TIDMDLAR

RNS Number : 4316C

De La Rue PLC

18 June 2021

De La Rue plc

Annual Financial Report & Notice of Annual General Meeting

Further to the announcement of its 2020/21 full year results on 26 May 2021 (the "Results Announcement"), De La Rue plc (the "Company") announces that it has today posted to shareholders and has submitted to the National Storage Mechanism, copies of the following documents:

   --    Annual Report and Accounts 2021 (the "Annual Report and Accounts ") 
   --    Circular relating to the Annual General Meeting to be held on 29 July 2021 
   --    Forms of Proxy for shareholders to vote at the Annual General Meeting 

As required by LR 9.6.1 R, these documents will shortly be available for inspection on the National Storage Mechanism https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

As required by DTR 6.3.5 R (3), the Company confirms that the Annual Report and Accounts and the Circular relating to the Annual General Meeting are now available to view or download in pdf format from the Company's corporate website, www.delarue.com/ investors/agm-information-2021 .

The appendix to this announcement contains the following additional information which has been extracted from the Annual Report and Accounts for the purposes of compliance with DTR 6.3.5 R and should be read together with the Results Announcement, which can also be downloaded from the Company's corporate website:

   --    A statement on the principal risk and uncertainties 
   --    A statement on related party transactions 

Together these constitute the information required by DTR 6.3.5 R which is required to be communicated to the media in unedited full text through a Regulatory Information Service.

Physical attendance and Voting at the Annual General Meeting

In light of the evolving guidance from the UK Government in relation to the COVID-19 pandemic and specifically the potential for restrictions on travel and large gatherings to be imposed at short notice, we are asking our shareholders not to attend the Annual General Meeting in person this year and to submit their proxy form in advance, appointing the Chairman of the meeting as their proxy rather than a named person. Instructions on how to vote can be found on the Proxy Form enclosed with the Notice of AGM.

However, we value our engagement with all our shareholders and will therefore be providing an audio webcast of the meeting so that shareholders can follow the Annual General Meeting online. Full details of how the webcast will work are available on the Company's website, www.delarue.com .

Jane Hyde

Company Secretary

01256 605212

18 June 2021

De La Rue plc's LEI code is 213800DH741LZWIJXP78

Appendix

Principal risk and uncertainties

Certain of the principal risks and uncertainties which were set out in the 2020 annual report no longer appear on our principal risk register. These include: reliance on a small number of large orders, banking, failure to convert modernisation into value, loss of material contract, pension fund liability and failure in health, safety and environment controls. Due to the changing nature of the Group's risk profile, in particular taking account of the progress of the Turnaround Plan and the Group's business transformation, the Board believes these matters no longer represent principal risks and, to the extent relevant, are now monitored as operational risks.

 
Key for strategic focus 
---------------------------------------------------------    -------------------------------------------    ----- 
1 Value stream excellence    2 Currency market leadership    3 Continued strong growth in Authentication 
-------------------------    ----------------------------    ------------------------------------------- 
 
 
 
 Exposure                Impact                       Mitigation                     Impact   Outlook 
 Bribery and corruption 
 It is possible          Major reputational           We have Level 1                1 ,2,    No change 
  that our employees      and financial damage.        accreditation to               3 
  or overseas             A successful prosecution     the Banknote Ethics 
  representatives,        under anti-bribery           Initiative (last 
  either individually     legislation could            recertification 
  or in collusion         see the Company              in 2020 following 
  with others,            barred from participating    external audit), 
  could act in            in major tenders.            which provides 
  contravention                                        governments and 
  of our stringent                                     central banks with 
  requirements                                         assurance regarding 
  in relation                                          our ethical standards 
  to bribery and                                       and business practices. 
  corruption,                                          Our commitment 
  anti-competitive                                     to ethical standards 
  behaviours and                                       is articulated 
  management of                                        in the Code of 
  third-party                                          Business Principles. 
  partners (TPPs).                                     This is supported 
  On 23 July 2019,                                     by underlying policies 
  the Company                                          which are reviewed 
  announced that                                       regularly and enforced 
  the Serious                                          robustly. There 
  Fraud Office                                         is zero tolerance 
  had opened an                                        to non-compliance, 
  investigation                                        and it is dealt 
  into the Group                                       with through disciplinary 
  and its associated                                   procedures. 
  persons in relation                                  We have a focus 
  to suspected                                         on raising awareness 
  corruption in                                        through local Ethics 
  the conduct                                          Champions as well 
  of business                                          as training on 
  in South Sudan.                                      anti-bribery and 
  As announced                                         corruption, and 
  by the Company                                       competition law. 
  on 16 June 2020,                                     Our policies and 
  the SFO subsequently                                 processes are independently 
  informed the                                         audited. 
  Company of its                                       Our rigorous process 
  decision to                                          for the appointment, 
  discontinue                                          management and 
  such investigation.                                  remuneration of 
                                                       TPPs 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. 
                                                       This is further 
                                                       enhanced by external 
                                                       due diligence checks. 
                                                       Our whistleblowing 
                                                       policy and associated 
                                                       procedures are 
                                                       integral aspects 
                                                       of the compliance 
                                                       framework, which 
                                                       is complemented 
                                                       by a whistleblowing 
                                                       hotline. 
                        ---------------------------  -----------------------------  -------  ---------- 
 
 
 Exposure                  Impact                     Mitigation                Impact   Outlook 
 Quality management and delivery failure 
 Each of our               A shortfall in             We operate an enhanced    1 ,2,    No change 
  contracts has             quality management         end to end quality        3 
  a unique specification    could have a material      management system 
  on product quality        adverse impact             with defined standards 
  and delivery.             on the Group's             and acceptable 
  Given the nature          relationship with          limits for all 
  of the Group's            key customers,             products across 
  business and              harm the Group's           all production 
  the fact that             reputation, and            sites. The process 
  each product              may lead to a material     is run by dedicated 
  the Group makes           increase in costs          quality professionals. 
  and each service          for the Group as           All manufacturing 
  the Group provides        a result of it             sites are certified 
  is bespoke at             having to pay damages      to ISO 9001:2015 
  some level,               in respect of the          quality management 
  many of these             late delivery,             system standards. 
  contracts demand          rectification and/or 
  a high degree             the complete remake 
  of technical              of relevant products 
  specification.            and/or the termination 
                            of key contracts. 
                            This could have 
                            a material adverse 
                            effect on the Group's 
                            business, operations 
                            and financial condition 
                            and/or prospects. 
                          -------------------------  ------------------------  -------  ---------- 
 
 
 Exposure                   Impact                   Mitigation                Impact   Outlook 
 Failure to implement the Turnaround Plan and run the business 
 Our business               As a result, key         The business has          1 ,2,    Decreasing 
  has seen a considerable    processes may break      developed a strong        3 
  level of organisational    down and projects        leadership commitment 
  change and it              may fail to meet         and an aligned 
  is a possibility           milestones, resulting    Executive Leadership 
  that business              in operational           Team. 
  leaders may                disruption, financial    We are executing 
  be unable to               loss and serious         the Turnaround 
  sustainably                consequences for         Plan to: 
  manage the level           the business             1. Provide clear 
  of change required                                  objectives classified 
  to simultaneously                                   into Run, Fix and 
  Transform and                                       Transform. 
  Fix the business                                    2. Cascade clear 
  (enact the Turnaround                               and concise objectives 
  Plan) while                                         via business units 
  ensuring that                                       and support functions, 
  day to day business                                 to provide line 
  goals are achieved.                                 of sight to strategy 
  The risk is                                         and link business 
  further exacerbated                                 as usual with longer 
  by the potential                                    term goals. 
  impacts of the                                      3. Provide a robust 
  COVID-19 pandemic.                                  prioritisation 
                                                      process with regular 
                                                      reviews of programmes 
                                                      and projects. 
                                                      Our aim is to continue 
                                                      to provide clear 
                                                      process improvement 
                                                      programmes across 
                                                      several areas of 
                                                      the business. 
                           -----------------------  ------------------------  -------  ----------- 
 
 
 Exposure                 Impact                  Mitigation                      Impact   Outlook 
 Loss of a key site or process 
 All our manufacturing    The total loss          All our manufacturing           1 ,2,    No change 
  sites are                of any one of these     sites and Head Office           3 
  exposed to               sites could have        are certified to 
  business interruption    a major financial       the ISO 22301: 2019 
  risks.                   impact, particularly    Business Continuity 
                           where the site          standard, under 
                           represents a single     a single, Group 
                           source of supply.       level certification. 
                                                   Although we coordinate 
                                                   business continuity 
                                                   risk centrally, 
                                                   each site has a 
                                                   business continuity 
                                                   advisor and focal 
                                                   point for all continuity 
                                                   and resilience matters. 
                                                   We maintain a degree 
                                                   of interoperability 
                                                   across all our manufacturing 
                                                   sites, and where 
                                                   this is not possible 
                                                   look to partner 
                                                   with the appropriate 
                                                   third party. We 
                                                   aim to minimise 
                                                   risk by adopting 
                                                   the highest standards 
                                                   of risk engineering 
                                                   in our production 
                                                   processes. We also 
                                                   maintain business 
                                                   continuity stock 
                                                   as appropriate. 
                                                   These controls are 
                                                   monitored via internal 
                                                   auditing and through 
                                                   monthly business 
                                                   continuity reporting, 
                                                   quarterly business 
                                                   continuity management 
                                                   steering committee 
                                                   meetings and regular 
                                                   ELT, Risk and Audit 
                                                   Committee meetings. 
                         ----------------------  ------------------------------  -------  ---------- 
 
 
 Exposure                    Impact                       Mitigation                 Impact   Outlook 
 Sustainability and climate change 
 We recognise                Moving towards               De La Rue have             2, 3     Increasing 
  that the business           carbon neutrality            set a goal to reach 
  must undergo                is a competitive             carbon net zero 
  a climate change-related    and an ethical               by 2030 in our 
  transition by               necessity within             own operations 
  addressing carbon           our business. Our            and the areas under 
  reduction, energy           customer base is             our own operational 
  usage, waste                becoming more demanding      control. We have 
  management and              in this area placing         commenced a "Transform 
  use of plastics             pressures on their           Sustainability" 
  in our operations.          supply chains,               programme to address 
  Governments,                including our business       the key areas of 
  the financial               and our material             energy reduction, 
  community and               suppliers. The               increasing our 
  industries,                 impact of not addressing     use of renewables, 
  including our               this could be significant    reducing our waste 
  own business                and result in loss           and reducing our 
  and our customers',         of business and              reliance on the 
  see the 2020s               reputational damage.         use of plastics 
  as a call to                                             in packaging. We 
  action, with                                             are also focusing 
  major new commitments                                    on providing recycling 
  to achieving                                             solutions for end 
  net zero carbon                                          of life polymer 
  emissions.                                               banknote products. 
                                                           We continue to 
                                                           work with our customers 
                                                           and partners to 
                                                           reduce the carbon 
                                                           impact of our products. 
                            ---------------------------  -------------------------  -------  ----------- 
 
 
 Exposure                Impact                   Mitigation                  Impact   Outlook 
 Breach of information security 
 A breakdown             Any compromise           Our corporate information   1 ,2,    No change 
  in the control          in the software          security management         3 
  environment             functionality or         system is certified 
  including collusion,    confidentiality          to the ISO27001:2013 
  non-compliance          of information           Information Security 
  or an external          could impact our         standard. This 
  attack could            reputation with          is supported by 
  lead to a cyber         current and potential    an independent 
  security breach         customers.               information security 
  resulting in                                     team which is focused 
  the loss of                                      on ensuring that 
  critical data.                                   all hardware and 
                                                   software deployed 
                                                   is compliant with 
                                                   built in security. 
                                                   We maintain a strict 
                                                   control environment 
                                                   to enforce disciplined 
                                                   software development 
                                                   and information 
                                                   security practices 
                                                   and behaviours. 
                                                   Several key technical 
                                                   controls are in 
                                                   place to manage 
                                                   this risk, including 
                                                   agile software 
                                                   development techniques, 
                                                   behaviour analytics, 
                                                   quality reviews, 
                                                   regular testing, 
                                                   network segregation, 
                                                   access restrictions, 
                                                   system monitoring, 
                                                   security reviews 
                                                   and vulnerability 
                                                   assessments of 
                                                   infrastructure 
                                                   and applications. 
                                                   We also conduct 
                                                   supplier reviews 
                                                   on a risk basis 
                                                   and ensure all 
                                                   our employees undertake 
                                                   mandatory information 
                                                   security 
                                                   e-learning. 
                                                   Our processes and 
                                                   policies are monitored 
                                                   and audited internally 
                                                   and externally. 
                        -----------------------  --------------------------  -------  ---------- 
 
 
 Exposure                 Impact                      Mitigation                  Impact   Outlook 
 Failure of a key supplier 
 We have close            Failure of a key            Key suppliers are           2, 3     No change 
  trading relationships    supplier, the inability     monitored and managed 
  with several             to source critical          through supplier 
  key suppliers,           materials or poor           analytics, contract 
  including unique         supplier performance        management programmes 
  producers of             in terms of quality         and digitised contract 
  specialised              or delivery could           management tools. 
  components that          disrupt our supply          This ensures that 
  we incorporate           and ability to              all key supplier 
  into our finished        deliver on time             contracts have 
  products.                and in full. This           been reviewed on 
                           could result in             their financial 
                           the payment of              strength and their 
                           damages and/or              ability to deliver 
                           forfeiting performance      to our quality 
                           bonds or loss of            standards and security, 
                           contracts and result        as well as their 
                           in material reputational    business continuity 
                           damage.                     arrangements as 
                                                       a part of the onboarding 
                                                       process. Key suppliers 
                                                       are audited on 
                                                       a rotational basis 
                                                       and have a recovery 
                                                       plan in case of 
                                                       failure. 
                                                       As a contingency, 
                                                       alternative suppliers 
                                                       are pre-qualified 
                                                       wherever possible 
                                                       and where necessary 
                                                       we retain higher 
                                                       levels of stocks. 
                         --------------------------  --------------------------  -------  ---------- 
 
 
 Exposure                Impact                       Mitigation                     Impact   Outlook 
 Breach of product security 
 Loss of product         Any loss of product          We have dedicated              2, 3     No change 
  or high security        or high security             security personnel, 
  components from         components has               robust standardised 
  a manufacturing         the potential to             physical security 
  site could occur        cause reputational           and materials control 
  as a result             and financial damage.        policies and procedures 
  of negligence           In certain circumstances,    at our production 
  or theft. Loss          customer contracts           sites, which reduce 
  of product while        may mean that we             the risk of inadvertent 
  in transit,             are liable for               loss or theft during 
  particularly            those losses.                manufacturing. 
  during transhipment,                                 This is overseen 
  through the                                          and monitored by 
  failure of freight                                   Group Security, 
  companies or                                         HSE and Risk to 
  through the                                          ensure compliance. 
  loss of an aircraft                                  Vetting of personnel, 
  or vessel as                                         training and auditing 
  a result of                                          is conducted in 
  an accident                                          line with the Group 
  or natural disaster,                                 Baseline Security 
  is also possible.                                    Manual (our security 
                                                       policies). All 
                                                       manufacturing sites 
                                                       are now vertically 
                                                       aligned to ISO14298:2013 
                                                       and INTERGRAF certification 
                                                       Requirements. All 
                                                       the finished product 
                                                       manufacturing sites 
                                                       certified to Central 
                                                       Bank level, as 
                                                       testament of our 
                                                       commitment to product 
                                                       security. 
                                                       We apply risk assessed 
                                                       stringent operational 
                                                       procedures - and 
                                                       use vetted and 
                                                       approved carriers 
                                                       and personnel - 
                                                       to handle movements 
                                                       of security materials 
                                                       between our sites 
                                                       and onward delivery 
                                                       to customers. All 
                                                       movements are monitored, 
                                                       risk managed and 
                                                       conducted in line 
                                                       with Transported 
                                                       Asset Protection 
                                                       Association standards. 
                                                       We ensure that 
                                                       product security 
                                                       verification and 
                                                       reconciliation 
                                                       are embedded and 
                                                       monitored throughout 
                                                       all sites to ensure 
                                                       that product is 
                                                       stored, shipped, 
                                                       reconciled and 
                                                       destroyed securely 
                                                       and safely. We 
                                                       also maintain a 
                                                       comprehensive global 
                                                       insurance programme. 
                        ---------------------------  -----------------------------  -------  ---------- 
 
 
 Exposure               Impact                      Mitigation                  Impact   Outlook 
 Sanctions 
 Entering a contract    Breach could result         We utilise strong           2, 3     No change 
  or other commitment    in imprisonment             policies and processes 
  with a customer,       and/or substantial          to ensure national 
  supplier or            fines for individuals,      and international 
  partner which          the leadership              sanction compliance. 
  is subject to          team, the Board             This is overseen 
  a sanction or          and the Company.            by the Sanctions 
  trade embargo          In addition, it             Board and internal 
  could lead De          may lead to a withdrawal    and external auditing 
  La Rue to be           of our banking              of the programme. 
  in breach of           facilities, as              Commercial opportunities 
  sanctions.             well as disbarment          are considered 
                         from future tenders.        against the sanction 
                                                     risk as standard 
                                                     within the request 
                                                     for approval process 
                                                     and we utilise 
                                                     customer relationship 
                                                     management systems 
                                                     to identify medium 
                                                     and high sanction 
                                                     risk opportunities. 
                                                     If identified these 
                                                     are investigated 
                                                     by legal, treasury 
                                                     and commercial 
                                                     teams to ensure 
                                                     compliance. 
                       --------------------------  --------------------------  -------  ---------- 
 
 
 Exposure                  Impact                      Mitigation                 Impact   Outlook 
 COVID-19 
 The COVID-19              If the COVID-19             As part of De La           1 ,2,    Decreasing 
  pandemic could            pandemic continues          Rue's response             3 
  have a material           and results in              to COVID-19, the 
  adverse effect            a prolonged period          business has invoked 
  on the Group's            of onerous restrictions,    a long-standing 
  supply chain,             there is potential          Pandemic Incident 
  distribution              impact to the global        Management Plan 
  network, manufacturing    supply and distribution     throughout the 
  operations and/or         infrastructure              Group, and all 
  weakening customer        of the business.            sites are working 
  demand.                   If current measures         towards the following 
                            fail to adequately          four key objectives: 
                            mitigate the impact         1. Ensuring the 
                            of the COVID-19             safety of our employees 
                            pandemic in the             and their families. 
                            countries in which          2. Playing our 
                            the Group has a             part in restricting 
                            manufacturing presence,     the spread of the 
                            there is also a             virus. 
                            risk that one or            3. Continuing to 
                            more of the Group's         run the business, 
                            manufacturing sites         serving our customers 
                            may be forced to            worldwide with 
                            partially or fully          the timely provision 
                            cease operations            of high-quality 
                            for a prolonged             products and services. 
                            period as a result          4. Ensuring that 
                            of the introduction         De La Rue emerges 
                            of more stringent           resilient to the 
                            restrictions by             impact of the pandemic. 
                            the relevant authorities    Our manufacturing 
                            and/or the absence          sites are spread 
                            of a significant            across several 
                            number of employees         sites in the UK, 
                            for COVID-19 related        Malta, Kenya, North 
                            reasons.                    America and Sri 
                                                        Lanka which allows 
                                                        us the ability 
                                                        to reprioritise 
                                                        and potentially 
                                                        relocate production 
                                                        in the event of 
                                                        a business continuity 
                                                        incident. 
                          --------------------------  -------------------------  -------  ----------- 
 

Related Party Transactions (note 30 to the 2020/21 Financial Statements)

During the year the Group traded on an arm's length basis with the associated company Fidink S.A. (33.3% owned). The Group's trading activities with this company included GBP8.2m (FY 2020: GBP30.9m) for the purchase of security ink and other consumables. At the balance sheet date there were creditor balances of GBP1.5m (FY 2020: GBP2.5m) 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

 
                                2021  2020 
                                GBPm  GBPm 
------------------------------  ----  ---- 
Salaries and other short term 
 employee benefits               3.3   2.9 
 Retirement benefits: 
 - Defined contribution          0.1   0.4 
 Termination benefits              -   1.1 
------------------------------  ----  ---- 
                                 3.4   4.4 
------------------------------  ----  ---- 
 

Key management comprises members of the Board (including the fees of Non-executive Directors) and the ELT. Termination benefits include compensation for loss of office, ex gratia payments, redundancy payments, enhanced retirement benefits and any related benefits in kind connected with a person leaving office or employment.

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June 18, 2021 08:44 ET (12:44 GMT)

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