De La Rue plc

Annual Report

2023

About De La Rue

Who we are

De La Rue provides

governments and commercial

organisations with products

and services that underpin the

integrity of trade, personal

identity and the movement

of goods.

With a rich history dating back

over 200 years, we have built

strong relationships with

governments, international

brands and central banks

around the world, developing

leading-edge traceability

software while staying at the

forefront of material science

and design.

What we do

Our highly secure digital and

physical solutions provide

surety and control. Our digital

authentication solutions

provide transparency,

engagement and control

across supply chains.

Our physical features and

documents leverage our

design expertise to meet the

needs of a diverse range of

stakeholders and scenarios.

De La Rue’s Authentication

division enables governments

and commercial organisations

to protect their citizens and

consumers, revenues and

reputations. We provide

high security digital and

physical solutions, such

as comprehensive supply

chain traceability, physical

authentication tokens and

ID security components.

Revenue

£91.7m

+1.6%

– Government Revenue

Solutions

– Brand Protection

– ID Security Solutions

For more information:

delarue.com/authentication

Authentication

Protecting goods, supply

chains and identities

Our Currency division provides

market-leading end-to-end

currency solutions to over half

the central banks and issuing

authorities around the world,

from finished banknotes to

secure polymer substrate,

banknote security features

and design services.

– Banknotes

– Design services

– Polymer substrate

– Security features

For more information:

delarue.com/currency

Currency

Secure, durable and

sustainable banknotes that

enable financial inclusion

Revenue

£254.6m

-9.4%

Why it matters

Strong economies and thriving societies

require trust. Counterfeits and illicit

trade represent a multi-trillion dollar

issue and 3.3% of global trade, with the

potential to undermine that trust. Our

solutions help to secure trust and both

physical and digital solutions play an

important role in this.

Our digital authentication solutions

provide transparency, engagement and

control across supply chains.

However 5 billion people are not

connected or poorly connected online.

To put the global digital infrastructure in

place to connect them would require

over $400bn.

Physical banknotes include everyone

financially, while contributing towards a

more resilient payments landscape and

protecting the fundamental right to

privacy. Tax stamps, brand protection

physical tokens and passports provide

standalone off-line surety and enable

quick visual authentication.

Contents

IFC About/Highlights

Strategic report

4 Our markets

10 CEO review

16 Our business model

18 Our strategy

20 Engaging with our

stakeholders

21 Section 172 Statement

24 Responsible business

report

46 Key performance

indicators

50 Financial review

56 Risk and risk management

64 Viability statement

Governance report

70 Board statement on

corporate governance

72 Board of Directors

74 Governance at a glance

78 Board leadership and

company purpose

80 Division of responsibilities

83 Composition, succession

and evaluation

88 Audit, risk and internal

control

101 Remuneration

128 Directors’ report

133 Directors’ responsibility

statement

Financial statements

136 Independent Auditor’s

Report

145 Consolidated income

statement

146 Consolidated statement

of comprehensive income

147 Consolidated balance

sheet

148 Consolidated statement

of changes in equity

149 Consolidated cash flow

statement

151 Accounting policies

161 Notes to the accounts

205 Company balance sheet

206 Company statement of

changes in equity

207 Accounting policies

– Company

209 Notes to the accounts

– Company

211 Non-IFRS measures

214 Five year record

215 Shareholder information

Our purpose is to

secure trust between

people, businesses

and governments

At De La Rue, we are driven by a desire to enable businesses and

individuals to participate securely in the global economy, and to

protect them from the impact of counterfeiting and illicit trade.

We do this by producing secure documents, providing international

support, and offering physical and digital tools that authenticate

goods and protect identities.

De La Rue plc Annual Report 2023 1

Strategic report Governance report Financial statements

Strategic report

10bn+

unique products

are tracked annually,

via our digital

traceability systems

60%

of all commercially

printed banknotes

since 2020

De La Rue plc Annual Report 20232

4 Our markets

10 CEO review

16 Our business model

18 Our strategy

20 Engaging with our stakeholders

21 Section 172 statement

24 Responsible business report

46 Key performance indicators

50 Financial review

56 Risk and risk management

64 Viability statement

Currency

Page 12

Authentication

Page 11

CEO review

Page 10

Why invest?

Page 15

De La Rue plc Annual Report 2023 3

Strategic report Governance report Financial statements

Our markets

We are ideally

placed to benefit

from future growth

in our markets

De La Rue operates in a truly global

market, with customers in every continent

other than Antarctica. In countries where

we have customers, it is hard to find a

consumer without one of our products in

their pocket or bag. Both Authentication

and Currency divisions are therefore

subject to a range of global trends.

Group revenue split per region

140

countries in which we

have customers

countries with

SAFEGUARD® polymer

substrate banknotes

countries signed to World

Health Organization

Framework Convention

on Tobacco Control but

without compliant tax

stamp scheme

CEO review – page 10

Our business model – page 16

Our strategy – page 18

The Americas

16%

20%

Rest of Europe

42%

Middle East

and Africa

11%

Asia

Australasia

De La Rue plc Annual Report 20234

Currency:

Banknote demand

Banknotes

maintain

dominance

in the global

payments

landscape

Why use banknotes in the

21st century?

– Privacy, including protection from

identity theft

– Does not require electricity or

internet access

– Needs no change of habit or

additional education to use

new technology

– Acts as a storage of value,

particularly in difficult times

– Increases margins, particularly for

small businesses, due to lower

transaction fees

– Can help budgeting

– Sustainable – uses only 17.5% of

the energy consumed by the global

payments industry, according to

the IMF

Electronic payment methods

remain out of reach for many

– 1.4bn do not have a bank account¹

– 5bn have poor or no internet

access²

– 43% of adults in developing

countries have not made a

digital payment¹

– 65 countries pay at least a quarter

of their adults in cash¹

– Over $400bn needed, mostly in

emerging market economies, to get

a global digital infrastructure in

place according to IMF²

Demand for banknotes is

driven by three things:

– To increase the value of cash

in circulation

– To transition to a new series

of banknotes

– To replace banknotes that have

reached the end of their useful life

Value of cash in circulation

continues to increase

– 4.9% increase in the volume of

banknotes in circulation in 2022

– 96 of 98 issuing authorities

surveyed saw an increase in cash in

circulation March 2023 vs 2020

– Inflation was over 10% in 71 countries

in 2022

– Growth in the absolute number of

transactions, caused by a growing

and more economically active

population, also increases use

of cash

Benefits of polymer substrate

Ten years ago De La Rue introduced

SAFEGUARD® polymer substrate and

remains one of the two substantial

manufacturers in this growing market.

Compared to paper, polymer

banknotes are:

– more durable

– harder to counterfeit, particularly

through use of transparent windows

– more easily recycled

– more accessible as they can

incorporate durable blind

recognition functionality

Banknote series are renewed every

7 to 10 years on average, to remain

ahead of counterfeiters. Often the old

notes are replaced rather than being

allowed to wear out.

Annual demand for commercially

printed banknotes (in billions)

FY04 FY11FY08 FY17 FY20FY14 FY23

De La Rue is the largest commercial

designer of banknotes, creating 60%

of new designs since 2020. We saw

an increase in new design requests

in FY23, an early indicator that

several banknote series are about

to be upgraded.

Notes:

1. Global Findex 2021 survey

2. IMF Spring Meeting 2023: Analytical Corner: Tackling

the Digital Divide

For more information:

delarue.com/currency

De La Rue plc Annual Report 2023 5

Strategic report Governance report Financial statements

The proliferation of illicit

economic activity is a key

global risk according to the

World Economic Forum

Authentication:

Global counterfeits and illicit trade

Illicit economic activity:

– undermines excise revenues

– damages businesses

– harms consumers

– benefits criminals, including

funding terrorism

– innovation is not rewarded

– goods are produced and

supplied without needing to

meet the health, safety, legal or

environmental requirements of

a legitimate supplier

Governments need to minimise the

impact of illicit trade and protect tax

revenue and identities in order to:

– fulfil a financial and moral duty

– meet legal obligations, such as the

WHO Framework Convention on

Tobacco Control

– decrease tax leakage and so

generate revenue

– provide security for jobs, increase

trade and protect the health and

wellbeing of their citizens

Countries that fail to build strong tax

administrations are missing a

‘tremendous opportunity to improve

the quality of life for their citizens.

In a rapidly developing economy,

a 10 to 15% increase in tax revenues

often translates into an ability to

double expenditures on, for example,

health care or education’ according

to McKinsey

The size of the problem

– Sale of counterfeit and pirated

goods represents somewhere

between $1.7trn and $4.5trn per

annum according to the US Patent

and Trademark Office

– 2.5% of all global trade

per OECD

– 5.8% of all goods entering the EU

– across all channels – are illicit

– 25.8% of global alcohol consumption

involves illicit products

– Estimated to cost 2.5m jobs

every year

– All industries are impacted

– Rise of e-commerce, social media

platforms and cryptocurrencies

provide fertile grounds for the sale

of counterfeit goods

– Weak and disrupted supply chains

also provide avenues for counterfeits

to enter legitimate channels

Types of illicit trade

– Smuggling is the movement of

products between tax jurisdictions

– Counterfeiting involves the

production of fake goods, often

at scale

– Tax evasion arises from undeclared

goods, overproduction in country or

falsification of shipping and taxation

documents, allowing criminals to

take advantage of different tax

levels between territories, without

necessarily moving products

Impacts of illicit trade

Risk to life and public health:

– 1 in 10 medical products in low and

middle income countries are

substandard or counterfeit

according to WHO

Risk to livelihood:

– Africa loses up to 70% of food

production because of low-quality

or counterfeit seeds

– Non-genuine pesticides account

for around 30% of the domestic

agrochemical market in India

– A threat to international security

– Financing of organised crime

and terrorism

– Economic losses and destabilisation

of legitimate industries

– Environmental damage

– Intellectual property infringement

Preventing illicit trade

– Digital traceability is essential to

combat smuggling

– Physical tokens, increasingly in

combination with digital solutions,

help distinguish real products from

fake ones

– Volume verification of production,

through the use of tax markings

and data analytics, ensures that

excise revenues are correctly

aligned with the actual volume

of goods manufactured

– Protection of travel documents to

protect supply chains from bad

actors and aid law enforcement

De La Rue provides digital and physical

end-to-end authentication solutions

that are reliable, adaptable, and rapid

to implement to protect revenue

and reputations.

We offer comprehensive traceability

software which, together with physical

security token and documents, make

our expertise in preventing illicit and

counterfeit trade world class.

For more information:

delarue.com/authentication

Our markets continued

Notes:

1. McKinsey & Company – Unlocking tax-revenue

collection in rapidly growing markets

http://www.mckinsey.com/insights/public_sector/

ten_quick_steps_to_unlocking_taxrevenue_

collection_in_rapidly_growing_markets

2. https://dfworldcouncil.com/wp-content/

uploads/2022/09/TTS-Duty-Free-paper-2022_

FINAL.pdf

3. “Size and Shape of the Global Illicit Alcohol Market”,

Euromonitor International (2018)

4. https://www.un.org/securitycouncil/ctc/sites/

www.un.org.securitycouncil.ctc/files/ctc_cted_

factsheet_cft_oct_2021.pdf

De La Rue plc Annual Report 20236

Trend:

Rise in electronic payments

Trend:

Rise in online purchases

Trend:

Move to digital from

physical solutions

Why this is important

The rise in electronic payments is driven

by technological advancements and

changing consumer behaviour. This is

expected to continue as a steady trend.

In a minority of countries, such as the UK,

concerns about access to cash in the

future are triggering protective measures

and laws.

Why this is important

Online purchases are rising generally.

Without the ability to physically inspect

goods at the point of sale, this offers

more potential for counterfeiters.

The rise in online shopping is linked to

increases in counterfeit and illicit trade,

creating significant issues for brand

owners and governments hoping to

reduce this activity.

Why this is important

There is a trend towards providing

digital solutions, either in combination

with traditional physical ones or as

stand-alone solutions. Our digital

products must evolve to keep pace

with technological advances and our

physical solutions need to interact

seamlessly with them.

Our response

While increasing electronic payments

represent more of a risk than an

opportunity for the Currency business

of De La Rue, in many of the significant

countries in which De La Rue operates,

the infrastructure, cultural habits and

global financial literacy levels mean

rapid changes are not expected:

– For central banks and governments

recognising that cash will have

a significant role to play even in

a less-cash society, De La Rue’s

SAFEGUARD® polymer banknotes

offer a more cost-effective solution to

maintaining a functioning cash cycle,

compared with paper banknotes.

– De La Rue is keeping a watching brief

over the rise of digital currencies and

is pro-active in influencing

discussions about access to cash and

central bank digital currencies.

Our response

De La Rue’s brand protection solutions

and tax excise schemes provide ways of

verifying genuine products, combating

the spread of counterfeit goods.

Our response

Within Authentication, our solutions

are now digital enabled or digital based.

Our Government Revenue Solutions

(GRS)and Brand systems, DLR Certify™

and Traceology®, offer digitally enabled

end-to-end track and trace systems

together with customer digital

verification. Our solutions are designed

with the needs of all stakeholders along

the supply chain in mind and built on

the best technological solution to deliver

against their needs. Our solutions are

fast to use and easy to implement.

People without a bank account

1.4bn*

Percentage of retail sales made online in UK

Global macro trends

2015 20172016 2019 2020 20212018 202

Source: Ofﬁce for National Statistics

* Source: World Bank

De La Rue plc Annual Report 2023 7

Strategic report Governance report Financial statements

Our markets continued

Trend:

Inflation

Trend:

Population growth in

developing countries

Trend:

Aftermath of Covid-19

Trend:

Increasing sophistication

of counterfeiters

Why this is important

Many countries are experiencing a

resurgence of inflation as the world

recovers from the Covid-19 pandemic,

exacerbated by rapidly rising energy

prices following Russia’s invasion

of Ukraine.

Why this is important

Populations are still growing in developing

countries. This leads to a greater need

for goods, services and identification

documents and helps sustain the use

of cash over time.

Why this is important

Many countries stocked up with

banknotes at the beginning of the

Covid-19 pandemic. Several of these

used up foreign currency reserves during

the pandemic and now have little hard

currency in reserve to replace banknotes.

Why this is important

Counterfeiters are becoming ever

more sophisticated over time and take

advantage of the developments in

commercially available equipment and

materials to produce additional and

more realistic fake products. Counterfeit

goods undermine consumer trust,

expose consumers to greater risk and

weaken economies.

Our response

Inflation is both a challenge and an

opportunity for De La Rue.

Inflation provides us with cost challenges.

We have reduced our FY23 cost risk by

managing existing suppliers, realigning

and dual sourcing. We also fixed our UK

energy costs substantially below both

spot prices and the Government’s winter

price cap.

Inflation also provides an opportunity to

our Currency division. Countries with high

levels of inflation require more banknotes

as the purchasing power of a single

denomination drops and ‘storage-of-

value’ banknotes become transactional.

Some countries need to introduce higher

value banknotes to keep their cash

volumes at manageable levels.

Our response

De La Rue is well placed geographically

to provide banknotes for most countries

where cash will remain a significant

payment tool. We are also well-placed

to deliver solutions for the growing

markets for excisable goods and

identification documents that population

growth brings.

Our response

Currency volumes have been subdued.

We are repositioning our operations

within this division to optimise efficiency

during this time of low banknote

demand, while retaining the ability

to scale up operations when the

market returns.

Our response

Whether it is the use of laminated

polycarbonate in the production of ID

documents or the use of increasingly

sophisticated combinations of

components in banknotes, all De La Rue

products and solutions are designed

with the aim of deterring counterfeiters.

Our solutions are extremely challenging,

and consequently expensive, for

counterfeiters to simulate.

Rise in currency in circulation Percentage revenue from Asia, Middle East

and Africa

53%

Estimated fall in commercially produced

banknotes in 2022

c.15-20%

Annual trade in counterfeit and

pirated goods

$1.7trn+*

Global macro trends

2020 2021 2022

1.8

1.6

1.4

1.2

1.0

0.8

Lines represent selected De La Rue customers.

Value relative to value in circulation at 1 Jan 2020 = 1.

Source: IMF IFS Currency in Circulation

De La Rue plc Annual Report 20238

Case study:

Currency

100 notes are now on our

SAFEGUARD® polymer substrate

Continued conversion of banknotes

to polymer

The introduction of SAFEGUARD®

ten years ago marked an acceleration

in the rate that central banks converted

to polymer, providing a second source

of supply and removing any business

continuity risks. The recently

introduced new Jamaican series of

banknotes marked SAFEGUARD®

tipping over 100 notes.

The launch of the first two

SAFEGUARD® Egyptian banknotes and

continuation of the UAE series on to

polymer demonstrates De La Rue’s

strategy to grow revenue by selling

more to state print works.

The move towards ASSURE™ level three

covert taggant, only detectable by

central banks, embedded in the core of

SAFEGUARD® opens up new customers.

Polymer now offers every type of

security provided by paper substrate.

Number of Polymer Denominations

in Circulation

1990 20001995 2010 20152005 2020

250

200

2013

Safeguard

launches

150

100

Case study:

Authentication

Our track and trace software

systems read billions of unique DLR

codes with sub-second response times

DLR Certify™ and Traceology®

De La Rue has two proprietary

software systems for the tracking

and tracing of goods.

DLR Certify™ manages products

covered by our GRS schemes and is

compliant with the WHO FCTC. Our

brand protection schemes use our

Traceology® system.

Both systems trace goods through the

supply chain to end user by assigning

a unique code to each product.

Within DLR Certify™, enforcement

teams can rapidly read the DLR codes

to confirm authentic product and that

duty has been paid. For both systems,

consumers can use a smartphone

app to reassure them that goods

are genuine.

Trend:

Inflation

Trend:

Population growth in

developing countries

Trend:

Aftermath of Covid-19

Trend:

Increasing sophistication

of counterfeiters

Why this is important

Many countries are experiencing a

resurgence of inflation as the world

recovers from the Covid-19 pandemic,

exacerbated by rapidly rising energy

prices following Russia’s invasion

of Ukraine.

Why this is important

Populations are still growing in developing

countries. This leads to a greater need

for goods, services and identification

documents and helps sustain the use

of cash over time.

Why this is important

Many countries stocked up with

banknotes at the beginning of the

Covid-19 pandemic. Several of these

used up foreign currency reserves during

the pandemic and now have little hard

currency in reserve to replace banknotes.

Why this is important

Counterfeiters are becoming ever

more sophisticated over time and take

advantage of the developments in

commercially available equipment and

materials to produce additional and

more realistic fake products. Counterfeit

goods undermine consumer trust,

expose consumers to greater risk and

weaken economies.

Our response

Inflation is both a challenge and an

opportunity for De La Rue.

Inflation provides us with cost challenges.

We have reduced our FY23 cost risk by

managing existing suppliers, realigning

and dual sourcing. We also fixed our UK

energy costs substantially below both

spot prices and the Government’s winter

price cap.

Inflation also provides an opportunity to

our Currency division. Countries with high

levels of inflation require more banknotes

as the purchasing power of a single

denomination drops and ‘storage-of-

value’ banknotes become transactional.

Some countries need to introduce higher

value banknotes to keep their cash

volumes at manageable levels.

Our response

De La Rue is well placed geographically

to provide banknotes for most countries

where cash will remain a significant

payment tool. We are also well-placed

to deliver solutions for the growing

markets for excisable goods and

identification documents that population

growth brings.

Our response

Currency volumes have been subdued.

We are repositioning our operations

within this division to optimise efficiency

during this time of low banknote

demand, while retaining the ability

to scale up operations when the

market returns.

Our response

Whether it is the use of laminated

polycarbonate in the production of ID

documents or the use of increasingly

sophisticated combinations of

components in banknotes, all De La Rue

products and solutions are designed

with the aim of deterring counterfeiters.

Our solutions are extremely challenging,

and consequently expensive, for

counterfeiters to simulate.

Rise in currency in circulation Percentage revenue from Asia, Middle East

and Africa

53%

Estimated fall in commercially produced

banknotes in 2022

c.15-20%

Annual trade in counterfeit and

pirated goods

$1.7trn+*

Global macro trends

* Source: US Patent and Trademark Office

De La Rue plc Annual Report 2023 9

Strategic report Governance report Financial statements

Clive Vacher

Chief Executive Officer

The actions we have taken over the

past few months, implementing a range

of initiatives about which we provide

further detail below have stabilised

the Company. Specifically, we have

renegotiated terms with our lenders,

leading to covenant relaxation, and

agreed a substantial deferral to our

pension deficit repair contributions.

These factors have allowed us to remove

the ‘material uncertainty’ cited at the

Interims in November 2022, and to

reiterate our guidance for adjusted

operating profit for FY24.

We set out below more detail on these

recent initiatives, together with narrative

on the results for FY23, where adjusted

operating profit and net debt for the

FY23 were in line with guidance

previously given in April 2023.

In FY23 the Currency division was

profitable at the adjusted operating

profit level, generating £13.6m despite

the low levels of demand across the

industry. This compares with £19.5m in

FY22, but demonstrates a continuation

of our commitment, made in FY20, that

the Currency division will be profitable

at this level during downturns, breaking

the historical cycle of losses during

market lows.

Amended bank facilities

Following extensive negotiations with

our banking syndicate, we have agreed

revised terms, which include substantial

relaxations of the covenant ratios to

which we have hitherto been subject.

This reflects the reality of the higher

interest rate environment in which

we now find ourselves, given recent

increases in base rates, which rose

350bps over the course of FY23 and,

with inflation still at high levels, the

prospect of further rises still to come.

We would like to thank our lenders for

their understanding and pragmatism

in reaching this revised agreement,

recognising the challenging competitive

and global economic environment in

which we are operating.

For the remainder of the term of the

loan, which runs to 1 January 2025,

the interest covenant ratio to which

De La Rue is subject has been relaxed to

a minimum of 1.0 times from its current

minimum of 3.0 times. The limit on the

gearing covenant ratio is relaxed to a

maximum of 4.0 times until March 2024

and then 3.6 times for the remaining life

of the facility. For comparison, at the end

of FY23 our interest cover ratio stood at

3.03 and our gearing ratio at 2.21.

An additional liquidity covenant will be

introduced, requiring De La Rue to

maintain ‘headroom’ of at least £25m

on its £175m facilities.

The new facility is subject to a 1%

arrangement fee, reduced to 0.5% if

the facilities are refinanced prior to

31 December 2023. It is payable on

the earlier of 1 January 2025 or the

refinancing of the facility. However, the

margin that we pay at any particular

gearing ratio will not be changing, other

than recognising additional rachets given

the higher ceiling this ratio now has.

Further details of the terms of the new

facility are given within the Financial

Review section on pages 50 to 55.

We remain focused on generating free

cash flow to reduce the average level

of debt.

Following a significant

downturn in Currency

demand over the past

18 months, there are

encouraging signs of

recovery. In addition,

our Authentication division

is on track for significant

revenue growth in FY24.

CEO review

Well positioned

in growing markets

De La Rue plc Annual Report 202310

Our systems

track billions

of products with

sub-second

response times

through supply

chain from

manufacturer

to end-user

of tax stamp schemes in Gulf

Cooperation Council area are

De La Rue schemes

100%

Authentication

In FY23 the Authentication division

produced an adjusted operating profit

of £14.3m (FY22: £16.3m) on revenue of

£91.7m (FY22: £90.3m).

In FY23 the division benefited from

significant revenue from the contract to

supply ID datapages for the new Australian

passport. The division also onboarded

new GRS schemes in Bahrain, Oman and

Qatar, with all three schemes generating

revenue from the first half of FY23.

With these three latest schemes on

board, De La Rue now runs Framework

Convention for Tobacco Control (FCTC)

compliant schemes across all countries

that have implemented a scheme in the

Gulf Cooperation Council area (totalling

five out of the six countries in the bloc),

a 100% win rate. Our other Government

Revenue Solutions contracts performed

as expected.

In the Brand segment our business with

Microsoft was impacted by the fall in

PC sales globally, with International Data

Corporation (IDC) noting a 16.5% year on

year fall in PC demand/shipments in

2022, and a 29% drop in the first calendar

quarter of 2023, compared to the same

quarter in 2022.

Adjusted operating profit was impacted

by sales mix, and the division also

attracted a greater proportion of central

overheads, having generated a greater

proportion of Group revenue in the year.

The arrival of Dave Sharratt as the

Managing Director, Authentication in

September 2022 has reinvigorated and

refocused marketing and sales efforts

within the division. The immediate focus

in GRS is now on expanding the offering

in territories where we already have

arrangements in place, to cover other

excisable goods, with e-cigarettes,

sweetened juices, mobile phones and

beauty products all being discussed as

additional product types. Three GCC

countries have already committed to

cover soft drinks. In addition, we have

recently secured multi-year GRS contract

renewals with countries across Europe

and Africa, securing our existing revenue

for future years.

Within GRS, the World Health Organization

has been pushing signatories of their

FCTC for compliance by the promised

dates (for example at the Meeting of the

Parties in October 2022). Linked to this,

our level of pre-sales activity is also

increasing: we are in direct conversation

with multiple countries in our focus

regions of Africa and the Middle East who

have expressed an intention to tender for

Digital Tax Stamp solutions within the

next 18 months. Our win rate for tenders

in this space since 2020 is over 50%.

In Brand protection we are targeting

expansion of the customer base, with

investment in the sales force and

implementation of a partner model to

boost opportunities. This approach is

already bearing fruit, with three-year

contracts recently agreed with a

multinational pharmaceutical company

and a wholesale parts manufacturer.

A strong pipeline of further opportunities

is being explored.

Our ID business secured a significant

boost during FY23 when we agreed an

extension to the contract to manufacture

datapages for Australian passports from

five to 10 years out to 2032, building on

our success to date in fulfilling the needs

of the Australian Passport Office (“APO”).

Based on that commitment, we have

invested in a second line to produce

polycarbonate datapages for ID

documents in Malta. This is now fully

operational, with available capacity

initially earmarked to allow the APO to

build up buffer stocks.

The commissioning of the ID data page

second line is the first fully-implemented

part of our Malta expansion. The remaining

expansion for the Authentication division

will considerably increase our capacity

for printing tax stamps and is expected

to be fully operational by the second half

of FY24.

Our software capabilities, with our DLR

Certify™ and Traceology® systems

allow end-to-end track and tracing

of De La Rue authenticated products.

These form a significant part of our

Authentication offering. Shortly after

Dave Sharratt joined De La Rue, he

requested a thorough review of our

software development operation.

Following this review we have mothballed

two projects, resulting in a £2.9m

exceptional write down. However, this

has allowed our team to focus on the

core business and our strategic direction

allows concentration on the areas that

give us the greatest future return.

For more information:

delarue.com/authentication

De La Rue plc Annual Report 2023 11

Strategic report Governance report Financial statements

CEO review continued

Currency

Maximising efficiency

and flexibility

throughout this

transformation

The Currency division in FY23 saw

revenues fall to £254.6m (FY22: £280.9m)

and saw an adjusted operating profit of

£13.6m (FY22: £19.5m).

Currency was impacted by the downturn

in activity in the wake of the Covid

pandemic when central banks stocked

up with currency, and subsequently the

global economic slowdown. This is an

industry-wide trend, as evidenced by

recent public statements made by a

number of competitor companies. This is

also evidenced by our win rate on bids,

which remains at the same high level as

it has been since we implemented the

initial changes back in FY20 and FY21. The

amount of cash in circulation continues

to rise, growing 4.9% between 2021 and

2022, indicating that central banks have

been working down the banknote

inventory buffer they built in response

to the Covid pandemic.

We entered FY24 with the total order

book at £136.8m (25 March 2022:

£170.8m) and the 12-month order book

at £131.7m (25 March 2022: £163.5m).

There are now encouraging signs that

the market is recovering, with strong bid

activity, a continuing positive win rate,

and the substantial majority of FY24

banknote print orders already awarded.

These include recent wins, especially in

Africa, the Middle East and Asia, that have

been received since the end of FY23.

In 2020 we made a clear pledge to

transform Currency, so that it is profitable

on an adjusted operating profit basis

even in downturns. While it is accepted

that Currency has fallen short of

expectations in recent times, the FY23

results of this division bear out that

pledge. In FY20, the Currency division

demonstrated an adjusted operating loss

of £9.4m. In the three subsequent years,

FY21 to FY23, the division’s adjusted

operating profits have been £16.2m,

£19.5m and £13.6m respectively. This

includes the severe downturn in FY23,

from which the market is beginning

to recover.

De La Rue has significantly enhanced

its competitiveness, refining its

manufacturing footprint and cost base,

and is well positioned for when the

market returns.

The termination of the long-term supply

agreement for banknote paper with

Portals in July 2022, eliminating £119m in

commitments for a cash payment of

£16.7m represented a further step in our

transformation. We give more detail on

this and progress on paper tendering

below. The recently completed wind

down of the Kenyan facility further

right-sizes our manufacturing facilities,

focusing on those with the greatest

capability, while maintaining De La Rue’s

position as the number one commercial

printer of banknotes worldwide.

The expansion of our Malta site, where

our new Currency operations will

progressively come online from the

first half of FY25, further refines that

operational flexibility.

For more information:

delarue.com/currency

Commercially printed banknotes

Growth in cash in circulation

2021 to 2022

60%

+4.9%

De La Rue plc Annual Report 202312

Deferral of pension deficit

reduction contributions

We have also successfully concluded

negotiations with the Trustee of the

De La Rue Pension Fund, overseen by

the Pensions Regulator, to defer £18.75m

of deficit reduction contributions.

The Trustee has agreed that we will defer

our deficit reduction contributions of

£3.75m per quarter from that due on

5 April 2023, up to and including the

payment that was due on 5 April 2024,

less an amount equivalent to the

arrangement fee agreed with our lenders

on the covenant package, due on or after

5 April 2024. During the second quarter

of FY25, deficit reduction contributions

will recommence at the rate of £3.75m

per quarter. ‘Catch up’ payments, to put

the Scheme in funds for the £17.5m

deferred, will start from July 2025 and

will continue from FY26 to FY29.

The next actuarial valuation of the

scheme is due based on the funding

position as of April 2024.

This deferral significantly eases the

short-term cash outflow for the business

and builds upon the actions previously

taken, such as the March 2022

agreement with the Pension Scheme

Trustees to lower cash payments that

fund the pension deficit. After the

deferral expires, cash payments to repair

the pension deficit will still be £9.5m per

annum lower than they would have been

without this March 2022 agreement.

Going concern

The agreements with our banking

syndicate and the pension fund trustee

are key elements in the Directors’

assessment of going concern, which

has concluded that there is no material

uncertainty with respect to going

concern. A full description of the process

and judgements made in reaching this

conclusion is set out in Going Concern

on pages 65 to 67.

Divisional performance

We set out on pages 11 and 12 more detail

on the trading during FY23 and since

year end within each division of

the business.

Cost base

We made substantial progress during the

year in limiting supply chain headwinds

in a period which saw a step change in

global rates of inflation. We used a

combination of dual sourcing, tendering

and robust negotiation to maintain a

competitive raw material price base.

Our UK energy costs are fixed to at least

September 2024, providing us with a

good degree of forward cost visibility.

The termination of the contract with

Portals Paper to supply banknote paper

in July 2022 marked another step in our

journey to resolve the legacy issues that

have impacted the efficiency of the

business. We have since qualified multiple

additional suppliers and validated the

predicted future cost savings.

Kenya

As referenced above, in January 2023,

the Group determined that, owing to

current market demand, and no

expectation of new banknote orders

from the Central Bank of Kenya for a

considerable period, De La Rue Kenya

(a joint venture with the Government

of Kenya) would suspend banknote

printing operations in the country.

Furthermore, operations in our

Authentication division in Kenya have

been wound down.

As a result of the review of the business

in Kenya, an exceptional charge of

£12.6m (FY22: £nil) was made in FY23.

This included redundancy charges of

£5.5m, property, plant and equipment

asset impairments of £4.9m, and

inventory impairments of £2.0m

De La Rue plc Annual Report 2023 13

Strategic report Governance report Financial statements

CEO review continued

Malta

The substantial expansion to our Malta

facility is progressing well. An additional

line producing ID datapages is now fully

operational and the remaining additional

Authentication space should be

completed in the second half of FY24.

The Currency facilities, including a new

vault, should be ready in FY25.

When complete, the new facilities will

substantially increase our capacity

within Authentication and add

significantly to our Currency capabilities

within Malta.

Outlook

As noted above, despite the low order

book going into FY24, there are

encouraging signs that the Currency

market is recovering. We expect revenue

in the Authentication division to exceed

£100m for the first time in FY24, driven

by existing contracts, including the full

year impact of the Qatar, Bahrain and

Oman GRS programmes, and a

substantial increase in demand from

the Australian passport programme.

On 12 April 2023, De La Rue announced

that the Board expected full year

adjusted operating profit for FY24 to be

in the low £20m range. Trading for the

first two months of FY24 has been in line

with this and it remains the Board’s

expectation for the full year, albeit with

H1 being broadly break-even at Group

level due to the timing of the recovery

in Currency orders.

Over the last three years we have

taken decisive steps to restructure

the business, driving efficiencies and

innovation, and reducing costs. In FY24

we are continuing this journey, including

making the final payment for the Portals

exit, thereby finally closing out another

major legacy issue. This year, we expect

net debt to rise to around £100m by

both the half year and the year end.

Conclusion

I would like to express my thanks to my

colleagues throughout the Group, who

have remained focused and resilient

through significant changes in the

business, and through a historically low

demand period in Currency. As we go

forward, we will redouble our efforts to

develop the Company, with a strong

operational plan, now underpinned by

the amendment to the banking

arrangement, a deferral of immediate

pension contributions, and a going

concern assessment that has not

identified any ‘material uncertainty’.

FY23 has been a challenging year for

the Company and its stakeholders.

We remain resolute in our determination

to build on the ongoing transformation

actions and create a positive future.

Clive Vacher

Chief Executive Officer

29 June 2023

Case study: Authentication

Case study: Currency

Renewal of GRS

contract in Cameroon

In FY23 De La Rue signed a two-year

contract renewal with Cameroon for

the supply of a digital tax stamp

solution for tobacco goods and

wines and spirits via DLR Certify™.

This extension builds on successful

cooperation with the Government

of Cameroon and the ongoing

deployment of a GRS solution

since 2010.

Production of new

King Charles III notes

for Bank of England

De La Rue has been working with

the Bank of England since 2003,

including on the conversion to

polymer banknotes which were first

issued in 2016.

In December 2022 the Bank of

England unveiled updated notes

featuring a portrait of His Majesty

King Charles III. These are a

continuation of the current series

of notes and represent some of the

most technically advanced banknotes

in the world. The new notes are due

to enter circulation by mid-2024.

De La Rue plc Annual Report 202314

Why invest?

Unique product offering

De La Rue is at the forefront of delivering currency

products and authentication solutions. We

specialise in design, material sciences, international

manufacturing and digital solutions. Our products

and services protect economies, revenue sources

and reputations.

Well positioned in growing markets

We are one of only two significant producers of

polymer banknote substrate. Just 5% of banknotes

are made of polymer, though this is steadily

increasing. We design more banknotes than other

commercial manufacturers.

We provide technologically advanced solutions

that verify bona fide goods and documents,

combating the $3 trillion annual trade in counterfeit

goods. We provide solutions to enable government

tax excise schemes.

Operational resilience

Over the past few years we have reshaped our

manufacturing footprint to a modern, flexible base,

adaptable to the demands of our customers.

We also are honing our operational delivery to use

our assets optimally, with our products meeting

the highest quality standards.

Moving towards free cash flow generation

We have simplified the business, addressing

legacy issues to improve profitability and cash

flow. We expect to move towards free cash

flow generation.

Leaders in responsible business

Engaging in business responsibly lies at the heart

of what we do. We work to improve the world

around us: for our customers, employees, suppliers

and the wider community.

De La Rue

is well

positioned

in our chosen

markets

Our values

Trust & Transparency

We are honest and transparent

and always act with integrity.

Customer Focus

We seek to understand the

needs of our customer be that

internal or external, through

insight and data. We challenge

the speed of delivery and

quality of output to exceed

their expectation.

Collaboration

We are inclusive and embrace

differences, working together

to deliver results through our

collective knowledge.

Challenge

We challenge ourselves and

each other to deliver the best

results we can, to continuously

improve and to learn from our

mistakes. We are courageous

and don’t shy away from

difficult situations.

Problem Solving

& Innovation

We create solutions that solve

real challenges by applying

new thinking and concepts for

both ourselves and our

customers.

De La Rue plc Annual Report 2023 15

Strategic report Governance report Financial statements

Our business model

Our people

– We have dedicated and passionate

employees around the world who work

closely with our customers.

1,800

employees

Suppliers and partners

– We work with suppliers and partners

all over the world to ensure ethical,

sustainable and reliable delivery to

our customers.

grade issued by

CDP* for supplier

engagement on

climate change

Manufacturing and development

capability

– We are investing in world class facilities

for banknote and authentication

product manufacturing in Malta, along

with targeted investments to grow

our authentication software, security

features, polycarbonate datapages and

SAFEGUARD® polymer substrate.

14,500m

extension in

collaboration with

Malta Enterprise

Design expertise

– We have our own design studio, with a

team that has over 350 years of design

and engraving experience. We work with

customers from concept development

through to proofing, trials, qualification

and production.

350

years of experience

Patents and know-how

– As well as a wealth of technical know-

how, we have a portfolio of over 850

patents granted, with 370 patents

pending. We specialise in a range of

surface-relief micro-structures, with

proprietary equipment and patents going

out into the late 2030s.

1,000+

patent portfolio

Strong balance sheet

– A strong balance sheet enables us

to compete efficiently and invest for

the future.

* formerly Carbon Disclosure Project

World leaders in our field,

De La Rue provides expertise in

secure product design, global

manufacturing and software

solutions for supply chain

traceability to governments

and businesses worldwide.

The resources we require

How we create value

De La Rue plc Annual Report 202316

Design and technical know-how

– We design products and solutions

that can be produced at scale by us

and are easy to authenticate, but also

resistant to counterfeiting.

– We combine national symbols,

security features, logos, colour and

substrate to produce an attractive,

cost effective, resilient end product,

whether a banknote, brand protection

label, tax stamp or software solution.

– Our brand protection labels and digital

tax stamps are designed to interact

with our digital software offerings.

Understanding customer needs

– Our customers are largely national

tax authorities, international brand

owners, state printing works and

banknote issuing authorities. We

understand the significance of the

introduction of a new banknote series,

ID document or a new tax stamp

scheme and work closely with them

on design and implementation.

– We have built up strong working

relationships with many authorities

and some major brand owners, up

to the highest level over the years.

– Our solutions are increasingly

sustainable, with a general focus on

reducing the impact of our business

operations, the use of durable

recyclable polymer banknotes in

Currency and the ability to introduce

more sustainable physical components

into Authentication solutions.

– Our research and development

activities provide focused innovation,

leveraging our deep knowledge of our

customer needs.

Manufacturing

– We produce goods of the highest

quality at volume.

– To be verifiable each banknote or tax

stamp must be designed for recognition

and authentication, but at the same

time to be traceable, they must have

unique identifiers.

Operations

– Our physical products are produced

and shipped securely on time.

– Our digital solutions are secure, robust

and reliable. They are designed for

speed of operations and ease of

implementation.

– In order to meet customer timetables

and run our manufacturing facilities

efficiently, we plan our production

timetables across our sites carefully.

– We focus on the environmental

efficiency of our operations to make

sure that they are as sustainable as

possible, complying to ISO 14001 and

international best practice to drive

continuous improvements.

Our products in use in the world

– Enable secure participation in

the economy.

– Help deliver confidence in

the economy.

– Support social and financial

inclusion.

– Protect tax revenues.

– Tackle counterfeit goods and

illicit trade.

Customers gain

– Authentication solutions that

provide security and ability to

trace products.

– Durable, high quality banknotes

reflecting key aspects of the country

they represent, embedding a

combination of features that make

counterfeiting as hard as possible.

Suppliers gain

– A long term working relationship with

an ethical partner.

– Repeat orders from a customer that

treats them with respect.

Employees

– We promote an inclusive culture

which values diversity, the health

and wellbeing of our employees

and where they can achieve their

full potential.

Communities 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 strategy (see page 18) is

designed to achieve sustainable

profitability and cash flow and

create long term shareholder value.

How we add value The value we create

for stakeholders

Excellence in

De La Rue plc Annual Report 2023 17

Strategic report Governance report Financial statements

Our strategy

In 2022 we considered the evolution of both the markets

in which we operate and the capabilities of De La Rue

in the three years since we set out the Turnaround Plan.

We refined our strategy accordingly.

Our focus can be summarised in three broad pillars: grow

repeatable business, drive efficient operations and invest

for the future. These broad pillars cover Government

Revenue Solutions (GRS), Brand Protection and ID Security

Solutions in Authentication. In Currency they cover security

features, polymer substrate and banknotes.

These are explained in more detail below:

The De La Rue strategy

undergoes a formal

review and approval

process each year

Increasing our revenue

through relationships

providing ongoing

income

Focusing our technical

expertise to develop the

solutions of the future

Streamlining our

business to minimise

cost while retaining

flexibility

Grow

repeatable

business

Invest

for the

future

Drive

efficient

operations

De La Rue plc Annual Report 202318

Business area

Grow repeatable business

Expand the GRS offering:

– to cover other excisable goods

– in targeted areas, focusing on the GCC and beyond

Within Brand Protection, grow sales of our highly secure labels and digital

end-to-end traceability

Build on the success of our world-leading polycarbonate datapage

Target the large market of state printworks for sales of:

– polymer

– security features and

– overspill services

Continue to supply secure, innovative banknotes of the highest quality to our customers

Drive efficient operations

Stabilise the funding position of the Group

Right-size Currency operations to match anticipated demand

Resolve remaining legacy issues affecting shareholder value

Deliver further operational efficiency improvement, with strong focus on cash generation

Deliver seamlessly for our customers

Invest for the future

Commercialise the next generation of effects, security features and product formats using

our expertise in surface-relief micro-structures and volume holography

Implement best practice to enhance our digital offering in Authentication

Evolve SAFEGUARD® for the next generation of security features and maintain ‘best for

printers’ position

Group-wide

Authentication

Currency

De La Rue plc Annual Report 2023 19

Strategic report Governance report Financial statements

Engaging with our stakeholders

While their primary duty is to deliver a return to shareholders that is sustainable over the long term, the Directors are aware of

their wider obligations, both to direct stakeholders and to society more generally. We rely on a number of internal and external

parties and counterparties in order to run our business. Similarly, our business and operations have an impact on a wide range

of stakeholders, as well as the natural environment. We have direct relationships with many of these stakeholders, but rely on,

impact or interact with others with whom we have an indirect relationship only.

We have identified our principal stakeholders as being:

Internal stakeholders External stakeholders

– direct relationships

External stakeholders

– indirect relationships

Corporate – Employees/workforce

– Pension Scheme members

– Independent non-

executive directors of

subsidiary companies

– Shareholders and potential

investors

– Lending banks and other

funders

– Pension Scheme trustee

– Tax authorities

– Insurers

– Auditors

– Suppliers of goods and

services

– Stock market users

– Regulators

– Proxy advisory firms

– Sustainability rating agencies

– Media

Authentication – Currency division

– Employees/workforce

– Pension Scheme members

– Trade Unions

– Third party partners

– Minority shareholders

in Group companies

– Suppliers of goods and

services

– Customers – governments,

tax/revenue authorities and

passport offices

– Customers – brand owners,

manufacturers of goods

carrying tax stamps

– Certification agencies

– Trade bodies

– Communities close to our

operations – as a source

of our workforce, and as a

group potentially impacted

by our business

– Natural environment

– Competitors

– Trade press

– Potential distributors

– Wider society as end users

of our products and services

Currency – Authentication division

– Employees/workforce

– Pension Scheme members

– Trade Unions

– Third party partners

– Minority shareholders in

Group companies

– Suppliers of goods and

services

– Customers – governments,

central banks, state print

works and papermakers

– Certification agencies

– Trade bodies

(International Currency

Association, Banknotes

Ethics Initiative etc)

– Communities close to our

operations – as a source

of our workforce, and as a

group potentially impacted

by our business

– Natural environment

– Competitors

– Trade press

– Wider society as end users

of our products and services

Stakeholder interactions

The Executive Directors and the other members of the Executive Leadership Team, supported by a number of senior managers,

undertake the vast majority of our engagement with stakeholders. All of our internal and external relationships are built on trust

and we recognise that while this is earned over a long period, it can be lost in an instant. Communication is key to our success

and there are clear accountabilities for relationship management across the business, to ensure that we protect and develop

our reputation with all our partners and counterparties.

The Chairman and Non-executive Directors also meet stakeholders whenever needed. This is either to supplement the work

done by management, or where engagement by them would be more appropriate. The experience or roles of the Non-executive

Directors can sometimes mean that they are particularly well placed to discuss issues with a counterparty: for example, the

Chairman of the Audit Committee routinely meets or holds calls with the internal auditors and external auditors. All of our Board

members are encouraged to spend time in the business and to meet De La Rue’s workforce.

De La Rue plc Annual Report 202320

Section 172 Statement

The Board has designated an

independent Non-executive Director

to lead on workforce engagement and

Employee Voice Forum meetings were

held during the year with workers at

several of our sites globally, with

findings and recommendations relayed

to the Board. For further information

see page 79.

The need to foster business

relationships with our

suppliers, customers and

other key stakeholders

We are proud that we have served

a large number of our customers for

many years and, in some cases,

decades. We have similarly

longstanding relationships with 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 kept

the status of our supply chain under

review during the year.

The likely consequence of any

decision in the long term

The Directors recognise that many of

the decisions they make will 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. As well

as delivering in-year results, the Board

continues to oversee capital expenditure

to generate transformational change

and a repositioning of the Group’s

technology and manufacturing base

for the long term.

The Directors continue to pursue longer

term sustainability goals, including

carbon 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. Protecting our

workforce in Sri Lanka, during a time of

significant uncertainty and challenge

in that country, was a concern for the

Board during the year. 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.

In their discussions and

decision making during the

year to 25 March 2023, 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:

Managing

relationships for

long term success

De La Rue plc Annual Report 2023 21

Strategic report Governance report Financial statements

The need to act fairly as

between our shareholders

Our shareholders collectively provide

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.

Well over 80% 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, with

just over 4,500 registered holders. While

it is more challenging to deal directly

with the retail investor 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 provide

a Q&A facility on our website in advance

of general meetings, including the AGM.

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. The Directors have

adopted action plans designed to

achieve carbon neutrality for our own

operations by 2030 and we are aligning

ourselves with the UK Government’s

targets, aiming to reach net zero across

our business by 2050. In 2023 we were

pleased to be ranked in the top

quartile of the Financial Times/Statista

Climate Leaders index, for the third

consecutive year.

During the year the Board reviewed

the outcomes from the first year of

implementing our sustainability strategy,

building on our sector-leading approach

to climate change.

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 adherence 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.

During the year the Board reviewed and

approved a new Code of Business

Principles which was launched across

the business in January 2023. They also

considered and approved a Human

Rights Policy Statement.

The Ethics Committee monitors the work

being done to drive a healthy corporate

culture, including monitoring reports made

to our CodeLine whistleblowing service.

The Committee also reviews the

completion of compliance training and

considers employee awareness

programmes to ensure that colleagues

are aware of expected standards of

ethical behaviour.

Section 172 Statement continued

Case study:

Currency

Successful conversion

of the LE10 to polymer

In July 2022 the Central Bank of Egypt

issued polymer banknotes for the first

time, a milestone reflecting an ongoing

partnership with De La Rue supporting

the central bank from design through

to manufacture.

Polymer substrate was selected

due to the increased cleanliness,

durability, cost effectiveness and

the overall reduced environmental

impact of polymer substrate over

other substrates.

The Central Bank of Egypt considers

the introduction of the polymer LE10,

printed at a new state of the art site in

the New Administrative Capital, to have

been a great success and of significant

benefit to the Egyptian public.

De La Rue plc Annual Report 202322

Key decisions made in FY23

The examples below show how the Directors and Board followed the principles described in the rest of this Section 172

Statement, when dealing with major decisions taken during the year:

Case study: Currency

Exit from the Portals Relationship Agreement

Case study: Authentication

New polycarbonate production line in Malta

A decision

with financial

benefits in the

short term

and long term

Investing and

using our

technical

expertise for

the future

In July 2022 we announced that we had

successfully negotiated the termination of

the long term Relationship Agreement (RA)

with Portals Paper. We entered into the RA

when we disposed of that business in 2018

and it committed the Group to purchase

fixed minimum volumes of security paper,

for Currency banknote printing, until 2028.

We paid £16.7m to exit the RA, which relieved

De La Rue of the obligation to pay £119m,

in addition to the cost of the paper we

purchased, over the remaining term of

the contract.

We worked with the owners of Portals Paper,

Epiris, who treated the termination of the RA

as a catalyst for the closure of Portals’ main

production site at Overton, Hampshire.

The Board identified a number of

stakeholders in this process. These included

third party paper suppliers (who had to be

able to meet our needs) and our customers

(whose acceptance of paper sourced from

those suppliers was critically important).

Other key considerations were the financial

interests of our shareholders and our lending

banks in funding the settlement payments

and avoiding the future liabilities to which

we were otherwise committed.

To date, we have achieved savings in the cost

of paper for banknote printing by running

competitive international tenders, with a

range of suppliers pre-qualified and

acceptable to our customers.

We have successfully protected the long

term interests of our financial stakeholders

(investors, lenders and the pension scheme,

as a major creditor) by achieving these

savings and avoiding the fixed payments that

would otherwise have been owed to Portals.

For more information see page 12.

In June 2022 the Board approved capital

expenditure by the Authentication division

on a new, second production line for

polycarbonate datapages to be used in

passports. Our key customer, Note Printing

Australia (NPA) who act in partnership with

the Australian Passport Office, significantly

increased their volume requirement for

polycarbonate datapages for Australian

passports over the remaining four years of

the existing contract. In recognition of the

capital expenditure by De La Rue, NPA offered

to extend the contract for the sole-source

supply of the polycarbonate datapages by a

further five years, so that this is now secured

until 2032. We announced this publicly in

September 2022.

Having established the customer’s

requirements, we worked with the suppliers

of the key equipment we needed to install

and selected our Malta site, where the first

production line is located, as the best home

for this. We worked in partnership with Malta

Enterprise, one of our key stakeholders, as

well as our existing employees and the local

contractors who installed and commissioned

the new production line.

The new production line became fully

operational in May 2023. The benefits of

this investment will be enhanced revenue,

operating profits and cash flow from FY24

onwards, to the benefit of the Company’s

investors, lenders and the pension scheme,

as a major creditor. It should also provide job

security for our workforce in Malta and work

for the suppliers of the raw materials and

other consumables used in the production

of the datapages, which includes embedded

silicon chips sourced from a number of

suppliers. The ultimate beneficiary of this

investment will be Australian citizens looking

to obtain new or replacement passports.

For more information see page 11.

De La Rue plc Annual Report 2023 23

Strategic report Governance report Financial statements

Responsible business report

Our commitments

Environment

– We are committed to leading the

industry on environmental

sustainability, and achieving carbon

neutrality for our own operations

by 2030.

– To minimise the impact of our

operations on the environment

we set clear environmental goals.

Find out more on page 26.

People

– We treat everyone in an ethical

and respectful way, promoting an

inclusive culture that values diversity,

and protecting human rights both

within our business and in our wider

supply chain.

– We prioritise the health, safety and

wellbeing of our people

– 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 37.

Business standards

– Our Code of Business Principles sets

out core principles which define the

way we behave and work daily.

– 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.

Our Authentication and Currency divisions enable our

customers to deliver sustainable services underpinning the

integrity of economies and trade. To achieve our overarching

purpose of securing trust between people, businesses

and governments, it is crucial that we uphold the highest

environmental, social, human rights, ethical and governance

standards in the way we conduct our business.

This responsible business report outlines

some of the ways we are fulfilling these

commitments, upholding the principles

of the UN Global Compact, and

contributing to the UN Sustainable

Development Goals. Further information

demonstrating how Environmental, Social

and Governance (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.

‘De La Rue has been

a participant in the

UN Global Compact

since 2016 and

remains committed

to the initiative.’

Clive Vacher

CEO

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.

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 was the nominated Non-

Executive Director with overall

responsibility for our sustainability

strategy until his resignation from the

Board effective 1 May 2023. Clive Whiley

will have responsibility for our

sustainability strategy in the future.

Governance of ESG-related matters is

embedded within our existing Board and

committee structure. See page 75 for an

overview of this structure. The Executive

Leadership Team (ELT) plays a key role,

with responsibility for strategy

implementation, setting targets, ensuring

ongoing monitoring of performance and

that ESG issues are an integral part of

day-to-day business decision making.

For further information about

environmental governance, see page 32.

De La Rue plc Annual Report 202324

UN SDG How De La Rue contributes UN SDG How De La Rue contributes

Our highly secure physical and digital

solutions underpin the integrity of

economies and trade. Our Currency

products and services enable all citizens,

including those with little or no access to

the banking system, to participate in the

global economy. Protecting government

revenues supports the provision of

health, education and infrastructure

to alleviate poverty.

See pages 5, 6 and 17 for further

information about our impact.

We work with governments to secure trust

and build strong economies by providing

solutions which underpin the integrity of

economies and trade. We protect labour

rights and promote safe and secure

working environments for our workers and

expect our suppliers to do the same.

See pages 5, 6, 37 and 40 for further

information about our impact.

Our Authentication products help to

tackle illicit trade, protecting populations

from counterfeit goods, including

medicines, food and drink which may be

harmful to health. Through our track and

trace solutions we directly contribute to

strengthening the implementation of the

World Health Organization Framework

Convention on Tobacco Control, a key

target of SDG3.

See pages 6 and 17 for further information

about our impact.

We are committed to leading our industry

in sustainability, working on the

sustainability credentials of our products

through their lifecycle and investing in

recycling and waste management

initiatives and carbon footprint models.

We participate annually in the CDP

(formerly known as the Carbon Disclosure

Project), have SBTi targets approved, and

support the recommendations of the Task

Force on Climate-related Financial

Disclosures (TCFD).

See pages 26 and 34 for further

information about our impact.

We are proud of our diversity, equity and

inclusion programme and have a gender

target for our management population

which is a KPI. We participated in the UN

Global Compact Target Gender Equality

initiative and report and publish

information in line with our obligations

under the UK Equality Act (Gender Pay

Gap Information) Regulations.

See pages 37, 38 and 49 for further

information about our impact.

Our GRS and brand protection solutions

prevent counterfeiting and illicit trade,

contributing to combatting organised

crime. The provision of secure

components for identity documents,

including holograms and polycarbonate

datapages, supports the target under this

SDG to provide legal identity for all.

See pages 6 and 17 for further information

about our impact.

By delivering on our purpose and working

closely with governments, central banks

and commercial organisations, we provide

products which improve economies,

particularly amongst developing countries.

See pages 5 and 6 for further information

about our impact.

We also make a positive contribution to the following SDGs:

United Nations Sustainable Development Goals

We believe that, in delivering our purpose of securing trust

between people, businesses and government, and adopting

internal polices and processes which have a positive impact

on our stakeholders, we make a significant contribution to

the following of the 17 United Nations Sustainable

Development Goals:

De La Rue plc Annual Report 2023 25

Strategic report Governance report Financial statements

CDP (formerly Carbon

Disclosure Project)

We have been disclosing to the CDP

since 2010 and publicly since 2013.

We are proud of the progress we have

made: following our 2022 submission

we achieved a score of A for supplier

engagement on climate change and

maintained our overall B climate

change score. In 2022 we also made

our first water security submission,

achieving a C rating. Our aim is to

continue to improve on our climate

change practices as we transition

to a low carbon economy.

We recognise the importance of carbon

offsets and therefore we pledged in FY23

to become carbon neutral by 2030 for

Scope 1 and Scope 2 emissions through

a phased offsetting programme. This will

complement our decarbonisation

journey and support increased

investment in the world’s carbon sinks.

De La Rue will only invest in carbon offset

credits which at a minimum will be

purchased from projects aligned with

PAS 2060, a recognised carbon

neutrality standard. Projects will be

procured from retailers with due

accreditation – i.e. Quality Assurance

Standard (QAS) – to ensure due and

timely credit retirements are made and

independently audited.

De La Rue captures and addresses

environmental initiatives through our

Transform Sustainability programme,

which identifies, assesses and manages

environmental initiatives throughout the

Group. This includes progress against our

climate targets, and initiatives on other

material topics including energy, waste,

single-use plastics and sustainable

procurement. We regularly review our

environmental initiatives to ensure we

are addressing the most material issues

to the business. There were no significant

environmental incidents during the year.

Material issues are those that are

considered as a principal risk to the

business, such as Sustainability and

Climate Change, as it could affect our

business performance. In addition,

issues are considered material if they

are important to our key stakeholders,

our partners, our customers, and our

suppliers and people.

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, a standard first achieved by

the business over 16 years ago, which

is externally audited by Lloyd’s Register

Quality Assurance. We also carry out

internal group audits against the

requirements of our corporate

environmental standards.

Climate change is a material

environmental issue for De La Rue.

Credible low carbon strategies require

science-based emission reduction

pathways, and the Science Based Targets

Initiative (SBTi) has approved our near

term science-based emissions reduction

target. In line with the target level of the

Paris Agreement of keeping global

temperature increases below 1.5°C,

De La Rue commits to reduce our

absolute Scope 1 and 2 GHG emissions

by 46.2% by FY30 from a FY20 base year.

We also commit to reducing our absolute

Scope 3 GHG emissions by 46.2% within

the same timeframe. We are committed

to consistency and transparency, and

review our targets. If necessary we will

recalculate and revalidate the targets in

line with SBTi policy.

Responsible business report continued

Environment

We continue to focus on minimising the impact of

our products and operations on the environment.

It has been a year since our ambitious climate

targets were set, and we have made meaningful

progress towards achieving them and building our

environmental strategy.

De La Rue plc Annual Report 202326

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 environmental risks are

identified through the Group Risk

risks and site tactical risks. The register

is reviewed at the Group Health, Safety

and Sustainability Committee (GHSSC)

twice-yearly and on a quarterly basis at

the Risk Committee (RC). It is evaluated

using our risk matrix as outlined on

page 56.

Sustainability and Climate change has

been a principal risk for the business

since FY21. Climate-related risks and

opportunities are therefore reviewed by

the GHSSC and the RC and integrated

into our enterprise risk management.

The process for assessing and identifying

climate-related risks is the same for all

principal risks and is described on page

56. We have carried out Climate Scenario

Analysis (CSA) to understand the

potential financial impact of climate-

related risks and inform our strategy and

financial planning in alignment with the

TCFD recommendations. Further

information on CSA and identified risks

and opportunities can be found on

pages 32 to 34.

Our material issues

Impact of products: We evaluate the impact of our products

throughout their lifecycle and therefore we will continue to invest in

and develop our product lifecycle assessment (LCA) models and

continue to reduce our emissions.

Water consumption: We understand the importance of sustainable

consumption and have monitored and reduced our water consumption

throughout the years. We are on track to hit our 2% per year water

reduction target for FY24.

Waste management: We are building responsible waste

management practices throughout the Group. We will always look

for the most sustainable end of life treatment for our waste and we

have a zero waste to landfill by 2030 target.

Energy: We are investing in energy efficiency and renewable energy

is key to environmental and business targets. We look to increase the

proportion of energy supplied from renewable sources and further

develop energy reduction schemes.

Single-use plastics: We are ensuring the packaging we use for

our products is sustainable and aligned with our responsible

consumption practices.

De La Rue plc Annual Report 2023 27

Strategic report Governance report Financial statements

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.

FY23 FY22 FY21

UK and

offshore Global*

% of total

UK and

offshore Global*

% of total

UK and

offshore Global*

% of totalType of emissions tCO

e tCO

Direct (Scope 1) 6,820 430 2.9 6,122 537 3.9 5,913 754 4.6

Indirect (Scope 2 –

market-based) 0 4,341 1.7 0 6,111 3.6 328 8,009 5.7

Indirect (Scope 2 –

location-based) 3,191 8,128 4,036 8,633 3,889 9,038

Scope 1 & 2 (market-based) 6,820 4,771 4.6 6,122 6,648 7.4 6,241 8,763

Indirect other (Scope 3)** 241,863 95.4 159,206 92.6 130,576 89.7

Purchased goods

and services 162,446 64.1 106,573 62.0 101,742 69.9

Upstream transport

and distribution 55,333 21.8 28,676 16.7 14,606 10.0

Capital goods 10,160 4.0 4,537 2.6 0 0.0

All other categories 13,924 5.5 19,420 11.3 14,228 9.8

Total gross emissions

(market-based) 253,454 100 171,976 100 145,580 100

Intensity ratio Tonnes of gross

e (market based) per £m

turnover (Scope 1 & 2) 33.1 34.0 38.7

Energy consumption used to

calculate Scope 1 and 2

emissions/kWh 35,092,849 23,189,524 31,055,320 25,173,111 31,697,918 24,152,529

Notes:

* Global includes all sites outside of the UK.

** Three most material Scope 3 categories reported individually.

Responsible business report continued

Environment continued

De La Rue plc Annual Report 202328

Streamlined Emissions and

Carbon Reporting

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 Greenhouse Gas Protocol Corporate

Standard methodology has been applied

to calculate the GHG emissions associated

to De La Rue’s operational activities,

along with the UK Government GHG

Conversion Factors for Company

Reporting 2022, IEA Emissions Factors

and AIB6 Residual Mix Emissions Factors.

In FY23, De La Rue continued to procure

100% renewable electricity for all our UK

facilities. In addition, we have purchased

Guarantees of Origin (GoOs) to partially

offset electricity consumption in Malta

and I-RECs that ensured the Sri Lanka

facility ran on 100% renewable electricity

for FY23. In addition to this, the site at

Westhoughton began to generate its own

electricity through solar panels installed

on the roof. Lastly, there were energy

efficiency upgrades that took place on

equipment at the Malta facility.

The emissions for previous years have

been restated within this year’s report.

This is due to new evidence and historical

data on process emissions becoming

available. The methodology to account

for this new information is aligned to the

latest reporting requirements.

We reported an increase in Scope 1

emissions, primarily due to an operating

inefficiency at our Westhoughton site

which has now been isolated and is

being rectified. In contrast, overseas

facilities showed a reduction in Scope 1

emissions, which decreased by 20%

compared to FY22. Investment in

purchased renewable electricity

overseas has also seen our Scope 2

emissions decreasing by 29% on a

year-on-year basis. Despite an increase

in our Scope 1 emissions this year, we are

seeing a 37% decrease against our FY20

base year for our Scope 1 and 2 SBTi

target. We have also seen a sustained

reduction in the total Scope 1 and 2

(market-based) gross normalised

emissions, which have seen a decrease

of 2.8% from 34.04 to 33.10 tCO

e per

£m revenue in FY23 compared to FY22.

Scope 3 emissions account for over

95% of our total carbon footprint. The

majority of these emissions arise from

our Purchased Goods and Services

accounting for roughly 64% of total

emissions. Due to the current lack of

visibility of supplier-specific emissions

data, De La Rue uses a spend-based

emissions factor method. In FY23, there

was significant increase in spend-based

emissions driven largely by a 43%

increase in the average emission factors

used for our supply chain. This has

resulted in emissions in this category

increasing by over 50% and contributing

to a correlating rise in total Scope 3

emissions. As we improve on our

sustainable procurement strategy and

continue to lead engagement with our

suppliers, including through EcoVadis,

we envisage using supplier-specific

emission factors for more reliable and

accurate calculations. Furthermore,

we were affected by global supply chain

and transport disruptions which is why

we see an increase in emissions for

upstream distribution and transport.

De La Rue remains committed to our

journey to decarbonise our operations.

We have seen continual decreases in

emissions for our operations (Scope 1

and 2) and we are working towards our

goal of increasing visibility of our supply

chain and beyond for more accurate and

transparent disclosures. This year,

De La Rue commissioned an

independent third party limited

verification of its direct (Scope 1) and

market-based indirect (Scope 2)

greenhouse gas emissions for FY22

aligned with the ISO 14064-3:2019

standard. This FY22 verification did not

take into account the restatement made

in this year’s Annual Report but it will be

in scope for the FY23 verification which

will take place during FY24. In addition,

as we look towards our goal of achieving

carbon neutrality for Scope 1 and Scope

2 emissions by FY30, we have offset 30%

of FY22’s Scope 1 and 2 emissions in line

with our phased offsetting programme.

De La Rue plc Annual Report 2023 29

Strategic report Governance report Financial statements

Responsible business report continued

Environment continued

Task Force on Climate-related Financial Disclosures (TCFD)

De La Rue supports the recommendations of the 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 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, strategy, risk management and metrics and targets. We acknowledge that there is an ongoing action for

De La Rue to improve on our alignment with the TCFD recommendations as we refine our approach on Climate Scenario Analysis

(CSA), with a focus on delivering insight for our internal and external stakeholders. We aim to better integrate the financial

impacts of climate-related risks and opportunities into future strategic reports.

TCFD at a glance

Pillar

Recommended

Disclosures Actions

Location in

Annual Report FY22 FY23 FY24

GOVERNANCE

Disclose the

organisation’s

governance around

climate-related risks

and opportunities.

a) Describe the Board’s

oversight of climate-

related risks and

opportunities.

Ensure governance

structure is

maintained.

page 75

b) Describe management’s

role in assessing and

managing climate-related

risks and opportunities.

Executive targets

to be aligned with

carbon reduction

targets.

page 119

STRATEGY

Disclose the actual and

potential impacts of

climate-related risks

and opportunities on

the organisation’s

businesses, strategy,

and financial planning

where such information

is material.

a) Describe the climate-

related risks and

opportunities the

organisation has identified

over the short, medium,

and long term.

Annual review and

further incorporation

into business

strategy.

page 32

b) Describe the impact of

climate related risks and

opportunities on the

organisation’s businesses,

strategy, and financial

planning.

Quantify the impacts

on our financial

planning.

pages 33

and 34

c) Describe the resilience

of the organisation’s

strategy, taking into

consideration different

climate-related scenarios,

including a 2°C or lower

scenario.

Develop robust

scenario analyses to

test the resilience of

the business.

page 32 –

De La Rue plc Annual Report 202330

Pillar

Recommended

Disclosures Actions

Location in

Annual Report FY22 FY23 FY24

RISK AND RISK

MANAGEMENT

Disclose how the

organisation identifies,

assesses, and manages

climate-related risks.

a) Describe the

organisation’s processes

for identifying and

assessing climate-

related risks.

Review process for

identifying and

managing climate-

related risks.

page 33

b) Describe the

organisation’s processes

for managing climate-

related risks.

Review our process

for managing climate-

related risks.

page 33

c) Describe how processes

for identifying, assessing,

and managing climate-

related risks are integrated

into the organisation’s

overall risk management.

Review our process

for integrating

climate-related risks.

pages 33

and 56

METRICS AND TARGETS

Disclose the metrics and

targets used to assess

and manage relevant

climate-related risks and

opportunities where such

information is material.

a) Disclose the metrics

used by the organisation to

assess climate-related

risks and opportunities in

line with its strategy and

risk management process.

Review and monitor

targets.

pages 35

and 36

b) Disclose Scope 1, Scope

2, and, if appropriate,

Scope 3 greenhouse gas

(GHG) emissions, and the

related risks.

Disclose and monitor

our GHG

commitments.

pages 28

and 29

c) Describe the targets

used by the organisation

to manage climate-related

risks and opportunities

and performance

against targets.

Review and monitor

targets.

pages 35

and 36

Partially aligned

Aligned

Continuous improvement

Maintain

De La Rue plc Annual Report 2023 31

Strategic report Governance report Financial statements

Responsible business report continued

Environment continued

Governance

The Board has overall accountability

for the management of all risks and

opportunities, including climate change.

Further detail on our ESG and Risk

Management governance structure can

be found on pages 57 and 75. While the

Board has overall accountability for

climate change-related matters, our

Chief Financial Officer and Executive

Leadership Team member, Rob Harding,

was responsible for oversight of our

climate change agenda during the year

under review. When Rob Harding leaves

the business, Charles Andrews, Interim

Chief Financial Officer will assume this

responsibility. The Board delegates

specific climate change matters to the

following Board committees:

– Audit Committee: oversees the

monitoring and reviewing of our

internal control and risk management

systems including a synopsis of

material risks which include

sustainability and climate change

from the Risk Committee chair. This

includes reviewing the scope and

results of any internal and external

assurance activities obtained over

the disclosures (See page 89).

– Risk Committee: oversees the

identification, evaluation and

monitoring of climate-related risks.

This includes reviewing the mitigations

and controls relating to those risks

(see page 97).

– Remuneration Committee: oversees

the remuneration policy and supports

the alignment of De La Rue’s incentive

plan to the sustainability agenda and

ambitions (see page 102).

The Board is supported by the Executive

Leadership Team (ELT) and the Group

Health, Safety and Sustainability

Committee (GHSSC). In FY23, the ELT

discussed key strategic sustainability

matters in their monthly meetings with

sustainability subject matter experts

invited to discuss progress against our

climate targets and agenda. The GHSSC

oversees progress against key

sustainability obligations and targets

including compliance.

Executive remuneration for the Executive

Directors and senior executives reporting

to the Chief Executive Officer, are set by

the Remuneration Committee. Changes

to the Annual Bonus Plan (ABP) in FY23,

resulted in ESG metrics accounting for

0% of the weighting attached to the ABP.

Further details can be found on the

pages 105 and 119.

Strategy

Sustainability and climate change is one

of our principal risks and therefore we

consider it to have the potential to

significantly affect our business and

financial results. Climate related risks for

De La Rue comprise physical risks arising

from the effects of climate change and

transition risks associated with the shift

to a low carbon economy. The process

for assessing and identifying climate-

related risks is the same for all principal

risks and is described on page 56. More

details on the risks, opportunities and

mitigating actions De La Rue is taking

can be found on pages 33 to 34.

Scenario analysis:

In alignment with the TCFD recommendations, we have conducted qualitative scenario analyses using two scenarios,

including a well-below 2°C. In developing the scenario analysis, we considered a well-below 2°C scenario by 2100 and a 4°C

by 2100 scenario to map the potential financial impacts of climate change on our business using the International Energy

Association (IEA) Net Zero Emissions by 2050 (NZE) and the UN’s Intergovernmental Panel on Climate Change (IPCC)

Representative Concentration Pathways (RCP) 8.5, respectively. We used these two scenarios to model a simple and discrete

narrative where a well-below 2°C would primarily model transition risks and a 4°C scenario physical risks, with no significant

transition risks assumed. This approach was decided to be suitable for our first iteration of CSA, with an ongoing action to

improve our scenario analyses and quantify financial impacts with greater clarity.

Well-below 2°C assumptions (NZE) 4°C assumptions (RCP 8.5) General assumptions

– Rapid and persistent transition to

a zero-carbon economy driven by

strengthened policy, legislation and

behaviour change

– Universal global climate action

cooperation

– Global demand for fossil fuels increases

due to rising population and the growing

middle class

– Increased climate adaptation efforts

required

– No De La Rue response

– FY22 baseline for scenario analysis

De La Rue plc Annual Report 202332

Key risks and opportunities

In developing our scenario analysis, we

took the two pathways and considered

a range of risk and opportunity types

using the TCFD framework. Risks were

evaluated as transition (market,

technology, policy and legal, reputation)

and physical (acute and chronic).

Opportunity types considered include

resource efficiency, resilience and

innovation. The scope of our assessment

included our operations, our supply

chain, our products and investment in

research and development.

We have identified the risks and

opportunities which we believe are

significant and have the potential to

impact our business financially. In

alignment with our viability statement

(see page 64) and due to the nature

of climate risks we have considered the

following time periods for our analyses

– short term (within 3 years), medium

term (between 3 to 10 years) and long

term (greater than 10 years).

Below we have summarised our key

climate-related risks and opportunities

relevant to De La Rue’s business and

activities for both scenarios. All the risks

noted below are applicable to both our

divisions unless stated otherwise. These

risks and opportunities were identified

through group forums and discussions

with De La Rue internal stakeholders and

subject matter specialists. The impacts

are not listed in order of significance,

nor are they meant to be exhaustive. In

disclosing the financial impact of risks

and opportunities, any assessment is

scenario based and thus should not be

considered as a financial forecast.

Risks

Risk Type of risk Time period

Description and

impact on De La Rue De La Rue resilience

Embedding

climate action

and progress

into strategy

Transition

– Reputation

Short term As a listed company, De La Rue could face

reputational risks related to climate change

from a variety of stakeholders. As ESG and in

particular climate action become embedded

within financial disclosures, a perceived lack

of action could lead to divestment from

De La Rue.

Certain customers may choose to limit or

stop work with the company if they perceive

us as not adequately addressing climate

change. This may have a resulting impact on

revenue and brand perception. In addition,

our ability to externally finance the company

may be impacted.

De La Rue is well positioned to respond to this

risk. With Sustainability and Climate Change

as one of our principal risks, we have

implemented several actions to build

resilience including science-based targets.

An opportunity arising from demonstrating

our climate commitments is the ability to

improve our brand image, attract a wider

talent pool, and retain current employees.

Increased

scrutiny on

plastic

(Currency)

Transition

– Market

Medium

term

There has been increased global focus

on plastic and more specifically

single-use plastics.

A potential risk is the cross-over of lobbying

action against polymer banknotes which is a

core aspect of our business. This may result in

a loss of orders and limited market interest

which is likely to impact our revenue figures.

We consider ourselves to be very well

positioned to respond to this risk. Polymer

banknotes have been proven to have a lower

carbon footprint compared to conventional

paper banknotes and are also increasingly

secure making them a desirable option for our

customers. Furthermore, as a secure product,

it is rare for banknotes to be discarded freely

and as a polymer product, these banknotes

have multiple recycling options.

With each polymer banknote launch, De La Rue

has worked with central banks and issuing

authorities in developing public education

programmes on the benefits of polymer

banknotes. In a recent survey conducted by

De La Rue, 82% of the world’s polymer

banknotes are recycled. To support our

customers further, we have established a

process for identifying end-of-life options to

provide the most sustainable disposal route.

De La Rue plc Annual Report 2023 33

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Responsible business report continued

Environment continued

Risk Type of risk Time period

Description and

impact on De La Rue De La Rue resilience

Less visibility

on future

trends

Transition

– Market

Medium

term

A rapidly changing market which responds

to new climate legislation and changes in

consumer behaviour may lead a move to

shorter term contracts or more stringent

contractual provisions.

As a result, De La Rue may lose its ability

to predict cost models beyond a five year

period as change requests may come more

frequently. Decreased visibility of trends may

also reduce our ability to respond to any

changes to the production schedule which

may lead to increased costs.

A significant proportion of our contracts are

long term enabling us to predict cost models

and reduce the impact of any short term

contracts. In addition, we actively engage

with our suppliers to ensure fair pricing in

our contracts.

Cotton

shortage

(Currency)

Physical

– Acute/

Chronic

Short term De La Rue continues to promote the growth

of polymer banknotes, however conventional

paper banknotes are still a significant part of

the business. The raw materials for paper

banknotes come from cotton.

Extreme weather and extended droughts are

likely to have a significant effect on cotton

production resulting in crop output decreases.

This will increase the costs associated with

purchasing cotton which is likely to affect

De La Rue.

De La Rue has built relationships and engaged

with multiple paper suppliers that are

geographically diverse. This will help De La Rue

to mitigate the impacts of cotton shortages.

Customer

expectations

for lower

carbon

intensive

products

Transition

– Market

Short term As the world transitions to net zero, there will

be increasing demand to lower the carbon

intensity of products. This may lead to

revenue loss as inaction could make

De La Rue’s products undesirable. In addition,

slow action would require rapid investment

which would lead to higher costs for

De La Rue.

De La Rue’s Transform Sustainability

programme is aimed at reducing the

environmental impact of our products

(see page 26).

In addition, our SBTi targets have increased

focus on decarbonising the business and we

are defining our strategy to transition into

a low carbon future.

Opportunities

Opportunity type Time period Description

Products and

services

Medium term Reducing the carbon footprint of our products and activities will help De La Rue transition

into the zero-carbon economy. For example, the switch to polymer from paper banknotes

allowed De La Rue to offer a more environmentally friendly option. Polymer banknotes have

been proven to have a longer lifecycle and are able to be recycled at end-of-life. By

developing our product Life Cycle Assessments we are investing in an opportunity to

understand the carbon impact of our products and subsequently to lower our footprint.

Resilience Short/Medium term Building resilience as we transition to the low carbon economy is vital. This is why De La Rue

has submitted science-based targets to reduce our carbon footprint and lower our impact.

We expect this will come with an associated cost and as such we are reviewing our trajectory

and aligning it with our financial planning for FY24 and beyond.

De La Rue plc Annual Report 202334

Next steps

De La Rue has previously reported on our efforts to mitigate impacts of climate change on the business; however, this was

our first attempt at evaluating our exposure to the impacts of climate change. For FY23 we used two distinct scenarios and

completed a qualitative analysis to understand the potential impacts on our financial planning. In FY24 and beyond, we expect

to review and build upon our analyses to better quantify the impacts of our significant climate related risks.

Risk management

The Risk and Risk Management section on pages 56 to 63 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 60.

Metrics and targets

Performance against FY23 climate objectives

Objective Outcome

Submit our CDP response for FY22 Achieved. We submitted responses for Climate and Water questionnaires and scored B and

C, respectively. In addition, we achieved a Supplier Engagement score of A.

Further alignment of risk management with

TCFD recommendations

Achieved. We have completed a qualitative climate scenario analysis to support our risk

management process and compliance with the TCFD recommendations.

Conduct a review on the impact of our

facilities on biodiversity with internal

ecological site surveys

Achieved. Our sites in Westhoughton and Malta have completed environmental surveys

considering biodiversity. We look to build upon this further in FY24.

Complete initial review of plastics across sites Achieved. We have begun the process of identifying the current gaps in our data collection

and what we can do to improve.

Reduce absolute energy use by 3% Not achieved. Unprecedented and greater than expected usage of natural gas at

Westhoughton Sites 1 and 2 severely impacted our progress against this Scope 1 target and it

was not achieved in FY23.

Reduce energy use per tonne of good output

by 7.5%

Not achieved. This target was set prior to the beginning of the financial year. FY23 production

volumes varied, decreasing our ability to operate efficiently, meaning that we did not achieve

this target.

Reduce waste generated by good tonne of

output by 5.5%

Not achieved. This target was set prior to the beginning of the financial year and production

volumes varied meaning that we did not achieve this target in FY23. The destruction of

secure waste delayed to after the pandemic also affected our ability to meet this target.

De La Rue plc Annual Report 2023 35

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Responsible business report continued

Ongoing climate objectives

Our short and medium term climate metrics and targets are as follows:

Future goals Target Performance to date

Reducing the carbon impact from our

operations and activities

SBTi near term targets, Scope 1, 2 & 3 -46.2%

against FY20 base year by FY30

We have achieved a 37% reduction against

our FY20 baseline for Scope 1 and 2

emissions putting us well on target to meet

our goals in FY30. We saw an increase in

Scope 3 emissions for FY23 against our

baseline year, however, we are still within

our allocated carbon budget to achieve

our SBTi target, and we have identified

pathways to have more accurate

calculations of our Scope 3 impact.

Reduce Scope 1 & Scope 2 by 23% against

FY20 base year by FY26

We remain on track to achieve this target

by FY26.

Suppliers accounting for 80% of total

procurement spend to be invited to

complete/share an EcoVadis scorecard

Since launching our EcoVadis programme in

FY22, suppliers accounting for 40% of our

total spend have now shared or completed

an assessment on EcoVadis. Through our

ongoing EcoVadis programme, we are able

to understand how our suppliers are

engaging on key ESG topics.

Targeting energy efficiency and renewable

energy within the business

Reduce absolute energy use by 20% FY26 vs

FY20 base year

We have currently achieved an energy

reduction of 6% against our FY20 base year.

10% group power use from onsite renewable

sources by FY27

We have installed solar panels at our

Westhoughton site and we are looking

to have solar installations in Malta and

Sri Lanka.

Sustainable consumption and nature solutions Reduce waste to landfill by 45% by FY26

against FY23 baseline. (Zero waste to landfill

by 2030)

This goal was introduced during FY23 and

we will report against our target from FY24

against an FY23 baseline.

Solid waste tonnes per tonne of good output

-3% by FY24 against FY23 performance

This goal was introduced during FY23 and

we will report against our target from FY24

against an FY23 baseline.

Reduce water consumption by 4% by FY24

against FY22 baseline

We have achieved a 2% reduction in FY23

against our FY22 baseline, and we consider

ourselves on track to hit this target.

In FY23, De La Rue conducted a review of all our reporting performance indicators and targets to assess their suitability for the

business. The targets for FY24 detailed in the table above align with what we consider our most material environmental issues:

carbon, energy, waste and water management. We believe these targets will help build resilience as we transition towards a low

carbon economy. Our GHG emissions including Scope 1, 2 and 3 emissions for FY23 can be found on page 28.

In addition, we plan to review our internal carbon tax for relevancy and better integration into our strategy. In FY23, De La Rue has

used an internal carbon price of $50 per tonne of carbon which is primarily used to evaluate internal projects from a carbon

perspective. Changes within the business and our carbon reduction targets warrant this review to inform future Group strategy.

We believe the targets we have set are correct for the Group and have captured the key strategic goals including reducing the

carbon and environmental impact of our products. Regarding our long term carbon reduction target, we are aligning ourselves

with achieving net zero by 2050, or before, in line with the UK Government. We continue to develop our pathways to achieve

these goals.

Environment continued

De La Rue plc Annual Report 202336

Human rights

De La Rue fully supports 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.

De La Rue’s Human Rights Policy

Statement, which is published on our

website, confirms our commitment to

fair pay and working conditions, freedom

of association and collective bargaining,

the elimination of forced, compulsory

and child labour, health, safety and

wellbeing, our expectations of our

suppliers and ways to raise concerns.

Our Code of Business Principles covers

human rights issues including fairness

and respect, modern slavery,

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.

Our Supplier Code of Conduct also

covers human rights issues. See page 44

for further information.

The business has remedial processes

in place should there be any human

rights infringements. These include

claims procedures and trade union

engagement procedures.

Further information outlining our

approach to specific human rights

matters is detailed below.

Modern slavery

De La Rue directly employs c. 1,800

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. 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. Online modern slavery

training is mandated for relevant

employees. Suppliers are obliged to

abide by the United Nations Convention

on the Rights of the Child and International

Labour Conventions 138 and 182. Our

supplier onboarding process considers

modern slavery risk.

Diversity, equity and inclusion

Diversity, equity and inclusivity in the

broadest sense remain a key focus at

De La Rue. We continue to promote

diversity in all respects through proactive

initiatives including training, awareness

and continued robust recruitment,

succession and development practices.

We are confident that this will help us

to continue to make De La Rue a place

where differences are embraced.

Our participation in the UN Global

Compact (UNGC) Target Gender Equality

initiative enabled us to self-assess our

current practices and identify areas

for improvement such as a review of

some of our family-friendly policies

and practices.

People

We are committed to creating a culture of respect

and inclusivity for every individual who works

within our business, prioritising their health, safety,

wellbeing and fair treatment. 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.

De La Rue plc Annual Report 2023 37

Strategic report Governance report Financial statements

Gender diversity statistics at 25 March 2023

Responsible business report continued

People continued

All employees

72%

1,328

28%

513

Management¹

65%

165

35%

Senior Managers²

72%

28%

Executive

60%

40%

Board

62%

38%

Female

Male

While legislation in many countries

prevents us from asking candidates

for diversity data, the UK data that we

collect tells us we attract a broad range

of people across different diversity

types including age, ethnicity and

beliefs and we continue to look for

opportunities to improve our recruitment

and retention practices.

Over the past 12 months, through our

internal communications, we have been

celebrating different cultural events

around the world and asking employees

to share their own stories and photos

with us. For International Women’s Day

in March 2023 we asked employees to

share stories of inspirational women in

their lives. These included colleagues,

friends and family.

Our refreshed company Values and

Code of Business Principles emphasise

the expected behaviours of our people

managers, employees and partners

in relation to creating an inclusive

environment where everyone is treated

with fairness and respect.

As at 25 March 2023 the male:female

gender split across the organisation was

72/28 (versus a target of an average

male/female ratio of 70/30 or better by

FY23) and in management the split was

65/35 (against a target of 60/40). We

continue to work on initiatives to support

the achievement of our gender targets.

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.

UK gender pay gap

We publish information in line with our

obligations under UK Equality Act 2010

(Gender Pay Gap Information)

Regulations 2017.

Since 2017, any UK organisation that has

250 or more employees must publish

and report specific figures about their

gender pay gap on an annual basis.

The gender pay gap is the difference

between the average earnings of men

and women relative to men’s earnings.

Since we began reporting in 2018, our

gender pay gap has shown improvement

each year in large part as a result of

a greater number of promotions and

appointments to managerial grades

among women.

Our current gender pay gap report is

based on a snapshot of data taken at

5 April 2022.

Further promotions within the managerial

positions, for example senior managers

to directors, have seen the gap close

even further to its position in the latest

snapshot of 3.1% (median), equivalent

to women earning 97p for every £1 men

earn, and 1.8% (mean). We believe that

anywhere within the region of +/- 3% is

a healthy number and will continue to

monitor this. The manufacturing industry

gender pay gap in 2021 was 11.7%

(median) and 8.1% (mean) so it is most

encouraging that the wider industry is

also moving in the right direction.

We remain proud that our data, as at

April 2022, continues to be significantly

better than the average.

The full report can be found on our

website, www.delarue.com

A full breakdown of our workforce by

gender can be found below.

Notes:

1. All managerial employees including senior managers but excluding executives.

2. Includes executive management.

De La Rue plc Annual Report 202338

Employee engagement

and culture

We recognise the importance of regularly

engaging with our employees and

particularly during periods of change.

We share regular communications at

group, divisional and site level and

provide many opportunities for

employees to give us feedback and

ask questions.

Many of our sites run local employee

groups to talk about what matters to

them and organise staff events.

Examples of this include an Employee

Involvement Group in our Debden, UK

site who have been discussing wellbeing;

and the ACE (Activities, Culture and

Engagement) team in Logan, USA who

organise charitable collections and

seasonal events. Our Malta site also has

a well-established employee-led Sports

and Social Committee who meet

regularly to plan social activities.

During the year Catherine Ashton took

over from Maria Da Cunha as our

Non-executive Director responsible for

workforce engagement and attended

‘Employee Voice’ meetings held at our

Westhoughton and Basingstoke sites to

find out first-hand what it is like to work

at De La Rue and what our employees

think is working well and what can

be improved.

Our UK National Employee Forum and

European Employee Forum meet

regularly with senior leaders to discuss

company matters. They represent the

views of all employees, whether covered

by a collective bargaining agreement or

not. All available executives and a Board

member attended the Forums’ joint

annual meeting in June and December

2022, and feedback from our employee

representatives who attend the meeting

is consistently positive.

We are extremely grateful to all our

employees and in particular our

representatives who give up their time

alongside their day jobs to show their

commitment to constructive engagement.

In January 2023 we refreshed our Values

to better reflect our organisation and

culture. These Values are a framework of

common behaviours that underpin how

we work with each other and with our

external stakeholders. They help us make

the right decisions in the right way and

set out how we expect everyone to

behave, providing stability, particularly

during periods of change.

We recognise that our line managers

have additional responsibilities to their

team and to the business. We have

therefore developed our People

Managers’ Charter that we expect every

manager to abide by to build strong and

successful teams and outcomes.

Employees and people managers will be

invited to attend workshops to explore

what the Values and Charter mean to

them. The Values and Charter have been

incorporated into our policies and

processes such as our employee

induction, our performance management

standards and our new Code of

Business Principles.

Our Values

Trust & Transparency

We deliver on our promises to each

other, our customers and shareholders.

We are honest and transparent and

always act with integrity.

Customer Focus

We seek to understand the needs of our

customer be that internal or external,

through insight and data. We challenge

the speed of delivery and quality of

output to exceed their expectation.

Collaboration

We are inclusive and embrace

differences, working together to deliver

results through our collective knowledge.

Challenge

We challenge ourselves and each other

to deliver the best results we can to

continuously improve and to learn from

our mistakes. We are courageous and

don’t shy away from difficult situations.

Problem Solving & Innovation

We create solutions that solve real

challenges by applying new thinking

and concepts for both ourselves and

our customers.

Our refreshed values reflect our organisation and culture.

De La Rue plc Annual Report 2023 39

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Responsible business report continued

People continued

Health, safety and wellbeing

Occupational health and safety

We continue to prioritise the health

and safety of our workforce. Our main

manufacturing sites are all certified to

ISO 45001:2018, the international

standard for occupational health and

safety management systems, which is

externally audited by our 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

defining 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 governmental

reportable accidents, lost time accidents,

near miss reporting and corrective

actions and minor first-aid incidents.

This takes place alongside 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 and supervisors.

All significant incidents are reported to

the executive leadership team on a

monthly basis to support and agree any

corrective actions required. During the

year we have had major development

and change projects ongoing at

Westhoughton, Malta and Gateshead

and we have had no significant incidents

resulting in harm (injury or ill-health) to

our employees.

Performance against FY23 health and safety objectives

Objective Outcome

Zero lost time to accidental injuries and a lost

time injury frequency rate (LTIFR) per 200,000

worked hours of ≤0.32 over 12 months.

Achieved. Our end of year LTIFR rate outcome

is 0.30; globally we had six lost time accidents

of which two were government reportable.

Severity of these lost time accidents was

reduced compared to the previous year.

Ensure that ≥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.

Achieved. Despite many operational changes

the percentage of managers and process

leaders trained or holding certified

qualifications has averaged 85% within 12

weeks. The exception was our Sri Lanka site

due to ongoing Covid travel restrictions.

Increase the number of reported near miss/

my safety concerns and achieve a five day

closure rate of ≥85% at all facilities.

Achieved. There has been a 5% increase in

near miss reports per employee per year.

The near miss closure rate has exceeded 90%

on average over the full year.

Achieve a ≥90% compliance to our area Safe,

Secure and Sustainable inspection

programmes.

Not achieved. Compliance to this programme

has run at an average of 85% over the year

due to a significant number of operational

changes and various headcount reductions.

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.

Achieved. We have increased the breadth of

online H&S training available to our employees

and added some further environmental

modules to our Venture in-house training

platform. We have also increased our

face-to-face HSE training post Covid-19.

Achieve good HSE training delivery

performance of over ≥1,700 8hr person days

per year.

Achieved. We have achieved this HSE training

target (1,742) without factoring in employee

headcount reductions.

FY24 health and safety objectives

Objective

Zero lost time accidental injuries and to achieve a lost time injury frequency rate (LTIFR) per

200,000 worked hours ≤50% below the UK Labour Force Survey average calculated LTIFR rate.

Maintain our operational manager and supervisor IOSH Managing Safely (or equivalent or

higher qualification) training at over 80% within 12 weeks of starting a new role.

Increase our near miss/my safety concern reporting to an average of at least 1.4 near misses

per employee, with a five day closure rate of ≥85% at all facilities.

Conduct a review of our safe, secure, and sustainable inspection programmes with a view

to achieving ≥87% compliance at all sites.

Track our HSE person days of training to ensure we achieve ≥90% of employee end of year

headcount in a year of further change, with a strong focus on environmental training.

De La Rue plc Annual Report 202340

Wellbeing

Wellbeing support is widely available in

all our sites and we monitor and compare

what we offer to ensure levels of support

are comparable.

In the past year across different

countries we have provided information

and support on a broad range of topics

including men’s and women’s health,

musculoskeletal health, neurodiversity

and financial wellbeing.

We offer free services such as flu

vaccines, health check ups and access

to GP and occupational health services

as well as comprehensive Employee

Assistance Programmes.

Where possible, we have retained hybrid

working to give employees flexibility to

their working hours and location and

have also started bringing people

together face to face to collaborate and

create a sense of community.

All our sites have accredited Mental

Health First Aiders (or equivalent, where

this exists) and we ensure they receive

regular training and support.

Training and development

We provide all employees with access

to our Learning Management System

(LMS) covering an array of learning and

development materials. This gives

employees the opportunity to access

content that aligns their learning styles and

preferences. The content has recently

been aligned to our company Values.

Some training modules are mandatory

and, where required, the content is

delivered face to face as well as on

our LMS.

Employees and managers hold

development conversations as part of

our performance management process

to agree what training is required and

our in-house learning and development

team can support these requests.

We continue to focus on virtual

classroom delivery of workshops such

as understanding self and leading with

inclusion as well as storytelling.

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, covering areas such

as professional coaching, software

development, finance, project

management and IT.

We have recently launched a

comprehensive training programme

to support our people managers

and leaders.

Working with our unions

We maintain strong and productive

relationships with the unions in the

countries where we have manufacturing

operations and in FY23 we recognised

the following unions: UNITE (UK), General

Workers Union (Malta), Kenya Union of

Printing, Publishing, Paper Manufacture,

Pulp & Packaging Industries (Kenya) and

De La Rue Branch – Internal Company

Employees Union (Sri Lanka). Overall,

around 62% 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:

– Consultation in our Gateshead,

Debden and Westhoughton sites to

reduce headcount and align shift

patterns to meet changing business

requirements reflecting external

market demand.

– Consultation in our Kenya site

to reduce operational activity

and headcount in line with

market demand.

– Commencing negotiations in relation

to a revised collective bargaining

agreement in Sri Lanka and Malta.

– Attendance from UNITE UK and

General Workers Union external

officials 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

regarding the importance of speaking up

about ethical issues and how to do so, 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 99.

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 other investors.

A planned roadshow following full and

half year results where the CEO and

CFO meet significant shareholders is

supplemented by a range of other

meetings and calls. The last planned

roadshow which took place following the

announcement of half year results in

November 2022 included meetings with

a number of active managers, together

holding 62% of the share register.

Further detail can be found in the

Section 172 statement on pages 21 to 23

and in the Corporate Governance report

on page 79.

De La Rue plc Annual Report 2023 41

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Responsible business report continued

Customers

De La Rue maintains close contacts

with many of our business, government

and central bank customers, frequently

updating them on our latest news,

developments and initiatives. Our

in-person interactions are supported by

digital marketing activities that enable

interactions via social media, emails and

the delarue.com website.

A multi-tiered approach is taken towards

customer needs. Macro-level analysis

(e.g. PESTLE – political, economic, social,

technology, legal, environmental –

analysis of our markets) supports some

customer conversations (e.g. future of

banknote demand). Structured surveys,

such as net promoter score, and

voice-of-the-customer interviews

are carried out, feeding into Market

Requirements Documents and product

portfolio considerations. Account

management and support team feedback

is also regularly captured and used

across the business.

The various interactions happen virtually,

via territory visits, via visits to De La Rue

sites and at a range of conferences. This

includes our own events, for instance

De La Rue recently hosted central banks

from Africa, the Middle East, Central

America, Central Asia and Europe at a

two-day event to open the new polymer

line in our Westhoughton site. In

Authentication the inside sales team

engages with our loyal, existing customer

base on a weekly/monthly/quarterly

basis as appropriate to ensure they are

receiving the right support, they know

who to speak to and they are aware of

De La Rue’s solutions.

Suppliers

We have been working in close

partnership with our key suppliers,

including work with our new portfolio of

banknote paper suppliers, to mitigate

and manage the impact of the current

global supply chain challenges and

inflationary headwinds associated with

the global cost of energy, oil and oil

derivatives, and supply disruptions

following the pandemic and the impact

of the war in Ukraine.

We have continued with our Scope 3

analysis work, recognising this significant

carbon impact, and are currently

engaging with a range of our key

suppliers who collectively account for

80% of our total procurement spend

across the business. During the year we

launched the Ecovadis programme and

have invited more than 50 suppliers to

participate in the assessment

programme. This will enable us to drive

both improved understanding and

visibility of our suppliers’ ESG impacts

and sustainability improvements across

our supply chain. We look forward to

widening this approach to all of our key

suppliers during FY24.

The progress of our work with suppliers

on ESG through these initiatives has

resulted in De La Rue achieving an A

score (the highest score available) in the

CDP Supplier Engagement Rating, putting

us in the top 8% for supplier engagement

on climate change.

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 in the local

community to ensure we are having

a positive impact.

In addition to ongoing support for several

educational initiatives, examples of

charitable activities around our sites

during the year included:

– Our Malta site launched a

collaboration with the Foodbank

Lifeline Foundation that assists people

who find themselves in financial

difficulty by giving them a supply

of staple food items. The site also

participated in an event to support

cancer charities.

– Colleagues in our Logan site in Utah,

USA collected around 30 warm coats

which were donated to a charity that

supports abuse prevention.

– In our head office in Basingstoke UK

we organised a fundraising event for

the national cancer support charity,

Macmillan and held a Christmas

Jumper Day in aid of Save The

Children charity. We also supported

a local primary school for children

with special needs and provided each

pupil with a Christmas gift.

Images of some of the charitable

activities undertaken by colleagues

during the year.

People continued

De La Rue plc Annual Report 202342

De La Rue’s ethical framework

The graphic below summarises our ethical governance framework.

Our people

Health, safety and

wellbeing

Fairness and respect

Human rights and

modern slavery

Our business standards

Environmental

sustainability

Bribery and corruption

Gifts and hospitality

Fair competition

Conflicts of interest

Fraud, tax evasion and

money laundering

Sanctions

Our information

Records and reports

Protecting personal

information

Confidential information

and information security

Market abuse and

insider trading

Inclusivity

Modern Slavery and human trafficking

Stress management

Human rights policy statement

Group HSE Sustainability policy

Occupational Health and Safety manual

Global health and safety

standards and monthly

reporting

ISO management systems

Safe and Secure audits

Grievance and disciplinary

processes

Gifts register

Expenses vetting

Third party onboarding

processes

Legal department

guidelines

Environmental reporting

Global environmental

standards

ISO management systems

Anti-bribery and corruption

Competition and anti-trust

Conflicts of interest

Recruitment of PEPs

Prevention of tax evasion

Gifts and hospitality

Supplier Code of Conduct

Fraud

Group HSE Sustainability policy and

EMS manual

Sanctions

Expenses

Charitable giving

Acceptable use of Information systems

Data protection

Document retention

Group Baseline Security Manual

Confidential Information and Dealing

Operational Delegation of Authority

Securities Dealing Code

Social Media

Compliance declarations

Separation of duties

External Monitoring

Procedures for managing

confidential & inside

information

Controls over share

dealing

Data protection annual

returns

Code of Business

Principles

Supporting policies Processes Oversight, control

and

communication

Training & induction

Benchmarking

CodeLine

ISO certifications

Specialist audits

BnEI accreditation

Internal audit

External audit

Risk reviews

UN Global Compact

SharePoint intranet

Employee surveys

Ethics Committee

Sanctions Board

Business standards

It is vital that we 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.

De La Rue plc Annual Report 2023 43

Strategic report Governance report Financial statements

Business standards continued

Responsible business report continued

The Board encourages a culture of

strong governance across the business.

Our ethical credentials are monitored

by the Ethics Committee, via formal

internal and external audits and senior

management review forums. In addition

to the governance activities described

earlier in this responsible business

report, further details about the activities

of the Board and its Committees can

be found in the Corporate Governance

section of this Annual Report on pages

74 to 127.

Code of Business Principles

In January 2023 we launched our new

Code of Business Principles, bringing our

guidance up to date to reflect legislation

and current best practice. The Code is

available in English, Maltese and Sinhala

to ensure accessibility for all colleagues.

The new Code is divided into three

sections: Our People, Our Business

Standards and Our Information. Further

details about the subject areas covered

in each section are shown in the graphic

on page 43. The Code includes an ethical

decision guide, scenarios based on each

subject covered, and details on how to

raise ethical concerns.

Every employee is required to either

attend a training session in person or

complete an online training module and

confirm that they understand and will

adhere to the Code and will speak up if

they become aware of any breaches.

Our people managers are asked to

complete a version of the online training

which highlights their enhanced

responsibilities under 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. Ethics Champions have been

involved with the rollout of the new

Code of Business Principles and, where

possible, are involved with employee

inductions to ensure new starters know

who they can approach with questions

around ethical practices.

Anti-bribery and corruption

We have a zero tolerance policy on

bribery and corruption and have

implemented a robust framework of

polices and processes to prevent our

employees, contractors, third party

partners, consultants and other

representatives from engaging in bribery

or other corrupt practices. All employees

are made aware of our stance through

their acknowledgement of our Code of

Business Principles and those in roles

which may have a higher potential

exposure to bribery and corruption risk

are required to complete detailed

mandatory online training every

two years.

During the year, an anti-bribery

management system review board

was established. This forum is attended

by senior managers from enabling

functions and the divisions and its role

is to monitor the continuing suitability,

adequacy and effectiveness of

the management system. The activities

of this forum are reported to the

Ethics Committee.

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.

This register is regularly reviewed by

executive management. Colleagues who

have regular contact with customers

and suppliers are asked to acknowledge

annually their understanding of

and adherence to our gifts and

hospitality policy.

Third party partner sales consultants

(TPPs) and suppliers

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 anti-bribery and

corruption 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 refreshed 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 and the level of

approval required to onboard or renew

agreements. 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.

Our Supplier Code of Conduct clearly

sets out the ethical standards to which

we expect our suppliers to adhere,

including in relation to bribery and

corruption and human rights. Further

progress has been made with the rollout

of our online onboarding system for new

suppliers and the cyclical screening of

existing suppliers.

During the year an ethical risk

assessment and management process

was developed and is applied to all key

suppliers. A supplier ethics forum

comprising representatives from

divisional and group procurement

teams and the ethics team has been

established and meets bi-monthly to

discuss any ongoing or emerging issues,

and to ensure that any risks or issues,

once flagged, are escalated and resolved

to our satisfaction.

De La Rue plc Annual Report 202344

Training

Regular, relevant and focused training is

important to support high standards of

business behaviours. During the period,

in addition to training on our new Code

of Business Principles mentioned above,

we continued our mandatory online

training programme, allocating anti-

bribery and corruption, competition

law, modern slavery, sanctions, and

gifts and hospitality training to new

joiners in relevant roles. 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 and Risk Management report on

page 56.

Following a review by external experts,

De La Rue’s data protection policies,

procedures and documents have been

enhanced to bring them in line with

best practice.

Accreditations and

certifications

De La Rue is an accredited member

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 is subject

to an external independent audit every

three years which rigorously tests

anti-bribery and anti-trust processes,

procedures and controls against an audit

framework. De La Rue is accredited at

Level 1, the highest level.

In addition to BnEI accreditation,

De La Rue maintains ISO management

system standards for anti-bribery (ISO

37001), occupational health and safety

(ISO 45001), environmental management

systems (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.

This section (pages 24 to 45)

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:

– Our business model

Pages 16 to 17

– Key performance indicators

Pages 46 to 49

– Non-financial key performance

indicators

Page 49

– Risk and risk management

Pages 56 to 63

– Corporate governance

Pages 75 to 76 and 78 to 79

– Ethics Committee

Pages 99 to 100

– Directors’ report

Page 128

Non-financial

information statement

De La Rue plc Annual Report 2023 45

Strategic report Governance report Financial statements

Key performance indicators

We use a balance of financial

and non-financial key

performance indicators to

measure our performance

Adjusted operating profitRevenue

Definition

Why it is

important

Performance

Historic

performance

IFRS operating profit, less exceptional

items and amortisation on acquired

businesses.

We measure IFRS revenue from each

division, less, in FY21 and before,

‘pass through’ revenue relating to

non-novated contracts following the

sales of certain historic businesses.

This key performance measure of

profitability is followed closely both

within the business and externally.

Increasing revenue is the bedrock

upon which the business is able

to grow

Adjusted operating profit fell 24.2%

in FY23, driven by lower revenue in

Currency, a sales mix which had an

adverse impact on margin and

inflationary pressures which were

partially, but not completely, offset

by cost savings.

Revenue in Authentication rose

marginally as additional GRS contracts

came online and sales of datapages for

Australian passports offset weaker

Brand sales. Currency revenues fell by

9.4% as the impact of weak market

demand was felt

Link to our strategic pillars

Link to remuneration

Link to our strategic pillars

Link to remuneration

2023202220212020

2019

-10

Authentication

Currency

Discontinued

2023202220212020

2019

100

200

300

400

500

600

Authentication

Currency

Discontinued

(£m)(£m)

De La Rue plc Annual Report 202346

Adjusted EBITDA and

free cash flow

Net debt/EBITDA covenant ratio EBIT/net interest covenant ratio

Adjusted EBITDA is operating profit less

exceptional items, depreciation and

amortisation. Free cash flow is net cash

flow before financing activities, plus

interest paid, lease payments and

dividends paid to minorities.

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.

This is the ratio between adjusted EBIT

and net interest payable, both adjusted

in accordance with the definition of the

covenant within our banking agreements.

Adjusted EBITDA gives an indication of

how much cash the Group is generating

from operations. Free cash flow shows

how much cash is being generated for

shareholders and is a metric used in

assessment of our Performance Share Plan.

Maintenance of this ratio below a certain

level, for FY23 less than 3.0, is a key

covenant within our historic banking

agreements. This ratio has superseded

EBITDA margin as a KPI as it is of more

relevance in managing the business.

Maintenance of this ratio above a

certain level, for FY23 more than 3.0,

is a key covenant within our historic

banking agreements.

Group adjusted EBITDA fell by 13.3% in

FY23. However the outflow of free cash

slowed, from £18.6m in FY22 to £11.4m in

FY23. The business generated cash at the

operating cash level, but paid out £17.4m

to cover exceptional costs, £16.5m of

pension deficit repair contributions and

£21.4m of capital expenditure.

This covenant ratio was 2.21 at 25 March

2023, within the limit set out in our

banking agreements. The ratio has

increased this year given the increase

in net debt and fall in EBITDA.

This covenant ratio was 3.03 at

25 March 2023, within the limit set out

in our banking agreements. The fall in

the ratio compared with prior year was

mostly caused by the increase in interest

payable, driven by the 450bp increase

in Bank of England base rates over

the period.

Link to our strategic pillars

Link to remuneration

Link to our strategic pillars

Link to remuneration

Link to our strategic pillars

Link to remuneration

2023202220212020

2019

2.21

1.46

0.99

2.24

1.3

0.0

0.5

1.0

1.5

2.0

3.0

2.5

Limit

2023202220212020

2019

-50

-25

Authentication

Currency

Discontinued

Free cash ﬂow

2023202220212020

2019

3.03

7.40

6.30

5.20

12.90

0.0

4.0

2.0

6.0

8.0

10.0

14.0

12.0

Limit

Our strategic pillars

Grow repeatable business

Drive efficient operations

Invest for the future

Find out more in Remuneration

(£m) (Ratio) (Ratio)

De La Rue plc Annual Report 2023 47

Strategic report Governance report Financial statements

Total shareholder return

Definition

Why it is

important

Performance

Historic

performance

(Ratio)

Total shareholder return of De La Rue

shares compared with that of the

FTSE 250 index. The graph below has

been rebased to 100 at 24 February

2020, the day before the Turnaround

Plan was announced.

This is a performance measure under

the Performance Share Plan.

Share performance over FY23 was

adversely impacted by market reaction

to the trading updates that took place

before and during the year.

Key performance indicators continued

Link to our strategic pillars

Link to remuneration

02/20 08/20 02/21 08/21 02/22 08/22 02/23

200

160

140

180

100

120

De La Rue

FTSE 250 (excluding investment trusts)

Net debt

The net of borrowings and cash and

cash equivalents.

This is a key measure of our indebtedness,

monitored both internally and externally.

Net debt increased by £11.7m in FY23, as

there was an overall net cash outflow in

the business as explained in the EBITDA

KPI opposite.

Link to our strategic pillars

Link to remuneration

2023202220212020

2019

-83.1

-71.4

-52.3

-102.8

-107.5

-120

-80

-100

-60

-40

-20

(£m)

De La Rue plc Annual Report 202348

Gender diversity in managementAdjusted basic earnings

per share

Energy used per tonne

of good output

(p) (%) (kWh/tonne)

Adjusted basic 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.

We monitor our gender diversity among

our management team, looking to reach

60/40 male/female split by FY23.

We measure our energy efficiency

in terms of the energy used per tonne

of good output, targeting a 7.5% fall

this year.

This is a performance measure under

the Performance Share Plan.

This is a key target that we set to

encourage gender diversity at a senior

level within the business.

We believe this is a representative

indicator of the energy efficiency of

our operations.

Adjusted basic EPS fell to a loss of 1.1p in

FY23 due to a fall in adjusted operating

profit and an increase in net finance

expense as explained above.

We did not achieve our target this year.

28% of the management team were

female at 25 March 2023. We continue

to work on initiatives to support the

achievement of this target.

We did not achieve our target this year,

due to the drop in volume of output.

We will continue to measure this ratio,

but are not setting direct targets for

FY24 due to the unpredictability of

volume of output.

Link to our strategic pillars

Link to remuneration

Link to our strategic pillars

Link to remuneration

Link to our strategic pillars

Link to remuneration

2019 2020 2021 2022 2023

-15

-30

IFRS

Adjusted

Male 72%

Female 28%

2023202220212020

2019

3,656

2,903

3,139

3,633

0.0

1,000

500

1,500

2,000

3,000

2,500

4,000

3,500

Our strategic pillars

Grow repeatable business

Drive efficient operations

Invest for the future

Find out more in Remuneration

De La Rue plc Annual Report 2023 49

Strategic report Governance report Financial statements

Financial review

Rob Harding

Chief Financial Officer

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

EBITDA and adjusted controllable

operating profit (adjusted operating

profit before enabling function

cost allocation), for both ongoing

operating divisions.

Over 99% of Group revenue for FY23 of

£349.7m (FY22: £375.1m) originated from

our ongoing operating divisions of

Currency and Authentication.

Together Currency and Authentication

delivered adjusted operating profit of

£27.9m (FY22: £35.8m), a fall of £7.9m

year-on-year. This largely reflects lower

revenue from the Currency division,

adverse mix and a slight increase in

operating expenses. Identity Solutions

generated an adjusted operating loss of

just £0.1m in the current financial year

with minimal remaining activity (FY22:

£0.6m profit).

Authentication

Our Authentication division protects

revenues and reputations through the

provision of physical and digital solutions

to governments and commercial

organisations. We also manufacture

ID security components.

During FY23 our existing Government

Revenue Solutions contracts have

performed as expected and revenue

benefitted from contracts in Bahrain,

Oman and Qatar coming on-stream

during the year. This was offset by the

HMRC contract ending as expected in

the first quarter.

In addition our ID business has grown

strongly with our contract with Note

Printing Australia (NPA) meeting

scheduled volumes during FY23, securing

sufficient semi-conductors despite

general supply shortages of these

components. The NPA contract reached

full production volumes shortly after the

year end on the newly commissioned

additional production line in Malta.

In contrast, our Brand business saw

lower than expected sales, with Microsoft

particularly impacted during the year

by the fall in PC sales globally, with

International Data Corporation (IDC), a

well-respected industry observer, noting

a 16.5% year on year fall in PC demand/

shipments in 2022, and a 29% drop in

the first calendar quarter of 2023,

compared to the same quarter in 2022.

The supply of Covid vaccine brand

protection seals, strong in FY22, also fell

away due to a change in strategic focus

by the customer.

Overall these movements led to revenue

for the year of £91.7m (FY22: £90.3m),

a slight increase over last year.

Gross profit fell slightly in both absolute

and margin terms with gross profit

margin falling by 110 basis points to 37.1%

(FY22: 38.2%), impacted by sales mix

despite careful cost control.

In FY23 we contended with

reduced revenue, an adverse

sales mix and inflationary

headwinds. We have worked

hard to implement cost

savings which have helped

to mitigate this impact.

Building the

business

De La Rue plc Annual Report 202350

Authentication

FY23

£m

FY22

£m Change

Revenue 91.7 90.3 +1.6%

Gross profit 34.0 34.5 -1.4%

Adjusted controllable operating profit* 23.0 23.7 -3.0%

Adjusted operating profit* 14.3 16.3 -12.3%

Operating profit 5.4 15.1 -64.2%

% %

Gross profit margin 37.1 38.2 -110bps

Adjusted controllable operating profit margin* 25.1 26.2 -110bps

Adjusted operating profit margin* 15.6 18.1 -250bps

* Non-IFRS measure.

Adjusted operating profit in

Authentication fell 12.3% to £14.3m

(FY22: £16.3m), mostly driven by a less

profitable mix of sales this year, a rise in

depreciation on capitalised software

development costs and a greater

proportion of enabling costs being

allocated to the Authentication division,

given the higher percentage of revenue

it contributed to the overall business.

Adjusted profit before controllable costs

also fell marginally, down 3.0% to £23.0m

(FY22: £23.7m), hit by an adverse sales

mix. On an IFRS basis, operating profit of

£5.4m (FY22: £15.1m) was impacted by

lower underlying profits and exceptional

costs, relating to asset impairment and

restructuring costs, that were £7.7m

higher than prior year.

Currency

De La Rue’s Currency division provides

market-leading end-to-end currency

solutions, from finished banknotes to

secure polymer substrate and banknote

security features to over half the central

banks and issuing authorities around

the world.

Revenue of £254.6m in FY23 (FY22:

£280.9m) for the Currency division was

down 9.4% on the previous year. The fall

in revenue was mostly due to lower

banknote volumes, with a fall in polymer

substrate volumes seen as well.

The post Covid-19 lull in demand,

exacerbated and extended by global

macroeconomic uncertainty, continued

throughout FY23. It is evident that this

slowdown has been experienced across

the Currency manufacturing industry, as

several of our competitors in this area

have commented publicly that they have

seen similar declines.

The demand for banknotes has recently

been at low levels. As at 25 March 2023,

the De La Rue Currency division’s total

order book stood at £136.8m (26 March

2022: £170.8m), a lower level at this

time of year than in any of the last five

years. The twelve month order book as

at 25 March 2023 stood at £131.7m

(26 March 2022: £163.5m).

There are encouraging signs that the

market is recovering, with a number of

substantial new tenders underway since

the year end, but the timing of this

recovery remains uncertain. As of 16 June

2023, we had secured the substantial

majority of the planned FY24 revenue.

Strong cost control and operational

efficiency, together with the benefits

of the Portals agreement termination,

meant that gross profit margin rose

slightly to 22.9% (FY22: 22.5%), though,

given the fall in revenue, gross profit

fell 7.9% in absolute terms to £58.2m

(FY22: £63.2m).

Currency

FY23

£m

FY22

£m Change

Revenue 254.6 280.9 -9.4%

Gross profit 58.2 63.2 -7.9%

Adjusted controllable operating profit* 37.6 42.5 -11.5%

Adjusted operating profit* 13.6 19.5 -30.3%

Operating (loss)/profit (24.8) 15.0 n/a

% %

Gross profit margin 22.9 22.5 +40bps

Adjusted controllable operating profit margin* 14.8 15.1 -30bps

Adjusted operating profit margin* 5.3 6.9 -160bps

* Non-IFRS measure.

De La Rue plc Annual Report 2023 51

Strategic report Governance report Financial statements

Adjusted operating profit in the Currency

division fell 30.3% to £13.6m (FY22:

£19.5m), impacted mostly by the fall in

revenue but also partly by the rise in

enabling function costs in absolute

terms, despite a smaller proportion of

those overall costs being allocated to the

division. Further detail about enabling

function costs is given below.

On an IFRS basis, the division moved into

an operating loss of £24.8m (FY22: profit

of £15.0m) with £38.4m of exceptional

costs attributed to the division (FY22:

£4.5m), comprising £17.0m of costs

relating to the termination of the

agreement with Portals Paper, £8.5m

of credit loss provision on Portals loan

notes and £12.9m of restructuring and

relocation costs.

Putting aside the impact of exceptional

items and the divisional allocation of

costs incurred centrally by enabling

functions discussed below, we also saw

a slight fall in adjusted controllable

operating profit to £37.6m (FY22:

£42.5m) driven by the fall in revenue,

though amid a background of cost

inflation, controllable operating profit

margin fell only slightly to 14.8%

(FY22: 15.1%).

Identity solutions

As noted above, the legacy Identity

Solutions business saw minimal activity

in FY23 with an operating loss of just

£0.2m (FY22: operating profit of £0.6m).

Enabling function costs

In FY23 enabling function costs of

£32.7m (FY22: £30.4m) rose by 7.6% and

represented 9.4% of Group revenue

(FY22: 8.1%). The rise in enabling function

costs came from the non-recurrence of

various credits received last year, a

reclassification of entity costs previously

deemed discontinued, IBRN (incurred

but not recorded) insurance claims

covering the risk that a claim may be

made in the future related to cyber

security and audit fee increases.

Exceptional items

Exceptional items during the period

constituted a net charge of £47.1m

(FY22: £5.7m) before tax.

Exceptional charges included:

– £17.0m (FY22: nil) relating to the

payments agreed to terminate the

long-term supply agreement with

Portals Paper

– £12.6m (FY22: nil) in relation to

redundancy charges and asset

impairments associated with the

wind down of activity in our Kenyan

operations. Of this, £6.9m relates to

fixed asset and inventory impairments

which are non-cash items.

– £2.9m (FY22: nil) impairment of

capitalised product development

costs within Authentication in relation

to two programs on which work was

mothballed during FY23.

– £1.4m (FY22: £nil) impairment of

software assets relating to the

Currency where future revenue

relating to these assets are minimal.

– £4.2m (FY22: £1.8m) of other site

relocation and restructuring expenses

incurred in connection with cost out

initiatives designed to right-size both

divisions for future operations.

– £8.5m (FY22: £3.1m) recognition

of credit loss provision on other

financial assets. Other financial assets

comprise securities held in the Portals

International Limited group which

were received as part of the

consideration for the paper disposal

in 2018, together with accrued

interest. In accordance with IFRS 9,

management has assessed the

recoverability of the carrying value of

these financial assets and recorded

an expected credit loss provision of

£8.5m in exceptional items. The net

amount remaining on the balance

sheet for other financial assets was

£nil (FY22: £7.4m). This provision will

not impact our efforts to work with

the Portals Group companies to

recover these investments.

– £0.5m (FY22: £0.4m) in relation to

legal fees incurred on rectification

of certain discrepancies identified

in the Pension Scheme rules net of

amounts recovered.

Tax related to exceptional items amounted

to £5.1m (FY22: tax credit of £1.8m). As well

as the tax impact of the items detailed

above, it included £4.0m (FY22: £1.5m) of

charge related to the derecognition of a

deferred tax asset relating to the pension

scheme and £6.1m (FY22: nil) relating

to the expected utilisation of tax credits

in Malta, which are expected to be

surrendered for capital grants against

future capital expenditure there.

The policy for exceptional items described

in the Annual Report and Accounts is

used when calculating our financial

covenants as agreed with our lenders.

Finance charge

The Group’s net interest charge was

£9.3m (FY22: £5.5m). This included

interest income of £1.2m (FY22: £0.9m),

interest expense of £11.6m (FY22: £6.2m)

and retirement benefit finance income

of £1.1m (FY22: expense of £0.2m).

Interest income of £1.2m (FY22: £0.9m)

included interest accrued on loan notes

and preference shares held in the Portals

International Limited Group of £1.1m

(FY22: £0.8m). Interest received on loan

notes and preference shares is excluded

from the Group’s covenant calculations.

Interest expense included interest on

bank loans of £7.2m (FY22: £3.1m), interest

on lease liabilities of £0.5m (FY22: £0.6m),

net charges relating to the November

2022 debt modification of £0.7m (FY22:

£nil) and other including amortisation of

finance arrangement fees of £3.2m (FY22:

£2.5m). The increase in bank loan interest

paid in FY23 was largely attributable to

the rises in Bank of England base rates

which moved from 0.75% to 4.25% over

the period and now stand at 5.0%.

The IAS 19 related finance cost, which

represents the difference between the

interest on pension liabilities and assets,

was a credit of £1.1m (FY22: £0.2m

charge). The credit in the year was due

to the opening IAS 19 pension valuation

being a surplus of £29.8m.

The net charges relating to the debt

modification of £0.7m (FY22: nil) relate

to a loss in carrying value of the banking

facilities incurred when they were

modified in November 2022, net of the

amortisation of this loss over the period.

The transaction costs will be amortised

over the period of the loan.

Taxation

The effective tax rate on continuing

operations before exceptional items and

the amortisation of acquired intangibles

was 123.2% (FY22: 11.0%). This includes

the impact of provisions against deferred

tax asset balances, changes in uncertain

tax provisions and the impact of tax rate

changes in Sri Lanka; the underlying

effective tax rate excluding these items

was 24.9% (FY22: 19.4%).

Financial review continued

De La Rue plc Annual Report 202352

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 £27.6m (FY22: £1.4m).

The net tax charge relating to exceptional

items in the period was £5.1m (FY22: tax

credit 1.8m). A tax credit of £0.3m

(FY22: tax credit £0.3m) was recorded

in respect of the amortisation of

acquired intangibles.

The Group paid tax of £1.0m in FY23

(FY22: £1.8m).

The underlying effective tax rate for

FY24 on continuing operations before

exceptional items and amortisation of

acquired intangibles is expected to be

between 70-80%. This appears

disproportionately high due to the

impact of expected corporate interest

restrictions in the UK.

Earnings per share

The basic weighted average number

of shares for earnings per share (‘EPS’)

purposes was 195.4m (FY21: 195.2m).

Adjusted basic loss per share was 1.5p

(FY22: EPS of 13.0p), reflecting the fall in

adjusted basic earnings. IFRS basic loss

per share from continuing operations

was 28.6p (FY22: EPS of 10.6p) reflecting

a basic loss of £55.9m (FY22: earnings

of £20.7m).

Cash flow and borrowing

Cash flow from operating activities was a

net cash inflow of £23.8m (FY22: £16.5m

inflow), generated after taking into account:

– £29.6m loss before tax (FY22:

£25.1m profit)

– £9.3m of net finance expense

(FY22: £5.5m)

– £20.0m of depreciation and

amortisation (FY22: £18.6m)

– £18.3m net working capital inflow

(FY22: £17.2m outflow). This included:

– £0.5m decrease in inventory (FY22:

decrease £3.4m);

– £6.0m decrease in trade and other

receivable and contract assets

(FY22: decrease £22.6m) mainly

due to timing of cash collections

on certain material customer

contracts; and

– £11.8m increase in trade and other

payables and contract liabilities

(FY22: £43.2m decrease), including

the final settlement payment of

£7.5m relating to Portals Paper

being accrued at year end but not

paid until April 2023.

– £16.5m of pension fund contributions

of (FY22: £16.4m) including amounts

related to administrative costs of

running the Scheme

– £13.9m of non-cash provisions within

exceptional items (FY22: £3.0m),

namely £5.4m (FY22: £0.1m credit)

of asset impairments and £8.5m

(FY22: £3.1m) of credit loss provision

on Portals loan notes

The cash outflow from investing activities

was £20.8m (FY22: £25.8m) driven by

capital expenditure of £21.4m (FY22:

£26.9m) as the Turnaround Plan

investment nears completion and we

continue to invest in the capabilities of

our software based products. Capital

expenditure is stated after cash receipt

from grants received of £4.2m (FY22:

£1.5m), largely relating to the

construction of our expanded facility

in Malta.

The cash inflow from financing activities

was £12.6m (FY22: £7.7m), including

£27.0m net draw down of borrowings

(FY22: draw down of £17.0m), £10.3m

(FY22: £6.2m) of interest payments and

£2.4m (FY22: £2.2m) of IFRS 16 lease

liability payments. Debt issue costs of

£0.9m (FY22: nil) were also paid on the

amendment and extension of the banking

facilities agreed in November 2022.

As a result of the cash flow items

referred to, Group net debt moved from

£71.4m at 26 March 2022 to £83.1m at

25 March 2023.

The Group had Bank facilities of £275.0m

including a Revolving Credit Facility (RCF)

cash drawdown component of up to

£175.0m and bond and guarantee

facilities of a minimum of £100.0m, with a

maturity date of 1 January 2025 following

an extension signed in November 2022.

The £100m of bond and guarantee

facilities provided guarantees or bonds

to participate in tenders and function

as back up to contracts, where the

customers require a guarantee as part of

their procurement process. In addition,

the facilities underpin some advance

payments from customers. The Group

considers the provision of such bonds

to be in its ordinary course of business.

At year end the RCF cash component

stood at £175.0m and the bond and

guarantee component stood at £100.0m.

As at 25 March 2023, the Group, as part

of the £175.0m RCF cash component,

has a total of undrawn committed

borrowing facilities, all maturing in more

than one year, of £53.0m (26 March

2022: £55.0m in more than one year).

The amount of loans drawn at 25 March

2023 on the £175.0m RCF cash

component is £122.0m (26 March 2022:

£95.0m). As at 25 March 2023

guarantees of £52.1m (26 March 2022:

£55.6m) were used from the £100.0m

guarantee facility. The accrued interest in

relation to cash drawdowns outstanding

at 25 March 2023 is £0.3m (26 March

2022: £nil).

During FY23 the financial covenants

required that the ratio of EBIT to net

interest payable will not be less than

three times 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 3.03 times, net debt/EBITDA of 2.21

times. The covenant tests use earlier

accounting standards and exclude

adjustments including IFRS 16.

On 29 June 2023 the Group reached

agreement with its lenders to

significantly relax its financial covenants

as outlined in the ‘CEO review’ above. In

addition to amending the interest cover

and net leverage ratio, the Company has

also agreed to maintain a minimum

liquidity ratio of £25m. The minimum

liquidity ratio is defined as available cash

and the undrawn portion of the available

RCF. The ratio is tested monthly but on a

weekly basis covering a 13-week historic,

actuals and a 13-week forward basis,

effective from I July 2023. The Group

must ensure liquidity must not drop

below the £25m level in any two week

consecutive period either looking

historically or forward.

De La Rue plc Annual Report 2023 53

Strategic report Governance report Financial statements

Furthermore, the Group has granted

fixed and floating security over certain

material assets of the Group and has

cancelled £25.0m of the £100.0m bond

and guarantee line. The Group now

has access to £75.0m of bond and

guarantee lines.

Pension scheme

As well as focusing on operational

performance, the Group continues

to look proactively to minimise future

cash outflows, particularly in the

immediate future.

To conserve cash, we have agreed with

the Pension Scheme Trustee to defer

£18.75m of deficit reduction

contributions. We will defer our deficit

reduction contributions of £3.75m per

quarter from that due on 5 April 2023,

up to and including the payment that

was due on 5 April 2024, less an amount

equivalent to the arrangement fee

agreed with our lenders on the covenant

package, due on or after 5 April 2024.

During the second quarter of FY25,

deficit reduction contributions will

recommence at the rate of £3.75m per

quarter. ‘Catch up’ payments, to put the

Scheme in funds for the £17.5m deferred,

will start from July 2025 and will continue

through FY26 to FY29.

In order to preserve and support the

position of the scheme, with the support

of the lenders, the scheme will be

provided with security on a pari passu

basis together with the lenders, as well as

an enhanced information sharing protocol

to ensure ongoing communication

between the Group and the Trustee

remains comprehensive.

On 24 May 2022, the Trustees of the

Main Scheme entered into a partial

pensioner buy-in contract for a

proportion of pension members. 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 premium paid

to the insurer was £319.0m. As at

25 March 2023, the value of the buy-in

contract was £220.6m. The impact of

the partial pensioner buy-in has been

recognised as a loss on the scheme

assets within the comprehensive

statement of income. This buy-in

reduces the overall future volatility of

the pension fund by fixing the liabilities

of a subset of pensioners.

The valuation of the Group’s UK defined

benefit pension scheme (the “Scheme”)

on an IAS 19 basis at 25 March 2023 is a

net liability of £51.3m (26 March 2022:

net surplus £31.6m). The movement in

the IAS 19 valuation from a net surplus at

26 March 2022 was mainly as a result of

losses on assets, as well as inflation

experience on liabilities (due to actual

inflation being higher than assumed).

This was partially offset by gains on the

Scheme’s liabilities as a result of changes

to the actuarial assumption – the

discount rate assumption increased

from 2.85% to 4.70% – and changes to

the mortality assumption resulting in

lower expectations on future life

expectancy of members.

The charge to adjusted operating profit

in respect of the Scheme in the period

was £1.6m (FY22: £1.8m). Under IAS 19

there was a finance credit of £1.1m

(FY22: £0.2m charge) arising from the

difference between the interest cost on

liabilities and the interest income on

scheme assets.

Capital structure

At 25 March 2023 the Group had net assets of £35.0m (26 March 2022: £161.8m).

The movement year-on-year included:

FY23

£m

FY22

£m

Opening net assets 161.8 111.4

(Loss)/Profit for the year (57,2) 23.7

Remeasurement (loss)/gain on retirement benefit obligations (100.3) 35.7

Tax related to remeasurement of net defined benefit liability 24.2 (8.8)

Other movements in other comprehensive income 5.5 (0.9)

Employee share scheme charges 1.9 1.7

Other (0.9) (1.0)

Closing net assets 35.0 161.8

Financial review continued

De La Rue plc Annual Report 202354

Case study:

Malta expansion

Our Maltese

expansion

increases our

capability

with efficient

use of capital

De La Rue is expanding the Malta facility by

14,500m² to provide significantly greater capacity

for the production of tax stamps and polycarbonate

datapages in Authentication, together with

additional banknote printing capability.

The build is being developed in conjunction

with Malta Enterprise, the Maltese economic

development agency, with De La Rue taking

a lease on the building.

As part of the expansion a range of machinery,

previously used at Gateshead in banknote

manufacture, is being relocated to use in

Malta, maximising the cost efficiency of the

overall project.

The extension is being built in stages, with the

additional polycarbonate datapage line already

operating. The remaining additional Authentication

space should be completed in the second half

of FY24 with the Currency facilities, which include

a new vault, ready by the first half of FY25.

The overall project provides substantial additional

manufacturing capacity for the Authentication

division and additional capability for the

Currency business.

Case study:

Authentication

Australian passport

polycarbonate

datapage

Just seven months after the contract

went live, Note Printing Australia

expressed their confidence in the

highly secure and durable

polycarbonate datapages produced

by De La Rue for the new Australian

passport by extending our

relationship, by five years, to cover a

full decade. This extension helped us

to have the confidence to ramp up

production further and invest in a

second polycarbonate line in Malta

which is now operational.

De La Rue plc Annual Report 2023 55

Strategic report Governance report Financial statements

Risk and risk management

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 97.

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 four 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, together with whether

it has identified the principal risks that

could impact the business in the

context of the environment in which

we operate.

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 58

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, which

are referred to as principal risks to the

business. 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 64 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.

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

of one or more of the principal risks.

Management of those risks forms part

of their personal objectives.

How we manage our

principal risks and

uncertainties

De La Rue plc Annual Report 202356

De La Rue’s risk management framework

Group Health, Safety and

Sustainability (Global HSS)

Committee

– Sets Health, Safety and

Sustainability standards

– Agrees and monitors

implementation of HSE strategy

– Monitors Health, Safety and

Sustainability performance

Executive Leadership Team (ELT)

– 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

Sanctions Board

– Responsible for ensuring internal

control procedures are in place

to mitigate the risk of breaching

applicable trade sanctions

and embargoes

Board of Directors and Company Secretary

Ethics Committee

– Reviews the effectiveness of internal controls

– Approves the annual internal and external audit plans

– Reviews findings from selected assurance providers

– Reviews ethical risks, policies

and standards

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

Audit Committee

De La Rue plc Annual Report 2023 57

Strategic report Governance report Financial statements

Risk and risk management continued

How we manage principal risks

Risk Internal controls External assurance Oversight

forum

Change

Bribery and corruption

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.

Link to our strategic pillars

– 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 partners (TPPs),

operating independently

from the sales function.

– We have a focus on raising

awareness through local

Ethics Champions.

– 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.

– We maintain

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.

Ethics

Committee

Risk

Committee

Audit

Committee

Quality management and

delivery failure

A failure in our Quality

Management System, including

specification, controls and

enforcement issues, could lead to

a major customer quality incident,

resulting in late delivery penalty

clauses and increased costs.

Link to our strategic pillars

– Implementing a product quality

strategy to reduce instances

and costs of quality incidents.

– Operational management

boards monitoring KPIs.

– Design approval process.

– Regular reviews and audits of

critical suppliers to ensure

standardisation.

– 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.

– All sites are certified

to ISO 9001, quality

management system.

– Regular customer

quality audits.

Divisional

business

reviews

Business

Process Review

(BPR) updates

Risk

Committee

De La Rue plc Annual Report 202358

Risk Internal controls External assurance Oversight

forum

Change

Macroeconomic and geo-

political environment

As a manufacturing business

operating worldwide, the Group is

exposed to the challenges of the

prevailing macro-economic

environment, inflationary pressures,

supply chain headwinds and stress

to sales pipelines which could

impact its operations and ability

to financially forecast accurately.

The Group also maintains both

Authentication and Currency

operations in territories that are

exposed to economic and/or

political instability. This type of

instability, which includes the

uncertainties of regime change,

creates risks both for our

manufacturing footprint and locally

based direct sales operations.

Link to our strategic pillars

– A robust prioritisation process

with regular reviews of

programmes and projects.

– A robust incident management

framework, including annual

exercising.

– Procurement conducting single

and sole source supplier

reviews as well as risk

assessments on financial and

operational risks from suppliers

– Regular reviews of the

anticipated impacts of pricing

pressures in the Supply Chain

fed into the established BPR

and budget review processes.

– Maintain strong employee

relations in all locations.

– A comprehensive travel

management programme.

– A comprehensive insurance

programme.

– Consideration of contracts

being designated in GBP or

hard currency, if possible,

subject to local regulations.

– Regular monitoring of financing

and fiscal matters, seeking early

advice, diversification, longer

term funding, and hedging, if

facilities are available.

– ELT monthly functional review

meetings.

– Third party risk

management alerting

(hotspots/regions of

concern) and risk

reporting.

– External auditing of risk

and resilience.

Divisional

business

reviews

Business

Process Review

updates

Risk

Committee

Loss of key site or process

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.

Link to our strategic pillars

– We invest in capacity,

equipment and facilities,

multiple sources of supply

to drive down single points

of failure.

– We hold business continuity

planning (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.

– 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.

Group

integrated

security and

business

continuity

steering

committee

Risk

Committee

Audit

Committee

Change in risk levels in FY23 (last 12 months)

Increased

Static

Decreased

New risk

De La Rue plc Annual Report 2023 59

Strategic report Governance report Financial statements

Risk and risk management continued

Risk Internal controls External assurance Oversight

forum

Change

Sustainability and climate

change

Climate change is recognised

as a significant global and

business risk.

Governments, the financial

community, and businesses

(including our own and our

customers) see the current

decade 2020-2030 as a call

to action, with major new

commitments to achieving net

zero emissions by 2050.

Link to our strategic pillars

– 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 within

our control.

– Our own internal audit

programme verifies the Group

environmental management

system and assures good

practices.

– We are tracking our annual

progress against our approved

Science Based Targets (SBTi)

– We have subscribed to

EcoVadis, a global sustainability

rating system for suppliers and

are targeting our most

significant suppliers regarding

engagement with this.

– We embarked upon a Transform

Sustainability Project in 2020,

which has 11 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.

– All our manufacturing

sites are certified to

ISO 14001 standard

which helps the

organisation reduce its

environmental impact.

– We participate in the

CDP (formerly Carbon

Disclosure Project) and

have submitted data

for the past 11 years,

enabling us to review

and reduce our carbon

impact.

– Our alignment with the

recommendations of

the Task Force on

Climate-related

Financial Disclosures

(TCFD) is described

within Responsible

Business on pages

24 to 45.

– We have structured

Science Based Targets

(SBTi) in support of

keeping global

temperature increases

below the 1.5°C limit.

– We comply with the

TCFD recommended

disclosures and have

completed a

qualitative climate

scenario analysis which

can be found on pages

24 to 45.

Risk

Committee.

Global Health,

Safety and

Sustainability

(HSS)

Committee

Monthly ELT

updates

Loss of key talent

Due to external pressures on the

Group there is a reduced ability to

attract and retain key talent, with

the required skills and knowledge.

This is likely to impact the

organisational ability to deal with

the current level of change.

Link to our strategic pillars

– Remuneration structure

designed to support retention.

– Organisational talent process

and succession planning to

provide early identification of

single points of failure and

capability gaps.

– Set clear objectives for the

coming financial year that

people can align around.

– Train Senior Leaders and

Managers on expectations and

how to deliver against these.

– Benchmarking to

known best practice.

– External auditing of

people risk.

HR Leadership

Team reviews.

Talent Board

reviews

annually.

Risk

Committee.

De La Rue plc Annual Report 202360

Risk Internal controls External assurance Oversight

forum

Change

Breach of information security

A breakdown in the control

environment:

– Including collusion or non-

compliance (excluding external

attack) could lead to a breach

of data.

– Resulting in an external attack

(including malware, ransomware

and/or hacking).

Either of which could lead to a

cyber security breach/incident

impacting the confidentiality,

integrity and/or availability

of customer and/or other

critical data.

Link to our strategic pillars

– 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

internal audits of our customer

and ISO standards to an agreed

plan. Any findings are risk

assessed and remediation

activities agreed and tracked.

– Data classification policy and

handling process with

monitoring of classification

changes and email traffic.

– We have cyber awareness

training at all levels of the

business.

– Group policies support and

enable our integrated security

management system.

– IT technical controls include

security incident and event

management software (SIEM),

event logging and management,

managed by an in-house

security operations centre

(SOC). Ensuring information

security is designed in from the

ground up for all deployed

hardware and software,

including the use of multi-

factor authentication (MFA)

where appropriate.

– Due diligence performed on

software and suppliers.

– Contractually bound data

protection provisions with third

parties handling personal data.

– 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.

Group

integrated

security and

business

continuity

steering

committee

Monthly ELT

updates

Risk

Committee

Audit

Committee

Board briefings

Change in risk levels in FY23 (last 12 months)

Increased

Static

Decreased

New risk

De La Rue plc Annual Report 2023 61

Strategic report Governance report Financial statements

Risk and risk management continued

Risk Internal controls External assurance Oversight

forum

Change

Supply chain failure

The failure of a key supplier to

deliver the products or services

that we need on time or to

specification, through either a

supply failure or a business failure,

could lead to disruption to our

operations and associated costs,

an inability to fulfil customer

contractual requirements,

resulting in penalties and forfeit

of performance bonds, loss of

customer contracts and

reputational damage.

The ethical failure of a key supplier,

such as a failure to adhere to our

requirements on Modern Slavery

or Bribery and Corruption in our

supply chain, could lead to major

reputational and financial damage

and potentially prosecution, and

a failure to control and limit price

inflation in our supply chain

could lead to significant erosion

of our profitability.

Link to our strategic pillars

– Key supplier risk assessments

reviewing the risk of supply

failure, credit risk, price

increases and ethical failure.

– Prioritised, supplier-specific

action plans for key risks with

monthly reporting on progress

to ELT.

– Supplier vetting platform to risk

assess all key and new

suppliers, engaging SMEs to

review standards across ethics,

quality, information and product

security and environmental

management.

– Regular reviews of the risk

assessment to ensure that it

remains up to date with latest

available data.

– Ensure that all key strategic

supplier contracts are fit

for purpose.

– Deepened Supplier Relationship

Management programme, with

direct and regular engagement

at executive level with all key

suppliers, to provide early

warning of issues and ensure

that De La Rue’s needs are

prioritised by our key suppliers.

– Utilise and fully deploy spend

analytics tool to increase

visibility of the full supply base

and drive integrated data-

driven action planning.

– We are externally

audited for ISO 14298

(Security Print), ISO

22301 (Business

Continuity) and PwC

on procurement and

supply chain controls.

– Supplier Quality Audit

programme.

Monthly

divisional and

ELT updates

Board updates

Breach of security – product

security

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.

Link to our strategic pillars

– Monthly security KPIs monitor

and maintain 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.

– Layered auditing at all sites,

enhancing security behaviours

and culture.

– Materials control to ensure

product security verification

and reconciliation.

– 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.

Group

integrated

security and

business

continuity

steering

committee

Risk

Committee

De La Rue plc Annual Report 202362

Risk Internal controls External assurance Oversight

forum

Change

Sanctions

Entering a contract or other

commitment with a customer,

supplier or partner which is

subject to a sanction or trade

embargo could lead De La Rue 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 compliance

matters when operating in higher

risk and sanctioned territories.

Additionally banking partners may

not be willing to support bonds or

guarantees for some countries.

Link to our strategic pillars

– A robust request for approval

(RFA) process ensures

commercial bid teams to

consider risk.

– As a responsible business we

ensure the monitoring and due

diligence of customers,

suppliers and partners.

– We conduct an Internal audit

of sanctions compliance

programme annually.

– We mandate sanctions training

to raise awareness of risks and

to clarify escalation routes for

concerns.

– Sanctions impact reviewed on

a case-by-case basis against

a known list of sanctioned

territories and potential

customers.

– We ensure both

internal and external

audit of sanctions

compliance

programme.

Sanctions

Board

Audit

Committee

Board briefings

Banking facilities

The Group maintains banking

facilities that provide liquidity

(ensure all liabilities can be

funded), bonding (to support

existing contracts and new

contracts where bonding is

required) and ancillary lines.

The main facilities will mature on

1 January 2025. The Group will be

seeking to extend these facilities

in what remains a challenging

competitive and global economic

environment. The ability to access

bonding services to the Group in

our existing facility given the

regions we operate in and our

lenders appetite to that risk is also

becoming increasingly complex.

If alternative capacity for foreign

exchange transactions cannot be

secured from main rated banks,

then the Group may need to either

operate with less hedging or

consider unrated counterparties

for foreign exchange contracts.

Link to our strategic pillars

– Manage and develop

relationships with existing and

new banks to continue to

support the business in its

liquidity, bonding and ancillary

needs.

– Regular dialogue with ELT,

banking partners and other

stakeholders.

– Active monitoring of the

available limits and proactive

management for both cash and

borrowings as well as

guarantees to make best use

of capacity.

– Continue to seek additional

counterparties for foreign

exchange.

– Compliance with financial

covenants

– External auditing by EY.

– Due diligence by banks

and their agents prior

to agreement to a

covenant amendment.

Functional risk

reviews

ELT reviews

Risk

Committee

Change in risk levels in FY23 (last 12 months)

Increased

Static

Decreased

New risk

De La Rue plc Annual Report 2023 63

Strategic report Governance report Financial statements

In assessing the viability of the Group,

the Directors have reviewed the principal

risks as set out in pages 56 to 63 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 are

set out below, with the quantitative

impacts modelled being consistent with

those adopted for the Going Concern

period as set out in page 65 to 67:

– Risk 1 Bribery and Corruption – illicit

trade impact on Authentication

business

– Risk 3 Macroeconomic and

geo-political

– Risk 10 Banking facilities – including

possible cash collateral requirements

vs advanced payments

– Risk 11 Kenya taxation and exit strategy

– Risk 13 Currency pipeline

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. The Directors

believe that to maximise stakeholder

value refinancing is required over the

period of recovery and ahead of the

maturity date of 1 January 2025 (with

a target date set for November 2023).

This will allow business as usual in

Authentication and for recovery in the

Currency business and the solidification

of growth. A key area of focus has

been the impact of these principal risks

to the recovery and the impact on the

financial covenants:

The Financial quarterly and monthly

liquidity testing levels are as set

out below.

a. EBIT/net interest payable more than or

equal to 1.0 times (3.0x times previously)

b. Net debt/EBITDA less than or equal to

4.0x times until the Q4 2024 testing

point, reducing to less than or equal

to 3.6x times from Q1 FY25 through to

the end of the current agreement to

1 January 2025 (3.0x times previously)

c. Minimum Liquidity testing monthly,

testing at each week-end point on a

four week historical basis and 13 week

forward looking basis. The minimum

liquidity is defined as ‘available cash

and undrawn RCF greater than or

equal to £25m’, although reduces

to £20m if £5m or more of cash

collateral is in place to fulfil guarantee

or bonding requirements.

There are a number of additional

requirements under the recently

amended facility agreement and

pensions Trustee arrangements

that include conventional enhanced

monitoring measures and progress

on the development of future options.

Progress has already been made on

ensuring that the right processes are

in place to be able to meet the non-

financial conditions and terms agreed

with the lenders, and the Directors are

confident that all of these additional

conditions and terms will be met in

the timeframe required.

There are certain scenarios that the

Directors have not individually modelled

(e.g. a terrorist attack or an event of

nature) as either sufficient insurance

coverage exists or the risk is covered

by the modelling performed on certain

scenarios for other principle risks.

The Directors have assumed that the

current revolving credit facility (with

the new recently amended terms)

remains in place with the same covenant

requirements through to 29 March 2025,

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

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 Directors when determining the

Viability assessment period took

consideration to the existing facility

agreement ending on 1 January 2025.

The Directors will be looking to extend/

renew the facility by November 2023

and are of firm belief that, for the

reasons set out in the Going Concern

assessment on pages 65 to 67, there

are reasonable prospects for this

extension being given.

The Directors believe that an

appropriate period to consider the

Group’s viability is over a two-year

period from the balance sheet date

(FY24 and FY25) or 21 months from

the date of approval of these financial

statements, to 29 March 2025. This

includes the period to the end of the

existing facility agreement and an

assumption this facility would be

renewed with a target date set for

November 2023 until at least the

end of the viability period.

Since the FY23 strategy process was

completed by the Board in October

2023, key strategic decisions have

been taken on footprint reduction in

the group which will be incorporated

into the next 3 year strategic cycle,

which is to be developed later in FY24.

This, combined with a business that is

inherently less predictable beyond this

two year period as good visibility of the

order book is only available over this

shorter-term horizon, justifies the

current two-year cycle selected (which

is a reduction to the three year cycle

adopted in the prior year).

Viability statement and

going concern assessment

De La Rue plc Annual Report 202364

consistent with the current facility

for the remainder of the viability

assessment period. In the event the

current lenders were not supportive of

an extension to the facility at FY24 Half

Year, the Group would consider and

implement alternative financing options

at that time. The directors continue to

assess these alternative financing

options, including but not limited to:

alternative lenders; alternative finance

vehicles; equity injections; and/or the

sale of trade and assets. However, the

Directors are confident this scenario

won’t manifest given its confidence in

refinancing and extending the facility

at FY24 Half Year.

In the event that the risks modelled in

the severe but plausible downside were

to materialise together, 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

29 March 2025.

Going concern

Background and relevant facts

The Group’s business activities, together

with the factors likely to affect its future

development, performance and position

are set out on pages 4 to 63 of the

Strategic Report. In addition, pages 176

to 185 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 financial

position of the Group, its cash flows,

liquidity position and borrowing facilities

are described on pages 50 to 54 of the

Strategic Report.

Following the interim results for the

period ended 24 September 2022 there

has been a difficult period of trading and

rising market interest rates, meaning the

Group forecast that they would breach

financial covenants in their going

concern period to 29 June 2024. As

a result, they entered into extensive

negotiations with the pension trustee

and the Group’s banking syndicate.

A deferral letter from the trustee was

signed on 28 June 2023 agreeing to

deferral of deficit repair contributions

as set out in the paragraph below and

an amended facility agreement for the

Group’s financing facilities was signed

on 29 June 2023, which includes a

relaxation of the financial covenant ratios

along with the introduction of a new

minimum liquidity requirement.

Deferral of deficit repair contributions

The Group has successfully concluded

negotiations with the Trustee of the

De La Rue Pension Fund to defer

£17.5m of the £18.75m of deficit repair

contributions that was targeted in the

Group’s April trading update.

The Trustee has agreed to defer the

Group’s deficit repair contributions of

£3.75m per quarter from that due on

5 April 2023 up to and including that

payment that was due on 5 April 2024.

From July 2024, deficit repair

contributions will recommence at the

previously agreed £3.75m per quarter.

‘Catch up’ payments for the £18.75m of

deferred payments will start from FY26

and will continue through to FY29.

This deferral significantly eases the

short term cashflow burden on the

business and has been incorporated

into all modelling.

Amended Facility Agreement

Under the amended facility agreement,

which was executed by all parties on the

29 June 2023, the Group continues to

have access to a revolving credit facility

(‘RCF’) of £250m that expires on 1st

January 2025, which allows the drawing

down of cash up to the level of £175m and

the use of bonds and guarantees up to

the level of £75m. The amendment to the

debt agreement reduces the available

facility by £25m from £275m to £250m,

with the cash draw-down component

remaining unchanged and the use of the

bonding and guarantee lines reduced to

£75m from the prior £100m level.

The continued access to these borrowing

facilities is subject to quarterly covenant

tests which look back over a rolling

12-month period. In each covenant test

in FY23 the Group has met its covenant

ratios on the historical covenant quarterly

levels. At 25th March 2023, EBIT/net

interest payable was 3.0 times and Net

debt/EBITDA was 2.2 times with net debt

of £83.1m and bonding and guarantees

in place totalling £52m. The Group is

additionally in compliance with all

covenant requirements at 29 June 2023.

The quarterly covenant levels (which will

continue to be tested on a 12-month

rolling basis) have been revised from the

first testing period at 1st July 2023 (Q1

FY24). These are now subject to monthly

minimum liquidity testing and quarterly

covenant tests from this date. The terms

include consideration of future options

for the group, provision of further

non-financial deliverables and milestones

that the banks will monitor, and these are

fully within management’s control.

From 1 July 2023, the revised financial

covenants and spread levels were

as follows:

– EBIT/net interest payable more than or

equal to 1.0 times, (3.0 times previously)

– Net debt/EBITDA less than or equal to

4.0 times until the Q4 2024 testing

point, reducing to less than or equal

to 3.6 times from Q1 FY25 through to

the end of the current agreement to

1st January 2025. (3.0 times previously)

– Minimum Liquidity testing monthly,

testing at each weekend point on a

4 week historical basis and 13 week

forward looking basis. The minimum

liquidity is defined as “available cash

and undrawn RCF greater than or

equal to £25m”, although reduces to

£20m if £5m or more of cash collateral

is in place to fulfil guarantee or bonding

requirements (new test)

– Increases in spread rates on the

leverage ratio as a result of the

relaxation of levels:

Leverage

(consolidated net debt to EBITDA)

Margin

(% per

annum)

Greater than 3.5:1 4.35

Greater than 3.0:1 and less than or

equal to 3.5:1 4.15

Greater than 2.5:1 and less than or

equal to 3.0:1 3.95

In order to determine the appropriate

basis of preparation for the financial

statements for the year ended March

2023 the Directors must consider

whether the Group can continue in

operational existence for a period

until 29th June 2024 taking into

account the above liquidity and

covenant requirements.

De La Rue plc Annual Report 2023 65

Strategic report Governance report Financial statements

Testing assumptions and

headroom level

The Group has prepared and reviewed

profit and cashflow forecasts which

cover a period up to 29th June 2024

(Q1 FY25), the going concern period, and

this includes the following quarters: Q1,

Q2, Q3, Q4 FY24 & Q1 FY25 as well as

monthly liquidity testing points

throughout this period.

Management’s assessment is that a

period of 12 months to 29 June 2024 is

an appropriate going concern period for

the following reasons:

– A 12 month period is consistent with

De La Rue modelling and approach

over a number of years, which in prior

periods has also included a facility

termination shortly after the going

concern period (such as in FY22).

– The Directors have considered events

after the end of this period, including

the re-financing requirement for the

RCF which is at 1 January 2025, which

is considered further below

Base case assumptions and headroom

The base case forecasts over the going

concern period have been built taking

into consideration the uncertainty

around the timing of the Currency

market recovery. Revenue growth in

Authentication to over £100m is expected

to be driven from the annualization of

contracts already won in prior periods.

The base financials over the going concern

period reflect further restructuring and

refinancing costs that have already been

initiated. This will help to right size the

business for the current demand with any

ramp up required over the going concern

period to be carefully managed in line

with pipeline capacity requirements and

orders to avoid significant negative

fluctuations vs base plans.

The Group entered FY24 with the

Currency total order book at £136.8m

(25 March 2022: £170.8m) and the

12 month order book at £131.7m

(25 March 2022: £163.5m). The win rate

of over 70% since 2020 on Currency

bids remains high. By 16 June 2023, over

80% of the Currency business plans

revenues for FY24 are secured, with key

wins in Asia providing a solid foundation

for expectations for the year.

The Group’s base case modelling shows

headroom on all covenant thresholds

and the minimum liquidity requirement

across the period.

Severe yet plausible downsides

and headroom

The downside modelling produced has

factored in the Directors’ assessment of

events that could occur in a “severe yet

plausible downside” scenario. The risks

modelled are directly linked to the Risk

Committee “principal risks” described on

pages 56 to 63 of the annual report. The

most significant material risks modelled

were as follows;

Risk 3 Macroeconomic and

geo-political risk

– Authentication new wins and

implementations are not achieved

in the timescales modelled in the

base case. In the severe yet

plausible downside scenario 100% of

revenues with new customers have

been excluded.

Risk 10 Banking Facilities

– Following the recent interest rate rises,

the Group will be paying an interest

rate on its facilities of approximately

8.5% based on the current SONIA rate

of 5% and the applicable margin.

Based on the base case numbers in

FY24, the combined rate would need

to reach c16% before a breach in the

interest covenant would be triggered,

with an implied SONIA rate of 9.2%.

Whilst management had used 5.3%

as their interest rate in a severe but

plausible scenario, based on the

stress testing procedures described

above, they have assessed the risk of

a breach triggered by rising interest

rates as remote given the current

SONIA rate applicable is 5%, the

sensitivity, and that these sensitised

rates would need to apply for the

entire FY24 period.

Risk 11 Kenya taxation and exit strategy

– Cash outflow assumed over and

above the base case, which includes

acceleration of outflows for site exit

and legal settlements.

Risk 13 Currency pipeline

– Volumes and budget margins not

achieved as forecasted in the going

concern period. For currency pipeline

downside risks modelled, margins have

been determined using the average

production cost as opposed to using

the facilities with the lowest production

costs where there is modelled

capacity. As at 26 March 2023,

Currency total order book at £136.8m

(25 March 2022: £170.8m) and the

12-month order book at £131.7m

(25 March 2022: £163.5m). By 16 June

2023, over 80% of the Currency

business plan revenues for FY24 are

secured, with key wins in Asia providing

a foundation for expectations for

the year.

– As a result of the new liquidity testing

requirement, the Directors also

considered historical monthly working

capital swings over the last three

years as well as weekly cash outflow

averages to ensure that adequate

considerations have been made to

capture “in month” working capital

swings that the Group can see given

the volatility of working capital in the

Currency business in particular.

A £20m working capital outflow was

demonstrated to be suitable for a

plausible severe downside to apply

monthly to liquidity testing, assuming

no mitigation at all on liquidity at any

given testing period.

If all of these modelled downside risks

were to materialise in the Going

Concern period, the Group would still

meet its required covenant ratios and

liquidity requirements.

There remains headroom against all

covenant thresholds in a “severe yet

plausible” downside scenario across the

going concern period.

Minimum Liquidity testing monthly

Company modelling of the severe but

plausible downside (including taking into

account working capital swings and

potential cash collateral requirements)

also shows headroom to the liquidity

requirement throughout the period, with

further controllable mitigations such as

reduction in discretionary capex that

could be applied.

The level of reduction that would be

required to breach the liquidity covenant

is considered to be remote by

management on the basis that in the

tightest observable period of the severe

but plausible downside scenario in £27m

and £17m if taking into account working

capital swings and potential cash

collateral requirements. This assessment

excludes the potential further mitigations

available.

Stress-Testing

Under the base case modelling, EBIT and

EBITDA would need to drop by £10m

(46)% and £11m (27%) respectively, or

liquidity would need to drop £30m from

the lowest point, for any breach to occur.

In the severe but plausible scenario

Viability statement continued

De La Rue plc Annual Report 202366

modelling, EBIT and EBITDA would need

to drop by £6m (32%) and £6m (15%)

respectively, or liquidity would need to

drop £27m from the lowest point (£17m

including a negative working capital

swing of £20m and cash collateralisation

savings of £10m), for any breach to

occur. Management concluded that

a breach is remote given that:

– Trading to the end of P2 indicates the

Group is on-track to deliver the FY24

budget from an EBIT and EBITDA

perspective. The Group has

experienced working capital drag

which has led to Net Debt levels being

worse than those forecast in the base

case scenario. The working capital

drags are in line with those modelled

in the severe but plausible downside

scenario and the Group has seen

positive movements to recover

working capital in P3.

– Liquidity stress testing excluded

controllable mitigating actions (as

described above) that management

could employ and still showed

headroom.

– Management are comfortable that

any non-financial conditions and

reporting requirements can be

achieved. The Directors have assumed

that the current revolving credit

facility remains in place with the same

covenant requirements through to its

current expiry date (1 January 2025),

which is beyond the end of the period

reviewed for Going Concern purposes.

The Directors have concluded that the

Group will either renew the facility

thereafter or have sufficient time to

agree an alternative source of finance

from 1 January 2025 onwards.

Other Requirements

As referred to earlier, there are a number

of additional requirements under the

recently amended facility agreement

and pensions Trustee arrangements

that include conventional enhanced

monitoring measures and progress on

the development of future options.

Progress has already been made on

ensuring that the right processes are

in place to be able to meet the non-

financial conditions and terms agreed

with the lenders, and the Directors are

confident that all of these additional

conditions and terms will be met in the

timeframe required.

This Strategic Report (comprising pages 1 to 67 inclusive) was approved by the Board

on 29 June 2023.

By order of the Board

Jon Messent

Company Secretary

29 June 2023

Strategic Report

Reasonable prospects beyond the

going concern period

The Directors have also considered the

pension trustee’s and the lenders’

on-going support for the business given

that further refinancing discussions are

likely to occur over the going concern

period with the current facility due to

terminate on 1st January 2025.

Specifically, an extension by November

2023 is necessary to have adequate

facility duration for going concern

purposes at FY24 Half Year.

Management has concluded that there

are realistic prospects for refinancing to

occur ahead of facility termination as a

result of:

– Lenders have continued to support

the Group through a amended facility

agreement. This was signed on

29 June 2023, and the covenants

(financial and non-financial) were set

to levels that allows the Group to

continue to meet its covenant in a

severe but plausible downside

scenario. The Directors see no reason

that the lender’s support will not

continue given the level of relaxation

of covenants that has been agreed.

– As stated above, prior to the 30th

September 2023 Half-Year

announcement in November 2023,

the Group will have to agree an

extension with its existing lenders

for the facility that comes to end on

1 January 2025. Discussions will

commence over the coming months

with the banks on the future options

open to the Group, and subject to the

Group achieving specific financial and

non-financial milestones that the

Directors are confident in achieving.

To maximise stakeholder value for all

parties, the lenders would need to

provide the business with continued

support through the Currency market

recovery and continued growth in

the Authentication division. It is the

Directors’ judgement that based on

the current support of the lenders the

extension will be achieved.

– In the event the current lenders were

not supportive of an extension to the

facility at FY24 Half Year, the Group

would consider and implement

alternative financing options at that

time. The directors continue to assess

these alternative financing options,

including but not limited to: alternative

lenders; alternative finance vehicles;

equity injections; and/or the sale of

trade and assets. However, the

Directors are confident this scenario

won’t manifest given its confidence in

refinancing and extending the facility

at FY24 Half Year.

The Directors have therefore assessed

that the Group will either renew the

facility or have sufficient time to agree

an alternative source of finance. The

costs of refinancing are included in the

base case.

Conclusion

The base and severe but plausible

forecasts show headroom above the

covenant levels agreed with the lenders

and support the position that the Group

will be able to operate within its available

banking facilities and covenants

throughout the going concern period

to 29 June 2024.

Accordingly, the Directors are satisfied

that the Group is able to manage its

business risks and to continue in

operational existence for the going

concern period. Accordingly, the

Directors continue to adopt the going

concern basis in preparing the

Consolidated Financial Statements.

De La Rue plc Annual Report 2023 67

Strategic report Governance report Financial statements

Governance report

High standards of

corporate governance

are vital in helping

create and protect value

De La Rue plc Annual Report 202368

70 Board statement on corporate governance

72 Board of Directors

74 Governance at a glance

78 Board leadership and company purpose

80 Division of responsibilities

83 Composition, succession and evaluation

88 Audit, risk and internal control

101 Remuneration

102 Directors’ remuneration report

128 Directors’ report

133 Directors’ responsibility statement

How we manage the

relationship with our auditors

Page 94

Induction in action

Page 87

How we engage with

our workforce

Page 79

De La Rue plc Annual Report 2023 69

Strategic report Governance report Financial statements

Dear Shareholder,

The last nine months have been a

difficult time for De La Rue. The market

conditions in which each of our

Authentication and Currency divisions

are operating are discussed in the

Strategic report, but have created

unprecedented challenges.

As a Board, we retain a deep conviction

that the fundamentals of De La Rue’s

business remain sound. We are

approaching the future with energy and

urgency and are confident that we will

chart a course through to calmer waters.

The Company’s businesses have

significant market opportunities and

clear plans for how to address these.

While the recent past has been

immensely challenging, there are now

clear signs that the markets in which

we operate are improving.

The right conditions for

success are in place

Delivering our purpose requires clear and

visible leadership, the right culture and

robust corporate governance. We believe

that we have all three of these in place.

The Board and our Executive Leadership

Team (ELT) each comprise leaders drawn

from a diverse range of backgrounds and

provide clear direction to the business.

Through a divisional structure with clear

goals, expectations and accountabilities,

we provide clarity to the organisation.

We are operating in very volatile times

with rapid and significant changes in the

business environment and the markets in

which we operate and compete. At the

same time, our strategy requires that the

Group is transforming at a significant pace.

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 long term sustainable

success of the Group. This is crucial in

maintaining the trust of our employees

and wider workforce, our customers,

suppliers and other key stakeholders.

The ELT members and our divisional

leadership teams play an integral role in

our governance framework by exhibiting

and promoting positive behaviour.

We have a strong corporate governance

framework. While it is unlikely that good

governance will, in itself, create value, it is

certainly the case that it can help preserve

value. As Board members, we all seek to

provide the critical challenge that is

essential in reaching the best decisions in

the face of often dynamic and uncertain

situations. Our governance framework

also creates checks and balances within

the business, with every employee

encouraged to speak out if they can see

ways of improving our performance.

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. The section 172 statement

on pages 21 to 23 describes how we took

our wider responsibilities into account

during the year.

Board changes and

succession planning

At the AGM in July 2022, Maria da Cunha

retired from the Board after seven years’

service as a Non-executive Director, as

advised in this report a year ago.

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.

Delivering our purpose

requires clear and visible

leadership, the right culture

and robust corporate

governance. This enables

us to earn and repay our

stakeholders’ trust.

Board statement on

corporate governance

De La Rue plc Annual Report 202370

In September 2022 we were delighted to

welcome Mark Hoad as a Non-executive

Director. A chartered accountant,

he is the Chief Financial Officer of TT

Electronics plc and brings vast knowledge

and experience to our deliberations.

Mark will take over the chairmanship of

the Audit Committee from the 2023

AGM. Nick Bray, who currently chairs

the Audit Committee, has served as a

Non-executive Director since July 2016

and has agreed to extend his tenure for

a further term beyond the 2023 AGM.

Given that we have a new lead audit

engagement partner and a new Chief

Financial Officer, Nick’s knowledge and

experience will provide invaluable

continuity and support to the Audit

Committee and, of course, to the Board

as a whole.

In January 2023 the Company

announced that Rob Harding, our Chief

Financial Officer, had resigned to take

on a new role as Chief Financial Officer

of PayPoint plc. Rob will leave us in

July 2023 and we thank him for his

contribution and wish him all the very

best in his next role. In April 2023

Charles Andrews joined us as interim

Chief Financial Officer and as a member

of the ELT but not as a Director. There

has been a successful handover from

Rob to Charles, who brings wide-ranging

experience and a proven ability to lead

change and transformation at an

executive level.

On 1 May 2023 Kevin Loosemore

resigned as a Director and as the

Chairman of the Board. On 12 June

Catherine Ashton resigned as a Non-

executive Director in order to create

time to take up future international

commitments. On 19 June we announced

that Margaret Rice-Jones had decided

not to seek re-election at the 2023 AGM,

in light of her other business commitments.

We would like to acknowledge the

significant contributions that each of

them has made to De La Rue and thank

them for their service and commitment.

On 18 May 2023 we appointed Clive

Whiley as a Director and as the Chairman

of the Board, following an accelerated

search process. We believe that Clive’s

breadth and depth of experience

and skills are what is required to pilot

the business.

On 26 June 2023 we appointed Dean

Moore as a Non-executive Director. He

has deep experience of listed companies

across a wide range of industry sectors,

both as a senior executive and as a

non-executive director.

We are confident that both Clive and

Dean will be valuable additions to the

Board team.

We will continue to keep the Board’s

composition, and in particular the

diversity and blend of backgrounds,

skills, experience present at the Board,

under review.

Our succession plans extend further

than just the Board. During the year

the Nomination Committee reviewed

succession plans for members of the

Executive Leadership Team and their

first and second reports. Succession

planning is important in ensuring that

management is fully prepared for

planned or sudden departures from

key positions. This remains an ongoing

focus and our goal is the development

of a diverse pipeline of talented and

experienced people supporting us and

the ELT in delivering our strategic goals

and fulfilling our purpose.

People

As a Board we are, as always, deeply

impressed by the commitment of our

people, who have been through

significant change over the last three

years. Redesigning and repositioning an

organisation is never straightforward and

we have asked much of our workforce,

who have been required to deliver

immense change. We all feel privileged

to be part of an organisation that

has delivered such a fundamental

transformation since 2020 and

immensely grateful for the efforts of

every one of our people during that time.

We will, of necessity, continue to ask

them to deal with more change, but are

confident that this will leave us well

placed for success in the short and

long term.

Responsible business

As noted opposite, we have

responsibilities to a wide range of

stakeholders. Delivering business results

is clearly of huge importance, but how

we go about delivering those results is

equally important. We are striving to

build a sustainable business that can

deliver profits and cashflow throughout

the economic cycle. Of necessity, this

means that we have to take a long term

view and ensure that whatever we do is

done properly. Everyone who works in

our business, from the factory floor to

the Boardroom, is aware of the importance

of conducting our business responsibly,

taking stakeholders’ interests into account.

Looking forward

We believe that De La Rue is at an

inflection point. The second half of FY23

has by any historical measure been

exceptionally challenging, but we are

confident that we can weather the storm.

We are confident that we and the ELT

are providing the leadership necessary

to take the business forward. De La Rue

has a positive, proactive and responsible

corporate culture that gets the right

things done in the right ways. Our robust

corporate governance framework,

described on the following pages, helps

create the checks and balances needed

so that we deliver the business outcomes

and financial results that we and our

shareholders wish to see.

By order of the Board

Jon Messent

Company Secretary

29 June 2023

De La Rue plc Annual Report 2023 71

Strategic report Governance report Financial statements

Board of Directors

The Board provides leadership to the Company.

The responsibilities of the Board, and how it

discharges its duties, are explained in this

Corporate Governance report.

Key for committees

Audit Committee

Nomination Committee

Risk Committee

Ethics Committee

Remuneration Committee

Committee Chair

Appointed to the Board in April 2021

Career, skills and experience

Ruth joined De La Rue in 1988 as a graduate trainee and

has spent over 30 years working in the international

government sector, living and working in the UK, Mexico,

Colombia, Spain and Malaysia.

During her career at De La Rue, she has held a number

of executive management positions within the Currency,

Identity and Brand businesses in Sales, Marketing,

Manufacturing and General Management. Ruth was

appointed Managing Director of the Currency Division

in 2019. Prior to that she was Sales Director for the

Currency businesses from 2012 until 2019.

In 2018, Ruth joined the advisory board of the

International Currency Association, helping lead the

currency industry in creating a single, cohesive voice.

She was elected its Vice-Chair in 2022. She is also a

member of the advisory council for Commonwealth

Enterprise and Investment Council.

Contribution to long term sustainable success

Ruth has an unrivalled knowledge of the international

currency market, and extensive contacts in finance ministries,

central banks and state print works around the world.

Ruth

Euling

Executive

Director &

MD, Currency

Appointed to the Board on 18 May 2023

Current directorships and business interests

– Mothercare plc, Chairman

– Sportech plc, Senior Independent Director

– Griffin Mining Limited, Senior Independent Director

Career, skills and experience

Clive has 40 years’ experience, both as an executive and

non-executive director, across a wide range of industries

and geographies in regulated and listed company

governance positions. He was previously Chairman of

Dignity plc and a non-executive director of Grand Harbour

Marina plc (listed in Malta), Camper & Nicholsons Marina

Investments Limited and Stanley Gibbons Group plc.

Clive was responsible for successfully guiding Mothercare’s

emergence as an internationally-focused brand business

alongside, at Dignity, leading 12% of the UK funeral market

in the eye of the Covid-19 pandemic.

Contribution to long term sustainable success

Clive’s track record demonstrates that he is capable

of operating in all operational, financial or regulatory

circumstances and the Board believes his depth

of experience and skills are what is required to pilot

the business.

Appointed to the Board in October 2020 and will leave

our employment and the Board in July 2023

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.

Rob resigned as Chief Financial Officer in January 2023 in

order to take up the position of Chief Financial Officer of

PayPoint plc after the expiry of his notice period at the end

of July 2023.

Appointed to the Board in 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.

Contribution to long term sustainable success

Clive has a strong track record of delivering successful

turnaround strategies in a range of industries.

Clive

Whiley

Chairman

Clive Vacher

Chief Executive

Officer

Rob

Harding

Chief

Financial

Officer

De La Rue plc Annual Report 202372

Appointed to the Board on 28 September 2022

Current directorships and business interests

– TT Electronics plc, CFO and Executive Director

Career, skills and experience

Mark is a chartered accountant with a deep understanding

of finance and operational activities, acquired during a

career spent in senior finance/management roles with FTSE

listed companies. He has been a director of TT Electronics

plc and its Chief Financial Officer since January 2015 and

previously held equivalent roles with BBA Aviation plc. His

other previous experience includes several years working

in a variety of management roles in Continental Europe and

Australia, as well as a strong focus on driving business

transformation in the US.

Mark has spent the last 25 years working in global industrial

businesses and has extensive experience of driving

business and functional re-structuring and transformation,

M&A, and equity and debt capital markets.

Contribution to long term sustainable success

Mark is a strategically-minded chartered accountant, with

extensive financial management experience in complex

global manufacturing businesses and strong experience

in listed companies and public markets.

Appointed to the Board on 26 June 2023

Current directorships and business interests

– Cineworld Group plc, Senior Independent Director

– Griffin Mining Ltd, independent Non-executive Director

– THG plc, independent Non-executive Director

– Volex plc, Senior Independent Director

Career, skills and experience

Dean is a chartered accountant with over 35 years of

public company experience in companies operating in

many different sectors and environments. He is a highly

respected finance professional and non-executive

director with a proven track record.

He was previously chief financial officer at Dignity plc,

Cineworld plc (on an interim basis), N Brown Group plc,

T&S Stores plc and Graham Group plc, and formerly

Non-Executive Chair at Tuxedo Money Solutions Limited

and independent Non-Executive Director at Dignity plc.

Contribution to long term sustainable success

Dean’s significant experience of the strategic

development of listed companies, in both senior

executive roles and in non-executive appointments is

ideally suited to supporting the Board and the executive

team in delivering future growth.

Appointed as General Counsel on 3 April 2023 and as

Company Secretary on 11 April 2023

Career, skills and experience

Jon brings to De La Rue a wealth of experience in Company

Secretarial, Legal and Governance, having held numerous

executive roles in both listed and private companies

operating in industrial, manufacturing, property, security

and the defence sectors. His most recent role was as

Group General Counsel and Company Secretary with

QinetiQ Group plc, a multi-national FTSE 250 operating

primarily in the defence, security and critical national

infrastructure markets.

In addition to the Directors named above, three other Directors held office

during FY23:

– Maria da Cunha served as a Non-executive Director until she retired from

office at the AGM on 27 July 2022.

– Kevin Loosemore served as a Non-executive Director and as Chairman

of the Board throughout FY23. Shortly after the year end he resigned as

a Director and ceased to hold office on 1 May 2023.

– Catherine Ashton served as a Non-executive Director throughout FY23.

She resigned as a Director and ceased to hold office on 12 June 2023.

Appointed to the Board in 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.

Contribution to long term sustainable success

Nick is a chartered accountant and highly experienced

CFO, with strong strategic management skills.

Nick Bray

Independent

Non-executive

Director

Mark Hoad

Independent

Non-executive

Director

Dean Moore

Independent

Non-executive

Director

Jon Messent

General Counsel

and Company

Secretary

Appointed to the Board in September 2020 and is not

seeking re-election at the 2023 AGM

Current directorships and business interests

– Origami Energy Limited, Chair

– Holiday Extras Investments Ltd, non-executive director

– ScaleUp Institute, Chair

– Calnex Solutions plc, non-executive director

Career, skills and experience

Margaret has an extensive background in innovative

technology businesses, bringing particular expertise in

software and digital platforms and M&A. Building on an

engineering and product marketing background she has

operated at board level for over 20 years. Amongst these

roles she was Chair of Confused.com until its sale in 2021

and Chair of Skyscanner Limited from 2013 until its sale

in 2016 to Ctrip for £1.4bn. She is now Chair at the

ScaleUp Institute, a not-for-profit company working with

government and industry to build the right environment in

the UK for scaling businesses. On the public markets she

was a director of Xaar plc from 2015 to 2020, where she

was Senior Independent Director and Chair of the

Remuneration Committee. She is currently a non-executive

director of AIM-quoted test and measurement provider

Calnex Solutions plc.

Contribution to long term sustainable success

Margaret has extensive experience of guiding and leading

the strategic development of a range of businesses,

particularly in the IT and tech sectors.

Margaret

Rice-Jones

Senior

Independent

Director

De La Rue plc Annual Report 2023 73

Strategic report Governance report Financial statements

Governance in support of the

corporate purpose

Our corporate purpose is to secure

trust between people, businesses

and governments.

To enable us to fulfil our purpose and

support our customers and others who

benefit from our products and services,

De La Rue needs robust internal

structures and processes. These are

designed to ensure, as far as possible,

that we are ourselves deserving of our

stakeholders’ trust.

Those structures and processes

combine to make up our corporate

governance framework. By training our

people in what is expected of them and

how we expect things to be done, we

create the conditions under which we

will fulfil our corporate purpose.

Corporate governance

framework

The Company’s governance structure is

intended to ensure that the right people

are able to focus on the right issues, at

the right time. The goal is to create and

preserve value for all our stakeholders,

including our shareholders.

As well as the Board Committees

recommended by the UK Corporate

Governance Code (the Code) we have

created a mix of Board and management

bodies and meetings to consider some

of the key issues and risks facing the

Company. This enables groups with the

required subject matter expertise to

devote time and attention to the areas

where they can make a difference.

Reports from the principal Board

Committees are included later in this

Corporate Governance report.

Governance at a glance

Corporate governance is the system

by which companies are directed and

controlled, being a combination of

people, structures and processes

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 25 March 2023, complied with all of

the provisions of the Code.

De La Rue plc Annual Report 202374

Our governance framework

Certain Board responsibilities are delegated to formal Board Committees

which play an important governance role through the work they carry out:

CEO Remuneration

Committee

Disclosure

Committee

Audit

Committee

Risk

Committee

Sanctions

Board

Reviews the structure,

size and composition

of the Board and its

Committees,

managing succession

planning to ensure

a balance of skills,

knowledge and

experience and having

regard to diversity

considerations.

Implements the

approved Directors’

remuneration policy,

sets pay for the

Chairman and

Executive Directors

and monitors the

policies and practices

applied to senior

management

remuneration.

Oversees the

implementation of

the governance

procedures

associated with the

assessment, control

and disclosure of

inside information in

accordance with the

UK Market Abuse

Regulation.

Reviews and monitors

the integrity of the

Company’s financial

reporting, risk

management systems

and internal controls

and the effectiveness

of the internal audit

function and external

auditors.

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.

Provides leadership to

the business and sets

‘tone from the top’.

Develops strategic

recommendations for

the Board and then

implements agreed

business plans.

Oversees relations

with stakeholders.

For more information

on the CEO’s role:

see page 81

Ethics

Committee

Nomination

Committee

For Clive’s biography:

see page 72

For more information:

see page 99

For more information:

see page 102

For more information:

see page 89

For more information:

see page 85

Responsible for

ensuring internal

control procedures

are in place to

mitigate the risk of

breaching applicable

trade sanctions and

embargoes.

Oversees the Group’s

risk management

framework. Identifies,

evaluates and

monitors the principal

risks facing the Group

and reviews mitigation

activities.

For more information:

see page 97

The Board

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

For more information:

see page 82

Transform Sustainability

Programme Board

– Addresses the Group sustainability and climate

change risk

– Reviews the key improvement workstreams on

a monthly basis to create accountability

– Reviews any significant planned expenditure

relating to sustainability

– Reviews any key actions related to workstreams

and the Transform Sustainability programme

Group Health, Safety and

Sustainability Committee

– Makes recommendations on health & safety

and sustainability strategy

– Monitors compliance with H&S and

sustainability obligations

– Tracks key H&S and sustainability KPIs

– Recommends appropriate training and actions

to maintain H&S and sustainability

improvements and performance

For more information:

see page 34

For more information:

see page 27

Board

Board committees

Management committees

De La Rue plc Annual Report 2023 75

Strategic report Governance report Financial statements

Governance at a glance continued

Key matters considered by the Board in FY23

During the year ended 25 March 2023 the Board considered a wide range of matters, alongside its normal oversight of

operational and financial performance. The table below shows some of the key matters considered by the Board and the

business outcomes that flowed from these.

Topic and link to

strategy pillars

Key matters considered Outcomes

Developing and

implementing strategy

– Review of implementation of strategy – Approval of capex for Authentication and

Currency in Malta

– Business plan and budget for FY23 – Refined the FY23 budget

– Review of new strategy to end FY25 – Approval of strategy

– Future of the Kenyan operations – Cessation of operations in Kenya

– Business plan and budget for FY24 – FY24 budget reviewed and approved

Monitoring and

managing risk

– Covid-19 response – Confirmed that Covid-19 should be treated

as a business as usual risk

– Economic situation in Sri Lanka – We were able to keep the production site

running throughout the local disruption

– Review of principal risks and risk appetite – Confirmed the risk appetite and which risks

should be insured

Business and

stakeholder

imperatives

– Economics of the Portals Relationship

Agreement

– Termination of the Relationship Agreement

– Funding of the business – Amendment and extension of the

bank facilities

– Feedback following engagement with

Crystal Amber

– Decision to hold a General Meeting in

December 2022

– Feedback from Employee Voice Forum

sessions

– Focus on means of enhancing internal

communications

– Review of the ESG strategy – Re-confirmed support for the ESG strategy

– Review of material new contracts – Approval of tenders, TPP appointments

Reporting and

accountability

– Reviewed financial performance through

the year

– Scrutinised performance against prior

year outcomes and current year budget

and forecasts

– Reviewed results of the auditor’s interim

review and full year statutory audit

– Interim results released; full year results

announcement and Annual Report released

– Matters to be proposed at the 2023 AGM – All Directors standing for re-election

reappointed; adoption of new Sharesave

Scheme

Ensuring good

governance

– Succession planning for retirement of

Nick Bray

– Appointed Mark Hoad as a Non-executive

Director

– 2022 Board effectiveness review – Site visit to Westhoughton to demonstrate

visible leadership to the business and

familiarise the directors with this key site

– Feedback from institutional investor

roadshows following results announcements

– Refinement of market messaging

– 2023 Board effectiveness review – Strengthening of the Board’s processes

De La Rue plc Annual Report 202376

Attendance at scheduled Board and Committee meetings

The Board met on six scheduled occasions during the year, with additional meetings held as required to provide approvals or

discuss matters at short notice, which did not always require attendance from all Board members. Attendance at the scheduled

Board meetings and at all Committee meetings is shown below.

Where a Director is unable to participate in a Board or Committee meeting they 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 Committee Chair.

Key:

meeting attended meeting missed

Director Board Audit

Committee

Nomination

Committee

Remuneration

Committee

Ethics

Committee

Kevin Loosemore¹

Clive Vacher

Rob Harding

Ruth Euling

Catherine Ashton²

Nick Bray

Maria da Cunha³

Mark Hoad⁴

Margaret Rice-Jones

Notes

1. Following the year end, Kevin Loosemore resigned as a Director with effect from 1 May 2023.

2. Following the year end, Catherine Ashton resigned as a Director on 12 June 2023.

3. Retired from the Board on 27 July 2022.

4. Appointed to the Board on 28 September 2022.

De La Rue plc Annual Report 2023 77

Strategic report Governance report Financial statements

Code Principle A:

A successful company is led by an

effective and entrepreneurial board,

whose role is to promote the long-

term sustainable success of the

company, generating value for

shareholders and contributing to

wider society.

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 16

to 19. 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 ongoing transition 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.

The Board is highly entrepreneurial, with

two Executive Directors who are directly

profit-accountable, a commercially-

minded CFO and Non-executive

Directors who have played senior

executive roles in growing successful

multi-billion pound revenue companies.

The Directors’ experience also includes

the strategic design and delivery of

corporate transactions that created

significant value for shareholders.

The Board is cognisant of its duties to

a wide range of stakeholders, though its

overriding purpose is the delivery of

returns to shareholders sustainably over

the longer term. For more details of our

approach to stakeholders’ interests,

please see the section 172 statement

on pages 21 to 23.

Code Principle B:

The board should establish the

company’s purpose, values and

strategy, and satisfy itself that

these and its culture are aligned.

All directors must act with integrity,

lead by example and promote the

desired 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. The corporate strategy

is explained on pages 18 and 19. 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, the Risk Committee and

the Ethics 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 56 to 63. For further

information on our approach to audit,

risk and internal control, please see

section 4 of this Corporate Governance

report on pages 88 to 100.

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. We continue to

build a high-performance culture across

the business to support the delivery of

our strategy and during the year we

refreshed our corporate values and

launched a revision of our Code of

Business Principles. This was

supplemented by the launch of a People

Managers Charter, which sets out our

expectations for all levels of leadership.

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, covering job-related,

inter-personal skills and general

personal development, are provided for

our employees on an ongoing basis.

Code Principle C:

The board should ensure that the

necessary resources are in place for

the company to meet its objectives

and measure performance against

them. The board should also establish

a framework of prudent and effective

controls, which enable risk to be

assessed and managed.

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 our 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.

In recent years, we have significantly

reviewed and refined the resources

that the Group needs to deliver on its

objectives. We will continue to do so in

the light of volatile market conditions,

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.

Our internal control environment is well

established. For further information

please see section 4 of this Corporate

Governance report on page 96.

Section 1: Board leadership

and company purpose

De La Rue plc Annual Report 202378

Code Principle D:

In order for the company to meet its

responsibilities to shareholders and

stakeholders, the board should

ensure effective engagement with,

and encourage participation from,

these parties.

The section 172 statement on pages 21

to 23 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.

The Board has asked one of the Non-

executive Directors to take responsibility

for leading its workforce engagement

activities. Until her retirement at the

2022 AGM, Maria da Cunha held this role,

which was then assumed by Catherine

Ashton. The designated Non-executive

Director gathers the views of the workforce

at all levels of the organisation and shares

these views with the Board at relevant

points in its discussions and decision

making. We believe that this approach

works well for the Company, the Board

and, most importantly, our workforce.

During FY23 we continued to operate our

regular ‘Employee Voice Forum’ sessions

across our sites. These complement the

other formal and informal workplace

forums and networks we operate.

Sessions were held in person at the

Westhoughton production site and at

our Basingstoke offices, with further

sessions planned for the production

plants in Sri Lanka, Malta, Debden and

Logan to ensure that on a rolling basis

the Board is able to interact with the

workforce across all our major locations.

In addition, Catherine attended a one

day in-person meeting of our UK/

European Employee Forum in December

2022. The Forum comprises elected

representatives from our workforce in

the UK and EU countries and enables

management to present business

updates while listening and responding

to whatever questions and concerns the

attendees may raise. The Forum enables

the general sentiment of our workforce

to be assessed.

Feedback from all of these meetings was

presented to the Board in March 2023.

The key message was for the Board and

senior management to continue to

communicate, openly and frankly, with

the Group’s entire workforce. For details

of how we do this, please see page 130.

Subsequent to the year end, Catherine

Ashton resigned as a Non-executive

Director on 12 June 2023. The Board

recognises the importance of the role of

the workforce engagement director and

currently intends to appoint another

Non-executive Director in this capacity.

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 24 to 45.

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 answer questions. All

votes are taken on a poll, so that we take

into account the proxy votes cast by

those unable to attend the meeting.

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.

Code Principle E:

The board should ensure that

workforce policies and practices are

consistent with the company’s values

and support its long-term sustainable

success. The workforce should be

able to raise any matters of concern.

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

and Catherine Ashton during the year in

direct workforce engagement on behalf

of the Board is an important bolstering

of our existing processes.

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 99.

De La Rue plc Annual Report 2023 79

Strategic report Governance report Financial statements

Code Principle F:

The chair leads the board and is

responsible for its overall

effectiveness in directing the

company. They should demonstrate

objective judgement throughout

their tenure and promote a culture

of openness and debate. In addition,

the chair facilitates constructive

board relations and the effective

contribution of all non-executive

directors, and ensures that directors

receive accurate, timely and

clear information.

The Chairman is responsible for

leadership of the Board, including its

overall effectiveness in directing the

Company’s affairs. While the Chairman

is not regarded as an independent

Director under the Code, the Board is

satisfied that Kevin Loosemore

demonstrated independent and

objective judgement throughout his

tenure. The Board believes that Clive

Whiley will also demonstrate independent

and objective judgement.

The role of the Chairman at Board

meetings is primarily to facilitate

constructive Board relations and the

effective contribution of all Directors,

promoting 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.

Code Principle G:

The board should include an

appropriate combination of executive

and non-executive (and, in particular,

independent non-executive)

directors, such that no one individual

or small group of individuals

dominates the board’s decision-

making. There should be a clear

division of responsibilities between

the leadership of the board and the

executive leadership of the

company’s business.

As at 25 March 2023 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 72 and 73.

As noted on pages 70 and 71 there has

been a material change in the Board’s

composition since the year end. In

addition, the current CFO, Rob Harding,

will leave the Company’s employment in

July 2023 and the Senior Independent

Director, Margaret Rice-Jones, has

decided not to seek re-election at the

2023 AGM due to the time demands

of her other business commitments.

All of the Non-executive Directors who

served during the year and to the date

of this report 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 Group

from 1997 to 1999 and receives a small

pension from the Company’s defined

benefit pension scheme. Similarly,

Margaret Rice-Jones worked for the

Group from 1997 to 2000 and has a

deferred pension entitlement in that

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 their specialist

areas 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 2023. 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

opposite 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 serving at the date of this report

will retire from office at the AGM on

7 September 2023 and offer themselves

for re-election, other than Rob Harding,

and Margaret Rice-Jones, as noted above.

Section 2:

Division of responsibilities

De La Rue plc Annual Report 202380

Chairman – Provides leadership of the Board, setting its agenda, style and tone to promoting constructive

challenge and debate.

– Ensures good information flows from the Executive Directors to the Board, and from the Board

to key stakeholders.

– Takes overall responsibility for the composition and capability of the Board, its Committees

and senior management, including acting as Chair of the Nomination Committee.

– Ensures that high standards of corporate governance and probity are maintained throughout

the Group.

Chief Executive Officer – Maintains and motivates a senior management team with the appropriate knowledge,

experience, skills and drive to manage the Group’s day-to-day activities.

– Demonstrates personal leadership and a management style which encourages excellent and

open working relationships at all levels within the Group.

– Ensures, through the Chief Financial Officer, the implementation, control and coordination

of the Group’s financial and funding policies approved by the Board.

– Ensures that the Group has in place appropriate systems of risk management and internal

control, including in relation to the health, safety and well being of its workforce.

– Proposes for Board approval operational plans and financial budgets to deliver the agreed

strategy for creating value for shareholders.

– Communicates with the Company’s shareholders and other key stakeholders and briefs the

Board on any material views and issues.

Senior Independent

Director

– 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.

– 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 any recruitment of a new Chairman, other than

when being considered for the position themself.

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 members of the ELT, each of the Executive Directors 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

– Strategy: constructively challenge and contribute to the development of strategy.

– Performance: review the performance of management in meeting agreed goals and objectives

and delivering against business plans and budgets or forecasts.

– Reporting to shareholders: monitor the accuracy and completeness of financial and narrative

information provided to the market.

– Risk and internal control: as part of the Board, establish a framework of prudent and effective

controls, which enable risk to be assessed and ensure that the systems of risk management

and internal control are robust and defensible.

– People: monitor succession planning and management development. Ensure that the voice

of the workforce and other stakeholders is considered by the Board.

General Counsel and

Company Secretary

– Supports the Chairman in ensuring a timely flow of high quality information to the Directors

– Advises the Board on matters of corporate governance and supports the Chairman and

Non-executive Directors individually.

– The point of contact for investors on matters of corporate governance.

– Ensures probity and good governance practices at Board level and throughout the Group.

De La Rue plc Annual Report 2023 81

Strategic report Governance report Financial statements

Section 2: Division of responsibilities continued

Code Principle H:

Non-executive directors should have

sufficient time to meet their board

responsibilities. They should provide

constructive challenge, strategic

guidance, offer specialist advice and

hold management to account.

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 85 to 87.

As part of the selection process,

candidates are asked to confirm that

they will have sufficient time to meet

their responsibilities as Directors and

to undertake not to accept any further

appointment without first clearing the

proposed role with the Chairman.

The role of the Non-executive Directors

is described in the table on page 81.

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.

Code Principle I:

The board, supported by the

company secretary, should ensure

that it has the policies, processes,

information, time and resources it

needs in order to function effectively

and efficiently.

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. For more

detail of the key matters discussed

during FY23, please see page 76. 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 later in this Corporate

Governance report.

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 2023 and are

compliant with the recommendations

of the Code.

The Board met formally on six occasions

during FY23, with additional meetings

held as required to provide approvals or

discuss matters at short notice, which

did not always require attendance from

all Board members. Attendance at the

scheduled meetings and at those of the

Committees is shown in the table on

page 77. Where a Director is unable to

participate in a Board or Committee

meeting, they 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

development and implementation of the

Group’s culture and aids the 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.

De La Rue plc Annual Report 202382

Code Principle J:

Appointments to the board should

be subject to a formal, rigorous and

transparent procedure, and an

effective succession plan should be

maintained for board and senior

management. Both appointments

and succession plans should be

based on merit and objective criteria

and, within this context, should

promote diversity of gender, social

and ethnic backgrounds, cognitive

and personal strengths.

Securing the best possible candidate

for every role is critical. The Nomination

Committee report on pages 85 to 87

provides more information on how we

create the candidate specification for a

Director appointment, including diversity

considerations, and then identify and

appoint candidates. 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.

Code Principle K:

The board and its committees

should have a combination of skills,

experience and knowledge.

Consideration should be given to

the length of service of the board

as a whole and membership

regularly refreshed.

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.

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.

All new Directors receive a tailored

induction on joining the Board, including

meetings with senior management,

key advisors and visits to key Group

locations. They also receive a detailed

briefing which includes details of their

duties and responsibilities as a Director

and other governance-related issues.

For further information on how this

operates in practice, please see page 87

where Mark Hoad explains the process

he followed on joining the Board.

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 production sites.

Code Principle L:

Annual evaluation of the board should

consider its composition, diversity

and how effectively members work

together to achieve objectives.

Individual evaluation should

demonstrate whether each director

continues to contribute effectively.

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, including the

Chairman. The Chairman routinely holds

one-to-one meetings with all Directors

to review their contribution to the Board.

Non-executive Directors’ tenure

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Beyond

Clive Whiley

Kevin Loosemore

Maria da Cunha

Nick Bray

Catherine Ashton

Margaret Rice-Jones

Mark Hoad

Dean Moore

First three year term

Second three year term

Additional term beyond six years

Section 3: Composition, succession

and evaluation

De La Rue plc Annual Report 2023 83

Strategic report Governance report Financial statements

Section 3: Composition, succession and evaluation continued

As explained in last year’s annual report, the Board commissioned a performance evaluation in FY22, using an external

independent facilitator, Lintstock Limited, which has no other connection with the Company or individual Directors. This was

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. These changes,

and what was done during the year are:

Agreed change What happened in FY23?

Succession planning – after a period of rapid and

fundamental change in management, 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 Nomination Committee reviewed succession plans for the top three levels of

management (being the ELT members, and their first and second reports)

– The Nomination Committee also reviewed the Company’s processes for identifying,

nurturing and retaining high potential individuals who could become the future

leaders of the Company

Visible leadership – reintroduce a regular

programme of site visits and meetings

– The Board visited polymer production site at Westhoughton in July 2022, meeting

a wide range of employees and managers. The visit spanned both the original

production hall and the new facility completed during 2022

– Mark Hoad also visited Westhoughton as part of his induction programme, after he

joined the Board in September 2022

During FY23 we undertook performance evaluations of the Directors (including the Chairman) and of the Board and its

Committees. The processes used for these reviews were as follows:

Review of the Chairman’s effectiveness

A set of structured questions was

circulated to each Director by

Margaret Rice-Jones, the Senior

Independent Director

The Directors met without the Chairman

present, in a private session led by

Margaret, using the questions as a guide

to their discussions

Feedback was provided to the Chairman

privately in a face-to-face meeting

The conclusion was that Kevin Loosemore was highly effective as Chairman of the Board, with a deep understanding of the

Company’s businesses and playing a significant role in helping the Board focus on the key strategic drivers of performance.

Review of the Board’s and Committees’ effectiveness

A tailored set of questions

was developed by the

Company Secretary and

the Chairman

Each Director completed the

tailored questionnaire, using

an online system managed

by Lintstock

Lintstock produced a report

summarising the results of the

survey, with both quantitative

and qualitative data

The Board discussed the

report of the survey’s findings

and agreed what actions it

would take in response

The conclusion was that the Board and its Committees were functioning effectively. There were two procedural changes that

were agreed by the Board, both of which have already been actioned:

Agreed change What has happened subsequently?

Each Board meeting should commence with

a private session for the Chairman and other

Non-executive Directors, and be followed by

a joint session with the Chief Executive Officer

– All scheduled (and, where appropriate, ad hoc) Board meetings now begin with

these private sessions

– These allow the Non-executive members of the Board to share any concerns or specific

matters that they wish to see discussed in the formal part of the Board meeting

During a period of significant uncertainty in the

Company’s markets and the challenging business

context that this creates, to re-introduce a Directors’

call in those months with no scheduled Board meeting,

following publication of the management accounts

– These calls have been scheduled for the first six months of FY24, after which the

Board will review whether the practice should continue

Review of the individual Directors’ effectiveness

Following the year end, the Nomination Committee reviewed the effectiveness, commitment and contribution of each Director.

They concluded that each Board member was performing at or beyond the required standard and recommended to the Board

that those Directors who intended to stand for re-election at the 2023 AGM should do so, and that the Board should

recommend to shareholders that each of those Directors should be appointed. The Board supported this recommendation.

De La Rue plc Annual Report 202384

Nomination Committee

Clive Whiley

Chairman of the

Nomination Committee

Dear Shareholder,

I am pleased to present the Nomination

Committee report for the period ended

25 March 2023.

Committee members

The members of the Committee during

FY23 were:

– Kevin Loosemore (Committee Chair)

– Clive Vacher

– Catherine Ashton

– Nick Bray

– Maria da Cunha (until 27 July 2022)

– Mark Hoad (from 28 September 2022)

– Margaret Rice-Jones

Members’ attendance at Committee

meetings is shown in the table on

page 77.

Following the year end, Kevin Loosemore

resigned as a Director with effect from

1 May 2023, and Clive Whiley was

appointed as a member and the

Chairman of the Committee on

18 May 2023.

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

change process, 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 twice during FY23.

The principal matters considered at its

meetings were:

– Recommending to the Board that

Mark Hoad should be appointed as

a Non-executive Director, to ensure

that the skills and experience

available at the Board table remain

appropriate. The recruitment

process took diversity

considerations into account

– Considering whether the Directors

collectively possessed sufficient

skills, knowledge and experience of

technology to drive the evolution

of the Group’s business

– Reviewing succession plans for the

top three levels of management

(being the ELT members, and their

first and second reports) and the

Company’s processes for identifying,

nurturing and retaining high potential

individuals

– Reviewing the commitment,

contribution and effectiveness of

the 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.

“Ensuring we have

a Board of Directors

and leadership team

possessing the skills,

knowledge and

experience to drive

the evolution of the

Group’s business.”

Board composition

– 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

– 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

– Oversee the Board’s diversity policy

and its implementation

Effectiveness

– Review the independence and

time commitment of the

Non-executive Directors

– Act on the results of effectiveness

reviews in relation to individual

Directors

Principal responsibilities

De La Rue plc Annual Report 2023 85

Strategic report Governance report Financial statements

Nomination Committee continued

Section 3: Composition, succession and evaluation continued

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 to ensure that the Board members

are collectively 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 appointments and

process followed

As noted in the ‘Activities’ section above,

the Committee oversaw a process to

find a new Non-executive Director with

the skills and experience to chair the

Audit Committee of the Board, as well

as making a positive contribution to

the Board’s wider discussions and the

strategic development of the Company.

A detailed role and candidate

specification was drawn up and an

executive search consultancy, Russell

Reynolds (which has no other connection

with the Company or any of its Directors)

was retained to identify suitable

individuals, with the benefits of diversity

stressed in the brief provided to them.

This process culminated in the

Committee recommending to the Board

that Mark Hoad should be appointed as

a Non-executive Director. The Board

appointed Mark on 28 September 2022

and he will take over as Chair of the Audit

Committee following the 2023 AGM.

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 above

and opposite, but recognises that more

remains to be done in relation to other

facets of diversity.

Gender balance

As at 25 March 2023

Male

Female

At Board level

5/3

Executive

Leadership Team

3/2

Direct reports

to ELT members

17/18

De La Rue plc Annual Report 202386

The Committee has followed the

development and implementation of the

new Listing Rules requirements in relation

to diversity. As these only apply to

accounting periods commencing on or

after 1 April 2022, they do not apply to

the Company in respect of FY23.

As at 25 March 2023, the gender balance

of the Board and Executive Leadership

Team (ELT) was as shown in the table

above. Shareholders will note that at

the year end date, one of the four senior

positions on the Board of Directors

was held by a woman, being the

Senior Independent Director,

Margaret Rice-Jones.

The Committee intends to review its

diversity, equity and inclusion policy

early in FY24 to take into account the

policy and reporting requirements of

the new Listing Rules.

Subsequent to the year end, Catherine

Ashton resigned as a Director on 12 June

2023 and on 19 June 2023 we announced

that Margaret Rice-Jones had decided

not to seek re-election at the 2023 AGM,

in each case to create time to be able to

fulfil external commitments.

On 26 June 2023 Dean Moore was

appointed as an independent

Non-executive Director.

Gender balance of the Board and Executive Leadership Team (ELT)

As at 25 March 2023

Number of

Board

members

Percentage of

the Board

Number of

senior

positions on

the Board

(CEO, CFO,

SID and

Chair)

Number in

executive

management

(ELT)

Percentage of

executive

management

(ELT)

Men 5 62% 3 3 60%

Women 3 38% 1 2 40%

Not specified/prefer not to say n/a n/a n/a n/a n/a

Re-election of Directors at the

2023 AGM

All Directors serving at the date of this

report will stand for re-election at the

2023 AGM, with the exceptions of Rob

Harding, who leaves our employment in

July 2023 and Margaret Rice-Jones who

will retire in order to devote more time to

her other business interests.

The Committee has carried out a formal

performance evaluation (as explained

above) 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

relevant resolutions at the 2023 AGM.

Clive Whiley

Chairman of the Nomination Committee

29 June 2023

Mark Hoad on:

Induction in action

I joined the Board in September

2022. While I am an experienced

CFO and executive director of

listed companies, this is my first

non-executive role.

The induction process I followed

was tailored to my main role

responsibilities as the chairman-

designate of the Audit Committee.

The key activity was 1:1 meetings with

the audit engagement partner and key

members of his audit team, the senior

members of the internal audit team

and all the key people within the

Company’s finance team. I also met

senior managers from key central

functions including legal and risk. In

relation to my duties as non-executive

director of a listed company, I met

with the Company’s brokers and

corporate lawyers.

As I joined the Board, it was

considering an evolution and

refinement of the corporate strategy,

which provided a good introduction

to De La Rue’s business and market

opportunities. I also visited the

polymer production site at

Westhoughton, which provided

a practical glimpse into the sheer

scale of the Company’s operations.

Overall, the induction process

covered the finance and governance

issues thoroughly and gave me the

opportunity to glean insights from

and build relationships with key

individuals. I have provided feedback

to the Company Secretary on the

process, which will help inform

induction activities for future

Board appointees.

Mark Hoad

Independent Non-executive Director

De La Rue plc Annual Report 2023 87

Strategic report Governance report Financial statements

Code Principle M:

The board should establish formal

and transparent policies and

procedures to ensure the

independence and effectiveness of

internal and external audit functions

and satisfy itself on the integrity of

financial and narrative statements.

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 the external

audit process.

For further details, please refer to the

Audit Committee report on pages

89 to 96.

Code Principle N:

The board should present a fair,

balanced and understandable

assessment of the company’s

position and prospects.

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 below.

Code Principle O:

The board should establish

procedures to manage risk, oversee

the internal control framework, and

determine the nature and extent of

the principal risks the company is

willing to take in order to achieve its

long-term strategic objectives.

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

2023. 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 56

to 63, with a description of how this is

overseen by the Risk Committee on page

97 and an explanation of how the Audit

Committee oversees this on page 96.

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 89 to 96.

The Board’s responsibility does not

extend to associated companies or joint

ventures where the Group does not have

management control.

Section 4:

Audit, risk and internal control

De La Rue plc Annual Report 202388

Audit Committee

Nick Bray

Chairman of the

Audit Committee

Dear Shareholder,

I am pleased to present the Audit

Committee report for the period ended

25 March 2023.

Committee members

The members of the Committee during

FY23 were:

– Nick Bray (Committee Chair)

– Catherine Ashton

– Maria da Cunha (until 27 July 2022)

– Mark Hoad (from 28 September 2022)

– Margaret Rice-Jones

All members of the Committee are

independent Non-executive Directors.

Members’ attendance at Committee

meetings is shown in the table on

page 77.

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.

Mark Hoad is also regarded by the Board

as having relevant and recent financial

experience. He is an experienced

chartered accountant and currently

serves as a director and the Chief

Financial Officer of TT Electronics plc.

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.

Nick Bray will retire as Committee Chair

at the conclusion of the 2023 AGM,

from which time Mark Hoad will serve

in that capacity. Nick will remain as a

member of the Committee to provide

continuity, given the recent change in

lead audit engagement partner and the

imminent change of CFO.

Biographical details of the members of

the Board who held office up to the

date of this report can be found on

pages 72 and 73.

“Ensuring our internal

and external audits

take account of the

Group’s risks, and

monitoring the Group’s

financial and

narrative reporting.”

Financial reporting

– Review the integrity of the interim

and full year financial statements

– Review significant financial reporting

issues and accounting judgements

– Review the adoption of new

accounting standards

External audit

– Oversee the relationship with the

external auditors, including the

scope and extent of the external

audit and the fees payable

– Review and monitor the external

auditor’s effectiveness,

independence and objectivity,

including the nature and

appropriateness of any non-audit

work and the associated fees

Internal audit

– Oversee the relationship with the

internal auditors, including the

internal audit charter, annual work

programme and fees and their

independence and effectiveness

– Monitor 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

– Monitor and review the effectiveness

of the systems of internal control

and risk management

Principal responsibilities

De La Rue plc Annual Report 2023 89

Strategic report Governance report Financial statements

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 on how this was conducted,

please see page 84.

Activities during the period

The Committee met five times during

the period ended 25 March 2023.

The principal matters considered at

its meetings were:

– The half and full year financial

statements, including any key

accounting matters

– The annual report and other

narrative reporting

– 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 representation letters to be

provided to the external auditors

– The external auditors’ reviews of the

financial statements and associated

narrative reporting

– 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, informed by reviews

of these by the Risk Committee

– The assurance available in relation to

the Group’s risks, including:

– Internal audit findings and

recommended improvement actions

– Reviews 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

– Approval of an updated version of

the Fraud Policy and a review of the

procedures for whistleblowing in

relation to fraud and financial

misstatements

– The further implementation of the

Company’s ERP system and further

enhancements of the internal control

environment,

– The resourcing and maturity of the

Company’s cyber security

arrangements and the approach

to the 2023 insurance renewal.

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 FY23

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 opposite and on

the following pages:

Section 4: Audit, risk and internal control continued

Audit Committee continued

De La Rue plc Annual Report 202390

Topic What is the risk?

What did the

Committee do?

What conclusion

did it reach?

Revenue

recognition

Revenue (and therefore

profit) is not recorded

in the correct financial

year, resulting in an

incorrect statement of

performance

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 valuation of the

pension scheme assets

and/or liabilities is

incorrectly or

inappropriately valued.

This would result in the

balance sheet being

misstated

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

surplus to a net deficit. 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 the UK Multi Asset Credit and

secured Finance funds account for approximately £61m and

£139m of the pension assets respectively (FY22: £63m and

£143m respectively). During the period from 28 February to

25 March, based on the movement in relevant market indices,

we have estimated that the value of the funds has decreased

by £4.4m. The total UK pension scheme assets value is

£678.2m. This £4.4m decrease includes £3.9m relates to the

updated third-party valuation data as at the year end date and

the remaining £0.5m is based on day-to-day market volatility

of high yield market indices. A 0.1% change in these market

indices would result in a £0.6m increase in the pension

scheme assets.

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 Committee

considered the

difference in valuation

caused by the year end

and reporting dates to

not be significant when

compared to total UK

defined benefit pension

scheme assets of circa

£0.7m. However, the

Committee decided

that the critical

accounting judgement

on this should be

disclosed – see pages

158 and 159.

De La Rue plc Annual Report 2023 91

Strategic report Governance report Financial statements

Topic What is the risk?

What did the

Committee do?

What conclusion

did it reach?

Recoverability

of other

financial assets

The carrying value of

the investments made

by the Group in entities

within the Portals

group is recognised

at an incorrect or

inappropriate value in

the balance sheet,

resulting in an under-

or over-statement

of assets

The Committee noted that management has carefully

assessed the recoverability of the other financial assets on the

balance sheet as at 25 March 2023 based on information

available to them determining that an expected credit loss

provision of £8.5m (see note 5 exceptional items for further

details) is required which will fully impair these other financial

assets. Management had considered the following factors in

making this determination:

1) The public announcements from the Portals group relating to

the wind down of the Overton paper mill and its sale of assets.

2) The latest available financial position of Portals International

Limited group as presented in its 2022 consolidated financial

statements including significant losses for the period and a net

liabilities position.

3) The announcement of the sale of the Fedrigoni business to

IN Groupe in May 2023.

This provision accounts for the risk that the full amounts

due will not be recovered rather than the instruments being

credit impaired.

The Committee has

concluded that it

supports the expected

credit loss provision of

£8.5m that has been

recorded in FY23.

The Committee noted

that if factors change

again in the future, this

may alter the

judgements made

resulting in a revision to

the value of expected

credit loss provision to

be recognised.

Estimation of

and provisions

The value of provisions

at the balance sheet

are incorrectly or

inappropriately

calculated, resulting

in a misstatement of

profits for the year and

of the closing balance

sheet position

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 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 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.

Replacement

of Savings

Related Share

Scheme

granted

The accounting for the

new Save As You Earn

(‘SAYE’) share option

grant made under

modification

accounting should have

been cancellation

accounting instead.

The Committee reviewed Managements assessment that

judged the new grant as a replacement award for two

SAYE grants which are due to vest in FY24 and FY25 that

were cancelled by employees at the time of the new grant

and applied modification accounting rather than

cancellation accounting.

The Committee

concluded that the

accounting treatment

was appropriate.

Recoverability

assessment

and

impairment

charges related

to plant and

machinery and

capitalised

product

development

costs

The impairment

assessments carried

out by the Group have

not identified all

applicable impairments.

The Committee reviewed Management’s assessment of

impairments made in the year in particular in relation to the

wind down of the Kenya operations and capitalised product

development costs.

The Committee

concluded that the

impairments made in

the year were

appropriate.

Audit Committee continued

Section 4: Audit, risk and internal control continued

De La Rue plc Annual Report 202392

Topic What is the risk?

What did the

Committee do?

What conclusion

did it reach?

Accounting for

the extension

of the factory

site in Malta

The timing of the

accounting for new

lease on the Malta site

extension was not

recorded appropriately.

The Committee reviewed Management’s judgement as to

whether the Company has control of the Malta site during the

construction period. If the Group has the right to control the

use of the identified asset for only a portion of the term of the

contract, the contract contains a lease for that portion of the

term. In order to control the asset, the lessee must have the

right to obtain substantially all of the economic benefits from

the use of the asset and the right to direct the use of the asset.

It was determined that control exists only after the build is

completed and site becomes available for use. Management

considers that given the building was under construction at the

year-end date and therefore there were no economic benefits

as the asset was not ready for use at that time.

Therefore, management have concluded that no lease should

be recognised in FY23. The lease will be recognised when the

building becomes available for use.

The Committee

concluded that

Management’s

assessment that the

lease will be recognised

when the building

becomes available for

use is appropriate.

Classification

of exceptional

items

Costs or income are

incorrectly categorised

as, or omitted from,

exceptional items,

resulting in a

misstatement of profits

for the year

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 its

review, the Committee

concluded that the

accounting treatment

and disclosures in

relation to these items

were appropriate.

Impairment of

investment in

subsidiaries in

the Company

(only) financial

statements

The carrying value of

the investment in

subsidiaries in the Plc

Company financial

statement is misstated

The Committee considered management’s assumptions and

decision to record an impairment against the investment in

subsidiaries in the parent company (only) financial statements

of £85.6m for FY23.

The Committee

considers this

appropriate given the

significant reduction

in the market

capitalisation of the

group to approximately

£71m at 27 June 2023

versus approximately

£214m market

capitalisation as at

26 March 2022 given

the resetting of market

expectations on

FY24 and revised

outlook guidance.

Going Concern The use of an

inappropriate basis of

accounting, should the

Group prove not have

access to sufficient

liquidity to pay its

debts as they fall due

in the near term.

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.

De La Rue plc Annual Report 2023 93

Strategic report Governance report Financial statements

Fair, balanced and

understandable view

At its May 2022 meeting the Committee

reviewed, at the Board’s request, the

content of the 2022 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 FY23. In making its

recommendation to the Board the

Committee drew on its experience

during that and prior financial 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.

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 original lead audit

engagement partner, Kevin Harkin, retired

from the audit team at the 2022 AGM in

accordance with the mandatory

five year partner rotation requirement.

The statutory audit of the FY23 financial

statements is therefore the first to be

undertaken under the leadership of the

new lead audit engagement partner,

San Gunapala.

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.

Audit quality: Independence

and objectivity of external

auditors

The Committee places great emphasis

on audit quality. This encompasses

monitoring the skills and knowledge of

the audit team, their mindset and culture

and the quality of the judgements

reached by the senior members of the

audit team. In terms of approach, the

objectivity of the Company’s auditors in

reviewing the financial statements that

are issued to shareholders is of crucial

importance. 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. The Committee also receives

the views of senior members of the

finance team on their, and their teams’,

dealings with the external auditors and

whether there are any indications that

audit quality is being compromised in

any way, or means by which it could be

further enhanced.

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.

The Committee also reviewed two Audit

Quality Inspection and Supervision

Reports published by the FRC in July

2022; one relating to the larger UK audit

firms, the other being specific to EY.

Section 4: Audit, risk and internal control continued

Audit Committee continued

De La Rue plc Annual Report 202394

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 November 2022,

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 split between audit and non-audit

related fees was:

£’000 FY23 FY22 FY21

Audit fees 869 740 778

Audit-related fees

(review of interim

financial statements) 177 80 77

Non-audit services - - -

Total fees paid to EY 1,046 820 855

Non-audit fees relative

to audit fees (%) 20% 11% 10%

Over the three financial years non-audit

fees have averaged 14% 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 proposal for

re-election at the AGM

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 reappointment

of Ernst & Young LLP should be put to

shareholders at the 2023 AGM.

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 FY14. 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 FY23 internal audit plan was

approved by the Committee in March

2022 and kept under review during the

year. All of the internal audit assignments

were completed during the period, other

than one where fieldwork was deferred

to April/May 2023 as a result of an

internal reorganisation. In March 2023 the

Committee reviewed and approved the

internal audit charter and plan for FY24.

A review of the effectiveness of the

internal auditors was completed and

presented to the Committee in May

2023. 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.

De La Rue plc Annual Report 2023 95

Strategic report Governance report Financial statements

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 56 to 63. 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: internal

control environment

The Committee is responsible for

reviewing, on behalf of the Board, the

effectiveness of the Group’s internal

control systems, which covers all material

controls, including financial, operational

and compliance controls and which

operates within the corporate culture

and values set by the Board.

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

29 June 2023

Section 4: Audit, risk and internal control continued

Audit Committee continued

De La Rue plc Annual Report 202396

Jon Messent

Chair of the Risk Committee

Dear Shareholder,

I am pleased to present the Risk

Committee report for the period ended

25 March 2023.

Committee members

The members of the Committee during

FY23 were:

– Clive Vacher (Committee Chair from

27 July 2022)

– Jane Hyde (Committee Chair and

member to 27 July 2022)

– Natasha Bishop

– Andrew Clint (to 2 September 2022)

– Ruth Euling

– Rob Harding

– Dave Sharratt (from 12 September 2022)

In addition, Jon Messent joined the

Committee on 3 April 2023 and became

its Chairman from 18 May 2023.

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 56 to 63.

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 three 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 56 to 63)

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

2022 Annual Report

– Review of the risk disclosures within

the FY23 Interim Report

“Overseeing the

identification and

management of risks

that could affect our

corporate performance.”

Risk Committee

– Monitor and develop the risk

management policy and oversee

the implementation of the Group-

wide risk management framework

for identifying and managing risks

– Promote a risk management culture

and control environment

– Identify and keep under review the

principal risks faced by the Group,

and review the mitigations and

controls relating to those risks

– Identify and assess any emerging

or developing risks

– Review the effectiveness of the

Group’s system of risk management

– Provide reports on the status of risk

management within the Group to

the Audit Committee and Board,

and externally through this report

Principal responsibilities

De La Rue plc Annual Report 2023 97

Strategic report Governance report Financial statements

– ‘Deep dive’ sessions with operational

or functional risk owners:

– Breach of Product security with a

specific focus on the handling of

materials within the Currency

business

– Breach of Information Security, an

overall review encompassing the

risk of the loss of Company,

customer or employee data and

the separate risk of an external

cyber attack. A subsequent

session reviewed an internal audit

assignment which had utilised the

US National Institute of Standards

and Technology’s framework to

assess the maturity of De La Rue’s

cyber security arrangements,

ahead of the insurance renewal

– Banking facilities and the

Company’s ability to operate within

the covenants to which the facility

is subject

– Quality management in the

Currency business, reviewing the

issues that had arisen in the year to

date and their root causes

– Performance of, and communications

between, our divisional and central

enabling functions’ risk committees

– Insurance market conditions,

particularly in relation to cyber

risks insurance

– Business Continuity Planning

– Review of our risk management policy

and framework

– Review of the Committee’s

effectiveness

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

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.

Jon Messent

Chair of the Risk Committee

29 June 2023

Section 4: Audit, risk and internal control continued

Risk Committee continued

De La Rue plc Annual Report 202398

Clive Whiley

Chair of the

Ethics Committee

Dear Shareholder,

I am pleased to present the Ethics

Committee report for the period ended

25 March 2023.

Committee members

The members of the Committee during

FY23 were:

– Kevin Loosemore (Committee Chair)

– Catherine Ashton

– Nick Bray

– Maria da Cunha (until 27 July 2022)

– Mark Hoad (from 28 September 2022)

– Margaret Rice-Jones

Members’ attendance at Committee

meetings is shown in the table on

page 77.

Following the year end, Kevin Loosemore

resigned as a director with effect from

1 May 2023, and Clive Whiley was

appointed as a member and the Chairman

of the Committee on 18 May 2023.

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 25 March 2023,

the Committee focused on the

following activities:

CBP-related initiatives, including:

– The launch of a new Code of

Business Principles in January 2023

– Monitoring the completion 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

The management of the TPP

programme including:

– Reviewing the ongoing management

of third party sales consultants

“Delivering results

is important, but

delivering those results

in the right way is the

only basis on which we

can be successful on a

sustainable basis over

the long term.”

Ethics Committee

– 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

Principal responsibilities

De La Rue plc Annual Report 2023 99

Strategic report Governance report Financial statements

Oversight of other business ethics matters:

– Update on activities related to the

ISO 37001 anti-bribery management

system and the Banknotes Ethics

Initiative (BnEI) accreditations

including reviewing the findings from

the audits of both standards which

took place during the year and the

responses of the business to the

recommended improvements

– 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

24 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:

– E-learning and face-to-face training

relating to the rollout of the new Code

of Business Principles including

acknowledgement by colleagues

that they understand and will comply

with it

– Anti-bribery and competition law

training where relevant for new starters

and those changing roles and bi-

annual refresher anti-bribery training

– Sanctions awareness training

– Online training modules for TPPs

– One-to-one training for new site

Ethics Champions

– 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.

Clive Whiley

Chair of the Ethics Committee

29 June 2023

Section 4: Audit, Risk and Internal Control continued

Ethics Committee continued

De La Rue plc Annual Report 2023100

Code Principle P:

Remuneration policies and practices

should be designed to support strategy

and promote long-term sustainable

success. Executive remuneration

should be aligned to company

purpose and values, and be clearly

linked to the successful delivery of

the company’s long-term strategy.

Our remuneration policies and practices

are designed to support the delivery of

the Group’s strategy. During FY23 there

was a review of whether the approach

followed in recent years truly continues

to support the needs of the Company,

its shareholders and management.

The intention is to provide a range of

fixed and variable pay that promotes

the success of the Company through

the sustained 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 to the executive Directors and

other ELT members 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 that

follows in this section.

Code Principle Q:

A formal and transparent procedure

for developing policy on executive

remuneration and determining director

and senior management remuneration

should be established. No director

should be involved in deciding their

own remuneration outcome.

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. This was

last approved by shareholders at the 2020

AGM and an amended version will be

proposed for approval at the 2023 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 that

follows in this section.

Code Principle R:

Directors should exercise independent

judgement and discretion when

authorising remuneration outcomes,

taking account of company and

individual performance, and wider

circumstances.

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 that

follows in this section.

Section 5:

Remuneration

De La Rue plc Annual Report 2023 101

Strategic report Governance report Financial statements

Chair’s Introduction to Remuneration

Margaret Rice-Jones

Chair of the

Remuneration Committee

This report is presented in three main

sections: an annual statement from the

Chair of the Committee; the Directors’

remuneration policy; and the annual

report on remuneration for FY23. The

Directors’ remuneration policy was

approved by shareholders at the AGM

on 6 August 2020 and had a binding

effect from that date. An updated

policy will be proposed for shareholder

approval at the 2023 AGM.

Dear Shareholder,

As Chair of the Remuneration

Committee, I am pleased to present the

Directors’ remuneration report for the

period ended 25 March 2023, my first as

Chair which has been prepared by the

Committee and approved by the Board.

I would like to extend my thanks to Maria

Da Cunha, who stepped down as Chair

of the Committee on 27 July 2022.

This year, I would like to focus on two

themes: the changes that we are

proposing to make to the remuneration

policy which will, if approved by

shareholders, apply from the 2023 AGM;

and the performance of the Group in

FY23, which resulted in no bonus under

the Annual Incentive Plan being payable

to Executive Directors and the PSP

awards granted in 2020 lapsing.

The Committee understands the need

to create a remuneration framework that

incentivises effectively for significant

achievements in performance and

associated return to shareholders, and

acts as a retention mechanism for senior

executives, and we have consulted

widely with our shareholders in advance

of making recommendations in relation

to the policy.

As outlined in earlier sections of this

Annual Report, we face continued

headwinds to address both the ongoing

legacy challenges the business faces

while mitigating the continuing impacts

of the current macro environment.

We have experienced an

unprecedentedly volatile external market

impacting us in every market sector in

which we operate. Increased materials

and energy costs, supply chain challenges

and material shortages, increases in

inflation and a global pandemic have led

to a slower market growth in both

Currency and Authentication than

originally anticipated.

‘Despite progress to

continue to address

legacy issues and

develop an agile

footprint which has

ensured profitability in

a challenging year, the

results have remained

disappointing and

this is reflected in

our remuneration

outcomes.’

Section 5: Remuneration continued

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

Principal responsibilities

De La Rue plc Annual Report 2023102

However, despite these issues, in the last

three years we have continued to make

progress to ensure we have a strong

underlying business and have been able

to remain profitable even in the most

difficult of market downturns, something

that was unachievable three years ago.

The business has introduced a new

leadership team into Authentication to

focus on accelerating growth, capitalising

on existing GRS schemes and expansion

of these beyond the GCC countries

and driving growth in Brand and ID

components. In Currency we have taken

significant further cost from the business

and redefined the operating model and

product roadmap to ensure that we are

as optimal and efficient as possible. This

allows us to remain competitive in the

market against our key competitors.

We continue to tackle many of the

legacy issues in our business particularly

in addressing our cost base. Over the

course of the three years since we

commenced turnaround, we have

removed in excess of £40m of cost,

reducing annual pension payments,

saving £57m of future cash spend and

exited the Portals Relationship

Agreement, avoiding future outlays of

£119m. We have equally prioritised a

continued focus on creating a flexible

and competitive footprint and optimal

operating model.

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.

Committee meetings

The Remuneration Committee consists

exclusively of Non-executive Directors,

all of whom are regarded as independent.

The Committee met seven times during

FY23 and details of attendance can be

found in the table on page 77. The Chief

Executive Officer and the Group Director

of Human Resources attended these

meetings by invitation. The General

Counsel and Company Secretary, who is

the 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

– Triennial review of Directors

Remuneration Policy including

extensive consultation

– Review of performance targets for

short and long term incentive plans

– Approval of pay awards for the

Chairman, the Executive Directors and

the other ELT members

– Review and approval of the Directors’

remuneration report for FY22

– Review of market trends and latest

developments in governance

– 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

Structure of Directors’

remuneration report

This report is presented in three main

sections: an annual statement from

the Chairman of the Committee; the

Directors’ remuneration policy to be

approved by shareholders at the 2023

AGM; and the annual report on

remuneration for FY23.

In accordance with the regulations, we

will be asking shareholders to vote on

two separate remuneration resolutions

as follows:

– The binding triennial vote on the

proposed Directors’ remuneration

policy as set out on pages 105 to 111

which will, subject to shareholder

approval, become formally effective

from the 2023 AGM

– An advisory vote on the annual

report on remuneration as set out on

pages 105 to 125 which provides

details of the remuneration earned

by Directors for performance in FY23

A copy of the remuneration policy

approved in 2020 can be found in the

annual report 2020 on the Company’s

website: www.delarue.com.

Proposed remuneration policy

Our remuneration policy is key to

delivering both in year performance

and the longer term transformation of

De La Rue.

This year we have carried out our

triennial review of the policy.

The proposed policy is designed to

support the business in delivering a

sustainably profitable and cash

generative business, targeting growth

opportunities in Authentication and,

in Currency. We will continue to shape

our Currency division’s printing capacity

to market demand across our sites in

Malta, Sri Lanka, and the UK and to

address and resolve legacy issues

across the group.

De La Rue plc Annual Report 2023 103

Strategic report Governance report Financial statements

The last two years have represented

a challenging period for the business

driven primarily by the delayed impact of

Covid-19 creating market pressures and

we share our shareholders’ disappointment

in relation to share price performance

during this time. It is with this in mind

that we have considered any changes

to the remuneration policy.

We are proposing a change to our current

long term incentive arrangements by

introducing a proportion of higher

leveraged reward for both executives and

senior management for overachievement

of targets that results in an increase in

shareprice. Long Term Incentives (LTIPs)

have previously been applied as

Performance Share Plans (PSP) subject to a

three year performance period measured

against two equally weighted metrics,

followed by a two year holding period.

Following review of appropriate metrics

and consultation with our shareholders

we are proposing that LTIP will be made up

of a mix of PSP and market value options.

Full details of this new plan, to be known

as De La Rue Investor Return Plan, are set

out in the policy section of the report on

pages 105 to 116, and will be subject to a

binding shareholder vote at the AGM on

7 September 2023.

The changes proposed will:

– Strongly align executive and

shareholder interests

– Allow for common and unified

reward amongst all senior management

and Executive Directors, aligning

all participants

– Provide greater levels of reward where

longer term focus results in improving

the share price

– Provide a mechanism to attract, retain

and motivate executives and leaders

over the longer term to deliver our

strategic goals

– Promote a high-performance culture

We remain confident that all other

aspects of the Policy are fit for purpose

and are not proposing any further

material changes.

Implementation of the policy

in FY24

If approved by shareholders at the

forthcoming AGM, the Committee

intends to apply the revised

remuneration policy as follows:

– Base salary and benefits: No material

change to the Executive Directors’

base salary level or pension and

benefits arrangements.

– Annual Bonus Plan (ABP): For FY24

the current maximum opportunity

level of 135% of salary for the CEO will

continue to apply, with 60% of any

bonus payable in cash and 40%

deferred into shares released half

after one year and the remaining half

after a further year. The Committee

has carefully considered bonus

performance metrics for FY24 and

concluded that the current measures

remain highly relevant for the current

turnaround situation

– De La Rue Investor Return Plan: The

Remuneration Committee has given

detailed consideration to the most

appropriate Long Term Incentive (LTIP)

arrangements that provide a strong

link between business performance,

shareholder return and executive

reward. For awards from FY24

onwards, the Committee proposes to

implement a new policy proposal. Plan

participants will receive their LTIP

award in two elements. Firstly, awards

under the existing Performance Share

Plan, subject to two performance

conditions (Free cash flow and EPS)

both equally weighted and measured

over three year periods. The second

portion of award will be made as

market value options, to be granted

under the new Investor Return Plan.

Vesting of these awards will be

subject to an underpin that our Total

Shareholder Return at least equals the

return of the FTSE mid-250 (excluding

Investment Trusts) index measured

over a three year performance period

The Committee carried out an extensive

consultation exercise in relation to the

proposed new policy with our largest

shareholders. All key shareholders and

main UK institutional investor bodies

were written to and encouraged to

attend a meeting to discuss proposals

in detail. Eight shareholders, collectively

holding 48% of our equity, took up

this opportunity to discuss proposed

policy changes.

The feedback we received was both

constructive and in a large measure

supportive and it was clear that our

shareholders, while understandably

disappointed in the share price

performance, have a good appreciation

of the challenges that De La Rue is

dealing with and the need for significant

change. I hope you will welcome the

conclusions the Committee has reached

on this matter as a result of the

consultation process which we believe

acknowledges the challenges facing the

business and demonstrates our

commitment to a high level of alignment

between the interests of shareholders

and the senior management of the

business. The Committee believes that

the above Policy is in the best interests

of shareholders as it will encourage,

reinforce and reward the delivery.

Activities in FY23

The primary focus for the business

during the FY23 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

– 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.

Section 5: Remuneration continued

Chair’s Introduction to Remuneration continued

De La Rue plc Annual Report 2023104

Employee experience

During FY23, our operating sites in the

UK, Malta, Kenya, Sri Lanka and the US

remained operational. Despite significant

disruption due to global events including

the economic situation in Sri Lanka we

were able to deliver in full to customers

as required during the financial year.

The impact of the headwinds and

slowing of our market on overall business

performance is reflected appropriately

in the outturn of the Annual Bonus Plan

with no eligible employees receiving an

award under these plans.

We also conducted a salary review

during the year for all eligible employees.

The employees in Collectively bargained

agreements received the second year

increase negotiated through the multi-

year pay deals in FY22. The wider workforce

remuneration was taken into account in

our decisions on executive remuneration.

We have continued to expand our

wellbeing benefits and support in all

locations, branching out into financial

wellbeing alongside both health and

mental health wellbeing.

As a result of the changes to market

performance we were required to reduce

costs and continue to right size our

manufacturing footprint and ensure we

had optimal structures in both Currency

and Authentication. This did mean that

redundancy exercises were conducted in

both our Kenyan and Westhoughton

manufacturing sites as well as across a

number of teams and departments both

in the UK and internationally.

We continued to maintain all our formal

and informal forums and communicate

openly and transparently to ensure that

our employees remain aware of the

business performance and challenges

as well as successes and that all views,

questions and concerns had a mechanism

through which to be raised.

Shareholder experience

Business performance in FY23 was

impacted due to the extremely tough

trading conditions for both divisions

of De La Rue. Currency experienced

the worst market background for

many years.

While strong supply chain management

mitigated much of the cost risks

identified at the beginning of the year,

adjusted operating profit fell substantially

versus prior year which has had a

negative impact on the shareprice.

The Board does not expect to pay

dividends unless and until the Company

is generating sustainable positive free

cash flow.

Remuneration outcomes FY23

As discussed elsewhere in the Annual

Report, the business faced a number of

significant challenges during the year

with lower than expected volumes

impacting both divisions. This has been

well documented throughout the year

resulting in a re-basing of profit

expectations for the year.

Primarily thanks to the steps the

management team have taken to

mitigate legacy issues including

continuing to reduce complexity in our

footprint, reduce costs and improve

efficiencies across the Group we have

been able to offset the impact of the

headwinds reporting an adjusted

operating profit of £27.8m in line with

revised market expectations.

ABP scorecard financial measures

account for 80% of maximum ABP with

the remaining 20% based on achievement

against strategic personal objectives

including a specific ESG metric.

While substantial progress was made

during the second half, through a variety

of actions, designed to maximise profit

despite lower volumes and a continued

focus on cash management and a

reduction in net debt, overall the

performance did not achieve the

underpin required above which an annual

bonus would have been payable and

accordingly no ABP will be paid for FY23.

During FY23 we incorporated ESG on a

formulaic basis with having a 10% weighting

attached to a target reduction of solid

waste per good output.

Further details on our performance

against bonus measures is set out on

page 118.

We still believe that measures for ABP

are the right ones and believe that the

balance of remuneration between both

short and long term incentives is

appropriate for the business.

The performance period for the PSP

awards granted in 2020 concluded

during the year. Performance did not

meet threshold levels and none of these

awards have vested.

The Committee reviewed all remuneration

outcomes in context of the business

outcomes and the experience of the

shareholders and the wider workforce.

In all cases it decided not to adjust the

formulaic outcomes. There was therefore

no reward payable under either the

ABP or PSP to any Executive Director

during FY23.

As outlined we are making proposed

changes to the long term incentive

arrangements. Our aim is to achieve

an appropriate balance between

incentivising Executive Directors and

ensuring that variable remuneration will

only be payable on performance that

delivers sustainable value to shareholders.

We believe that the changes in our policy

in relation to the Long Term Incentive

Awards will meet that aim.

De La Rue plc Annual Report 2023 105

Strategic report Governance report Financial statements

We are pleased that our previous

Remuneration report was supported by

shareholders at the AGM on 27 July 2022,

with almost 87% of votes cast in favour

and a minimal level of votes withheld.

We welcome and are grateful for the

constructive feedback our shareholders

have provided in the last year, which has

informed our deliberations and helped

shape our approach to remuneration.

Executive Director changes

As announced in January 2023 Rob

Harding resigned as Chief Financial

Officer and will leave the business in

July 2024.

Priorities for FY24

The work of the Committee in FY24

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 specific

Environment, Social and Governance

(ESG) measures introduced 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 policy and

implementation reports clear and

informative and the Committee can

continue to receive your support on both

votes at this year’s AGM.

Margaret Rice-Jones

Chair of the Remuneration Committee

29 June 2023

Current ABP structure and weighting %

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, and to state that this

section has been properly prepared in

accordance with these regulations.

Revenue 20

Profit 30

Net debt 30

Strategic ESG objective 10

Strategic personal objectives 10

Section 5: Remuneration continued

Chair’s Introduction to Remuneration continued

De La Rue plc Annual Report 2023106

Introduction

This section of the report contains

details of the Directors’ remuneration

policy that will govern the Company’s

future remuneration payments.

The Remuneration Committee has

established the policy on the

remuneration of the Executive Directors

and the Chairman. The Board has

established the policy on the remuneration

of the other Non-executive Directors.

Awards and benefits granted under the

previous Directors’ remuneration policy

will be honoured.

Proposed remuneration policy

The Group’s remuneration policy aims

to align the interests of the Executive

Directors and other senior executives

with those of shareholders.

The policy will take effect from

7 September 2023, subject to shareholder

approval at the AGM. The remuneration

policy is designed to ensure execution of

the Group’s strategy and to align with the

interests of shareholders.

As indicated in the annual statement

from the Chairman of the Remuneration

Committee, we believe that the previous

remuneration policy remains in the

majority fit for purpose and does not

require fundamental change. Therefore,

we are only proposing a variation to our

Long Term Incentive Arrangements (LTIP).

The Committee believe that with the

current external market pressures

and a need to capitalise on growth

opportunities over the next three years,

a change to the LTIP will help ensure we

can attract and retain the appropriate

talent within the business required to

deliver consistent business performance

and shareholder return. The changes

proposed remain true to the underlying

current method of long term reward

through Performance Share Plan but

provide higher leveraged outcomes for

the achievement of significant growth

during this period.

The overriding objective of the policy

review is to ensure that the executive

remuneration policy both encourages,

reinforces and rewards the delivery of

sustainable shareholder value while

providing an effective mechanism to

attract, retain and motivate executives

and senior management to deliver long

term growth and value.

The Remuneration Committee believes

executives should be rewarded through

performance-related pay scales that

are commensurate with the delivery of

value for the business and with annual

increases comparable to awards across

the majority of the workforce.

Incentives and particularly long term

incentives should account for a

significant proportion of the overall

remuneration package of Executive

Directors so that their reward is aligned

with shareholder interests and the

Group’s performance, without

encouraging excessive risk-taking.

Performance-related elements of

remuneration therefore form a significant

proportion of the total remuneration

packages. This is illustrated on page 115.

The Committee continues to take into

account performance on environmental,

social and governance matters with

annual bonus having a direct link to both

delivery against strategic personal

objectives and a specific measurable

ESG measure.

Policy table

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.

Directors’ remuneration policy

De La Rue plc Annual Report 2023 107

Strategic report Governance report Financial statements

Purpose and link

to strategy

Operation Maximum potential

opportunity

Performance metrics

Base Salary

Fixed competitive

remuneration set at

levels to recruit and

retain talent.

Determination informed,

but not led, by reference

to the marketplace for

companies of similar

size and complexity.

Reflects individual skills,

experience and

responsibility necessary

to deliver business

strategy.

Rewards individual

performance.

Reviewed annually and fixed for

12 months (but may be reviewed

more frequently).

Influenced by:

– Role, experience, responsibilities

and performance

– Change in broader workforce salary

– Group profitability and prevailing

market conditions

– Salary levels across the Group

generally

– Eliminating the gender pay gap

Increases are not automatic.

To avoid creating expectations

of Executive Directors and

other employees, no maximum

base salary has been set.

Increases will not normally

exceed the average of

increases awarded within the

rest of the Group in the UK.

Larger increases may be

awarded in certain

circumstances including, but

not limited to:

– Increases in scope or

responsibility

– Where market conditions

indicate a lack of

competitiveness and risk to

attracting or retaining

executives

Where the Remuneration

Committee exercises its

discretion to award increases

above the average for other

employees, a full explanation

will be provided in the next

annual report on remuneration.

Individual performance is the

primary consideration in setting

salary alongside overall Group

performance, affordability and

market competitiveness.

Benefits

Market competitive

benefits sufficient to

recruit and retain the

talent necessary to

develop and execute the

business strategy.

Provision of car allowance, life

assurance and private medical scheme.

Executive Directors are also provided

with permanent health insurance.

Executive Directors can also participate

in the annual leave flexibility scheme.

Other benefits may be provided on an

individual basis such as, but not limited

to, relocation allowances including

transactional and legal costs, disturbance

and travel and subsistence costs.

While the Remuneration

Committee has not set an

absolute maximum, benefits

will be market competitive

taking into account role and

individual circumstances.

Not applicable

Pension

To provide market

competitive post-

retirement income

sufficient to recruit and

retain executives.

Executive Directors are offered

membership of a defined contribution

pension plan or choice of cash in lieu

(for example, where contributions to

the plan would cause an Executive

Director to exceed the HM Revenue and

Customs (HMRC) annual allowance or

lifetime allowance limits). The

contribution rates offered are aligned

with pension contributions for the

wider workforce and based on base

salary only.

The contribution rates for

newly appointed Executive

Directors will be aligned to

rates for the wider workforce

at the date of appointment.

The Executive Directors may

choose to receive a cash

allowance in lieu of

contributions. The allowance

is equal to the pension

contribution that would

otherwise have been paid less

the Company’s national

insurance contribution to

ensure cost neutrality.

Not applicable.

Section 5: Remuneration continued

Directors’ remuneration policy continued

De La Rue plc Annual Report 2023108

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

the Chief Financial Officer

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.

De La Rue plc Annual Report 2023 109

Strategic report Governance report Financial statements

Purpose and link

to strategy

Operation Maximum potential

opportunity

Performance metrics

Long Term Incentive Plan awards

A share-settled long

term incentive aligned

closely to corporate

strategy and

shareholders interests.

Awards under the

Performance Share Plan

require delivery of key

business metrics

assessed over a

three-year performance

period, which should

result in the delivery of

value to shareholders

Awards under the

Investor Return Plan will

only have value if the

share price exceeds the

option price, and vesting

requires that we have

delivered market-

competitive total returns

to shareholders

For Executive Directors,

there is a further

two-year holding period

before any reward can

be realised. All awards

are share-settled, to

further align executives’

and shareholders’

interests.

The strategic alignment

is to:

– drive performance,

measured using key

strategically aligned

performance metrics,

over the longer-term

– ensure that

shareholder value,

and in particular

share price growth,

is prioritised

– ensure that there has

been performance

before pay can be

delivered

– attract, retain and

motivate talented

individuals of the

calibre needed to

drive the Company’s

future development

and performance

Executive Directors receive share

awards annually under either or both

of: (a) an award under the existing

Performance Share Plan and (b) a

market value share option under the

proposed Investor return plan. The

overall value of award will not exceed

the policy limit in any year.

PSP awards vest subject to continued

employment and meeting stretching

performance conditions. These consist

of two components, measured

separately and in each case over

a period of three financial years.

IRP awards vest subject to continued

employment and an underpin linked to

the Company’s Total Shareholder

Return relative to a market benchmark.

Performance metrics while challenging

will not encourage excessive risk taking.

In each case, vested awards cannot be

exercised or received by an Executive

Director until after a further two-year

holding period.

The Committee may determine that

the award holder will receive additional

shares equal to the value of any

dividends which would have been paid

(to end of the holding period) on the

shares subject to an award which vest.

PSP and IRP awards may vest early in

‘good leaver’ circumstances. This can

include on a change of control (or other

similar event) subject to satisfaction

of the performance conditions and,

unless the Committee determines

otherwise, pro-rating for time in the

performance period.

The Committee has the right to impose

‘malus’ on any unvested awards and to

‘claw back’ any awards within three

years of the vesting where there has

been material misstatement of results,

gross misconduct, any act or omission

that could bring the business into

disrepute and or cause reputational

damage or corporate failure, for which

the participant was culpable.

The Committee may also make

discretionary adjustments, up and

down, to the formulaic outcome of any

incentive plans if it judges that there is

misalignment with the Group’s strategic

goals or shareholders’ interests.

The maximum face value

of awards granted to any

Executive Director or other

eligible employees in any

financial year shall be an

amount not 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 under the PSP will

normally vest subject to the

achievement of Group

performance over a period of

three financial 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.

Awards under the IRP will only

vest subject to an underpin that

the Company’s Total

Shareholder Return matches or

exceeds that of the FTSE

mid-250 (excluding Investment

Trusts) index, measured over an

initial three-year period or other

suitable underpin as deemed

appropriate by the

Remuneration Committee.

The 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 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.

Section 5: Remuneration continued

Directors’ remuneration policy continued

De La Rue plc Annual Report 2023110

Purpose and link

to strategy

Operation Maximum potential

opportunity

Performance metrics

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

2022 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.

Shareholding requirement for

Executive Directors

The Remuneration Committee believes

that it is vital that the interests of

Executive Directors should be closely

aligned with those of shareholders.

Executive Directors are required to build

up a shareholding equivalent to two

times salary. 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.

A post-employment shareholding

requirement will apply of two times

salary (or the actual shareholding at date

of exit if lower) for the first year following

exit and 50% of this level for the second

year following exit.

For the purposes of the in-employment

shareholding requirement, the following

types of shares will be included:

– Fully beneficially owned shares,

including shares purchased by the

individual out of own funds

– Deferred Bonus shares (on a net-of-

tax basis)

– PSP awards, from the point where the

performance conditions have been

assessed and the award has vested

(on a net-of-tax basis)

– IRP options, from the point where

the awards has vested (on a net-of-

tax basis)

For the purposes of the post-

employment holding requirement,

the above categories of shares will be

required to be held, with the exception of

shares purchased by the individual out

of own funds, so as to avoid potentially

disincentivising share purchases.

Employee considerations

In line with best practice and as outlined

in our Responsible Business section of

this report, the Remuneration Committee

and main Board ensure a constant

understanding of the level of engagement

and views of our employees through

regular and direct contact.

We continue to maintain an appointed

Non-executive Director with direct

accountability for listening to

employee views.

Through this role we have taken steps

to engage with employees on European

Employee Forum and UK employee

forums on the proposed remuneration

policy and its application when

determining the remuneration

arrangements for Executive Directors.

Decisions on Executive remuneration

consistently take into consideration the

pay and conditions of employees

throughout the Group.

In particular, the Committee is kept

informed of the structure and application

of reward policies across the Group,

including:

– Salary increases for the general

employee population

– Overall spend on variable pay,

including annual bonus and other

incentive and commission schemes in

operation across the Group

– Participation in the ABP and Long

Term Incentives

– Gender pay gap

– CEO pay ratio analysis

De La Rue plc Annual Report 2023 111

Strategic report Governance report Financial statements

Pay review budgets for senior managers

and executives are set at levels which

are typically lower or the same as those

agreed with our trade unions for

employees whose pay is collectively

bargained. The principle of fair pay

aligned to performance operates across

the Group at all levels. The remuneration

policy applied to the Executive

Leadership Team and the most senior

executives in the Group is consistent

with the policy for the Executive

Directors, in that a significant element

of remuneration is dependent on Group

and individual performance and tied to

longer term growth of the business

aligned to shareholder interests. The

Group aims to offer competitive levels

of remuneration, benefits and incentives

to attract and retain talented individuals

at all levels with the experience and

capability to deliver the business strategy.

The Chief Executive Officer consults

with the Remuneration Committee 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, market

practice and the key principles of

remuneration outlined above.

On authority of the Committee, the Chief

Executive Officer has discretion to make

Long term incentive awards to a limited

number of employees not being

Executive Directors or Executive

Leadership Team members.

These arrangements ensure that the

application of the policy is heavily

influenced by remuneration

arrangements for all employees.

Remuneration Committee

discretion

The Remuneration Committee reserves

the right to adjust or set different

performance measures for both short

and long term plans if events occur or

circumstances arise in which performance

conditions have ceased to be appropriate.

These events include substantial

changes in business structure or

strategy, acquisition or divestment.

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. Any use of this

discretion will be carefully considered

by the Committee and fully disclosed.

Shareholder views

The Remuneration Committee engages

in regular dialogue with shareholders to

discuss and take feedback on its

remuneration policy and governance

matters. The Committee approached the

holders of 77% of our equity including

the main UK institutional Investor bodies

as at March 2023 and extensively

engaged with regards to the proposals

for the new directors’ remuneration

policy. The policy remain subject to a

binding vote at the AGM on 7 September

2023. The Committee welcomes an open

dialogue with shareholders and intends

to continue to consult with major

shareholders before implementing any

significant change to the Directors’

remuneration policy.

Service contracts

Current and new Executive Directors

are employed on contracts that have

a notice period that should not exceed

six months.

The Remuneration Committee

recognises that in the case of

appointments to the Board from outside

the Group, it may be necessary to offer

a longer initial notice period, which would

subsequently reduce to six months after

that initial period.

Non-executive Directors

All Directors offer themselves for annual

re-election at each AGM in accordance

with the UK Corporate Governance

Code. Service contracts for Executive

Directors and letters of appointment for

Non-executive Directors are available for

inspection at the registered office

address of the Company.

Payment for loss of office

In determining compensation for early

termination of a service contract, the

Remuneration Committee carefully

considers the specific circumstances,

the Company’s commitments under the

individual’s contract and the individual’s

obligation to mitigate loss. The table below

outlines the framework for contracts for

Executive Directors. Should additional

compensation matters arise, such as a

settlement or compromise agreement, the

Remuneration Committee will exercise

judgement and will take into account the

specific commercial circumstances.

Section 5: Remuneration continued

Directors’ remuneration policy continued

De La Rue plc Annual Report 2023112

Policy

Notice period on termination by

the Company

Maximum of six calendar months. The Remuneration Committee recognises that in

the case of appointment to the Board from outside the Group, it may be necessary

to offer a longer initial notice period, which would subsequently reduce to six

months or less.

Termination payment at the

Company’s sole discretion

On termination by either the Company or the relevant Executive Director, the

Company retains the discretion to make a payment in lieu of notice not exceeding

six months’ basic salary, excluding bonus but including benefits in kind (including

company car or car allowance and private health insurance) and pension

contributions (or cash in lieu of pension).

Benefits provided in connection with termination payments may also include,

but are not limited to, outplacement and legal fees.

Change of control Under the ABP, share awards will vest in full on change of control. Awards under the

PSP or Long term incentives 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 lapsed in the

performance period.

Vesting of incentives for leavers The Remuneration Committee has the discretion to determine appropriate bonus

amounts taking into consideration the circumstances in which an Executive Director

leaves. Typically for ‘good leavers’, bonus amounts (as estimated by the Remuneration

Committee) will be pro-rated for time in service to termination and will be subject to

performance, paid at the usual time. ‘Good leavers’ will be those individuals who die

in service or leave De La Rue as a result of their ill-health, injury, disability or the sale

of their employing company or business out of the Group or in any other

circumstances at the discretion of the Committee.

– The vesting of share awards is governed by the rules of the appropriate incentive

plan approved by shareholders. Typically for ‘good leavers’:

– Under the DBP, the provisions allow awards to vest in full at the normal vesting

date or earlier at the discretion of the Remuneration Committee

– Under the PSP and the proposed IRP, awards are pro-rated to reflect the

proportion of the performance period that was worked (unless the Remuneration

Committee determines otherwise), and then vest at the normal vesting date to

the extent that the relevant performance targets have been met. Participants then

have a short window in which to exercise their options. The Remuneration

Committee has the discretion to test the performance targets early and

accelerate vesting to the point of cessation of employment

– Good leavers under the Sharesave scheme, which is an HMRC tax-advantaged

scheme, are entitled to exercise options, using their accumulated savings plus any

early closure interest

– If awards are made on recruitment, the treatment on leaving would be determined

at the time of grant at the Remuneration Committee’s discretion, in accordance

with the relevant plan rules.

Pension benefits These will be paid in accordance with the rules of the pension scheme. Where an

early retirement pension is paid from a legacy UK defined benefit pension scheme,

a reduction will be made to the pension to reflect early receipt using factors

determined and set by the Trustees from time to time.

De La Rue plc Annual Report 2023 113

Strategic report Governance report Financial statements

Remuneration policy for the Chairman and Non-executive Directors

Element Operation by the Company

Chairman fees The remuneration of the Chairman is set by the Remuneration Committee. Fees are

set at a level which reflects the skills, knowledge and experience of the individual,

while taking into account market data.

Non-executive Director fees Non-executive Directors do not have service contracts but are appointed for fixed

terms of three years renewable for a further three years. Terms beyond this period

are considered on a case-by-case basis.

The Board (excluding Non-executive Directors) is responsible for setting Non-

executive Directors’ fees. Fees are structured as a basic fee for Board and

Committee membership. Committee Chairmen and the Senior Independent Director

receive an additional fee. Reasonable expenses for attending Board meetings are

reimbursed by the Company and the Group may pay any tax due on such benefits.

Fees may be paid in the form of De La Rue shares.

Total fees paid to Non-executive Directors will remain within the limit set out in the

Company’s articles of association of £750,000 per annum.

Non-executive Directors are not eligible for pension scheme membership and do

not participate in any of the Group’s annual incentive plans, or share option

schemes. No compensation is payable to the Chairman or to any Non-executive

Director if the appointment is terminated.

Remuneration policy for new

appointments

When considering the appointment of

Executive Directors, the Committee

balances the need to attract candidates

of sufficient calibre while remaining

mindful of the need to pay no more than

necessary. The Committee will typically

align the remuneration package with the

above remuneration policy. Base salary

may be set at a higher or lower level than

previous incumbents. Where possible,

salary may be set at an initially lower

level with the intention of increasing it

over the following two years dependent

on performance in the role and

experience gained. In certain

circumstances, to facilitate the

recruitment of individuals of the required

calibre, incentive arrangements and

awards may also be higher. The

Remuneration Committee retains the

discretion to make payments or awards

which are outside the policy to facilitate

the recruitment of candidates of the

appropriate calibre to implement the

Group’s strategy. In addition,

remuneration forfeited on resignation

from a previous employer may be

compensated. The form of this

compensation would be considered

on a case-by-case basis and may

comprise either cash or shares.

Generally (though not necessarily in all

circumstances) the Committee will

favour share awards with appropriately

stretching performance targets attached

and, at a minimum, expects that:

– If forfeited remuneration was in the

form of shares, compensation will be

in the form of shares

– If forfeited remuneration was subject

to achievement of performance

conditions, compensation will be

subject to no less challenging

performance conditions

– The timing of any compensation will,

where practicable, match the vesting

schedule of the remuneration forfeited

A newly-appointed Executive Director

may be provided with reasonable

relocation support.

Internal appointments will receive a

remuneration package that is consistent

with the remuneration policy. Legacy

terms and conditions would be

honoured, including any outstanding

incentive awards. Company pension

contribution rates would be set in line

with the rates available to the wider

workforce at the date of appointment.

Subject to the limit on additional

maximum variable remuneration set out

below, incentive awards may be granted

within the first 12 months of appointment

above the maximum award opportunities

set out in the policy table above.

Excluding payments or awards to

compensate for remuneration forfeited

on resignation from a previous employer,

the maximum level of variable

remuneration which may be awarded to

a new Executive Director, above the

maximum levels set out in the policy

table above, is one times base salary.

The Remuneration Committee will ensure

that variable remuneration is linked to

the achievement of appropriate and

challenging performance measures

and will be forfeited if performance or

continued employment conditions are

not met.

Fees payable to a newly-appointed

Chairman or Non-executive Director will

be in line with the fee policy in place at

the time of appointment.

Section 5: Remuneration continued

Directors’ remuneration policy continued

De La Rue plc Annual Report 2023114

Summary 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 1 July 2023.

Annual Bonus Plan Long Term Incentive Plan

80% Group

financial performance

10% strategic

personal

objectives and 10% ESG

Performance Share Plan Investor Return Plan

50% EPS

50% free cash

flow

TSR underpin*

60% cash

40% deferred shares

Performance-tested vesting after three years

two year post-vesting holding period

Malus and clawback and shareholding requirements

Note:

* Median performance vs FTSE250 3 year performance

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 2023

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%

35.3%

544,728

988,621

1,672,458

2,041,969

Managing Director, Currency

Minimum

Target

Maximum

100%

58.4%

35.0%

28.6%

17.4% 11.6%12.6%

20.9% 13.9%

17.1% 17.1%

30.2%

37.2%

183.571

314.585

525.000

640.926

Maximum with

50% growth

Fixed remuneration

Annual Incentive Plan (Cash)

Annual Incentive Plan (Deferred Shares)

Long Term Incentive Plan

De La Rue plc Annual Report 2023 115

Strategic report Governance report Financial statements

Illustrative scenario charts

Performance scenarios for the ABP and LTIP 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 Long Term

Incentive Plan

Target cash bonus and deferred

shares under the ABP, target

vesting under the Long Term

Incentive Plan

Maximum cash bonus, maximum

deferred shares under the ABP,

maximum vesting under the Long

Term Incentive Plan

Maximum cash bonus, maximum

deferred shares under ABP,

maximum vesting under the Long

Term Incentive Plan 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 the Long

Term Incentive Plan

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 shares vesting (25% of

salary for CEO and CFO and other

Executive Directors)

100% of shares vesting (100% of

salary for CEO, CFO and other

Executive Directors)

100% of shares vesting valued

at 150%

Executive Director remuneration mix FY24

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

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 FY24. For further

information on the director’s remuneration policy please see pages 105 to 115.

Section 5: Remuneration continued

Directors’ remuneration policy continued

De La Rue plc Annual Report 2023116

This section of the Directors’ remuneration report shows how the Remuneration Committee implemented the policy on

Directors’ remuneration in the year ended 25 March 2023 including all elements of remuneration received by Executive

Directors and the incentive outturns for FY23.

Single figure of remuneration for each Director (audited)

The table below shows how we have applied the current remuneration policy during FY23. It discloses all the elements

of remuneration received by the Directors during the period.

Fixed Variable

Salary

and fees

Benefits

(excluding

pensions)

Pensions

Total

Fixed Bonus

Long term

incentive (PSP)

(vested)

Total

Variable Total

2023

£’000

2022

£’000

2023

£’000

2022

£’000

2023

£’000

2022

£’000

2023

£’000

2023

£’000

2022

£’000

2023

£’000

2022

£’000

2023

£’000

2023

£’000

2022

£’000

Executive Directors

Clive Vacher 477 464 17 17 48 46 542 – 265 – – – 542 792

Rob Harding 291 283 14 17 17 17 322 – 138 – – – 322 455

Ruth Euling 265 260 37 36 – – 302 – 126 – – – 302 422

1,033 1,007 68 70 65 63 1,166 – 529 – – – 1,166 1,669

Chairman

Kevin Loosemore 206 202 – – – – 206 – – – – – 206 202

Non-executive Directors

Nick Bray 60 59 – – – – 60 – – – – – 60 59

Maria da Cunha (Retired on

27 July 2022) 20 59 – – – – 20 – – – – – 20 59

Mark Hoad (Appointed on

28 September 2022) 26 – – – – – 26 – – – – – 26 –

Margaret Rice-Jones 65 57 – – – – 65 – – – – – 65 57

Catherine Ashton (Resigned

12 June 2023) 52 51 – – – – 52 – – – – – 52 51

Aggregate emoluments 1,462 1,435 68 70 65 63 1,595 529 1,595 2,097

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 FY23 is provided on page 118.

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

e. See page 123 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.

Changes in Executive Directors during the year

There were no changes in the Executive Directors during FY23. The Chief Financial Officer, Rob Harding, resigned on 31 January

2023 and will leave employment and the Board in July 2023. For more information, please see page 106.

Annual Report on remuneration

De La Rue plc Annual Report 2023 117

Strategic report Governance report Financial statements

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.

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.

Executive Directors, Clive Vacher and Ruth Euling were both awarded a 2.5% increase in line with the wider workforce in July

2022. The Committee has determined that Clive Vacher and Ruth Euling will not receive a pay rise in 2023.

Base

salary level

July 2022

£’000

Base

salary level

October 2021

£’000

Increase

Clive Vacher 480 468 2.5

Rob Harding 293 286 2.5

Ruth Euling 267 260 2.5

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.

Both the fees for the Non-executive Directors and the Chairman increased by 1.5% effective in July 2022 aligned with the timing

of a review of salary levels for the wider workforce. The Committee have determined that no further increase will be made in

during FY24.

The fees for 2022 are as follows:

Non-executive Director fees

July 2022

£’000

October 2021

£’000

Basic fee 51.7 51

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

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 and Ruth Euling hold no remunerated external directorship appointments.

Pension contributions (audited)

During FY23 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.

Variable remuneration (audited)

Annual bonus for FY23

The Annual Bonus Plan for FY23 was issued with the following financial structure and targets:

Measure Threshold Target Maximum Actual

% of

maximum

achieved

Group adjusted revenue £370.0m £378.8m £395.0m £349.7m 0%

Group adjusted operating profit £34.0m £36.5m £41.7m £27.8m 0%

Average net debt £92.7m £87.7m £82.7m £94.2m 0%

Section 5: Remuneration continued

Annual Report on remuneration continued

De La Rue plc Annual Report 2023118

Under the Group adjusted revenue metric, the target award under the plan was based on the budget with Maximum award at

stretch aligned with market consensus.

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

market consensus. Financial targets under the ABP for FY23 were not met and as such no award will be made under the plan.

Eighty per cent of award is linked of the achievement of the financial metrics and ten 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 profitable growth for the Currency Division

through a focus on operational improvements and

efficiencies. Securing targeted Polymer and features

volume growth and delivering targeted FY23 revenue

and divisional adjusted operating profit.

Partially achieved

– Divisional OP and Revenue not achieved to plan and

delayed polymer growth plan

– Strong cash management and cost reduction

delivered ensuring the business remained profitable

in a subdued market.

– New Polymer launches completed

Authentication Growth

– 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.

Partially achieved

– Revenue and operating profit were not achieved in line

with plan although overall increase in revenue versus

FY22. Recent wins in brand and ID growth achieved

in year.

– Controllable cashflow target achieved

Value Stream Excellence

– Focus on improving efficiencies in ways of working and

associated cost reduction.

– Continuing to address targeted legacy issues

– Publishing a targeted ESG strategy with a focus on

environmental and sustainability targets

– Maintaining high standards of HSE and improved

organisational diversity.

Achieved in full

– ESG Strategy published, and significant progress

made as outlined in the Responsible Business Section

of this report

– Key footprint progress completed

– HSE training and other key metrics met in full and DEI

reporting in line with plan

ESG

– Reduction in solid waste per good output tonne

Not achieved

– Due to lower production volumes

Component 20%of maximum award

Award achieved 0%

In reaching its decision on ABP outcome, the Committee considered 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

pages 102 to 106 and also took into account wider stakeholder perspectives. Despite progress being made during the year the

Committee considered that the formulaic outcomes for Executive Directors were reflective of the underlying business

performance, as a result Executive Directors will not receive an award under the plan.

Long term incentive – Performance Share Plan (PSP)

During FY23 the PSP plan as outlined in our current remuneration policy was applied. This 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.

De La Rue plc Annual Report 2023 119

Strategic report Governance report Financial statements

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 awards made from 2021-2022 were are aligned to the challenging growth objectives

of the Turnaround Plan reflecting the changing market conditions during that period and associated market consensus.

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 FY23

PSP grants made in 2020 outlined below have not met performance criteria and therefore no awards vested under the PSP in

FY23 for any Executive Director.

PSP awards made in August 2022 (audited)

The Committee granted awards under the PSP on 31 August 2022 to participants including the three Executive Directors. In line

with the commitment made in this report a year ago, 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 Committee reduced the

size of each award by 20% from the policy award that would otherwise have been made.

Performance targets applicable to the 2022 awards took 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 anticipated facing in future years. To take into account 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 determined that the face value of awards will be scaled back compared to 2021 award levels. The measures and

targets were confirmed at the time of grant via a Regulatory News Service announcement.

A summary of the performance levels and award vesting levels that apply to awards under the 2021-2022 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

2022 EPS¹ 25 100 13.9 21.9

RTSR 25 100 Median Upper Quartile

2021 EPS¹ 25 100 8.5 16.7

RTSR 25 100 Median Upper Quartile

2020 EPS¹ 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 FY23 in line with the existing Directors’ remuneration policy as follows:

Year of award

Number of

awarded Date of award

of salary

Face value

£’000

Vesting at

threshold

(as a % of

maximum)

Performance period

end date

Clive Vacher 454,059 31 August 2022 80 390 25 July 2025

Rob Harding 277,480 31 August 2022 80 239 25 July 2025

Ruth Euling 252,158 31 August 2022 80 217 25 July 2025

Section 5: Remuneration continued

Annual Report on remuneration continued

De La Rue plc Annual Report 2023120

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 84.55p. Face value is the maximum number of shares that could

vest multiplied by the closing share price of 86p 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 FY24

The remuneration arrangements in FY24 will operate in line our proposed remuneration policy.

Salary and benefits

The Committee have determined that no Executive Director will be awarded a salary increase in FY24

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

ABP FY24

The Remuneration Committee has carefully considered bonus performance measures for FY24, and concluded that the current

measures set out in the table on page 106 remain highly relevant.

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

management. Cost competitiveness, improved efficiency also remain a key priority, alongside targeted increase in order intake

supporting growth in both Currency and Authentication. Financial targets will remain in line with the adjusted market expectation

to ensure that executives remain incentivised and rewarded for delivering in line or better than the plans as set out. As outlined

in the policy and applied in prior years a 20% weighting on non-financial strategic targets has been applied ensuring that Executive

Directors are incentivised on both the delivery of clear financial metrics and good management of the underlying business.

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. In FY23 an additional metric for ESG was added accounting

for 10% of the strategic personal objective to ensure focus continues in this important area. We propose to continue with this

approach for the FY24 plan. The structure and weightings will be as follows:

Structure & weighting Weighting

Adjusted revenue 20%

Adjusted operating profit 30%

Average net debt1 30%

Group strategic 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 strategic

priorities aligned to the business strategy and plan:

– Grow repeatable and profitable business delivering an improved orderbook across all targeted markets and securing key

contract extensions

– Drive efficient operations and continue to remove legacy challenges

– Invest for the future, delivering key product development

The Committee will assess 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.

De La Rue plc Annual Report 2023 121

Strategic report Governance report Financial statements

Performance measures applying to LTIP awards to be made in 2023

As outlined in our proposed Remuneration policy on page 105 to 115, The Remuneration Committee has given detailed

consideration to the most appropriate Long Term Incentive arrangements that provide a strong link between business

performance and executive reward.

For awards to be made in FY24 we propose preparing on basis of the proposed policy and the share plans rules we anticipate

being approved at the 2023 AGM as outlined below.

Performance Measure Weighting

Entry

pay-out

Target

pay-out

Stretch

pay-out

PSP EPS 20% 0% 50% 100%

Free cashflow 20% 0% 50% 100%

Market Value Share

Options

RTSR Underpin Median performance

vs FTSE 250 (3 year performance).

Calculated based on a starting

net return index (NRI) averaged over a

30 day period ending on the day before

the start of the performance period.

Equivalent to 60% of award on a

relative face value calculation

100% awarded if underpin met

Further work is underway to calibrate performance targets. Full details of these will be disclosed via an RNS announcement at

the time of award. Should the share price remain subdued we would anticipate the Investor Return Plan is set a premium price

ensuring that Executives are awarded for share price growth reflecting appropriate Shareholder return.

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.

Year of award 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 n/a

Nick Bray 21 July 2016 20 July 2022

Kevin Loosemore 1 October 2019 n/a

Margaret Rice-Jones 22 September 2020 22 September 2023

Clive Whiley 18 May 2023 18 May 2026

Dean Moore 26 June 2023 26 June 2026

Mark Hoad 13 September 2022 29 September 2025

Subsequent to the year end, Kevin Loosemore resigned as the Chairman and as a Director on 1 May 2023. Clive Whiley was

appointed as a Director and as Chairman on 18 May 2023. Catherine Ashton resigned as a Director on 12 June 2023. Margaret

Rice-Jones has confirmed that she will not be standing for re-election at the AGM.

Section 5: Remuneration continued

Annual Report on remuneration continued

De La Rue plc Annual Report 2023122

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 25 March 2023:

Variable

Subject to

performance

conditions

Not subject to

performance conditions Vested shares

Current

shareholding

ordinary

shares (held

outright)

Current

shareholding

as % of salary

Performance

Share Plan

Performance

Share Plan

Deferred

Bonus Plan SAYE

Vested

unexercised

during the

period

Vested

exercised

during the

period

Executive Directors

Clive Vacher 233,904 26 1,033,607 – 198,330 29,925 – –

Rob Harding 8,879 2 631,648 – 87,302 11,393 – –

Ruth Euling 49,217 10 569,177 – 89,357 – 21,154 –

Non-executive Chairman

Kevin Loosemore¹ 947,840 N/A – – – – – –

Non-executive Directors

Catherine Ashton² – N/A – – – – – –

Nick Bray 26,375 N/A – – – – – –

Mark Hoad³ – N/A – – – – – –

Margaret Rice-Jones – N/A – – – – – –

Notes:

1. Subsequent to the year end, resigned on 1 May 2023.

2. Subsequent to the year end, resigned on 12 June 2023.

3. Appointed on 28 September 2022.

There have been no changes in Directors’ interests in ordinary shares in the period from 26 March 2023 to 28 June 2023.

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 53.1p on 24 March 2023, being the last working day before the end of FY23.

De La Rue plc Annual Report 2023 123

Strategic report Governance report Financial statements

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

26 March

2022

Awarded

during the

year

Exercised

during the

year

Lapsed/

cancelled

during the

year

Awards

held at

25 March

2023

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 – – – 186.16

80.20 Jul 22 Jul 22

Jul 21 63,700 – – – 63,700 – 186.16

– Jul 23 Jul 23

Jul 22 – 67,315 – – 67,315 – 78.87

– Jul 23 Jul 23

Jul 22 – 67,315 – – 67,315 – 78.87

– Jul 24 Jul 24

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

Aug 22 – 454,059 – – 454,059 – 84.55

– Aug 27 Aug 32

Total 1,063,597 588,689 63,700 356,649 1,231,937

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

Feb 23 – 29,925 – – 29,925 – 60.15

– Apr 26 Sep 26

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

Jul 22 – 35,042 – – 35,042 – 78.87

– Jul 23 Jul 23

Jul 22 – 35,043 – – 35,043 – 78.87

– Jul 24 Jul 24

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

Aug 22 – 277,480 – – 277,480 – 84.55

– Aug 27 Aug 32

Total 388,603 347,565 17,218 718,950

Sharesave options¹ 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

Deferred Bonus Plan¹ Jul 21 25,669 – 25,669 – – – 186.16

– Jul 22 Jul 22

Jul 21 25,668 – – – 25,668 – 186.16

– Jul 23 Jul 23

Jul 22 – 31,845 – – 31,845 – 78.87

– Jul 23 Jul 23

Jul 22 – 31,844 – – 31,844 – 78.87

– Jul 24 Jul 24

Performance

Share Plan

Dec 13¹ 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 – – – 515 515 680.10

– 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

Aug 22 – 252,158 – – 252,158 – 84.55

– Aug 27 Aug 32

Total 389,510 315,847 25,669 679,688

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. For Sharesave options the share price shown is the exercise price which was 90% of mid-market value of an ordinary share averaged over the three dealing days immediately preceding

award date.

Section 5: Remuneration continued

Annual Report on remuneration continued

De La Rue plc Annual Report 2023124

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 25 March 2023

– 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 2013 2014 2015 2016 2017 2018 2019 2020 2020 2021 2022 2023

Chief Executive Officer

Tim

Cobbold

Tim

Cobbold

Martin

Sutherland

Martin

Sutherland

Martin

Sutherland

Martin

Sutherland

Martin

Sutherland

Martin

Sutherland

Clive

Vacher³

Clive

Vacher

Clive

Vacher

Clive

Vacher

Single figure of total

remuneration £’000 634 1,071 1,107 998 899 783 954 340 249 1,106 792 542

Annual bonus

payout as a %

of maximum

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

LTIP vesting

against maximum

opportunity (%) Nil 60 Nil Nil Nil 25 25 Nil 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 25 March 2023, of £100 invested in De La Rue plc on 25 March 2013, compared with the value

of £100 invested in the FTSE 250 Index (excluding 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

Total shareholder return

Source: FactSet

2013 2014 2015 201820172016 2019 2020 2022 20232021

TSR

De La Rue plc FTSE 250 (excluding Investment Trusts)

100

150

200

250

De La Rue plc Annual Report 2023 125

Strategic report Governance report Financial statements

Chief Executive Officer pay ratio

The table below sets out the CEO pay ratios from the FY23 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 43% 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

2022/2023 Option A 14:1 12:1 9:1

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.

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

Year Method

Total pay

and benefits

Total

salary

Total pay

and benefits Total salary

Total pay

and benefits

Total

salary

2022/2023 Option A £37,556.46 £33,904.94 £46,886.44 £42,659.39 £61,407.42 £56,377.26

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 £37,017.34 £32,584.92 £45,423.49 £41,795.49 £62,770.89 £53,918.64

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 FY22 and FY23. ABP and Sales Incentive Plans were not paid in FY23. The table

shows the UK employee average percentage salary change which is comprised of collective and individual awards throughout

the financial year.

2022/23 2021/22

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

Clive Vacher 2.5% 0% - 2% 0% -55%

Rob Harding 2.5% 0% - 2% 148.6% –14%

Ruth Euling 2.5% 2.4% – – – –

Kevin Loosemore 1.5% – – 2% – –

Mark Hoad - – – - – –

Nick Bray 1% – – 2% – –

Margaret Rice-Jones 14.6%

1 – – 18.3% – –

Catherine Ashton 1.5% – – 2.0% – –

UK employee average 4.8% 0% - 1.5% 0% –146%

Note:

1. Margaret Rice-Jones base increase was 1.5%. The remainder was for becoming SID and Remuneration Committee Chair.

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

Section 5: Remuneration continued

Annual Report on remuneration continued

De La Rue plc Annual Report 2023126

Statement of shareholder voting

The Directors’ remuneration report was approved by shareholders at our AGM on 27 July 2022. Details of the poll voting result

on the relevant resolutions are shown below:

Total votes cast For¹ (%) Against (%) Votes withheld²

Approval of remuneration report 147,547,543 127,958,215 86.72 19,589,328 13.28 190,432

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 FY23, 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 £31,529.

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 28 June 2023 and signed on its behalf.

Margaret Rice-Jones

Chair of the Remuneration Committee

29 June 2023

De La Rue plc Annual Report 2023 127

Strategic report Governance report Financial statements

The Directors present their annual report

on the affairs of the Group for the period

ended 25 March 2023.

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 25 March 2023 and

likely future developments in the Group.

The various sections of that report,

from page 1 to 67 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 70 to 101 and

page 133;

– Data on greenhouse gas emissions

and other climate change-related

disclosures from page 28 onwards.

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 123 and 124;

– 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 FY22. The Directors did not declare

an interim dividend and do not

recommend a final dividend to be

paid in respect of FY23.

Directors

The names and biographical details of

the Directors of the Company at the

date of this report, and the names and

dates of service of others who served as

Directors during the period. are provided

on pages 72 and 73.

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 report on pages 70 to 101.

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 21 to 23.

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 Rob Harding

who leaves the Company’s employment

in July 2023 and Margaret Rice-Jones

who has decided not to seek re-election

due to the time demands of her other

business commitments, retire at the

AGM on 7 September 2023 and, being

eligible, offers himself or herself for

re-election.

Details of the Company’s contracts of

service with its Executive Directors can

be found on pages 112-113 and 122 and

details of the Company’s letters of

appointment for the Non-executive

Directors are on pages 114 and 122.

Details of Directors’ remuneration are

provided in the Directors’ remuneration

report on pages 102 to 127. The interests

of the Directors and their families in the

share capital of the Company are shown

in the Directors’ remuneration report on

page 123.

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.

Directors’ report

De La Rue plc Annual Report 2023128

Shares and major shareholdings

Structure of the Company’s

share capital

As at 25 March 2023, the share capital

of the Company comprised 195,437,227

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.

The 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 25 March 2023, 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

Odey Asset Management Limited 23/03/2023 Indirect 6.89

The Wellcome Trust Limited 21/11/2022 Direct 5.22

Aberforth Partners LLP 09/04/2018 Indirect 5.11

JPMorgan Chase & Co. 22/03/2023 Indirect 5.06

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

The following changes have been notified between the end of FY23 and 28 June 2023:

– JPMorgan Chase & Co advised on 30 March 2023 that the nature of their interest had changed and

amounted to 5.05% and further advised on 23 May 2023 that they no longer held a notifiable interest.

– Odey Asset Management Ltd advised on 21 June 2023 that their interest had reduced to 2.93% and was

no longer notifiable.

– Spreadex Ltd advised on 23 June 2023 that they had an interest in 3.89% of the Company’s issued share

capital and further advised on 27 June 2023 that their interest had increased to 4.30% and on 28 June

2023 that their interest had increased to 5.25%.

– Richard Griffiths advised on 27 June 2023 that he had an interest (via CFDs) in 4.26% of the Company’s

issued share capital and further advised on 28 June 2023 that his interest had increased to 5.21%.

De La Rue plc Annual Report 2023 129

Strategic report Governance report Financial statements

Directors’ report continued

Directors’ authorities in relation

to share capital

Power to issue and allot

At the AGM held on 27 July 2022 the

Directors were generally and

unconditionally authorised to allot shares

in the Company up to an aggregate

nominal value of £29,213,815 (being

approximately one third of the

Company’s then issued share capital) or

up to an aggregate nominal value of

£58,427,630 (being approximately two

thirds of the Company’s then issued

share capital) in respect of a strictly

pro-rata rights issue.

At the 2022 AGM the Directors were also

granted additional powers to allot ordinary

shares for cash (i) up to a nominal value

of £4,382,070 (being approximately 5%

of the Company’s then issued share

capital) and (ii) up to a further nominal

value of £4,382,070, 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 Pre-emption Group updated its

Statement of Principles in November

2022. Companies are now permitted to

seek a general disapplication of pre-

emption rights to issue, for cash, equity

securities representing no more than 10%

of the issued ordinary share capital plus

an additional 10% in connection with an

acquisition or specified capital investment.

We are seeking authorities in line with

the revised Principles at the 2023 AGM,

to create flexibility. We are not, however,

seeking the additional authority permitted

under the Principles for the additional 2%

pre-emption disapplication permitted in

each case for a ‘follow-on’ offer.

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.

279,875 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 our employee share

schemes are provided in the Directors’

remuneration report on pages 102 to 127.

Authority to purchase own shares

At the 2022 AGM, shareholders gave the

Company authority to make market

purchases of up to 19,532,925 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 2023 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

to oversee its engagement with the

workforce. For further details of how that

duty was fulfilled this role and how it

informed the Board’s discussions during

the year, please see page 79.

De La Rue plc Annual Report 2023130

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

25 March 2023.

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 58 to 63.

Financial risk management

Please refer to the disclosures in note 14

to the financial statements.

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 2023 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 140

families of patents which support its

business. There are around 1,200 patents

and patent applications, of which over

850 have been granted and circa 350

applications are pending. During the year

the Group had 29 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 10, the business

model and strategy summaries on pages

16 to 19 and in other parts of the

Strategic report.

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 pages 30 and 31.

De La Rue plc Annual Report 2023 131

Strategic report Governance report Financial statements

Annual General Meeting

The AGM will be held at 10:00am on

Thursday 7 September 2023 at the

Company’s offices, De La Rue House,

Jays Close, Viables, Basingstoke,

Hampshire, RG22 4BS.

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 issued 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.

This confirmation is given, and should be

interpreted, in accordance with the

provisions of section 418 of the

Companies Act 2006.

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.

Going concern

As described on pages 64 to 67, 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

published by the FRC in September

2014) in preparing the consolidated

financial statements.

Post-balance sheet events

On 29 June 2023 the Company entered

into a number of documents which had

the effect of amending and restating the

terms of the revolving facility agreement

with its lending banks and their agents.

These documents are an amendment

and restatement agreement with the

various lenders and the banks’ agent

and security agent, a debenture between

the Company, certain other Group

companies and the banks’ security

agent and an inter-creditor agreement

between the creditors. As a result of

these changes, the facilities are now

secured against material assets and

shares within the Group.

On the 28 June 2023 the Company

entered into an agreement with the

trustees of the De La Rue Pension

Scheme in relation to the deferral of

certain deficit reduction payments that

were otherwise due to be paid by the

Company and other Group companies

to that scheme. In order to preserve and

support the position of the scheme, with

the support of the lenders, the scheme

will be provided with security on a pari

passu basis together with the lenders,

as well as an enhanced information

sharing protocol to ensure ongoing

communication between the Group and

the trustee remains comprehensive.

This Directors’ report was approved by

the Board on 29 June 2023.

By order of the Board

Jon Messent

Company Secretary

29 June 2023

Directors’ report continued

De La Rue plc Annual Report 2023132

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 (“FRS 102”)), 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.

Fair, balanced and

understandable

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 89 to 96.

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 67 and

the Directors’ report on pages 128 to

132, 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.

By order of the Board

Jon Messent

Company Secretary

29 June 2023

Directors’ responsibility

statement

De La Rue plc Annual Report 2023 133

Strategic report Governance report Financial statements

Financial statements

We worked hard to

mitigate cost inflation

and minimise the

impact of low currency

demand in FY23

De La Rue plc Annual Report 2023134

136 Independent Auditor’s Report

145 Consolidated income statement

146 Consolidated statement of

comprehensive income

147 Consolidated balance sheet

14 8 Consolidated statement of

changes in equity

149 Consolidatedcashflow

statement

151 Accounting policies

161 Notes to the accounts

205 Company balance sheet

206 Company statement of changes

in equity

207 Accounting policies – Company

209 Notes to the accounts –

Company

211 Non-IFRS measures

214 Five-year record

215 Shareholder information

Five-year record

Page 214

Consolidated income statement

Page 145

De La Rue plc Annual Report 2023 135

Strategic report Governance report Financial statements

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 25 March

2023 and of the group’s loss for the

periodthenendedasdefinedwithin

the Group’s accounting policies;

– 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periodended25March2023whichcomprise:

Group Parent company

Consolidated balance sheet as at

25 March 2023

Company Balance sheet as at 25 March 2023

Consolidated income statement for the

period ended 25 March 2023

Company Statement of changes in equity for

the period ended 25 March 2023

Consolidated statement of comprehensive

income for the period ended 25 March 2023

Relatednotes1to8atothefinancial

statementsincludingasummaryofsignificant

accounting policies

Consolidated statement of changes in equity

for the period ended 25 March 2023

Consolidatedcashflowstatementforthe

period ended 25 March 2023

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 also performed

procedures in conjunction with internal

specialists to test the appropriateness

of management’s underlying modelling.

– We assessed the appropriateness of

the duration of the going concern

assessment period to 29 June 2024

(“thegoingconcernperiod”)and

considered the existence of any

significanteventsorconditionsbeyond

this period based on our enquiries and

knowledge arising from other areas of

the audit.

Independent Auditor’s Report

Independent Auditor’s

Report to the members of

De La Rue plc

De La Rue plc Annual Report 2023136

– Weobtainedthefinalsigned

amendment to the Revolving Credit

Facility dated 29 June 2023 and

assessed the implications of the revised

terms in the context of management’s

assessment, including covenant and

liquidity compliance in the going

concern period. We considered the

changestotheunderlyingfinancial

covenants, as well as the inclusion of

monthly liquidity testing and non-

financialrequirements,includingthe

need for the company to assess the

future options available to them.

– We obtained the signed agreement with

the Pension Trustee to defer previously

agreed contributions until June 2024.

Weconfirmedthatsucheffectshad

been appropriately modelled in the

forecastcashflowassumptions.

– Weobtainedthecashflow,covenant

forecasts and sensitivities for the going

concern period prepared by

management and tested for arithmetical

accuracy of the models as well as

checking the net debt position at the

period-end date which is the starting

point for the model. Further to this, we

reviewed actual post period-end trading

against the forecast and considered all

relevant factors from the period-end

date to the approval date of the

financialstatements.Weassessedthe

reasonablenessofthecashflowforecast

by analysing management’s historical

forecasting accuracy. We also assessed

the reasonableness of the forecasts

with reference to the level of secured

orders, the prospect of securing the

pipeline and assumptions including

bothfixedandvariablecostsaswellas

assessing whether all key factors have

been considered by management.

– 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 all of its bank

covenants and liquidity requirements

during the going concern period. We

reviewed management’s reverse stress

testingscenarioswhichquantifiedthe

downside required to breach the

covenants(bymodellingboth

decreased earnings and increased net

debt) or exhaust liquidity and evaluated

whetherthedownsideincashflows,

earnings and net debt 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 note that management has

performed an assessment to consider

whether any events outside of the

going concern period beyond 29 June

2024 need to be considered in the

context of management’s conclusion.

Managementhaveidentifiedthe

successfulre-financingofthe

company’s Revolving Credit Facility

which expires on 1 January 2025 and

continued covenant compliance until

then to be such events. We have

performed procedures to assess

whether management’s conclusions in

this regard are reasonable, including

review of forecasts in this period and

discussions with the company’s

advisors and the lenders in conjunction

with internal debt specialists to

determine whether the Group has

realistic prospects of covenant

complianceandarefinancingofthe

Revolving Credit Facility.

– 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 held discussions with the Audit

Committee and full board of Directors

to corroborate the forecasts and their

basis as prepared by management.

Further to this we held discussions

with the Company’s advisors as

well as the lenders to corroborate

other key assumptions in

management’s assessment.

– We considered whether management’s

disclosuresinthefinancialstatements

sufficientlyandappropriatelyreflect

the going concern assessment, key

judgements made 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

We note the following key observations in

relation to management’s assessment

and the procedures we have performed

as stated above:

– On 29 June 2023 the Company signed

an amended agreement with the

Lenders on its Revolving Credit Facility

which includes updated covenants, a

new liquidity requirement and other

non-financialmilestonestobeactioned

including the need for the company to

assess the future options available to

them. On 28 June 2023, the Company

signed an agreement with the Pension

Trustee on the deferral of previously

agreed payments into the scheme.

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 29 June 2024, a period of

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.

De La Rue plc Annual Report 2023 137

Strategic report Governance report Financial statements

Independent Auditor’s Report continued

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, represents

the principal business units within the

Group. We selected a further seven

componentsasspecifiedprocedures

components, for which we performed

certainauditproceduresonspecific

accounts within that component which

we considered had the potential for the

greatestimpactonthesignificant

accountsinthefinancialstatements,

either because of the size of the accounts

ortheirriskprofile.

The table below sets out the coverage

obtained from the work performed by our

audit teams.

Number of

locations

Adjusted

EBITDA

(%)

Revenue

(%)

Total

Assets

(%)

Full Scope 3 99.1 89.7 64.1

SpecificScope 3 –* 2.1 20.0

SpecifiedProcedures 7 –* 8.2 13.8

Fullandspecifiedprocedurescoverage 13 99.1 100.0 97.9

Remaining components 37 0.9* 0.0 2.1

Total reporting components 50 100.0 100.0 100.0

* ThecontributionofspecifiedprocedurecomponentstoGroupAdjustedEBITDAisincludedwithin‘remaining

components’asauditprocedureswereperformedoncertain,butnotall,significantaccountsofthespecifiedprocedures

components contributing to Group Adjusted EBITDA.

Of the 13 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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.

For the remaining seven components

(representing-8.3%ofadjustedEBITDA)

weperformedspecifiedprocedures

performed through centralised testing by

the group team. 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 audit

procedures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lineitems.

The audit scope of the components in

specificscopeorspecifiedprocedures

doesnotinclude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(14.2%)oftheGroup’s

adjusted EBITDA, we performed other

procedures, including cash and

borrowingsverificationtestingonall

material 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. In addition, we have also

performed other procedures on a random

selection of additional immaterial

balances in order to achieve an element

of unpredictability in our audit procedures

as well as detailed analytical procedures

on certain cost centres.

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 audit procedures

accountedfor99.1%ofadjustedEBITDA(beingadjustedfor

exceptionalitems),89.7%ofRevenueand64%ofTotalassets.The

componentswhereweperformedfull,specificorspecifiedaudit

proceduresinrelationtorevenueaccountedfor100%ofRevenue.

Key audit

matters

– Revenue recognition

– Post-retirementbenefitobligations-liabilities&assets

Materiality – OverallGroupmaterialityof£0.9mwhichrepresents2%ofadjusted

EBITDA. Adjusted EBITDA represents earnings from continuing

operations before the deduction of interest, tax, depreciation,

amortisation and exceptional items.

De La Rue plc Annual Report 2023138

Changes from the prior year

Therehavebeenno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

(99.1%oftheGroup’sadjustedEBITDA,

89.7%oftheGroup’sRevenueand64.1%

of the Group’s Total assets) Furthermore

thesignificantrisksidentifiedrelatetothe

Group and full scope components which

are based in the UK and audited by the

primary audit team. 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 to

the Group audit team. 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 certain 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

Stakeholders are increasingly interested

in how climate change will impact 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thesingleuse

plasticinKenya);theriskoffloodingof

key sites as a result of rising water levels

and precipitations patterns; and the risk

of being unable to execute the transition

of operations required to effectively

reduce its footprint, energy usage, waste

and reliance on plastics in its operations.

These are explained on pages 26 to 36

in the Task Force for Climate related

Financial Disclosures and on page 60 in

the principal risks and uncertainties.

They have also explained their climate

commitments on page 35. All of these

disclosuresformpartofthe“Other

information,” rather than the audited

financialstatements.Ourprocedureson

these unaudited disclosures therefore

consisted solely of evaluating 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, in line with our responsibilities

on“Otherinformation”.

In planning and performing our audit we

assessed the potential impacts of climate

change on the Group’s business and any

consequential material impact on its

financialstatements.

The Group has explained in the strategic

reporthowtheyhavereflectedthe

impact of climate change in their

financialstatements.

Our audit effort in considering the impact

ofclimatechangeonthefinancial

statements was focused on evaluating

management’s assessment of the impact

of climate risk, physical and transition,

their climate commitments, the effects of

material climate risks disclosed on pages

26to36andthesignificantjudgements

and estimates disclosed on pages 157 to

160 and whether these 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

assumptions around the costs anticipated

in meeting the Group’s target to become

carbon neutral for its own operations by

2030. Where required by the relevant

accounting standard, this includes the

capital expenditure required to enable

the Group to reduce its carbon footprint,

energy usage, waste and reliance on

plastics. As part of this evaluation, we

performed our own risk assessment

supported by our climate change internal

specialists, to determine the risks of

materialmisstatementinthefinancial

statements from climate change which

needed to be considered in our audit.

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.

De La Rue plc Annual Report 2023 139

Strategic report Governance report 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 – £349.7m

(FY22 – £375.1m)

Refer to the Audit Committee Report (page

89); Accounting policies (page 151); and Note

2 of the Consolidated Financial Statements

(page 163)

Risk on revenue cut-off

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

‘overtime’theriskrelatestothejudgements

made in relation to appropriate evidence; the

existence of an enforceable right to payment

as per the contract; and completion of

inventory or costs incurred compared to

total estimated cost to complete.

Risk on bill & hold arrangements

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. 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(6components)

including(whererelevant)consolidation

adjustments, we performed audit procedures

whichcovered91.8%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.

Risk on revenue cut-off

To address the risk of inappropriate cut-off,

we selected a sample of revenue transactions

around the period end date and for our

sample selected, we tested to corroborate

that there was appropriate evidence to

support that control has passed to the

customer and that revenue was recognised

in the appropriate period. This included

checking to third party evidence of delivery,

where applicable.

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.

Risk on bill & hold arrangements

Toaddresstheriskon‘billandhold’,we

ensuredthatthe‘billandhold’arrangement

was stipulated in the contractual terms, that

the related goods had been manufactured at

the period-end date, including physically

verifying a sample of these items, and that

control had passed to the customer.

Based on our audit procedures we have

concluded that revenue is appropriately

recognised in the period and appropriately

accrued or deferred at 25 March 2023.

De La Rue plc Annual Report 2023140

Risk Our response to the risk Key observations communicated to the Audit Committee

Post-retirement benefit obligations –

(£54.7m), (FY22 – £29.8m)

Refer to the Audit Committee Report (page

89); Accounting policies (page 151); and Note

24 of the Consolidated Financial Statements

(page 197).

Post-retirement benefit Liabilities – £731.3m

(FY22 – £957.1m)

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.

Post-retirement benefit Assets – £678.2m

(FY22 – £988.7m)

Thepensionassetsincludesignificantpension

asset investments, the fair value measurement

ofwhichincludessignificantjudgement.

Management uses an off-cycle period-end

date of 25 March 2023 which means that

valuations provided by fund managers are not

provided in line with the balance sheet date,

but rather at the 31 March calendar month-

end date.

There is a further risk in this valuation process

asanumberofthepensionassetsare“hard

to value”, which do not have a readily

observable market price.

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.

Response to the risk on post-retirement

benefit liabilities

We utilised EY pension specialists to assist us

in testing the valuation of post-retirement

benefitliabilities.Wegainedanunderstanding

of the valuation process through discussion

with the pension scheme actuaries. This

included challenging 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.

Response to the risk on post-retirement

benefit assets:

We assessed the competency of

management’s expert used in determining

the asset valuation.

Wehaveconfirmedtheexistenceofscheme

assets with the schemes’ fund managers and

independentlyconfirmedthevaluationof

scheme assets by performing detailed testing

on a sample of assets, taking into account the

relative complexity of the underlying asset class.

For the hard to value assets, we have obtained

aconfirmationdirectlyfromthefund

managers on the number of units and period

end price by investment product. We have

also involved our EY valuation specialists in

determining the valuation of certain hard to

valueassetseginterestrateswaps,inflation

swaps and cross currency swaps.

We tested management’s assessment of the

valuation difference between the period end

date and calendar month end date, by

performing sample testing of assets re-valued

by third parties and performing a recalculation

of the volatility adjustment using market data.

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.

We have also concluded that the pension

scheme assets are stated at fair market value.

De La Rue plc Annual Report 2023 141

Strategic report Governance report Financial statements

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£0.9m(2022:£1.1m),whichis2%

(2022:2%)ofadjustedEBITDA.Giventhe

focus on the Group’s ability to continue

operating as a going concern in recent

periods, 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£1.5million(2022:£5.3

million),whichis2%(2022: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loss(£1.3m)

Adjustments – Add back net exceptional

items of £47.1m as

disclosed on the Group

Income statement

Materiality – Totals £45.8m

– Materiality of £0.9m

(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%(2022:50%)ofour

planning materiality, namely £0.45m

(2022:£0.5m).Wehavesetperformance

materiality at this percentage due to

an expectation of possible audit

misstatements in the current period

driven by the volume and quantum of

auditmisstatementsidentifiedinthe

prior period.

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 period,

the range of performance materiality

allocated to components was £0.1m to

£0.4m(2022:£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 £45,000

(2022:£54,000),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 133, 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period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.

De La Rue plc Annual Report 2023142

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 pages 64 to 67;

– 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 pages 64 to 67;

– Directors’ statement on fair, balanced

and understandable set out on

page 133;

– Board’sconfirmationthatithascarried

out a robust assessment of the

emerging and principal risks set out on

page 133;

– The section of the annual report that

describes the review of effectiveness of

risk management and internal control

systems set out on page 56; and;

– The section describing the work of the

audit committee set out on page 89.

Responsibilities of directors

As explained more fully in the directors’

responsibilities statement set out on page

133, 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(IFRS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

(2018Code)

De La Rue plc Annual Report 2023 143

Strategic report Governance report Financial statements

Independent Auditor’s Report continued

– 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

period; 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.

– For those contracts where revenue

has been recognised over time or at

a point-in-time, our procedures and

conclusions are documented in the

key audit matters’ table above.

– We incorporated data analytics into

our testing of manual journals,

including segregation of duties, and

in respect of our testing of revenue

recognition, investigated journals

posted to revenue, with focus on

manual transactions recorded at

or close to the year-end date.

– 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.

– Whereweidentifiedpotentialnon-

compliance with laws and regulations,

we developed an appropriate audit

response and communicated directly

with components impacted. Our

procedures involved: understanding

the process and controls to identify

non-compliance, reading the

correspondence between the Group

and their regulators, review of

whistleblowing logs and understanding

management’s response, inquiring of

internal and external legal counsel and

reading their reports, understanding the

fact patterns in each case and

documenting the positions taken by

management, and using EY specialists

(includingForensics)tosupportusin

concludingonthemattersidentified.

– 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.

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

period 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 four years,

covering the periods ending 31 March

2018 to 25 March 2023.

– 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.

San Gunapala

(Senior statutory auditor)

for and on behalf of Ernst & Young LLP,

Statutory Auditor

Reading

29 June 2023

De La Rue plc Annual Report 2023144

Consolidated income statement

for the period ended 25 March 2023

Notes

2023

£m

2022

£m

Revenue from customer contracts 2 34 9.7 3 75.1

Cost of sales

(2 57.6) (277 .5)

Gross Profit 92 .1 97. 6

Adjusted operating expenses

4 (64.3) (61.2)

Adjusted operating profit 2 7. 8 36 .4

Adjusted Items¹:

— Amortisation of acquired intangibles

10 (1.0) (1. 0)

— Net exceptional items – expected credit loss

5 (8.5) (3.1)

— Net exceptional items – other

5 (38. 6) (2 .6)

— Net exceptional items – Total

5 (47 . 1) (5.7)

Operating (loss)/profit (20 .3) 2 9.7

Interest income

6 1.2 0.9

Interest expense

6 (11.6) (6.2)

Net retirement benefit obligation finance income/(expense)

6, 24 1.1 (0 .2)

Net finance expense (9.3) (5.5)

(Loss)/Profit before taxation from continuing operations (2 9.6) 2 4.2

Taxation

7 (27.6) (1.3)

(Loss)/Profit for the year from continuing operations (5 7.2) 22.9

Profit from discontinued operations

3 – 0. 8

(Loss)/Profit for the year (57 .2) 23. 7

Attributable to:

— Owners of the parent (55.9) 21.5

— Non-controlling interests (1.3) 2.2

(Loss)/Profit for the year (57 .2) 23. 7

Earnings per ordinary share

Basic

Basic EPS continuing operations (28. 6)p 10. 6p

Basic EPS discontinued operations – 0 .4p

Total Basic EPS (28. 6)p 11.0p

Diluted

Diluted EPS continuing operations (28. 6)p 10.5p

Diluted EPS discontinued operations – 0 .4p

Total Diluted EPS (28. 6)p 10. 9p

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.

De La Rue plc Annual Report 2023 145

Strategic report Governance report Financial statements

Consolidated statement of comprehensive income

for the period ended 25 March 2023

Notes

2023

£m

2022

£m

(Loss)/Profit for the year (57 .2) 23. 7

Other comprehensive income

Items that are not reclassified subsequently to profit or loss:

Remeasurement (loss)/gain on retirement benefit obligations

24 (100.3) 35.7

Tax related to remeasurement of net defined benefit liability

7 24.2 (8 . 8)

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation differences for foreign operations 5 .0 (1.5)

Foreign currency translation differences for foreign operations – non-controlling interests – 0.1

Change in fair value of cash flow hedges

14(a) (1. 0) (0.6)

Change in fair value of cash flow hedges transferred to profit or loss

14(a) 1.7 0. 8

Tax related to cash flow hedge movements

7 (0.1) 0.1

Tax related to components of other comprehensive income

7 (0.1) 0. 2

Other comprehensive (loss)/income for the year, net of tax (7 0.6) 2 6.0

Total comprehensive (loss)/income for the year (127 .8) 49.7

Comprehensive income for the year attributable to:

Equity shareholders of the Company (126 .5) 47 .4

Non-controlling interests (1.3) 2.3

(127 .8) 49.7

De La Rue plc Annual Report 2023146

Consolidated balance sheet

at 25 March 2023

Notes

2023

£m

2022

£m

ASSETS

Non-current assets

Property, plant and equipment

9 9 7. 1 102. 7

Intangible assets

10 39. 3 3 7. 5

Right-of-use assets

23 12. 1 12. 9

Long-term pension assets

24 – 31 .6

Other financial assets

11 – 7. 4

Deferred tax assets

16 18.3 11.2

Derivative financial assets

14a – 0.1

166 .8 203.4

Current assets

Inventories

12 49.3 5 0. 1

Trade and other receivables

13 70.7 89 .0

Contract assets

2 18.9 8 .0

Current tax assets 0. 2 0. 4

Derivative financial assets

14a 2.4 3.3

Cash and cash equivalents

15 40.3 24.3

181.8 175. 1

Total assets 348.6 378 .5

LIABILITIES

Current liabilities

Trade and other payables

17 (92.1) (8 0.0)

Current tax liabilities (23.2) (13.9)

Derivative financial liabilities

14a (1. 9) (4.8)

Lease liabilities

23 (3. 0) (2.7)

Provisions for liabilities and charges

19 (6.0) (5.9)

(126 .2) (107 .3)

Non-current liabilities

Borrowings

18 (118.4) (9 2 .6)

Retirement benefit obligations

24 (54.7) (1.8)

Deferred tax liabilities

16 (2.8) (2.4)

Lease liabilities

23 (10.3) (11.5)

Other non-current liabilities (1.2) (1.1)

(187 .4) (109.4)

Total liabilities (313. 6) (216. 7)

Net assets 35. 0 161.8

EQUITY

Share capital

20 88.8 88.8

Share premium account 42.2 42.2

Capital redemption reserve 5 .9 5.9

Hedge reserve 0.1 (0.5)

Cumulative translation adjustment 9.2 4.2

Other reserve (83.9) (31.9)

Retained earnings (43.3) 35.1

Total equity attributable to shareholders of the Company 19 .1 143.8

Non-controlling interests 15.9 18.0

Total equity 35. 0 161.8

Approved by the Board on 29 June 2023

Clive Vacher Rob Harding

Chief Executive Officer Chief Financial Officer

Registered number: 3834125

De La Rue plc Annual Report 2023 147

Strategic report Governance report Financial statements

Consolidated statement of changes in equity

for the period ended 25 March 2023

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 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 – – – – – – 21.5 2.2 23.7

Other comprehensive income for the year,

net of tax – – – 0. 3 (1.5) – 2 7. 1 0.1 2 6.0

Total comprehensive income for the year – – – 0. 3 (1.5) – 48. 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

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 (31. 9) 35.1 18. 0 161.8

Loss for the year – – – – – – (55.9) (1.3) (57 .2)

Other comprehensive income for the year,

net of tax – – – 0. 6 5 .0 – (76 .2) – (7 0.6)

Total comprehensive income for the year – – – 0.6 5 .0 – (132.1) (1.3) (127 .8)

Reclassification between reserves – – – – – (51.9) 51. 9 – –

Transactions with Owners of the Company

recognised directly in equity

Share Capital issued – – – – – – – – –

Employee share Scheme

— value of service provided – – – – – – 1 .9 – 1.9

Tax on income and expenses recognised directly

in equity – – – – – – (0.5) – (0.5)

Dividends paid – – – – – – – (0. 8) (0. 8)

Other – unclaimed dividends – – – – – – 0. 4 – 0. 4

Balance at 25 March 2023 88.8 42.2 5 .9 0.1 9. 2 (83.8) (43.3) 15.9 35. 0

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 £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, 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, increasing other reserves from a deficit of £83.8m to a deficit of £31.9m. 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 De La Rue 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. In the current year the Group recorded an impairment of the

intercompany loan. As a matter of generally accepted accounting practice, a profit previously regarded as unrealised becomes realised when there is a loss recognised on the write-down for

depreciation, amortisation, diminution in value or impairment of the related asset. Therefore, on the basis, the £51.9m previously treated as unrealised within Other Reserves is now treated as

a realised amount and has therefore been reclassified from “Other Reserves” to “Retained earnings” as at 25 March 2023.

De La Rue plc Annual Report 2023148

Consolidated cash flow statement

for the period ended 25 March 2023

Notes

2023

£m

2022

£m

Cash flows from operating activities

(Loss)/profit before tax – continuing operations (2 9.6) 24.2

Profit before tax – discontinued operations – 0.9

(2 9.6) 25.1

Adjustments for:

Finance income and expense

6 9.3 5.5

Depreciation of property, plant and equipment

9 12.5 12.0

Depreciation of right-of-use assets

23 2.2 2.3

Amortisation of intangible assets

10 5.3 4.3

Gain on sale of property plant and equipment

9 (0.1) (0 .5)

Impairment/(impairment reversal) of property, plant and equipment included within exceptional items

9 5.4 (0.1)

Impairment of intangible assets included within exceptional items

10 4.3 –

Share based payment expense

21 1 .9 1.8

Pension Recovery Plan and administration cost payments

(16 .5) (16.4)

Increase/(decrease) in provisions

19 0.1 (3.7)

Non-cash credit loss provision – other financial assets

5,11 8.5 3 .1

Non-cash credit loss provision – other (0 .3) (0.2)

Other non-cash movements 3.5 2.3

Cash generated from operations before working capital 6.5 35.5

Changes in working capital:

Decrease in inventory 0. 5 3.4

Decrease in trade and other receivables and contract assets 6.0 22. 6

Increase/(Decrease) in trade and other payables and contract liabilities 11.8 (43.2)

18.3 (17 .2)

Cash generated from operating activities 24.8 18.3

Note:

1. The £16.5m (FY22: £16.4m) of pension payments includes £15.0m (FY23: £15.0m) payable under the Recovery Plan, agreed in May 2020, and a further £1.5m (FY22: £1.4m) relating to

payments made by the Group towards the administration costs of running the scheme.

De La Rue plc Annual Report 2023 149

Strategic report Governance report Financial statements

Consolidated cash flow statement

for the period ended 25 March 2023

continued

Notes

2023

£m

2022

£m

Cash generated from operating activities 24.8 18.3

Net tax paid (1. 0) (1.8)

Net cash flows from operating activities 23.8 16.5

Cash flows from investing activities

Purchase of loan notes

11 – (0.9)

Purchases of property, plant and equipment – gross (15.2) (1 9.6)

Purchases of property, plant and equipment – grants received 4.2 1.5

Purchases of property, plant and equipment – net

(11. 0) (18.1)

Purchase of software intangibles and development assets capitalised

10 (10.4) (8 . 8)

Proceeds from sale of property, plant and equipment 0. 4 1 .9

Receipt of research and development tax credit – 0. 1

Interest received 0. 2 –

Net cash flows from investing activities (20 .8) (25.8)

Net cash flows before financing activities 3.0 (9.3)

Cash flows from financing activities

Net draw down of borrowings

14(f) 2 7.0 1 7. 0

Payment of debt issue costs

14(f) (0. 9) –

Lease liability payments

23 (2.4) (2.2)

Interest paid (10 .3) (6 .2)

Dividends paid to non-controlling interests

30 (0. 8) (0.9)

Net cash flows from financing activities 12.6 7. 7

Net increase/(decrease) in cash and cash equivalents in the year 15.6 (1.6)

Cash and cash equivalents at the beginning of the year 24.3 25. 7

Exchange rate effects 0. 4 0. 2

Cash and cash equivalents at the end of the year 40 .3 24.3

Cash and cash equivalents consist of:

Cash at bank and in hand

15 26 .5 2 0. 3

Short term deposits

15 13.8 4 .0

15,22 40.3 24.3

Note:

1. Additions to property, plant and equipment in the year were £11.2m (FY22: £16 .5m) (note 9). Purchases of property, plant and equipment includes down payments and capex creditors

of capital expenditure creditors of £0 .5m (FY22: £1. 6m) and excludes £0. 7m (FY22: £nil) of grants not yet received.

Consolidated cash flow statement continued

De La Rue plc Annual Report 2023150

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 25 March 2023, being the

last Saturday in March. The comparatives

for the FY22 financial period are for the

period ended 26 March 2022.

The consolidated financial statements

of the Company for the period ended

25 March 2023 were authorised for

issuance by the board of Directors on

28 June 2023.

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 205 to 210 and the

accounting policies in respect of the

Company financial statements are set

out on pages 207 and 208.

Significant accounting

policies

Basis of preparation

The consolidated financial statements

of the Company for the period ended

25 March 2023 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 key areas of estimation

uncertainty where assumptions and

estimates are significant in preparing 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 other than the global

economic conditions, concluded this to

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 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.

Going concern

Background and relevant facts

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 10 of the Strategic

Report. In addition, pages 56 to 63 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 financial position of the

Group, its cash flows, liquidity position

and borrowing facilities are described on

page 53 of the Strategic Report.

Following the interim results for the period

ended 24 September 2022 there has

been a difficult period of trading and

rising market interest rates, meaning the

Group forecast that they would breach

financial covenants in their going concern

period to 29 June 2024. As a result, they

entered into extensive negotiations with

the pension trustee and the Group’s

banking syndicate. A deferral letter from

the trustee was signed on 28 June 2023

agreeing to deferral of deficit repair

contributions as set out in the paragraph

below and an amended facility agreement

for the Group’s financing facilities was

signed on 28 June 2023, which includes a

relaxation of the financial covenant ratios

along with the introduction of a new

minimum liquidity requirement.

Deferral of deficit repair contributions

The Group has successfully concluded

negotiations with the Trustee of the

De La Rue Pension Fund to defer £17.5m of

the £18.75m of deficit repair contributions

that was targeted in the Group’s April

trading update.

The Trustee has agreed to defer the

Group’s deficit repair contributions of

£3.75m per quarter from that due on

5 April 2023 up to and including that

payment that was due on 5 April 2024.

From July 2024, deficit repair

contributions will recommence at the

previously agreed £3.75m per quarter.

‘Catch up’ payments for the £18.75m of

deferred payments will start from FY26

and will continue through to FY29.

This deferral significantly eases the

short term cashflow burden on the

business and has been incorporated

into all modelling.

Accounting policies

De La Rue plc Annual Report 2023 151

Strategic report Governance report Financial statements

Accounting policies continued

Amended Facility Agreement

Under the amended facility agreement,

which was executed by all parties on the

29 June 2023, the Group continues to

have access to a revolving credit facility

(‘RCF’) of £250m that expires on 1st

January 2025, which allows the drawing

down of cash up to the level of £175m and

the use of bonds and guarantees up to

the level of £75m. The amendment to the

debt agreement reduces the available

facility by £25m from £275m to £250m,

with the cash draw-down component

remaining unchanged and the use of the

bonding and guarantee lines reduced to

£75m from the prior £100m level.

The continued access to these borrowing

facilities is subject to quarterly covenant

tests which look back over a rolling

12-month period. In each covenant test

in FY23 the Group has met its covenant

ratios on the historical covenant quarterly

levels. At 25 March 2023, EBIT/net interest

payable was 3.0 times and Net debt/

EBITDA was 2.2 times with net debt of

£83.1m and bonding and guarantees in

place totalling £52m. The Group is

additionally in compliance with all

covenant requirements at 29 June 2023.

The quarterly covenant levels (which will

continue to be tested on a 12-month

rolling basis) have been revised from the

first testing period at 1 July 2023 (Q1

FY24). These are now subject to monthly

minimum liquidity testing and quarterly

covenant tests from this date. The terms

include consideration of future options for

the group, provision of further non-

financial deliverables and milestones that

the banks will monitor, and these are fully

within management’s control.

From 1 July 2023, the revised financial

covenants and spread levels were

as follows:

– EBIT/net interest payable more than or

equal to 1.0 times, (3.0 times previously)

– Net debt/EBITDA less than or equal to

4.0 times until the Q4 2024 testing

point, reducing to less than or equal to

3.6 times from Q1 FY25 through to the

end of the current agreement to 1

January 2025 (3.0 times previously).

– Minimum Liquidity testing monthly,

testing at each weekend point on a

4-week historical basis and 13 week

forward looking basis. The minimum

liquidity is defined as “available cash

and undrawn RCF greater than or equal

to £25m”, although reduces to £20m if

£5m or more of cash collateral is in

place to fulfil guarantee or bonding

requirements (new test)

– Increases in spread rates on the

leverage ratio as a result of the

relaxation of levels:

Leverage

(consolidated net debt to EBITDA)

Margin (% per

annum)

Greater than 3.5:1 4.35

Greater than 3.0:1 and less than or

equal to 3.5:1 4.15

Greater than 2.5:1 and less than or

equal to 3.0:1 3.95

In order to determine the appropriate

basis of preparation for the financial

statements for the year ended 25 March

2023, the Directors must consider

whether the Group can continue in

operational existence for the foreseeable

future, being at least 12 months from the

approval date of these financial

statements, being 29 June 2024 taking

into account the above liquidity and

covenant requirements.

Testing assumptions and headroom level

The Group has prepared and reviewed

profit and cashflow forecasts which cover

a period up to 29 June 2024 (Q1 FY25),

the going concern period, and this includes

the following quarters: Q1, Q2, Q3, Q4 FY24

& Q1 FY25 as well as monthly liquidity

testing points throughout this period.

Management’s assessment is that a

period of 12 months to 29 June 2024 is an

appropriate going concern period for the

following reasons:

– A 12-month period is consistent with

De La Rue modelling and approach over

a number of years, which in prior

periods has also included a facility

termination shortly after the going

concern period (such as in FY22).

– The Directors have considered events

after the end of this period, including

the re-financing requirement for the

RCF which is at 1 January 2025, which

is considered further below.

Base case assumptions and headroom

The base case forecasts over the going

concern period have been built taking

into consideration the uncertainty around

the timing of the Currency market

recovery. Revenue growth in Authentication

to over £100m is expected to be driven

from the annualization of contracts

already won in prior periods. The base

financials over the going concern period

reflect further restructuring and

refinancing costs that have already been

initiated. This will help to right size the

business for the current demand with any

ramp up required over the going concern

period to be carefully managed in line

with pipeline capacity requirements and

orders to avoid significant negative

fluctuations vs base plans.

The Group entered FY24 with the

Currency total order book at £136.8m

(26 March 2022: £170.8m) and the

12-month order book at £131.7m

(26 March 2022: £163.5m). The win rate

of over 70% since 2020 on Currency bids

remains high. By 16 June 2023, over 80%

of the Currency business plans revenues

for FY24 are secured, with key wins in Asia

providing a solid foundation for

expectations for the year.

The Group’s base case modelling shows

headroom on all covenant thresholds and

the minimum liquidity requirement across

the period.

Severe yet plausible downsides

and headroom

The downside modelling produced has

factored in the Directors’ assessment of

events that could occur in a “severe yet

plausible downside” scenario. The risks

modelled are directly linked to the Risk

Committee “principal risks” described on

page 56 of the annual report. The most

significant material risks modelled were

as follows;

Risk 3 Macroeconomic and

geo-political risk

– Authentication new wins and

implementations are not achieved in

the timescales modelled in the base

case. In the severe yet plausible

downside scenario 100% of revenues

with new customers have been

excluded.

Risk 10 Banking Facilities

– Following the recent interest rate rises,

the Group will be paying an interest rate

on its facilities of approximately 8.5%

based on the current SONIA rate of 5%

and the applicable margin. Based on

the base case numbers in FY24, the

combined rate would need to reach

c16% before a breach in the interest

covenant would be triggered, with an

implied SONIA rate of 9.2%. Whilst

management had used 5.3% as their

interest rate in a severe but plausible

scenario, based on the stress testing

procedures described above, they have

assessed the risk of a breach triggered

by rising interest rates as remote given

the current SONIA rate applicable is 5%,

the sensitivity, and that these sensitised

rates would need to apply for the entire

FY24 period.

Risk 11 Kenya taxation and exit strategy

– Cash outflow assumed over and

above the base case, which includes

acceleration of outflows for site exit

and legal settlements.

De La Rue plc Annual Report 2023152

Risk 13 Currency pipeline:

– Volumes and budget margins not

achieved as forecasted in the going

concern period. For currency pipeline

downside risks modelled, margins have

been determined using the average

production cost as opposed to using

the facilities with the lowest production

costs where there is modelled capacity.

As at 25 March 2023, Currency total

order book at £136.8m (25 March 2022:

£170.8m) and the 12-month order book

at £131.7m (25 March 2022: £163.5m).

By 16 June 2023, over 80% of the

Currency business plan revenues for

FY24 are secured, with key wins in Asia

providing a foundation for expectations

for the year.

– As a result of the new liquidity testing

requirement, the Directors also

considered historical monthly working

capital swings over the last three years

as well as weekly cash outflow averages

to ensure that adequate considerations

have been made to capture “in month”

working capital swings that the Group

can see given the volatility of working

capital in the Currency business in

particular. A £20m working capital

outflow was demonstrated to be

suitable for a plausible severe downside

to apply monthly to liquidity testing,

assuming no mitigation at all on liquidity

at any given testing period.

If all of these modelled downside risks were

to materialise in the Going Concern period,

the Group would still meet its required

covenant ratios and liquidity requirements.

There remains headroom against all

covenant thresholds in a “severe yet

plausible” downside scenario across

the going concern period.

Minimum Liquidity testing monthly

Company modelling of the severe but

plausible downside (including taking into

account working capital swings and

potential cash collateral requirements)

also shows headroom to the liquidity

requirement throughout the period, with

further controllable mitigations such as

reduction in discretionary capex that

could be applied.

The level of reduction that would be

required to breach the liquidity covenant

is considered to be remote by management

on the basis that in the tightest observable

period of the severe but plausible

downside scenario in £27m and £17m

if taking into account working capital

swings and potential cash collateral

requirements. This assessment excludes

the potential further mitigations available.

Stress-Testing

Under the base case modelling, EBIT

and EBITDA would need to drop by £10m

(46)% and £11m (27%) respectively, or

liquidity would need to drop £30m from

the lowest point, for any breach to occur.

In the severe but plausible scenario

modelling, EBIT and EBITDA would need

to drop by £6m (32%) and £6m (15%)

respectively, or liquidity would need to

drop £27m from the lowest point (£17m

including a negative working capital swing

of £20m and cash collateralisation

savings of £10m), for any breach to occur.

Management concluded that a breach is

remote given that:

– Trading to the end of P2 indicates the

Group is on-track to deliver the FY24

budget from an EBIT and EBITDA

perspective. The Group has

experienced working capital drag which

has led to Net Debt levels being worse

than those forecast in the base case

scenario. The working capital drags are

in line with those modelled in the severe

but plausible downside scenario and the

Group has seen positive movements to

recover working capital in P3.

– Liquidity stress testing excluded

controllable mitigating actions (as

described above) that management

could employ and still showed headroom.

– Management are comfortable that any

non-financial conditions and reporting

requirements can be achieved. The

Directors have assumed that the

current revolving credit facility remains

in place with the same covenant

requirements through to its current

expiry date (1 January 2025), which is

beyond the end of the period reviewed

for Going Concern purposes. The

Directors have concluded that the

Group will either renew the facility

thereafter or have sufficient time to

agree an alternative source of finance

from 1 January 2025 onwards.

Other Requirements

As referred to earlier, there are a number

of additional requirements under the

recently amended facility agreement and

pensions Trustee arrangements that

include conventional enhanced monitoring

measures and progress on the development

of future options. Progress has already

been made on ensuring that the right

processes are in place to be able to meet

the non-financial conditions and terms

agreed with the lenders, and the Directors

are confident that all of these additional

conditions and terms will be met in the

timeframe required.

Reasonable prospects beyond the going

concern period

The Directors have also considered the

pension trustee’s and the lenders’

on-going support for the business given

that further refinancing discussions are

likely to occur over the going concern

period with the current facility due to

terminate on 1 January 2025. Specifically,

an extension by November 2023 is

necessary to have adequate facility

duration for going concern purposes

at FY24 Half Year.

Management has concluded that there

are realistic prospects for refinancing

to occur ahead of facility termination as

a result of:

– Lenders have continued to support the

Group through an amended facility

agreement. This was signed on 29 June

2023, and the covenants (financial and

non-financial) were set to levels that

allows the Group to continue to meet

its covenant in a severe but plausible

downside scenario. The Directors see

no reason that the lender’s support will

not continue given the level of relaxation

of covenants that has been agreed.

– As stated above, prior to the 30

September 2023 Half-Year

announcement in November 2023, the

Group will have to agree an extension

with its existing lenders for the facility

that comes to end on 1 January 2025.

Discussions will commence over the

coming months with the banks on the

future options open to the Group, and

subject to the Group achieving specific

financial and non-financial milestones

that the Directors are confident in

achieving. To maximise stakeholder

value for all parties, the lenders would

need to provide the business with

continued support through the Currency

market recovery and continued growth

in the Authentication division. It is the

Directors’ judgement that based on the

current support of the lenders the

extension will be achieved.

– In the event the current lenders were

not supportive of an extension to the

facility at FY24 Half Year, the Group

would consider and implement

alternative financing options at that

time. The directors continue to assess

these alternative financing options,

including but not limited to: alternative

lenders; alternative finance vehicles;

equity injections; and/or the sale of

trade and assets. However, the

Directors are confident this scenario

won’t manifest given its confidence in

refinancing and extending the facility

at FY24 Half Year.

De La Rue plc Annual Report 2023 153

Strategic report Governance report Financial statements

Accounting policies continued

The Directors have therefore assessed

that the Group will either renew the

facility or have sufficient time to agree an

alternative source of finance. The costs of

refinancing are included in the base case.

Conclusion

The base and severe but plausible

forecasts show headroom above the

covenant levels agreed with the lenders

and support the position that the Group

will be able to operate within its available

banking facilities and covenants

throughout the going concern period

to 29 June 2024.

Accordingly, the Directors are satisfied

that the Group is able to manage its

business risks and to continue in

operational existence for the going

concern period. Accordingly, the Directors

continue to adopt the going concern

basis in preparing the Consolidated

Financial Statements.

A copy of the 2022 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

27 March 2021. The Group put in place

plans and measures in order to enable the

business to maintain normal operations,

to the extent possible, against the

backdrop of the evolving situation. The

Group implemented actions to mitigate

the impact of COVID-19, including steps

to protect our employees in line with

guidance from governments. The Board

believed that the Group’s operations

would continue to experience only limited

disruption due to the impact of the

COVID-19 pandemic. The directors still

consider this assessment to be appropriate

for the 25 March 2023 financial

statements based on the current position.

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, 26 March 2022, 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 FY23, but do not have an impact

on these consolidated financial

statements of the Group.

Effective for periods commencing after

1 January 2022:

– 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 (e.g., the costs

of direct labour and materials) and an

allocation of costs directly related to

contract activities (e.g., 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 per

cent’ 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:

– 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.

De La Rue plc Annual Report 2023154

Effective for periods commencing

after 1 January 2024, all subject to

UK endorsement:

– Amendments to IFRS 16 “Leases”

– Lease liabilities in a sale and

leaseback – This amendment to

IFRS 16 specifies the requirements that

a seller-lessee uses in measuring the

lease liability arising in a sale and

leaseback transaction, to ensure the

seller-lessee does not recognise any

amount of the gain or loss that relates

to the right of use it retains.

– 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.

Other amendments in IFRS 1(“First time

adoption”), IAS 41 (“Agriculture”) and IFRS

17 (“Insurance contracts”) are not

applicable to the Group. IFRS 17

(“Insurance contracts”) is under review by

management and the impact, if any, is still

to be quantified.

The impact of the amendments and

interpretations listed above are not

expected to a have a material impact on

the Consolidated Financial Statements .

III

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 (25 March 2023).

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 25 March 2023.

The results of subsidiaries where the

financial statements are not prepared to

25 March are still included in the

consolidation as at 25 March with the

income statement and other financial

information being also prepared for the

year ended 25 March 2023.

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 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 and the amount

of non-controlling interests (as applicable)

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.

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

1. 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 other

comprehensive income.

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.

2. 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 other comprehensive

income within 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.

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.

De La Rue plc Annual Report 2023 155

Strategic report Governance report Financial statements

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 local governments and do not give

the Group an enforceable right to payment. Instead, the

umbrella agreement allows for the Group to enter 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

(such as delivery of tax stamps) and only has a right to

payment for this performance obligation, no revenue

is allocated and recognised on delivery of any other

deliverables (such as the software to track tax stamps)

under the umbrella agreement.

Authentication also enters into contracts with

performance obligations that include access to

systems which incorporates system configuration

and integration and the provision of authentication

products such as tax stamp, all of which are provided

together. 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.

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: For IDS, as 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.

De La Rue plc Annual Report 2023156

C Costs to obtain contracts

1. 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 (i.e. committed sales volumes

and values from the customer) then sales

commission payments are not capitalised.

2. 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.

3. 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 FY23 (FY22: £nil)

as no costs met this requirement.

4. 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 contract that the

entity can specifically identify;

– 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.

D Other revenue recognition matters

1. 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:

1) It can first be demonstrated that

control of the product has passed to

the customer – principally because the

customer has taken the risk and/or title

for the product transferred to them

and the Group has an enforceable right

to payment; and

2) It can be demonstrated that the

arrangement is substantive, for

example, that the customer has

requested it.

2. 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 (i.e. to ensure the transaction

price is “constrained” in accordance with

IFRS 15). Any adjustment required is

recorded as a reduction to revenue based

on the most likely amount.

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.

3. 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.

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 in

“B. Critical accounting estimates” below.

Other accounting estimates that are not

considered to have a significant risk of

causing a material adjustment with the

next financial year but which the Group

would like to draw attention to due to

judgements or longer-term estimates are

set out in “C. Other areas of accounting

estimates” below.

A Critical accounting judgements

1. 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.

2. 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. Control will also pass

if the customer requests that goods are

held in storage until required. Specific

consideration is needed at year end to

ensure revenue is recorded within the

appropriate financial year.

De La Rue plc Annual Report 2023 157

Strategic report Governance report Financial statements

Accounting policies continued

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.

3. 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 FY23 the Group has had customer

contracts where revenue is recognised

‘over-time’ in the Currency and

Authentication divisions.

4. 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 for

further details.

5. Replacement of Savings Related

Option Scheme granted

During the year the Group granted a Save

As You Earn share option grant (“SAYE”),

management judged the new grant as a

replacement award for two SAYE grants

which are due to vest in FY24 and FY25

that were cancelled by employees at the

time of the new grant and applied

modification accounting rather than

cancellation accounting.

To account for the replacement grant on

modification basis, the following factors

were considered by the management:

a. The new share options are with the

same participants as the cancelled

options.

The modification basis of accounting was

used, where a given participant applied

for options under the 2022 invitation and

that same person issued an instruction to

Equiniti (the administrators of De La Rue’s

Sharesave plan) to cancel one or more of

their existing savings contracts in the

period between (1) the date on which the

invitation was launched to participants

and (2) the date on which the options

were granted. Any cancellation

instructions given by a 2022 applicant

outside of this time window is not treated

as linked to the cancelled award. Similarly,

any cancellation of options by an

employee who does not apply for 2022

options is not treated under the

modification basis.

b. The transactions to issue and cancel

the options are part of the same

arrangement.

As explained in point a above, the

management are able to point to a

decision taken by the participant during

a short time window in relation to

demonstrate the linkage between their

application for new 2022 options and

their instructions to Equiniti to terminate

the savings contracts entered into in the

2020 and/or 2021 invitations.

c. The cancellation of the options would

not have occurred unless the new

options were issued.

The management has carefully

considered the correlation of

cancellations and new subscriptions and

the close proximity in time between

cancelling and applying for options in the

2022 invitation and made judgement that

there is a strong indication of a connection.

d. Management identified the FY23

SAYE grant

The Remuneration Committee set no limit

(subject to HMRC limit of £500) on the

monthly saving for the FY23 grant. In

comparison the previous grants in FY21

and FY22 had a maximum limit set by

the Company. On management’s

recommendation, the Remuneration

Committee agreed to approach the 2022

invitation as a replacement for the 2020

and 2021 options. On this basis, the

Committee decided not to apply any

arbitrary caps to monthly savings

amounts or shares under option (both of

which have been done in recent years)

or to invoke a rule which counts any

cancelled awards by employees towards

their monthly limit of £500. The latter is

included in the plan rules specifically as

a tool to mitigate cancellations of options,

where the company does not want this

to occur.

The scheme documents and the internal

newsflash were substantially amended

from previous years, to make employees

aware of the difference in the option

prices from 2020 and 2021 to 2022/23,

and that they are able to cancel their

previous savings contracts/options and

apply for new options in the 2022/23

invitation.

Applying modification accounting results

in £0.3m lower share-based payment

expense compared with cancellation

accounting in FY23. The impact on future

periods assuming a forfeiture rate of 10%

is shown below:

Accounting type applied

FY23

£’000

FY23

£’000

FY25

£’000

FY26

£’000

Modified accounting 1,147.3 566.7 325.5 167.4

Cancellation accounting 1,420.9 421.4 282.4 173.3

Additional expense versus modified accounting 273.6 (145.3) (43.1) 5.9

De La Rue plc Annual Report 2023158

6. Accounting for the extension of the

factory site in Malta

On 9 September 2021 the Group signed

an Agreement with Malta Enterprise

(“ME”) where ME finances the

construction, civil works and M&E

installations to be carried out at the

premises located in Malta. The premises

included land, the demolition of an

existing building and a rebuild to the

Group’s specifications. On 14 September

2021 the Company signed a lease for the

premises for an initial term of 20 years.

The Group is managing the construction

of the new buildings for the lessor to the

pre-agreed specifications.

Management have made a judgement as

to whether the Company has control of

the site during the construction period.

If the Group has the right to control the

use of the identified asset for only a

portion of the term of the contract, the

contract contains a lease for that portion

of the term. In order to control the asset,

the lessee must have the right to obtain

substantially all of the economic benefits

from the use of the asset and the right to

direct the use of the asset. It was

determined that control exists only after

the build is completed and site becomes

available for use. Management considers

that given the building was under

construction at the year-end date and

therefore there were no economic

benefits as the asset was not ready for

use at that time.

As per the agreement, there are three

separate units with different start-up

dates. Therefore, the lease will be

recognised as these units become

available for use. The lease costs will be

allocated to the division to which they

relate to based on area. However, if the

cost relates to the total site, then it is

divided based on the percentage split

of the area, with 27% of the total sqm

occupied by Authentication and 73% by

Currency. The first block is currently

scheduled to be completed in H2 FY24.

Therefore, management have concluded

that no lease should be recognised in

FY23. The lease will be recognised when

the building becomes available for use.

Please refer to note 26 for the related

future capital commitments.

B Critical accounting estimates

1. Recoverability of other financial assets

Other financial assets comprise securities

interests held in companies in the Portals

International Limited group following the

Portals paper business disposal in 2018.

In addition, a further amount of £0.9m of

loan notes were subscribed for pursuant

to a pre-emptive offer in November 2021

to enable Portals to undertake a business

combination. The Group also purchased

cotton banknote paper under the RA, until

its termination in July 2022.

Management has carefully assessed the

recoverability of the other financial assets

on the balance sheet as at 25 March 2023

based on information available to them

and performed probability weighted

modelling against three scenarios

determining that an expected credit loss

provision of £8.5m (see note 5 exceptional

items for further details) is required which

will fully impair these other financial assets.

Management has considered the following

factors in making this determination::

1) The public announcements from the

Portals group relating to the wind down

of the Overton paper mill and its sale

of assets.

2) The latest available financial position

of Portals International Limited group

as presented in its 2022 consolidated

financial statements including

significant losses for the period and

a net liabilities position.

3) The announcement of the sale of the

Fedrigoni business to IN Groupe in

May 2023.

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 again in the future, this

may alter the judgements made resulting

in a revision to the value of expected

credit loss provision to be recognised.

2. Recoverability assessment and

impairment charges related to plant and

machinery and capitalised product

development costs

In January 2023, the Group announced

that owing to current market demand, and

no expectation of new bank note orders

from the Central Bank of Kenya for at least

the next 12 months, De La Rue Kenya (a

joint venture with the Government of

Kenya) has suspended banknote printing

operations in the country. In addition,

operations in our Authentication division

are also in the process of winding down.

As a result of the review of the business in

Kenya an exceptional charge of £12.6m

(FY22: £nil) was made in the year including

redundancy charges of £5.5m, property,

plant and equipment asset impairments

of £4.9m, inventory impairments of £2.0m

and other costs of £0.2m (note 5). There

is not expected to be any recoverable

value relating to these assets.

In addition, an impairment charge of

£2.9m (FY22: £nil) was made in the

year in relation to capitalised product

development costs. A review was carried

out as part of the Authentication business

right-sizing programme of ongoing

development projects and their suitability

for further divisional growth and the product

portfolio. As a result, two programs were

terminated and associated capitalised

costs were impaired.

In FY22 the Group ceased banknote

printing at its Gateshead site and as

a result the Group had a material value

of plant and machinery for which an

impairment was required. Management

has, in FY23, made a judgement on what

its future plans are for the expansion in

certain other locations based on future

business needs and concluded that for

the remaining assets in Gateshead not

impaired in the prior period, their value

could be supported based on their

anticipated relocation to another site

for usage there.

3. 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 (note 24).

4. 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 25 March 2023.

However, the Multi Asset Credit and

Secured Finance funds held by the UK

Pension Scheme are valued on a monthly

basis only at calendar month ends.

It was agreed to determine the IAS 19

position as at 25 March 2023 for these

funds that they would be calculated

by rolling forward the fund value at

28 February 2023, using suitable

market indices.

De La Rue plc Annual Report 2023 159

Strategic report Governance report Financial statements

Accounting policies continued

The UK Multi Asset Credit and secured

Finance funds account for approximately

£61m and £139m of the pension assets

respectively (FY22: £63m and £143m

respectively). During the period from

28 February to 25 March, based on the

movement in relevant market indices,

we have estimated that the value of the

funds has decreased by £4.4m. The total

UK pension scheme assets value is

£678.2m. This £4.4m decrease includes

£3.9m relates to the updated third-party

valuation data as at the year end date and

the remaining £0.5m is based on day-to-

day market volatility of high yield market

indices. A 0.1% change in these market

indices would result in a £0.6m increase

in the pension scheme assets.

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. The Secured Finance

fund is composed of a wide range of

corporate debt. Management has

therefore made the judgement that

valuing the pension assets using the

28 February 2023 valuation for these funds

and rolling forward to 25 March 2023 is

reasonable given there is no practical way

of obtaining a better estimate.

5. 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 in certain countries in which the

Group operates. These tax assessments

have been subject to court ruling both in

favour of the Group and also against the

Group. The rulings are subject to ongoing

appeal processes. The Group has

increased the relevant tax provisions and

is fully provided where necessary as

required by the relevant accounting

standards. The disputed tax assessments

are subject to ongoing dialogue with the

relevant tax authorities to reach a

settlement without the requirement to

continue in a protracted legal process.

Please refer to notes 7 and 16 for

further information.

C Other areas of accounting estimates

1. 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 25 March 2023.

In making this determination, management

has prepared discounted cashflows using

its forecasts for the business which

include budgeted financial performance

for a 5-year period with a growth rate

assumption applied which extrapolates

the business into perpetuity 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 19.0%

before an impairment occurred;

– Sensitivity 2 (revenue growth):

Forecasts used in the base impairment

calculation include strong revenue

growth in FY24 to FY25 before the

growth rate reduces to 3% per year

from FY26, management has modelled

a scenario of no revenue growth from

FY26 and concluded that at this point

no impairment would be required;

– Sensitivity 3 (loss of material customer):

Management has modelled the impact

of the loss of revenue of a significant

customer from FY24, orders from which

were not yet secured at the end of FY23.

Management noted that in this scenario,

no impairment was needed; and

– Sensitivity 4 (profit margin reduction):

The base calculation includes 19.7%

margin in FY24 which growth to

constant 24.7% from FY25.

Management has modelled the impact

of margin reduction to 20.0% from

FY26. Management noted that in this

scenario, no impairment was required.

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 25 March 2023 and

therefore no impairment is recognised.

There are no reasonable possible changes

in the key assumptions (e.g. discount rate,

growth rate or profit margin) that would

cause the recoverable amount to fall

below the carrying amount of the cash

generating unit.

2. Onerous contract provisions

The financial statements also included

a small number of onerous contract

provisions for loss making contracts.

Management has assessed these and

applied judgement in determining 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.

3. Estimation of provisions

The Group holds a number of provisions

relating to warranties for defective

products and contract penalties.

Management has assessed these and

applied judgement in determining the

value of provisions required.

De La Rue plc Annual Report 2023160

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 excisable 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. FY22 also included to sales under a service arrangement with

HID Corporation Limited following the sale of the International Identity Solutions business in October 2019.

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.

FY23

Currency

£m

Authentication

£m

Identity

Solutions

£m

Unallocated

£m

Total of

Continuing

operations

£m

Total revenue from contracts with customers 254.6 91.7 3.4 – 349.7

Less: inter-segment revenue – – – – –

Revenue from contracts with customers 254.6 91.7 3.4 – 349.7

Cost of sales (196.4) (57.7) (3.5) – (257.6)

Gross profit 58.2 34.0 (0.1) – 92.1

Adjusted operating expenses (44.6) (19.7) – – (64.3)

Adjusted operating profit 13.6 14.3 (0.1) – 27.8

Adjusted items:

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

– Net exceptionals (38.4) (7.9) (0.1) (0.7) (47.1)

Operating (loss)/profit (24.8) 5.4 (0.2) (0.7) (20.3)

Interest income 1.0 – 0.1 0.1 1.2

Interest expense (0.9) (0.1) – (10.6) (11.6)

Net retirement benefit obligation finance Income – – – 1.1 1.1

Net finance expense 0.1 (0.1) 0.1 (9.4) (9.3)

(Loss)/Profit/(loss) before taxation (24.7) 5.3 (0.1) (10.1) (29.6)

Capital expenditure on property, plant and equipment (excluding grants received) (7.9) (7.1) – (0.2) (15.2)

Capital expenditure on intangible assets (note 10) (2.9) (7.4) – (0.1) (10.4)

Impairment of property, plant and equipment (note 9) (3.9) (1.5) – – (5.4)

Impairment of intangible assets (note 10) (1.4) (2.9) – – (4.3)

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

(note 9/23) (11.1) (2.6) – (1.0) (14.7)

Amortisation of intangible assets (note 10) (1.3) (3.4) – (0.6) (5.3)

Notes to the accounts

De La Rue plc Annual Report 2023 161

Strategic report Governance report Financial statements

Notes to the accounts continued

1 Segmental analysis continued

FY22

Currency

£m

Authentication

£m

Identity

Solutions

£m

Unallocated

£m

Total of

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 (excluding 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 of property, plant and equipment on intangible assets (note 10) 0.1 – – – 0.1

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

(note 9/23) (10.7) (2.5) – (1.1) (14.3)

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

Currency

£m

Authentication

£m

Identity

Solutions

£m

Unallocated

£m

Total of

Continuing

operations

£m

FY23

Segmental assets 169.9 68.5 15.8 94.4 348.6

Segmental liabilities (70.4) (14.0) (4.5) (224.7) (313.6)

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)

Unallocated assets principally comprise long-term pension assets of £nil (FY22: £31.6m) deferred tax assets of £18.3m (FY22:

£11.2m), cash and cash equivalents of £40.3m (FY22: £24.3m) and derivative financial instrument assets of £2.4m (FY22: £3.4m)

as well as current tax assets, associates and centrally managed property, plant and equipment.

Unallocated liabilities principally comprise retirement benefit obligations of £54.7m (FY22: £1.8m), borrowings of £118.4m (FY22:

£92.6m), current tax liabilities of £23.2 (FY22: £13.9m) and derivative financial instrument liabilities of £1.9m (FY22: £4.8m) as well

as deferred tax liabilities and centrally held accruals and provisions.

Geographic analysis of non-current assets

2023

£m

2022

£m

UK 97.7 91.2

Malta 27.5 22.9

USA 15.1 15.4

Sri Lanka 7.7 9.4

Other countries 0.5 14.2

148.5 153.1

Note:

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

Major customers

The Group had one (FY22: none) major customers from which it derived total revenues in excess of 10% of Group revenue.

De La Rue plc Annual Report 2023162

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:

FY23

Currency

£m

Authentication

£m

Identity

Solutions

£m

Total of

Continuing

operations

£m

Timing of revenue recognition:

Point in time 217.6 78.3 3.4 299.3

Over time 37.0 13.4 – 50.4

Total revenue from contracts with customers 254.6 91.7 3.4 349.7

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

Geographic analysis of revenue by destination

2023

£m

2022

£m

Middle East and Africa 145.4 196.4

Asia 39.3 44.3

UK 55.7 65.4

The Americas 24.8 28.8

Rest of Europe 71.2 37.3

Rest of world 13.3 2.9

349.7 375.1

Contract balances

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

Note

2023

£m

2022

£m

Trade receivables 13 42.3 64.8

Provision for impairment

13 (0.6) (0.8)

Net trade receivables

13 41.7 64.0

Contract assets 18.9 8.0

Contract liabilities

17 (0.3) (0.3)

Payments received on account

17 (22.7) (14.3)

Trade receivables have decreased to £42.3m in FY23 (FY22: £64.8m) reflecting timing of payments on certain material

customer contracts.

Contract assets have increased to £18.9m in FY23 (FY22: £8.0m) reflecting the timing of revenue recognition under IFRS 15.

Payments on account in FY23 have increased to £22.7m (FY22: £14.3m) reflecting significant additions in the year of £21.7m

(FY22: £4.6m) and revenue recognised from payments on account at the end of FY22 of £13.3m (FY22: utilisation of £28.3m).

2023

£m

2022

£m

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

Performance obligations satisfied in previous years – –

De La Rue plc Annual Report 2023 163

Strategic report Governance report Financial statements

Notes to the accounts continued

2 Revenue from contracts with customers continued

Performance obligations

Information about the Group’s performance obligations is summarised in the Accounting Policies section on page 151.

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.

2023

£m

2022

£m

Within 1 year 12.4 31.3

Between 2 – 5 years 15.5 25.8

5 years and beyond – –

27.9 57.1

3 Discontinued operations

In FY23 there were no amounts related to discontinued operations (FY22: gain of £0.8m, after tax of £0.1m).

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 FY22 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.

4 Adjusted operating expenses by nature

Note

2023

£m

2022

£m

Depreciation of property, plant and equipment 9 12.5 12.0

Amortisation of intangibles

10 5.3 4.3

Impairment of inventories

12 1.0 0.9

Depreciation of right-of-use assets

23 2.2 2.3

Cost of sales relating to inventory 249.2 265.1

Expenses related to short-term and low-value leases

23 0.6 0.5

Research and non-capitalised development expense* 5.1 6.3

Employee costs (including Directors’ emoluments)

25 95.0 97.6

Foreign exchange loss 1.6 2.2

Amounts payable to EY and its associates:

– Audit of these consolidated financial statements 0.6 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 – –

Note:

* Includes £0.7m income in FY23 for RDEC claims (FY22: £0.8m). The Group policy is to net RDEC relating to research and development against the expense .

De La Rue plc Annual Report 2023164

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.

2023

£m

Cash

£m

Non-

cash

£m

2022

£m

Cash

£m

Non-

cash

£m

Termination of Relationship Agreement with Portals Paper Limited 17.0 9.3 7.7 – – –

Site relocations and restructuring costs 21.1 7.6 13.5 1.8 2.1 (0.3)

Pension underpin costs 0.5 0.5 – 0.4 0.4 –

Foreign exchange loss on devaluation of Sri Lankan rupee – – – 0.4 – 0.4

38.6 17.4 21.2 2.6 2.5 0.1

Recognition of expected credit loss provision on other financial assets (note 11) 8.5 – 8.5 3.1 – 3.1

Total exceptional items 47.1 17.4 29.7 5.7 2.5 3.2

Tax charge/(credit) on exceptional items 5.1 (1.8)

Net exceptionals 52.2 3.9

Termination of Relationship Agreement with Portals Paper Limited

On the 26 July 2022, the Group reached a settlement to terminate its long-term supply agreement with Portals Paper Limited

(“Portals”), related to the supply of banknote, proofing and security paper (the “Relationship Agreement” or “RA”). As a result of this

termination, £17.0m (FY22: £nil) was recorded as an exceptional item in the period, being the agreed settlement together with

associated legal costs. This is further described below.

Background

In March 2018, De La Rue sold the Portals paper-making business to a private equity backed management buyout and entered into

the RA for a period of 10 years. Under this agreement, De La Rue has purchased banknote, proofing and security paper from Portals,

subject to a minimum annual volume guarantee, and Portals has purchased security features from De La Rue, with no guarantee

of volume.

Settlement arrangements

Under the settlement terms, De La Rue is released from all obligations under the RA is free to purchase banknote and security

paper from any supplier worldwide. De La Rue agreed to pay Portals the amounts due under the normal RA arrangements in

respect of confirmed orders placed up to the end of July 2022, and a total of £16.7m in cash to terminate the RA.

The £16.7m and the associated legal costs are classed as an exceptional charge in the period, and payments were made according

to the following schedule: £1.7m on or before 31 October 2022, £7.5m on or before 31 December 2022 and £7.5m on or before

7 April 2023. The final payment was made in FY24.

With the termination of the RA, De La Rue is not liable to pay any more volume-related shortfall payments. These payments have

averaged £3.3m annually for each of the past two financial years and totalled £3.0m in FY23, up to the termination of the RA.

De La Rue retains its existing equity and loan note interests in the Portals group of companies and its rights in respect of those

interests remain unaffected by this settlement.

Following the termination of the RA, De La Rue will be able to sell all banknote security features freely to customers, through any

other paper supplier. This includes the advanced features developed in collaboration with Portals. Strategically, this settlement

supports De La Rue’s goal to convert more of its print customers to polymer banknotes, as, in doing so, there will no longer be

volume shortfall payments.

Site relocations and restructuring costs

Site relocations and restructuring costs in FY23 of £21.1m (FY22: £1.8m) included:

– in January 2023, the Group announced that owing to current market demand, and no expectation of new bank note orders from

the Central Bank of Kenya for at least the next 12 months, De La Rue Kenya (a subsidiary with a material non-controlling interest

held by joint venture with the Government of Kenya) has suspended banknote printing operations in the country. In addition,

operations in our Authentication division are also in the process of winding down. As a result of the review of the business in

Kenya an exceptional charge of £12.6m (FY22: £nil) was made in the year including redundancy charges of £5.5m, property, plant

and equipment asset impairments of £4.9m, inventory impairments of £2.0m and other costs of £0.2m. Further costs, as yet

undetermined, are expected in relation to this as the operations continue to be wound down in FY24.

– a £2.5m (FY22: £nil) charge for redundancy and legal fees was made in relation to restructuring initiatives in both the Currency

(£1.2m) and Authentication (£1.3m) divisions in order to right-size the divisions for future operations. No further costs are

expected in relation to these projects in FY24.

– an impairment charge of £4.3m (FY22: £nil) was made in the year in relation to capitalised product development costs and

software assets. A review was carried out as part of the Authentication business right-sizing programme of ongoing development

projects. With the resulting restructuring initiatives, the Group no longer had the technical and financial ability to complete two

programs. As a result, work on the two programs was terminated and the technology mothballed with the associated capitalised

costs impaired (£2.9m). A further £1.4m of software assets relating to the Currency business were impaired as future revenue

relating to these assets are minimal. No further costs are expected in relation to this in FY24.

De La Rue plc Annual Report 2023 165

Strategic report Governance report Financial statements

Notes to the accounts continued

5 Exceptional items continued

– the recognition of £1.1m (FY22: £0.9m) 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 £0.1m, of relocating assets to different Group manufacturing

locations and further plant and equipment impairments of £0.5m. Since this program commenced, £9.9m of costs have been

incurred in relation to this. As the Group continues its expansion of the manufacturing facilities in Malta, into FY25, a cost of

approximately £2.1m net of any grants received, is expected; and

– a further £0.6m (FY22: £1.3m) 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, £3.4m of costs have been

incurred in relation to this. No further costs are expected.

FY22 was offset by a reversal of £0.4m of asset impairments no longer required related to cessation of banknote production at our

Gateshead facility.

Pension underpin costs

Pension underpin costs of £0.5m (FY22: £0.4m) 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.

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

25 March 2023 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 £8.5m (FY22: £3.1m) in relation to the original principal value of £7.9m (FY22: £2.3m) and

interest receivable of £0.6m (FY22: £0.8m) 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 in FY22.

Taxation relating to exceptional items

The overall tax charge relating to continuing exceptional items arising in the period was £5.1m (FY22: tax credit £1.8m).

Included in the exceptional tax items is a deferred tax charge of £4.0m (FY22: £1.5m credit) relating to the derecognition of a

deferred tax asset in relation to restricted UK tax interest amounts that under IAS12 had to be recognised in prior years even though

the amounts are not expected to be fully utilised for the foreseeable future. The asset was originally recognised because the defined

benefit pension was in a surplus position which 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.

During FY23 the pension moved from a surplus to a deficit position, which meant that the deferred tax asset on the UK restricted

UK tax interest amounts is no longer required to be recognised. As the majority of the deferred tax in relation to the pension

movements is recognised directly in the Statement of Comprehensive Income, to recognise movements in the recognition and

derecognition 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 creation or unwind of this asset is therefore considered to be

an Exceptional item for financial reporting purposes where possible.

Exceptional items also includes a tax charge in respect of additional expected utilisation of tax credits in Malta of £6.1m, as they are

expected to be surrendered for capital grants against future capital expenditure in Malta.

The balance of £5.0m credit within exceptional tax items relates to the tax impact on the exceptional costs before tax.

De La Rue plc Annual Report 2023166

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.

2023

£m

2022

£m

Recognised in the income statement

Interest income:

– Other interest 0.1 0.1

– Interest on loan notes and preference shares (note 11) 1.1 0.8

Total interest income 1.2 0.9

Interest expense:

– Bank loans (7.2) (3.1)

– Other, including amortisation of finance arrangement fees (3.2) (2.5)

– Net loss on debt modification (0.9) –

– Amortisation of debt modification loss 0.2 –

– Interest on lease liabilities (note 23) (0.5) (0.6)

Total interest expense (11.6) (6.2)

Retirement benefit obligation finance income/(expense) (note 24) 1.1 (0.2)

Net finance expense (9.3) (5.5)

All finance income and expense arise 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 £1.1m of interest was accrued

(FY22: £0.8m) and an expected credit loss of £1.1m (FY22: £0.8m) was recorded within exceptional items (notes 5 and 11).

The gain/(loss) to the income statement in respect of the ineffective portion of derivative financial instruments was £nil (FY22: £nil).

On the 18 November 2022 the Group’s exiting banking facilities were extended until 1 January 2025 with a 25-basis point increase

in margin (note 14b), which is treated as a non-substantial modification under IFRS 9 Financial Instruments, as the refinancing did

not result in an extinguishment of debt. The difference between the amortised cost carrying amount of the old facility and the

present value of the new facility, discounted using the original effective interest rate, resulted in a modification loss, which is

amortised over the life of the new revolving credit facility. The net loss on debt modification was £0.9m together with the

subsequent associated amortisation of £0.2m (FY22: £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 credit in FY23 of £1.1m (FY22: loss £0.2m) was due to the opening pension valuation on

an IAS 19 basis as at 26 March 2022 being a surplus of £29.8m.

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.

De La Rue plc Annual Report 2023 167

Strategic report Governance report Financial statements

Notes to the accounts continued

7 Taxation continued

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.

2023

£m

2022

£m

Current tax

UK corporation tax:

– Current tax 11.9 3.3

– Adjustment in respect of prior years 0.1 0.2

12.0 3.5

Overseas tax charges:

– Current year 2.1 1.7

– Adjustment in respect of prior years (0.3) 0.2

1.8 1.9

Total current income tax charge 13.8 5.4

Deferred tax:

– Origination and reversal of temporary differences, UK 7.4 (4.1)

– Origination and reversal of temporary differences, overseas 6.4 0.1

Total deferred tax credit 13.8 (4.0)

Total income tax charge in the consolidated income statement 27.6 1.4

Included in:

Income tax expense reported in the consolidated income statement in respect of continuing operations 27.6 1.3

Income tax expense/(credit) in respect of discontinued operations (note 3) – 0.1

Total income tax charge in the consolidated income statement 27.6 1.4

Tax on continuing operations attributable to:

– Ordinary activities 22.8 3.4

– Amortisation of acquired intangible assets (0.3) (0.3)

– Exceptional items (note 5) 5.1 (1.8)

27.6 1.3

2023

£m

2022

£m

Consolidated statement of comprehensive income:

– On remeasurement of net defined benefit liability (24.2) 8.8

– On cash flow hedges 0.1 (0.1)

– On foreign exchange on quasi-equity balances 0.1 (0.2)

Income tax (credit)/charge reported within other comprehensive income (24.0) 8.5

Consolidated statement of changes in equity:

– On share options 0.5 0.3

Income tax charge reported within equity 0.5 0.3

De La Rue plc Annual Report 2023168

The tax on the Group’s consolidated (loss)/profit before tax differs from the UK tax rate of 19% as follows:

2023 2022

Before

exceptional

items

£m

Movement on

acquired

intangibles

£m

Exceptional

items

£m

Total

£m

Before

exceptional

items

£m

Movement on

acquired

intangibles

£m

Exceptional

items

£m

Total

£m

(Loss)/profit before tax 18.5 (1.0) (47.1) (29.6) 30.9 (1.0) (5.7) 24.2

Tax calculated at UK tax rate of 19%

(FY22: 19.0%) 3.5 (0.2) (8.9) (5.6) 5.8 (0.2) (1.1) 4.5

Effects of overseas taxation 1.1 (0.1) 1.2 2.2 0.4 (0.1) – 0.3

Charges/(credits) not allowable/taxable for

tax purposes 0.5 – 1.7 2.2 (1.0) – 0.1 (0.9)

Changes in uncertain tax provisions 8.5 – – 8.5 – – – –

Tax attributes not previously recognised for

deferred tax 7.9 – 4.0 11.9 (0.1) – (0.7) (0.8)

Utilisation of tax credits upon which no

deferred tax was previously recognised – – 6.1 6.1 – – – –

Adjustments in respect of prior years (0.5) – – (0.5) 0.8 – 0.2 1.0

Impact of UK tax rate change on deferred tax

balances 1.8 – 1.0 2.8 (2.5) – (0.3) (2.8)

Tax charge/(credit) 22.8 (0.3) 5.1 27.6 3.4 (0.3) (1.8) 1.3

The underlying effective tax rate excluding exceptional items was 123.2% (FY22: 11.0%). This includes the impact of provisions against

deferred tax balances, changes in uncertain tax provisions and the impact of tax rate changes in Sri Lanka: the underlying effective

tax rate excluding these items was 24.9% (FY22: 19.4%).

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 in certain countries in which the Group operates. These tax assessments have

been subject to court ruling both in favour of the Group and also against the Group. The rulings are subject to ongoing appeal

processes. The Group has increased the relevant tax provisions and is fully provided where necessary as required by the relevant

accounting standards. The disputed tax assessments are subject to ongoing dialogue with the relevant tax authorities to reach

a settlement without the requirement to continue in a protracted legal process.

De La Rue plc Annual Report 2023 169

Strategic report Governance report Financial statements

Notes to the accounts continued

8 Earnings per share

Accounting policies

Basic earnings per share (“EPS”) 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 EPS, 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 EPS, before exceptional items, is useful to readers of the

accounts as it gives an indication of underlying business performance.

Earnings per share

2023

pence

per share

2022

pence

per share

Basic EPS – continuing operations (28.6) 10.6

Basic EPS – discontinued operations – 0.4

Basic EPS – total (28.6) 11.0

Diluted EPS – continuing operations

(28.6) 10.5

Diluted EPS – discontinued operations – 0.4

Diluted EPS – total (28.6) 10.9

Adjusted EPS

Basic EPS – continuing operations (1.5) 13.0

Diluted EPS – continuing operations (1.5) 12.8

Number of shares (m)

Weighted average number of shares 195.4 195.2

Dilutive effect of shares 0.5 2.6

195.9 197.8

Note:

1. The Group reported a loss from continuing operations attributable to the ordinary equity shareholders of the Company for FY23. The Diluted EPS is reported as equal to Basic EPS,

no account can be taken of the effect of dilutive securities under IAS 33.

Reconciliations of the earnings used in the calculations are set out below:

Note

2023

£m

2022

£m

(Loss)/Earnings for basic EPS – Total (55.9) 21.5

Add: Earnings for basic EPS – discontinued operations – (0.8)

(Loss)/Earnings for basic EPS – continuing operations (55.9) 20.7

Add: amortisation of acquired intangibles

10 1.0 1.0

Less: tax on amortisation of acquired intangibles

7 (0.3) (0.3)

Add: exceptional items (excluding non-controlling interests)

5 47.1 5.7

Less: tax on exceptional items

7 5.1 (1.8)

Earnings for adjusted EPS (3.0) 25.3

De La Rue plc Annual Report 2023170

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 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

Exchange differences 0.2 3.8 0.3 0.5 4.8

Additions

1.7 (2.9) 0.5 11.9 11.2

Reclassifications 1.0 12.6 3.5 (17.1) –

Disposals (4.0) (14.1) (0.9) – (19.0)

At 25 March 2023 52.2 226.6 32.1 18.3 329.2

Accumulated depreciation

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

Exchange differences 0.1 3.0 0.3 – 3.4

Depreciation charge for the year 1.0 9.3 2.2 – 12.5

Disposals (4.0) (13.9) (0.8) – (18.7)

Impairments

0.5 4.9 – – 5.4

At 25 March 2023 29.3 180.6 22.2 – 232.1

Net book value at 25 March 2023 22.9 46.0 9.9 18.3 97.1

Net book value at 26 March 2022 21.6 49.9 8.2 23.0 102.7

Notes:

1. During the year £3.5m (FY22: £1.5m) of government grants were received by the Group in cash for the purchase of certain items of property, plant and equipment, which is offset against

the plant and machinery additions of £0.6m (FY22: £2.5m). A further £0.7m of government grants were received in cash relating to FY22. The following conditions are attached to these grants:

– Malta Phase 1 – to retain an average employment level of 250 workers for a period of 8 years and retain qualifying investment project for a minimum of 8 years. The investment project

began on 1 September 2015, therefore at the year end 0.5 years was left to satisfy the minimum period.

- Malta Phase 2 – A further investment project commenced on 9 September 2021 linked to adding a further 100 employees within 4 years of 1 December 2020 and covering a further

8 years of funding.

2. Impairments in the year of £5.4m included £4.9m relating to the wind down of operations in Kenya (£0.5m in Land and buildings and £4.4m in Plant and machinery) and £0.5m for

impairments in Gateshead, relating to cessation of manufacturing at Gateshead facility (all in Plant and machinery) (note 5).

De La Rue plc Annual Report 2023 171

Strategic report Governance report Financial statements

Notes to the accounts continued

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 – “C Other long-term

estimation uncertainties”.

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 ten 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.

Discount rate, derived from the company’s weighed average cost of capital have been used in discounting the projected cash

flows. These rates are reviewed annually with external advisers and are adjusted for risks specific to the market in which the

business operate.

The annual impairment test is performed at each year end, based initially on five-year cash flow forecasts approved by the senior

management. Short term revenue growth rates used in five-year plan are based on internal data regarding our current contracted

position, the pipeline of opportunities and forecast market growth. This growth rate considered to be consistent with publicly

available growth rates for the markets in which the business operates.

Short term profitability and cash conversion is based on our historic experiences and a level of judgement is applied to expected

changes in both.

The calculations include a terminal value based on the projections for the fifth year of the short-term plan, with a growth rate

assumption applied which extrapolates the business into perpetuity. The terminal growth rates are based on long term inflation

rates of the geographic market for the business and does not exceed the average long term growth rates forecast.

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 FY23 a discount rate of 13.8% (FY22: 11.5%), revenue growth rate of 3% (FY22: 2%) and long-term

growth rate of 3% (FY22: 2%) have been used in the impairment test calculations. A discount rate of over 19.0% (FY22: 19.9%) would

be required for an impairment to be realised. Based on the impairment test performed no impairment of the goodwill is considered

necessary. There are no reasonable possible changes in the key assumptions (e.g. discount rate, growth rate or profit margin) that

would cause the recoverable amount to fall below the carrying amount of the cash generating unit.

De La Rue plc Annual Report 2023172

Goodwill

£m

Development

costs

£m

Software

assets

£m

Intellectual

property

£m

Customer

relationships

£m

Trade

names

£m

In course of

construction

£m

Total

£m

Cost

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

Exchange differences 0.7 – 0.1 0.3 0.3 – – 1.4

Additions – – 1.4 – – – 9.0 10.4

Disposals – (0.2) – – – – (2.9) (3.1)

Reclassifications – 0.7 5.3 – – – (6.0) –

At 25 March 2023 9.2 27.6 18.7 3.9 4.6 0.2 10.9 75.1

Accumulated amortisation

At 30 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 27 March 2022 – 16.3 8.3 2.0 2.2 0.1 – 28.9

Exchange differences – (0.1) (0.1) 0.3 0.2 – – 0.3

Amortisation for the year

– 2.1 2.2 0.6 0.4 – – 5.3

Impairment

– – 1.4 – – – 2.9 4.3

Disposals – (0.1) – – – – (2.9) (3.0)

At 25 March 2023 – 18.2 11.8 2.9 2.8 0.1 – 35.8

Net book value at 25 March 2023 9.2 9.4 6.9 1.0 1.8 0.1 10.9 39.3

Carrying value at 26 March 2022 8.5 10.8 3.6 1.6 2.1 0.1 10.8 37.5

Notes:

1. Amortisation of acquired intangibles of £1.0m (FY22: £1.0m) relates to Intellectual property of £0.6m (FY22: £0.6m) and Customer relationships of £0.4m (FY22: £0.4m).

2. Impairments in the year of £4.3m included £2.9m relating to product development costs and £1.4m of software licenses with limited future revenue generating expectations (note 5).

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.

De La Rue plc Annual Report 2023 173

Strategic report Governance report Financial statements

11 Otherfinancialassetscontinued

Note

2023

£m

2022

£m

Opening balance 7.4 8.8

Interest accrued in the period

6 1.1 0.8

Additional investment in loan notes in the Portals International Limited group – 0.9

Expected credit loss (reported in exceptionals)

5 (8.5) (3.1)

Closing balance – 7.4

Analysed as:

Fixed rate unsecured loan notes in Portals Finance 1 Limited 3.8 3.8

Preference shares in Portals International Group Limited 2.6 2.6

Fixed rate unsecured loan notes in Portals International Group Limited 0.9 0.9

B ordinary shares in Portals International Group Limited 0.2 0.2

Cumulative accrued interest 4.1 3.0

Cumulative expected credit loss (11.6) (3.1)

– 7.4

Fixed rate unsecured loan notes in Portals Finance 1 Limited are repayable in December 2028, bear interest at 10% per annum and

compounds annually if the interest is not paid. These are listed on the International Stock Exchange in Guernsey.

2,563,095 cumulative redeemable preference shares of £0.000001 each were issued at £1.00 per share, have a cumulative

dividend of 10% per annum and are redeemable at any time at the discretion of the issuer or will be redeemed in full by

31 December 2028.

Fixed rate unsecured loan notes in Portals International Group Limited are repayable in December 2029 and interest accrues at

a rate of 15% per annum and compounds annually if the interest is not paid. These are listed on the International Stock Exchange

in Guernsey.

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 FY22 an additional £0.9m was invested in loan notes in the Portals International Limited group.

Management has assessed the recoverability of the other financial assets on the balance sheet as at 25 March 2023 and as a

result an expected credit loss was recorded in the period of £8.5m. Further details on the impairment can be found in “B Critical

accounting estimates – 1. Recoverability of other financial assets, assumptions and judgements” within Accounting Policies.

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.

2023

£m

2022

£m

Raw materials 19.6 25.7

Work in progress 9.6 12.3

Finished goods 20.1 12.1

49.3 50.1

The replacement cost of inventories is not materially different from original cost. Income statement charges in FY23 with respect

of the recognition of inventory provisions of £1.0m (FY22: £0.9m) was recognised in operating expenses – ordinary.

Notes to the accounts continued

De La Rue plc Annual Report 2023174

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 (i.e. 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.

2023

£m

2022

£m

Trade receivables 42.3 64.8

Provision for impairment (0.6) (0.8)

Net trade receivables 41.7 64.0

Other receivables

25.4 22.1

Prepayments 3.6 2.9

70.7 89.0

Note:

1. Other receivables of £25.4m (FY22: £22.1m) included, VAT recoverable of £6.2m (FY22: £5.1m), project work-in-progress costs of £3.3m (FY22: £3.2m), RDEC of £2.5m (FY22: £2.7m),

and deposits for assets under construction of £2.2m (FY22: £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 25 March 2023 there was £0.1m (FY22: £0.3m) of current balances due relating to Ukraine covered by

existing pledges to settle (of which £0.1m has been settled post year-end), a £nil (FY22: £14k Russia, £nil Belarus) balance relating

to Russia and 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

2023

£m

ECL

allowance

2023

£m

Gross

2022

£m

ECL

allowance

2022

£m

Not past due 61.3 (0.2) 75.2 (0.2)

Past due 0-30 days 4.4 (0.1) 6.3 –

Past due 31-120 days 1.5 – 4.9 (0.1)

Past due more than 120 days 0.5 (0.3) 0.5 (0.5)

67.7 (0.6) 86.9 (0.8)

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:

2023 2022

Government departments

and National banks

(for Moody’s sovereign rating

graded as ‘speculative’ only)

Private or

publicly

traded

organisations

Government departments

and National banks

(for Moody’s sovereign rating

graded as ‘speculative’ only)

Private or

publicly

traded

organisations

Current not yet due 0.25% 1% 0.25% 1%

<6 months overdue 1% 2% 1% 2%

<1 year overdue 5% 50% 5% 50%

<2 years overdue 25% 100% 25% 100%

>2 years overdue 100% 100% 100% 100%

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

2023

£m

2022

£m

Balance at beginning of year (0.8) (1.5)

Impairment losses recognised (0.2) (0.1)

Utilised – 0.5

Impairment losses reversed 0.4 0.3

Balance at end of year (0.6) (0.8)

De La Rue plc Annual Report 2023 175

Strategic report Governance report Financial statements

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.

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.

Notes to the accounts continued

De La Rue plc Annual Report 2023176

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

2023

£m

Carrying

amount

2023

£m

Total fair

value*

2022

£m

Carrying

amount*

2022

£m

Financial assets

Trade and other receivables

13 Level 3 58.4 58.4 78.3 78.3

Contract assets

2 Level 3 18.9 18.9 8.0 8.0

Other financial assets

11 Level 3 – – 7.2 7.2

Cash and cash equivalents

15 Level 1 40.3 40.3 24.3 24.3

Derivative financial instruments:

– Forward exchange contracts designated as cash flow hedges Level 2 1.2 1.2 1.3 1.3

– Foreign exchange fair value hedges – other economic hedges Level 2 1.1 1.1 0.9 0.9

– Embedded derivatives Level 2 0.1 0.1 1.2 1.2

Total financial assets 120.0 120.0 121.2 121.2

Financial liabilities

Unsecured bank loans and overdrafts

18 Level 2 (123.4) (123.4) (95.7) (95.7)

Trade and other payables

17 Level 3 (66.1) (66.1) (62.9) (62.9)

Derivative financial instruments:

– Forward exchange contracts designated as cash flow hedges Level 2 (1.0) (1.0) (1.8) (1.8)

– 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 (0.4) (0.4) (2.9) (2.9)

– Embedded derivatives Level 2 (0.4) (0.4) (0.1) (0.1)

Total financial liabilities (191.4) (191.4) (163.4) (163.4)

Notes:

1. Excludes prepayments of £3.6m (FY22: 2.9m), RDEC of £2.5m (FY22: £2.7m) and VAT recoverable of £6.2m (FY22: £5.1m).

2. FY22 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 of £5.0m (FY22: £3.1m).

4. Excludes social security and other taxation amounts of £3.0m (FY22: £2.6m), contract liabilities of £0.3m (FY22: £0.3m) and payments on account of £22.7m (FY22: £14.3m).

* The prior year comparatives have been restated to correct a prior year error by removing a VAT receivable of £5.1m from the Trade and other receivables line item in accordance with

the requirements of IFRS 9. The restatement only affects the line item mentioned and has no other impact on the consolidated financial statements.

Trade receivables decreased to £42.3m compared to £64.8m at FY22 reflecting timing of payments on certain material

customer contracts.

Contract assets have increased by £10.9m from £8.0m at FY22 to £18.9m at FY23. This relates to an increase in Currency contracts

of £12.7m (FY22: £4.9m) and Authentication contracts of £6.2m (FY22: £3.1m).

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.

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.

De La Rue plc Annual Report 2023 177

Strategic report Governance report Financial statements

14(a) Financial instruments continued

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 25 March 2023 was a gain of £0.1m (FY22: loss £0.5m). Net movements in the hedge reserve are

shown in the Group statement of changes in equity.

Comprehensive income after tax was £0.6m (FY22: £0.3m) includes a loss of £1.0m (FY22: loss £0.6m) of fair value movements

on new and continuing cash flow hedges and a gain of £1.7m (FY22: gain £0.8m) on maturing cash flow hedges.

Deferred tax on the gain of £0.7m (FY22: gain £0.2m) amounted to £0.1m credit (FY22: £0.1m charge).

Hedge reserve movements in the income statement were as follows:

Revenue

£m

Operating

expense

£m

Exceptional

items

£m

Total

£m

25 March 2023

Maturing cash flow hedges (3.2) 1.7 – (1.5)

Ineffectiveness on de-recognition of cash flow hedges – – (0.2) (0.2)

(3.2) 1.7 (0.2) (1.7)

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)

The ineffective portion of fair value hedges that was recognised in the income statement amounted to £nil (FY22: £nil).

The ineffective portion of cash flow hedges that was recognised in the income statement within operating expenses was a £nil

(FY22: £nil) and within exceptional items was a £0.2m loss, relating to the close out of hedges relating to Portals relationship

agreement termination (note 5) (FY22: £nil).

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.

The following are the contractual undiscounted cash flow maturities of financial liabilities, including contractual interest payments

and excluding the impact of netting agreements.

25 March 2023 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 9.7 129.4 0.7 – 139.8 (16.4) 123.4

Trade and other payables

17 66.1 – – – 66.1 – 66.1

Obligations under leases

23 4.0 2.7 6.5 23.1 36.3 (23.0) 13.3

Derivative financial liabilities

Gross amount payable from currency

derivatives:

– Forward exchange contracts designated as

cash flow hedges* 91.3 2.3 – – 93.6 (92.6) 1.0

– Short duration swap contracts designated as

fair value hedges* 27.3 – – – 27.3 (27.2) 0.1

Fair value hedges – other economic hedges* 35.2 0.7 – – 35.9 (35.5) 0.4

233.6 135.1 7.2 23.1 399.0 (194.7) 204.3

Notes to the accounts continued

De La Rue plc Annual Report 2023178

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

Notes:

* Excludes embedded derivatives.

1. Excludes social security and other taxation amounts of £3.0m (FY22: £2.6m), contract liabilities of £0.3m (FY22: £0.3m) and payments on account of £22.7m (FY22: £14.3m).

2. The undiscounted value of the unsecured bank loans and overdrafts as at 26 March 2022 was £106.9m. The impact of discounting was £5.9m.

The following are the contractual undiscounted cash flow maturities of financial assets, including contractual interest receipts and

excluding the impact of netting agreements.

25 March 2023 Note

Due

within

1 year

£m

Due

between 1

and 2 years

£m

Due

between 2

and 5 years

£m

Due

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 40.3 – – – 40.3 – 40.3

Trade and other receivables

13 58.4 – – – 58.4 – 58.4

Contract assets

2 18.9 – – – 18.9 – 18.9

Other financial assets

11 – – – – – – –

Derivative financial assets

Gross amount receivable from currency

derivatives:

– Forward exchange contracts designated as

cash flow hedges* 71.3 0.3 – – 71.6 (70.4) 1.2

– Short duration swap contracts designated as

fair value hedges* 1.0 – – – 1.0 (1.0) –

– Fair value hedges – other economic hedges* 88.8 – – – 88.8 (87.7) 1.1

278.7 0.3 – – 279.0 (159.1) 119.9

26 March 2022 Note

Due

within

1 year

£m

Due

between 1

and 2 years

£m

Due

between 2

and 5 years

£m

Due

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 78.3 – – – 78.3 – 78.3

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

236.3 2.7 – 7.2 246.2 (126.2) 120.0

Notes:

* Excludes embedded derivatives.

1. Excludes prepayments of £3.6m (FY22: 2.9m), RDEC of £2.5m (FY22: £2.7m) and VAT recoverable of £6.2m (FY22: £5.1m).

2. FY22 excludes ordinary shares of £0.2m which are accounted for as fair value through profit and loss.

* The prior year comparatives have been restated to correct a prior year error by removing a VAT receivable of £5.1m from the Trade and other receivables line item in accordance with the

requirements of IFRS 9. The restatement only affects the line item mentioned and has no other impact on the consolidated financial statements.

De La Rue plc Annual Report 2023 179

Strategic report Governance report Financial statements

14(b) Liquidity risk continued

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 (FY22: £275.0m) including an RCF cash drawdown component of up to £175.0m (FY22:

£150.0m) and bond and guarantee facilities of a minimum of £100.0m (FY22: £125.0m), which were previously due to mature in

December 2023.

On 18 November 2022. the existing banking facilities were extended until 1 January 2025 with 25-basis point increase in margin.

The terms of the extended facilities are as follows:

– Maturity date of 1 January 2025;

– An up-front arrangement fee of 25 basis points payable in November 2022;

– An increase in Margin of 25 basis points;

– Further arrangement fees payable between June and December 2023 of 95 basis points on the commitments under this facility

on the dates those fees would be due; and

– No change in covenant tests.

This debt refinancing has been accounted for as a debt modification with extinguishment under IFRS 9 Financial Instruments as the

terms of the debt remain substantially the same. A debt modification loss has been recognised within Interest expense in the

Consolidated income statement. Refer to note 6 for further details.

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. During FY23 the Group has reallocated £25.0m of the bond and guarantee

component to the cash component, such that at present £175.0m in total is available on the RCF component.

As at 25 March 2023, the Group, as part of the £175.0m RCF cash component, has a total of undrawn committed borrowing

facilities, all maturing in more than one year, of £53.0m (26 March 2022: £55.0m in more than one year).

The amount of loans drawn on the £175.0m RCF facility is £122.0m (26 March 2022: £95.0m). Guarantees of £52.1m (26 March

2022: £55.6m) have been drawn using the £100.0m guarantee facility. The accrued interest in relation to cash drawdowns

outstanding as at 25 March 2023 is £0.3m (26 March 2022: £0.1m).

Actual as at

26 March

2023

£m

Minimum

Facility

£m

Maximum

Facility

£m

Facilities:

Cash 122.0 125.0 175.0

Bonds and guarantees 52.1 150.0 100.0

172.1 275.0 275.0

The financial covenants require that the ratio of EBIT to net interest payable will not be less than 3.0 times 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

3.03 times (FY22: 7.4 times), net debt/EBITDA of 2.21 times. (FY22: 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 as at 25 March 2023 are US dollar 108.1m,

Euro 49.1m, Swiss franc 7.6m, Saudi Arabian riyal 11.6m, Swedish krona 64.9m, Hong Kong dollar 2.8m and United Arab Emirates

dirham 1.1m.

The net principal amounts outstanding under forward contracts with maturities greater than 12 months are Euro 0.8m,

US dollar 2.8m and Saudi Arabian riyal 1.2m.

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 25 March 2023 will be

released to the income statement at various dates between one month and 14 months from the balance sheet date. For this

financial year the tables below include all net foreign exchange forward contracts over £500k.

Notes to the accounts continued

De La Rue plc Annual Report 2023180

Hedges versus GB Pounds only

Notional

amount in

currency

Notional

amount in

£m Maturity

Average

forward

rate

As at 25 March 2023

Forward exchange forward contracts

USD 110.2 (91.1) 2024 1.2099

EUR (57.5) 50.9 2024 1.1313

CHF (1.3) 1.2 2024 1.1247

SAR (11.6) 2.6 2024 4.4951

SEK 64.9 (5.1) 2023 12.6468

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

Note:

Forward sales shown as positive, and purchases shown as negative.

Hedges versus other currencies

Notional

amount

currency 1 in

Notional

amount

currency 2 in

m Maturity

Average

forward rate

As at 25 March 2023

Forward exchange forward contracts

EUR/CHF 6.4 (6.3) 2024 0.9789

EUR/USD 2.0 (2.1) 2024 1.0639

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

Notes:

Forward sales are shown as positive and purchases are 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 25 March 2023 was £nil (26 March 2022: £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 25 March 2023 are, Euro 6.9m, United Arab

Emirates dirham 1.7m and Saudi Arabian riyal 3.8m.

(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 25 March 2023 was a £0.1m liability (26 March 2022:

£nil). Gains and losses on balance sheet swaps are included in the consolidated income statement.

The principal amounts outstanding under balance sheet swaps at 25 March 2023 are US dollar 10.7m (FY22: 13.5m), Euro 12.7m

(FY22: 6.6m) and Swiss franc 1.1m (FY22: 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 25 March 2023 was a £0.3m liability (26 March 2022: £1.1m).

Gains and losses on fair value hedges

The gains and losses recognised in the year on the Group’s fair value hedges were a loss of £0.1m relating to balance sheet hedges

(FY22: gain £0.1m), loss £6.5m relating to other fair value hedges (FY22: gain £1.9m), and £nil relating to cash management hedges

(FY22: £nil).

De La Rue plc Annual Report 2023 181

Strategic report Governance report Financial statements

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.

Exposure to currency risk

The following significant exchange rates applied during the year:

Average rate Reporting date spot rate

2023 2022 2023 2022

US dollar 1.22 1.37 1.22 1.32

Euro 1.16 1.18 1.14 1.20

Sensitivity analysis

A 10 per cent strengthening of Sterling against the following currencies at 25 March 2023 and 26 March 2022 would have

increased/(decreased) profit or loss by the amounts shown below based on the Group’s external monetary assets and liabilities.

2023

£m

2022

£m

XAF (0.4) (0.3)

EURO 0.4 0.3

LKR (0.8) (0.2)

CHF (0.1) (0.1)

A 10 per cent weakening of Sterling against the above currencies at 25 March 2023 and 26 March 2022 would have had the

following effect

2023

£m

2022

£m

XAF 0.5 0.3

EURO (0.4) (0.3)

LKR 0.9 0.2

CHF 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 FY22.

Interest rate risk

All material financial assets and liabilities are initially contracted 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, if sufficient capacity

is available in the market to do so. This remains the policy in the medium term however the Group was unable to apply this policy

during FY23 due to market conditions and this remains the policy in the medium-term and will be reviewed periodically.

Notes to the accounts continued

De La Rue plc Annual Report 2023182

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

Carrying amount

2023

£m

2022

£m

Variable rate instruments:

Financial assets (note 15) 40.3 24.3

Financial liabilities (note 18) (123.4) (95.7)

(83.1) (71.4)

At the year ending 25 March 2023 the Group had no floating to fixed interest rate swaps with financial institutions in place.

Excluded from the above analysis is £13.3m (FY22: £14.2m) 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)

25 March 2023 (0.9) 0.9 – –

26 March 2022 (0.6) 0.6 – –

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. 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.

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:

Carrying amount

Notes

2023

£m

2022

£m

Trade and other receivables

13 58.4 78.3

Contract assets

2 18.9 8.0

Other financial assets

11 – 7.2

Cash and cash equivalents

15 40.3 24.3

Forward exchange contracts used for hedging

14(a) 2.3 2.2

Embedded derivatives

14(a) 0.1 1.2

120.0 121.2

Notes:

1. Excludes prepayments of £3.6m (FY22: 2.9m), RDEC of £2.5m (FY22: £2.7m) and VAT recoverable of £6.2m (FY22: £5.1m).

2. FY22 excludes ordinary shares of £0.2m which are accounted for as fair value through profit and loss.

De La Rue plc Annual Report 2023 183

Strategic report Governance report Financial statements

Notes to the accounts continued

14(d) Credit risk continued

The maximum exposure to credit risk for trade and other receivables (excluding prepayments, RDEC and VAT recoverable)

by geographic region was:

Carrying amount

2023

£m

2022

£m

UK 12.6 17.6

Rest of Europe 16.0 11.5

Africa 12.7 17.6

Rest of world 17.1 31.6

58.4 78.3

The maximum exposure to credit risk for trade and other receivables (excluding prepayments, RDEC and VAT recoverable) by type

of customer was:

Carrying amount

2023

£m

2022

£m

Banks and financial institutions 17.2 36.0

Government institutions 6.5 6.9

Other 34.7 35.4

58.4 78.3

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

2023

£m

2022

£m

Total equity attributable to shareholders of the Company 19.1 143.8

Add back/(deduct)/add back long-term pension deficit/(surplus)

24 54.7 (29.8)

Adjusted equity attributable to shareholders of the Company 73.8 114.0

Net debt

22 83.1 71.4

Group capital 156.9 185.4

The long-term pension (deficit)/surplus 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.

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. Dividends can be paid pro-rata to all shareholders (including external parties) in respect of companies treated as consolidated

subsidiaries that have non-controlling interests.

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.

De La Rue plc Annual Report 2023184

14(f) Changes in liabilities arising from financing activities

The analysis below 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 27

March

2022

£m

Cash

flow

£m

Exchange

differences

and other

£m

New

leases and

modifications

£m

Non-cash

movements

£m

As at 26

March

2023

£m

Borrowings (gross) 18 (95.7) (27.0) – – (0.7) (123.4)

Prepaid loan arrangement fees

18 3.1 1.4 – – 0.5 5.0

Borrowings (92.6) (25.6) – – (0.2) (118.4)

Lease liabilities

23 (14.2) 2.9 (0.1) (1.4) (0.5) (13.3)

Liabilities arising from financing activities (106.8) (22.7) (0.1) (1.4) (0.7) (131.7)

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 (gross) 18 (78.0) (17.0) (0.7) – – (95.7)

Prepaid loan arrangement fees

18 3.8 – – – (0.7) 3.1

Borrowings (74.2) (17.0) (0.7) – (0.7) (92.6)

Lease liabilities

23 (15.7) 2.8 (0.2) (0.5) (0.6) (14.2)

Liabilities arising from financing activities (89.9) (14.2) (0.9) (0.5) (1.3) (106.8)

Note:

1. Lease liability payments include principal of £2.4m (FY22: £2.2m) and interest of £0.5m (FY22: £0.6m) (note 6).

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.

2023

£m

2022

£m

Cash at bank and in hand 26.5 20.3

Short term bank deposits 13.8 4.0

40.3 24.3

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.

De La Rue plc Annual Report 2023 185

Strategic report Governance report Financial statements

Notes to the accounts continued

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:

2023

£m

2022

£m

Deferred tax assets 18.3 11.2

Deferred tax liabilities (2.8) (2.4)

15.5 8.8

The gross movement on the deferred income tax account is as follows:

2023

£m

2022

£m

Beginning of the year 8.8 17.1

Exchange differences 0.2 (0.2)

Tax credit/(charge) to income statement (13.8) 4.0

Tax credit/(charge) to OCI 20.9 (11.8)

Tax credit/(charge) to equity (0.6) (0.3)

End of the year 15.5 8.8

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

Retirement

benefits

£m

Total

£m

At 27 March 2021 – (1.1) (2.0) – (3.1)

Recognised in the income statement – 0.3 (0.3) – –

Recognised in OCI – – – (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)

At 26 March 2022 – (1.0) (2.3) (7.4) (10.7)

Recognised in the income statement (1.8) 0.3 (1.0) – (2.5)

Recognised in OCI – – – 7.4 7.4

Exchange differences (0.1) (0.1) – – (0.2)

Subtotal (1.9) (0.8) (3.3) – (6.0)

Jurisdictional offset 3.2

At 25 March 2023 (2.8)

De La Rue plc Annual Report 2023186

Deferred Tax Assets

Property,

plant and

equipment

£m

Retirement

benefits

£m

Tax

losses

£m

Other

£m

Total

£m

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 – (4.4) – – (4.4)

Recognised in equity – – – (0.3) (0.3)

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

At 26 March 2022 0.6 – 6.2 12.7 19.5

Recognised in the income statement (0.6) 0.1 0.1 (10.9) (11.3)

Recognised in OCI – 13.7 – (0.2) 13.5

Recognised in equity – – – (0.6) (0.6)

Exchange differences – 0.1 – 0.3 0.4

Subtotal – 13.9 6.3 1.3 21.5

Jurisdictional offset (3.2)

At 25 March 2023 18.3

Other deferred assets and liabilities include tax associated with provisions of £0.5m (FY22: £0.4m), restricted interest carried

forward of £nil (FY22: £3.9m) and in respect of overseas tax credits of £1.0m (FY22: £7.0m).

Gross deferred tax assets are recognised for tax losses available (FY23: £6.3m; FY22: £6.2m) and temporary deductible differences

on retirement obligations (FY23: £13.9m; FY22: £nil) to carry forward to the extent that the realisation of the related tax benefit

through future taxable profits is probable. Tax losses carried forward do not have an expiry date.

Future taxable profits have been forecast based on the expected profitability of the group over a 5-year period based on

management’s forecasts for FY24 and FY25 applying no growth in the final 3 years and taking into account historic performance

against budgets. The forecasts for FY24 and FY25 were also used in the group’s going concern and viability assessments.

Recent group tax losses have mostly arisen as a consequence of non-recurring exceptional costs. Future exceptional costs are

expected to be significantly lower, with the company forecast to be profitable on this basis, allowing the company to recover the

amounts noted above before the end of FY28.

The Directors have assessed that:

– if the forecast taxable profits are lower by 5% over the 5-year period, then this would reduce the deferred tax assets recognised

by approximately £0.3m;

– if the forecast taxable profits are higher by 5% over the 5-year period, then this would increase the deferred tax assets

recognised by approximately £0.8m.

The Group has not recognised deferred tax assets of £14.3m (FY22: £6.4m) in respect of losses amounting to £54.6m (FY22:

£27.9m) that can be carried forward against future taxable income or deferred tax assets of £3.8m related to property, plant, and

equipment timing differences (FY22: £nil). Similarly, the Group has not recognised certain deferred tax assets of £26.2m (FY22:

£19.2m) in respect of overseas tax credits that are carried forward for utilisation in future periods, including some that have been

allocated for providing to Governmental authorities as part of investment projects.

Unremitted foreign earnings totalled £198.8m at 25 March 2023 (FY22: £200.6m). 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 25 March 2023 (FY22: £317.2m). No deferred tax asset has been recognised in

respect of these losses.

UK tax rate

The UK deferred tax assets and liabilities at 25 March 2023 have been calculated based on the rate of 25%, being the substantively

enacted rate at the balance sheet date.

De La Rue plc Annual Report 2023 187

Strategic report Governance report Financial statements

Notes to the accounts continued

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.

2023

£m

2022

£m

Current liabilities

Payments received on account 22.7 14.3

Contract liabilities 0.3 0.3

Trade payables 39.2 31.0

Social security and other taxation 3.0 2.6

Accrued expenses

21.3 25.6

Other payables

5.6 6.2

92.1 80.0

Notes:

1. Accrued expenses include commissions £0.4m (FY22: £1.8m), rebate accruals of £2.7m (FY22: £2.7m), employee related accruals of £1.9m (FY22: £5.6m), and freight accruals £2.1m (FY22:

£2.5m), and commission and TTP Accruals of £1.24m (FY22: £2.4m) and bank financing fee accruals of £2.6m (FY22: £nil).

2. Other payables include capex creditors £0.8m (FY22: £1.2m) and interest payable £1.6m (FY22: £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

2023

£m

Carrying

amount

2023

£m

Face value

2022

£m

Carrying

amount

2022

£m

Non-current liabilities

Unsecured bank loans and overdrafts EUR 4.83% 2028 0.7 0.7 0.7 0.7

Unsecured bank loans and overdrafts GBP 7.72% 2025 122.7 122.7 95.0 95.0

Total interest-bearing liabilities 123.4 123.4 95.7 95.7

The total interest-bearing liabilities above is presented excluding unamortised pre-paid borrowing fees of £5.0m (FY22: £3.1m).

Under the Group’s banking arrangements there is no right of offset and no accounts were in an overdraft position as at

25 March 2023.

As at 25 March 2023, 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 FY23.

On 18 November 2022, the existing banking facilities were extended until 1 January 2025 with a 25-basis point increase in margin.

The terms of the extended facilities are as follows:

– Maturity date of 1 January 2025;

– An up-front arrangement fee of 25 basis points payable in November 2022;

– An increase in Margin of 25 basis points;

– Further arrangement fees payable between June and December 2023 of 95 basis points on the commitments under this facility

on the dates those fees would be due; and

– No change in covenant tests.

This debt refinancing has been accounted for as a debt modification with extinguishment under IFRS 9 Financial Instruments as

the terms of the debt remain substantially the same. A debt modification loss has been recognised within Interest expense in the

Consolidated income statement. Refer to note 6 for further details.

De La Rue plc Annual Report 2023188

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 the year (0.6) (0.8) (1.2) (2.6)

Released in the year – (1.6) (1.4) (3.0)

At 26 March 2022 0.4 1.4 4.1 5.9

Charge for the year 1.8 0.7 2.8 5.3

Utilised in year (0.2) – (2.2) (2.4)

Released in year (0.2) (1.2) (1.4) (2.8)

At 25 March 2023 1.8 0.9 3.3 6.0

Expected to be utilised within 1 year 1.8 0.9 3.3 6.0

Restructuring provisions

Restructuring provisions as at 26 March 2022 of £1.8m (FY22: £0.4m) primarily relate to redundancy and other employee

termination costs as a result of the wind down of operations in Kenya and other restructuring programmes within the Currency

and Authentication divisions. The remaining provision as at 25 March 2023 is expected to be utilised in FY24.

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 (£1.2m), employee related liabilities (£0.6m), IBNR insurance claim provisions (£0.5m) and other liabilities

(£1.0m) arising through the Group’s normal operations. The £1.4m released in the year related primarily to onerous contract

provisions no longer required.

Onerous contract provisions arise where the unavoidable costs under a contract exceed the economic benefits expected to be

received under it. Unavoidable costs represent the least net cost of exiting the contract, which is the lower of the cost of fulfilling

it and any compensation or penalties arising from failure to fulfil it. Costs to fulfil a contract include those that directly relate to the

contract, including incremental costs and allocation of production overheads. The precise timing of the utilisation of these

provisions is uncertain but is generally expected to fall within one year.

De La Rue plc Annual Report 2023 189

Strategic report Governance report Financial statements

Notes to the accounts continued

20 Share capital

2023

£m

2022

£m

Issued and fully paid

195,437,227 ordinary shares of 44

152

⁄175p each (FY22: 195,157,352 ordinary shares of 44

152

⁄175p each) 87.7 87.7

111,673,300 deferred shares of 1p each (FY22: 111,673,300 deferred shares of 1p each) 1.1 1.1

88.8 88.8

2023 2022

Ordinary

’000

Deferred

’000

Ordinary

’000

Deferred

’000

Allotments during the year

Shares in issue at 26 March 2022/27 March 2021 195,157 111,673 195,064 111,673

Issued under Savings Related Share Option Scheme – – 46 –

Issued under Annual Bonus Plan 279 – 24 –

Issued under Performance Share Plan 1 – 23 –

Shares in issue at 25 March 2023/26 March 2022 195,437 111,673 195,157 111,673

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.

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.

At 25 March 2023, 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

2023

£m

2022

£m

Annual Bonus Plan 0.2 0.9

Performance Share Plan 0.4 0.4

Savings Related Share Option Scheme 1.3 0.5

1.9 1.8

Note:

The FY23 Performance Share Plan above includes cash settled share-based payments of £nil (FY22: £nil).

Reconciliations of option movements over the period to 25 March 2023 for each class of share awards are shown below:

De La Rue plc Annual Report 2023190

Annual Bonus Plan

For details of the Annual Bonus Plan, refer to the Directors’ remuneration report on pages 102 to 127.

2023

Number of

awards

’000

2022

Number of

awards

’000

Share awards outstanding at start of year 453 23

Granted 484 462

Forfeited (102) (9)

Vested (278) (23)

Outstanding at end of year 557 453

During the period the weighted average share price on share awards exercised in the period was 84.65p (FY22: 174.4p).

Performance Share Plan

For details of the Performance Share Plan, refer to the Directors’ remuneration report on pages 102 to 127.

Performance Share Options (the “Options”) were granted to Executive Director’s and other employees on 31 August 2022.

The Options were granted with an exercise price of nil. The Awards will vest, subject to achievement of the performance conditions

on 31 August 2025. The “Performance Period” for the Awards is the three years ending 31 July 2025. Awards granted to

Executive Directors are subject to a post-vesting holding period which ends two years after the vest date, being 31 August 2027.

The fair value of share options is estimated at the date of grant using Monte Carlo model to value the awards subject to the

TSR performance condition. The Options subject to non-market performance conditions have been valued using a Black-Scholes

model. The significant assumptions used in the valuation models are disclosed below:

FY23 Arrangements Performance Share Plan Performance Share Plan

Dates of current year grants 31 August 2022 31 August 2022

Participant Executive Directors

Performance conditions

Non-market (50%) –

EPS growth TSR (50%)

Non-market (50%) –

EPS growth TSR (50%)

Award type Options Options Options Options

Fair value (per option granted)

69p 50p 86p 63p

Fair value (% of share price at grant date) 80.2% 58.1% 100.0% 73.3%

Number of options granted 828,188 828,187 676,948 676,948

Inputs

Share price at grant 86p

Exercise price Nil

Dividend yield 0.0%

Expected term 3 years

Risk free rate 2.84%

Share price volatility of the Company 50.0%

Median share price volatility of the

Comparator Group n/a 44.1% n/a 44.1%

Median correlation n/a 16.6% n/a 16.6%

TSR performance of the Company at date

of grant n/a 10.1% n/a 10.1%

Median TSR performance of the Comparator

Group at the date of grant n/a (0.4)% n/a (0.4)%

Discount for post vesting restrictions 20.0% n/a

Note:

1. The fair value of Awards granted to Executive Directors is shown after deducting a discount in relation to the post-vesting holding period which is applicable to Executive Directors Awards.

To value the Awards, a continuously compounded risk-free rate of 2.84% has been used. The risk-free rate is based on the implied

yield available on zero-coupon UK government issues at the date of grant with a term in line with expected term of the Awards

(sourced from Thomson DataStream).

De La Rue plc Annual Report 2023 191

Strategic report Governance report Financial statements

Notes to the accounts continued

21Sharebasedpaymentscontinued

During the year ended 26 March 2022 the fair value of share options were 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

Dates of current year grants 30 June 2021

Performance conditions EPS TSR

Number of options granted 702,184 702,183

Exercise price n/a n/a

Contractual life (years) 10 10

Settlement Share Share

Vesting period (years) 3 3

TSR correlation with comparator index n/a 35% pa

TSR/Share price volatility 90% pa 90% pa

Share price at grant (pence) 186.2 186.2

Fair value per option at grant date 191.76 144.40

Reconciliation of option movements:

2023

Number of

awards

’000

2022

Number of

awards

’000

Share awards outstanding at start of year 3,485 2,560

Granted 3,010 1,404

Forfeited (1,946) (466)

Vested (1) (13)

Outstanding at end of year 4,548 3,485

During the period the weighted average share price on share awards exercised in the period was 61.05p (FY22: 157.07p).

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.

During the year ended 25 March 2023, the Company granted a new SAYE grant as a replacement for the two grants that due to

vest in FY24 and FY25 with option prices significantly higher than the average share price for the year. The new grant has a vesting

period of 3 years and is subject to service conditions only. Employees were invited to invest into a new grant with the option to

cancel their contributions to 2020 and 2021 grants, with option price of 131.1p and 112.4p respectively, to maximise their investment

at an option price of the replacement grant of 60.2p. Options cancelled and reinvested into the replacement grant during the

investment window and up to the grant date, were accounted for on modification basis and shares cancelled but not replaced,

were treated as cancellations. An explanation on why the FY23 grant is treated as a replacement grant is included in the “V Critical

accounting estimates, assumptions and judgements”.

The following number of awards were identified for each type of award and the fair values calculated:

Plan type Award type Award year

Number of

awards

Fair value (at

the date of

grant)

SAYE Modified awards

2020 354,955 £0.19

SAYE Modified awards

2021 201,576 £0.14

SAYE New grant 2022 2,963,125 £0.22

SAYE Cancelled/forfeited awards 2019 252,200 £0.48

SAYE Cancelled/forfeited awards 2020 710,040 £1.04

SAYE Cancelled/forfeited awards 2021 367,740 £1.01

Note:

1. For modified awards fair value represents incremental fair value.

De La Rue plc Annual Report 2023192

The fair value of the modified transactions was determined using the Black-Scholes option pricing model, with the

following assumptions:

Year Granted 2020 2021 2022

Fair value per Option £0.026 £0.083 £0.219

Assumptions:

Share price at grant £0.638 £0.638 £0.638

Exercise price £1.311 £1.124 £0.602

Dividend yield 0.0% 0.0% 0.0%

Expected term 1.25 years 2.25 years 3.25 years

Risk free rate 4.12% 3.86% 3.44%

Volatility 50.0% 50.0% 50.0%

Discount for non-vesting conditions 5.0% 10.0% 15.0%

A summary of the incremental fair values is set out in the following table:

Award

Option fair

value

2022 Option

fair value

Incremental

fair value

SAYE 2020 £0.026 £0.219 £0.193

SAYE 2021 £0.083 £0.219 £0.136

For the Savings Related Share Option Scheme (SAYE) an expected volatility rate of 50% (FY22: 95%) has been used for grants in the

period. This rate is based on historical volatility over the last 3.25 years to 22 February 2023. For the 2022 grant, it was noted that

the 3.25 year historical share price volatility includes the significant impact of Covid-19 on the Company’s share price. In accordance

with IFRS 2 it is appropriate to adjust historical volatility for one-off events and given the Company’s volatility has reduced to

a more stable level over the past two years, it was considered appropriate to use a lower adjusted volatility for the 2022 grant.

The expected life is the average expected period to exercise. The risk-free rate of return is based on the implied yield available on

zero-coupon government issues at the date of grant with a life equal to the expected term of the Options. The rate applied during

the year was 3.44% per annum for a period of 3.25 years (FY22: 0.82%).

During the year ended 26 March 2022 the fair value of share options were 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 Arrangement

Savings Related Share Option

Scheme

Dates of current year grants 5 January 2022

Number of options granted 991,157

Exercise price 112.43

Contractual life (years) 3

Settlement Share

Vesting period (years) 3

Dividend yield

Nil to 31 March 2023

and 10p per share pa

thereafter

Risk free interest rate 0.82% pa

Share price volatility 90%pa

Share price at grant (pence) 158.2

Fair vale per option at grant date 101.0

There are no performance conditions attaching 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/cancellation rate of 15%,

reflecting leavers and withdrawals, has been assumed on new options granted in the year based on historic experience.

De La Rue plc Annual Report 2023 193

Strategic report Governance report Financial statements

Notes to the accounts continued

21Sharebasedpaymentscontinued

Reconciliation of option movements:

2023 2022

Weighted

average

exercise

price pence

per share

Number of

options

’000

Weighted

average

exercise

price pence

per share

Number of

options

’000

Options outstanding at start of year 130.91 3,173 151.29 2,803

Granted 60.15 3,520 149.31 991

Forfeited/Cancelled 155.71 (1,942) 155.71 (475)

Exercised 111.38 – 111.38 (46)

Expired 409.64 (139) 409.64 (100)

Outstanding at end of year 130.91 4,612 130.91 3,173

The range of exercise prices for the share options outstanding at the end of the year is between 60.15p and 131.10p (FY22: between

108.55p and 403.46p).

The weighted average remaining contractual life of the outstanding share options is 2.20 years (FY22: 1.99 years).

During the period the weighted average share price on options exercised in the period was nil (FY22: 174.17p).

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 25 March 2023 (26 March 2022: 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

At 26 March

2022

£m

Cash flow

£m

Foreign

exchange and

other

£m

At 25 March

2023

£m

Borrowings 18 (95.7) (27.0) (0.7) (123.4)

Cash and cash equivalents

15 24.3 15.6 0.4 40.3

Net debt (71.4) (11.4) (0.3) (83.1)

Note

At 27 March

2021

£m

Cash flow

£m

Foreign

exchange and

other

£m

At 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)

Net debt is presented excluding unamortised pre-paid borrowing fees of £5.0m (FY22: £3.1m) and £13.3m (FY22: £14.2m) 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 January 2025. 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 FY23, the Group reallocated £25.0m of the bond and guarantee component to the cash component such that at

present, £175.0m in total is available on the RCF component, of which £122.0m was drawn as at 25 March 2023. A separate borrowing

facility for financing equipment under construction is in place and at 25 March 2023 the amount outstanding on this facility is £0.7m.

As at 25 March 2023, the Group had a total of undrawn committed borrowing facilities, all maturing in more than one year,

of £53.0m (26 March 2022: £55.0m, all maturing in more than one year).

De La Rue plc Annual Report 2023194

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.

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 2 years to in excess of 100 years in certain cases. Leases for other equipment

used in operations are typically for periods of 2 to 5 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.

Right-of-use assets

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 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)

At 26 March 2022 12.5 0.4 12.9

Additions – change in lease assessment 1.0 0.4 1.4

Depreciation expense (2.1) (0.1) (2.2)

At 25 March 2023 11.4 0.7 12.1

De La Rue plc Annual Report 2023 195

Strategic report Governance report Financial statements

Notes to the accounts continued

23Leasescontinued

Lease liabilities

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 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)

Additions – change in lease assessment (1.0) (0.4) (1.4)

Accretion of interest (note 6) (0.5) – (0.5)

Lease payments

2.8 0.1 2.9

Exchange differences (0.1) – (0.1)

At 25 March 2023 (12.6) (0.7) (13.3)

2023

£m

2022

£m

Included within:

Current liabilities (3.0) (2.7)

Non-current liabilities (10.3) (11.5)

(13.3) (14.2)

Note:

1. Lease payments include principal of £2.4m (FY22: £2.2m) and interest of £0.5m (FY22: £0.6m).

The following amounts have been recognised in the income statement:

2023

£m

2022

£m

Depreciation of right-of-use assets (2.2) (2.3)

Interest expense on lease liabilities (note 6) (0.5) (0.6)

Expense relating to short-term leases (0.3) (0.3)

Expenses relating to leases of low-value assets (0.3) (0.2)

The Group had total cash outflows for leases of £3.5m in FY23 (FY22: £3.3m), including amounts relating to principal payment

£2.4m (FY22: £2.2m), interest payments of £0.5m (FY22: £0.6m) and short and low values assets £0.6m (FY22: £0.5m).

The Group also had non-cash additions to right-of-use assets £1.4m (FY22: £0.6m) and liabilities of £1.4m (FY22: £0.6m).

At 25 March 2023, 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 0.8 0.5 1.3

Termination options expected to be exercised 0.3 – 0.3

De La Rue plc Annual Report 2023196

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 trustee representation

on the trustee board and a professional independent trustee has been appointed as chair of the Board. The trustee board

undertakes regular training to ensure they are able to fulfil their function as a trustee 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 25 March 2023 as the Group has an unconditional right to any surplus. No significant

judgements were involved in making this determination. The Group has recorded a net deficit on an IAS 19 basis within non-current

liabilities on the balance sheet as at 25 March 2023. A deferred tax asset has been recognised on the pension deficit and was

included within deferred tax assets as at 25 March 2023 (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. 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 24 May 2022, the Trustees of the Main Scheme entered into a partial pensioner buy-in contract (qualifying insurance policy)

for a proportion of pension members. 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 is considered to be a qualifying insurance policy. The premium paid to the insurer was £319.0m. As at 25

March 2023, the value of the buy-in contract was £220.6m. The impact of the partial pensioner buy-in has been recognised as

a loss on the scheme assets.

In addition, during FY23, legal fees of £0.5m have been incurred in the rectification of certain discrepancies identified in the

Scheme’s rules (FY22: £0.4m) (note 5). This has no impact on the UK defined benefit pension liability.

De La Rue plc Annual Report 2023 197

Strategic report Governance report Financial statements

Notes to the accounts continued

24Retirementbenefitobligationscontinued

(a) Defined benefit pension schemes

Amounts recognised in the consolidated balance sheet:

2023

£m

2022

£m

UK retirement benefit (deficit)/surplus (53.1) 31.6

Overseas retirement liability (1.6) (1.8)

Retirement benefit (deficit)/surplus (54.7) 29.8

Reported in:

Non-current assets – 31.6

Non-current liabilities (54.7) (1.8)

(54.7) 29.8

2023

£m

2023

Overseas

£m

2023

Total

£m

2022

£m

2022

Overseas

£m

2022

Total

£m

Equities 3.2 – 3.2 56.3 – 56.3

Bonds 88.7 – 88.7 154.9 – 154.9

Secured/fixed income 133.0 – 133.0 456.2 – 456.2

Liability Driven Investment Fund 163.6 – 163.6 248.1 – 248.1

Multi Asset Credit 60.2 – 60.2 62.8 – 62.8

Qualifying insurance policy 220.6 – 220.6 – – –

Other 8.9 – 8.9 10.4 – 10.4

Fair value of scheme assets 678.2 – 678.2 988.7 – 988.7

Present value of funded obligations (727.5) – (727.5) (952.8) – (952.8)

Funded defined benefit pension schemes (49.3) – (49.3) 35.9 – 35.9

Present value of unfunded obligations (3.8) (1.6) (5.4) (4.3) (1.8) (6.1)

Net (deficit)/surplus (53.1) (1.6) (54.7) 31.6 (1.8) 29.8

Amounts recognised in the consolidated income statement:

2023

£m

2023

Overseas

£m

2023

Total

£m

2022

£m

2022

Overseas

£m

2022

Total

£m

Included in employee benefits expense:

— Current service cost – – – – – –

— Administrative expenses and taxes (1.6) – (1.6) (1.8) – (1.8)

Included in interest on retirement benefit obligation net finance

expense: –

— Interest income on scheme assets 27.6 – 27.56 20.2 – 20.2

— Interest cost on liabilities (26.5) – (26.5) (20.4) – (20.4)

Retirement benefit obligation net finance expense (note 6) (1.1) – (1.1) (0.2) – (0.2)

Total recognised in the consolidated income statement (0.5) – (0.5) (2.0) – (2.0)

Return on scheme assets excluding assumed interest income (301.1) 0.4 (300.7) (51.2) – (51.2)

Remeasurement gains/(losses) on defined benefit pension obligations 200.4 – 200.4 86.9 – 86.9

Amounts recognised in other comprehensive income (100.7) 0.4 (100.3) 35.7 – 35.7

De La Rue plc Annual Report 2023198

Major categories of scheme assets as a percentage of total scheme assets:

2023

Overseas

2023

Total

2022

Overseas

2022

Total

Equities 1 – 1 6 – 6

Bonds 13 – 13 16 – 16

Secured/fixed income 20 – 20 46 – 46

Liability Driven Investment Fund 24 – 24 25 – 25

Multi Asset Credit 9 – 9 6 – 6

Qualifying insurance policy 32 – 32 – – –

Other 1 – 1 1 – 1

100 – 100 100 – 100

The Liability Driven Investment (“LDI”) fund consists of fixed interest and inflation linked bond holdings and interest, inflation, credit

default and other swaps. Derivatives have been valued on a “mark to market basis”.

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.

Debt securities (bonds) have quotes prices in active markets and equity instruments consist of private indices with underlying

equities with quoted prices in active markets. Multi Asset Credit 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 of cash, interest rate swaps and floating rate notes.

Principal actuarial assumptions:

2023

Overseas

2022

Overseas

Discount rate 4.70% – 2.85% –

CPI inflation rate 2.50% – 3.10% –

RPI inflation rate 3.00% – 3.50% –

The financial assumptions adopted as at 25 March 2023 reflect the duration of the scheme liabilities which has been estimated

to be broadly 14 years (FY22: broadly 15 years).

At 25 March 2023 mortality assumptions were based on tables issued by Club Vita, with future improvements in line with the CMI

model, CMI_2021 (FY22: CMI_2021) with a smoothing parameter of 7.5 and a long-term future improvement trend of 1.25% per

annum (FY22: long-term rate of 1.25% per annum) and w2020 parameter of 20% (FY22: 5%). The resulting life expectancies within

retirement are as follows:

2023 2022

Aged 65 retiring immediately (current pensioner) Male 21.8 22.0

Female 23.9 24.0

Aged 50 retiring in 15 years (future pensioner) Male 22.4 22.5

Female 25.3 25.4

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.

De La Rue plc Annual Report 2023 199

Strategic report Governance report Financial statements

Notes to the accounts continued

24Retirementbenefitobligationscontinued

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

0.50% decrease in discount rate Increase in liability of c.£46m

0.50% increase in discount rate Decrease on liability by c£42m

0.25% increase in expected RPI and CPI inflation rate Increase in liability of c.£9m

0.25% increase in expected CPI inflation rate Increase in liability of £8m

Increasing life expectancy by one year Increase in liability of c.£27m

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 FY23 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

2023

£m

2022

£m

At 26 March 2022/27 March 2021 988.7 1,053.3

Assumed interest income on scheme assets 27.6 20.2

Scheme administration expenses (1.6) (1.8)

Return on scheme assets less interest income

(301.1) (51.2)

Employer contributions and other income 16.5 16.4

Benefits paid (including transfers) (51.9) (48.2)

At 25 March 2023/26 March 2022 678.2 988.7

Note:

1. The £16.5m of pension payments includes £15.0m payable under the Recovery Plan, agreed in May 2020, and a further £1.5m relating to payments made by the Group towards the

administration costs of running the scheme, which were £1.6m in FY23.

Changes in the fair value of UK defined benefit pension obligations:

UK defined benefit pension obligations

2023

£m

2022

£m

At 27 March 2022/27 March 2020 (957.1) (1,071.8)

Interest cost on liabilities (26.5) (20.4)

Effect of changes in financial assumptions 225.3 101.0

Effect of changes in demographic assumptions 3.0 (2.1)

Effect of experience items on liabilities (27.9) (12.0)

Benefits paid (including transfers) 51.9 48.2

At 25 March 2023/26 March 2022 (731.3) (957.1)

(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 (FY22: £4.1m).

De La Rue plc Annual Report 2023200

25 Employee information

2023

number

2022

number

Average number of employees

United Kingdom and Ireland 935 985

Rest of Europe 557 558

The Americas 65 63

Rest of World 485 630

2042 2,236

2023

£m

2022

£m

Employee costs (including Directors’ emoluments)

Wages and salaries 80.8 83.5

Social security costs 7.7 7.8

Pension costs 4.6 4.5

93.1 95.8

Share incentive schemes 0.6 1.3

Sharesave schemes 1.3 0.5

95.0 97.6

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 102 to 127.

26 Capital and other commitments

2023

£m

2022

£m

Capital and other expenditure contracted but not provided:

Property, plant and equipment 16.4 10.6

Lease commitments 13.9 –

Other commitments – 364.2

30.3 374.8

Lease commitments relate to the factory site extension in Malta where the Company has signed a lease for the premises for an

initial term of 20 years. The lease will be recognised when the building becomes available for use.

Other commitments in the table above in FY22 were amounts 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 supplied 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 assessed that such supply

arrangement all associated commitments form a single agreement for accounting purposes. The termination of the Relationship

Agreement with Portals in the year resulted in these commitments being extinguished (note 5).

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 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 then appealed to the Supreme Court, which also

dismissed the appeal in July 2022. We have now had confirmation from the Court that Pastoriza has not lodged an appeal with

the Constitutional Court (which would have been the final possible forum for this litigation) and it is now too late to do so, therefore

the litigation is now at an end.

De la Rue has been made aware that the Central Bureau of Investigation in India (CBI-I) has launched an investigation into the

conduct of Arvind Mayaram, the former Indian Finance Secretary, in which the historical activities of De La Rue in India prior to 2016

have been implicated. The Company has not received any official direct communication of this investigation from the CBI-I but has

learned about it from publicly available sources. De La Rue has not served the Government of India or the Central Bank of India in

any capacity since 2016. The Company believes that there is no merit to the allegations that relate to De La Rue and is seeking legal

advice in this regard.

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, a provision may be required subject to the particular circumstances including an

assessment of its recoverability.

De La Rue plc Annual Report 2023 201

Strategic report Governance report Financial statements

Notes to the accounts continued

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 £22.2m (FY22: £20.3m) for the purchase of ink and other consumables on an arm’s

length basis. At the balance sheet date there was £1.7m (FY22: £4.6m) 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

2023

£’000

2022

£’000

Aggregate emoluments 1,595 2,097

Aggregate gains made on the exercise of share options – –

1,595 2,097

Directors and Key management

2023

£m

2022

£m

Salaries and other short term employee benefits 2.1 2.7

Retirement benefits – Defined contribution 0.1 0.1

Termination benefits 0.2 –

Share-based payments 0.1 0.8

2.5 3.6

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 25 March 2023

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, Suite 2, Block C, Hirzel Court, St Peter Port, GY1 3HT, Guernsey

Non-trading 100

Ireland Thomas De La Rue and Company (Ireland) Limited

Floor 3, Block 3, Miesian Plaza, Dublin 2, D02 Y754, 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

De La Rue plc Annual Report 2023202

Country of incorporation Name and Registered Office address and operation Activities

De La Rue

interest %

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

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 60

Nigeria De La Rue Commercial Services Limited

7th Floor, Marble House, 1 Kingsway Road, Ikoyi, Lagos, Nigeria

Trading 100

Senegal De La Rue West Africa SARL

Ouakam, 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 LTD

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

Non-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

Non-trading 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 .

De La Rue plc Annual Report 2023 203

Strategic report Governance report Financial statements

Notes to the accounts continued

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 Sri Lanka Kenya

Non-controlling interest percentage 51% 40% 40% 51% 40% 40%

2023

£m

2023

£m

2023

£m

2022

£m

2022

£m

2022

£m

Non-current assets – 7.7 0.2 – 9.4 5.8

Current assets 8.9 30.5 22.8 5.8 22.6 25.1

Non-current liabilities – (0.4) – – (0.3) (0.1)

Current liabilities (5.7) (10.6) (13.7) (5.1) (3.8) (14.2)

Net assets (100%) 3.2 27.2 9.3 0.7 27.9 16.6

2023

£m

2023

£m

2023

£m

2022

£m

2022

£m

2022

£m

Revenue 13.8 35.0 16.8 14.3 34.4 30.5

Profit/(loss)for the year 2.2 1.2 (7.3) 0.3 3.0 2.2

Profit/(loss) allocated to non-controlling interest 1.1 0.5 (2.9) 0.2 1.1 0.9

Dividends declared by non-controlling interest – 0.8 – – 0.7 0.2

Cash flows from operating activities 2.9 8.9 0.8 (0.6) (0.6) 0.9

Cash flows from investing activities – (0.2) (0.3) – 0.2 (0.3)

Cash flows from financing activities – (1.9) (0.1) 0.3 (1.8) (0.5)

Net (decrease)/increase in cash and cash equivalents 2.9 6.8 0.4 (0.3) (2.2) 0.1

Notes:

1. In January 2023, the Group announced that it has suspended banknote printing operations Kenya. In addition, operations in Authentication division are also in the process of winding down

(note 5) .

31 Post balance sheet events

On 29 June 2023 the Company entered into a number of documents which had the effect of amending and restating the terms

of the revolving facility agreement with its lending banks and their agents.

These documents are an amendment and restatement agreement with the various lenders and the banks’ agent and security

agent, a debenture between the Company, certain other Group companies and the banks’ security agent and an inter-creditor

agreement between the creditors. As a result of these changes, the facilities are now secured against material assets and shares

within the Group.

On the 28 June 2023 the Company entered into an agreement with the trustees of the De La Rue Pension Scheme in relation to

the deferral of certain deficit reduction payments that were otherwise due to be paid by the Company and other Group companies

to that scheme. In order to preserve and support the position of the scheme, with the support of the lenders, the scheme will be

provided with security on a pari passu basis together with the lenders, as well as an enhanced information sharing protocol to

ensure ongoing communication between the Group and the trustee remains comprehensive.

De La Rue plc Annual Report 2023204

Company balance sheet

at 25 March 2023

Notes

2023

£m

2022

£m

Fixed assets

Investments in subsidiaries

3a 71.8 155.8

71.8 155.8

Current assets

Debtors: receivable within one year

4a – 111.3

Cash at bank and in hand 1.0 0.9

1.0 112.2

Creditors:

Amounts falling due within one year

5a (0.2) (0.6)

(0.2) (0.6)

Net current assets 0.8 111.6

Total assets less current liabilities 72.6 267.4

Net assets 72.6 267.4

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

Profit and loss account (64.3) 78.6

Total shareholders’ funds 72.6 267.4

The loss for the year of the Company was £197.1m (FY22: profit £1.3m).

Approved by the Board on 29 June 2023.

Clive Vacher Rob Harding

Chief Executive Officer Chief Financial Officer

De La Rue plc Annual Report 2023 205

Strategic report Governance report Financial statements

Company statement of changes in equity

for the period ended 25 March 2023

capital

£m

premium

account

£m

Capital

redemption

reserve

£m

Other

reserve

£m

Profit and

loss account

£m

Total

equity

£m

Balance at 27 March 2021 88.8 42.2 5.9 51.9 75.6 264.4

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

Loss for the financial year – – – – (197.1) (197.1)

Reclassification between reserves – – – (51.9) 51.9 –

Employee share scheme:

– value of services provided – – – – 1.9 1.9

Other – unclaimed dividends – – – – 0.4 0.4

Balance at 25 March 2023 88.8 42.2 5.9 – (64.3) 72.6

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

⁄

175

p, 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 De La Rue 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. In the current year the Group recorded an impairment of the intercompany

loan. As a matter of generally accepted accounting practice, a profit previously regarded as unrealised becomes realised when

there is a loss recognised on the write-down for depreciation, amortisation, diminution in value or impairment of the related asset.

Therefore, on the basis, the £51.9m previously treated as unrealised within Other Reserves is now treated as a realised amount and

has therefore been reclassified from “Other Reserves” to “Profit and Loss Account” as at 25 March 2023.

De La Rue plc Annual Report 2023206

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

During the period, the Company booked

an impairment in its subsidiary of £85.6m

based on an equity valuation of £71.6m.

Management considers this appropriate

given the significant reduction in the

market capitalisation of the group to

approximately £71m at 27 June 2023

versus approximate £214m market

capitalisation as at 26 March 2022 given

the resetting of market expectations on

FY24 and revised outlook guidance.

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 and Going Concern modelling.

Management has also used an updated

post-tax discount rate of 12.3% (which

was applied to the post-tax cashflow)

which management considers to be

appropriate. Management determined

that the impact of using pre-tax

cashflows as a pre-tax discount rate,

would not be material.

The Directors consider the 3% terminal

growth rate reasonable, as encouraging

signs of recovery are being seen in

Currency. In addition, continued growth in

Authentication is expected at a rate that

supports a terminal growth rate of 3%.

The Directors also consider that a 3%

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 3% terminal growth rate.

Management applied the following

sensitivities, based on reasonably

possible change in assumptions:

The Directors noted that a reduction in

the discount rate by 1% (from 12.3%) would

have increased the equity valuation to

£99.5m, increasing the headroom vs the

revised investment carrying value of

£71.6m by £27.8m.

The Directors noted that decreasing the

terminal rate from 3% to 2% would have

reduced the equity valuation to £46.8m,

reducing the headroom versus the

revised investment carrying value of

£71.6m by £24.9m.

The accounts have been prepared as at

25 March 2023, being the last Saturday in

March. The comparatives for the 2020/21

financial period are for the period ended

26 March 2022.

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, 26 March

2022, apart from standards, amendments

to or interpretations of published

standards adopted during the year.

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.

Accounting policies – Company

De La Rue plc Annual Report 2023 207

Strategic report Governance report Financial statements

Accounting policies – Company continued

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.

De La Rue plc Annual Report 2023208

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 102 to 127.

2023

number

2022

number

Average employee numbers 3 3

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 Inves tm ent s

Investments are stated at deemed cost in the balance sheet, less provision for impairment.

2023

£m

2022

£m

Investments comprise:

Investments in subsidiaries 71.8 155.8

Cost at 27 March 2022 and 26 March 2021 155.8 154.5

Additions 1.6 1.3

Impairment (85.6) –

Cost at 25 March 2023 and 26 March 2022 71.8 155.8

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 207 of

AccountingPolicies.

For details of investments in Group companies, refer to the list of subsidiary and associated undertakings on pages 202 to 203.

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.

2023

£m

2022

£m

Amounts due within one year

Amounts owed by Group undertakings – 111.3

During the year an impairment charge of £113.9m (FY22: £nil) was recorded against amounts owed to Group undertakings.

5a Other creditors

2023

£m

2022

£m

Amounts falling due within one year

Accruals and deferred income 0.2 0.6

Other creditors 0.2 0.6

Notes to the accounts – Company

De La Rue plc Annual Report 2023 209

Strategic report Governance report Financial statements

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 102 to 127.

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.

Notes to the accounts – Company continued

De La Rue plc Annual Report 2023210

Non-IFRS measures

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 excluded “pass-through” revenue relating to non-novated contracts following the paper and international

identity solutions business sales. There has been no “pass-through” revenue in FY23 or FY22 and therefore this non-IFRS is no

longer used by the Group.

B Adjusted operating profit

Adjusted operating profit represents earnings from continuing operations adjusted to exclude exceptional items and amortisation

of acquired intangible assets.

2023

£m

2022

£m

Operating (loss)/profit from continuing operations on an IFRS basis (20.3) 29.7

Amortisation of acquired intangible assets 1.0 1.0

Exceptional items 47.1 5.7

Adjusted operating profit from continuing operations 27.8 36.4

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.

2023

£m

2022

£m

(Loss)/Profit attributable to equity shareholders of the Company (55.9) 21.5

Exclude: discontinued operations – (0.8)

(Loss)/Profit attributable to equity shareholders of the Company from continuing operations on an

IFRS basis (55.9) 20.7

Amortisation of acquired intangible assets 1.0 1.0

Exceptional items 47.1 5.7

Tax on amortisation of acquired intangible assets (0.3) (0.3)

Tax on exceptional items 5.1 (1.8)

Adjusted (loss)/profit attributable to equity shareholders of the Company from continuing operations (3.0) 25.3

Weighted average number of ordinary shares for basic earnings 195.4 195.2

Continuing operations

2023

pence per

2022

pence per

Basic earnings per ordinary share on an IFRS basis (28.6) 10.6

Basic adjusted earnings per ordinary share (1.5) 13.0

De La Rue plc Annual Report 2023 211

Strategic report Governance report Financial statements

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 EBITDA margin percentage takes the applicable EBITDA figure and divides this by the continuing revenue in the period of

£349.7m (FY22: £375.1m). The covenant test (note 14(b)) uses earlier accounting standards and excludes adjustments for IFRS 16

and takes into account lease payments made.

2023

£m

2022

£m

(Loss)/Profit for the year (57.2) 23.7

Add back:

Profit on discontinued operations – (0.8)

Taxation 27.6 1.3

Net finance expenses 9.3 5.5

(Loss)/Profit before interest and taxation from continuing operations (20.3) 29.7

Add back:

Depreciation of property, plant and equipment 12.5 12.0

Depreciation of right-of-use assets 2.2 2.3

Amortisation of intangible assets 5.3 4.3

EBITDA (0.3) 48.3

Exceptional items 47.1 5.7

Adjusted EBITDA 46.8 54.0

Revenue £m 349.7 375.1

EBITDA margin (0.1)% 12.9%

Adjusted EBITDA margin 13.4% 14.4%

The adjusted EBITDA split by division was as follows:

FY23

Currency

£m

Authentication

£m

Identity

Solutions

£m

Central

£m

Total of

continuing

operations

£m

Operating (loss)/profit on IFRS basis (24.8) 5.4 (0.2) (0.7) (20.3)

Add back:

Net exceptional items 38.4 7.9 0.1 0.7 47.1

Depreciation of property, plant and equipment and right-of-use assets 11.1 2.5 0.1 1.0 14.7

Amortisation of intangible assets 1.3 3.4 – (0.6) 5.3

Adjusted EBITDA 26.0 19.2 – 1.6 46.8

FY22

Currency

£m

Authentication

£m

Identity

Solutions

£m

Central

£m

Total of

continuing

operations

£m

Operating (loss)/profit on IFRS basis 15.0 15.1 0.6 (1.0) 29.7

Add back:

Net exceptional items 4.5 0.2 – 1.0 5.7

Depreciation of property, plant and equipment and right-of-use assets 10.7 2.5 – 1.1 14.3

Amortisation of intangible assets 1.3 2.3 – 0.7 4.3

Adjusted EBITDA 31.5 20.1 0.6 1.8 46.8

Non-IFRS measures continued

De La Rue plc Annual Report 2023212

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.

FY23

Currency

£m

Authentication

£m

Identity

Solutions

£m

Central

£m

Total of

continuing

operations

£m

Operating (loss)/profit on IFRS basis (24.8) 5.4 (0.2) (0.7) (20.3)

Amortisation of acquired intangibles – 1.0 – – 1.0

Net exceptional items 38.4 7.9 0.1 0.7 47.1

Adjusted operating profit (note 1) 13.6 14.3 (0.1) – 27.8

Enabling function overheads 24.0 8.7 – (32.7) –

Adjusted controllable operating profit/(loss) 37.6 23.0 (0.1) (32.7) 27.8

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 5.7

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

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 was still applicable to PSP share awards which vested between 2021 and 2022, with the last vesting date was

in July 2022. This non-IFRS measure is no longer used by the Group.

2022

£m

Property, plant and equipment 102.7

Intangible assets 37.5

Right-of-use assets 12.9

Other financial assets 7.4

Inventories 50.1

Trade and other receivables 89.0

Contract assets 8.0

Derivative financial assets 3.4

Trade and other payables (80.0)

Derivative financial liabilities (4.8)

Capital Employed 226.2

ROCE = Adjusted operating profit/Average Capital Employed

Adjusted operating profit 36.4

Capital Employed – current year 226.2

Capital Employed – prior year 202.5

Average Capital Employed 214.3

ROCE 17.0%

De La Rue plc Annual Report 2023 213

Strategic report Governance report Financial statements

Five-year record

Income Statement

2019

£m

2020

£m

2021

£m

2022

£m

2023

£m

Revenue 564.8 472.1 397.4 375.1 349.7

Adjusted operating profit 60.1 23.7 38.1 36.4 27.8

– Amortisation of acquired intangible assets (0.7) (0.9) (1.0) (1.0) (1.0)

– Net exceptional items (27.9) 20.0 (22.6) (5.7) (47.1)

Operating profit/(loss) 31.5 42.8 14.5 29.7 (20.3)

Interest income 0.6 1.0 0.8 0.9 1.2

Interest expense (4.5) (6.1) (7.1) (6.2) (11.6)

Retirement benefit obligation net finance expense/income (2.1) (1.6) 1.7 (0.2) 1.1

Profit/(loss) before taxation from continuing operations 25.5 36.1 9.9 24.2 (29.6)

Taxation (4.8) – (1.4) (1.3) (27.6)

Profit/(loss) after taxation from continuing operations 20.7 36.1 8.5 22.9 (57.2)

(Loss)/profit from discontinued operations (2.4) (0.3) (0.4) 0.8 –

Profit/(loss) for the year 18.3 35.8 8.1 23.7 (57.2)

Equity non-controlling interests (1.3) (1.7) (2.2) (2.2) 1.3

Profit for the year attributable to equity shareholders 17.0 34.1 5.9 21.5 (55.9)

Dividends 25.7 – – – –

Dividends per ordinary share 25.0p n/a n/a n/a n/a

Earnings per share (‘EPS’)

Basic EPS – continuing operations 18.8 30.3 3.7 10.6 (28.6)

Basic EPS – discontinued operations (2.3) (0.3) (0.3) 0.4 –

Diluted EPS – continuing operations 18.8 30.2 3.7 10.5 (28.6)

Diluted EPS – discontinued operations (2.3) (0.3) (0.3) 0.4 –

Adjusted basic EPS – continuing operations 42.9 11.1 14.7 13.0 (1.5)

Balance sheet

2019

£m

2020

£m

2021

£m

2022

£m

2023

£m

Non-current assets 174.2 233.2 175.5 203.4 166.8

Net current (liabilities)/assets

(13.0) (19.2) 21.3 43.5 15.3

Net debt (107.5) (102.8) (52.3) (71.4) (83.1)

Non-current liabilities

(82.9) (22.8) (33.1) (13.7) (64.0)

Equity non-controlling interests (9.9) (15.5) (16.4) (18.0) (15.9)

Total equity attributable to shareholders of the Company (39.1) 72.9 95.0 143.8 19.1

Note:

1. Excludes amounts included in net debt (note 22).

De La Rue plc Annual Report 2023214

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: Jon Messent

E-mail: companysecretarial@delarue.com

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 businesses –

Authentication and Currency

– 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 2023 AGM

Registrar

Computershare Investor Services PLC,

The Pavilions,

Bridgwater Road,

Bristol BS99 6ZZ

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.

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

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.

Annual General Meeting

The AGM will be held at 10:00am on

7 September 2023 at De La Rue House,

Jays Close, Viables, Basingstoke,

Hampshire RG22 4BS.

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 2023 AGM.

Electronic voting

All shareholders can submit proxies for

the AGM electronically by logging onto

Computershare’s website at

www.investorcentre.co.uk/eproxy

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.

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.

Shareholder information

De La Rue plc Annual Report 2023 215

Strategic report Governance report Financial statements

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.

Shareholder information continued

De La Rue plc Annual Report 2023216

De La Rue is a registered trademark of

De La Rue Holdings Limited.

DLR Certify™ is an unregistered trademark of

De La Rue International Limited.

SAFEGUARD® is a registered trademark of

De La Rue International Limited.

Traceology® is a registered trademark of

De La Rue Authentication Solutions Inc.

Designed and produced by Gather

www.gather.london

Printed by Pureprint Group, ISO 14001

Certified, FSC® Certified and a

CarbonNeutral® company. The printing

inks used are all vegetable oil based.

This report is printed on Forest Stewardship

Council® (FSC®) certified Amadeus Silk

paper and board, from well managed

forests and other controlled sources. The

manufacturing mill hold EMAS and ISO14001

environmental certification.

De La Rue plc

De La Rue House

Jays Close

Viables

Basingstoke

Hampshire

RG22 4BS

T +44 (0)1256 605000