DE LA RUE PLC

AGM Information • Jun 19, 2014

This document is important and requires your IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are advised to consult your stockbroker, bank manager, solicitor, accountant or other professional adviser authorised pursuant to the Financial Services and Markets Act 2000 immediately. If you have sold or otherwise transferred all of your ordinary shares in De La Rue you should pass this document together with the accompanying documents (but not the personalised proxy form) as soon as possible to the purchaser or transferee or to the person through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Letter from the Chairman

18 June 2014

Dear Shareholder

Annual General Meeting

I have pleasure enclosing this year's notice of our Annual General Meeting (AGM) which will be held at De La Rue House, Jays Close, Viables, Basingstoke, Hampshire RG22 4BS, at 10.30am on Thursday 24 July 2014. This letter sets out the details of the items of business to be transacted at the meeting, including the approval of the final dividend for the year ended 29 March 2014.

The purpose of this document is to provide details of the resolutions and to explain why the Board believes that the resolutions are in the best interests of the Company and its shareholders as a whole.

Resolutions 1 to 12 are ordinary resolutions and deal with: the strategic report, the directors' report and the audited financial statements for the period ended 29 March 2014 (resolution 1); the approval of the directors' remuneration policy (resolution 2); the approval of the directors' remuneration report for the year ended 29 March 2014 (resolution 3); the approval of the final dividend for the period ended 29 March 2014 (resolution 4); the re-election of Directors (resolutions 5 to 10); the reappointment of the Company's auditor and the authority to agree the auditors' remuneration (resolutions 11 and 12); resolutions 13 to 18 deal with: authority to allot shares (ordinary resolution 13); waiver of shareholders' pre-emption rights (special resolution 14); authority for the Company to purchase its own shares (special resolution 15); political donations (ordinary resolution 16); amendments to the De La Rue Annual Bonus Plan (ordinary resolution 17) and the length of notice of general meetings (special resolution 18).

Full details of the special business to be proposed at the AGM can be found in the explanatory notes incorporated in the notice of AGM attached to this letter.

Recommendations

The Board believes that all the resolutions to be considered at our AGM and as set out in the notice of AGM will promote the success of the Company and are in the best interests of the Company and its shareholders as a whole. Accordingly, the Board unanimously recommends shareholders to vote in favour of them. Individual members of the Board intend to vote their own beneficial and non-beneficial holdings currently amounting to 0.03 per cent of the issued ordinary share capital of De La Rue plc in favour of all resolutions.

What to do next

You will find a proxy form for the AGM with this letter. This allows someone else to attend the AGM and vote on your behalf. That person need not be a shareholder. Alternatively, you can use the form to allow me to vote for you. Please fill in the proxy form and return it to the Company's registrar by 10.30am on Tuesday 22 July 2014. Shareholders may, if they wish, submit proxy votes electronically via the registrar's website, www.eproxyappointment.com. CREST members who wish to appoint a proxy or give an instruction through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST manual. More details are set out in the notes on the form of proxy. CREST members wishing to appoint multiple proxies for a holding should contact the Company's registrar. If you vote electronically your vote must also be registered by 10.30am on Tuesday 22 July 2014. You may still attend the AGM whether you reply by post or electronically.

Electronic shareholder communication

If you would like to receive e-mail notifications each time we publish new shareholder documents, you should register online at www.investorcentre.co.uk/ecomms. You will need to have your shareholder reference number (SRN) available to register. This 11 character number (which starts with the letter C or G) may be found on either your share certificate or form of proxy. When you reach the website you should select De La Rue plc from the list and follow the on screen instructions to register your e-mail address and choose the way in which you receive your documents.

If you choose this option you will receive notification by email each time the Company publishes shareholder documents on its website and you will be able to download and read them at your convenience. You may, however, vary your instruction or request a paper copy of any shareholder document at any time in the future by contacting the registrar at www.investorcentre.co.uk/contactus or by writing to them at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY.

The use of electronic communication is entirely voluntary.

Yours sincerely,

Philip Rogerson Chairman

Registered Office: De La Rue House, Jays Close, Viables, Basingstoke, Hampshire RG22 4BS. Registered Number: 3834125 England

Notice of Annual General Meeting

Notice is hereby given that the fifteenth Annual General Meeting of De La Rue plc (the Company) will be held at De La Rue House, Jays Close, Viables, Basingstoke, Hampshire RG22 4BS on Thursday 24 July 2014 at 10.30am to consider and, if thought fit, to pass resolutions 1 to 13 inclusive and 16 and 17 as ordinary resolutions and resolutions 14, 15 and 18 as special resolutions:

• 1. To receive the strategic report, the directors' report and the financial statements of the Company for the period ended 29 March 2014 together with the report of the auditors.
• 1. To approve the directors' remuneration policy, set out on pages 43 to 51 in the directors' remuneration report, to take effect from the conclusion of the AGM.
• 1. To approve the directors' remuneration report (other than the part containing the directors' remuneration policy set out on pages 43 to 51) set out on pages 41 to 58 of the annual report for the period ended 29 March 2014.
• 1. To declare a final dividend on the Company's ordinary shares in respect of the period ended 29 March 2014.

To re-elect the following Directors retiring pursuant to the UK Corporate Governance Code who, being eligible, offer themselves for re-election:

• 1. Colin Child
• 1. Warren East
• 1. Victoria Jarman
• 1. Gill Rider
• 1. Philip Rogerson
• 1. Andrew Stevens
• 1. To re-appoint KPMG LLP as auditors of the Company to hold office from the conclusion of the meeting until the conclusion of the next General Meeting at which accounts are laid before the Company.
• 1. To authorise the Directors to determine the auditors' remuneration.
• 1. That the Directors be generally and unconditionally authorised for the purposes of section 551 of the Companies Act 2006 to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for, or to convert any security into, shares in the Company ("Rights") up to an aggregate nominal amount of £15,066,997 provided that this authority shall expire at the conclusion of the next Annual General Meeting of the Company or, if earlier, on 24 October 2015, save that the Company may before such expiry make offers or agreements which would or might require shares to be allotted or Rights to be granted after such expiry and the Directors may allot shares and grant Rights in pursuance of any such offer or agreement as if this authority had not expired; and all unexercised authorities previously granted to the Directors to allot shares and grant Rights be and are hereby revoked.
• 1. That, subject to the passing of resolution 13, the Directors be empowered pursuant to section 570 and section 573 of the Companies Act 2006 (the "Act") to allot equity securities (as defined by section 560 of that Act) for cash, either pursuant to the authority conferred by resolution 13 above or by way of a sale of treasury shares, as if section 561(1) of that Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities:
• (i) In connection with an offer of securities by way of rights, open offer or other offer of securities, to holders of ordinary shares on the register of members at such record date(s) as the Directors may determine where the equity securities respectively attributable to the interests of the ordinary shareholders are proportionate (as nearly as may be practicable) to the respective numbers of ordinary shares held by them on any such record date(s), but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with treasury shares, fractional entitlements or any legal or practical problems under the laws of any territory, or the requirements of any regulatory body or stock exchange, or any other matter whatsoever; and
• (ii) Otherwise than pursuant to sub-paragraph (i) above up to an aggregate nominal amount of £2,260,050;

and shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or, if earlier, on 24 October 2015, save that the Company may, before such expiry, make offers or agreements which would or might require equity securities to be allotted after such expiry and the

Directors may allot equity securities in pursuance of any such offer or agreement as if the power conferred hereby had not expired.

• 1. That the Company be generally and unconditionally authorised to make market purchases (within the meaning of section 693(4) of the Companies Act 2006) of any of the Company's ordinary shares of 44152/¹⁷⁵ pence, on such terms and in such manner as the Directors of the Company may from time to time determine, provided that:
• (i) The maximum aggregate number of ordinary shares hereby authorised to be purchased is 10,074,081 representing approximately 10 per cent of the Company's issued ordinary share capital as at 28 May 2014;
• (ii) The minimum price which may be paid for each ordinary share is 44152/¹⁷⁵ pence;
• (iii) The maximum price which may be paid for each ordinary share is an amount equal to 105 per cent of the average of the middle market quotations for an ordinary share in the Company, as derived from the London Stock Exchange Daily Official List, for the five business days immediately preceding the day on which the share is contracted to be purchased;
• (iv) Unless previously renewed, varied or revoked, the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the Company or, if earlier, on 24 October 2015; and
• (v) The Company may make a contract or contracts to purchase ordinary shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of such authority and may make a purchase of ordinary shares in pursuance of any such contract or contracts.
• 1. That in substitution for the existing authority and in accordance with section 366 and section 367 of the Companies Act 2006 (the "Act"), the Company, and each company which is or becomes its subsidiary during the period to which this resolution relates, be and are hereby authorised to:
• (i) Make political donations to political parties and/or independent election candidates not exceeding £100,000 in total;
• (ii) Make political donations to political organisations other than political parties not exceeding £100,000 in total; and
• (iii) Incur political expenditure not exceeding £100,000 in total,

during the period commencing on the date of this resolution and ending on the date of the Company's Annual General Meeting in 2015 or, if earlier, on 24 October 2015, provided that, in any event, the total aggregate amount of all political donations and political expenditure incurred by the Company and its subsidiaries in such period shall not exceed £100,000. For the purposes of this resolution, 'political donations', 'political organisations', 'political parties', 'independent election candidates' and 'political expenditure' have the meanings given in sections 363 to 365 of the Act.

• 1. That the amendments to the De La Rue Annual Bonus Plan ("ABP") in the form produced to the meeting and initialled by the Chairman for the purposes of identification, a summary of which is set out in Part 2 of the notice of AGM, be hereby approved and the Directors be hereby authorised to do all things which they may consider necessary or expedient to implement the amendments to the ABP.
• 1. That a general meeting other than an Annual General Meeting may be called on not less than 14 clear days' notice.

By order of the Board

Edward Peppiatt, Company Secretary

18 June 2014

Registered Office: De La Rue House Jays Close Viables Basingstoke Hampshire RG22 4BS

Registered in England, number 3834125

Part 1 explanatory notes

A shareholder entitled to attend and vote at the Annual General Meeting ("AGM") is entitled to appoint a proxy to exercise all or any of his rights to attend, speak and vote in his place. A member may appoint more than one proxy provided each proxy is appointed to exercise the rights attached to a different share or shares.

A proxy need not be a shareholder of the Company but must attend the AGM to represent you. Your proxy could be the Chairman, another Director of the Company or another person who has agreed to attend to represent you. Your proxy must vote as you instruct and must attend the AGM for your vote to be counted. Appointing a proxy does not preclude you from attending the AGM and voting in person.

A proxy form accompanies this Notice of AGM and should be completed and returned to the Company's registrar: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY. Details of how to appoint a proxy are set out in the notes to the proxy form. Alternatively, you may register your vote electronically by accessing the registrar's website: www.eproxyappointment.com. Proxy forms should be deposited at the office of Computershare Investor Services PLC no later than 48 hours before the time for holding the AGM. Electronic votes must also be registered no later than 48 hours before the time for holding the AGM.

A shareholder may change proxy instructions by returning a new proxy appointment using the methods set out above. A shareholder who has appointed a proxy using the hard copy form of proxy but would like to change the instructions using another hard copy proxy form, should contact Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY. The above deadline for receipt of proxy appointments also applies to amended instructions. Any attempt to terminate or amend a proxy appointment after the relevant deadline will be disregarded. Where two or more valid, separate appointments of proxy are received in respect of the same share relating to the same meeting, the one which is sent last shall be treated as replacing and revoking the other or others.

A copy of this notice of AGM has been sent, for information only, to persons who have been nominated by a shareholder to hold information rights under section 146 of the Companies Act 2006 (the "Act") (a "Nominated Person"). The rights to appoint a proxy cannot be exercised by a Nominated Person: they can only be exercised by the shareholder. However, a Nominated Person may have a right under an agreement between him and the shareholder by whom he was nominated to be appointed as a proxy for the meeting or to have someone else so appointed. If a Nominated Person does not have such a right or does not wish to exercise it, he may have a right under such an agreement to give instructions to the member as to the exercise of voting rights.

To be entitled to attend and vote at the AGM, shareholders must be registered in the register of members of the Company at 6.00pm on Tuesday 22 July 2014 (or, if the AGM is adjourned, provided that the adjourned meeting takes place no later than 6.00pm, at 6.00pm on the date which is two days prior to the adjourned meeting). Changes to entries on the register after this time shall be disregarded in determining the rights of persons to attend or vote (and the number of votes they may cast) at the AGM or adjourned meeting.

CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so by utilising the procedures described in the CREST manual on the Euroclear website (www.euroclear.com/CREST). CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear UK & Ireland Limited's (EUI) specifications and must contain the information required for such instructions, as described in the CREST manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID number – 3RA50) by the latest time(s) for receipt of proxy appointments specified in the Notice of AGM. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST applications host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. The Company may treat as invalid a CREST proxy instruction in the circumstances set out in regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST proxy instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST manual concerning practical limitations of the CREST system and timings.

Please note that the Company takes all reasonable precautions to ensure no viruses are present in any electronic communication it sends out but the Company cannot accept responsibility for loss or damage arising from the opening or use of any email or attachments from the Company and recommends that shareholders subject all messages to virus checking procedures prior to use. Any electronic communication received by the Company, including the lodgement of an electronic proxy form, that is found to contain any virus will not be accepted.

Voting on all resolutions will be conducted by way of a poll rather than a show of hands. This is a more transparent method of voting as shareholder votes are to be counted according to the number of shares held. As soon as practicable following the AGM, the results of the voting at the AGM will be announced via a regulatory information service and also placed on the Group's website: www.delarue.com

A shareholder of the Company which is a corporation may authorise a person or persons to act as its representative(s) at the AGM. In accordance with the provisions of the Act, each such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual shareholder of the Company, provided that they do not do so in relation to the same shares. It is no longer necessary to nominate a designated corporate representative.

Shareholders who meet the threshold requirements set out in section 527 of the Act, can instruct the Company to publish on its website, at the Company's own expense, a statement setting out any matter relating to (a) the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the AGM; or (b) any circumstances connected with an auditor of the Company ceasing to hold office since the last AGM, that the shareholders propose to raise at the meeting. If the Company is required to place a statement on the website under section 527 of the Act, the statement must be forwarded to the Company's auditors no later than the time when it is made available on the website. The business which may be dealt with at the AGM includes any statement that the Company has been required under section 527 of the Act to publish on its website.

The Company must cause to be answered at the AGM any question relating to the business being dealt with at the AGM which is put by a shareholder attending the AGM, except (i) if to do so would interfere unduly with the conduct of the AGM or involve the disclosure of confidential information, (ii) if the answer has already been given on a website in the form of an answer to a question, or (iii) if it is undesirable in the interests of the Company or the good order of the AGM that the question be answered.

As at 28 May, 2014 (being the latest practicable day prior to the publication of this notice of AGM), the Company's issued share capital consists of 100,740,808 ordinary shares, carrying one vote each. Therefore the total number of shares over which voting rights in the Company are held is 100,740,808.

A copy of this notice of AGM and other information required by section 311A of the Companies Act 2006 can be found on the Group's website www.delarue.com

The following documents will be available for inspection during normal business hours (Saturdays, Sundays and public holidays excepted) from Wednesday 18 June 2014 at the registered office of the Company and at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG and will also be available for inspection at the place of the AGM from 10.15am on the day of the AGM until the conclusion of the AGM:

• a copy of the rules of the De La Rue Annual Bonus Plan showing the proposed amendments
• copies of the contracts of service of Executive Directors together with Non-executive Directors' letters of appointment

You may not use any electronic address provided in this notice of AGM to communicate with the Company for any purposes other than those expressly stated.

Receipt of the strategic report, the directors' report and the audited financial statements – resolution 1

The Directors will present the strategic report, the directors' report and the audited financial statements for the year ended 29 March 2014 to the AGM.

Approval of the directors' remuneration policy – resolution 2

All companies must put their remuneration policy to a shareholder resolution at the AGM held in the first financial year to commence on or after 1 October 2013. After that, whenever companies want to introduce a new remuneration policy or make changes to an existing policy they will need to put the remuneration policy to shareholders for approval. Once the remuneration policy has been approved, the Company will only be able to make payments that are in line with the policy. The Company is then required to seek shareholder approval of the remuneration policy every three years, or earlier if it is proposed that it is changed during that period. Accordingly resolution 2 seeks shareholder approval of the directors' remuneration policy as set out on pages 43 to 51 (inclusive) of the annual report for the year ended 29 March 2014.

Approval of the directors' remuneration report – resolution 3

Resolution 3 seeks shareholder approval for the directors' remuneration report as set out on pages 41 to 58 (inclusive) (excluding the directors' remuneration policy as set out on pages 43 to 51 (inclusive)) of the annual report for the year ended 29 March 2014. It gives details of the directors' remuneration for the year ended 29 March 2014. The Company's auditor, KPMG LLP, has audited those parts of the report required by the Act. The auditor's report is on pages 63 to 65 of the annual report. No individual Director's remuneration is dependent on the resolution on the remuneration report being passed as it is an 'advisory' resolution. However, if the Company fails the annual advisory resolution in a year in which the remuneration policy was not also put to a shareholder resolution, this will trigger the need for the Company to put its remuneration policy to a shareholder resolution the following year. Where a substantial minority of shareholders vote against the director's remuneration report, the Company must respond and say how it will address shareholder concerns.

Declaration of final dividend – resolution 4

This resolution approves the declaration of a final dividend.

Directors – resolutions 5 to 10

The UK Corporate Governance Code provides for all directors of FTSE 350 companies to be subject to election/re-election by their shareholders annually. Accordingly, in keeping with the Board's aim of following best corporate governance practice, resolutions 5 to 10 provide for all of the Directors to retire and offer themselves for reelection by shareholders at this year's AGM.

The Board, having carried out an effectiveness and evaluation process, considers the performance of each of the Directors standing for re-election at this year's AGM to be fully satisfactory and is of the opinion that they have demonstrated continued commitment to the role. The Board strongly supports their re-election and recommends that shareholders vote in favour of the resolutions at the AGM. Biographical details of the Directors standing for re-election are given on pages 30 and 31 of the annual report 2014 and on the Group's website.

Re-appointment of auditors and auditors' remuneration – resolutions 11 and 12

Resolution 11 is related to the re-appointment of KPMG LLP as auditors of the Company until the conclusion of the AGM in 2015.

Resolution 12 authorises the Directors to set the amount to be paid to KPMG LLP for their role as auditors.

Allotment of share capital - resolution 13

At the last AGM of the Company held on 25 July 2013, the Directors were given authority to allot ordinary shares in the capital of the Company up to a maximum nominal amount of £14,922,213 representing approximately one third of the Company's then issued ordinary share capital. This authority expires at the end of this year's AGM.

There is no statutory limit on the maximum nominal amount of the section 551 authority under the Act but, under the current guidelines of the Association of British Insurers (ABI), ABI members will permit, and treat as routine, resolutions seeking authority to allot shares representing up to one third of the Company's issued share capital.

In light of these guidelines, the Board considers it appropriate that Directors be granted authority to allot shares in the capital of the Company up to a maximum nominal amount of £15,066,997 representing the ABI guideline limit of approximately one third of the Company's issued ordinary share capital as at 28 May 2014 (the latest practicable date prior to publication of this letter). The power will last until the end of the next AGM of the Company or, if earlier, 24 October 2015.

The Directors do not currently intend to exercise this authority except in respect of exercises of share options and the release of shares awarded under the Company's share plans. However, the Directors consider it appropriate to maintain the flexibility that this authority provides.

As at the date of this letter the Company does not hold any ordinary shares in the capital of the Company in treasury.

Disapplication of statutory pre-emption rights - resolution 14

If equity securities are to be allotted for cash using the authority given by resolution 13, section 561(1) of the Act requires that those securities are offered first to existing shareholders in proportion to the number of ordinary shares they each hold at the time of the offer. An offer of this type is called a rights issue and the entitlement to the offer of the new securities first is known as a pre-emption right.

There are circumstances when it is in the interests of the Company for the Directors to be able to allot new equity securities for cash other than by way of a strict rights issue. This cannot be done under the Act unless the shareholders have first waived their pre-emption rights. The authority given by resolution 14 empowers the Directors to modify this requirement for rights issues so that they may effect such exclusions or other arrangements as they may deem necessary or expedient in relation to fractional entitlements or legal or practical problems arising under the laws or requirements of any recognised regulatory body or any stock exchange or otherwise in any overseas territory or any other matter.

In the light of the ABI guidelines described in relation to resolution 13 above, this authority will permit the Directors to allot:

• (a) Shares up to a nominal amount of £15,066,997 (representing one third of the Company's issued share capital) on an offer of securities to existing shareholders (subject to any adjustments, such as for fractional entitlements and overseas shareholders, as the Directors see fit)
• (b) Shares up to a maximum nominal value of £2,260,050 representing approximately 5 per cent of the issued ordinary share capital of the Company as at 28 May 2014 (the latest practicable date prior to publication of this letter) otherwise than in connection with an offer to existing shareholders. In respect of this aggregate nominal amount, the Directors confirm their intention to follow the provisions of the Pre-Emption Group's Statement of Principles regarding cumulative usage of authorities within a rolling three year period where the Principles provide that usage in excess of 7.5 per cent should not take place without prior consultation with shareholders.

Resolution 14 is being passed pursuant to sections 570 and 573 of the Act.

The authority contained in resolution 14 will expire at the end of the next AGM of the Company or, if earlier, on 24 October 2015.

Share buyback – resolution 15

The resolution to be proposed will seek to renew authority granted to the Directors at the AGM in July 2013 and which will expire on 24 July 2014. No shares have been acquired pursuant to that authority.

If shareholders pass resolution 15 the authority, unless previously renewed, varied or revoked, will expire at the conclusion of the next AGM of the Company or, if earlier, on 24 October 2015.

This authority will apply up to 10,074,081 ordinary shares, having an aggregate nominal value of £4,520,099, being 10 per cent of the issued ordinary share capital on 28 May 2014 (the latest practicable date prior to publication of this letter). The minimum price which may be paid is 44152/¹⁷⁵ pence per share and the maximum price is an amount equal to 105 per cent of the average of the middle market quotations of the Company's shares, as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the share is contracted to be purchased.

The Directors consider that there may be circumstances in which it would be desirable for the Company to purchase its own shares in the market. They would like to be able to act quickly if circumstances arose in which they considered such a purchase desirable, for example when, in the Board's opinion, market prices do not reflect the Company's worth. The Directors will keep the matter under review, taking into account the financial resources of the Company, the Company's share price and future funding opportunities. Purchases would only be made if their effect would be expected to increase earnings per share and would be expected to benefit shareholders generally. Any purchases of ordinary shares would be by means of market purchases through the London Stock Exchange.

Listed companies purchasing their own shares are allowed to hold them in treasury as an alternative to cancelling them. No dividends are paid on shares while held in treasury and no voting rights attach to treasury shares. Shares purchased under this authority would be cancelled and the number of shares in issue would be reduced accordingly, or held in treasury if considered appropriate. As at 28 May 2014 (being the latest practicable day prior to the publication of this Notice of AGM) no ordinary shares are held in treasury. In order to respond properly to the Company's capital requirements and prevailing market conditions, the Directors will need to assess at the time of any and each actual purchase whether to hold the shares in treasury or cancel them.

The total number of ordinary shares over which options to subscribe were outstanding at 28 May 2014 was 2,857,718 being 2.84 per cent of the current issued share capital. If the authority to purchase the Company's ordinary shares (existing and proposed) was exercised in full, the number of shares under these options would represent 3.54 per cent of the Company's issued ordinary share capital.

Political donations – resolution 16

Under the Act, political donations to any political parties, independent election candidates or political organisations or the incurring of political expenditure are prohibited unless authorised by shareholders in advance. Shareholders will be aware that it is the Group's policy not to make political donations. This policy will remain unchanged whether or not resolution 16 is passed. However, it is possible that certain routine activities undertaken by the Company and its subsidiaries may unintentionally fall within the broad scope of the provisions controlling political donations and expenditure contained in the Act. Accordingly, as a precaution and in order to avoid any possibility of inadvertently contravening the Act, the Board considers that it would be prudent to follow the procedure specified in the Act to obtain shareholder approval for the Company and its subsidiaries to make political donations or incur political expenditure until the conclusion of the 2015 AGM of the Company or, if earlier, 24 October 2015.

As stated earlier the Board will continue its policy of not making political donations or incurring political expenditure but the Group will report any such expenditure in its 2015 annual report.

Length of notice of meeting – resolution 18

Resolution 18 is a resolution to allow the Company to hold general meetings (other than AGMs) on 14 clear days' notice.

Before the introduction of the Companies (Shareholders' Rights) Regulations 2009 in August 2009, the minimum notice period permitted by the Act for general meetings (other than public company AGMs) was 14 days. One of the amendments made to the Act by the Regulations was to increase the minimum notice period for general meetings of listed companies to 21 days, but with an ability for companies to reduce this period back to 14 days (other than for AGMs) provided that two conditions are met. The first condition is that the Company offers a facility for shareholders to vote by electronic means. This condition is met if the Company offers a facility, accessible to all shareholders, to appoint a proxy by means of a website. The second condition is that there is an annual resolution of shareholders approving the reduction of the minimum notice period from 21 days to 14 days.

The Board is therefore proposing resolution 18 as a special resolution to approve 14 clear days as the minimum period of notice for all general meetings of the Company other than AGMs. The approval will be effective until the end of the Company's next AGM, when it is intended that the approval be renewed. The Board will consider on a case by case basis whether the use of the flexibility offered by the shorter notice period is merited, taking into account the circumstances, including whether the business of the meeting is time-sensitive.

Part 2 explanatory notes

Summary of the features specific to the De La Rue Annual Bonus Plan (ABP) – resolution 17

Following a review of the Company's executive incentive arrangements, the Remuneration Committee is proposing certain changes to the way in which the De La Rue Annual Bonus Plan ("ABP") is operated. The changes, which are set out in detail in the directors' remuneration report, follow consultation with the Company's major shareholders.

The ABP was approved by shareholders in 2010 and the proposed amendments now require further approval.

The Remuneration Committee is not proposing any change to the maximum annual bonus opportunity for Executive Directors under the ABP, which will remain 135 per cent for the Chief Executive and 115 per cent for the Finance Director. However, the Committee is proposing that the cash and share mix of awards, as well as the deferral periods for the share element, be amended. The current cash and share mix is made up of up to 100 per cent of salary immediately in cash for the Chief Executive (80 per cent for the Finance Director) and up to 35 per cent of salary in shares, deferred for three years. The proposal is to maintain the overall maximum opportunity for awards but to satisfy 60 per cent of any award immediately in cash and 40 per cent of any award in shares, deferred in two equal tranches to vest on the first and second anniversary of the award. The Remuneration Committee will have flexibility for setting the vesting date or dates for other participants, although the vesting of awards will be no earlier than the first anniversary of the award, and for granting awards wholly in shares or in cash and shares in different proportions to that outlined above. The changes to the ABP should be seen in the context of changes to the Company's Performance Share Plan (PSP) which introduce a longer period of vesting (increased from three to four years) for awards under that scheme. The proposed changes to both these schemes are more fully explained in the directors' remuneration report.

The Remuneration Committee considers that the potential for a greater proportion of annual bonus to be delivered in the form of shares under the ABP will further align Executive Directors' interests with the long term objectives of shareholders. The proposed changes will also give the Company greater flexibility in operating the ABP in future years, and will allow for more targeted retention/incentive awards to be made to senior managers below Board level.