0)

(17. 2) (3 9.8)

Cash generated from/(used in) operating activities 18 . 3 (5.6)

Note:

1. The £16.4m of pension payments includes £15.0m payable under the Recovery Plan, agreed in May 2020, and a further £1.4m relating to payments made by the Group towards the administration

costs of running the scheme.

104

Consolidated cash flow statement

for the period ended 26 March 2022

Notes

2022

£m

2021

£m

Cash generated from/(used in) operating activities 18 . 3 (5.6)

Net tax paid (1. 8) (2.4)

Net cash flows from operating activities 16 . 5 (8.0)

Cash flows from investing activities:

Deduction from the sale of subsidiary (net of cash disposed and associated disposal costs) – (1. 9)

Purchase of loan notes 11 (0. 9) –

Purchases of property, plant and equipment

– gross 9 (19. 6) (19 . 0)

Purchases of property, plant and equipment – grants received 9 1. 5 3.5

Purchase of software intangibles and development assets capitalised 10 (8. 8) (5.6)

Proceeds from sale of property, plant and equipment 1. 9 2.7

Receipt of research and development tax credit 0 .1 –

Interest received – 0 .1

Net cash flows from investing activities (2 5. 8) (20.2)

Net cash flows before financing activities (9.3) (2 8. 2)

Cash flows from financing activities:

Net proceeds from the equity capital raise – 9 2.7

Net draw down/(repayment) of borrowings

14(f) 1 7. 0 (3 9.3)

Payment of debt issue costs 14(f) – (4. 8)

Lease liability payments (2 . 2) (2. 2)

Interest paid (6.2) (5 .7)

Dividends paid to non-controlling interests 30 (0.9) (1. 0)

Net cash flows from financing activities 7. 7 3 9 .7

Net (decrease)/increase in cash and cash equivalents in the year (1. 6) 11 . 5

Cash and cash equivalents at the beginning of the year 2 5 .7 14 . 5

Exchange rate effects 0.2 (0.3)

Cash and cash equivalents at the end of the year 24.3 2 5 .7

Cash and cash equivalents consist of:

Cash at bank and in hand 15 20.3 25 .7

Short term deposits 15 4.0 –

15, 22 24.3 2 5 .7

Notes:

1. Purchases of property, plant and equipment excluding down payments and capex creditors of £1.6m (FY21: £2.4m) was £16.5m (FY21: £13. 1m).

2. In the period FY21 the majority of the equity capital raise proceeds were used to subsequently repay a substantial part of the RCF shortly after amendment on 7 July 2020.

105

Financial statements De La Rue plc Annual Report 2022

General information

De La Rue plc (the Company) is a public

limited company incorporated and domiciled

in the United Kingdom, whose shares

are publicly traded on the London Stock

Exchange. The registered office is located

at De La Rue House, Jays Close, Viables,

Basingstoke, Hampshire, RG22 4BS.

De La Rue plc and its subsidiaries

(together‘Group’) has two principal

segments Currency and Authentication.

In Currency we design, manufacture and

deliver bank notes, polymer substrate

and security features around the world.

In Authentication, we supply products

and services to governments and Brands

to assure tax revenues and authenticate

goodsas genuine. In addition, there is a

third segment, Identity Solutions, which

includes minimal non-core activities.

The financial statements have been

prepared as at 26 March 2022, being the

last Saturday in March. The comparatives

for the 2020/21 financial period are for the

period ended 27 March 2021.

The consolidated financial statements of the

Company for the period ended 26 March

2022 were authorised for issuance by the

board of Directors on 24 May 2022.

Company financial statements

The Company has elected to prepare

its entity only financial statements in

accordance with FRS 102 Financial

Reporting Standard applicable in

the UKandRepublic of Ireland.

These are setout on pages 147 to 152

andthe accounting policies in respect

oftheCompany financial statements

aresetout on page 149.

Significant

accountingpolicies

1 Basis of preparation

The consolidated financial statements of the

Company for the period ended 26 March

2022 have been prepared in accordance

with UK-adopted International Accounting

Standards (‘IFRS’) in accordance with the

requirements of the Companies Act 2006.

IFRS includes standards issued by the

International Accounting Standards Board

(‘IASB’) that are endorsed for use in the UK.

The consolidated financial statements

are prepared on a going concern basis

under the historical cost convention with

the exception of certain items which are

measured at fair value as disclosed in

theaccounting policies below.

The preparation of financial statements

in accordance with IFRS requires the use

of certain critical accounting estimates.

It also requires management to exercise

itsjudgement in the process of applying

theGroup’s accounting policies.

The areas involving a higher degree of

judgement or complexity, or areas where

assumptions and estimates are significant

to the consolidated financial statements are

disclosed below in V ‘Critical accounting

estimates, assumptions and judgements’.

The Directors have considered the impact

of the war in Ukraine on the results of the

Group and concluded this is be immaterial

(note 13).

The principal accounting policies adopted

in the preparation of these consolidated

financial statements are set out below or

have been incorporated with the relevant

notes to the accounts where appropriate.

These policies have been consistently

applied to all the periods presented,

unlessotherwise stated.

Climate change

In preparing the Consolidated Financial

Statements management has considered

the impact of climate change and the

actions that the Group will take in order to

fulfil its sustainability strategy and satisfy its

commitment to become carbon neutral from

its own operations by 2030. This includes

the estimates around future cash flows used

in impairment assessments of the carrying

value of goodwill and intangible assets in De

La Rue Authentication Inc, recoverability of

deferred tax assets and the useful economic

life of plant and equipment, especially

assets which are very power-intensive and

expected to be replaced. This is within

the context of the disclosures included in

Strategic Report, including those made in

accordance with the recommendation of

the Taskforce on Climate-related Financial

Disclosures this year. These considerations

did not have a material impact on the

financial reporting judgements and

estimates consistent with the assessment

that climate change is not expected to have

a significant impact on the Group’s going

concern assessment as discussed below.

Going concern

The Group’s business activities, together

with the factors likely to affect its future

development, performance and position

are set out on pages 1 to 15 of the

Strategic report in the 2021 Annual Report.

In addition, pages 135 to 144 of the

2021 Annual Report include the Group’s

objectives, policies and processes for

financial risk management, details of its

financial instruments and hedging activities

and its exposure to credit risk, liquidity risk

and commodity pricing risk.

The Group has prepared and reviewed

profit and cashflow forecasts which cover

aperiod up to 30 June 2023. This base

caseforecast assumes continued delivery

ofthe Turnaround Plan, specifically

protecting market share in Currency,

growing Authentication revenue, and the

benefit of the cost out initiatives already

completed in addition to continued careful

management of costs. These forecasts

show significant headroom and support

thatthe Group will be able to operate

withinits available banking facilities and

covenants throughoutthis period.

Covenants are calculated on a rolling

12-month basis each quarter and therefore

for all quarters until Q4 of FY23 and Q1

of FY24, a portion of the EBITDA/EBIT

has already been earned, reducing the

risk of a potential breach. Taking this into

account along with the forecasts reviewed,

it is considered that the net debt/ EBITDA

covenant for the rolling 12 months to Q4

of FY23 and Q1 of FY24 is the limiting

factor, rather than the overall facility or

the EBIT/net interest payable covenant in

this period. The Directors have therefore

completed a reverse stress test of the

forecasts to determine the magnitude of

downturn which would result in a breach to

this covenant in the going concern period.

Management have included a number of

potential downsides including significant

further supply chain cost pressures and

revenue and margin levels being below

current forecasts.

If all of these modelled downside risks

were to materialise in the Going Concern

period, the Group would still just meet

its net debt/EBITDA covenant ratio after

taking into account mitigating actions which

the Director’s considered to be within the

management’s control. This modelling

demonstrated that a cumulative decline

of30% in EBITDA compared with the

base case without any mitigation would

need to occur in the going concern period

for the net debt/EBITDA covenant to

breached. Taking into account mitigating

actions considered to be within the control

of management, a fall in EBITDA of 42%

frombase case would need to occur in the

going concern period before the net debt/

EBITDA covenant would be breached.

These reductions in EBITDA are considered

to be remote by management taking into

account order cover for the same period

(see page 19) and other controllable

mitigating actions available to management.

Additionally, the SONIA rate would need to

rise to 8.0% in FY23 to trigger a breach in

the interest covenant. Management have

assessed this risk as remote given that

the current SONIA rate applicable is less

tha n 1%.

106

Accounting policies

The Directors have assumed that the

currentrevolving credit facility remains

inplace with the same covenant

requirements through to its current expiry

date (December 2023), which is beyond

the end of the period reviewed for Going

Concern purposes. The Directors have

assessed that the Group will either renew

the facility thereafter or have sufficient time

to agree an alternative source of finance

forthe subsequent period.

Accordingly, the Directors are satisfied

thatthe Group is well placed to manage

itsbusiness risks and to continue in

operational existence for the foreseeable

future. Accordingly, the Directors continue

toadopt the going concern basis in

preparing these Consolidated Annual

Financial Statements.

A copy of the 2021 Annual Report is

available at www.delarue.com or on request

from the Company’s registered office at

De La Rue House, Jays Close, Viables,

Basingstoke, Hampshire, RG22 4BS.

Covid-19

The Annual Report for the period ended

27 March 2021 included an assessment

of the potential impact of Covid-19 on

the financial position of the Group as at

March 2021. The Directors still consider

this assessment to be appropriate for

the27 March 2022 financial statements

based on the current position.

2 New Standards,

interpretations and

amendments adopted

bytheGroup

Other than as described below, the

accounting policies adopted in the

preparation of these consolidated financial

statements are consistent with those

appliedby the Group in its consolidated

financial statements as at, and for the

period ended, 27 March 2021, apart

fromstandards, amendments to or

interpretations of published standards

adopted during the year.

During the period, the following new and

amended IFRS became effective for the

Group. The Group has not early adopted

any standard, interpretation or amendment

that has been issued but is not yet effective.

The impacts of applying these policies are

not considered material.

Several amendments apply for the

first timein FY22, but do not have an

impactonthese consolidated financial

statements of the Group.

Effective for periods commencing

after1January 2021:

– Interest Rate Benchmark Reform –

Phase2: Amendments to IFRS9,

IAS39,IFRS7, IFRS4 and IFRS16.

The amendment provides temporary

reliefs which address the financial

reporting effects when an interbank

offered rate (‘IBOR’) is replaced with an

alternative nearly risk-free rate (‘RFR’).

The amendments include the following

practical expedients:

– A practical expedient to require

contractual changes, or changes to

cash flows that are directly required by

the reform, to be treated as changes to

a floating interest rate, equivalent to a

movement in a market rate of interest.

– Permit changes required by

IBORreform to be made to hedge

designations and hedge documentation

without the hedging relationships

being discontinued.

– Provide temporary relief to entities

from having to meet the separately

identifiable requirement when an RFR

instrument is designated as a hedge

ofa risk component.

These amendments had no impact on

the consolidated financial statements

ofthe Group.

The Group transitioned from the use of the

IBOR benchmark to RFR on 30 September

2021 in the Group’s main borrowing facility

and as the Group generally borrows for

a series of one-month periods the new

basis for calculating contractual cash flows

is considered economically equivalent

to the previous basis. In addition, no

existing derivatives have been impacted

by the change and there are no financial

instruments yet to transition to RFRs.

The IBOR reform has had a minimal impact

to the Group’s risk management strategy but

given the RFR is a backward-looking rate

there is naturally less certainty on cashflows

until the final RFR and calculation is finalised

at the end of the period of any borrowing.

Effective for periods commencing

after 1 January 2022, all subject to

UKendorsement:

– Amendments to IFRS 3 “Business

Combinations” – Reference to

the Conceptual Framework.

The amendments are intended to update

a reference to the Conceptual Framework

without significantly changing the

requirements of IFRS 3. The amendments

will promote consistency in financial

reporting and avoid potential confusion

from having more than one version of

theConceptual Framework.

– Amendments to IAS 16 “Property,

plant and equipment” – Proceeds

before intended use. The amendment

prohibits entities from deducting from the

cost of an item of property and equipment

any proceeds of the sale of items

produced while bringing that asset to the

location and condition necessary for it to

be capable of operating in the manner

intended by management. Instead, an

entity recognises the proceeds from

selling such items, and the costs of

producing those items, in profit or loss.

– Amendments to IAS 37 “Provisions,

Contingent assets and liabilities” –

Onerous Contracts – Costs of Fulfilling

a Contract. These amendments specify

which costs an entity needs to include

when assessing whether a contract is

onerous or loss-making. The amendments

apply a ‘directly related cost approach’.

The costs that relate directly to a contract

to provide goods or services include both

incremental costs (eg, the costs of direct

labour and materials) and an allocation of

costs directly related to contract activities

(eg, depreciation of equipment used to fulfil

the contract as well as costs of contract

management and supervision). General and

administrative costs do not relate directly

to a contract and are excluded unless they

are explicitly chargeable to the counterparty

under the contract.

– Amendments to IFRS 9 “Financial

Instruments” – Fees in the ’10%’

test for derecognition of financial

liabilities. The amendment clarifies

the fees that an entity includes when

assessing whether the terms of a new or

modified financial liability are substantially

different from the terms of the original

financial liability. These fees include only

those paid or received between the

borrower and the lender, including fees

paid or received by either the borrower

orlender on the other’s behalf.

Effective for periods commencing

after 1 January 2023, all subject

toUK endorsement:

– Amendments to IAS 1 “Presentation

of financial statements” –

Classification of Liabilities as Current

or Non-current. The amendments

clarify: what is meant by a right to defer

settlement; that a right to defer must

exist at the end of the reporting period;

that classification is unaffected by the

likelihood that an entity will exercise

its deferral right and that only if an

embedded derivative in a convertible

liability is itself an equity instrument,

would the terms ofaliability not impact

its classification.

107

Financial statements De La Rue plc Annual Report 2022

– Amendments to IAS 8 “Accounting

policies, changes in accounting

estimates and errors” – Definition

of Accounting Estimates.

The amendments clarify the distinction

between changes in accounting estimates

and changes in accounting policies

and the correction of errors. Also, they

clarify how entities use measurement

techniques and inputs to develop

accounting estimates.

– Amendments to IAS 1 “Presentation

of financial statements” –

Disclosure of Accounting

Policies – Amendments to IAS 1

and IFRS Practice Statement 2.

The amendments aim to help entities

provide accounting policy disclosures

that are more useful by: replacing the

requirement for entities to disclose their

‘significant’ accounting policies with a

requirement to disclose their ‘material’

accounting policies and adding guidance

on how entities apply the concept of

materiality in making decisions about

accounting policy disclosures.

– Amendments to IAS 12 “Income

Taxes” – Deferred Tax related to

Assets and Liabilities arising from

aSingle Transaction. The amendment

narrows the scope of the initial recognition

exception under IAS 12 so that it no

longer applies to transactions that give

rise to equal taxable and deductible

temporary differences.

Other amendments in IFRS 1 (“First

time adoption”), IAS 41 (“Agriculture”)

and IFRS17(“Insurance contracts”)

arenotapplicable to the Group.

The impact of the amendments and

interpretations listed above are not

expected to a have a material impact on

theConsolidated Financial Statements.

3 Basis of consolidation

The consolidated financial statements

comprise the financial statements of the

Company and entities controlled by the

Company and its subsidiaries prepared

at the consolidated statement of financial

position date (26 March 2022).

Subsidiaries

Subsidiaries are entities controlled by the

Group. The Group is considered to control

an entity when it is exposed to, or has rights

to, variable returns from its involvement

with an entity and has the ability to affect

those returns through exerting control

overthe entity.

The results of subsidiaries acquired or

disposed of during the period are included

in the consolidated financial statements

from the date that control commences or

until the date that control ceases. Intra-

group balances and transactions are

eliminated on consolidation. The majority

of the subsidiaries prepare their financial

statements up to 26 March 2022.

The results of subsidiaries where the

financial statements are not prepared

to 26 March are still included in the

consolidation as at 26 March with the

income statement and other financial

information being also prepared for

theyearended 26 March 2022.

For partly owned subsidiaries, the

allocation of net assets and net earnings to

outside shareholders is shown in the line

“Attributable to Non-controlling interests”

on the face of the consolidated statement

of comprehensive income and the

consolidated statement of financial position.

Business combinations

Acquisitions of subsidiaries and businesses

are accounted for using the acquisition

method of accounting. The consideration

transferred and the amount of non-

controling interests (as applicable) in the

acquisition is measured at fair value as

are the identifiable assets and liabilities

acquired. The excess of the fair value of

consideration transferred over the fair value

of net assets acquired is accounted for as

goodwill. Any goodwill that arises is tested

annually for impairment. Transaction costs

are expensed as incurred and are presented

within exceptional items in accordance with

the Group’s policy.

4 Significant

accountingpolicies

The significant accounting policies adopted

in the preparation of these consolidated

financial statements have been incorporated

into the relevant notes where possible.

General accounting policies which are not

specific to an accounting are set out below.

A Foreign currency

I Foreign currency transactions

These financial statements are presented

in sterling, which is the functional and

presentational currency of the Company.

The functional currency of Group entities

is principally determined by the primary

economic environment in which the

respective entity operates.

Transactions in foreign currencies entered

into by Group entities are translated into

the functional currencies of those entities

at the rates of exchange at the date of

the transaction.

Monetary assets and liabilities denominated

in foreign currencies at the balance sheet

date are translated at the rate of exchange

ruling at that date. Foreign exchange

differences arising on translation are

recognised in the income statement.

Foreign currency non-monetary items

measured in terms of historical cost

are translated at the rate of exchange

at the dateof the transaction.

Exchange differences on non-monetary

items measured at fair value are recognised

in line with whether the gain or loss on the

non-monetary item itself is recognised in

theincome statement or in equity.

In order to hedge its exposure to certain

foreign exchange risks, the Group enters

into forward contracts. Refer to note 14

for details of the Group’s accounting

policies in respect of such derivative

financial instruments.

II Translation of foreign operations

onconsolidation

Assets and liabilities of foreign operations,

including goodwill and intangible assets,

are translated into GBP (the presentational

currency of the Group) at the exchange

rate prevailing at the balance sheet date.

Income and expenses are translated at

average exchange rates (which approximate

to actual rates). Exchange differences arising

on re-translation are recognised in the

Group’s currency translation reserve, which

is a component of equity. When a foreign

operation is sold, exchange differences that

were recorded in equity are recognised in

the income statement as part of the gain

orloss on sale.

III Net investment in foreign operations

Foreign currency differences arising on

the re-translation of a financial liability

designated as a hedge of a net investment

in foreign operations are recognised in the

currency translation reserve to the extent

the hedge is effective. To the extent that

the hedge is ineffective, such differences

are recognised as finance income or costs

in the income statement. When a foreign

operation is sold, exchange differences that

were recorded in equity are recognised in

the income statement as part of the gain

orloss on sale.

B Revenue recognition

The Group accounts for revenue under

IFRS 15. IFRS 15 provides a single,

five-step principles-based model to be

applied to all contracts with customers

which requires identification of the contract

for accounting purposes, the separate

performance obligations within the contract,

the transaction price for the contract,

allocation of the transaction price and

recognition of revenue on satisfaction

ofperformance obligation.

The following table provides information

about the nature and timing of the

satisfaction of performance obligations

in contracts with customers, including

significant payment terms, and the related

revenue recognition policies.

108

Accounting policies continued

Type of product/

service/segment

Nature and timing of satisfaction

of performance obligations

Revenue recognition

under IFRS 15

Authentication

segment

The Group has certain contracts which operate in the

form of an umbrella agreement with the local government

which awards the Group to be the provider of an end-to-

end authentication track and trace system. The umbrella

agreement specifies the nature of services and products to

be provided. However, these agreements do not include any

purchase commitments from the local government and do

not give the Group an enforceable right to payment. Instead,

the umbrella agreement allows for the Group to entered

into individual agreements with individual manufacturers

and provides it with the right to sell physical authentication

products (such as tax stamps) thus giving the Group

an enforceable right to payment from each individual

manufacturer for physical products sold.

The Group has therefore determined that these umbrella

contracts do not meet the definition of a contract for IFRS 15

accounting purposes. Instead, the relevant contract for IFRS

15 purposes is the contract with the individual manufacturers

in the country. It is the manufacturers which represent the

customers from an IFRS 15 perspective. Consequently, as

the Group only has one performance obligation in the revenue

contract with the manufacturer and only has a right to payment

for thisperformance obligation no revenue is allocated and

recognised on delivery of any other deliverables under the

umbrella agreement.

For Authentication contracts entered into with a single party

and where multiple performance obligations are included,

the transaction price for the contract is allocated to each

performance obligation separately identified. Performance

obligations include access to systems which incorporates

system configuration and integration and the provision

ofauthentication products such as tax stamps.

Revenue on the sale of authenticity products, including tax

stamps, is recognised when control passes to the customer

based on the standalone selling price of the product. Stand-

alone selling prices are typically calculated using the ‘expected

cost-plus margin’ approach. Control generally passes on

delivery of the physical product to the customer or the issuance

of a digital security key. Revenue in relation to system access is

recognised on a straight-line basis over the life of the contract

asthe customer receives the benefit.

The Group has determined that for certain authentication

contracts (given the highly bespoke nature of the products)

with enforceable right to payment, the customer controls

all of the work in progress as the products are being

manufactured.

This is because under those contracts, authentication

products are made to a customer’s specification and if a

contract is terminated by the customer, then the Group is

entitled to reimbursement of the costs incurred to date,

plusa reasonable profit margin.

Revenue for certain Authentication contracts with enforceable

right to payment will be recognised over time for physical

product produced to date and ahead of delivery to the

customer. Revenue is recognised progressively based on

the input method based on the cost incurred relative to the

expected total cost.

Currency segment:

Supply of banknotes

The Group has determined that for certain banknote

contracts (given the highly bespoke nature of the products)

with enforceable right to payment, the customer controls

all of the work in progress as the products are being

manufactured.

This is because under those contracts, currency products

are made to a customer’s specification and if a contract

is terminated by the customer, then the Group is entitled

to reimbursement of the costs incurred to date, plus a

reasonable margin.

For other banknote contracts, where customers do not take

control of the goods until they are completed or delivered,

revenue is recognised at the point in time when control

transfers to the customer.

If the Group has recognised revenue, but not issued an

invoice, then the entitlement to consideration is recognised

as a contract asset. The contract asset is transferred to

receivables when the entitlement to payment becomes

unconditional.

Revenue for certain banknote contracts with enforceable

right topayment will be recognised over time for banknotes

produced to date and ahead of delivery to the customer.

Revenue is recognised progressively based on the input method

based on the cost incurred relative to the expected total cost.

Revenue for other banknote contracts, where customers do not

take control of the goods until they are completed is recognised

based on contractual terms which will determine when control

has passed to the customer. This might include recognition

of revenue on inventory placed into storage for the customer,

so long as it is demonstrated that control of the product has

passed to the customer.

Currency segment:

Supplyof banknotes

alongwith other

services



In addition to the supply of banknotes, which is a separate

performance obligation (see above), additional and separate

performance obligations such as design and storage services

have been identified.

The value attributable to the additional performance obligations

is deemed to be immaterial. Accordingly, no separate value will

be attributed to these performance obligations; instead, the

consideration in the contract will be entirely allocated to the

singleperformance obligation of supplying currency.

IDS segment: IDS

contracts including

supply of passports,

hardware and

softwareand

otherservices

For IDS customers do not take control of the goods until they

are completed or delivered, revenue is recognised at the

point in time when control transfers to the customer.

Where customers do not take control of the goods until they are

completed is recognised on formal acceptance by the customer.

109

Financial statements De La Rue plc Annual Report 2022

D Other revenue

recognitionmatters

I Bill and hold revenue

Certain customers require the Group to

store completed inventory for them ahead

of them taking delivery once they require

it. Revenue is recognised on a bill and hold

basis when:

a. It can first be demonstrated that

control ofthe product has passed to

the customer – principally because the

customer taken has risk and/or title for

the product transferred to them and

the Group has an enforceable right

topayment; and

b. It can be demonstrated that the

arrangement is substantive, for example,

that the customer has requested it.

II Variable consideration oncontracts

The Group has a small number of contracts

where the terms with the customers place a

limit on the profit margin that can be earned

under these. As these profit margin impacts

the amount of revenue that the Group can

bill the customers, detailed reconciliations

of the profit margins earned on these

contracts at each reporting period end are

completed to ensure that amount of revenue

recorded in the year is not overstated using

the most likely amount method (ie to ensure

the transaction price is ‘constrained’ in

accordance with IFRS 15).

The Group also has other potential forms of

variable consideration in the form of prices

concessions and discounts which may be

offered to customers and penalties or fines

which might be incurred if the Group did not

fully perform against contract deliverables.

If a discount or price concession is offered

to a customer this is taken into account

in the estimated transaction price for the

contract to ensure it is ‘constrained’ in

accordance with IFRS 15. If the Group

anticipates a penalty or a fine to be incurred

this is estimated and accounted for as a

reduction from the transaction price again

toensure it is ‘constrained’ in accordance

with IFRS 15.

III Warranties

All warranties are considered to be of a

standard nature (assurance type) and

as such are accounted for under IAS 37

ratherthan IFRS 15.

C Costs to obtain contracts

I Sales commissions

Management expects that incremental

commission fees paid to intermediaries and

employees as a result of obtaining long term

sales contracts are recoverable. The Group

therefore capitalises them as contract costs

where the contract signed with the customer

creates enforceable rights and obligations.

If a sales contract takes the form of an

over-arching umbrella agreement which

does not create such enforceable rights and

obligations (ie committed sales volumes

and values from the customer) then sales

commission payments are not capitalised.

II Capitalised commission fees are

amortised when the related revenues

arerecognised

The Group applies the practical expedient

in paragraph 94 of IFRS 15 and recognises

the incremental costs of obtaining contracts

as an expense when incurred, if the

amortisation period of the assets that the

Group otherwise would have recognised

isone year or less.

III Bid costs

Bid costs are capitalised only when

they relate directly to a contract and are

incremental to securing the contract and

would not have been incurred had the

contract not been won. There were no

capitalised bid costs in FY22 (FY21: £nil)

asno costs met this requirement.

IV Deferred costs

The Group incurs costs on certain (mainly

Authentication division) contracts in advance

of recording revenue. On these contracts

costs are capitalised on the balance sheet

and recognised in the income statement

over the period when revenue is recognised

if the following criteria are met:

– the costs relate directly to a contract

ortoan anticipated identity;

– the costs generate or enhance resources

of the entity will be used in satisfying

(or continuing to satisfy) performance

obligations in the future; and

– costs are expected to be recovered.

5 Critical accounting

estimates, assumptions

andjudgements

Management has discussed with the

AuditCommittee the development,

selectionand disclosure of the Group’s

critical accounting policies and estimates

and the application of these policies

and estimates. Management is required

to exercise significant judgement in the

application of these policies. Estimates are

made in many areas and the outcome may

differ from that calculated.

The key assumptions concerning the

future and other key sources of estimation

uncertainty at the balance sheet date

that have a significant risk of causing a

material adjustment to the carrying amounts

of assets and liabilities within the next

financialyear are set out below.

A Critical accounting

judgements

Determination of lease term

Management has made certain judgements

on lease terms based on the Group’s current

expectations of whether break or renewal

options will be taken. In arriving at these

judgements, management has considered

its current business plans including the

locations in which it wants to operate in

addition to the impact of any cost-out

programmes it is considering.

Revenue recognition and cut-off

Customer contracts will often include

specific terms that impact the timing of

revenue recognition. The timing of the

transfer of control varies depending on the

individual terms of the sales agreement.

For sales of products the transfer usually

occurs on loading the goods onto the

relevant carrier, however the point at which

control passes may be later if the contract

includes customer acceptance clauses or

control passes on arrival at the customer

location. Specific consideration is needed

at year end to ensure revenue is recorded

within the appropriate financial year.

This judgement is particularly important in

the Currency division due to the material

nature of certain contracts which may

ship near to a reporting period end.

Management has carefully reviewed material

customer contracts with particular focus

on those shipping in the last quarter of the

financial period to ensure revenue has been

recorded in the correct year.

110

Accounting policies continued

Revenue recognition and determination

of whether an enforceable right to

payment exists

For certain customer contracts, revenue

isrecognised over time in accordance with

IFRS 15, as the Group has an enforceable

right to payment.

Determination of whether the Group had an

enforceable right to payment requires careful

analysis of the legal terms and conditions

included within the customer contract

and consideration of applicable laws and

customary legal practice in the territory

under which contract is enforceable.

External legal advice is obtained if

considered necessary to allow management

to make this assessment. Management has

carefully reviewed material contracts

relating to revenue recognised in the period

to determine if an enforceable right to

payment exists which results in revenue

being recorded ‘over-time’ rather than

‘pointin time’.

In FY22 the Group has had customer

contracts where revenue is recognised

‘over-time’ in the Currency and

Authentication divisions.

Accounting treatment for sales to Portals

The Group provides Security Features to

Portals for inclusion in the paper which

they manufacture and which the Group

subsequently purchases back. The Group

has carefully considered the nature of this

arrangement and considers it appropriate to

record the Security Features sales to Portals

as revenue since Portals is not an associate

of the Group and does not constitute a

related party and the relationship is that of

a third party with full control of the product

passing to Portals upon sale.

Classification of exceptional items

The Directors consider items of income

and expenditure which are material by size

and/or by nature and not representative

of normal business activities should

be disclosed separately in the financial

statements so as to help provide an

indication of the Group’s underlying

business performance. The Directors label

these items collectively as ‘exceptional

items’. Determining which transactions are

to be considered exceptional in nature is

often a subjective matter.

However, circumstances that the Directors

believe would give rise to exceptional items

for separate disclosure would include: gains

or losses on the disposal of businesses,

curtailments on defined benefit pension

arrangements or changes to the pension

scheme liability which are considered to be

of a permanent nature and non-recurring

fees relating to the management of historical

scheme issues; restructuring of businesses;

asset impairments and costs associated

with the acquisition and integration of

business combinations.

All exceptional items are included in the

appropriate income statement category

towhich they relate. Refer to note 5 on

pages 116 and 117 for further details.

B Critical accounting estimates

Recoverability of other financial assets

Other financial assets comprise securities

interests held in companies in the Portals

International Limited group (Portals

International Limited was previously known

as MooreCo Limited) following the Portals

paper business disposal in 2018, in addition

to a further amount of £0.9m of loan notes

which was subscribed for pursuant to

a pre-emptive offer in November 2021.

The Group also purchases cotton banknote

paper under the Relationship Agreement

entered into in March 2018 with Portals

Paper Limited following the disposal of

thepaper business.

Management has carefully assessed the

recoverability of the other financial assets

on the balance sheet as at 26 March

2022 based on information available to

them and performed probability weighted

modelling against three scenarios

determining that anexpected credit loss

provision of £3.2m (see note 5 exceptional

items for further details) is required.

Management has considered the following

factors in determining which probabilities

tobe assigned to each scenario:

1) The current financial position of

Portals International Limited group

aspresented in its 2021 consolidated

financial statements;

2) The statements made publicly about

Portals’ plans to improve financial

performance over time including the

acquisition of Fedrigoni;

3) De Le Rue’s expectations for the future

ofthe cotton paper market overall;

This provision accounts for the risk that the

full amounts due will not be recovered rather

than the instruments being credit impaired.

Management notes that if factors change

in the future, this may alter the judgements

made as to the probabilities to be assigned

to each scenario in the modelling, resulting

in a revision to the value of expected

credit loss provision to be recognised.

Management has also prepared a sensitivity

analysis by increasing the weighting applied

to the scenario which results in the largest

expected credit loss being incurred by 20%

and an equivalent 10% decrease each to

the scenarios giving rise to the lowest and

second lowest expected credit loss and

theimpact on the overall level of provision

was £0.8m.

Recoverability assessment and

impairment charges related to plant

andmachinery

During the prior year the Group ceased

banknote printing at its Gateshead facility.

As a result, the Group had a material value

of plant and machinery for which it has

needed to assess whether an impairment

is required. Management determined

that given the specialised nature of the

plant and machinery and the very limited

market opportunities to sell them to a

third party, the asset values could only be

supported based on management being

able to demonstrate a continued use at a

different Group manufacturing location thus

demonstrating the asset’s carrying value

is supported by continued value in use.

In making this assessment, management

carefully assessed its current plans for

relocating assets thus determining those

assets which no longer have an ongoing

value in use to the Group. Those assets

for which no ongoing value in use was

determined were fully impaired resulting

in a material impairment charge recorded

within exceptional items in the prior period

ofapproximately £10m.

111

Financial statements De La Rue plc Annual Report 2022

Management has, in FY22, made a

judgement on what its future plans are for

the expansion in certain locations based on

future business needs and concluded that

for the remaining assets not impaired in the

prior period, their value could be supported

based on their anticipated ongoing use

aftera period of relocation.

Post-retirement benefit obligations

Pension costs within the income statement

and the pension obligations/assets as stated

in the balance sheet are both dependent

upon a number of assumptions chosen by

management with advice from professional

actuaries. These include the rate used to

discount future liabilities, the expected

longevity for current and future pensioners

and estimates of future rates of inflation.

The discount rate is the interest rate that

should be used to determine the present

value of estimated future cash outflows

expected to be required to settle the

pension obligations.

The Group engages the services of

professional actuaries to assist with

calculating the pension liability.

Determination of the incremental

valuation date of certain fund assets in

the UK defined benefit pension scheme

The UK defined benefit pension scheme

assets are made up of a number of

separate funds. For the majority of these

funds valuations have been available as at

the Group’s year end of 26 March 2022.

However, the Multi Asset Credit funds held

by the UK Pension Scheme are valued on

a monthly basis only at calendar month

ends and the 31 March 2022 fund valuation

has been used to determine the IAS19

position as at the 26 March 2022 as it is

not practicable to obtain a valuation as

at26 March 2022.

The UK Multi Asset Credit funds account for

approximately £63m (FY21: £125m) of the

pension assets. If a valuation for these funds

were to be conducted as at 26 March 2022

it is estimated the impact would be less than

£1m, compared to total UK Pension Scheme

assets of £1bn.

The potential impact has been estimated

by observing what were considered to be

the most relevant comparable indices to

establish the level of day-to-day volatility

inthe market.

The Multi Asset Credit funds are largely

composed of sub-investment grade

corporate debt and the most relevant

indices were determined to be those which

measure the return on high yield corporate

bonds. Management has therefore made

thejudgement that valuing the pension

assets using the 31 March 2022 valuation

forthese funds is reasonable given there

is no practical way of obtaining a better

estimate and a less than £1m difference

is not considered significant compared

to the total value of the assets in the

pension scheme.

Impairment test of goodwill

andacquired intangibles

These assets were recognised following

the acquisition of De La Rue Authentication

Inc in January 2017. Management has

considered the Group’s short-term and

the long-term profitability for this business

and determined that the goodwill and

acquired intangible asset values are

recoverable at 26 March 2022. In making

this determination, management has

prepared discounted cashflows using its

forecasts for the business which include

budgeted financial performance for the

earlier periods (FY23 and FY24) and growth

rates and ratios for the later periods (FY25

onwards) based on management’s longer-

term expectations for the business which

are aligned to the Group’s longer term

expectations the Authentication division.

In order to obtain further assurance as to the

recoverability of the goodwill and intangible

assets, management has prepared a range

of sensitivities to model what adverse

changeswould need to occur before

animpairment was required.

Management modelled the following

sensitivities and concluded that:

– Sensitivity 1 (discount rate): The discount

rate used for the impairment calculation

(assuming the same cashflows as

in the base impairment test) would

need to increase to 19.9% before

animpairment occurred;

– Sensitivity 2 (revenue growth): Forecasts

used in the base impairment calculation

include strong revenue growth each year

from FY23 to FY26 before the growth rate

starts to reduce from FY27, management

has modelled a scenario of no revenue

growth from FY24 and concluded

that at this point no impairment would

be required;

– Sensitivity 3 (loss of material customers):

Management has modelled the impact of

the loss in FY25 of a significant customer.

Management noted that in this scenario

no impairment was needed; and

– Sensitivity 4 (No revenue generated from

an expected new significant contract):

The base impairment forecasts include

revenue from a significant new contract

win. Management has modelled the

impact on the impairment calculations if

no revenue was generated from this new

contract. The impact was a significant

reduction in headroom but no impairment.

Based on the base impairment forecast

prepared and the additional sensitivities

referred to above, management is confident

that no impairment of the goodwill and

intangible asset balances is required

asat26 March 2022.

Tax

The Group is subject to income taxes

innumerous jurisdictions and significant

judgement is required in determining

the worldwide provision for those taxes.

The level of current and deferred tax

recognised is dependent on subjective

judgements as to the outcome of decisions

to be made by the tax authorities in the

various tax jurisdictions around the world

inwhich the Group operates.

It is necessary to consider which deferred

tax assets should be recognised based

on an assessment of the extent to which

they are regarded as recoverable, which

involves assessment of the future trading

prospects of individual statutory entities,

the nature and level of any deferred tax

liabilities from other items in the accounts

such as pension positions, and overseas tax

credits that are carried forward for utilisation

in future periods, including some that have

been allocated to Governmental authorities

aspart of investment projects.

The actual outcome may vary from that

anticipated. Where the final tax outcomes

differ from the amounts initially recorded,

there will be impacts upon income tax and

deferred tax provisions and on the income

statement in the period in which such

determination is made.

The Group has current tax provisions

recorded within Current tax liabilities,

in respect of uncertain tax positions.

In accordance with IFRIC 23, tax provisions

are recognised for uncertain tax positions

where it is considered probable that the

position in the filed tax return will not be

sustained and there will be a future outflow

of funds to a taxing authority. Tax provisions

are measured either based on the most

likely amount (the single most likely amount

in a range of possible outcomes) or the

expected value (the sum of the probability-

weighted amounts in a range of possible

outcomes) depending on management’s

judgement on how the uncertainty may

be resolved.

The Group is disputing tax assessments

received from the tax authorities of some

countries in which the Group operates.

The disputed tax assessments are at

various stages in the appeal processes,

but the Group believes it has a supportable

and defendable position (based upon

local accounting and legal advice) and

is appealing previous judgements and

communicating with the relevant tax

authority. The Group’s expected outcome

of the disputed tax assessments is held

within the relevant provisions in the 2022

Financial Statements.

112

Accounting policies continued

1 Segmental analysis

The continuing operations of the Group have three main operating units: Currency, Authentication and Identity Solutions. The Board, which

is the Group’s Chief Operating Decision Maker, monitors the performance of the Group at this level and there are therefore three reportable

segments. The principal financial information reviewed by the Board is revenue and adjusted operating profit.

The Group’s segments are:

– Currency – provides Banknote print, Polymer and Security features;

– Authentication – provides the physical and digital solutions to authenticate products through the supply chain and to provide tracking

of exercisable goods to support compliance with government regulators. Working across the commercial and government sectors the

division addresses consumer and Brand owner demand for protection against counterfeit goods; and

– Identity Solutions –includes minimal non-core activity in the year and primarily relates to sales under the DSA arrangement with HID

following the sale of the International Identity Solutions business in October 2019. In the prior year this also included the results of the

Group’s UK Passport contract which completed in FY21.

The segment note is focused on three divisions, which reflects what has been reported to the Chief Operating Decision Maker, this is in line

with the commentary in other areas of this Annual Report and Accounts. The commentary elsewhere in this Annual Report and Accounts

relating to the future strategy only refers to the Currency and Authentication divisions.

Inter-segmental transactions are eliminated upon consolidation.

FY22

Currency

£m

Authentication

£m

Identity

Solutions

£m

Unallocated

£m

Total from

Continuing

operations

£m

Total revenue from contracts with customers 280.9 90.3 3.9 – 375.1

Less: inter-segment revenue – – – – –

Revenue from contracts with customers 280.9 90.3 3.9 – 375.1

Cost of sales (217.7) (55.8) (4.0) – (277.5)

Gross profit 63.2 34.5 (0.1) – 97.6

Adjusted operating expenses (43.7) (18.2) 0.7 – (61.2)

Adjusted operating profit 19.5 16.3 0.6 – 36.4

Adjusted items:

Amortisation of acquired intangible assets – (1.0) – – (1.0)

Net exceptionals (4.5) (0.2) – (1.0) (5.7)

Operating profit/(loss) 15.0 15.1 0.6 (1.0) 29.7

Interest income 0.9 – – – 0.9

Interest expense (0.8) – – (5.4) (6.2)

Net retirement benefit obligation finance expense (0.1) – – (0.1) (0.2)

Net finance expense – – – (5.5) (5.5)

Profit/(loss) before taxation 15.0 15.1 0.6 (6.5) 24.2

Capital expenditure on property, plant and equipment

(netofgrantsreceived) (15.7) (2.0) – (0.4) (18.1)

Capital expenditure on intangible assets (note 10) (1.0) (7.7) – (0.1) (8.8)

Impairment reversal of property, plant and equipment on intangible

assets (note 9) 0.1 – – – 0.1

Depreciation of property, plant and equipment and right-of-use-assets

(notes 9, 23) (10.7) (2.5) – (1.1) (14.3)

Amortisation of intangible assets (note 10) (1.3) (2.3) – (0.7) (4.3)

113

Financial statements De La Rue plc Annual Report 2022

Notes to the accounts

1 Segmental analysis continued

FY21

Currency

£m

Authentication

£m

Identity

Solutions

£m

Unallocated

£m

Total from

Continuing

operations

£m

Total revenue from contracts with customers 295.7 77. 6 24.1 – 3 97. 4

Less: inter-segment revenue – – – – –

Revenue from contracts with customers 295.7 77.6 24.1 – 3 97.4

Cost of sales (230.4) (47.7 ) (11.5) – (289.6)

Gross profit 65.3 29.9 12.6 – 107. 8

Adjusted operating expenses (4 9.1) (18.6) (2.0) – (69.7)

Adjusted operating profit 16.2 11.3 10.6 – 38.1

Adjusted items:

– Amortisation of acquired intangible assets – (1.0) – – (1.0)

– Net exceptionals (20.6) (0.4) (0.4) (1.2) (22.6)

Operating (loss)/profit (4.4) 9.9 10.2 (1.2) 14.5

Interest income 0.8 – – – 0.8

Interest expense (1.7) (0.2) – (5.2) ( 7.1)

Net retirement benefit obligation finance expense – – – 1.7 1.7

Net finance expense (0.9) (0.2) – (3.5) (4.6)

(Loss)/profit before taxation (5.3) 9.7 10.2 (4.7) 9.9

Capital expenditure on property, plant and equipment

(netofgrantsreceived) (14.0) – (0.4) (1.1) (15.5)

Capital expenditure on intangible assets (note 10) (0.5) (5.1) – – (5.6)

Impairment reversal of property, plant and equipment on intangible

assets (note 9)

(11.9) – – – (11.9)

Depreciation of property, plant and equipment and right-of-use-assets

(notes 9, 23) (12.0) (2.0) – (1.4) (15.4)

Amortisation of intangible assets (note 10) (1.6) (1.8) – (0.8) (4.2)

Note:

1. Impairments and accelerated depreciation of £11.9m have been included within exceptional items (see note 5).

Currency

£m

Authentication

£m

Identity

Solutions

£m

Unallocated

£m

Total of

Continuing

operations

£m

FY22

Segmental assets 203.1 65.7 13.3 96.4 378.5

Segmental liabilities (53.0) (13.4) (3.1) (147. 2) (216.7)

FY21

Segmental assets 216.8 57. 3 14.4 88.6 37 7.1

Segmental liabilities (8 8.1) (17.2) (3.3) (157.1) (265.7)

Unallocated assets principally comprise long-term pension assets £31.6m (FY21: £nil), deferred tax assets of £11.2m (FY21: £19.7m), cash

and cash equivalents of £24.3m (FY21: £25.7m) which are used as part of the Group’s financing offset arrangements and derivative financial

instrument assets of £3.4m (FY21: £7.5m) as well as current tax assets, associates and centrally managed property, plant and equipment.

Unallocated liabilities principally comprise retirement benefit obligations of £1.8m (FY21: £20.5m), borrowings of £92.6m (FY21: £74.2m),

current tax liabilities of £13.9m (FY21: £13.6m) and derivative financial instrument liabilities of £4.8m (FY21: £8.3m) as well as deferred tax

liabilities and centrally held accruals and provisions.

Geographic analysis of non-current assets

2022

£m

2021

£m

UK 91.2 97. 2

Malta 22.9 15.6

USA 15.4 16.0

Sri Lanka 9.4 11.0

Other countries 14.2 7.1

153.1 146.9

Note:

1. Other financial assets, retirement benefit obligations, deferred tax assets and derivative financial instruments are excluded from the analysis shown above for FY22 and FY21.

Major customers

The Group had no (FY21: one) major customers from which it derived total revenues in excess of 10% of Group revenue. In FY21 one

customer was in the Currency segment with revenue £40.6m which equates to 10.0% of Group revenue.

114

Notes to the accounts continued

2 Revenue from contracts with customers

Information regarding the Group’s major customers, and a segmental analysis of revenue is provided in note 1.

Timing of revenue recognition across the Group’s revenue from contracts with customers is as follows:

FY22

Currency

£m

Authentication

£m

Identity

Solutions

£m

Total of

Continuing

operations

£m

Timing of revenue recognition:

Point in time 257.2 76.0 3.9 337.1

Over time 23.7 14.3 – 38.0

Total revenue from contracts with customers 280.9 90.3 3.9 375.1

FY21

Currency

£m

Authentication

£m

Identity

Solutions

£m

Total of

Continuing

operations

£m

Timing of revenue recognition:

Point in time 240.2 72.0 24.1 336.3

Over time 55.5 5.6 – 61.1

Total revenue from contracts with customers 295.7 77.6 24.1 3 97.4

Geographic analysis of revenue by destination

2022

£m

2021

£m

Middle East and Africa 196.4 192.0

Asia 44.3 51.3

UK 65.4 97.7

The Americas 28.8 33.7

Rest of Europe 37.3 20.2

Rest of world 2.9 2.5

375.1 397. 4

Contract balances

The contract balances arising from contracts with customers are as follows:

Note

2022

£m

2021

£m

Trade receivables 13 64.8 69.6

Provision for impairment 13 (0.8) (1.5)

Net trade receivables 13 64.0 68.1

Contract assets 8.0 14.8

Contract liabilities 17 (0.3) (1.6)

Payments received on account 17 (14.3) (38.0)

Trade receivables have decreased to £64.8m compared to £69.6m in FY21 reflecting timing of payments on certain material customer contracts.

Contract assets have decreased to £8.0m compared to £14.8m in FY21 reflecting the fact that in the current period customer invoicing has

more closely matched the timing of revenue recognition.

Payments on account have decreased to £14.3m compared to £38.0m in FY21 reflecting utilisation in the year of £28.3m.

Set out below is the amount of revenue recognised from:

2022

£m

2021

£m

Amounts included in contract liabilities at the beginning of the year 1.3 –

Performance obligations satisfied in previous years – –

Performance obligations

Information about the Group’s performance obligations is summarised in the Accounting Policies section on page 109.

The following table shows the transaction price allocated to remaining performance obligations for contracts with original expected duration

of more than one year. The Group has decided to take the practical expedient provided in IFRS15.121 not to disclose the amount of the

remaining performance obligations for contracts with original expected duration of less than one year.

2022

£m

2021

£m

Within 1 year 31.3 51.8

Between 2 – 5 years 25.8 35.7

5 years and beyond – –

57.1 87.5

115

Financial statements De La Rue plc Annual Report 2022

3 Discontinued operations

The Group completed the sale of the entire issued share capital of Cash Processing Solutions Limited and related subsidiaries

(together‘CPS’) to CPS Topco Limited, a company owned by Privet Capital on 22 May 2016.

The gain on discontinued operations in the period of £0.8m (net of associated tax of £0.1m) included £0.3m related to the winding down

andfinalising of remaining activity related to the CPS contract, which has now ended, and £0.5m foreign exchange gains in the period

fromaforeign subsidiary in Brazil, where operations have been discontinued.

FY21 was a loss of £0.4m (net of associated tax of £0.1m) and related to a change in assessment of the total net loss the Group will incur

completing a loss-making CPS contract that was not novated post disposal in addition to amounts associated with the winding down

ofremaining activity related to CPS.

4 Adjusted operating expenses by nature

Note

2022

£m

2021

£m

Depreciation of property, plant and equipment 9 12.0 12.9

Impairment of inventories 12 0.9 1.6

Amortisation of intangibles 10 4.3 4.2

Depreciation of right-of-use assets 23 2.3 2.5

Cost of sales relating to inventory 265.1 289.6

Expenses related to short-term and low value leases 23 0.5 0.3

Research and non-capitalised development expense 6.3 5.2

Employee costs (including Directors’ emoluments) 25 97.6 107.7

Foreign exchange loss/(gains) 2.2 (0.8)

Amounts payable to EY and its associates:

– Audit of these consolidated financial statements 0.4 0.4

– Audit of the financial statements of subsidiaries pursuant to legislation 0.4 0.4

– Non-Audit Services 0.1 0.1

– Taxation services – –

5 Exceptional items

Accounting policies

Exceptional items are disclosed separately in the financial statements to provide readers with an increased insight into the underlying

performance of the Group.

2022

£m

2021

£m

Site relocation and restructuring 1.8 21.4

Pension underpin costs 0.4 0.6

Foreign exchange loss on devaluation of Sri Lankan rupee 0.4 –

Costs associated with the equity raise and bank refinancing – 2.9

Loss on resolution of a historical issue relating to UK defined benefit pension scheme – 0.1

Gain on sale of property, plant and equipment – (2.7)

Loss on disposal of subsidiary – 0.3

2.6 22.6

Recognition of expected credit loss provision on other financial assets (note 11) 3.1 –

Exceptional items in operating profit 5.7 22.6

Tax credit on exceptional items (1.8) (4.2)

Net exceptionals 3.9 18.4

The cash flow impact of exceptional items in FY22 was £2.5m (FY21: £11.2m) which included £2.1m (FY21: £10.6m) relating to site relocation

and restructuring costs and £0.4m (FY21: £0.6m) relating to pension underpin costs.

Site relocation and restructuring costs

Site relocation and restructuring costs in FY22 of £1.8m (FY21: £21.4m) included:

– the recognition of £0.9m (FY21: £7.9m) of restructuring charges related to the cessation of banknote production at our Gateshead facility

primarily relating to the costs, net of grant income received of £1.0m, of relocating assets to different Group manufacturing locations.

Since this program commenced, £8.8m of costs have been incurred in relation to this. This relocation of assets will continue into FY23 as

the Group continues its expansion of the manufacturing facilities in Malta, net of any grants received;

– a further £1.3m (FY21: £1.6m) of charges relating to other cost out initiatives including the initial Turnaround Plan restructuring of our central

enabling functions, selling and commercial functions. Since this program commenced, £2.8m of costs have been incurred in relation to this; and

– offset by a reversal of £0.4m of asset impairments made in FY21 no longer required (FY21: £11.9m of asset impairments and accelerated

depreciation charges related to cessation of banknote production at our Gateshead facility).

Pension underpin costs

Pension underpin costs of £0.4m (FY21: £0.6m) relate to legal fees, net of amounts recovered, incurred in the rectification of certain

discrepancies identified in the Scheme’s rules. The Directors do not consider this to have an impact on the UK defined benefit pension

liability at the current time, but they continue to assess this.

116

Notes to the accounts continued

Recognition of expected credit loss provision on other financial assets

Other financial assets comprise securities interests held in the Portals International Limited group which were received as part of the

consideration for the paper disposal in 2018. The amount presented on the balance sheet within other financial assets as at 26 March

2022 includes the original principal received and accrued interest amounts. In accordance with IFRS 9, management has assessed the

recoverability of the carrying value on the balance sheet and recorded an expected credit loss provision of £3.1m in relation to the original

principal value and interest receivable, which has been recorded in exceptional items consistent with the original recognition as part of

theloss on disposal. Further details can be found in “V Critical accounting estimates, assumptions and judgements”.

Foreign exchange loss on devaluation of Sri Lankan rupee

Significant devaluation of Sri Lanka Rupee versus the British Pound which occurred in March 2022 where the Rupee/GBP rate moved from

265/£ on 8 March 2022 to 342/£ on 15 March 2022, following the decision on 9 March 2022 by the Sri Lanka Government to free float the

exchange rate. This period of significant devaluation is deemed an exceptional item as it is considered to be non-trading in nature resulting

from of an external event being the impact of the exchange rate change triggered by the free-float of the exchange rate. An amount of

£0.4mhas been included in exceptional items.

Costs associated with equity raise and bank refinancing

In FY21 certain costs were incurred in relation to the equity raise and bank refinancing projects that, while directly associated with these,

did not relate to activities which in accordance with IFRS would qualify for recording in equity or capitalisation on the balance sheet as

transaction costs in relation to the debt refinancing. These costs included: £0.7m write-off of prepaid arrangement fees on the previously

signed RCF which was amended on 7 July 2020 (due to the substantial repayment of the amounts outstanding at that time this has been

accounted for as a settlement); costs of £1.5m associated with advisors fees in connection with the new pension deficit funding plan put in

place in July 2020 following the equity raise and bank refinancing and other fees totalling £1.0m related to equity raise and bank refinancing

which while directly related to these projects, did not meet the IFRS criteria for capitalisation on the balance sheet or recording within equity.

Gain on sale of PPE

A £2.7m gain was made in FY21 on the sale of a non-operational property held by the Group net of sales costs.

Loss on disposal of subsidiary and associated costs

During FY21 the final working capital balance relating to the sale of the Group’s International Identity Solutions business on 14 October 2014

was agreed with HID, which resulted in an additional £0.3m loss being recorded.

Taxation relating to exceptional items

The overall tax credit relating to continuing exceptional items arising in the period was £1.8m (FY21: tax credit of £4.2m).

Included in the exceptional tax credit is a deferred tax credit of £1.5m (FY21: £nil). This relates to the recognition of a deferred tax asset in

relation to restricted UK tax interest amounts that under IAS12 must be recognised even though the amounts are not expected to be fully

utilised for the foreseeable future. This is because the large movement in the pension accounting position from a deficit to a surplus in the

year has led to a deferred tax liability relating to pensions in the UK, and under IAS any potential deferred tax assets must be recognised

against this deferred tax liability. As the majority of the deferred tax in relation to the pension movement is recognised directly in the

Statement of Comprehensive Income, to recognise the creation of this asset as an operating item would distort the Operating Effective

TaxRate and therefore considered to be unhelpful for users of the accounts. This movement and any future unwind of this asset is

thereforeconsidered to be an Exceptional item for financial reporting purposes where possible.

6 Interest income and expense

Accounting policies

Interest income/expense is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable,

which is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset/liability to the net carrying

amount of that asset/liability.

2022

£m

2021

£m

Recognised in the income statement

Interest income:

– Other interest 0.1 –

– Interest on loan notes and preference shares (note 11) 0.8 0.8

0.9 0.8

Interest expense:

– Bank loans (3.1) (3.6)

– Other, including amortisation of finance arrangement fees (2.5) (2.9)

– Interest on lease liabilities (note 23) (0.6) (0.6)

Total interest expense calculated using the effective interest method (6.2) ( 7.1)

Retirement benefit obligation finance (expense)/income (note 24) (0.2) 1.7

Net finance expense (5.5) (4.6)

All finance income and expense arises in respect of assets and liabilities not restated to fair value through the income statement.

Interest due on the loan notes and preference shares relates to interests held in the Portals International Limited group (formerly Mooreco

Limited) (obtained as part of the considered for the Portals paper disposal). The loan notes and preference shares are included in the

balance sheet as Other Financial Assets. In accordance with the terms of the instruments, the interest has not been paid in the year

butaccrued and added to the value of the Other Financial Asset. In the period £0.8m of interest was accrued (FY21: £0.8m).

117

Financial statements De La Rue plc Annual Report 2022

6 Interest income and expense continued

The gain/(loss) to the income statement in respect of the ineffective portion of derivative financial instruments was £nil (FY21: £nil).

The retirement benefit obligation finance income/expense is calculated under IAS 19 and represents the difference between the interest

onpension liabilities and assets. The debit in FY22 of £0.2m (FY21: credit of £1.7m) was due the opening pension valuation on an IAS 19

basis as at 27 March 2021 being a net deficit of £20.5m.

7 Taxation

Accounting policies

The tax expense included in the income statement comprises current and deferred tax. Current tax is the expected tax payable on the

taxable income for the year, including adjustments in respect of prior periods, using tax rates enacted or substantively enacted by the

balance sheet date. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity,

inwhich case it is recognised in equity.

Deferred tax is provided on temporary differences arising between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for taxation purposes. Deferred tax is measured using tax rates that have been enacted or substantively

enacted by the balance sheet date and that are expected to apply when the asset is realised, or the liability is settled.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that

it is probable that future taxable profits will be available against which the temporary difference can be utilised. Such assets and liabilities

are not recognised if the temporary difference arises from goodwill not deductible for tax purposes or result from the initial recognition (other

than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the

Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse

in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable

that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and deferred tax liabilities are only offset to the extent that there is a legally enforceable right to offset current tax assets

and current tax liabilities, they relate to taxes levied by the same taxation authority and the Group intends to settle its current tax assets and

liabilities on a net basis or to realise an asset and settle a liability simultaneously.

De La Rue has extensive international operations and is subject to various legal and regulatory regimes, including those covering taxation

matters from which, in the ordinary course of business, uncertainty over the tax treatment can arise. De La Rue assesses whether it is

probable or not the tax authority will accept the tax treatment; if probable that the treatment will be accepted then the potential tax effect

of the uncertainty is a tax-related contingency. If it is not probable of being accepted, the most likely amount or the expected value is

recognised. There are some tax assessments where a provision has been made on the basis of a combination of advice received and

management judgement. The amount provided may be less than the headline figures on assessments received from a tax authority and

reflect an estimate of a more likely outcome on the basis of current communications with the tax authority. In the possible event that there

was an adverse outcome to any dispute this could result in a material outflow.

2022

£m

2021

£m

Current tax

UK corporation tax:

– Current tax 3.3 2.4

– Adjustment in respect of prior years 0.2 0.1

3.5 2.5

Overseas tax charges:

– Current year 1.7 1.7

– Adjustment in respect of prior years 0.2 1.7

1.9 3.4

Total current income tax charge 5.4 5.9

Deferred tax:

– Origination and reversal of temporary differences, UK (4.1) (2.3)

– Origination and reversal of temporary differences, overseas 0.1 (2.3)

Total deferred tax credit (4.0) (4.6)

Total income tax charge in the consolidated income statement 1.4 1.3

Included in:

Income tax expense reported in the consolidated income statement in respect of continuing operations 1.3 1.4

Income tax expense/(credit) in respect of discontinued operations (note 3) 0.1 ( 0.1)

Total income tax charge in the consolidated income statement 1.4 1.3

Tax on continuing operations attributable to:

Ordinary activities 3.4 6.0

Amortisation of acquired intangible assets (0.3) (0.4)

Exceptional items (1.8) (4.2)

1.3 1.4

118

Notes to the accounts continued

2022

£m

2021

£m

Consolidated statement of comprehensive income:

– On remeasurement of net defined benefit/(liability) 8.8 (18.2)

– On cash flow hedges (0.1) 0.2

– On foreign exchange on quasi-equity balances (0.2) –

Income tax charge/(credit) reported within other comprehensive income 8.5 (18.0)

Consolidated statement of changes in equity:

– On share options 0.3 (0.2)

Income tax charge/(credit) reported within equity 0.3 (0.2)

The tax on the Group’s consolidated profit before tax differs from the UK tax rate of 19% as follows:

2022 2021

Before

exceptional

items

Movement

on acquired

intangibles

Exceptional

items Total

Before

exceptional

items

Movement

on acquired

intangibles

Exceptional

items Total

Profit before tax 30.9 (1.0) (5.7) 24.2 33.5 (1.0) (22.6) 9.9

Tax calculated at UK tax rate

of19%(FY21: 19%) 5.8 (0.2) (1.1) 4.5 6.4 (0.2) (4.3) 1.9

Effects of overseas taxation 0.4 (0.1) – 0.3 0.7 – – 0.7

(Credits)/charges not allowable/

taxablefortax purposes (1.0) – 0.1 (0.9) 0.2 – 0.2 0.4

Tax attributes not previously

recognised for deferred tax (0.1) – (0.7) (0.8) (1.9) – – (1.9)

Utilisation of tax credits upon

which nodeferred tax was

previously recognised – – – – (1.4) – – (1.4)

Adjustments in respect of prior years 0.8 – 0.2 1.0 2.0 (0.2) ( 0.1) 1.7

Impact of UK tax rate change on

deferred tax balances (2.5) – (0.3) (2.8) – – – –

Tax charge/(credit) 3.4 (0.3) (1.8) 1.3 6.0 (0.4) (4.2) 1.4

The underlying effective tax rate excluding exceptional items was 11.0% (FY21: 17.9%).

The Group is subject to income taxes in numerous jurisdictions and significant judgement is required in determining the worldwide provision

for those taxes. The level of current and deferred tax recognised is dependent on subjective judgements as to the outcome of decisions

to be made by the tax authorities in the various tax jurisdictions around the world in which the Group operates. It is necessary to consider

which deferred tax assets should be recognised based on an assessment of the extent to which they are regarded as recoverable, which

involves assessment of the future trading prospects of individual statutory entities.

The actual outcome may vary from that anticipated. Where the final tax outcomes differ from the amounts initially recorded, there will be

impacts upon income tax and deferred tax provisions and on the income statement in the period in which such determination is made.

The Group has current tax provisions recorded within Current tax liabilities, in respect of uncertain tax positions. In accordance with IFRIC

23, tax provisions are recognised for uncertain tax positions where it is considered probable that the position in the filed tax return will not

be sustained and there will be a future outflow of funds to a taxing authority. Tax provisions are measured either based on the most likely

amount (the single most likely amount in a range of possible outcomes) or the expected value (the sum of the probability weighted amounts

in a range of possible outcomes) depending on management’s judgement on how the uncertainty may be resolved.

The Group is disputing tax assessments received from the tax authorities of some countries in which the Group operates. The disputed

tax assessments are at various stages in the appeal processes, but the Group believes it has a supportable and defendable position

(based upon local accounting and legal advice) and is appealing previous judgements and communicating with the relevant tax authority.

The Group’s expected outcome of the disputed tax assessments is held within the relevant provisions in the FY22 Financial Statements.

119

Financial statements De La Rue plc Annual Report 2022

8 Earnings per share

Accounting policies

Basic earnings per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of

ordinaryshares outstanding during the year, excluding those held in the employee share trust which are treated as treasury shares.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted for the impact of the dilutive effect

ofshare options.

The Directors are of the opinion that the publication of the adjusted earnings per share, before exceptional items, is useful to readers

oftheaccounts as it gives an indication of underlying business performance.

2022

pence

per share

2021

pence

per share

Earnings per share

Basic earnings per share – continuing operations 10.6 3.7

Basic earnings per share – discontinued operations 0.4 (0.3)

Basic earnings per share – total 11.0 3.4

Diluted earnings per share – continuing operations 10.5 3.7

Diluted earnings per share – discontinued operations 0.4 (0.3)

Diluted earnings per share – total 10.9 3.4

Adjusted earnings per share

Basic earnings per share – continuing operations 13.0 14.7

Diluted earnings per share – continuing operations 12.8 14.6

Number of shares (m)

Weighted average number of shares 195.2 172.4

Dilutive effect of shares 2.6 1.6

197.8 174.0

Reconciliations of the earnings used in the calculations are set out below:

Note

2022

£m

2021

£m

Earnings for basic earnings per share – Total 21.5 5.9

Add: Earnings for basic earnings per share – discontinued operations (0.8) 0.4

Earnings for basic earnings per share – continuing operations 20.7 6.3

Add: amortisation of acquired intangibles 10 1.0 1.0

Less: tax on amortisation of acquired intangibles 7 (0.3) (0.4)

Add: exceptional items (excluding non-controlling interests) 5 5.7 22.6

Less: tax on exceptional items 7 (1.8) (4.2)

Earnings for adjusted earnings per share 25.3 25.3

120

Notes to the accounts continued

9 Property, plant and equipment

Accounting policies

Property, plant and equipment are stated at cost, less accumulated depreciation and any accumulated provision for impairment in value.

Assets in the course of construction are included in property, plant and equipment on the basis of expenditure incurred at the balance

sheet date.

Costs of major maintenance activities are capitalised and depreciated over the estimated useful life for the asset.

Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached conditions will

be complied with. The grant reduces the carrying amount of the asset and then is recognised in profit or loss over the useful life of the

depreciable asset by way of a reduced depreciation charge.

No depreciation is provided on freehold land. Building improvements are depreciated over their estimated useful economic lives of 50 years.

Other leasehold interests are depreciated over the lease term.

Plant and machinery are depreciated over their estimated useful lives which typically range from 10 to 20 years. Fixtures and fittings and

motor vehicles are depreciated over their estimated useful lives which typically range from two to 15 years. No depreciation is provided

forassets in the course of construction until they are ready for use.

Depreciation methods, residual values and useful lives are reviewed at least at each financial year end, taking into account commercial and

technical obsolescence as well as normal wear and tear, provision being made where the carrying value exceeds the recoverable amount.

Land and

buildings

£m

Plant and

machinery

£m

Fixtures and

fittings and

Motor Vehicles

£m

In course of

construction

£m

Total

£m

Cost

At 28 March 2020 48.7 241.4 33.5 14.5 338.1

Exchange differences (0.3) (1.7) (0.3) (0.2) (2.5)

Additions 4.3 (2.9) – 11.7 13.1

Reclassifications 0.6 4.3 3.5 (10.1) (1.7)

Disposals – (8.1) ( 7.6 ) (0.3) (16.0)

At 27 March 2021 53.3 233.0 29.1 15.6 331.0

Exchange differences (0.2) (1.4) – (0.4) (2.0)

Additions – 1.0 0.5 15.0 16.5

Reclassifications 0.2 2.1 0.8 (3.1) –

Disposals – (7.5) (1.7) (4.1) (13.3)

At 26 March 2022 53.3 227. 2 28.7 23.0 332.2

Accumulated depreciation

At 28 March 2020 28.2 169.5 25.3 0.5 223.5

Exchange differences (0.2) (1.1) (0.4) – (1.7)

Depreciation charge for the year 1.8 8.8 2.3 – 12.9

Disposals – (7.9 ) ( 7. 6 ) – (15.5)

Impairments* 0.9 7. 9 0.6 2.4 11.8

At 27 March 2021 30.7 177.2 20.2 2.9 231.0

Exchange differences – (1.3) (0.1) – (1.4)

Depreciation charge for the year 1.0 8.9 2.1 – 12.0

Disposals – (7.5) (1.7) (2.8) (12.0)

Impairments reversal – – – (0.1) (0.1)

At 26 March 2022 31.7 177.3 20.5 – 229.5

Net book value at 26 March 2022 21.6 49.9 8.2 23.0 102.7

Net book value at 27 March 2021 22.6 55.8 8.9 12.7 100.0

Note:

* FY21 included £10.3m of impairments which had been presented as part of the £11.9m of impairments and accelerated depreciation shown within exceptional items relating to the cessation

ofmanufacturing at the Gateshead facility.

During the year £1.5m (FY21: £3.5m) of government grants were received by the Group for the purchase of certain items of property,

plant and equipment, which is offset against plant and machinery. The following conditions are attached to these grants: to retain an

average employment level of 250 workers for a period of eight years and retain qualifying investment project for a minimum of eight years.

The investment project began on 1 September 2015, therefore at the year end 1.5 years were left to satisfy the minimum period.

121

Financial statements De La Rue plc Annual Report 2022

10 Intangible assets

Accounting policies

Impairment of intangible assets

Intangible assets that are subject to amortisation are reviewed for impairment whenever events or circumstances indicate that the carrying

value may not be recoverable. In addition, goodwill is tested at least annually for impairment. Impairment tests are performed for all Cash

Generating Units (CGUs) to which goodwill has been allocated at the balance sheet date or whenever there is indication of impairment.

For the sensitivity information in impairment of goodwill, refer to “Accounting policies – B – Critical accounting estimates”.

An impairment loss is recognised immediately in the income statement for the amount by which the asset’s carrying value exceeds its

recoverable amount, the latter being the higher of the asset’s fair value less costs to sell and value in use. In assessing value in use, the

estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments

of the time value of money and the risks specific to the asset. In testing intangible assets for impairment, a number of assumptions must

be made when calculating future cash flows. These assumptions include growth in customer numbers, market size and sales prices and

volumes, all of which will determine the future cash flows.

Other information

Intangible assets purchased separately, such as software licences that do not form an integral part of related hardware, are capitalised

atcost less accumulated amortisation and impairment losses. Software intangibles are amortised on a straight-line basis over the shorter

oftheir useful economic life or their licence period at rates which vary between three and five years.

Expenditure incurred in the development of products or enhancements to existing product ranges is capitalised as an intangible asset if the

recognition criteria in IAS 38 ‘Intangible Assets’ have been met. Development costs not meeting these criteria are expensed in the income

statement as incurred. Capitalised development costs are amortised on a straight-line basis over their estimated useful economic lives, which

vary between five and 10 years, once the product or enhancement is available for use. Product research costs are written off as incurred.

Intangible assets purchased through a business combination are recognised separately from goodwill and are initially recognised at their

fairvalue at the acquisition date (which is regarded as their cost). Subsequent to initial acquisition, intangible assets acquired through

abusiness combination are reported at cost less accumulated amortisation and impairment losses.

Intellectual property recorded on the balance sheet relates to the acquisition of De La Rue Authentication Solutions Inc. and is amortised

over its expected life of 10 years. Customer relationships, relating to those acquired in the acquisition of De La Rue Authentication Solutions

Inc. are amortised over their expected lives of 10 to 15 years. Trade names relating to the acquisition of De La Rue Authentication Solutions

Inc. are amortised over their expected lives of 15 years.

Assets in course of construction relates to internally generated software which is not yet completed.

Goodwill relates to the acquisition in FY17 of De La Rue Authentication Inc. (previously DuPont Authentication Inc). The goodwill has been

tested for impairment during the year as IAS 36 requires annual testing for assets with an indefinite life. For the purposes of impairment

testing the Cash Generating Unit (CGU) for the Goodwill has been determined as the De La Rue Authentication entity as a whole. This is

consistent with the fact that the entity is not fully integrated into the Group and the integrated nature of the Intellectual Property and other

assets which collectively generate cash flows. The key sensitivities in the impairment test are discount rate, future growth in revenue

and the level of profit margin generated by De La Rue Authentication. For FY22 a discount rate of 11.5% and a long-term growth rate of

2% havebeen used in the impairment test calculations. A discount rate of over 19% would be required for an impairment to be realised.

Based on the impairment test performed noimpairment of the goodwill is considered necessary.

Goodwill

£m

Development

costs

£m

Software

assets

£m

Distribution

rights

£m

Intellectual

property

£m

Customer

relationships

£m

Trade

names

£m

In course of

construction

£m

Total

£m

Cost

At 30 March 2020 9.2 21.3 15.6 0.1 3.5 4.1 0.2 3.6 57.6

Exchange differences (1.1) – 0.9 – (0.4) (0.5) – – (1.1)

Additions – 0.1 – – – – – 5.5 5.6

Disposals – (0.4) (0.3) (0.1) – – – (1.4) (2.2)

Reclassification – 1.4 (0.7) – 0.3 0.5 – 0.2 1.7

At 27 March 2021 8.1 22.4 15.5 – 3.4 4.1 0.2 7.9 61.6

Exchange differences 0.4 0.2 (0.1) – 0.2 0.2 – (0.1) 0.8

Additions – – – – – – – 8.8 8.8

Disposals – (1.1) (3.7) – – – – – (4.8)

Reclassification 5.6 0.2 – – – – (5.8) –

At 26 March 2022 8.5 27.1 11.9 – 3.6 4.3 0.2 10.8 66.4

Accumulated amortisation

At 30 March 2020 – 14.0 8.7 0.1 0.9 1.5 – 1.4 26.6

Exchange differences – – 0.9 – (0.1) (0.2) – – 0.6

Amortisation for the year – 1.7 1.4 – 0.6 0.4 0.1 – 4.2

Disposals – (0.3) (0.3) (0.1) – – – (1.4) (2.1)

At 27 March 2021 – 15.4 10.7 – 1.4 1.7 0.1 – 29.3

Exchange differences – 0.1 (0.1) – – 0.1 – – 0.1

Amortisation for the year – 1.9 1.4 – 0.6 0.4 – – 4.3

Disposals – (1.1) (3.7) – – – – – (4.8)

At 26 March 2022 – 16.3 8.3 – 2.0 2.2 0.1 – 28.9

Net book value at 26 March 2022 8.5 10.8 3.6 – 1.6 2.1 0.1 10.8 37.5

Carrying value at 27 March 2021 8 .1 7.0 4.8 – 2.0 2.4 0.1 7.9 32.3

122

Notes to the accounts continued

11 Other financial assets

Accounting policies

As part of the consideration received for the disposal of the Portals De La Rue paper business, the Group received loan notes, preference

shares and ordinary shares in the Portals International Limited group (formerly Mooreco Limited), a parent company of the purchaser.

The instruments relating to the loan notes and preference shares are being held solely to collect principal and interest payments on specified

dates (SPPI) and they meet the business test model to be held at amortised cost. Amortised cost approximated fair value at the date these

instruments were received, as they were obtained in an arms-length transaction with a third party and priced accordingly as part of the sales

negotiation process. The Group has not chosen to fair value these through the income statement, they are accounted for on an amortised

cost basis. The ordinary shares are accounted for as fair value through profit and loss (FVPL) and the value of these represents £0.2m of

theamounts shown below.

Note

2022

£m

2021

£m

Opening balance 8.8 8.0

Interest accrued in the period 6 0.8 0.8

Additional investment in loan notes in the Portals International Limited group 0.9 –

Expected credit loss (reported in exceptionals) 5 (3.1) –

Closing balance 7.4 8.8

In accordance with the terms of the instruments, the interest has not been paid in the year but accrued and added to the value of the

Other Financial Asset. During the period an additional £0.9m was invested in loan notes in the Portals International Limited group (formerly

Mooreco Limited).

Management has assessed the recoverability of the other financial assets on the balance sheet as at 26 March 2022 and as a result an

expected credit loss was recorded in the period of £3.1m. Further details can be found in “V Critical accounting estimates, assumptions

and judgements”.

12 Inventories

Accounting policies

Inventories and work in progress are valued at the lower of cost and net realisable value. Cost is determined on a weighted average

cost basis and comprises directly attributable purchase and conversion costs, including direct labour and an allocation of production

overheads based on normal operating capacity that have been incurred in bringing those inventories to their present location and condition.

Net realisable value is the estimated selling price less estimated costs of completion and selling costs.

Valuation of inventory

At any point in time, the Group has significant levels of inventory, including work in progress. Manufacturing is a complex process and the

final product is required to be made to exacting specifications and tolerance levels. In valuing the work in progress at the balance sheet

date,assessments are made over the normal levels of waste contained within the product based on the production performance to date

andpast experience. Any abnormal levels of waste is expensed as incurred.

In assessing the recoverability of finished stock, assessments are made to validate that inventory is correctly stated at the lower of cost

andnet realisable value and that obsolete inventory, including inventory in excess of requirements, is provided against.

2022

£m

2021

£m

Raw materials 25.7 22.8

Work in progress 12.3 11.5

Finished goods 12 .1 20.2

50.1 54.5

The replacement cost of inventories is not materially different from original cost. An income statement charges in FY22 with respect of the

recognition of inventory provisions of £0.9m (FY21: £1.6m) was recognised in operating expenses – ordinary.

13 Trade and other receivables

Accounting policies

Trade receivables that do not contain a significant financing component are recognised at the transaction price and other receivables are

measured at amortised cost. Trade and other receivables are recognised net of allowance for ECL. The Group calculates an allowance for

potentially uncollectable accounts receivable balances using the ECL model and follows the simplified approach. The Group has calculated

the ECL by segmenting its accounts receivable balances into different segments representing the risk levels applying to those customer

groupings and thus allowing for the calculation of the ECL by applying the expected loss rate relevant to each segment. The loss rates

applied to each segment are based on the Group historical experience of credit losses in addition to available knowledge of potential future

credit risk based on available data such as country credit ratings. The Group reviews the account receivable ledger to identify if there are

any collectability issues which might require the recognition of an expected credit loss allowance (ie a specific bad debt provision) in addition

to the expected credit loss allowance calculated based on historical experience. The Group’s policy for managing credit risk is set out in

note 14.

123

Financial statements De La Rue plc Annual Report 2022

13 Trade and other receivables continued

2022

£m

2021

£m

Trade receivables

64.8 69.6

Provision for impairment

(0.8) (1.5)

Net trade receivables 64.0 68.1

Other receivables

22.1 26.2

Prepayments 2.9 4.5

89.0 98.8

Notes:

1. In FY21 a receivable from Venezuela of £19.1m was written off during the period and provision was released to off set this.

2. Other receivables of £22.1m in FY22 (FY21: £26.2m) included, £5.1m of VAT recoverable (FY21: £3.2m), £3.2m of project work-in-progress costs (FY21: £1.7m), £2.7m of RDEC (FY21: £2.6m),

and£2.2m of deposits for assets under construction (FY21: £2.2m).

The Group has considered the impact of the war in Ukraine on the recoverability of amounts due from customers in Ukraine, Belarus and

Russia. At 26 March 2022 there was £0.3m of current balances due relating to Ukraine covered by existing pledges to settle (of which £0.2m

has been settled post year-end), a £14k balance relating to Russia, which was settled post year-end and there were no outstanding amounts

relating to Belarus. The Group continued to monitor activities in these areas.

The ageing of trade and other receivables (excluding prepayments and provisions for impairment) at the reporting date was:

Gross

2022

£m

ECL

allowance

2022

£m

Gross

2021

£m

ECL

allowance

2021

£m

Not past due 75.2 (0.2) 60.0 (0.2)

Past due 0-30 days 6.3 – 7.1 –

Past due 31-120 days 4.9 (0.1) 12.6 (0.4)

Past due more than 120 days 0.5 (0.5) 16.1 (0.9)

86.9 (0.8) 95.8 (1.5)

The provision for impairment in respect of trade receivables is used to record losses unless the Group is satisfied that no recovery of the

amount owing is possible, at that point the amounts considered irrecoverable are written off against the financial asset directly.

The following expected credit loss rates were applied in the year:

Government departments and National banks

(for Moody’s sovereign rating graded as ‘speculative’ only)

Private or publicly

traded organisation

Current not yet due 0.25% 1%

< 6 months overdue 1% 2%

< 1 year overdue 5% 50%

< 2 years overdue 25% 100%

> 2 years overdue 100% 100%

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

2022

£m

2021

£m

Balance at beginning of year (1.5) (19.9)

Impairment losses recognised (0.1) (0.8)

Utilised 0.5 19.2

Impairment losses reversed 0.3 –

Balance at end of year (0.8) (1.5)

Note:

1. In FY21, the receivable from Venezuela of £19.1m was written off and provision was released to offset this.

14 Financial risk

Financial risk management

The Group’s activities expose it to a variety of financial risks, the most significant of which are liquidity risk, market risk and credit risk.

The Group’s financial risk management policies are established and reviewed regularly to identify and analyse the risks faced by the Group,

to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The use of financial derivatives is governed by the

Group’s risk management policies approved by the Board of Directors, which provide written principles on the use of financial derivatives

consistent with the Group’s risk management strategy. The Group’s treasury department is responsible for the management of these

financial risks faced by the Group.

Group treasury identifies, evaluates and in certain cases hedges financial risks in close cooperation with the Group’s operating units.

Group treasury provides written principles for overall financial risk management as well as policies covering specific areas, such as

foreignexchange risk, interest rate risk, use of derivative financial instruments and the investment of excess liquidity.

124

Notes to the accounts continued

14(a) Financial instruments

As permitted by IFRS 9, the Group has continued to apply the requirements of IAS 39 only in relation to hedge accounting at the current

time. Derivative financial instruments are recognised at fair value at the date a derivative contract is entered into and are subsequently

remeasured to their fair value at each balance sheet date. The gain or loss on subsequent fair value measurement is recognised in the

income statement unless the derivative qualifies for hedge accounting when recognition of any resultant gain or loss depends on the nature

of the item being hedged.

Cash flow hedges

Changes in the fair value of derivative financial instruments that are designated and are effective as hedges of future cash flows are

recognised directly in equity and the ineffective portion is recognised immediately in the income statement. Amounts accumulated in equity

are recycled to the income statement in the period in which the hedged item also affects the income statement. However, if the hedged item

results in the recognition of a non-financial asset or liability, the amounts accumulated in equity on the hedging instrument are transferred

from equity and included in the initial measurement of the cost of the asset or liability. Hedge accounting is discontinued when the hedging

instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge accounting. At that time, for forecast transactions,

any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs.

If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income

statement. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income

statement as they arise.

Fair value hedges

For an effective hedge of an exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment,

the hedged item is adjusted for changes in fair value attributable to the risk being hedged with the corresponding entry in net income.

Gains orlosses from remeasuring the derivative or, for non-derivatives, the foreign currency component of its carrying value, are

recognisedin net income.

Embedded derivatives

Derivatives embedded in other financial liability instruments or other non-financial host contracts are treated as separate derivatives when

their risks and characteristics are not closely related to those of the host contracts and the host contracts are not carried at fair value.

Any unrealised gains or losses on such separated derivatives are reported in the income statement within revenue or operating expenses,

inline with the host contract.

Fair values

The fair value of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:

Note

Fair value

hierarchy

Total fair

value

2022

£m

Carrying

amount

2022

£m

Total fair

value

2021

£m

Carrying

amount

2021

£m

Financial assets

Trade and other receivables

13 Level 3 83.4 83.4 91.7 91.7

Contract assets 2 Level 3 8.0 8.0 14.8 14.8

Other financial assets

11 Level 3 7. 2 7.2 8.6 8.6

Cash and cash equivalents 15 Level 1 24.3 24.3 25.7 25.7

Derivative financial instruments:

– Forward exchange contracts designated as cash flow hedges Level 2 1.3 1.3 2.5 2.5

– Short duration swap contracts designated as fair value hedges Level 2 – – 0.1 0.1

– Foreign exchange fair value hedges – other economic hedges Level 2 0.9 0.9 4.9 4.9

– Embedded derivatives Level 2 1.2 1.2 – –

Total financial assets 126.3 126.3 148.3 148.3

Financial liabilities

Unsecured bank loans and overdrafts

18 Level 2 (95.7) (95.7) (78.0) (78.0)

Trade and other payables

17 Level 3 (62.9) (62.9) (78.9) (78.9)

Derivative financial instruments:

– Forward exchange contracts designated as cash flow hedges Level 2 (1.8) (1.8) (3.4) (3.4)

– Short duration swap contracts designated as fair value hedges Level 2 – – (0.1) (0.1)

– Foreign exchange fair value hedges – other economic hedges Level 2 (2.9) (2.9) (1.7) (1.7)

– Embedded derivatives Level 2 (0.1) (0.1) (3.1) (3.1)

Total financial liabilities (163.4) (163.4) (165.2) (165.2)

Notes:

1. Excludes prepayments and RDEC of £2.7m (FY21: £2.6m).

2. Excludes ordinary shares of £0.2m which are accounted for as fair value through profit and loss.

3. Excludes unamortised pre-paid loan arrangement fees.

4. Excludes social security amounts, contract liabilities and payments on account.

Trade receivables decreased compared to FY21 reflecting timing of payments on certain material customer contracts. Contract assets have decreased from £14.8m at FY21 to £8.0m at FY22

reflecting the fact that in the current period customer invoicing has more closely matched the timing of revenue recognition.

125

Financial statements De La Rue plc Annual Report 2022

14 Financial risk continued

Fair value hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy,

described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

– Level 1 valuations are derived from unadjusted quoted prices for identical assets or liabilities in active markets

– Level 2 valuations use observable inputs for the assets or liabilities other than quoted prices

– Level 3 valuations are not based on observable market data and are subject to management estimates

There has been no movement between levels during the current or prior periods.

Fair value measurement basis for derivative financial instruments

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the

reporting date. The valuation bases are classified according to the degree of estimation required in arriving at the fair values. See fair value

hierarchy above.

Forward exchange contracts used for hedging

The fair value of forward exchange contracts has been determined using quoted forward exchange rates at the balance sheet date.

Interest rate swaps

Interest rate swaps are measured by reference to third party bank confirmations and discounted cash flows using the yield curves in effect

atthe balance sheet date.

Embedded derivatives

The fair value of embedded derivatives is calculated based on the present value of forecast future exposures on relevant sales and purchase

contracts and using quoted forward foreign exchange rates at the balance sheet date.

Determination of fair values of non-derivative financial assets and liabilities

Non-derivative financial assets at fair value through profit or loss are measured at fair value and changes therein, including any interest,

arerecognised in profit or loss. Directly attributable transaction costs are recognised in profit or loss as incurred.

Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial

recognition, these liabilities are measured at amortised cost using the effective interest method.

Hedge reserves

The hedge reserve balance on 26 March 2022 was a loss of £0.5m, (FY21: loss £0.8m). Net movements in the hedge reserve are shown

in the Group statement of changes in equity. Comprehensive income after tax was £0.3m (FY21: £0.9m) comprising a loss of £0.6m

(FY21: £0.3m) of fair value movements on new and continuing cash flow hedges and a gain of £0.8m (FY21: £0.4m loss) on maturing cash

flow hedges. Deferred tax on the gain of £0.2m (FY21: £0.7m loss) amounted to £0.1m (FY21: £0.2m loss). Hedge reserve movements in

theincome statement were as follows:

Revenue

£m

Operating

expense

£m

Interest

expense

£m

Total

£m

26 March 2022

– Maturing cash flow hedges 0.7 (1.5) – (0.8)

– Ineffectiveness on de-recognition of cash flow hedges – – – –

0.7 (1.5) – (0.8)

27 March 2021

– Maturing cash flow hedges 0.2 0.4 – 0.6

– Ineffectiveness on de-recognition of cash flow hedges – (0.1) (0.1) (0.2)

0.2 0.3 (0.1) 0.4

The ineffective portion of fair value hedges that was recognised in the income statement amounted to £nil (FY21: £nil). The ineffective portion

of cash flow hedges that was recognised in the income statement within operating expenses was a £nil (FY21: loss of £0.1m) and within

Interest expense was a £nil (FY21: loss of £0.1m).

14(b) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing

liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities where due, under both normal and

stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group manages this risk by ensuring that it maintains sufficient levels of committed borrowing facilities and cash and cash equivalents.

The level of headroom needed is reviewed annually as part of the Group’s planning process.

A maturity analysis of the carrying amount of the Group’s borrowings is shown below in the reporting of financial risk section together

withassociated fair values.

126

Notes to the accounts continued

The following are the contractual undiscounted cash flow maturities of financial liabilities, including contractual interest payments and

excluding the impact of netting agreements.

26 March 2022 Note

Due

within

1 year

£m

Due

between 1

and 2 years

£m

Due

between 2

and 5 years

£m

After

5 years

£m

Total

undiscounted

cash flows

£m

Impact of

discounting

and netting

£m

Carrying

amount

£m

Non-derivative financial liabilities

Unsecured bank loans and overdrafts 18 – 95.0 0.7 – 95.7 – 95.7

Trade and other payables

17 62.9 – – – 62.9 – 62.9

Obligations under leases 23 2.6 2.6 5.7 24.9 35.8 (21.6) 14.2

Derivative financial liabilities

Gross amount payable from currency

derivatives:

– Forward exchange contracts

designatedas cash flow hedges* 108.4 0.1 – – 108.5 (106.7) 1.8

– Short duration swap contracts

designated as fair value hedges* 11.4 – – – 11.4 (11.4) –

Fair value hedges – other

economichedges* 115.8 0.6 – – 116.4 (113.5) 2.9

301.1 98.3 6.4 24.9 430.7 (253.2) 177.5

27 March 2021 Note

Due

within

1 year

£m

Due

between 1

and 2 years

£m

Due

between 2

and 5 years

£m

After

5 years

£m

Total

undiscounted

cash flows

£m

Impact of

discounting

and netting

£m

Carrying

amount

£m

Non-derivative financial liabilities

Unsecured bank loans and overdrafts 18 – – 78.0 – 78.0 – 78.0

Trade and other payables

17 78.9 – – – 78.9 – 78.9

Obligations under leases 23 3.0 2.6 6.6 26.6 38.8 (23.1) 15.7

Derivative financial liabilities

Gross amount payable from currency

derivatives:

– Forward exchange contracts

designatedas cash flow hedges* 94.5 0.8 – – 95.3 (91.9) 3.4

– Short duration swap contracts

designated as fair value hedges* 13.7 – – – 13.7 (13.6) 0.1

Fair value hedges – other

economichedges* 95.9 – – – 95.9 (94.2) 1.7

286.0 3.4 84.6 26.6 400.6 (222.8) 177.8

Notes:

* Excludes embedded derivatives.

1. Excludes social security amounts, contract liabilities and payments on account.

The following are the contractual undiscounted cash flow maturities of financial assets, including contractual interest receipts and excluding

the impact of netting agreements.

26 March 2022 Note

Due

within

1 year

£m

Due

between 1

and 2 years

£m

Due

between 2

and 5 years

£m

After

5 years

£m

Total

undiscounted

cash flows

£m

Impact of

discounting

and netting

£m

Carrying

amount

£m

Non-derivative financial assets

Cash and cash equivalents 15 24.3 – – – 24.3 – 24.3

Trade and other receivables

13 83.4 – – – 83.4 – 83.4

Contract assets 2 8.0 – – – 8.0 – 8.0

Other financial assets

11 – – – 7. 2 7. 2 – 7.2

Derivative financial assets

Gross amount receivable from

currencyderivatives:

– Forward exchange contracts

designatedas cash flow hedges 60.7 0.7 – – 61.4 (60.1) 1.3

– Short duration swap contracts

designated as fair value hedges 8.1 – – – 8.1 (8.1) –

Fair value hedges – other

economichedges 56.9 2.0 – – 58.9 (58.0) 0.9

241.4 2.7 – 7.2 251.3 (126.2) 125.1

127

Financial statements De La Rue plc Annual Report 2022

14 Financial risk continued

27 March 2021 Note

Due

within

1 year

£m

Due

between 1

and 2 years

£m

Due

between 2

and 5 years

£m

After

5 years

£m

Total

undiscounted

cash flows

£m

Impact of

discounting

and netting

£m

Carrying

amount

£m

Non-derivative financial assets

Cash and cash equivalents 15 25.7 – – – 25.7 – 25.7

Trade and other receivables

13 91.7 – – – 91.7 – 91.7

Contract assets 2 14.8 – – – 14.8 – 14.8

Other financial assets

11 – – – 8.6 8.6 – 8.6

Derivative financial assets

Gross amount receivable from

currencyderivatives:

– Forward exchange contracts

designatedas cash flow hedges* 75.0 0.1 – – 75.1 (72.6) 2.5

– Short duration swap contracts

designated as fair value hedges* 12.9 – – – 12.9 (12.8) 0.1

– Fair value hedges – other

economichedges* 146.5 13.2 – – 159.7 (154.8) 4.9

366.6 13.3 – 8.6 388.5 (240.2) 148.3

Notes:

* Excludes embedded derivatives.

1. Excludes prepayments and and RDEC of £2.7m (FY21: £2.6m).

2. Excludes ordinary shares of £0.2m which are accounted for as fair value through profit and loss.

The fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged instrument is more

than 12 months and as a current asset or liability if the maturity of the hedged instrument is less than 12 months.

Cash and cash equivalents, trade and other current receivables, contract assets, bank loans and overdrafts, trade payables and other

current liabilities have fair values that approximate to their carrying amounts due to their short-term nature.

The Group has Bank facilities of £275.0m including an RCF cash drawdown component of up to £175.0m and bond and guarantee facilities

of a minimum of £100.0m, which currently are due to mature in December 2023. The Group can convert (in blocks of £25.0m) up to £50.0m

of the undrawn RCF cash component to the bond and guarantee component if required and can elect to convert this back (again in blocks of

£25.0m) in order to draw in cash if the bond and guarantee component has not been sufficiently utilised. The Group has reallocated £25.0m

ofthe cash component to the bond and guarantee component, such that at present £150.0m in total is available on the RCF component.

As at 26 March 2022, the Group, as part of the £150.0m RCF cash component, has a total of undrawn committed borrowing facilities, all

maturing in more than one year, of £55.0m (27 March 2021: £72.0m in more than one year). The amount of loans drawn on the £150.0m

RCFfacility is £95.0m (27 March 2021: £78.0m). Guarantees of £55.6m (27 March 2021: £78.2m) have been drawn using the £125.0m

guarantee facility. The accrued interest in relation to cash drawdowns outstanding at 26 March 2022 is £0.1m (27 March 2021: £nil).

The financial covenants require that the ratio of EBIT to net interest payable will not be less than 2.8 times (subsequently increasing up to

3.0 times for each relevant period after 31 March 2022) and the net debt to EBITDA ratio will not exceed three times. At the period end the

specific covenant tests were as follows: EBIT/net interest payable of 7.4 times, net debt/EBITDA of 1.46 times. The covenant tests use earlier

accounting standards and exclude adjustments including IFRS 16.

Forward foreign exchange contracts

The net principal amounts of the outstanding forward foreign exchange contracts at 26 March 2022 are US dollar 125.9m, Euro 18.1m,

Swissfranc 15.9m, Saudi Arabian riyal 14.3m, Swedish krona 5.7m, Hong Kong dollar 5.7m and United Arab Emirates dirham 0.9m.

The net principal amounts outstanding under forward contracts with maturities greater than 12 months are Euro 2.2m and US dollar 0.1m.

These forward contracts are designated as cash flow hedges or fair value hedges as appropriate.

Gains and losses recognised in the hedging reserve in equity on forward foreign exchange contracts at 26 March 2022 will be released to

the income statement at various dates between one month and 16 months from the balance sheet date. The tables below include all net

foreign exchange forward contracts over £500k.

Hedges versus GB Pounds only

Notional

amount in

currency

Notional

amount in

£m Maturity

Average

forward

rate

As at 26 March 2022

Forward exchange forward contracts

USD 127. 2 (94.0) 2023 1.3533

EUR (25.4) 22.0 2023 1.1534

CHF (9.4) 7.6 2023 1.2378

SAR (14.3) 2.9 2023 4.9962

HKD 5.7 (0.5) 2023 10.5843

As at 27 March 2021

Forward exchange forward contracts

USD 16 9.1 (126 .1) 2022 1.3417

EUR (21.5) 18.8 2022 1.1423

CHF (12.3) 10.1 2022 1.2172

SAR 16.6 (1.4) 2022 11.5044

Note:

Forward sales shown as positive, and purchases shown as negative.

128

Notes to the accounts continued

Hedges versus other currencies

Notional

amount

currency 1 in

Notional

amount

currency 2 in

m Maturity

Average

forward

rate

As at 26 March 2022

Forward exchange forward contracts

EUR/CHF 6.2 (6.5) 2023 1.0608

EUR/USD 1.1 (1.3) 2023 1.1780

27 March 2021

Forward exchange forward contracts

EUR/CHF 5.9 (6.4) 2022 1.0766

EUR/USD 1.3 (1.5) 2022 1.149 6

Notes:

Forward sales shown as positive and purchases shown as negative.

Notional amount in currency 1 refers to Euro and notional amounts in currency 2 refer to CHF or USD as indicated.

Notional amounts are shown in the currency as stated and not in GBP.

Short duration swap contracts

(i) Cash management swaps

The Group uses short duration currency swaps to manage the level of borrowings in foreign currencies. The fair value of cash management

currency swaps at 26 March 2022 was £nil (27 March 2021: £nil). Gains and losses on cash management swaps are included in the

consolidated income statement.

The principal amounts outstanding under cash management currency swaps at 26 March 2022 are US dollar 0.7m, Euro 1.3m, United Arab

Emirates dirham 2.6m, Saudi Arabian riyal 2.7m, Canadian dollar 0.1m and Australian dollar 0.1m.

(ii) Balance sheet swaps

The Group uses short duration currency swaps to manage the translational exposure of monetary assets and liabilities denominated in

foreign currencies. The fair value of balance sheet swaps as at 26 March 2022 was £nil (27 March 2021: £nil). Gains and losses on balance

sheet swaps are included in the consolidated income statement.

The principal amounts outstanding under balance sheet swaps at 26 March 2022 are US dollar 13.5m, Euro 6.6m and Swiss franc 1.2m.

Embedded derivatives

Embedded derivatives relate to sales and purchase contracts denominated in currencies other than the functional currency of the customer/

supplier, or a currency that is not deemed to be a commonly used currency of the country in which the customer/supplier is based. The net

fair value of embedded derivatives at 26 March 2022 was £1.1m (27 March 2021: £3.1m).

Gains and losses on fair value hedges

The gains and losses recognised in the year on the Group’s fair value hedges were a gain of £0.1m relating to balance sheet hedges (FY21: loss

£0.9m), gain £1.9m relating to other fair value hedges (FY21: gain £1.6m), and £nil relating to cash management hedges (FY21: loss £0.1m).

14(c) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or

the value of its holdings of financial instruments. The Group uses a range of derivative instruments, including forward contracts and swaps

to hedge its risk to changes in foreign exchange rates and interest rates with the objective of controlling market risk exposures within

acceptable parameters, while optimising the return. Derivative financial instruments are only used for hedging purposes.

Currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with

respect tothe US dollar and the Euro. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities,

unrecognised firm commitments and investments in foreign operations.

To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Group

use forward contracts, transacted with Group treasury. Foreign exchange risk arises when future commercial transactions or recognised

assets or liabilities are denominated in a currency that is not the entity’s functional currency. Group treasury is responsible for managing

thenet position in each currency via foreign exchange contracts transacted with financial institutions.

The Group’s risk management policy aims to hedge firm commitments in full, and between 60% and 100% of forecast exposures in each

major currency for the subsequent 12 months to the extent that forecast transactions are highly probable.

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The Group’s

policy is to manage the currency exposure arising from the net assets of the Group’s foreign operations primarily through borrowings

denominated in the relevant foreign currencies and through foreign currency swaps.

The Group’s policy is not to hedge net investments in subsidiaries or the translation of profits or losses generated in overseas subsidiaries.

Exposure to currency risk

The following significant exchange rates applied during the year:

Average rate Reporting date spot rate

2022 2021 2022 2021

US dollar 1.37 1.31 1.32 1.38

Euro 1.18 1.12 1.20 1.17

129

Financial statements De La Rue plc Annual Report 2022

14 Financial risk continued

Sensitivity analysis

A 10 per cent strengthening of Sterling against the following currencies at 26 March 2022 and 27 March 2021 would have increased/

(decreased) profit or loss by the amounts shown below based on the Group’s external monetary assets and liabilities.

2022

£m

2021

£m

XAF (0.3) (0.2)

EURO 0.3 0.2

LKR (0.2) (0.4)

GHS (0.1) (0.1)

A 10 per cent weaking of Sterling against the above currencies at 26 March 2022 and 27 March 2021 would have had the following effect:

2022

£m

2021

£m

XAF 0.3 0.2

EURO (0.3) (0.3)

LKR 0.2 0.4

GHS 0.1 0.1

The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for FY21.

Interest rate risk

All material financial assets and liabilities are maintained at floating rates of interest. Where the Group has forecast average levels of net debt

above £50.0m on a continuing basis, the policy is to use floating to fixed interest rate swaps to fix the interest rate on a minimum of 50% of

the Group’s forecast average levels of net debt for a period of at least 12 months. This remains the policy in the medium term however the

Group has elected not to currently apply this policy and this will be reviewed at least semi-annually.

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

Carrying amount

2022

£m

2021

£m

Variable rate instruments:

Financial assets 24.3 25.7

Financial liabilities (95.7) (78.0)

(71.4) (52.3)

At the year ending 26 March 2022 the Group had no floating to fixed interest rate swaps with financial institutions in place.

Excluded from the above analysis is £14.2m (FY21: £15.7m) of amounts payable under leases, which are subject to fixed rates of interest

(note 23).

Sensitivity analysis

A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit and loss by the

amounts shown below. The analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Profit and loss Equity

100bp

increase

£m

100bp

decrease

£m

100bp

increase

£m

100bp

decrease

£m

Variable rate instruments cash flow sensitivity (net)

26 March 2022 (0.6) 0.6 – –

27 March 2021 (0.3) 0.3 – –

14(d) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual

obligations and arises principally from the Group’s receivables from customers and investment securities.

The Group’s exposure to credit risk is influenced by various factors, largely pertaining to the profile of the customer as acknowledged in

our IFRS 9 Receivables segmentation, in particular the customer’s status as a Government or Banking institution as compared to that

of a private or publicly owned entity. Due to the large make up of Government or central banks at around 80% of the Group’s revenues,

measuring credit risk is largely driven by factors including the country’s sovereign rating, historic knowledge, local market insights, and

political factors in country and industry credit risk is not an influencing factor. The Group’s long standing historic trade with Government and

central bank institutions guides strongly towards the lower credit or doubtful debt risk that these customers represent. Where private or

publicly owned Business Trade applies, the Business adopts a conventional and in-depth trading entity credit review. Where appropriate,

letters of credit are used to reduce the credit risk for the Business and where possible advanced payments are also requested.

All credit assignment risk is mitigated through a threshold-based sign-off matrix, where larger value credit exposures require multiple and

more senior Business sign-off. The Group has processes in place to ensure appropriate credit limits are set for customers and for ensuring

appropriate approval is given for the release of products to customers where any perceived risk has been highlighted.

130

Notes to the accounts continued

Exposure to credit risk

The carrying amount of financial assets represents the credit exposure at the reporting date. The exposure to credit risk at the reporting date was:

Notes

Carrying amount

2022

£m

2021

£m

Trade and other receivables

13 83.4 91.7

Contract assets 2 8.0 14.8

Other financial assets

11 7.2 8.6

Cash and cash equivalents 15 24.3 25.7

Forward exchange contracts used for hedging 14(a) 2.2 7.5

Embedded derivatives 14(a) 1.2 –

126.3 148.3

Notes:

1. Excludes prepayments and RDEC of £2.7m (FY21: £2.6m).

2. Excludes ordinary shares of £0.2m which are accounted for as fair value through profit and loss.

The maximum exposure to credit risk for trade and other receivables (excluding prepayments and RDEC) by geographic region was:

Carrying amount

2022

£m

2021

£m

UK 22.7 22.3

Rest of Europe 11.5 13.0

Africa 17.6 35.4

Rest of world 31.6 21.0

83.4 91.7

The maximum exposure to credit risk for trade and other receivables (excluding prepayments and RDEC) by type of customer was:

Carrying amount

2022

£m

2021

£m

Banks and financial institutions 36.0 43.2

Government institutions 12.0 15.1

Other 35.4 33.4

83.4 91.7

Fair value adjustment to credit risk on derivative contracts

The impact of credit related adjustments being made to the carrying amount of derivatives measured at fair value and used for hedging

currency and interest rate risk has been assessed and considered to be immaterial. These derivatives are transacted with investment grade

financial institutions. Similarly, the impact of the credit risk of the Group on the valuation of its financial liabilities has been assessed and

considered to be immaterial.

14(e) Capital management

The Board’s policy is to maintain a strong capital base in order to maintain investor, creditor and market confidence and to sustain future

development of the business.

The Group finances its operations through a mixture of equity funding and debt financing, which represent the Group’s definition of capital

for this purpose.

Notes

2022

£m

2021

£m

Total equity attributable to shareholders of the Company 142.7 95.0

(Deduct)/add back long-term pension surplus/(deficit) 24 (30.1) 18.5

Adjusted equity attributable to shareholders of the Company 112.6 113.5

Net debt 22 71.4 52.3

Group capital 184.0 165.6

The long-term pension surplus/(deficit) has been removed as a separate agreement is in place regarding the funding for this deficit which

ispaid out of cash flows from continuing operations. The Group’s debt financing is also analysed in notes 18 ‘Borrowings’ and 22 ‘Analysis

ofNet Debt’.

Included within the Group’s net debt are certain cash and cash equivalent balances that are not readily available for use by the Group.

These balances are not significant and are not readily available due to restrictions within some of the countries in which we operate.

Earnings per share and dividend payments are the two measures which, in the Board’s view, summarise best whether the Group’s

objectives regarding equity management are being met. The Group’s earnings and dividends per share and relative rates of growth

illustratethe extent to which equity attributable to shareholders has changed. Both measures are disclosed and discussed within the

Strategic Report. Earnings per share is disclosed in note 8.

The Group’s objective is to maximise sustainable long-term growth of the earnings per share.

131

Financial statements De La Rue plc Annual Report 2022

14 Financial risk continued

De La Rue’s dividend policy is to provide shareholders with a competitive return on their investment over time, while ensuring sufficient

reinvestment of profits to enable the Group to achieve its strategy. During the period, the Group invested in ongoing research and

development expenditure and capital expenditure. There is no proposed dividend to De La Rue plc shareholders for the year and it should

be noted that none are permitted within 18 months of the Refinancing of 7 July 2020. Dividends can be paid pro-rata to all shareholders

(including external parties) in respect of Joint Venture companies including those companies treated as consolidated subsidiaries.

The decision to pay dividends, and the amount of the dividends, will depend on, among other things, the earnings, financial position, capital

requirements, general business conditions, cash flows, net debt levels and share buyback plans.

There were no changes to the Group’s approach to capital management during the year but in the short-term some restrictions apply

following the Refinancing.

14(f) Changes in liabilities arising from financing activities

The below analysis provides a reconciliation between the opening and closing positions in the balance sheet for liabilities arising from

financing activities excluding movements in cash and cash equivalents.

Note

At 28 March

2021

£m

Cash

flow

£m

Exchange

Differences

and other

£m

New

leases and

modifications

£m

Non-cash

movements

£m

At 26 March

2022

£m

Borrowings 18 (78.0) (17.0 ) (0.7) – – (95.7)

Prepaid loan arrangement fees 18 3.8 – – – (0.7) 3.1

Lease liabilities

23 (15.7) 2.8 (0.2) (0.5) (0.6) (14.2)

Liabilities arisings from financing activities (89.9) (14.2) (0.9) (0.5) (1.3) (106.8)

Note

At 29 March

2020

£m

Cash

flow

£m

Exchange

Differences

and other

£m

New

leases and

modifications

£m

Non-cash

movements

£m

At 27 March

2021

£m

Borrowings 18 (117. 3) 39.3 – – – (78.0)

Prepaid loan arrangement fees 18 0.8 4.8 – – (1.8) 3.8

Lease liabilities

23 (13.9) 2.8 0.4 (4.4) (0.6) (15.7)

Liabilities arisings from financing activities (130.4) 46.9 0.4 (4.4) (2.4) (89.9)

Note:

1. Lease liability payments include principal of £2.2m (FY21: £2.2m) and interest of £0.6m (FY21: £0.6m).

15 Cash and cash equivalents

Accounting policies

Cash and cash equivalents comprise bank balances and cash held by the Group and short-term deposits with an original maturity of

three months or less. Bank overdrafts that are repayable on demand and form part of the Group’s cash management are included as a

component of cash and cash equivalents for the purpose of the cash flow statement.

2022

£m

2021

£m

Cash at bank and in hand 20.3 25.7

Short term bank deposits 4.0 –

24.3 25.7

An analysis of cash, cash equivalents and bank overdrafts is shown in the Group cash flow statement. Certain cash and deposits are of a

floating rate nature and are recoverable within three months.

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 14.

16 Deferred taxation

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax

liabilities and when the deferred income taxes relate to the same fiscal authority. The offset amounts are as follows:

2022

£m

2021

£m

Deferred tax assets 11.2 19.7

Deferred tax liabilities (2.4) (2.6)

8.8 17.1

The gross movement on the deferred income tax account is as follows:

2022

£m

2021

£m

Beginning of the year 17.1 (3.3)

Exchange differences (0.2) (0.1)

Income statement credit 4.0 4.6

Tax (charge)/credit to OCI and equity (12 .1) 15.9

End of the year 8.8 17.1

132

Notes to the accounts continued

The movement in deferred tax assets and liabilities during the period is as follows:

Deferred Tax Liabilities

Property, plant

and equipment

£m

Fair value

gains

£m

Development

costs

£m

Retirement

benefits

£m

Total

£m

At 28 March 2020 (1.4) (1.7) (1.9) (12.3) (17.3)

Recognised in the income statement 1.2 0.4 (0.1) 0.1 1.6

Recognised in OCI and equity – – – 12.3 12.3

Exchange differences 0.2 0.2 – (0.1) 0.3

Subtotal – (1.1) (2.0) – (3.1)

Jurisdictional offset 0.5

At 27 March 2021 (2.6)

At 27 March 2021 – (1.1) (2.0) – (3.1)

Recognised in the income statement – 0.3 (0.3) – –

Recognised in OCI and equity – – – (7.4) (7.4)

Exchange differences – (0.2) – – (0.2)

Subtotal – (1.0) (2.3) (7.4) (10.7)

Jurisdictional offset 8.3

At 26 March 2022 (2.4)

Deferred Tax Assets

Property, plant

and equipment

£m

Retirement

benefits

£m

Tax losses

£m

Other

£m

Total

£m

At 28 March 2020 – 0.5 5.1 8.4 14.0

Recognised in the income statement 1.6 0.1 (0.8) 2.1 3.0

Recognised in OCI and equity – 3.5 – 0.1 3.6

Exchange differences – – – (0.4) (0.4)

Subtotal 1.6 4.1 4.3 10.2 20.2

Jurisdictional offset (0.5)

At 27 March 2021 19.7

At 27 March 2021 1.6 4.1 4.3 10.2 20.2

Recognised in the income statement (1.1) 0.3 1.9 2.9 4.0

Recognised in OCI and equity – (4.4) – (0.3) (4.7)

Exchange differences 0.1 – – (0.1) –

Subtotal 0.6 – 6.2 12.7 19.5

Jurisdictional offset (8.3)

At 26 March 2022 11.2

Other deferred assets and liabilities include tax associated with provisions of £0.4m (FY21: £0.5m), restricted interest carried forward £3.9m

(FY21: £1.2m) and in respect of overseas tax credits £7.0m (FY21: £7.2m).

Deferred tax assets are recognised for tax losses available to carry forward to the extent that the realisation of the related tax benefit through

future taxable profits is probable.

The Group has not recognised deferred tax assets of £6.4m (FY21: £7.3m) in respect of losses amounting to £27.9m (FY21: £26.9m) that

can be carried forward against future taxable income. Similarly, the Group has not recognised deferred tax assets of £19.2m (FY21: £17.3m)

in respect of overseas tax credits that are carried forward for utilisation in future periods, including some that have been allocated to

Governmental authorities as part of investment projects.

Unremitted foreign earnings totalled £200.6m at 26 March 2022 (FY21: £189.5m). Deferred tax liabilities have not been recognised for the

withholding tax and other taxes that would be payable on the unremitted earnings of certain subsidiaries where the timing of the reversal

canbe controlled and it was considered unlikely that dividends would be paid from those subsidiaries.

UK capital losses of £317.2m are carried forward at 26 March 2022 (FY21: £319.5m). No deferred tax asset has been recognised in respect

of these losses.

UK tax rate

The UK deferred tax assets and liabilities at 26 March 2022 have been calculated based on the rate of 25%, being the substantively enacted

rate at the balance sheet date, due to apply from April 2023. Adjustments have been made for any timing differences expected to reverse

before the UK tax rate changes from 19% to 25% from April 2023.

133

Financial statements De La Rue plc Annual Report 2022

17 Trade and other payables

Accounting policies

Trade and other payables are measured at carrying value which approximates to fair value.

Payments received on account relate to monies received from customers under contract, as per individual contract agreements, prior

to commencement of production of goods or delivery of services. Once the obligation has been fulfilled the revenue is recognised in

accordance with IFRS 15.

Contract liability is recognised when a payment from customer is due or already received, before a related performance obligation is satisfied

for the contract agreements that have started production of goods or delivery of services.

2022

£m

2021

£m

Current liabilities

Payments received on account 14.3 38.0

Contract liabilities 0.3 1.6

Trade payables 31.0 40.2

Social security and other taxation 2.6 2.0

Accrued expenses

25.6 32.3

Other payables

6.2 6.4

80.0 120.5

Notes:

1. Accrued expenses include commissions £1.8m (FY21: £3.9m), rebate accruals £2.7m (FY21: £2.2m), employee related accruals of £1.5m (FY21: £6.2m) and freight accruals £2.5m (FY21: £1.4m).

2. Other payables include capex creditors £1.2m (FY21: £1.5m) and interest payable £1.4m (FY21: £1.4m).

The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 14.

18 Borrowings

Accounting policies

Borrowings are recognised at amortised cost. For more information about the Group’s exposure to interest rate, foreign currency and

liquidity risk (note 14).

Currency

Nominal

interest rate

Year of

maturity

Face

value

2022

£m

Carrying

amount

2022

£m

Face

value

2021

£m

Carrying

amount

2021

£m

Non-current liabilities

Unsecured bank loans and overdrafts EUR 1.80% 2028 0.7 0.7 – –

Unsecured bank loans and overdrafts GBP 3.64% 2023 95.0 95.0 78.0 78.0

Total interest-bearing liabilities 95.7 95.7 78.0 78.0

The total interest-bearing liabilities above is presented excluding unamortised pre-paid borrowing fees of £3.1m (FY21: £3.8m).

In FY21, £53.6m was offset for interest purposes against bank accounts in a credit balance position. Under the new banking arrangements

there is no ongoing right of offset and no accounts were in an overdraft position as at 26 March 2022. Overdrafts are presented net in the

balance sheet where there is a legally enforceable right of offset against a cash balance and the Group intends to either settle on a net basis

or to realise the asset and settle the financial liability simultaneously.

As at 26 March 2022, the Group has a committed revolving facility, all maturing in more than one year, of £275m which depending on the

value of guarantees utilised a maximum of £175m can be used as way of cash draw downs.

The drawdowns on the RCF facility are typically rolled over on terms of between one and three months. However, as the Group has the

intention and ability to continue to roll forward the drawdowns under the facility, the amount borrowed has been presented as long-term

at FY22.

19 Provisions for liabilities and charges

Accounting policies

Provisions are recognised when the Group has a present obligation in respect of a past event, it is probable that an outflow of resources

will be required to settle the obligation, and where the amount can be reliably estimated. Provisions are measured at the management’s

best estimate of the amount required to settle the obligation at the balance sheet date and are discounted where the time value of money is

considered material.

Restructuring

£m

Warranty

£m

Other

£m

Total

£m

At 27 March 2021 0.7 3.2 5.7 9.6

Charge for the year 0.3 0.6 1.0 1.9

Utilised in year (0.6) (0.8) (1.2) (2.6)

Released in year – (1.6) (1.4) (3.0)

At 26 March 2022 0.4 1.4 4.1 5.9

Expected to be utilised within 1 year 0.4 1.4 4.1 5.9

134

Notes to the accounts continued

Restructuring provisions

Restructuring provisions as at 27 March 2021 related to the cessation of banknote manufacturing at the Group’s Gateshead facility and

substantially related to redundancy and other employee related termination costs. This was substantially utilised in the period. The charge

forthe period of £0.3m related to redundancy and other employee related termination costs for a Group factory relating to a change in

working patterns. The remaining provision as at 26 March 2022 is expected to be utilised in FY23.

Warranty provisions

Warranty provisions relate to present obligations for defective products. The provisions are management judgements based on information

currently available, past history and experience of the products sold. However, it is inherent in the nature of the business that the actual

liabilities may differ from the provisions. The precise timing of the utilisation of these provisions is uncertain but is generally expected to

fallwithin one year.

The Group measures warranty provisions at the Directors’ best estimate of the amount required to settle the obligation at the balance sheet

date, discounted where the time value of money is considered material. These estimates take account of available information, historical

experience and the likelihood of different possible outcomes. Both the amount and the maturity of these liabilities could be different from

those estimated.

Other provisions

Other provisions comprise a number of liabilities with varying expected utilisation rates. The liabilities include a small number of onerous

contract provisions (£2.3m), employee related liabilities (£1.7m) and other liabilities (£0.1m) arising through the Group’s normal operations.

Onerous contract provisions arise where the contract is loss making after taking into account all manufacturing and delivery costs and any

related contract fines. The precise timing of the utilisation of these provisions is uncertain but is generally expected to fall within one year.

20 Share capital

2022

£m

2021

£m

Issued and fully paid

195,157,352 ordinary shares of 44 152/175p each (FY21: 195,064,380 ordinary shares of 44 152⁄175p each) 87.7 87.7

111,673,300 deferred shares of 1p each (FY21: 111,673,300 deferred shares of 1p each) 1.1 1.1

88.8 88.8

2022 2021

Ordinary

’000

Deferred

’000

Ordinary

’000

Deferred

’000

Allotments during the year

Shares in issue at 27 March 2021/28 March 2020 195,064 111,673 103,998 111,673

Equity Capital Raise – – 90,909 –

Issued under Savings Related Share Option Scheme 46 – 5 –

Issued under Annual Bonus Plan 24 – 68 –

Issued under Performance Share Plan 23 – 84 –

Shares in issue at 26 March 2022/27 March 2021 195,157 111,673 195,064 111,673

The deferred shares carry limited economic rights (and no right to receive a dividend) and no voting rights. They are unlisted and are not

transferable except in accordance with the articles.

21 Share based payments

Accounting policies

The Group operates various equity settled and cash settled option schemes. On 17 June 2020 De La Rue announced an equity capital

raise. The equity capital raise was made on the basis of seven new shares for every 16 existing shares held by qualifying shareholders

attherecord date.

To adjust for the dilutive impact of the equity capital raise, for share options held that had not vested by 16 June, the Group granted an

additional 1.093 (the adjustment factor) share options for every share option that employee held to ensure that the fair value remained

unchanged after dilution. For all the ‘free share awards’ (ie the ABP and PSP awards) the exercise price remained unchanged. For any

optionwith an exercise price (ie Sharesave options), the exercise price per share is reduced by the inverse of the adjustment factor,

toensurethat the aggregate exercise price (given that the number of shares is increasing) remains the same.

For equity settled share options, the services received from employees are measured by reference to the fair value of the share options.

The fair value is calculated at grant date and recognised in the consolidated income statement, together with a corresponding increase

in shareholders’ equity, on a straight-line basis over the vesting period, based on the numbers of shares that are actually expected to

vest, taking into account non-market vesting conditions (including service conditions). Vesting conditions, other than non-market-based

conditions and non-vesting conditions (requirement to save) are taken into account when estimating the fair value.

On the performance related awards, until 2020 performance measure was based on ROCE and EPS. From 2020 ROCE was replaced

byTSR, a market-based condition.

For cash settled share options, the services received from employees are measured at the fair value of the liability for options outstanding

and recognised in the consolidated income statement on a straight-line basis over the vesting period. The fair value of the liability is

remeasured at each reporting date and at the date of settlement with changes in fair value recognised in the consolidated income statement.

135

Financial statements De La Rue plc Annual Report 2022

21 Share based payments continued

At 26 March 2022, the Group has a number of share-based payment plans, which are described below. The compensation cost and related

liability that have been recognised for the Group’s share-based plans are set out in the table below:

Expense recognised for the year

2022

£m

2021

£m

Annual Bonus Plan 0.9 0.1

Performance Share Plan 0.4 0.6

Savings Related Share Option Scheme 0.5 (0.3)

1.8 0.4

Note:

The FY22 Performance Share Plan above includes cash settled share-based payments of £nil (FY21: credit £4,241).

The fair value of share options is estimated at the date of grant using a lattice-based option valuation model. The significant assumptions

used in the valuation model are disclosed below:

FY22 Arrangements Performance Share Plan Savings Related Share Option Scheme

Dates of current year grants 30 June 2021 5 January 2022

Performance conditions EPS TSR n/a

Number of options granted 702,184 702,183 991,157

Exercise price n/a n/a 112.43

Contractual life (years) 10 10 3

Settlement Share Share Share

Vesting period (years) 3 3 3

Dividend yield n/a n/a Nil to 31 March 2023 and

10p per share pa thereafter

Risk free interest rate n/a n/a 0.82% pa

TSR correlation with comparator index n/a 35% pa n/a

TSR/Share price volatility 90% pa 90% pa 90% pa

Share price at grant (pence) 186.2 186.2 158.2

Fair value per option at grant date 191.76 144.40 101.0

FY21 Arrangements Performance Share Plan Savings Related Share Option Scheme

Dates of current year grants 14 July 2020 6 January 2021

Performance conditions EPS TSR n/a

Number of options granted 925,470 925,470 1,799,16 3

Exercise price n/a n/a 131.1

Contractual life (years) 10 10 3

Settlement Share Share Share

Vesting period (years) 3 3 3

Dividend yield n/a n/a Nil

Risk free interest rate n/a n/a - 0.13% pa

TSR correlation with comparator index n/a 35% pa n/a

TSR/Share price volatility 90% pa 90% pa 90% pa

Share price at grant (pence) 125.00 125.00 166.40

Fair value per option at grant date 132.28 109.66 104.00

For the Savings Related Share Option Scheme (SAYE) an expected volatility rate of 95% (FY21: 90%) has been used for grants in the period.

This rate is based on historical volatility over the last three years to 6 January 2021. The expected life is the average expected period to

exercise. The risk-free rate of return is the yield on zero coupon UK government bonds of a term consistent with the assumed option life.

The rate applied during the year was 0.82% per annum for a period of three years (FY21: 0.13%).

The 30 June 2021 Performance Share Plan (PSP) award is subject to two components, a TSR test and one subject to an Earnings Per Share

(‘EPS’) test. For this award an expected TSR volatility rate of 90% has been used for grants in the period. This rate is based on historical

volatility over the last three years to 30 June 2021. The expected life is the average expected period to exercise. TSR Correlation between

the Company and the FTSE 250 (excluding investment trusts) comparators was measured over a 3 -year period and 35% per annum

was adopted.

Reconciliations of option movements over the period to 26 March 2022 for each class of share awards are shown on page 137.

136

Notes to the accounts continued

Annual Bonus Plan

For details of the Annual Bonus Plan, refer to the Directors’ remuneration report on pages 69 to 84 .

2022 Number

of awards

’000

2021 Number

of awards

’000

Share awards outstanding at start of year 23 105

Adjustment post-Equity Capital Raise – 7

Granted 462 –

Forfeited (9) (65)

Vested (23) (24)

Outstanding at end of year 453 23

During the period the weighted average share price on share awards exercised in the period was 174.4p (FY21: 142.05p).

Performance Share Plan

For details of the Performance Share Plan, refer to the Directors’ remuneration report on pages 69 to 84.

2022 Number

of awards

’000

2021 Number

of awards

’000

Share awards outstanding at start of year 2,560 1,538

Adjustment post-Equity Capital Raise – 55

Granted 1,404 1,851

Forfeited (466) (775)

Vested (13) (109)

Outstanding at end of year 3,485 2,560

During the period the weighted average share price on share awards exercised in the period was 157.07p (FY21: 142.87p).

The awards have been allocated based on a share-prices as follows:

Date of grant Share price

29 June 2015 541.00p

27 June 2016 grants 520.85p

27 June 2017 grants 680.10p

27 June 2018 grants 551.00p

10 June 2019 grants 298.00p

6 January 2020 grants 37.45p

14 July 2020 grants 132.28p/109.66p

30 June 2021 grants 191.76p/144.40p

Savings Related Share Option Scheme

The scheme is open to all UK employees. Options are granted at the prevailing market price at the time of the grant (with a discretionary

discount to the market price) to employees who agree to save between £5 and the maximum savings amount offered per month over a

period of three or five years.

There are no performance conditions attached to the options. After the three or five-year term has expired, employees normally have six

months in which to decide whether or not to exercise their options. A pre-vesting forfeiture rate of 5%, reflecting leavers or withdrawals,

hasbeen assumed on new options granted in the year based on historic experience.

2022 2021

Weighted

average

exercise price

pence per

Number of

options

’000

Weighted

average

exercise price

pence per

Number of

options

’000

Options outstanding at start of year 151.29 2,803 232.30 1,534

Additional shares granted from equity capital raise – – 190.03 103

Granted 149.31 991 131.10 1,799

Forfeited 155.71 (475) 268.71 (493)

Exercised 111.38 (46) 108.55 (5)

Expired 409.64 (100) 411.78 (135)

Outstanding at end of year 130.91 3,173 151.29 2,803

The range of exercise prices for the share options outstanding at the end of the year is between 108.55p and 403.46p (FY21: between

108.55p and 475.91p). The weighted average remaining contractual life of the outstanding share options is 1.99 years (FY21: 2.43 years).

During the period the weighted average share price on options exercised in the period was 174.17p (FY21: 161.02p).

137

Financial statements De La Rue plc Annual Report 2022

21 Share based payments continued

Market share purchase of shares by Trustee De La Rue Employee Share Ownership Trust

The De La Rue Employee Share Ownership Trust (Trust) is a separately administered trust established to administer shares granted to

Executive Directors and senior employees under the various discretionary share option plans established by the Company. Liabilities of the

Trust are guaranteed by the Company and the assets of the Trust mainly comprise shares in the Company. Equiom (Guernsey) Limited is the

Trustee. The own shares held by the Trust are shown as a reduction in shareholders’ funds. The shares will be held at historical rates until

such time as they are disposed of. Any profit or loss on the disposal of own shares is treated as a movement in reserves rather than as an

income statement item.

The Trustee held nil shares at 26 March 2022 (27 March 2021: nil).

22 Analysis of net debt

The analysis below provides a reconciliation between the opening and closing of the Group’s net debt position (being the net of borrowings

and cash and cash equivalents).

Note

27 March

2021

£m

Cash flow

£m

Foreign

exchange

and other

£m

26 March

2022

£m

Borrowings 18 (78.0) (17.0) (0.7) (95.7)

Cash and cash equivalents 15 25.7 (1.6) 0.2 24.3

Net debt (52.3) (18.6) (0.5) (71.4)

Note

28 March

2020

£m

Cash flow

£m

Foreign

exchange

and other

£m

27 March

2021

£m

Borrowings 18 (117. 3 ) 39.3 – (78.0)

Cash and cash equivalents 15 14.5 11.5 (0.3) 25.7

Net debt (102.8) 50.8 (0.3) (52.3)

Net debt is presented excluding unamortised pre-paid borrowing fees of £3.1m (FY21: £3.8m) and £14.2m (FY21: £15.7m) of lease liabilities.

The Group has Bank facilities of £275.0m including an RCF cash drawdown component of up to £175.0m and bond and guarantee facilities

of a minimum of £100.0m, which currently are due to mature in December 2023. The Group can convert (in blocks of £25.0m) up to £50.0m

of the undrawn RCF cash component to the bond and guarantee component if required and can elect to convert this back (again in blocks

of £25.0m) in order to draw in cash if the bond and guarantee component has not been sufficiently utilised.

The drawdowns on the RCF facility are typically rolled over on terms of between one and three months. However, as the Group has the

intention and ability to continue to roll forward the drawdowns under the facility, the amount borrowed has been presented as long-term.

In the second half of FY21, the Group reallocated £25.0m of the cash component to the bond and guarantee component such that at

present, £150.0m in total is available on the RCF component, of which £95.0m was drawn as at 26 March 2022. In the year a separate

borrowing facility for financing equipment under construction has been signed and at 26 March 2022 the amount outstanding on this

facilityis £0.7m.

As at 26 March 2022, the Group had a total of undrawn committed borrowing facilities, all maturing in more than one year, of £55m

(27 March 2021: £78.0m, all maturing in more than one year).

23 Leases

Accounting policies

At the inception of a contract, the Group assesses whether a contract is or contains a lease. A contract is or contains a lease if the contract

conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group accounts for identified

leases in accordance with IFRS 16 (‘Leases’).

Management has made certain judgements on lease terms based on the Group’s current expectations of whether break or renewal options

will be taken. Judgements have also been made in estimating the incremental borrowing rates to use when discounting lease payments.

Leases are recognised on the balance sheet (unless they are low value or for a term of less than 12 months) with a right to use asset and

corresponding lease liability being recorded at the date the lease asset is available for use.

The right to use asset is depreciated over the shorter of, the assets useful economic life and the lease term. Each lease payment is allocated

between repayment of the lease liability and finance cost.

The finance cost is charged to the income statement over the lease term to produce a constant periodic rate of interest on the remaining

lease liability.

At commencement date of the lease, a lease liability is initially recognised on the balance sheet at the present value of future lease payments

(including fixed payments and variable lease payments that depend upon an index) and any lease penalties payable on the early exit of a

lease if management anticipates taking these, discounted using the incremental borrowing rate appropriate for that lease, absent of the

interest rate implicit in the lease being available.

The right to use asset is initially measured at cost, being the initial value of the lease liability, any lease payments made (net of any incentives

received from the lessor) before the commencement of the lease and any initial direct costs and any restoration costs. Payments in respect

of short-term leases (duration of less than 12 months) or low value leases continue to be charged to the income statement on a straight-line

basis over the lease term. Right of use assets are tested for impairment when indicators of impairment exist.

138

Notes to the accounts continued

The Group has lease contracts for various properties and ground leases in addition to other equipment used in its operations. Leases for

property and ground leases range from two years to in excess of 100 years in certain cases. Leases for other equipment used in operations

are typically for periods of two to five years. There are several lease contracts which include extensions and termination options and these

are discussed below.

The Group also has certain leases that have terms of less than 12 months or lease or where equipment is of a low value. The Group applies

the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions.

Set out below are the carrying amounts of right-to-use assets recognised and the movement during the period:

Land and

buildings

£m

Plant and

equipment

£m

Total

£m

At 28 March 2020 12.3 0.6 12.9

Additions – change in lease assessment 4.4 – 4.4

Depreciation expense (2.4) (0.1) (2.5)

Exchange differences (0.2) – (0.2)

At 27 March 2021 14.1 0.5 14.6

Additions – change in lease assessment 0.6 – 0.6

Depreciation expense (2.2) (0.1) (2.3)

Exchange differences – – –

At 26 March 2022 12.5 0.4 12.9

Set out below are the carrying amounts of lease liabilities and the movement during the period:

Land and

buildings

£m

Plant and

equipment

£m

Total

£m

At 28 March 2020 (13.3) (0.6) (13.9)

Additions – change in lease assessment (4.4) – (4.4)

Accretion of interest (note 6) (0.6) – (0.6)

Lease payments 1 2.7 0.1 2.8

Exchange differences 0.4 – 0.4

At 27 March 2021 (15.2) (0.5) (15.7)

Additions – change in lease assessment (0.5) – (0.5)

Accretion of interest (note 6) (0.6) – (0.6)

Lease payments

2.7 0.1 2.8

Exchange differences (0.2) – (0.2)

At 26 March 2022 (13.8) (0.4) (14.2)

Note:

1. Lease payments include principal of £2.2m (FY21: £2.2m) and interest of £0.6m (FY21: £0.6m).

2022

£m

2021

£m

Included within:

Current liabilities (2.7) (2.7)

Non-current liabilities (11.5) (13.0)

(14.2) (15.7)

The following amounts have been recognised in the income statement:

2022

£m

2021

£m

Depreciation of right-of-use assets (2.3) (2.5)

Interest expense on lease liabilities (0.6) (0.6)

Expense relating to short term leases (0.3) (0.2)

Expenses relating to leases of low-value assets (0.2) (0.1)

The Group had total cash outflows for leases of £3.3m in FY22 (FY21: £3.1m), (including amounts relating to principal payment £2.2m

(FY21: £2.2m), interest payments of £0.6m (FY21: £0.6m) and short and low values assets) £0.5m (FY21: £0.3m) in FY22 (FY21: £3.1m).

The Group also had non-cash additions to right-of-use assets £0.6m (FY21: £4.4m) and liabilities of £0.6m (FY21: £4.4m). At 26 March 2022,

there are no leases entered into which have not yet commenced.

The Group has certain leases that include extension or termination options. Management exercises judgement in determining whether

theseextensions and termination options are reasonably certain to be exercised.

Set out below are the undiscounted potential future rental payment relating to the period following the exercise date of extension and

termination options that are not included in the lease term:

Within

five years

£m

More than

five years

£m

Total

£m

Extension options expected not to be exercised 1.1 0.2 1.3

Termination options expected to be exercised 0.3 – 0.3

139

Financial statements De La Rue plc Annual Report 2022

24 Retirement benefit obligations

Accounting policies

The Group operates retirement benefit schemes, devised in accordance with local conditions and practices in the country concerned,

covering the majority of employees. The assets of the Group’s schemes are generally held in separately administered trusts or are insured.

The major schemes are defined benefit pension schemes with assets held separately from the Group. The cost of providing benefits under

each scheme is determined using the projected unit credit actuarial valuation method. The major defined benefit pension scheme is based

in the UK and is now closed to future accrual. The current service cost and gains and losses on settlements and curtailments are included

inoperating costs in the Group income statement. The interest income on the plan assets of funded defined benefit pension schemes and

the imputed interest on pension scheme liabilities are disclosed as retirement benefit obligation net finance expense/income respectively

inthe income statement.

Return on plan assets excluding assumed interest income on the assets, changes in the retirement benefit obligation due to experience

andchanges in actuarial assumptions are included in the statement of comprehensive income in full in the period in which they arise.

The net liability/surplus recognised in respect of defined benefit pension schemes is the present value of the defined benefit obligation

lessthe fair value of the scheme assets, as determined by actuarial valuations carried out at the balance sheet date. Any net pension

surplusis recognised at the lower of the net surplus in the defined benefit pension valuation under IAS 19 and the asset ceiling.

The Group’s contributions to defined contribution plans are charged to the income statement in the period to which the contributions relate.

A trustee board has been appointed to operate the UK defined benefit scheme in accordance with its governing documents and pensions

law. The scheme meets the legal requirement for member nominated trustees representation on the trustee board and a professional

independent trustee has been appointed as chair of the Board. The members of the trustee board undertake regular training to ensure

theyare able to fulfil their function as trustees and have appointed professional advisers to give them specialist expertise where required.

The Group has calculated the value of the minimum funding commitments to its schemes and determined that no additional liability under

IFRIC 14 is required at 26 March 2022 as the Group has an unconditional right to any surplus. No significant judgements were involved in

making this determination. As the Group has assessed that it has an unconditional right to any surplus, it is also considered appropriate

torecord the full net surplus on an IAS 19 basis within non-current assets on the balance sheet as at 26 March 2022. As the Group did not

intend to recover the pension surplus from the pension scheme as a refund, it has been recognised gross of the potential withholding tax if

the surplus was to be recovered in this way. Instead, a deferred tax liability has been recognised on the pension surplus, and was included

within deferred tax liabilities as at 26 March 2022 (see note 18).

On 2 March 2022, the Trustee and the Company agreed the terms for a schedule of contributions and a recovery plan, setting out a

programme for clearing the UK Pension Scheme deficit (the ‘Recovery Plan’). The last actuarial valuation of the UK Pension Scheme was

at5 April 2021, which was based on intentionally prudent assumptions, revealed a funding shortfall (technical provisions minus the value

ofthe assets) of £119.5m.

The £119.5m deficit is addressed by payments of £15m per annum (payable quarterly in arrears) under the Recovery Plan payable from

the year ending 5 April 2022 until 31 March 2029 whereas under the recovery plan agreed with the trustees in 2020 (‘2019 Recovery Plan’)

until 31 March 2029. Additional contingent contributions in exceptional circumstances will become payable by way of an acceleration of the

contributions due in later years where: (i) the leverage ratio (consolidated net debt: EBITDA) is equal to or greater than 2.5x in FY23, up to a

maximum of £4m in the financial year and /or (ii) the Company or any of its subsidiaries take any action which will cause material detriment

(defined in section 38 Pensions Act 2004) to the UK Pension Scheme of £8m (£8m in FY23) over the period up to March 2023.

On 20 November 2020, the High Court issued its latest ruling in relation to the equalisation of pension benefits between men and women

relating to Guaranteed Minimum Pensions (or ‘GMP’). The High Court ruled that statutory cash equivalent transfer values (‘CETVs’) paid from

defined benefit pension schemes are subject to challenge and a top-up payment may be required if the CETV value insufficiently reflected

the value of an equalised GMP benefit accrued between 17 May 1990 and 5 April 1997.The Group’s estimate of the impact of this latest

ruling was to increase the pension liability by £0.1m which was recorded as an exceptional item in FY21.

In addition, during FY22, legal fees of £0.2m have been incurred in the rectification of certain discrepancies identified in the Scheme’s rules

(FY21: £0.6m). The Directors do not consider this to have an impact on the UK defined benefit pension liability at the current time, but they

are continuing to assess this.

(a) Defined benefit pension schemes

Amounts recognised in the consolidated balance sheet:

2022

£m

2021

£m

UK retirement benefit surplus/(liability) 31.6 (18.5)

Overseas retirement liability (1.8) (2.0)

Retirement benefit surplus/(liability) 29.8 (20.5)

Reported in:

Non-current assets 31.6 –

Non-current liabilities (1.8) (20.5)

29.8 (20.5)

140

Notes to the accounts continued

2022

£m

2022

Overseas

£m

2022

Total

£m

2021

£m

2021

Overseas

£m

2021

Total

£m

Equities 56.3 – 56.3 125.0 – 125.0

Bonds 154.9 – 154.9 123.6 – 123.6

Diversified Growth Fund – – – 54.7 – 54.7

Secured/fixed income 456.2 – 456.2 342.7 – 342.7

Liability Driven Investment Fund 248.1 – 248.1 276.3 – 276.3

Multi Asset Credit 62.8 – 62.8 125.0 – 125.0

Other 10.4 – 10.4 6.0 – 6.0

Fair value of scheme assets 988.7 – 988.7 1,053.3 – 1,053.3

Present value of funded obligations (952.8) – (952.8) (1,0 67.0 ) – (1,0 67. 0 )

Funded defined benefit pension schemes 35.9 – 35.9 (13.7) – (13.7)

Present value of unfunded obligations (4.3) (1.8) (6.1) (4.8) (2.0) (6.8)

Net surplus/(liability) 31.6 (1.8) 29.8 (18.5) (2.0) (20.5)

Amounts recognised in the consolidated income statement:

2022

£m

2022

Overseas

£m

2022

Total

£m

2021

£m

2021

Overseas

£m

2021

Total

£m

Included in employee benefits expense:

– Current service cost – – – – – –

– Past service cost – – – 0.1* – 0.1*

– Administrative expenses and taxes (1.8) – (1.8) (2.1) – (2.1)

Included in interest on retirement benefit

obligation net finance expense:

– Interest income on scheme assets 20.2 – 20.2 24.6 – 24.6

– Interest cost on liabilities (20.4) – (20.4) (22.9) – (22.9)

Retirement benefit obligation net finance (expense)/

income (note 6) (0.2) – (0.2) 1.7 – 1.7

Total recognised in the consolidated

incomestatement (2.0) – (2.0) 0.3 – 0.3

Return on scheme assets excluding assumed

interestincome (51.2) – (51.2) 27.0 – 27. 0

Remeasurement gains/(losses) on defined benefit

pension obligations 86.9 – 86.9 (122.6) – (122.6)

Amounts recognised in other

comprehensiveincome 35.7 – 35.7 (95.6) – (95.6)

Note:

* Included within exceptional items.

Major categories of scheme assets as a percentage of total scheme assets:

2022

Overseas

2022

Total

2021

Overseas

2021

Total

Equities 6 – 6 12 – 12

Bonds 16 – 16 12 – 12

Diversified Growth Fund – – – 5 – 5

Secured/fixed income 46 – 46 33 – 33

Liability Driven Investment Fund 25 – 25 26 – 26

Multi Asset Credit 6 – 6 11 – 11

Other 1 – 1 1 – 1

100 – 100 100 – 100

The Diversified Growth Fund is a diversified asset portfolio which includes investments in equities, emerging market bonds, property, high yield

credit and structured finance and smaller holdings in other asset classes. The Liability Driven Investment (LDI) fund consists of fixed interest

bond holdings (approximately 78% of LDI fund value net of repurchase agreements at FY21) and interest and inflation swaps (approximately

22% of LDI fund value at FY21). Derivatives have been valued on a mark to market basis. The LDI is designed to proportionally counterbalance

the effect/impact of a decrease/increase in interest rates/inflation on 75% of the funded obligations. The Multi Asset Credit Fund invests in

avariety of debt instruments. Multi Asset Credit, Diversified Growth Funds, Secured income and LDI asset categories include certain assets

which are not quoted in an active market and are stated at fair value estimates provided by the manager of the investment fund.

Virtually all equity and debt instruments have quoted prices in active markets. Multi Asset Credit, Diversified Growth Funds and LDI asset

categories include certain assets which are not quoted in an active market and are stated at fair value estimates provided by the manager

ofthe investment fund.

Other UK assets comprise cash, interest rate swaps and floating rate notes.

141

Financial statements De La Rue plc Annual Report 2022

24 Retirement benefit obligations continued

Principal actuarial assumptions:

2022

Overseas

2021

Overseas

Discount rate 2.85% – 1.95% –

CPI inflation rate 3.10% – 2.65% –

RPI inflation rate 3.50% – 3.15% –

The financial assumptions adopted as at 26 March 2022 reflect the duration of the scheme liabilities which has been estimated to be broadly

15years (FY21: broadly 16 years).

At 26 March 2022 mortality assumptions were based on tables issued by Club Vita, with future improvements in line with the CMI model,

CMI_2021 (FY21: CMI_2020) with a smoothing parameter of 7.5 and a long-term future improvement trend of 1.25% per annum (FY21:

long-term rate of 1.25% per annum) and w2020 parameter of 5% (FY20: no allowance). The resulting life expectancies within retirement

areas follows:

2022 2021

Aged 65 retiring immediately (current pensioner) Male 22.0 22.0

Female 24.0 23.4

Aged 50 retiring in 15 years (future pensioner) Male 22.5 22.9

Female 25.4 24.7

The defined benefit pension schemes expose the Group to the following main risks:

Mortality risk – An increase in the life expectancy of members will increase the liabilities of the schemes. The mortality assumptions are

reviewed regularly and are considered appropriate.

Interest rate risk – A decrease in bond yields will increase the liabilities of the scheme. Liability driven investment strategies are used

tohedge part of this risk.

Investment risk – The value of pension scheme assets vary with changes in interest rates, inflation expectations, credit spreads,

exchangerates, and equity and property prices. There is a risk that asset returns are volatile and that the value of pension scheme assets

may not move in line with changes in pension scheme liabilities. To mitigate against investment risk the pension scheme invests in derivatives

which aim to hedge a proportion of the movements in assets and liabilities. The pension scheme invests in a wide range of assets to provide

diversification in order to reduce the risk that a single investment or type of asset class could have a materially adverse impact on total

scheme assets. The investment strategy and performance of investment funds are reviewed regularly to ensure the asset strategy of the

pension schemes continues to be appropriate.

Inflation risk – The liabilities of the scheme are linked to inflation. An increase in inflation will result in an increase in liabilities. There are caps

in place for UK scheme benefits to mitigate the risk of extreme increases in inflation. Liability driven investment strategies are used to hedge

part of this risk. Any increase in the retirement benefit obligation could lead to additional funding obligations in future years.

The table below provides the sensitivity of the liability in the scheme to changes in various assumptions:

Assumption change Approximate impact on liability

0.25% decrease in discount rate Increase in liability of c.£33m

0.25% increase in CPI inflation rate Increase in liability of c.£15m

Increasing life expectancy by one year Increase in liability of c.£49m

The liability sensitivities have been derived using the duration of the scheme based on the membership profile as at 5 April 2021 and

assumptions chosen for the 2022 year end. The sensitivity analysis does not allow for changes in scheme membership since the 2021

actuarial valuation or the impact of the Scheme or Group’s risk management activities in respect of interest rate and inflation risk on the

valuation of the Scheme assets.

The largest defined benefit pension scheme operated by the Group is in the UK. Changes in the fair value of UK scheme assets:

UK Scheme assets

2022

£m

2021

£m

At 27 March 2021/27 March 2020 1,053.3 1,046.9

Assumed interest income on scheme assets 20.2 24.6

Scheme administration expenses (1.8) (2.1)

Return on scheme assets less interest income (51.2) 2 7.1

Employer contributions and other income

16.4 12.7

Benefits paid (including transfers) (48.2) (55.9)

At 26 March 2022/27 March 2021 988.7 1,053.3

Note:

1. The £16.4m of pension payments includes £15.0m payable under the Recovery Plan, agreed in May 2020, and a further £1.4m relating to payments made by the Group towards the administration

costs of running the scheme.

142

Notes to the accounts continued

Changes in the fair value of UK defined benefit pension obligations:

UK defined benefit pension obligations

2022

£m

2021

£m

At 27 March 2021/27 March 2020 (1,071.8) ( 9 82.1)

Interest cost on liabilities (20.4) (22.9)

Past service cost – (0.1)

Effect of changes in financial assumptions 101.0 (139.8)

Effect of changes in demographic assumptions (2 .1) 2.2

Effect of experience items on liabilities (12.0) 15.0

Benefits paid (including transfers) 48.2 55.9

At 26 March 2022/27 March 2021 (957.1) (1,071.8)

(b) Defined contribution pension plans

The Group operates a number of defined contribution plans for which the charge in the consolidated income statement for the year was

£4.1m (FY21: £4.6m).

25 Employee information

2022

number

2021

number

Average number of employees

United Kingdom and Ireland 985 960

Rest of Europe 558 521

The Americas 63 60

Rest of World 630 640

2,236 2,181

2022

number

2021

number

Employee costs (including Directors’ emoluments)

Wages and salaries 83.5 93.4

Social security costs 7.8 8.0

Share incentive schemes 1.3 0.7

Sharesave schemes 0.5 (0.3)

Pension costs 4.5 5.9

97.6 107.7

More detailed information regarding the Directors’ remuneration, shareholdings, pension entitlement, share options and other long term

incentive plans is shown in the Directors’ remuneration report on pages 69 to 84.

26 Capital and other commitments

2022

£m

2021

£m

Capital and other expenditure contracted but not provided:

Property, plant and equipment 10.6 11.8

Intangible assets – 0.1

Other commitments 364.2 425.6

374.8 4 37.5

Other commitments in the table above is an amount in relation to the sale of Portals De La Rue Limited to EPIRIS Fund II on 29 March 2018.

As part of the transaction Portals De La Rue Limited will supply paper to meet the Group’s anticipated internal requirements with pre-agreed

volumes and price mechanisms until March 2028. Based on the terms of the agreement the Group had other commitments of approximately

£626.9m over 10 years from the date of sale. Management has assessed that such supply arrangements and associated commitments form

a single agreement for accounting purposes.

27 Contingent assets and liabilities

In June 2019 De La Rue International Limited terminated its agency agreement and sales consultancy agreement with Pastoriza SRL, a

company which provided agency and sales consultancy services to the Group in the Dominican Republic from 2016 to 2019. Pastoriza SRL

disputed the termination and commenced a commercial lawsuit in the Dominican Republic for a claimed amount of approximately US$8m

(plus monthly interest) which was dismissed by the Court in December 2020. Pastoriza appealed the decision but the Court of Appeal

dismissed the appeal in May 2021. Pastoriza has now appealed to the Supreme Court, we anticipate a decision being issued in summer

2022, although the Group does not anticipate this appeal will be successful either.

The Group also provides guarantees and performance bonds which are issued in the ordinary course of business. In the event that a

guarantee or performance bond is called, provision may be required subject to the particular circumstances including an assessment of

its recoverability.

143

Financial statements De La Rue plc Annual Report 2022

28 Related party transactions

During the year the Group traded on an arm’s length basis with the associated company Fidink (33.3% owned). The Group’s trading activities

with Fidink in the period comprise £20.3m (FY21: £28.2m) for the purchase of ink and other consumables on an arm’s length basis. At the

balance sheet date there was £4.6m (FY21: £1.5m) owing to this company.

The value of the Group’s investment in associate is not material and hence not disclosed on the face of the balance sheet.

Intra-group transactions between the Parent and the fully consolidated subsidiaries or between fully consolidated subsidiaries are eliminated

on consolidation.

Directors and Key management compensation

Directors

2022

£m

2021

£m

Aggregate emoluments 2,097 1,811

Aggregate gains made on the exercise of share options – –

2,097 1,811

Directors and Key management

2022

£m

2021

£m

Salaries and other short term employee benefits 2.7 3.3

Retirement benefits – Defined contribution 0.1 0.1

Share-based payments 0.8 –

3.6 3.4

Key management comprises members of the Board (including the fees of Non-executive Directors) and the Executive Leadership Team.

Termination benefits include compensation for loss of office, ex gratia payments, redundancy payments, enhanced retirement benefits and

any related benefits in kind connected with a person leaving office or employment.

29 Subsidiaries and associated companies as at 26 March 2022

A full list of subsidiary and associated undertakings is below. Unless otherwise stated all Group owned shares are ordinary.

Country of incorporation Name and Registered Office address and operation Activities

De La Rue

interest %

Europe

United Kingdom DLR (No.1) Limited Holding company 100

DLR (No.2) Limited

Holding company 100

De La Rue Holdings Limited Holding and general

commercial activities

100

De La Rue International Limited Trading 100

De La Rue Overseas Limited Holding company 100

De La Rue Finance Limited Internal financing 100

De La Rue Investments Limited Holding company 100

Portals Group Limited

Holding company 100

De La Rue Consulting Services Limited Trading 100

De La Rue Healthcare Trustee Limited Dormant 100

De La Rue Pension Trustee Limited Dormant 100

De La Rue Scandinavia Limited Holding company 100

Harrison & Sons Limited Non-trading 100

Portals Holdings Limited Dormant 100

Portals Property Limited Trading 100

De La Rue House, Jays Close, Viables, Basingstoke,

HampshireRG224BS, United Kingdom

Guernsey The Burnhill Insurance Company Limited Level 5, Mill Court,

LaCharroterie, St Peter Port, GY1 1EJ, Guernsey

Insurance 100

De La Rue (Guernsey) Limited PO Box 142, The Beehive, Rohais,

St Peter Port, GY1 3HT, Guernsey

Non-trading 100

Ireland Thomas De La Rue and Company (Ireland) Limited 5th Floor,

BeauxLaneHouse, Mercer Street Lower, Dublin 2, Ireland

Dormant 100

Malta De La Rue Currency and Security Print Limited B40/43

IndustrialEstate,Bulebel, Zejtun, Malta

Trading 100

Netherlands De La Rue BV Hoogoorddreef 15, 1101 BA, Amsterdam, Netherlands Non-trading 100

Poland Harrison & Sons Sp. Zo. o. 02-013 Warszawa, ul.Lindleya 16, Poland In liquidation 100

Sweden De La Rue (Sverige) AB Box 6343, 102 35 Stockholm, Sweden Non-trading 100

Switzerland Thomas De La Rue A.G. Rue de Morat 11, 1700 Fribourg, Switzerland Holding company 100

144

Notes to the accounts continued

Country of incorporation Name and Registered Office address and operation Activities

De La Rue

interest %

North America

USA De La Rue North America Holdings Inc.

Holding company 100

De La Rue Authentication Solutions Inc. 1750 North 800 West,

Logan, Utah 84321, USA

Trading 100

Canada De La Rue Canada One Limited 1400-340 Albert Street, Ottawa,

ON K1R 0A5, Canada

Trading 100

South America

Brazil De La Rue Cash Systems Industrias Limitada

Rua Boa Vista, 254, 13th Floor, Suite 40, Centro, Sao Paulo,

State of Sao Paulo, 01014-907, Brazil

Non-trading 100

De La Rue Cash Systems Limitada

Rua Boa Vista, 254, 13th Floor, Suite 41, Centro,

Sao Paulo, State of Sao Paulo, 01014-907, Brazil

Trading 100

Africa

Kenya De La Rue Currency and Security Print Limited Trading 100

De La Rue Kenya EPZ Limited ABC Towers, 6th Floor,

ABC Place, Waiyaki Way, Nairobi, Kenya

Trading

Nigeria De La Rue Commercial Services Limited 7th Floor, Marble House,

1 Kingsway Road, Ikoyi, Lagos, Nigeria

Trading 60

Senegal De La Rue West Africa SARLOuakam, derrière l’hôpital,

Lot No 43, Dakar, Senegal

Trading 100

South Africa De La Rue Global Services (SA) (Pty) Limited Wanderers Office Park,

52 Corlett Drive, Illovo, Johannesburg, 2196, South Africa

Non-trading 100

Ghana De La Rue Buck Press Limited, Buck Press Building, Accra-Nsawam

Hwy, Accra, Ga West, Greater Accra, P.O. Box AN 12321,

Accra GA/R, Ghana

Trading 49

Australia and Oceania

Australia De La Rue Australia Pty Limited Level 7, 151 Clarence Street,

Sydney NSW 2000, Australia

Trading 100

Far East and Asia

China De La Rue Security Technology (Beijing) Co. Ltd Room 1-053,

Building No.1, Yard 4, East Beitucheng Road, Chaoyang District,

Beijing, PR, China

Trading 100

Hong Kong Thomas De La Rue (Hong Kong) Limited Suite 1106-8, 11/F

Tai Yau Building, No 181 Johnson Road, Wanchai, Hong Kong

Trading 100

Sri Lanka De La Rue Lanka Currency and Security Print (Private) Limited

Export Processing Zone, Biyagama, Malwana, Sri Lanka

Trading 60

India De La Rue India Private Limited 312 Vardaan House, 7/28 Ansari Road,

Darya Gank, Central Delhi, Delhi, 110002, India

Trading 100

Malaysia De La Rue Asia Sdn. Bhd. No. 256B, Jalan Bandar 12, Taman Melawati,

53100 Kuala Lampur, Wilayah Persekutuan, Malaysia

Trading 100

Qatar De La Rue Doha LLC Desk BL24, 22nd Floor, Tornado Tower, Westbay,

Doha, Qatar

Trading 100

Singapore De La Rue Currency and Security Print Pte Ltd 80 Raffles Place, #32-01,

UOB Plaza, 048624, Singapore

100

United Arab Emirates De La Rue FZCO Dubai Airport Free Zone Authority, Building 6

West Wing A, Office #820, PO Box 371683, Dubai

Trading 100

Saudi Arabia De La Rue Communication and Information Technology Co LLC

Akaria Plaza, Gate “D”, Level 6, Olaya Main St, Riyadh, 1148,

Kingdom of Saudi Arabia

Trading 100

Associates

Switzerland Fidink S.A. Trading 33

Notes:

1. Ordinary shares held directly by De La Rue plc.

2. Ordinary shares, cumulative preference shares and deferred shares.

3. Common stock.

4. Quotas.

145

Financial statements De La Rue plc Annual Report 2022

30 Non-controlling interest

The Group has three subsidiaries with material non-controlling interests:

– De La Rue Buck Press Limited, whose country of incorporation is Ghana;

– De La Rue Lanka Currency and Security Print (Private) Limited, whose country of incorporation is Sri Lanka; and

– De La Rue Kenya EPZ Limited, whose country of incorporation and operation is Kenya.

The accumulated non-controlling interest of the subsidiary at the end of the reporting period is shown in the Group balance sheet.

The following table summarises the key information relating to these subsidiaries, before intra-group eliminations.

Ghana

2022

£m

Sri Lanka

2022

£m

Kenya

2022

£m

Ghana

2021

£m

Sri Lanka

2021

£m

Kenya

2021

£m

Non-controlling interest percentage 51% 40% 40% 51% 40% 40%

Non-current assets – 9.4 5.8 – 11.0 6.4

Current assets 5.8 22.6 25.1 5.1 27.4 23.1

Non-current liabilities – (0.3) (0.1) – (0.7) –

Current liabilities (5.1) (3.8) (14.2) (5.2) (11.4) (14.7)

Net assets (100%) 0.7 27.9 16.6 (0.1) 26.3 14.8

Revenue 14.3 34.4 30.5 5.6 34.8 29.4

Profit for the year 0.3 3.0 2.2 – 2.6 3.1

Profit allocated to non-controlling interest 0.2 1.1 0.9 – 1.0 1.2

Dividends paid to non-controlling interest – 0.7 0.2 – 0.6 0.4

Cash flows from operating activities (0.6) (0.6) 0.9 1.4 (0.1) 1.5

Cash flows from investing activities – 0.2 (0.3) – 0.5 (0.8)

Cash flows from financing activities 0.3 (1.8) (0.5) – (1.5) (1.0)

Net (decrease)/increase in cash and

cashequivalents (0.3) (2.2) 0.1 1.4 (1.1) (0.3

Ghana JV

On 8 June 2020 the Group and Buck Press Limited (‘BPL’) established a new Joint Venture company in Ghana for the distribution of printed

and personalized excise tax stamps – De La Rue Buck Press Limited, which is owned by De La Rue International Limited (49%) and BPL

(51%). This was to enter into a contract with the Ghana Revenue Authority which is expected to run for five years.

In applying the definitions of control identified in IFRS 10, it has been determined that the Group controls De La Rue Buck Press Limited

due to the fact that it has a majority of the Board membership and is able to use this to control the key business decisions of the JV entity.

As such the results of the subsidiary are fully consolidated into the Group’s financial statements.

31 Post balance sheet events

Insurance

Effective 1 April 2022, the Group started to write insurance for Cyber and Tech PI through its subsidiary The Burnhill Insurance Company

Limited. This subsidiary is licenced to write insurance. Under these arrangements, the Group has coverage against Cyber and Tech PI claims

up to £6m (after deduction of excess) using its own external insurers, but any claim amounts between £6m and £16m would be covered by

The Burnhill Insurance Company Limited and would result in a loss in the Group income statement.

Partial pensioner buy-in

On 24 May 2022, the trustees of the De La Rue Pension Scheme (“the Scheme”), entered into a partial pensioner buy-in contract (“the buy-

in”). In return for a premium paid from the Scheme’s assets, from the date of the buy-in, payments will be made to the Scheme that match

the benefit payments to those Scheme members covered under the buy-in contract. The buy-in contract covers approximately 36% of the

Scheme liabilities. The price of the buy-in is still to be determined as at the date of this report.

The buy-in is accounted for as a change in the Scheme’s investment strategy. From the buy-in date, the value of the buy-in will be included in

the fair value of plan assets on the Company balance sheet. The value of the buy-in will be determined as equal to the value of the Scheme’s

liabilities covered by the buy-in contract, as determined in accordance with the requirements of IAS 19. Any change in the fair value of plan

assets arising from the buy-in will be recognised through Other Comprehensive Income at the 25 September 2022.

The buy-in is a non-adjusting post balance sheet event per the guidance set out in IAS 10 as the buy-in contract was executed after the

balance sheet date.

146

Notes to the accounts continued

Notes

2022

£m

2021

£m

Fixed assets

Investments in subsidiaries 3a 155.8 154.5

155.8 154.5

Current assets

Debtors: receivable within one year 4a 111.3 9 6.1

Cash at bank and in hand 0.9 14.4

112.2 110.5

Creditors:

Amounts falling due within one year 5a (0.6) (0.6)

(0.6) (0.6)

Net current assets 111.6 109.9

Total assets less current liabilities 267.4 264.4

Net assets 267.4 264.4

Capital and reserves

Share capital 6a 88.8 88.8

Share premium account 42.2 42.2

Capital redemption reserve 5.9 5.9

Other reserve 51.9 51.9

Retained earnings 78.6 75.6

Total shareholders’ funds 267.4 264.4

The profit for the year of the Company was £1.3m (FY21: profit £30.5m).

Approved by the Board on 24 May 2022.

Kevin Loosemore Clive Vacher

Chairman Chief Executive Officer

147

Financial statements De La Rue plc Annual Report 2022

Company balance sheet

at 26 March 2022

capital

£m

premium

account

£m

Capital

redemption

reserve

£m

Other

reserve

£m

Retained

earnings

£m

Total

£m

Balance at 28 March 2020 47. 8 42.2 5.9 – 44.9 140.8

Share capital issued 0.2 – – – – 0.2

Equity capital raise 40.8 – – 51.9 – 92.7

Profit for the financial year – – – – 30.5 30.5

Employee share scheme:

– value of services provided – – – – 0.2 0.2

Balance at 27 March 2021 88.8 42.2 5.9 51.9 75.6 264.4

Share capital issued – – – – – –

Profit for the financial year – – – – 1.3 1.3

Employee share scheme:

– value of services provided – – – – 1.7 1.7

Balance at 26 March 2022 88.8 42.2 5.9 51.9 78.6 267.4

Share premium account

This reserve arises from the issuance of shares for consideration in excess of their nominal value.

Capital redemption reserve

This reserve represents the nominal value of shares redeemed by the Company.

Other reserve

On 1 February 2000, the Company issued and credited as fully paid 191,646,873 ordinary shares of 25p each and paid cash of £103.7m

to acquire the issued share capital of De La Rue plc (now De La Rue Holdings Limited), following the approval of a High Court Scheme

of Arrangement. In exchange for every 20 ordinary shares in De La Rue plc, shareholders received 17 ordinary shares plus 920p in cash.

The other reserve of £83.8m arose as a result of this transaction and is a permanent adjustment to the consolidated financial statements.

On 17 June 2020 the Group announced that it would issue new ordinary shares via a ‘cash box’ structure to raise gross proceeds of £100m,

in order to provide the Company and its management with operational and financial flexibility to implement De La Rue’s turnaround plan,

which was first announced by the Company earlier in the year. The cashbox completed on 7 July 2020 and consisted of a firm placing and

open offer. The Group issued 90.9m new ordinary shares each with a nominal value of 44 152/175p, at a price of 110p per share (giving

gross proceeds of £100m). A ‘cash box’ structure was used in such a way that merger relief was available under Companies Act 2006,

section 612 and thus no share premium needed to be recorded and instead an ‘other reserve’ of £51.9m was recorded. This section applies

to shares which are issued to acquire non-equity shares (such as the Preference Shares) issued as part of the same arrangement.

The Group recorded share capital equal to the aggregate nominal value of the ordinary shares issued (£40.8m) and merger reserve equal

to the difference between the total proceeds net of costs and share capital. As the cash proceeds received by DLR plc where loaned via

intercompany account to a subsidiary company to enable a substantial repayment of the RCF, the increase to other reserves of £51.9m was

treated as an unrealised profit and hence not currently considered distributable as at 26 March 2022. This judgement might be revised in

future periods, subject to certain internal transactions enabling the settlement of intercompany positions.

148

Company statement of changes in equity

for the period ended 26 March 2022

Basis of preparation

The financial statements of De La Rue

plc (the Company) have been prepared

in accordance with the revised Financial

Reporting Standard 102. The presentation

and functional currency of these financial

statements is GBP.

Under section s408 of the Companies Act

2006 the Company is exempt from the

requirement to present its own profit and

loss account.

In accordance with FRS 102, the Company

meets the definition of a qualifying entity

and has therefore taken advantage of the

exemptions from the following disclosure

requirements listed below:

– Disclosures in respect of transactions

withwholly owned subsidiaries

– Cash Flow Statement and related notes

– Key Management

Personnel compensation

As the consolidated financial statements

of the Company include the equivalent

disclosures, the Company has also taken

the exemptions under FRS 102 available

inrespect of the following disclosures:

– Share based payment – share based

payment expense charged to profit or

loss, reconciliation of opening and closing

number and weighted average exercise

price of share options, how the fair

value of options granted was measured,

measurement and carrying amount of

liabilities for cash settled share-based

payments, explanation of modifications

to arrangements;

– The disclosures required by FRS 102.11

Basic Financial Instruments and FRS

102.12 Other Financial Instrument Issues

in respect of financial instruments not

falling within the fair value accounting rules

of Paragraph 36(4) of Schedule 1; and

– The Company proposes to continue to

adopt FRS 102 with the above disclosure

exemptions in its next financial statements.

Judgements made by the Directors, in the

application of these accounting policies

that have significant effect on the financial

statements and estimates with a significant

risk of material adjustment in the next year

are discussed below.

Critical accounting estimates

and judgement

Impairment of subsidiary

Management has used the same valuation

methodology as used in the prior period

and prepared an updated impairment

assessment based on Group’s latest

approved budgets and longer-term

cashflows as used in its Viability Statement

modelling. Management has also used

anupdated post-tax discount rate of

11.5%(which was applied to the post-tax

cashflow) which management considers

to be appropriate after the successful

completion of the equity capital raise.

Management has performed a sensitivity

analysis on the discount rate and noted that

a rate of 12.4% would result in headroom

being reduced to under £1m.

Management determined that the impact

of using pre-tax cashflows as a pre-tax

discount rate, would not be material.

In the current period impairment review

management has determined a 2% terminal

value to be appropriate. As a result of the

above no impairment has been determined

for FY22.

The Directors consider the 2% terminal

growth rate reasonable, as currency

circulation is expected to continue to grow at

a modest rate in the long term with growth

in the Currency division further enhanced by

the Group’s Polymer growth and Security

Features on Polymer strategy. In addition,

continued growth in Authentication

is expected at a rate that supports a

terminal growth rate of 2%. The Directors

also consider that a 2% terminal growth

rate can be supported by the ability to

maintain operating margins in later years.

The combination of these factors led the

Directors to be comfortable with a 2%

terminal growth rate.

The accounts have been prepared as at

26 March 2022, being the last Saturday in

March. The comparatives for the 2020/21

financial period are for the period ended

27 March 2021.

Other than as described below, the following

accounting policies have been applied

consistently to all periods presented in

these financial statements as at, and for the

period ended, 27 March 2021, apart from

standards, amendments to or interpretations

of published standards adopted during

the year.

Effective for periods commencing

after 1January2021:

Interest Rate Benchmark Reform –

Phase 2: Amendments to IFRS102

The amendment provides temporary

reliefswhich address the financial reporting

effects when an interbank offered rate

(‘IBOR’) is replaced with an alternative

nearlyrisk-free rate (‘RFR’).

The amendments include the following

practical expedients:

– A practical expedient to require

contractual changes, or changes to

cash flows that are directly required by

the reform, to be treated as changes to

a floating interest rate, equivalent to a

movement in a market rate of interest.

– Permit changes required by IBOR reform

to be made to hedge designations

and hedge documentation without the

hedging relationships being discontinued.

– Provide temporary relief to entities

from having to meet the separately

identifiable requirement when an RFR

instrument is designated as a hedge

ofarisk component.

The Company has some interest-

bearing balances with subsidiaries which

transitioned from the use of the IBOR

benchmark to RFR for the underlying

reference rate component of the interest

for the first interest calculation reset date

after the end of December 2021, which

willbe from around the end of March 2022.

The new basis for calculating contractual

cash flows is considered economically

equivalent to the previous basis and there

are no existing derivatives in the Company

to have been impacted by the change and

there are no financial instruments yet to

transition to RFRs. The IBOR reform has

had a minimal impact to the Company’s risk

management strategy but given the RFR is

abackward-looking rate there is naturally

less certainty on cashflows until thefinal

RFR and calculation is finalised at the

endofthe period of any borrowing.

149

Financial statements De La Rue plc Annual Report 2022

Accounting policies – Company

Measurement convention

The financial statements are prepared

onthehistorical cost basis.

Foreign currencies

Amounts receivable from overseas

subsidiaries which are denominated in

foreign currencies are translated into sterling

at the appropriate period end rates of

exchange. Exchange gains and losses on

translating foreign currency amounts are

included within the interest section of the

profit and loss account except for exchange

gains and losses associated with hedging

loans that are taken to reserves.

Transactions in foreign currencies are

translated into the functional currency at the

rates of exchange prevailing at the dates of

the individual transactions. Monetary assets

and liabilities denominated in foreign

currencies are subsequently retranslated at

the rate of exchange ruling at the balance

sheet date. Such exchange differences are

taken to the profit and loss account.

Dividends

Under FRS 102, final ordinary dividends

payable to the shareholders of the

Company are recognised in the period that

they are approved by the shareholders.

Interim ordinary dividends are recognised

inthe period that they are paid.

Investments in subsidiaries

These are separate financial statements of

the Company. In the transition to FRS 102

the Company took the first-time adoption

exemption for separate financial instruments

and as such the carrying amount of

the Company’s cost of investment in

subsidiaries is its deemed cost at transition

date, 30 March 2014.

Employee benefits

Defined benefit plans

The pension rights of the Company’s

employees are dealt with through a self-

administered scheme, the assets of which

are held independently of the Group’s

finances. The scheme is a defined benefit

scheme and is largely closed to future

accrual. The Group agrees deficit funding

with the scheme Trustees and Pension

Regulator. The Company is a participating

employer but the Group has adopted

a policy whereby the scheme funding

and deficit are recorded in the main UK

trading subsidiary of the Company, De La

Rue International Limited, which pays all

contributions to the scheme and hence

these are not shown in the Company

accounts. Full details of the scheme can

be found in note 24 to the consolidated

financial statements.

Share-based payment transactions

Full details of the share-based payments

Schemes operated by the Group are

found in note 21 to the consolidated

financial statements.

Taxation

The charge for taxation is based on the

result for the year and takes into account

taxation deferred because of timing

differences between the treatment of certain

items for taxation and accounting purposes.

Deferred tax is recognised, without

discounting, in respect of all timing

differences between the treatment of certain

items for taxation and accounting purposes

which have arisen but not reversed by the

balance sheet date, except as otherwise

required by FRS 102.

Financial guarantee contracts

Where the Company enters into financial

guarantee contracts to guarantee the

indebtedness of other companies within the

Group, the Company considers these to

be insurance arrangements and accounts

for them as such. In this respect, the

Company treats the guarantee contract

as a contingent liability until such time as

it becomes probable that the Company

will be required to make a payment under

the guarantee.

150

Accounting policies – Company continued

1a Employee costs and numbers

Employee costs are borne by De La Rue Holdings Limited. For details of Directors’ remuneration, refer to disclosures in the Directors’

remuneration report on pages 69 to 84.

2022

number

2021

number

Average employee numbers 3 2

2a Auditor’s remuneration

Auditor’s remuneration is borne by De La Rue Holdings Limited. For details of auditor’s remuneration, see note 4 to the consolidated

financial statements.

3a Investments

Investments are stated at deemed cost in the balance sheet, less provision for impairment.

2022

£m

2021

£m

Investments comprise:

Investments in subsidiaries 155.8 154.5

Cost at 27 March 2021 and 28 March 2020 154.5 123.2

Additions 1.3 –

Reversal of impairment – 31.3

Cost at 26 March 2022 and 27 March 2021 155.8 154.5

Where the Company grants share options over its own shares to the employees of its subsidiary undertakings these awards are accounted

for by the Company, as an additional investment in its subsidiary. The costs are determined in accordance with FRS 102. Any payments

made by the subsidiary undertaking in respect of these arrangements are treated as a return of this investment.

For further details on the impairment, see the ‘Critical accounting estimates and judgements’ section on page 149 of Account Policies.

For details of investments in Group companies, refer to the list of subsidiary and associated undertakings on pages 144 to 145.

4a Debtors

Other receivables are measured at amortised cost, which approximates to fair value. Trade and other receivables are discounted when the

time value of money is considered material. The amounts owed by Group undertakings are repayable on demand but are not expected to be

realised within 12 months.

2022

£m

2021

£m

Amounts due within one year

Amounts owed by Group undertakings 111.3 96.1

151

Financial statements De La Rue plc Annual Report 2022

Notes to the accounts – Company

5a Other creditors

2022

£m

2021

£m

Amounts falling due within one year

Accruals and deferred income 0.6 0.6

Other creditors 0.6 0.6

6a Share capital

For details of share capital, see note 20 to the consolidated financial statements.

7a Share based payments

The Company operates various equity and cash settled option schemes although the majority of plans are settled by the issue of shares.

The services received from employees are measured by reference to the fair value of the share options. The fair value is calculated at

grant date and recognised in the profit and loss account, together with a corresponding increase in shareholders’ funds, on a straight line

basis over the vesting period, based on an estimate of the number of shares that will eventually vest. Vesting conditions, other than market

conditions, are not taken into account when estimating the fair value. FRS 102 has been applied to share settled share options granted after

7 November 2002.

Where the Company grants options over its own shares to the employees of its subsidiary undertakings these awards are accounted for by

the Company, as an additional investment in its subsidiary. The costs are determined in accordance with FRS 102. Any payments made by

the subsidiary undertaking in respect of these arrangements are treated as a return of this investment.

For details of share-based payments, see note 21 to the consolidated financial statements and the Directors’ remuneration report on pages

69 to 84.

8a Related party transactions

The Company has no transactions with or amounts due to or from subsidiary undertakings that are not 100% owned either directly by

theCompany or by its subsidiaries. For details of key management compensation, see note 28 to the consolidated financial statements.

152

Notes to the accounts – Company continued

De La Rue plc publishes certain additional information in a non-statutory format in order to provide readers with an increased insight into

the underlying performance of the business. These non-statutory measures are prepared on a basis excluding the impact of exceptional

items and amortisation of intangibles acquired through business combinations, as they are not considered to be representative of

underlyingbusiness performance. The measures the Group uses along with appropriate reconciliations to the equivalent IFRS measures

where applicable are shown in the following tables.

The Group’s policy on classification of exceptional items is also set out below:

The Directors consider items of income and expenditure which are material by size and/or by nature and not representative of normal

business activities should be disclosed separately in the financial statements so as to help provide an indication of the Group’s underlying

business performance. The Directors label these items collectively as ‘exceptional items’. Determining which transactions are to be

considered exceptional in nature is often a subjective matter. However, circumstances that the Directors believe would give rise to

exceptional items for separate disclosure would include: gains or losses on the disposal of businesses, curtailments on defined benefit

pension arrangements or changes to the pension scheme liability which are considered to be of a permanent nature such as the change

inindexation or the GMPs, and non-recurring fees relating to the management of historical scheme issues, restructuring of businesses,

assetimpairments and costs associated with the acquisition and integration of business combinations. All exceptional items are included

inthe appropriate income statement category to which they relate.

A Adjusted revenue

Adjusted revenue excludes ‘pass through’ revenue relating to non-novated contracts following the paper and international identify solutions

business sales. The following amounts of ‘pass through’ revenue have been excluded: Currency £nil (FY21: £8.9m) and Identify Solutions:

£nil (FY21: £0.4m).

2022

£m

2021

£m

Revenue on an IFRS basis 375.1 3 97.4

Exclude: pass-through revenue – (9.3)

Adjusted revenue 375.1 388.1

B Adjusted operating profit

Adjusted operating profit represents earnings from continuing operations adjusted to exclude exceptional items and amortisation of acquired

intangible assets.

2022

£m

2021

£m

Operating profit from continuing operations on an IFRS basis 29.7 14.5

Amortisation of acquired intangible assets 1.0 1.0

Exceptional items 5.7 22.6

Adjusted operating profit from continuing operations 36.4 38.1

C Adjusted basic earnings per share

Adjusted earnings per share are the earnings attributable to equity shareholders, excluding exceptional items and amortisation of acquired

intangible assets and discontinued operations divided by the weighted average basic number of ordinary shares in issue. It has been

calculated by dividing the De La Rue plc’s adjusted operating profit from continuing operations for the period by the weighted average

basicnumber of ordinary shares in issue excluding shares held in the employee share trust.

2022

£m

2021

£m

Profit attributable to equity shareholders of the Company 21.5 5.9

Exclude: discontinued operations (0.8) 0.4

Profit attributable to equity shareholders of the Company from continuing operations

on an IFRS basis 20.7 6.3

Amortisation of acquired intangible assets 1.0 1.0

Exceptional items 5.7 22.6

Tax on amortisation of acquired intangible assets (0.3) (0.4)

Tax on exceptional items (1.8) (4.2)

Adjusted profit attributable to equity shareholders of the Company from continuing operations 25.3 25.3

Weighted average number of ordinary shares for basic earnings 195.2 172.4

Continuing operations

2022

pence per

2021

pence per

Basic earnings per ordinary share on an IFRS basis 10.6 3.7

Basic adjusted earnings per ordinary share 13.0 14.7

153

Financial statements De La Rue plc Annual Report 2022

Non-IFRS measures

D Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA represents earnings from continuing operations before the deduction of interest, tax, depreciation, amortisation and

exceptional items. The adjusted EBITDA margin percentage takes the applicable EBITDA figure and divides this by the continuing revenue

in the period of £375.1m (FY21: £388.1m) which excludes the Portal pass through revenue of £nil (FY21: £9.3m). The EBITDA margin on an

IFRS basis is a percentage against the reported revenue of £375.1m (FY21: £397.4m). The covenant test (note 14(b)) uses earlier accounting

standards and excludes adjustments for IFRS 16 and takes into account lease payments made.

2022

£m

2021

£m

Profit for the year 23.7 8 .1

Add back:

(Profit)/loss on discontinued operations (0.8) 0.4

Taxation 1.3 1.4

Net finance expenses 5.5 4.6

Profit before interest and taxation from continuing operations (Operating profit) 29.7 14.5

Add back:

Depreciation of property, plant and equipment 12.0 12.9

Depreciation of right-of-use assets 2.3 2.5

Amortisation of intangible assets 4.3 4.2

EBITDA 48.3 3 4.1

Exceptional items 5.7 22.6

Adjusted EBITDA 54.0 56.7

Adjusted Revenue £m 375.1 388.1

EBITDA margin 12.9% 8.8%

Adjusted EBITDA margin 14.4% 14.6%

E Adjusted controllable operating profit by division

Adjusted controllable operating profit represents earnings from continuing operations of the on-going divisions adjusted to exclude

exceptional items and amortisation of acquired intangible assets and costs relating to the enabling functions such as Finance, IT and Legal

that are deemed to be attributable only to the on-going two divisional structure model. Key reporting metrics for monitoring the divisional

performance is linked to gross profit and controllable profit (being adjusted operating profit before the allocation of enabling function

overheads), with the enabling functional cost base being managed as part of the overall business key Turnaround Plan objectives.

FY22

Currency

£m

Authentication

£m

Identity

Solutions

£m

Central

£m

Total of

continuing

operations

£m

Operating profit/(loss) on IFRS basis 15.0 15.1 0.6 (1.0) 29.7

Amortisation of acquired intangibles – 1.0 – – 1.0

Net exceptional items 4.5 0.2 – 1.0 5.5

Adjusted operating profit (note 1) 19.5 16.3 0.6 – 36.4

Enabling function overheads 23.0 7.4 – (30.4) –

Adjusted controllable operating profit/(loss) 42.5 23.7 0.6 (30.4) 36.4

FY21

Currency

£m

Authentication

£m

Identity

Solutions

£m

Central

£m

Total of

continuing

operations

£m

Operating profit/(loss) on IFRS basis (4.4) 9.9 10.2 (1.2) 14.5

Amortisation of acquired intangibles – 1.0 – – 1.0

Net exceptional items 20.6 0.4 0.4 1.2 22.6

Adjusted operating profit (note 1) 16.2 11.3 10.6 – 38.1

Enabling function overheads 25.5 7.0 – (32.5) –

Adjusted controllable operating profit/(loss) 41.7 18.3 10.6 (32.5) 3 8.1

154

Non-IFRS measures continued

F Return on capital employed (“ROCE”)

ROCE is the ratio of the adjusted operating profit (operating profit before amortisation of acquired intangible assets and net exceptional

items) over the average capital employed for the current and prior year.

In 2020 the Performance share plan measures were revised and TSR (Total Shareholder Return relative to FTSE 250 companies, measured

over three calendar years) was used in replacement of ROCE, to align to planned growth over the three-year period of the Turnaround Plan,

so that appropriate focus is placed on the key business imperative of restoring value to shareholders.

The ROCE measure is still applicable to current PSP share awards which will vest between 2021 and 2022, with the last vesting date in

July 2022.

2022

£m

2021

£m

– Property, plant and equipment 102.7 100.0

– Intangible assets 37.5 32.3

– Right of use assets 12.9 14.6

– Other financial assets 7.4 8.8

– Inventories 50.1 54.5

– Trade and other receivables 89.0 98.8

– Contract assets 8.0 14.8

– Derivative financial assets 3.4 7.5

– Trade and other payables (80.0) (120.5)

– Derivative financial liabilities (4.8) (8.3)

Capital Employed 226.2 202.5

ROCE = Adjusted operating profit/Average Capital Employed

Adjusted operating profit 36.4 3 8.1

Capital Employed – current year 226.2 202.5

Capital Employed – prior year 202.5 172.7

Average Capital Employed 214.3 187. 5

ROCE 17.0% 20.3%

155

Financial statements De La Rue plc Annual Report 2022

Income Statement

2018

£m

2019

£m

2020

£m

2021

£m

2022

£m

Revenue 493.9 564.8 472.1 3 97.4 375.1

Adjusted operating profit 62.8 60.1 23.7 3 8.1 36.4

– Amortisation of acquired intangible assets (0.7) (0.7) (0.9) (1.0) (1.0)

– Net exceptional items 60.9 (27. 9 ) 20.0 (22.6) (5.7)

Operating profit 123.0 31.5 42.8 14.5 29.7

Interest income – 0.6 1.0 0.8 0.9

Interest expense (3.8) (4.5) (6.1) ( 7.1) (6.2)

Retirement benefit obligation net finance expense/income (5.6) (2.1) (1.6) 1.7 (0.2)

Profit before taxation from continuing operations 113.6 25.5 36.1 9.9 24.2

Taxation (16.8) (4.8) – (1.4) (1.3)

Profit after taxation from continuing operations 96.8 20.7 36.1 8.5 22.9

(Loss)/profit from discontinued operations (1.8) (2.4) (0.3) (0.4) 0.8

Profit for the year 95.0 18.3 35.8 8.1 23.7

Equity non-controlling interests (1.4) (1.3) (1.7) (2.2) (2.2)

Profit for the year attributable to equity shareholders 93.6 17. 0 3 4.1 5.9 21.5

Dividends 25.4 25.7 – – –

Dividends per ordinary share 25.0p 25.0p n/a n/a n/a

£m £m £m £m £m

Earnings per share (‘EPS’)

Basic EPS – continuing operations 93.7 18.8 30.3 3.7 10.6

Basic EPS – discontinued operations (1.8) (2.3) (0.3) (0.3) 0.4

Diluted EPS – continuing operations 92.8 18.8 30.2 3.7 10.5

Diluted EPS – discontinued operations (1.8) (2.3) (0.3) (0.3) 0.4

Adjusted basic EPS – continuing operations 42.9 42.9 11.1 14.7 13.0

Balance sheet

2018

£m

2019

£m

2020

£m

2021

£m

2022

£m

Non-current assets 169.0 174.2 233.2 175.5 203.4

Net current (liabilities)/assets

(43.2) (13.0) (19.2) 21.3 43.5

Net debt (49.9) (107.5) (102.8) (52.3) (71.4)

Non-current liabilities

(96.6) (82.9) (22.8) (33.1) (13.7)

Equity non-controlling interests (8.9) (9.9) (15.5) (16.4) (18.0)

Total equity attributable to shareholders of the Company (29.6) (39.1) 72.2 95.0 143.8

Note:

1. Excludes amounts included in net debt (note 22).

156

Five-year record

Registered Office and

Company Secretary

De La Rue House,

Jays Close, Viables,

Basingstoke,

Hampshire RG22 4BS

Telephone: +44 (0)1256 605000

Fax: +44 (0)1256 605336

De La Rue plc is registered in England &

Wales with company number: 3834125

Company Secretary: Jane Hyde

E-mail: companysecretarial@delarue.com

Annual General Meeting

The AGM will be held at 10:45am on 27 July

2022 at the Worsley Park Marriott Hotel &

Country Club, Walkden Road, Worsley Park,

Manchester M28 2QT.

Further information is also available on

the Group’s website, www.delarue.com,

where there is a page containing a range

ofmaterialsrelating to the 2022 AGM.

Website

There is a wide range of information on

theGroup and its business available on

the Company’s website www.delarue.com,

including:

– Information on our business –

Currencyand Authentication

– Our priorities and activities in the areas

of Responsible Business, including

Environmental, Social and Governance

(ESG) matters

– Share price information

– Shareholder services information

– Financial information – annual and interim

reports, financial news and presentations

– Regulatory news and press releases,

including an archive

– A Q&A facility for the 2022 AGM

Registrar

Computershare Investor Services PLC,

The Pavilions,

Bridgwater Road,

Bristol BS99 6ZZ

Telephone: +44 (0)370 703 6375

Shareholder enquiries

Enquiries regarding shareholdings or

dividends should, in the first instance, be

addressed to Computershare. Details of

your shareholding(s) and how to make

amendments to personal details can be

viewed online at www.investorcentre.co.uk

Shareholder helpline telephone:

+44 (0)370 703 6375

Warning to shareholders – investment fraud

We are aware that some of our

shareholders have received unsolicited

telephone calls or correspondence

offering to buy or sell their shares on very

favourable terms. The callers can be very

persuasive and extremely persistent and

often have professional-looking websites

and telephone numbers to support their

activities. These callers willsometimes

imply a connection to DeLa Rue

and provide incorrect or misleading

information. This type of call should

betreated as an investment scam – the

safest thing to do is hang up and ignore

any written communications.

You should always check that any firm

calling you about potential investment

opportunities is properly authorised and

regulated by the FCA. If you deal with an

unauthorised firm you will not be eligible for

compensation under the Financial Services

Compensation Scheme. You can find

out more about protecting yourself from

investment scams by visiting the FCA’s

website www.fca.org.uk/consumers, or by

calling the FCA’s helpline on 0800 111 6768.

If you have already paid money to

share fraudsters contact Action Fraud

immediately on 0300 123 2040 or through

their website, www.actionfraud.police.uk.

Electronic voting

All shareholders can submit proxies

for the AGM electronically by logging

onto Computershare’s website at

www.investorcentre.co.uk/eproxy

Electronic shareholder

communications

Shareholders can register online at

www.investorcentre.co.uk/ecomms

to receive statutory communications

electronically rather than through the post.

Shareholders who choose this option will

receive an email notification each time

the Group publishes new shareholder

documents on its website.

Shareholders will need to have their

shareholder reference number (SRN) available

when they first log in. This 11 character

number (which starts with the letter C or

G) can be found on share certificates and

dividend tax confirmations. Shareholders who

subscribe for electronic communications can

revert to postal communications or request

apaper copy of any shareholder document

atany time in the future.

Consolidation of shares

Where registered shareholdings are

represented by several individual share

certificates, shareholders may wish to have

these replaced by one consolidated certificate.

The Company will meet the cost for this

service. Share certificates should be sent

tothe Company’s registrar together with

aletter of instruction.

Capital gains tax

March 1982 valuation

The price per share on 31 March 1982

was617.5p.

Shareholders are advised to refer to their

brokers/financial advisers for detailed advice

on individual capital gains tax calculations.

Share dealing facilities

Computershare, the Company’s registrar,

provides a simple way to sell or purchase

DeLa Rue plc shares. For further

information please visit their website,

www.computershare.com/dealingUK or

telephone +44 (0)370 703 0084 between

08:00 and 16:30 (UK time) on Monday

toFriday, excluding UK bank holidays.

Services include online, postal

and telephone dealing, on either a

certificated or uncertificated basis.

Fees apply andareexplained on

Computershare’s sharedealing website,

www.computershare.com/dealingUK.

157

Financial statements De La Rue plc Annual Report 2022

Shareholder information

Authentication

Specialist Technology:

Polycarbonate datapage

Featured:

Page 2

Gibraltar £5 note

Pictured:

PUREIMAGE™ thread

Client:

HM Government of Gibraltar

Featured:

Page 3

Detail from $20 polymer note

Pictured:

SAFEGUARD

with Iridescence

Client:

Central Bank of Trinidad and Tobago

Featured:

Front cover

Authentication

Pictured:

French tax stamps

Featured:

Inside front cover

Authentication

Pictured:

Alcohol production line

Featured:

Page 2

New £50 polymer note

Pictured:

SAFEGUARD

Client:

Bank of England

Featured:

Page 3

Bank of Scotland £100

Pictured:

SAFEGUARD

with Holographic Stripe

Client:

Bank of Scotland

Featured:

Page 3

Authentication

Specialist Technology:

IZON™ security label

Featured:

Page 2

ECCB 2022 series

Pictured:

SAFEGUARD

with

Holographic Stripe

andDEPTH™

Client:

Eastern Carribean

Central Bank

Featured:

Page 5

Housenotes

showcasing NEXUS™

Pictured:

NEXUS™ new colours

Client:

DeLa Rue

Featured:

Page 9

Authentication

Specialist Technology:

PURE™ Security Labels

Featured:

Page 10 –11

Authentication

Specialist Technology:

Secure Hologram

Featured:

Page 12

Detail of £50

Specialist Technology:

Fresnel – digital

holographic effect

Client:

Royal Bank of Scotland

Featured:

Page 13

158

Glossary

Images featured in

this year’s report

New machine

for producing

polymer substrate

at Westhoughton

Featured:

Page 34

Increasing supply to

state printworks

Pictured:

IGNITE

security thread

with Drive effect.

Client:

The Central Bank of the

Republic of Uzbekistan

Featured:

Page 16

Detail from new £50 note

Pictured:

SAFEGUARD

Client:

Bank of England

Featured:

Page 19

Libyan 5 Dinar note

Pictured:

SAFEGUARD

andGEMINI™

Client:

Central Bank of Libya

Featured:

Page 15

First circulating note to

featureARGENTUM™

Specialist Technology:

Polymer window, ARGENTUM™

andMASK™

Client:

Central Bank of Libya

Featured:

Page 22

Enforcement officer authenticating

products with DLR Certify™

Specialist Technology:

DLR Certify™

Featured:

Page 21

At announcement of Malta facility

expansion; Clive Vacher, De La

Rue CEO, Miriam Dalli, Minister for

Energy, Enterprise and Sustainable

Development, and Prime Minister,

Robert Abela

Featured:

Page 47

Authentication

Specialist Technology:

Coiled Rope Hologram

Featured:

Page 15

Authentication

Pictured:

Dragon hologram

Featured:

Page 48

Signing ceremony

for Omani digital tax

stamp scheme

Client:

Tax Authority of Oman

Featured:

Page 17

Energy efficient

chiller installed at

our Sri Lankan site

in Malwana

Featured:

Page 35

SAFEGUARD

ILLUMINATE desi

Specialist Technology:

SAFEGUARD

ILLUMINATE

Featured:

Page 90

Authentication

Specialist Technology:

PURE™ Security Label

Featured:

Page 42

Kenyan colleagues

donating food to

a local home for

the elderly

Featured:

Page 42

Sri Lankan employees

delivering supplies to

the Covid-19 ward of

alocal hospital

Featured:

Page 42

159

Financial statements De La Rue plc Annual Report 2022

160

Cautionary note regarding

forward-looking statements

Certain statements contained in this

document relate to the future and

constitute ‘forward-looking statements’.

These forward-looking statements include all

matters that are not historical facts. In some

case, these forward-looking statements can

be identified by the use offorward-looking

terminology, including the terms “believes”,

“estimates”, “anticipates”, “expects”,

“intends”, “plans”, “may”, “will”, “could”,

“shall”, “risk”, “aims”, “predicts”, “continues”,

“assumes”, “positioned” or “should” or, in

each case, their negative or other variations

orcomparable terminology. They appear

in a number of places throughout this

document and include statements regarding

the intentions, beliefs or current expectations

of the Directors, De La Rue or the Group

concerning, amongst other things, the

results of operations, financial condition,

liquidity, prospects, growth, strategies and

dividend policy of De La Rue and the industry

in which it operates.

By their nature, forward-looking

statementsare not guarantees or

predictions of future performance and

involve known and unknown risks,

uncertainties, assumptions and other

factors, many of which are beyond the

Group’s control, and which may cause the

Group’s actual results of operations, financial

condition, liquidity, dividend policy and the

development of the industry and business

sectors in which the Group operates to

differ materially from those suggested by

the forward-looking statements contained

in this document. In addition, even if the

Group’s actual results of operations,

financial condition and the development

ofthe business sectors in which it operates

are consistent with the forward-looking

statements contained in this document,

those results or developments may not

be indicative of results or developments

insubsequent periods.

Past performance cannot be relied upon

as a guide to future performance and

should not be taken as a representation or

assurance that trends or activities underlying

past performance will continue in the future.

Accordingly, readers of this documents are

cautioned not to place undue reliance on

theseforward-looking statements.

Other than as required by English

law,noneof the Company, its Directors,

officers,advisers or any other person gives

any representation, assurance orguarantee

that the occurrence of theevents expressed

or implied in any forward-looking statements

in this document will actually occur, in

part or in whole. Additionally, statements

of the intentions of the Board and/or

Directors reflect the present intentions

ofthe Board and/or Directors, respectively,

as at the date of this document, and may

besubjectto change as the composition

ofthe Company’s Board of Directors

alters,orascircumstances require.

The forward-looking statements

containedinthis document speak

only asat the date of this document.

Except asrequired by the UK’s

Financial Conduct Authority, the London

Stock Exchange or applicable law

(including as may be required by the

UK Listing Rules and/or the Disclosure

Guidance and Transparency Rules),

De La Rue expresslydisclaims any

obligation or undertaking torelease

publicly any updates or revisionsto

any forward-lookingstatements

contained in this document to reflect

anychangeintheGroup’s expectations

with regardtheretoor any change in events,

conditions or circumstances onwhich

anysuchstatement is based.

De La Rue is a registered trademark

ofDeLaRue Holdings Limited.

DLR Analytics™, DLR Certify™, PureImage™,

Argentum™, Gemini™, Nexus™ and Pure™

areunregistered trademarks ofDeLaRue

International Limited.

Safeguard

, Ignite

and Enigma

, are

registered trademarks ofDeLa Rue

International Limited.

Izon

and Traceology

are registered

trademarks ofDeLa Rue Authentication

Solutions Inc.

This report is printed on Amadeus Silk

paper. This paper has been independently

certified as meeting the standards of

the Forest Stewardship Council

(FSC

and was manufactured at a mill that is

certified to the ISO14001 and EMAS

environmental standards.

Designed and produced by Radley Yeldar

www.ry.com

Printed at Pureprint Group that is ISO 14001

certified, CarbonNeutral

and FSC certified.

The inks used are all vegetable oil based.

De La Rue plc

De La Rue House

Jays Close

Viables

Basingstoke

Hampshire

RG22 4BS

T +44 (0)1256 605000

F +44 (0)1256 605004