Annual Financial Report

RNS Number : 5991B

De La Rue PLC

17 June 2016

De La Rue plc - Publication of Documents

De La Rue plc (the Company) has today posted or otherwise made available the following documents to shareholders:

Annual Report 2016

Notice of Annual General Meeting to be held on 21 July 2016

In accordance with Listing Rule 9.6.1, the Company has today submitted a copy of the above documents to the UK Listing Authority via the National Storage Mechanism and the documents will shortly be available for inspection at www.Hemscott.com/nsm.do

Copies of the documents are also available on the Company's website www.delarue.com

In addition, the information below which is extracted from the De La Rue plc Annual Report 2016 is in accordance with the requirements of the DTR 4.1.3 and DTR 6.3.5 to make public an annual financial report.

DE LA RUE PLC

ANNUAL FINANCIAL REPORT ANNOUNCEMENT - PERIOD TO 26 MARCH 2016

De La Rue plc (LSE: DLAR) (De La Rue, the "Group" or the "Company") announces its full year results for the twelve months ended 26 March 2016 (the period or full year).

KEY FINANCIALS

The table below shows the performance before and after the disposal of the Cash Processing Solutions (CPS) business which was sold on 22 May 2016.

	Continuing Operations*			Pre Disposal*
	2015/16 £m	2014/15 £m	Change %	2015/16 £m	2014/15 £m	Change %
Revenue	454.5	422.8	7%	488.2	472.1	3%
Underlying operating profit**	70.4	69.1	2%	62.5	69.5	(10%)
Underlying operating margin**	15.5%	16.3%	(80bpts)	12.8%	14.7%	(190bpts)

Underlying profit before tax**	58.5	57.5	2%	50.4	57.7	(13%)
Reported profit before tax	54.9	40.6	35%	20.8	38.9	(47%)

Underlying earnings per share**	48.1p	46.1p	4%	41.0p	47.9p	(14%)
Reported earnings per share	46.8p	31.8p	47%	16.2p	34.0p	(52%)
Total dividend per share	25.0p	25.0p	0%	25.0p	25.0p	0%

*	"Continuing Operations" is the Group excluding CPS, "Pre Disposal" is the Group including CPS.
**	On continuing operations basis, underlying numbers are before a net exceptional charge of £3.6m (restated 2014/15: £16.9m). Underlying EPS is calculated before the exceptional charge noted above and exceptional tax credits of £2.3m (restated 2014/15: £2.4m). On pre disposal basis, underlying numbers are before a net exceptional charge of £29.6m (2014/15: £18.8m). Underlying EPS is calculated before the exceptional charge noted above and exceptional tax credits of £4.5m (2014/15: £4.7m).

FINANCIAL HIGHLIGHTS

· Full year results in line with trading update on 13 April 2016

· Year on year revenue up 7% and underlying operating profit up 2%¹

· Positive operating cash flow resulting in net debt reduction of £4.9m to £106.1m. Net debt/EBITDA at 1.25x

· Underlying earnings per share up 4% to 48.1p¹

· Final dividend maintained at 16.7p. Full year dividend unchanged at 25.0p.

· Group 12 month order book up 62% year-on-year at £365m¹, providing good visibility for the year ahead

OPERATIONAL HIGHLIGHTS

· Banknotes volume up 9% to 7.1bn and Banknote Paper up 6% to 10,000 tonnes, benefiting from overspill contracts

· Currency revenue up 11% and underlying operating profit up 9%

· Successfully outsourced production of >500m banknotes

· Product Authentication and Traceability underlying operating profit up 19% due to reduced costs

· Identity Solutions revenue and underlying operating profit lower as a result of expected contractual reduction

· Reorganisation from divisional to functional structure completed

· 10% net average headcount reduction to 3,566 from operational improvements

STRATEGIC HIGHLIGHTS

· Cash Processing Solutions business 'root and branch' review concluded with business sold

· Encouraging progress in Polymer with a significant new three-year contract and doubling the number of customers to 14 note issuing authorities

· Doubled number of patent filings. Launched next generation security thread Active™ and two end-to-end software solutions - DLR Identify™ and DLR Certify™

· Manufacturing footprint review completed: reducing capacity by 25% and consolidating banknote print production to four sites³ to achieve >£13m savings p.a. from 2018/19

1	Continuing operations only
2	Excluding the site managed on behalf of Bank of England
3	Including the site managed on behalf of Bank of England

Martin Sutherland, Chief Executive Officer, commented:

"In the last year we have made good progress against our five year strategic plan to transform De La Rue into a technology-led security product and service provider. We have reorganised the business structure, increased investment in product development and new technologies, and successfully completed a manufacturing footprint review.

"Our Currency product lines have performed very well during the year. I am particularly pleased with our progress in Polymer which is a large and growing market. We have doubled our customer base in Polymer over the last year, including securing our first volume customer, and as the only vertically integrated polymer substrate manufacturer, we are well placed to continue to capture this growth opportunity.

"CPS continued to underperform in the second half of the year. Following a 'root and branch' review, we decided to exit the business and have now completed the sale.

"Looking ahead, whilst there is more to do, I am pleased with the progress we have made in the year and I am confident that the right foundations are now in place to develop a more balanced business portfolio and increase profitability. Our 12 month closing order book of £365m provides good visibility for the year ahead. Whilst, as previously announced, a material contract came to an end, we are confident that we can mitigate the impact and our expectations for the current year are unchanged."

Enquiries:

De La Rue plc		+44 (0)1256 605000
Martin Sutherland	Chief Executive Officer
Jitesh Sodha	Chief Financial Officer
Lili Huang	Head of Investor Relations

Brunswick		+44 (0)207 404 5959
Jon Coles
Oliver Hughes

A presentation to analysts will take place at 9:00 am BST on 24 May 2016 at the Lincoln Centre, 18 Lincoln's Inn Fields, WC2A 3ED. This will also be accessible via a conference call and an audio webcast. Dial-ins for the conference call are +44 (0) 20 3059 8125, passcode: De La Rue. An archive of the conference call is also available for a week from midday 24 May 2016, which is accessible via +44 (0) 121 260 4861, passcode: 3214 492#. For the live video webcast, please register at www.delarue.com where a replay will also be available subsequently.

About De La Rue

De La Rue is a leading commercial banknote printer, security paper maker and provider of security products and software solutions and, as a trusted partner of governments, central banks and commercial organisations around the world, is at the forefront of the battle against the counterfeiter.

De La Rue, as the world's largest commercial banknote printer, provides customers with a fully integrated range of sophisticated products and services which are available either individually or as a whole. This includes a leading design capability, production of innovative security components, manufacture of security paper and polymer substrates and sophisticated printing of banknotes, all contributing to trust in the integrity of currencies.

De La Rue is the world's largest commercial passport manufacturer in an environment of increasing global concern over security at national boundaries and border control. De La Rue also produces a wide range of other security products, including tax stamps for governments who are seeking to combat illicit trade and collect excise duties. Other products include authentication labels, assuring purchasers of product validity, and government identity documents.

De La Rue also provides a range of specialist services and software solutions including government identity schemes and product authentication systems.

De La Rue is listed on the London Stock Exchange (LSE:DLAR). For further information visit www.delarue.com

Cautionary note regarding forward-looking statements

These results include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout these results and the information incorporated by reference into these results 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 involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond De La Rue's ability to control or predict. Forward-looking statements are not guarantees of future performance. The Group's actual results of operations, financial condition, liquidity, dividend policy and the development of the industry in which it operates may differ materially from the impression created by the forward-looking statements contained in these results and/or the information incorporated by reference into these results. In addition, even if the results of operations, financial condition, liquidity and dividend policy of the Group and the development of the industry in which it operates, are consistent with the forward-looking statements contained in these results and/or the information incorporated by reference into these results, those results or developments may not be indicative of results or developments in subsequent periods.

Other than in accordance with its legal or regulatory obligations, De La Rue does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

DE LA RUE PLC

ANNUAL FINANCIAL REPORT ANNOUNCEMENT - PERIOD TO 26 MARCH 2016

De La Rue's full year results were in line with the upgraded expectations announced in the trading update on 13 April 2016. With a backdrop of challenging market conditions and significant internal changes, the Group has made good progress in the first year of the five year strategic plan which aims to focus the business into growth markets while driving operational efficiency. The Group has strengthened the 12 month order book to £365m¹ (2015: £226m) as at the end of the period.

Revenue in Currency product lines, encompassing Banknotes, Banknote Paper, Polymer and Security Features, grew 11% whilst underlying operating profit was up 9%. These increases were primarily driven by higher banknote volumes, partly from overspill orders, and from greater operational efficiencies. As previously announced, a material security features contract which contributed annual revenue of c£30m came to an end during the year.

There was encouraging progress in Polymer with the winning of a significant three year contract and the doubling of the number of customers to 14 issuing authorities. The Currency product lines' closing order book was up 85% year on year.

Identity Solutions has performed as expected with lower revenue and margin due to a contractual reduction in contribution from a large contract. With the launch of our first identity software solution DLR Identify™, we have strengthened our digital and service offerings which will help us to capture a larger share of the passport value chain. Revenue in Product Authentication & Traceability (PA&T) was flat year on year with higher margins due to cost savings from the Dulles site closure.

Cash Processing Solutions (CPS) continued to underperform in the second half. Following the 'root and branch' review of CPS, we have sold the business.

FINANCIAL RESULTS

On a pre disposal basis, group revenue grew 3% to £488.2m (2014/15: £472.1m). Underlying operating profit fell by 10% to £62.5m (2014/15: £69.5m), mainly due to a loss of £7.9m in CPS (2014/15: profit £0.4m). Underlying profit before tax was 13% lower at £50.4m (2014/15: £57.7m) and underlying earnings per share decreased to 41.0p (2014/15: 47.9p).

On a continuing operations basis, group revenue was up 7% to £454.5m (2014/15: £422.8m). Underlying operating profit increased by 2% to £70.4m (2014/15: £69.1m). Underlying profit before tax was £58.5m (2014/15: £57.5m) and underlying earnings per share were up 4% to 48.1p (2014/15: 46.1p).

On a pre disposal basis, net exceptional charges before tax in the period were £29.6m (2014/15: £18.8m) of which £26.0m related to the CPS discontinued activities (more fully described in notes 3 and 4). As a result, profit before tax was 47% lower at £20.8m (2014/15: £38.9m).On a continuing operations basis, profit before tax was up 35% to £54.9m (2014/15: £40.6m).

DIVIDEND

The Board proposes to maintain the dividend at the 2014/15 level and is recommending a final dividend of 16.7p per share (2014/15: 16.7p per share). Together with the interim dividend paid in January 2016, this will give a total dividend for the year of 25.0p per share (2014/15: 25.0p per share). Subject to shareholders' approval, the final dividend will be paid on 3 August 2016 to shareholders on the register on 24 June 2016.

The Board also recommends the introduction of an alternative scrip dividend scheme. The proposed scheme will give shareholders the option to receive new fully paid Ordinary Shares in the Company in place of their cash dividend payments. The Board intends that the necessary resolution to introduce the scrip dividend scheme will be put to shareholders at the AGM on the 21 July 2016. Further details will be provided with the AGM documentation when it is sent to shareholders. If the scheme is approved by shareholders, the last date for receipt of Scrip elections will be 13 July 2016.

STRATEGIC PROGRESS

In May 2015, we announced a clear strategic plan to transform De La Rue in the five years to 2020 into a technology-led security product and service provider, with a more balanced business portfolio that will deliver growth and increased profits, as well as reduce performance volatility. Changes in the market and customers' shift towards more technology-based, value driven procurement mean we must be more flexible and agile in our approach to managing our customer relationships, product pipelines and delivery.

During the year, we reorganised the business from a divisional to a functional structure. We strengthened the Executive Leadership Team with a number of new hires, including Chief Financial Officer Jitesh Sodha, Chief Technology Officer Selva Selvaratnam and Chief Commercial Officer Richard Hird. In addition, we streamlined and reshaped our Senior Leadership Team to align with the functional structure. We also established a product management team to ensure focus on the development of each product line.

We are one year into our five year plan and have already made good progress expanding our polymer product line and enhancing our product and service offerings with the launch of two end-to-end software solutions. We have also taken actions to address the overcapacity in Banknotes and sold the underperforming cash processing business. We are pleased with the progress we have made in the first year and are confident that the right foundations are now in place to grow the business. However, there is still much more to do in order to deliver our strategic goals.

Optimise and Flex

Currency is core to our business and our brand. The number of banknotes in circulation is expected to grow at 3-4% a year, but with ongoing oversupply in both the banknotes and paper making industries, we must optimise our capabilities by continuing to drive operational efficiencies and cost reduction. The volatility of the banknote market means it is essential that we build flexibility into our production capacity.

Banknotes

We made good progress in achieving production cost reduction through our ongoing Operational Excellence programme. We finished rolling out the Advanced Product Quality Planning system, giving us a standardised process across all manufacturing sites. This enables us to share best practice, improve productivity and reduce spoilage.

In December 2015, we announced the results of our manufacturing footprint review. The review concluded that we can achieve more than £13m of annual savings from FY2018/19 by reducing the number of print lines and consolidating banknote production into four centres of excellence³. This will reduce our banknote print production capacity from eight billion to six billion² notes a year, matching current and long term average market demand, as well as increasing our machine utilisation. The implementation of the restructuring plan is now under way following the conclusion of the consultation with affected employees.

We plan to gain access to additional capacity, as and when required, through external partnerships. During the year, we have successfully outsourced the printing of 500 million banknotes to three commercial and state banknote printers. We are now looking to build stronger relationships with selected third parties.

Banknote Paper

In the past year we saw increased demand for Banknote Paper though pricing remained competitive as a result of industry overcapacity. We made good progress in reducing production costs by driving efficiency and reducing overheads. We will continue to drive down cost and focus on growing direct sales. We are also seeking strategic partnerships in this market and exploratory discussions with a number of parties are ongoing, though they are complex and will take time.

Cash Processing Solutions

In November 2015, we announced a 'root and branch' review of CPS to address ongoing underperformance. We have completed the review and concluded that whilst CPS has a strong product profile and excellent long term customer relationships, we do not believe that this is a business which should form part of our portfolio. In order to focus on our core businesses, we have decided to exit the cash processing market by selling CPS to Privet Capital LLP following an auction process. We believe that the business will benefit from standalone ownership.

Invest and Build

We continue to build on De La Rue's long history of innovation, investing in differentiating features, new technologies and digital solutions. We have restructured our R&D team and prioritised our efforts in high growth and high margin product lines. We plan to double our R&D investment by 2020.

In order to accelerate growth in Identity Solutions and Product Authentication and Traceability (PA&T), we plan to invest in new capabilities and skills to create a centre of excellence for identity and security print at the De La Rue site in Malta. We have also put in place a dedicated team with new skills to strengthen our sales effort for both Identity Solutions and PA&T.

Polymer

Launched in 2012, sales of our polymer substrate Safeguard^® have started to gain traction. We built on the progress made in 2014 by growing the number of customers from seven to 14, including all three Scottish note issuing banks. We reached an important milestone by winning our first volume customer, with a significant three year contract for polymer substrate and a technology partnership. This raises our nominal market share to c5% by volume. We aim to continue to grow our market share by targeting customers who already use polymer as well as those looking to convert paper and coins to polymer.

We continue to focus much of our R&D efforts on developing our polymer capability, expanding the number of polymer-suited security features and enhancing the process for substrate manufacturing and banknote printing. There is a growing interest in polymer banknotes as central banks look for ways to reduce the overall cost of banknote ownership. As the only integrated polymer substrate manufacturer and experienced polymer banknote printer, we are well placed to capture this growth opportunity.

Security Features

We believe that continuous innovation will give us greater differentiation and a unique advantage in a competitive market.

In 2015 we made good progress in security feature development, with the launch of a micro-optics security thread - Active™ - which has already won its first two customers. The combination of cutting edge lenticular technology with microscopic fine line printing gives the new feature a distinctive 3D colour shifting effect that is simple to verify but difficult for counterfeiters to replicate.

To maximise the value of our existing product capabilities, we have started to explore cross-product utilisation, such as applying polymer and holographic features to passports. We also leverage our award winning design capabilities to enhance the sales channel for our new features by incorporating them into banknote and passport designs. In order to be at the forefront of technological progress and to accelerate product development, we continue to seek partnerships with research institutes and universities.

Identity Solutions

In collaboration with Her Majesty's Passport Office in the UK, we redesigned the UK passport. The redesign was launched in November 2015. The passport won the prestigious London Design Award for its intricate design and sophisticated security layering. It includes one of our latest inventions, the Continuous Bio-Data Page™ construction method which makes the passport much harder to counterfeit. To further enhance our passport offering we also acquired laminate capability by partnering with Japanese printer Dai Nippon Printing Co.

As countries increasingly look for secure and technology based population authentication and border control, there is expected to be a growing demand for end-to-end solutions and services. In June, we launched our first identity software suite - DLR Identify™ which provides an end-to-end solution for governments to manage and monitor the process for authenticating and issuing a passport. The second module of the DLR Identify™, which enables electronic registration of births, is expected to launch in July 2016.

Product Authentication and Traceability

We made steady progress in PA&T during the year, with the launch of our next generation digital solution - DLR Certify™. The end-to-end solution provides a track and trace capability, helping governments and commercial organisations to protect tax revenue and the integrity of their products and brands. We have already secured our first customer and will continue to focus on building credibility by securing reference customers. We have also initiated discussions with a number of potential technology partners to strengthen our digital platform.

OPERATING REVIEWS

Currency

	2015/16	2014/15	Change
Banknote print volume (bn notes)	7.1	6.5	9%
Banknote paper volume ('000 tonnes)	10.0	9.4	6%

	£m	£m
Revenue	353.3	317.9	11%
Operating profit*	55.1	50.5	9%
Operating margin*	15.6%	15.9%	(30bpts)
*Segmental operating profit and operating margin are stated before exceptional items

The Currency segment comprises Banknotes, Banknote Paper, Polymer, and Security Features.

The segment grew its revenue by 11% to £353.3m (2014/15: £317.9m) and operating profit by 9% to £55.1m (2014/15: £50.5m), primarily reflecting the increased volumes in Banknotes.

While volatility in the banknote market continued and orders remained lumpy, overall margins in the year were stable. Banknote volumes increased by 9% to 7.1bn notes (2014/15: 6.5bn) partly due to winning overspill orders. Following extensive trials, production of the new £5 Sterling polymer notes began in October 2015 and is progressing well.

Banknote Paper volumes were up 6% to 10,000 tonnes (2014/15: 9,400 tonnes), also benefiting from overspill contracts. Margins, however, continued to face downward pressure from oversupply in the industry.

Polymer gained encouraging momentum marked by the significant three year contract with a large customer, which resulted in a modest revenue contribution and a small operating loss for the year.

Security Features performed as expected, though an important five year contract, which contributed annual revenue of £30m, came to an end and was not renewed. While this is expected to affect the profitability of this product line in 2016/17, we are confident that we can mitigate the impact through other opportunities that we are actively pursuing. We remain optimistic about the long term growth prospect of this business.

At the year end the 12 month order book for Currency including estimated call-off orders for material contracts was up 85% at £278m on a like for like basis (2014/15: £150m). This provides good visibility for 2016/17.

Identity Solutions (previously Identity Systems)

	2015/16	2014/15	Change
	£m	£m
Revenue	65.8	69.0	(5%)
Operating profit*	6.4	11.1	(42%)
Operating margin*	9.7%	16.1%	(640bpts)
*Segmental operating profit and operating margin are stated before exceptional items

Revenue was 5% lower at £65.8m (2014/15: £69.0m) and operating profit was down to £6.4m (2014/15: £11.1m). The decline in both revenue and operating profit was expected and predominantly due to contractual reduction in contribution on a large contract.

The ten year contract with HMPO in the UK to produce and issue passports continues to perform well. Volumes were up 2% year on year. A new design of the passport was launched in November 2015 which included our latest security features Continuous Bio-Data Page™ and SkyLight™.

Sales of ePassports were slower than anticipated as a number of expected tenders were delayed, although the sales pipeline remained good. Our main focus in the next 12 months is to convert some of the pipeline to revenue and profit.

In June 2015, we launched our first identity software suite, DLR Identify™. During the year, we sold and successfully installed the software with its first customer.

Product Authentication & Traceability (PA&T, formerly Security Products)

	2015/16	2014/15	Change
	£m	£m
Revenue	39.5	39.6	0%
Operating profit*	8.9	7.5	19%
Operating margin*	22.5%	18.9%	360bpts
*Segmental operating profit and operating margin are stated before exceptional items

Revenue was flat year on year at £39.5m (2014/15: £39.6m), with operating profit up 19% to £8.9m (2014/15: £7.5m). The higher operating margin was due to cost savings from the closure of the Dulles site in 2014/15.

We continued to focus on building reference customers in both the public and private sectors, aiming particularly at central governments and enterprises that produce high value goods or operate in highly regulated industries.

Our first track and trace solution DLR Certify™ was launched in April 2015 and successfully delivered to its first customer in November 2015.

Cash Processing Solutions (CPS)

	2015/16	2014/15	Change
	£m	£m
Revenue	33.9	50.7	(33%)
Operating profit*	(7.9)	0.4
*Segmental operating profit is stated before exceptional items

Sales volumes in Cash Processing Solutions (CPS) was affected by increased competition and adverse foreign exchange movement, which resulted in a 33% decline in revenue to £33.9m (2014/15: £50.7m) and an operating loss of £7.9m (2014/15: operating profit of £0.4m).

Following a 'root and branch' review initiated in November 2015, we decided to exit the cash processing market. The sale of the CPS business was completed on 22 May 2016.

FINANCE CHARGE

On a continuing operations basis, the Group's net interest charge was £4.8m (2014/15: £4.6m) reflecting an increase in the average level of net debt during the period. The IAS 19 related finance cost, which represents the difference between the interest on pension liabilities and assets was £7.1m (2014/15: £7.0m).

EXCEPTIONAL ITEMS

During the period exceptional items on continuing operations, summarised below, totalling £3.6m net, have been charged (2014/15: £16.9m net - see note 4 for details).

Site relocation and restructuring costs in 2015/16 were £9.2m net (2014/15: £2.8m net). Restructuring costs were incurred as part of the redesign of the organisation structure and the optimisation of manufacturing capabilities including the impact of the manufacturing footprint review which will reduce our banknote print production capacity from eight billion to six billion² notes a year.

The sale of surplus land in Overton generated a profit of £9.5m while surplus warranty provisions of £1.3m, previously charged as exceptional items (2014/15: £3.0m) were released in the period.

Following a review of capitalised assets, £5.2m of tangible assets within the Currency segment were written down representing assets linked with specific products whose future income streams are forecast to be insufficient to support the current carrying value.

The net cash cost of exceptional items for continuing operations in the period was £12.5m. £17.6m of cash costs related to prior periods and predominantly reflected the settlement of the invocation of guarantees provided for as a post balance sheet event in 2014/15.

Exceptional charges on discontinued operations were £26.0m - see note 3 for details. These related to the Cash Processing Solutions which was sold on 22 May 2016.

Site closure and restructuring costs in 2015/16 were £2.6m (2014/15: £1.9m) mainly reflecting the closure of the Brazil operation.

Asset impairments of £23.4m arising on the remeasurement of the disposal group to fair value less costs to sell have been recognised. The impairment has been applied to software intangibles of £1.6m, goodwill of £4.0m and inventories of £17.8m.

The cash costs for exceptional items, on discontinued operations, was £1.0m (2014/15: £1.7m).

CASH FLOW AND BORROWING

Underlying operating cash flow, comprising underlying operating profit adjusted for depreciation and the movement in working capital, was £100.2m (2014/15: £85.6m). This represents a cash conversion ratio (underlying operating cash flow divided by underlying operating profit) of 160% (2014/15:123%).

Net debt decreased by £4.9m to £106.1m (2014/15: £111.0m). This was predominantly from improved working capital with increased payments in advance received from customers.

The Group utilises a £250m revolving credit facility which expires in December 2019. The Group has operated well within the key financial covenants on this facility. These are that the ratio of EBIT to net interest payable be greater than four times and the net debt to EBITDA ratio be less than three times. At the period end the specific bank covenant tests were as follows: EBIT/net interest payable of 12.9 times and Net debt/EBITDA of 1.25 times.

CAPITAL STRUCTURE

At 26 March 2016 the Group had net liabilities of £145.6m (28 March 2015: £146.9m) mainly due to the recognition of the long term retirement benefit obligations of £219.9m (2014/15: £236.7m) in accordance with IAS 19.

The Company had shareholders' funds of £174.4m (2014/15: £199.6m) and had 101.4m fully paid ordinary shares in issue (2014/15: 101.1m) at the year end.

TAXATION

On a continuing operations basis, the net tax charge for the year was £6.3m (2014/15: £7.7m). The effective tax rate before exceptional items was 14.7% (2014/15: 17.6%). The tax rate is lower than the prior year primarily as a result of favourable changes to UK tax rates, reducing from 21% to 20% in the current year and further reducing to 18% from April 2020. The Group has also benefited from the increasing relief available under the UK Patent Box regime.

Net tax credits relating to exceptional items, on continuing operations, arising in the period were £1.8m (2014/15 £2.4m). In addition there was an exceptional credit of £0.5m (2014/15: £nil) in respect of the determination of the tax treatment of a prior year exceptional restructuring item.

PENSION DEFICIT AND FUNDING

During 2015/16, special funding payments of £19.1m (including scheme administration fees) were made to the Group's UK defined benefit pension scheme (closed to new members in 2010 and future accrual from April 2013). The Group's formal triennial funding valuation of the UK defined benefit pension scheme as at 5 April 2015 has not been finalised as the company and scheme Trustees continue discussions with the Pensions Regulator. The previous valuation took place on 5 April 2012 and identified that the scheme had a deficit of £180m. The Group had agreed with the scheme Trustees and Pension Regulator deficit funding payments to the scheme of £18.9m in 2016/17, rising by 4% per annum. Pending finalisation of the 2015 valuation, the special funding arrangements agreed in 2012 which aim to eliminate the deficit by 2022 remain unchanged.

Recognition of the current deficit in accordance with IFRS when combined with overseas unfunded obligations results in the negative net assets shown on the Group balance sheet.

The valuation of the UK pension scheme under IAS 19 principles indicates a pre-tax scheme deficit at 26 March 2016 of £217.6m (28 March 2015: £234.1m). The decrease of £16.5m is largely a reflection of the increase in the discount rate used to project the value of the scheme liabilities (3.5% in 2015/16 compared with 3.2% in the prior year) and the Group funding contributions. The decrease has been partly offset by an increase in the life expectancy of members and lower than expected returns of scheme assets.

In common with other final salary schemes the scheme valuation is very sensitive to any movement in the discount rate, with a 0.25% increase in discount rate resulting in a £49m decrease in liabilities or vice versa and hence the deficit would reduce should interest and discount rates increase in the future.

The charge to operating profit in respect of the UK defined benefit pension scheme for 2015/16 was £1.2m (2014/15: £1.1m). In addition, under IAS 19 there was a finance charge of £7.1m arising from the difference between the interest cost on liabilities and the interest income on scheme assets (2014/15: £7.0m).

EVENTS SINCE THE BALANCE SHEET DATE

Since the year end the following material non adjusting event has occurred:

On 22 May 2016 the sale of the Cash Processing Solutions business was completed. The net result will be recognised in the half year ending 24 September 2016. This estimated loss includes the loss on disposal of certain current assets and liabilities held for sale (refer to note 3), the recycling through the income statement of accumulated foreign exchange translation movements recorded in reserves and the estimated costs of disposal.

In addition to the cash payment upon completion and deferred cash payments there is also a contingent element of consideration which is dependent upon the disposed business meeting certain future targets. This contingent element of the consideration has not been factored into the estimated loss on disposal.

BOARD CHANGES

There have been significant changes to both the Board and the executive management team in the past year.

We have welcomed four new Board members since the AGM on 23 July 2015. Sabri Challah and Maria da Cunha joined the Board as Non-executive Directors to replace Warren East and Gill Rider who stood down after serving eight years and nine years respectively. Sabri Challah was appointed Chair of the Remuneration Committee in July 2015, replacing Gill Rider.

Jitesh Sodha, appointed in August 2015 to replace Colin Child as Chief Financial Officer, and the Group's Chief Operating Officer Rupert Middleton also joined the Board as an Executive Director after the AGM.

Victoria Jarman has informed the Board of her decision to step down after the AGM having served six years as a Non-executive Director. We are in the advanced stages of recruiting a new Non-executive Director to the Board whom we anticipate will succeed Victoria as Chair of the Audit Committee. We would like to thank Victoria for the significant contribution she has made during her time on the Board.

We believe that the current Board composition offers the right balance of experience and skills to provide insightful strategic guidance as well as robust corporate governance to the business.

OUTLOOK

The Group's 12 month closing order book of £365m¹ provides good visibility for the year ahead. Whilst, as previously announced, a material contract came to an end, we are confident we can mitigate the impact and our expectations for the current year are unchanged.

-ends-

Risk and risk management

Effective risk management requires collective responsibility and engagement across the entire business. The Board has overall responsibility for risk management and is supported by the Risk Committee which comprises members of De La Rue's Executive Leadership Team. The Risk Committee is accountable for identifying, mitigating and managing risk. Further details of this Committee can be found on page 48 of the De La Rue plc Annual Report 2016. We have a formal risk identification process, to evaluate and manage the significant risks we face in accordance with the requirements of the UK Corporate Governance Code. The Group risk register identifies the risks, their potential impact and likelihood of occurrence, and the key controls and management processes we have established to mitigate these risks. Each of the Group's functional areas also maintains a risk register. The Risk Committee meets twice each year to review our management of risk arising from our activities and to monitor the status of key risks and the actions we have taken to address them at Group and functional level. Regular risk reporting occurs at the monthly Executive Leadership Team meetings to highlight any material changes. The Audit Committee also reviews the Group's risk report and receives regular reports from the Executive Leadership Team on the material risks at a functional level. Management is responsible for implementing and maintaining controls. Controls by their nature are designed to manage rather than eliminate risk and can only provide reasonable but not absolute assurance against material misstatement or loss. See page 51 of the De La Rue plc Annual Report 2016 for further information regarding internal controls.

System of internal control

Our system of internal control is built on the pillars of effective governance, control and assurance. These are more fully described below:

Governance

• The Board and its various sub committees

• Annual strategic planning and budgeting

• Group central functions: finance, human resources, company secretariat and legal, health, safety and environment, security and global information services

• Delegated levels of authority

• A Group policy framework which contains the core polices covering finance, operational, people, legal and IS policies

• A system of monthly financial and operational reporting

• Annual objective setting and performance reviews for each employee

Control

• A detailed financial, operational, compliance, security, people and Information security control environment

• Site based control environments that meet Group, customer and local legal and regulatory requirements

• Operational processes governing quality management, research and development, enquiry to delivery management, health, safety and environment and security

Assurance

• Annual control self assessment declarations process

• Assurance provision through activities of internal HSE, quality, security and business continuity teams

• External audit activities

• Customer audits

• ISO audits

• Internal audit, which is subject to the controlling direction of the Audit Committee

• A 24/7 Whistleblowing hotline

• The Audit Committee assists the Board in discharging its responsibility to review the system of internal control

Financial risk management

Overview

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.

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 in note 13 to the financial statements of the De La Rue Plc Annual Report 2016, together with associated fair values

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.

(a) 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 and between 60 per cent and 100 per cent of forecast exposures in each major currency for the subsequent 12 months to the extent that forecast transactions are highly probable.

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The Group's policy is to manage the currency exposure arising from the net assets of the Group's foreign operations primarily through borrowings denominated in the relevant foreign currencies and through foreign currency swaps.

The Group's policy is not to hedge net investments in subsidiaries or the translation of profits or losses generated in overseas subsidiaries.

(b) Interest rate risk

All material financial assets and liabilities are maintained at floating rates of interest. Where the Group has forecast average levels of net debt above £50m on a continuing basis, floating to fixed interest rate swaps have been used to fix the interest rate on a minimum of 50 per cent of the Group's forecast average levels of net debt for a period of at least 12 months.

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 mainly by the individual characteristics of each customer. The demographics of the Group's customer base, including the default risk of the industry and country in which customers operate has less of an influence on credit risk. Geographically, there is no concentration of credit risk. Where appropriate, letters of credit are used to mitigate the credit risk from customers.

The Group has established a credit policy that ensures that sales of products are made to customers with an appropriate credit history. The Group has a policy to procure advance payments during order negotiation which further reduces credit risk. Derivative counterparties and cash transactions are limited to high credit quality financial institutions and the Group has policies that limit the amount of credit exposure to any one financial institution.

Principal risks and uncertainties

The following pages set out the principal risks and uncertainties facing the Group, which could crystallise over the next three years. The Board has undertaken a robust risk assessment to identify the Group's principle risks. The risks are not listed in order of materiality. There may be other risks that we currently believe to be immaterial, which could become material to the Group. These risks, whether they materialise individually or simultaneously, could significantly affect our business and financial results. We have modelled potential scenarios of these risks crystallising to support the disclosures in the Viability Statement. See page 17 of the De La Rue plc Annual Report 2016 for further details. Due to the very nature of risk, the mitigating factors stated cannot be viewed as assurance that the actions taken or planned will be wholly effective.

Strategic risks

Risk

Failure to maintain competitive and technologically advanced products and services.

Exposure

We operate in competitive markets. Our products and services are characterised by continually evolving industry standards and changing technology, driven by the demands of our customers. Longer term threats include the growth of e-commerce, cashless societies and increasing ease of manufacture.

Impact

Failure to maintain technical innovation and intellectual property may result in lower demand, loss of market share and lower margins.

Mitigation

We maintain sustained levels of investment in research and development to ensure a pipeline of ideas generation. Our product roadmaps are designed to deliver our customers' needs. We centralise our materials science expertise and our software science team in the UK. These teams deliver through defined technology management processes, which include regular pipeline and portfolio reviews.

We continue to invest in new technologies to enable us to advance our R&D capabilities. We have increased our focus on digital technologies since the strategy review in 2015.

We look to double our R&D investment in the five years to 2020.

Risk

Cultural change

Exposure

In order to ensure our continued success and growth, an internal organisational redesign took place in 2015/16. The focus in 2016/17 and beyond has been on achieving sustained cultural change in our organisation to be able to adapt to a rapidly changing market environment.

Impact

Without the culture change we seek to achieve, we may not be able to execute the strategy laid out in May 2015.

Mitigation

In 2015/16 we completed the formation of the new Executive Leadership Team. Extensive training on strategic leadership skills was rolled out to the Senior Leadership Team.

We have set specific targets for performance appraisal and employee engagement.

The strategic plan envisaged a three year programme of training, communication and recruitment to fill capability gaps. The outcome is expected to be a change in behaviours and skills that will allow De La Rue to be a more dynamic, agile and high performing organisation. The plan is on track.

Financial risks

Risk

The timing and size of substantial contract awards can be uneven and unpredictable.

Exposure

Political and other factors can delay government procurement decisions for sensitive products like banknotes and passports.

Impact

The timing and size of contract awards is often uncertain and delays in awards result in volatility in the order book and our financial performance.

Mitigation

We maintain close and regular contact with customers so that any changes in timing and requirements are recognised promptly.

We monitor sales activity, order pipeline and forward order book in order to ensure that our production planning is optimised to deliver on time and in full to our customers.

We also monitor any delays in order confirmation on a weekly basis to ensure that the supply chain remains flexible and is able to accommodate required production planning changes.

For the long term, we proactively pursue longer term commitment from customers, as well as aim to grow recurring revenues by expanding our digital and service offerings.

Risk

Failure to win or renew a material contract.

Exposure

While we operate globally and have a diversified geographic, product and customer profile, we rely heavily on a small number of medium and longer term material contracts.

Impact

Failure to win or renew a key contract could restrict growth opportunities and have a material impact on our financial performance and reputation.

Mitigation

Our track record of delivering product innovation and our commitment to quality, combined with a commercial approach to tendering, places us in a good position to win or renew strategic or significant contract opportunities.

The business is focused on retaining its key contracts, as and when they fall due for renewal, and on winning new opportunities as they arise.

Risk

Political risk.

Exposure

A number of the countries that we sell to have a history of unstable government or conflict. There is an ongoing risk that orders may be unexpectedly cancelled or cannot be fulfilled; outstanding debts do not get paid; or performance guarantees do not get cancelled because of local political issues leading to financial loss.

Impact

Losses from cancelled orders and non payment of debt could lead to a reduction in operating profit.

Mitigation

We assess overall risk of contract pre-tender, including credit risk. There are defined approval limits for management and the Board to approve material contracts based on risk as well as contract size.

We negotiate payment terms with substantial down payments requested in higher risk situations. Where a third party partner is involved in the sale process we incentivise the agent by only paying commission on payment of debts from the customer.

All performance guarantees are approved by the Treasury department prior to contract signature.

Operational risks

Risk

Quality management failure

Exposure

Each of our contracts has a unique specification on product quality and delivery. Some of these contracts demand a high degree of technical specification.

Impact

A shortfall in quality management may expose us to additional cost to remake and to warranty costs in the event of the need to remake.

Mitigation

We have an established quality management system operating across all of our production sites. Our major sites are all certified to ISO9001 quality management standards.

In 2013, an Operational Excellence programme was introduced to further drive continuous improvement across our manufacturing sites. This programme is well established and continues to drive enhancements to the operation.

Risk

Supplier failure.

Exposure

We have close trading relationships with a number of key suppliers. Some are unique producers of specialised components that we incorporate into our finished products.

Impact

Failure of a key supplier, the inability to source critical materials or poor supplier performance in terms of quality or delivery could disrupt our supply and ability to deliver on time and in full.

Mitigation

Our exposure is reduced by the fact that we source many of our components from within the De La Rue supply chain.

Where external supply is required, we have established procedures for identifying possible risks for each supplier. Key suppliers are managed through a supplier relationship management programme that includes checks on their financial strength, ability to deliver to our quality standards and security and business continuity arrangements. Key suppliers are audited on a rotational basis.

As a contingency, alternative suppliers are pre-qualified wherever possible and where necessary we retain higher levels of stocks.

Risk

Product security.

Exposure

Loss of product or high security components from a manufacturing site could occur as a result of negligence or theft. Loss of product while in transit, particularly during transhipment, through the failure of freight companies or through the loss of an aircraft or vessel as a result of an accident or natural disaster, is also possible.

Impact

There is the potential for reputational and financial damage in the event of the loss of product or high security components. Under contracts with our customers, we may be liable for those losses.

Mitigation

We have robust physical security and materials control procedures at our production sites, which reduce the risk of an inadvertent loss or theft during manufacturing. We apply stringent operational procedures and use carefully selected carriers and personnel to handle movements of security materials between our sites and onward delivery to customers. All movements are risk managed and monitored globally on a 24/7 basis. The Group maintains a comprehensive global insurance programme.

Risk

Health, safety or environmental failure.

Exposure

All of our activities are subject to extensive internal health, safety and environmental (HSE) procedures, processes and controls. Nevertheless, there is a risk that failure of process could result in a serious incident.

Impact

Failure of an HSE management process could lead to a serious injury or an environmental breach.

Mitigation

We operate a robust HSE management system which is internally audited and certified to the OHSAS18001 and ISO14001 standards in all major facilities.

All of our activities are subject to extensive internal HSE procedures, processes and controls.

The Group HSE Committee regularly reviews HSE performance which is also monitored by the Chief Operating Officer's leadership team and reported to the Board monthly.

Each manufacturing facility has clear HSE action plans which are prioritised, monitored and subject to review by local senior management to ensure that health and safety standards are maintained.

Risk

Loss of a key site.

Exposure

There are a number of manufacturing sites across the business which are exposed to business interruption risks.

Impact

The total loss of any one of these key sites could have a major financial impact, particularly where the site forms a single source of supply for the business.

Mitigation

We are accredited to ISO22301:2012 Business Continuity standard for our Head Office and the banknote production operations in Debden, UK.

The business has a high degree of interoperability between sites for banknote production and security printing. We aim to minimise risk by adopting the highest standards of risk engineering in our production processes.

In recognition of increasing customer requirements regarding business continuity standards, we continue to enhance our business continuity resilience in line with the ISO standard across all of our major facilities.

Legal and regulatory risks

Risk

Breach of legal and regulatory requirements.

Exposure

It is possible that employees or overseas representatives of De La Rue acting either individually or in collusion with others could act in contravention of the Group's stringent requirements in relation to bribery and corruption, anti-competitive behaviours and management of third party partners (TPPs).

Impact

Major reputational and financial damage to the business.

Mitigation

We are accredited to the Banknote Ethics Initiative. This accreditation provides governments and central banks with assurance in respect of maintenance of high ethical standards and business practices.

The ethical tone of the business is articulated in the Code of Business Principles which is supported by underlying policies. These are regularly reviewed and enforced robustly. Non-compliances are dealt with through disciplinary procedures where necessary.

Particular focus is given to ongoing awareness raising and training on anti-bribery and corruption and competition law. Our policies and processes are independently audited.

We have a process for the appointment, management and remuneration of TPPs which operates independently of the sales function. The behaviours of TPPs are strictly monitored and the TPP process is overseen by the General Counsel and Company Secretary who reports directly to the Board on these matters.

The Group's whistleblowing policy and procedure forms an integral part of the compliance framework.

Information risks

Risk

Information security risk.

Exposure

The confidentiality and integrity of our customer, employee and business data could be affected by factors that include human error, ineffective design or operation of key data security controls or through breakdown of IT control processes.

Impact

Any compromising of the confidentiality of information could impact our reputation with current and potential customers.

Mitigation

We maintain accreditation to the ISO27001 Information Security standard in respect of our corporate information systems.

A strict control environment exists to enforce disciplined information security practices and behaviours. There are a number of key technical controls in place to manage this risk including network segregation, access restrictions, system monitoring, security reviews and vulnerability assessments of infrastructure and applications.

We keep all aspects of information security arrangements under regular review and employees undertake mandatory information security e-learning.

Responsibility Statement of the Directors in respect of the Annual Report Announcement

The 2016 Annual Report and Accounts, which will be issued to shareholders on 17 June 2016, contain a responsibility statement in compliance with Rule 4.1.12 of the Financial Services Authority's Disclosure & Transparency Rules. This states that each of the Directors as at 24 May 2016, the date of approval of the 2016 Annual Report and Accounts, confirms that to the best of their knowledge:

(a) The Group Financial Statements, prepared in accordance with IFRS as adopted by the EU, 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

(b) The management report represented by the strategic and directors' reports includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face

The Board

The Board of Directors that held office at 26 March 2016 and their respective responsibilities can be found on pages 35 to 37 of the De La Rue plc Annual Report 2016.

For and on behalf of the Board

Philip Rogerson

Chairman

24 May 2016

GROUP INCOME STATEMENT For the period ended 26 March 2016
	Notes	2016 £m	Restated* 2015 £m
Revenue		454.5	422.8
Operating expenses - ordinary		(384.1)	(353.7)
Operating expenses - exceptional	4	(3.6)	(16.9)
Total operating expenses		(387.7)	(370.6)
Operating profit		66.8	52.2
Comprising:
Underlying operating profit		70.4	69.1
Exceptional items	4	(3.6)	(16.9)

Profit before interest and taxation		66.8	52.2
Interest income		0.1	0.1
Interest expense		(4.9)	(4.7)
Net retirement benefit obligation finance cost		(7.1)	(7.0)
Net finance expense		(11.9)	(11.6)
Profit before taxation		54.9	40.6
Comprising:
Underlying profit before tax		58.5	57.5
Exceptional items		(3.6)	(16.9)

Taxation	5	(6.3)	(7.7)
Profit for the year from continuing operations		48.6	32.9
Comprising:
Underlying profit for the year		49.9	47.4
Loss for the year on exceptional items		(1.3)	(14.5)
(Loss)/profit from discontinued operations		(31.0)	2.2

Profit for the year		17.6	35.1

Profit attributable to equity shareholders of the company Profit for the year from continuing operations Loss for the year from discontinuing operations Total profit for the year attributable to equity shareholders of the company		47.4 (31.0) 16.4	32.1 2.2 34.3

Profit attributable to non-controlling interests Profit for the year from continuing operations Profit for the year from discontinuing operations Total profit for the year attributable to non-controlling interests		1.2 - 1.2	0.8 - 0.8

		17.6	35.1
*2015 figures have been restated for the impact of discontinued operations - see note 3

Profit for the year attributable to the Company's equity holders

Notes

2016
£m

2015
£m

Earnings per share

Basic

Basic EPS continuing operations

Basic EPS discontinued operations

Total Basic Earnings per share

46.8p

(30.6p)

16.2p

31.8p

2.2p

34.0p

Diluted

Diluted EPS continuing operations

Diluted EPS discontinued operations

Total Diluted Earnings per share

46.2p

(30.2p)

16.0p

31.3p

2.1p

33.4p

Earnings per share - underlying

Basic

Basic EPS continuing operations

Basic EPS discontinued operations

Total Basic Earnings per share

48.1p

(7.1p)

41.0p

46.1p

1.8p

47.9p

Diluted

Diluted EPS continuing operations

Diluted EPS discontinued operations

Total Diluted Earnings per share

47.5p

(7.0p)

40.5p

45.5p

1.8p

47.2p

GROUP STATEMENT OF COMPREHENSIVE INCOME For the period ended 26 March 2016
	2016 £m	2015 £m
Profit for the year	17.6	35.1
Other comprehensive income
Items that are not reclassified subsequently to profit or loss:
Remeasurement losses on retirement benefit obligations	5.4	(79.1)
Tax related to remeasurement of net defined benefit liability	(5.4)	16.0
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences for foreign operations	1.5	(10.4)
Change in fair value of cash flow hedges	4.1	(7.3)
Change in fair value of cash flow hedges transferred to profit or loss	1.6	5.3
Change in fair value of cash flow hedges transferred to non-current assets	1.5	1.6
Income tax relating to components of other comprehensive income	(1.8)	(0.1)
Other comprehensive income for the year, net of tax	6.9	(74.0)
Total comprehensive income for the year	24.5	(38.9)
Comprehensive income for the year attributable to:
Equity shareholders of the Company	23.3	(39.7)
Non-controlling interests	1.2	0.8
	24.5	(38.9)

GROUP BALANCE SHEET At 26 March 2016
	2016 £m	2015 £m
Assets
Non-current assets
Property, plant and equipment	167.0	179.3
Intangible assets	13.4	16.6
Investments in associates and joint ventures	0.1	0.1
Deferred tax assets	41.6	47.7
Derivative financial assets	1.9	0.3
	224.0	244.0
Current assets
Inventories	67.1	71.2
Trade and other receivables	93.5	105.4
Current tax assets	1.3	2.2
Derivative financial assets	15.0	7.8
Cash and cash equivalents	40.5	30.8
Assets classified as held for sale	11.2	-
	228.6	217.4
Total assets	452.6	461.4
Liabilities
Current liabilities
Borrowings	(146.6)	(141.8)
Trade and other payables	(171.5)	(159.1)
Current tax liabilities	(17.6)	(19.6)
Derivative financial liabilities	(12.0)	(12.0)
Provisions for liabilities and charges Liabilities classified as held for sale	(9.0) (10.5)	(26.6) -
	(367.2)	(359.1)
Non-current liabilities
Retirement benefit obligations	(219.9)	(236.7)
Deferred tax liabilities	(1.6)	(1.1)
Derivative financial liabilities	(1.2)	(1.0)
Provisions for liabilities and charges	(6.9)	(3.5)
Other non-current liabilities	(1.4)	(6.9)
	(231.0)	(249.2)
Total liabilities	(598.2)	(608.3)
Net liabilities	(145.6)	(146.9)
Equity
Share capital	46.6	46.5
Share premium account	35.7	35.5
Capital redemption reserve	5.9	5.9
Hedge reserve	2.3	(3.5)
Cumulative translation adjustment	(12.3)	(13.8)
Other reserves	(83.8)	(83.8)
Retained earnings	(146.6)	(139.4)
Total equity attributable to shareholders of the Company	(152.2)	(152.6)
Non-controlling interests	6.6	5.7
Total equity	(145.6)	(146.9)

GROUP STATEMENT OF CHANGES IN EQUITY For the period ended 26 March 2016
	Attributable to equity shareholders							Non-controlling interests	Total equity
	Share capital £m	Share premium account £m	Capital redemption reserve £m	Hedge reserve £m	Cumulative translation adjustment £m	Other reserve £m	Retained earnings £m	£m	£m
Balance at 29 March 2014	46.3	35.3	5.9	(3.2)	(3.4)	(83.8)	(72.6)	5.1	(70.4)
Profit for the year	-	-	-	-	-	-	34.3	0.8	35.1
Other comprehensive income for the year, net of tax	-	-	-	(0.3)	(10.4)	-	(63.3)	-	(74.0)
Total comprehensive income for the year	-	-	-	(0.3)	(10.4)	-	(29.0)	0.8	(38.9)
Transactions with owners of the Company recognised directly in equity:
Share capital issued	0.2	0.2	-	-	-	-	-	-	0.4
Employee share scheme:
- value of services provided	-	-	-	-	-	-	(0.5)	-	(0.5)
Income tax on income and expenses recognised directly in equity	-	-	-	-	-	-	(0.5)	-	(0.5)
Dividends paid	-	-	-	-	-	-	(36.8)	(0.2)	(37.0)
Balance at 28 March 2015	46.5	35.5	5.9	(3.5)	(13.8)	(83.8)	(139.4)	5.7	(146.9)
Profit for the year	-	-	-	-	-	-	16.4	1.2	17.6
Other comprehensive income for the year, net of tax	-	-	-	5.8	1.5	-	(0.4)	-	6.9
Total comprehensive income for the year	-	-	-	5.8	1.5	-	16.0	1.2	24.5
Transactions with owners of the Company recognised directly in equity:
Share capital issued	0.1	0.2	-	-	-	-	-	-	0.3
Employee share scheme:
- value of services provided	-	-	-	-	-	-	2.4	-	2.4
Income tax on income and expenses recognised directly in equity	-	-	-	-	-	-	(0.3)	-	(0.3)
Dividends paid	-	-	-	-	-	-	(25.3)	(0.3)	(25.6)
Balance at 26 March 2016	46.6	35.7	5.9	2.3	(12.3)	(83.8)	(146.6)	6.6	(145.6)

GROUP CASH FLOW STATEMENT For the period ended 26 March 2016
	Notes	2016 £m	2015 £m
Cash flows from operating activities
Profit before tax		20.8	38.9
Adjustments for:
Finance income and expense		12.1	11.9
Depreciation		23.0	23.0
Amortisation		3.2	1.8
Decrease in inventory		5.0	5.7
(Increase)/decrease in trade and other receivables		(2.0)	0.1
Increase/(decrease) in trade and other payables		11.4	(5.4)
Increase/(decrease) in reorganisation provisions		0.4	(0.3)
Special pension fund contributions		(19.1)	(18.6)
(Profit)/loss on disposal of property, plant, equipment and software intangibles		(7.6)	2.2
Asset impairment		10.8	3.8
Other non-cash movements		0.9	0.5
Cash generated from operating activities		58.9	63.6
Tax paid		(4.7)	(9.3)
Net cash flows from operating activities		54.2	54.3
Cash flows from investing activities
Purchases of property, plant, equipment and software intangibles		(25.0)	(28.8)
Development assets capitalised		(3.0)	(5.1)
Proceeds from sale of property, plant and equipment		9.9	0.2
Net cash flows from investing activities		(18.1)	(33.7)
Net cash flows before financing activities		36.1	20.6
Cash flows from financing activities
Proceeds from issue of share capital		0.3	0.4
Proceeds from/(repayments of) borrowings		3.6	(6.8)
Interest received		0.1	0.2
Interest paid		(4.2)	(4.8)
Dividends paid to shareholders		(25.3)	(36.8)
Dividends paid to non-controlling interests		(0.3)	(0.2)
Net cash flows from financing activities		(25.8)	(48.0)
Net increase/(decrease) in cash and cash equivalents in the year		10.3	(27.4)
Cash and cash equivalents at the beginning of the year		28.9	56.2
Exchange rate effects		(1.3)	0.1
Cash and cash equivalents at the end of the year		37.9	28.9
Cash and cash equivalents consist of:
Cash at bank and in hand	9	40.5	28.6
Short term bank deposits	9	-	2.2
Bank overdrafts	9	(2.6)	(1.9)
	9	37.9	28.9

1 Basis of preparation and accounting policies

The preliminary announcement for the period ended 26 March 2016 has been prepared consistently with International Accounting Standards and International Financial Reporting Standards (collectively "IFRS") as adopted by the European Union (EU) at 26 March 2016. Details of the accounting policies applied are those set out in De La Rue plc's annual report 2015. For 2015/16 there is an additional accounting policy included in the Group Financial Statements covering Classification of assets held for resale which addresses the discontinued operations of the CPS business.

During the period a number of amendments to IFRS became effective and were adopted by the Group, none of which had a material impact on the Group's net cash flows, financial position, total comprehensive income or earnings per share.

A number of other new and amended IFRS were issued during the year, which do not become effective until after 27 March 2016. IFRS 15 Revenue from Contracts with Customers (effective for the year ending 30 March 2019, not yet endorsed by the EU) provides a single, principles based, five step model to be applied to all sales contracts. Based on a provisional assessment, IFRS 15 is not expected to have a significant impact on the timing of revenue recognition in the Group. The group will continue to assess the impact during 2016/17. Otherwise, none of the new or amended IFRSs are expected to have a material impact on the Group for the 2016/17 period.

In applying the accounting policies, management has made appropriate estimates in many areas, and the actual outcome may differ from those calculated. The key sources of estimation uncertainty at the balance sheet date were the same as those that applied to the consolidated financial statements of the Group for the period ended 28 March 2015, apart from an additional accounting policy included in the Group Financial Statements covering Classification of assets held for resale which addresses the discontinued operations of the CPS business.

The financial information set out above does not constitute the Group's statutory accounts for the periods ended 26 March 2016 or 28 March 2015. The financial information for the period ended 26 March 2016 is derived from the statutory accounts for the period ended 26 March 2016 which will be delivered to the registrar of companies. The auditor has reported on the accounts for the period ended 26 March 2016; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

These consolidated financial statements have been prepared on the going concern basis and using the historical cost convention, modified for certain items carried at fair value, as stated in the Group's accounting policies.

2 Segmental analysis

The continuing operations of the Group have three main operating units: Currency, Identity Solutions and Product Authentication and Traceability. 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 underlying operating profit, measured on an IFRS basis.

The Group's segments are:

· Currency - provides printed banknotes, banknote paper and polymer substrates and banknote security features

· Identity Solutions - involved in the provision of passport, ePassport, national ID and eID, driving licence and voter registration schemes

· Product Authentication and Traceability (previously Security Products) - produces security documents, including authentication labels, brand licensing products, government documents, cheques and postage stamps

Inter-segmental transactions are eliminated upon consolidation.

Discontinued operations - The Cash Processing Solutions (CPS) operation, primarily focused on the production of large banknote sorters and authentication machines for central banks, has been classified as a disposal group held for sale (see note 3).

2016	Currency	Identity Solutions	Product Authentication and Traceability	Unallocated	Total of Continuing operations	Discontinued operations	Total
	£m	£m	£m	£m	£m	£m	£m
Total revenue	353.3	65.8	39.5	-	458.6	33.9	492.5
Less: inter-segment revenue	(0.8)	-	(3.3)	-	(4.1)	(0.2)	(4.3)
Revenue	352.5	65.8	36.2	-	454.5	33.7	488.2
Underlying operating profit/(loss)	55.1	6.4	8.9	-	70.4	(7.9)	62.5
Exceptional items - operating (note 4, 3)	(13.1)	-	(0.5)	10.0	(3.6)	(26.0)	(29.6)
Operating profit/(loss)	42.0	6.4	8.4	10.0	66.8	(33.9)	32.9
Net interest expense				(4.8)	(4.8)	(0.2)	(5.0)
Retirement benefit obligations net finance expense				(7.1)	(7.1)	-	(7.1)
Profit/(loss) before taxation					54.9	(34.1)	20.8
Segment assets	238.4	38.9	20.8	143.3	441.4	11.2	452.6
Segment liabilities	(119.4)	(26.7)	(7.2)	(434.4)	(587.7)	(10.5)	(598.2)
Capital expenditure on property, plant and equipment	11.1	0.2	1.7	3.5	16.5	-	16.5
Capital expenditure on intangible assets	3.3	1.4	0.3	-	5.0	0.3	5.3
Depreciation of property, plant and equipment	17.0	2.6	1.4	2.0	23.0	-	23.0
Impairment of property, plant and equipment	5.2	-	-	-	5.2	-	5.2
Amortisation of intangible assets	2.2	0.7	0.1	-	3.0	0.2	3.2
Impairment of intangible assets	-	-	-	-	-	5.6	5.6

2015	Currency	Identity Solutions	Product Authentication and Traceability	Unallocated	Total of Continuing operations	Discontinued operations	Total
	£m	£m	£m	£m	£m	£m	£m
Total revenue	317.9	69.0	39.6	-	426.5	50.7	477.2
Less: inter-segment revenue	(0.8)	-	(2.9)	-	(3.7)	(1.4)	(5.1)
Revenue	317.1	69.0	36.7	-	422.8	49.3	472.1
Underlying operating profit/(loss)	50.5	11.1	7.5	-	69.1	0.4	69.5
Exceptional items - operating (note 4, 3)	(10.7)	-	(6.2)	-	(16.9)	(1.9)	(18.8)
Operating profit/(loss)	39.8	11.1	1.3	-	52.2	(1.5)	50.7
Net interest expense				(4.6)	(4.6)	(0.2)	(4.8)
Retirement benefit obligations net finance expense				(7.0)	(7.0)	-	(7.0)
Profit/(loss) before taxation					40.6	(1.7)	38.9
Segment assets	241.7	38.8	19.8	128.0	428.3	33.1	461.4
Segment liabilities	(128.8)	(21.6)	(9.1)	(437.7)	(597.2)	(11.1)	(608.3)
Capital expenditure on property, plant and equipment	19.6	0.9	1.0	1.8	23.3	-	23.3
Capital expenditure on intangible assets	3.8	0.6	0.9	-	5.3	1.0	6.3
Depreciation of property, plant and equipment	17.3	2.7	1.6	1.4	23.0	-	23.0
Amortisation of intangible assets	1.3	0.4	-	-	1.7	0.1	1.8
Impairment of intangible assets	-	-	3.8	-	3.8	-	3.8

Unallocated assets principally comprise deferred tax assets of £41.6m (2014/15: £47.7m), cash and cash equivalents of £40.5m (2014/15: £30.8m) which are used as part of the Group's financing offset arrangements and derivative financial instrument assets of £17.1m (2014/15: £8.1m) as well as current tax assets, associates and centrally managed property, plant and equipment.

Unallocated liabilities principally comprise retirement benefit obligations of £219.9m (2014/15: £236.7m), borrowings of £146.6m (2014/15: £141.8m), current tax liabilities of £17.6m (2014/15: £19.6m) and derivative financial instrument liabilities of £13.4m (2014/15: £13.0m) as well as deferred tax liabilities and centrally held accruals and provisions.

3 Discontinued Operations

The Cash Processing Solutions business (CPS) is presented as a disposal group held for sale following the conclusion of a root and branch review. The Board concluded that whilst CPS has a good product profile and long term customer relationships, it does not believe that this is a business which should form part of the Group's portfolio and has therefore decided to exit this market. This will enable the continuing Group to focus on its core business and future growth areas, as well as allow CPS to achieve its full potential under new dedicated ownership.

The CPS assets and liabilities that the group plans to dispose of were transferred into the disposal group at their carrying value. A charge of £23.4m arising on the remeasurement of the disposal group to the lower of the carrying amount and its fair value less costs to sell has been recognised in exceptional items. This has been applied first to non-current assets and then to inventory within the disposal group.

In line with IFRS 5 no remeasurement has been applied to financial assets. The fair value reflects the anticipated sales price to be achieved upon completion.

No UK pension liability will transfer with the disposal group.

Results of the discontinued operation including the disposal group held for sale
	2016 £m	2015 £m
Revenue	33.7	49.3
Operating expenses - ordinary	(41.6)	(48.9)
Operating expenses - exceptional	(26.0)	(1.9)
Total operating expenses	(67.6)	(50.8)
Operating loss	(33.9)	(1.5)
Comprising:
Underlying operating (loss)/profit	(7.9)	0.4
Exceptional items	(26.0)	(1.9)

Loss before interest and taxation	(33.9)	(1.5)
Interest income	-	0.1
Interest expense	(0.2)	(0.3)
Net finance expense	(0.2)	(0.2)
Loss before taxation	(34.1)	(1.7)
Comprising:
Underlying (loss)/profit before tax	(8.1)	0.2
Exceptional items	(26.0)	(1.9)
Taxation	3.1	3.9
(Loss)/profit from discontinued operations	(31.0)	2.2
Comprising:
Underlying (loss)/profit for the year	(7.2)	1.8
(Loss)/profit for the year on exceptional items	(23.8)	0.4

Assets/liabilities held for sale/disposal group
	2016 £m	2015 £m
Assets classified as held for sale
Derivative financial assets	0.2	-
Trade and other receivables	11.0	-
	11.2	-

	2016 £m	2015 £m
Liabilities classified as held for sale
Trade and other payables	(10.0)	-
Derivative financial liabilities	(0.3)	-
Provisions for liabilities and charges	(0.2)	-
	(10.5)	-

	2016 £m	2015 £m
Exceptional items on discontinued operations
Site closures and restructuring	(2.6)	(1.9)
Assessment of carrying value following classification as an asset for sale	(23.4)	-
Exceptional items	(26.0)	(1.9)

Tax credit on exceptional items	2.2	2.3

Site closure and restructuring costs in 2015/16 were £2.6m (2014/15: £1.9m) comprising £0.7m (2014/15: £1.5m) in staff compensation, and £1.9m (2014/15: £nil) for site exit costs and £nil (2014/15: £0.4m) in other associated reorganisation costs.

The cash cost for exceptional items in the period was £1.0m (2014/15: £1.7m).

Tax credits relating to the exceptional items arising in the period were £0.3m (2014/15: £0.4m). In addition there was an exceptional credit of £1.9m in respect of the determination of the tax treatment of prior year discontinued exceptional items (2014/15: £1.9m).

Accumulated foreign currency translation gains and losses within the disposal group held for sale

The Group has accumulated foreign currency translation gains and losses in relation to the entities included within the disposal group. IAS 21 requires recycling of these foreign currency translation gains or losses, which have previously been taken direct to reserves, through the income statement at the point of disposal. At 26 March 2016 these foreign exchange gains or losses have not been recycled. If a sale of the disposal group had been completed as at 26 March 2016 the amount that would have been recycled through the income statement is c£3.5m gain.

Subsequent to the year end the disposal of the CPS business has been completed, refer to note 10.

4 Exceptional items
	2016 £m	Restated 2015 £m
Site relocation and restructuring	(9.2)	(2.8)
Invocation of guarantees	-	(13.3)
Sale of land	9.5	-
Warranty provisions	1.3	3.0
Asset impairment	(5.2)	(3.8)
Exceptional items in operating profit	(3.6)	(16.9)

Tax credit on exceptional items	2.3	2.4

The £9.2m net exceptional operating charge in respect of site relocation and restructuring (2014/15: £2.8m) comprised £8.4m (2014/15: £2.8m) in staff compensation, £1.0m (2014/15: £1.9m) for site exit costs offset by credits on existing provisions of £0.2m (2104/15: £1.2m) in staff compensation and £nil (2014/15: £0.7m) for site exit costs. The £9.2m charge was split between the operating segments as follows: Currency £8.7m, Product Authentication and Traceability £0.5m.

The sale of surplus land in Overton generated a profit of £9.5m while surplus warranty provisions of £1.3m, previously charged as exceptional items (2014/15: £3.0m) were released in the period.

The net cash cost of exceptional items for continuing operations in the period was £12.5m. £17.6m of cash cost of exceptional items related to prior periods and predominantly reflected the settlement of the invocation of guarantees provided for as a post balance sheet event in 2014/15.

In addition the following exceptional items were incurred in the prior year: £13.3m of charges in relation to the invocation of guarantees and £3.8m write off on first generation software within the Product Authentication and Traceability segment.

Tax credits relating to continuing exceptional items arising in the period were £1.8m (2014/15 £2.4m). In addition there was an exceptional credit of £0.5m (2014/15: £nil) in respect of the determination of the tax treatment of a prior year exceptional restructuring item.

5 Taxation
	2016 £m	Restated 2015 £m
Consolidated income statement
Current tax:
UK corporation tax:
- Current tax	8.3	6.1
- Adjustment in respect of prior years	(0.1)	(1.2)
	8.2	4.9
Overseas tax charges:
- Current year	2.2	2.8
- Adjustment in respect of prior years	(0.7)	(0.3)
	1.5	2.5
Total current income tax charge	9.7	7.4
Deferred tax:
- Origination and reversal of temporary differences, UK	(3.3)	0.3
- Origination and reversal of temporary differences, overseas	(0.1)	-
Total deferred tax (credit)/charge	(3.4)	0.3
Income tax expense reported in the consolidated income statement in respect of continuing operations	6.3	7.7
Income tax expense in respect of discontinued operations (note 3)
Total income tax charge in the consolidated income statement	(3.1)	(3.9)
Tax on continuing operations attributable to:	3.2	3.8
Tax on continuing operations attributable to:
- Ordinary activities	8.6	10.1
- Exceptional items	(2.3)	(2.4)
Tax on discontinued operations attributable to:
- Ordinary activities	(0.9)	(1.6)
- Exceptional items	(2.2)	(2.3)
Consolidated statement of comprehensive income:
- On remeasurement of net defined benefit liability	5.4	(16.0)
- On cash flow hedges	1.4	(0.1)
- On foreign exchange on quasi-equity balances	0.4	0.2
Income tax (credit)/charge reported within comprehensive income	7.2	(15.9)
Consolidated statement of changes in equity:
- On share options	0.3	0.5
Income tax charge reported within equity	0.3	0.5

The tax on the Group's consolidated profit before tax differs from the UK tax rate of 21 per cent as follows:

	2016			Restated 2015
	Before exceptional items	Exceptional items	Total	Before exceptional items	Exceptional items	Total
	£m	£m	£m	£m	£m	£m
Profit before tax	58.5	(3.6)	54.9	57.5	(16.9)	40.6
Tax calculated at UK tax rate of 20 per cent (2014/15: 21 per cent)	11.7	(0.7)	11.0	12.1	(3.5)	8.6
Effects of overseas taxation	(1.1)	-	(1.1)	(1.4)	-	(1.4)
(Credits)/charges not allowable for tax purposes	(1.5)	0.8	(0.7)	1.1	0.9	2.0
(Decrease)/increase in unutilised tax losses	-	(1.9)	(1.9)	-	0.4	0.4
Adjustments in respect of prior years	(0.1)	(0.5)	(0.6)	(1.5)	(0.2)	(1.7)
Change in UK tax rate	(0.4)	-	(0.4)	(0.2)	-	(0.2)
Tax charge/(credit)	8.6	(2.3)	6.3	10.1	(2.4)	7.7
The underlying effective tax rate excluding exceptional items was 14.7 per cent (Restated 2014/15: 17.6 per cent).

6 Earnings per share
	2016 Continuing operations pence per share	2016 Discontinued operations pence per share	2016 Total pence per share	Restated 2015 Continuing operations pence per share	Restated 2015 Discontinued operations pence per share	Restated 2015 Total pence per share
Earnings per share
Basic earnings per share	46.8	(30.6)	16.2	31.8	2.2	34.0
Diluted earnings per share	46.2	(30.2)	16.0	31.3	2.1	33.4
Underlying earnings per share
Basic earnings per share	48.1	(7.1)	41.0	46.1	1.8	47.9
Diluted earnings per share	47.5	(7.0)	40.5	45.5	1.8	47.3
Basic earnings per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held in the employee share trust which are treated as cancelled. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted for the impact of the dilutive effect of share options. The Directors are of the opinion that the publication of the underlying earnings per share, before exceptional items, is useful to readers of the accounts as it gives an indication of underlying business performance. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

Earnings	2016 Continuing operations £m	2016 Discontinued operations £m	2016 Total £m	Restated 2015 Continuing operations £m	Restated 2015 Discontinued operations £m	Restated 2015 Total £m
Earnings for basic and diluted earnings per share	47.4	(31.0)	16.4	32.1	2.2	34.3
Exceptional items	3.6	26.0	29.6	16.9	1.9	18.8
Less: Tax on exceptional items	(2.3)	(2.2)	(4.5)	(2.4)	(2.3)	(4.7)
Earnings for underlying earnings per share	48.7	(7.2)	41.5	46.6	1.8	48.4

Weighted average number of ordinary shares	2016 Number m	2015 Number m
For basic earnings per share	101.3	101.0
Dilutive effect of share options	1.3	1.5
For diluted earnings per share	102.6	102.5

7 Equity dividends
	2016 £m	2015 £m
Final dividend for the period ended 29 March 2014 of 28.2p paid on 1 August 2014	-	28.5
Interim dividend for the period ended 27 September 2014 of 8.3p paid on 7 January 2015	-	8.3
Final dividend for the period ended 28 March 2015 of 16.7p paid on 1 August 2015	16.9	-
Interim dividend for the period ended 26 September 2015 of 8.3p paid on 6 January 2016	8.4	-
	25.3	36.8

A final dividend per equity share of 16.7p has been proposed for the period ended 26 March 2016. If approved by shareholders the dividend will be paid on 3 August 2016 to ordinary shareholders on the register at 24 June 2016. In accordance with IFRS accounting requirements this dividend has not been accrued in these consolidated financial statements.
8 Financial Instruments Carrying amounts versus fair values The fair value of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:
	Fair value measurement basis	Fair value - Discontinued operations 2016 £m	Fair value - Continuing operations 2016 £m	Carrying amount - Continuing operations 2016 £m	Total fair value 2016 £m	Total fair value 2015 £m	Carrying amount 2015 £m
Financial assets
Trade and other receivables⁽¹⁾		10.8	88.7	88.7	99.5	100.3	100.3
Cash and cash equivalents		-	40.5	40.5	40.5	30.8	30.8
Derivative financial instruments:
- Forward exchange contracts designated as cash flow hedges	Level 2	-	5.0	5.0	5.0	3.3	3.3
- Short duration swap contracts designated as fair value hedges	Level 2	-	0.1	0.1	0.1	0.1	0.1
- Foreign exchange fair value hedges - other economic hedges	Level 2	0.1	3.6	3.6	3.7	2.0	2.0
- Embedded derivatives	Level 2	0.1	8.2	8.2	8.3	2.7	2.7
- Interest rate swaps	Level 2	-	-	-	-	-	-
Total financial assets		11.0	146.1	146.1	157.1	139.2	139.2

Financial liabilities
Unsecured bank loans and overdrafts		-	(146.6)	(146.6)	(146.6)	(141.8)	(141.8)
Trade and other payables		(1.8)	(61.3)	(61.3)	(63.1)	(62.9)	(62.9)
Derivative financial instruments:
- Forward exchange contracts designated as cash flow hedges	Level 2	-	(1.8)	(1.8)	(1.8)	(7.7)	(7.7)
- Short duration swap contracts designated as fair value hedges	Level 2	-	(0.3)	(0.3)	(0.3)	(0.2)	(0.2)
- Foreign exchange fair value hedges - other economic hedges	Level 2	(0.3)	(10.1)	(10.1)	(10.4)	(3.4)	(3.4)
- Embedded derivatives	Level 2	-	(0.7)	(0.7)	(0.7)	(1.7)	(1.7)
- Interest rate swaps	Level 2	-	(0.3)	(0.3)	(0.3)	-	-
Total financial liabilities			(221.1)	(221.1)	(223.2)	(217.7)	(217.7)
(1) Excluding prepayments (2) Excluding accrued expenses, deferred income and payments received on account 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. 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, while 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.

9 Analysis of net debt
	2016 £m	2015 £m
Cash at bank and in hand	40.5	28.6
Short term bank deposits	-	2.2
Bank overdrafts	(2.6)	(1.9)
Total cash and cash equivalents	37.9	28.9
Borrowings due within one year	(144.0)	(139.9)
Net debt	(106.1)	(111.0)

10 Property, plant and equipment
	Land and buildings £m	Plant and machinery £m	Fixtures and fittings £m	In course of construction £m	Total £m
Cost
At 29 March 2014	65.6	352.2	29.2	18.7	465.7
Exchange differences	0.1	(10.0)	(0.2)	(0.2)	(10.3)
Additions	-	4.0	0.3	19.0	23.3
Transfers from assets in the course of construction	0.1	15.9	1.7	(17.7)	-
Disposals	(1.0)	(12.4)	(0.9)	(1.1)	(15.4)
At 28 March 2015	64.8	349.7	30.1	18.7	463.3
Exchange differences	0.4	4.9	0.3	0.2	5.8
Additions	-	7.0	0.2	9.3	16.5
Transfers from assets in the course of construction	0.2	14.8	1.6	(16.6)	-
Disposals	(0.1)	(5.4)	(2.3)	(1.6)	(9.4)
Transferred to assets classified as held for sale	(3.8)	(1.6)	(3.8)	-	(9.2)
At 26 March 2016	61.5	369.4	26.1	10.0	467.0
Accumulated depreciation
At 29 March 2014	27.8	233.9	19.7	-	281.4
Exchange differences	0.1	(7.4)	(0.1)	-	(7.4)
Depreciation charge for the year	1.7	19.8	1.5	-	23.0
Disposals	(0.8)	(11.8)	(0.4)	-	(13.0)
At 28 March 2015	28.8	234.5	20.7	-	284.0
Exchange differences	0.3	3.8	0.1	-	4.2
Depreciation charge for the year	1.6	19.4	2.0	-	23.0
Impairment	-	5.2	-	-	5.2
Disposals	-	(4.9)	(2.3)	-	(7.2)
Transferred to assets classified as held for sale	(3.8)	(1.6)	(3.8)	-	(9.2)
At 26 March 2016	26.9	256.4	16.7	-	300.0
Net book value at 26 March 2016	34.6	113.0	9.4	10.0	167.0
Net book value at 28 March 2015	36.0	115.2	9.4	18.7	179.3
Net book value at 29 March 2014	37.8	118.3	9.5	18.7	184.3

11 Retirement benefit obligations
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 major defined benefit pension schemes are based in the UK and are now closed to future accrual, with all members being deferred members or pensioners. The cost of providing benefits under each scheme is determined using the projected unit credit actuarial valuation method.
	2016 £m	2015 £m
UK defined benefit pension	(217.6)	(234.1)
Overseas defined benefit pension	(2.3)	(2.6)
Gross defined benefit pension	(219.9)	(236.7)
Deferred tax	39.9	47.6
Net defined benefit pension	(180.0)	(189.1)

The largest defined benefit pension scheme operated by the Group is in the UK. A full actuarial valuation of the scheme is currently being carried out by a qualified actuary as at 5 April 2015.
Changes in the fair value of UK plan assets:	2016 £m	2015 £m
At 28 March 2015 / 29 March 2014	891.6	773.9
Interest income on scheme assets	28.1	34.4
Scheme administration expenses	(1.2)	(1.1)
Return on scheme assets less interest income	(37.1)	98.7
Employer contributions and other income	19.2	18.9
Benefits paid (including transfers)	(38.7)	(33.2)
At 26 March 2016 / 28 March 2015	861.9	891.6

Changes in the fair value of UK defined benefit pension obligations:	2016 £m	2015 £m
At 28 March 2015 / 29 March 2014	(1,125.7)	(939.5)
Interest cost on liabilities	(35.2)	(41.4)
Effect of changes in financial assumptions	58.7	(178.5)
Effect of changes in demographic assumptions	(12.3)
Effect of experience items on liabilities	(3.7)	0.5
Benefits paid (including transfers)	38.7	33.2
At 26 March 2016 / 28 March 2015	(1,079.5)	(1,125.7)

Amounts recognised in the consolidated balance sheet:	2016 £m	2015 £m
Equities	303.9	311.0
Bonds	100.1	104.5
Gilts	156.7	157.1
Diversified Growth Fund	186.3	193.7
Liability Driven Investment Fund	90.3	97.1
Other	24.6	28.2
Fair value of scheme assets	861.9	891.6
Present value of funded obligations	(1,072.2)	(1,117.6)
Funded defined benefit pension schemes	(210.3)	(226.0)
Present value of unfunded obligations	(7.3)	(8.1)
Net liability	(217.6)	(234.1)

Amounts recognised in the consolidated income statement:	2016 £m	2015 £m
Included in employee benefits expense:
- Administrative expenses and taxes	(1.2)	(1.1)
Included in interest on retirement benefit obligation net finance expense
- Interest income on scheme assets	28.1	34.4
- Interest cost on liabilities	(35.2)	(41.4)
Retirement benefit obligation net finance expense	(7.1)	(7.0)
Total recognised in the consolidated income statement	(8.3)	(8.1)
Return on scheme assets excluding interest income	(37.1)	98.7
Remeasurement (losses)/gains on defined benefit pension obligations	42.7	(178.0)
Amounts recognised in other comprehensive income	5.6	(79.3)

Principal actuarial assumptions:
	2016 UK %	2015 UK %
Future pension increases - past service	3.60	3.60
Discount rate	3.50	3.20
RPI Inflation rate	3.10	3.10

The financial assumptions adopted as at 26 March 2016 reflect the duration of the scheme liabilities which has been estimated to be 19 years. At 26 March 2016 mortality assumptions were based on tables issued by Club Vita, with future improvements in line with the CMI model, CMI_2013 and a long term rate of 1.25 per cent per annum. This assumption has been updated from that used in 2014/15 based on the expected assumption to be used at the 5 April 2015 funding valuation but removing a margin for prudence. The resulting life expectancies within retirement are as follows:
	2016	2015
Aged 65 retiring immediately (current pensioner) - Male	23.0	22.2
Aged 65 retiring immediately (current pensioner) - Female	24.4	24.6
Aged 50 retiring in 17 years (future pensioner) - Male	24.1	21.6
Aged 50 retiring in 17 years (future pensioner) - Female	26.9	24.0

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 pension schemes invest in a range of assets to mitigate the risk of any single asset class, and align growth and returns to the long term funding objectives. The investment strategy is reviewed regularly to ensure it continues to be appropriate. Inflation risk - The liabilities of the scheme are linked to inflation. An increase in inflation will result in an increase in liabilities. There are caps in place for UK scheme benefits to mitigate the risk of extreme increases in inflation. Liability driven investment strategies are used to hedge part of this risk. Any increase in the retirement benefit obligation could lead to additional funding obligations in future years. During 2015/16, the Group made special funding payments of £19.1m (including scheme administration fees). The Group had agreed with the scheme Trustees and the Pensions Regulator deficit funding payments to the scheme of £18.9m in 2016/17, rising by 4 per cent per annum. Pending finalisation of the 2015 valuation, the special funding arrangements agreed in 2012 which aim to eliminate the deficit by 2022 remain unchanged.
12 Related party transactions
During the year the Group traded on an arms length basis with the associated company Fidink S.A. (33.3 per cent owned). The Group's trading activities with this company included £24.2m (2014/15: £24.4m) for the purchase of security ink and other consumables. At the balance sheet date there were creditor balances of £3.2m (2014/15: £5.7m) with Fidink S.A. Intra-Group transactions between the parent and the fully consolidated subsidiaries or between fully consolidated subsidiaries are eliminated on consolidation.
Key management compensation
	2016 £'000	2015 £'000
Salaries and other short term employee benefits	3,356.6	3,222.7
Termination benefits	237.7	158.0
Retirement benefits:
- Defined contribution	230.4	168.1
Share based payments	827.0	(163.4)
	4,651.7	3,385.4

Key management comprises members of the Board (including the fees of Non-executive Directors) and the Executive Leadership Team. Termination benefits includes 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.

13 Contingent liabilities

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, contingent liabilities can arise. While the outcome of litigation and disputes can never be predicted with certainty, having regard to legal advice received and the insurance arrangements of the Company and its subsidiaries, the Directors believe that adequate provision has been made to cover these matters. The Group also provides guarantees and performance bonds which are issued in the ordinary course of business. In the event that a guarantee or bond is called, provision may be required subject to the particular circumstances, including an assessment of its recoverability.

The Company has received notification from the relevant UK law enforcement authorities that they have closed their investigation related to certain paper mis-certification issues in 2010. No action has been taken against the Company.

14 Events since the balance sheet date

Since the year end the following material events have occurred:

Non-adjusting event

On 22 May 2016 the sale of the Cash Processing Solutions business was completed. The sale is expected to result in a profit on disposal in the range of £nil to £3m, which will be recognised in the half year ending 24 September 2016. This estimated profit includes the loss on disposal of certain current assets and certain liabilities held for sale (refer to note 3), and the recycling through the income statement of accumulated foreign exchange translation gains recorded in reserves and the estimated costs of disposal.

15 Capital commitments
	2016 £m	2015 £m
The following commitments existed at the balance sheet date:
- Contracted but not provided for in the accounts	10.3	4.4

16 Dates

The consolidated accounts have been prepared as at 26 March 2016, being the last Saturday in March. The comparatives for the 2014/15 financial year are for the period ended 28 March 2015.

17 Statutory accounts

Statutory accounts for the period ended 26 March 2016 will be made available to shareholders for subsequent approval at the Annual General Meeting and copies will be available from the Company Secretary at De La Rue plc, De La Rue House, Jays Close, Viables, Hampshire, RG22 4BS.

18 Foreign exchange
Principal exchange rates used in translating the Group's results:
	2015/16		2014/15
	Average	Year End	Average	Year End
US dollar	1.50	1.41	1.61	1.49
Euro	1.36	1.27	1.28	1.37

19 De La Rue financial calendar : 2016/17
Ex-dividend date for 2015/16 final dividend	23 June 2016
Record date for final dividend	24 June 2016
Annual General Meeting	21 July 2016
Payment of 2015/16 final dividend	3 August 2016

This information is provided by RNS

The company news service from the London Stock Exchange

END

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