Business Conduct

Business Code of Conduct
Share Dealing Code and Market Abuse
Business Dealing Policy

Business Code of Conduct

Introduction
De La Rue's Principles
Implementing the Principles

1. Introduction

There are certain core values and principles which govern how De La Rue does business and which everyone within De La Rue must follow. It is always appropriate to restate these values and principles so that not only employees but also our shareholders, customers, suppliers and the communities in which we operate know what they are. De La Rue’s reputation is based on security, integrity and trust. These values underpin what we do and how we do it. Our reputation is our biggest asset so preserving it is something which every one of us, whatever we do and wherever we are based, must strive to do at all times. We will be judged by our actions. If we behave honestly, with integrity and in a lawful and trustworthy manner, we will uphold De La Rue’s reputation.

All employees are required to follow this Code when performing their day to day duties as employees of De La Rue or where they are representing De La Rue. In addition all agents, sales consultants and distributors must also follow this Code when they are representing De La Rue.

More detailed policies and guidelines supplement the principles of the Code. These may relate to specific issues such as timely, accurate and consistent disclosures to the market to enable investors to make informed decisions, doing business in a competitive and fair way, or the environment. These policies and guidelines are set out in the Company Policies section in the ‘How Do I’ part of the “Interchange”, De La Rue’s Intranet or communicated by individual business units. The provisions of the Code, Company Policies and other policies and guidelines may be changed unilaterally by De La Rue at any time and they are of course subject to the provisions of local law.

If employees require guidance about any of the principles or about any issue which may arise, they should seek help from their managers, or HR managers or the Company Secretarial department in head office.

2. De La Rue's Principles

A. Complying with Law

All employees must comply with the law of countries where they are employed or where they carry out business on behalf of De La Rue. All employees are responsible for ensuring that they are aware of relevant legal requirements by obtaining appropriate advice if necessary.

Employees should pay particular attention to the following areas:

Insider Dealing, Creating a False Market and Market Abuse

De La Rue’s shares are listed on the London Stock Exchange. There are certain periods when persons discharging managerial responsibility - PDMRs (ie directors of De La Rue plc and members of the Operating Board) and employee insiders may not deal in the Company’s shares. These times are the close period after the end of the half and full year and the date on which the interim and final financial results are announced to the market. In addition PDMRs and those employees with Inside Information at other times may not deal in the Company’s shares. This also applies to the connected persons (ie those persons, including spouse or civil partner or other person with whom the PDMR lives in an enduring family relationship, children or parent of the PDMR or children under 18 of the other person in an enduring family relationship living with the PDMR. Employees with Inside Information (employee insiders) may not disclose it to third parties who wish to deal. Likewise employees with Inside Information about customers, competitors or suppliers may not use that information to deal in the shares of those companies for personal gain. Dealing in a company’s shares on the basis of Inside Information not available to the market is called insider dealing. In the UK and many other countries it is a criminal offence. Likewise knowingly or recklessly making a misleading statement or forecast or creating a false market in a company's shares is also a criminal offence. In addition abuse of information (eg creating a false or misleading impression) is a civil offence in the UK. Insider dealing or deliberately creating a false market or market abuse by any De La Rue employee is gross misconduct. Further details (including definitions of terms) are set out in the guidance on Share Dealing, Market Abuse and Insider Lists and De La Rue’s Share Dealing Code.
Procedure for co-ordinating and disseminating Inside Information ("II") about De La Rue

Inside Information is:

information of a precise nature which:
1. is not generally available;
2. prelates, directly or indirectly, to one or more issuers of the qualifying investments or to one or more of the qualifying investments; and
3. would if generally available, be likely to have a significant effect on the price of the qualifying investments, or on the price related investments.
Employees who believe they are in possession of Inside Information not yet reported to the market must report it to their line manager immediately. In order to ensure that Inside Information is released to the market in a clear, co-ordinated and timely way, in order that investors may make informed decisions, all employees must follow this Procedure. Only announcements approved by a director may be made by the Company Secretary to the Regulatory Information Service.
Complying with competition /anti-trust law

All employees are required to comply with competition or laws of the countries in which De La Rue does business. The purpose of such laws is to prohibit various practices which distort fair competition. Failure to comply with the law may expose De La Rue to substantial fines and litigation and, in some countries, not only the Company but also the relevant employees may be prosecuted or fined. Legal advice must be sought.

Whilst the law is technical and varies from one country to another the basic anti trust rules make the following practices (which may be agreements or understandings about future behaviour) between competitors illegal: price fixing having or are intended to fix, stabilise or raise prices, profit margins; bid rigging regarding pricing or other terms and conditions of a bid; market sector division; reducing production or output; customers they will deal or not deal with and agreements with independent dealers or resellers to fix the minimum resale price of De La Rue products.

It does not matter that such agreements or understandings are not put into effect or that one party does not intend to abide by such agreement or understanding.

Employees should avoid getting into situations where they might be accused of colluding with or participating in prohibited activities.

Please also refer to the Legal Aids Section of ‘How Do I’ on the Interchange to the UK/EU Competition Compliance Guide Version 4 May 2005

Competition Compliance Checklist (note this checklist is also available in 6 translations)
US Competition Compliance Guide Version 2 May 2005

It is also important that employees understand these principles to ensure that De La Rue is not the victim of anti-competitive behaviour of other competitors, suppliers or trade customers
Complying with export licensing or trade embargo law

All employees must comply with trade embargo laws of the countries in which De La Rue does business. This area of the law is highly technical and detailed provisions vary from one country to another. The rules may be unilateral (imposed by one country) or multilateral where imposed by organisations such as the UN or EU. Sanctions may apply to categories of goods or to components within goods produced and sold outside the state imposing the sanctions. It is equally important to ensure that subsidiaries importing goods comply with the import rules of the country into which the goods are being imported. Failure to comply with the law may expose De La Rue to substantial fines and litigation and, in some countries, not only the Company but also the relevant employees may be prosecuted or fined. Legal advice must be sought

See also: Export Licensing and Trade Sanctions Guidance note on How do I – Legal Aids
Dealing with governments, customers, suppliers and third parties

De La Rue requires its employees to conduct business honestly and with integrity.

Paying or conspiring to pay (whether directly or through a third party), soliciting or accepting bribes is contrary to De La Rue’s policy. Nor may De La Rue funds be paid directly or indirectly through a third party to government officials or employees of state organisations for improper purposes. This applies not only to payment of money. Gifts of more than a nominal value and entertainment other than on a modest scale should not be provided.

Bribery is a criminal offence.
Dealing with third party partners (Sales Agents, Sales Consultants, Distributors, VAR, VAP, OEM, Service Providers)

If De La Rue carries on business in certain countries through an agent or uses a consultant or distributor, the payment of commission or fees could be misinterpreted. Therefore any commissions or fees paid must relate to the work carried out and must be invoiced. Only Divisional Managing Directors may approve rates of commission and fees. The relationship must be documented in an appropriate legal agreement. Cash payments of such commission or fees are prohibited.

The selection and appointment of suitable third party partners is therefore extremely important. Please refer to the Company Policy Appointment and Management of Third Party Partners for more detailed guidance.
Money Laundering

Money laundering is hiding the criminal origins of money or the proceeds of crime within legal businesses or business activities or using legitimate money to support terrorism. Most countries now have anti money laundering legislation which enables law enforcement agencies to trace and recover laundered money. Businesses may commit offences by using laundered money or concealing its nature or origin or tipping off the money launderer - i.e. disclosing anything likely to prejudice an investigation or prejudicing such investigation. In addition there are offences of failing to report a suspicion if there are reasonable ground to know or suspect that a third party is laundering money.

De La Rue employees must therefore strictly follow corporate treasury and finance procedures regarding receipt of payment and payment to third parties. If you have any doubts you must report them to the Finance Director or Company Secretary.

B. Conflict of Interest

Employees must conduct their relationships with third parties such as customers, agents, distributors, consultants, suppliers and competitors in a professional, impartial and competitive way. You must avoid any relationship where your personal interest conflicts or might appear to conflict with that of De La Rue. You must never put yourself in a position where a business decision could be or could be said to have been influenced by a third party providing gifts, favours or hospitality. You must not abuse your position in De La Rue or the confidential information which you gain as a result to enable you to achieve personal gain, whether direct or indirect.

Examples include:

an employee or his family owning shares, especially if the shareholding is substantial, in a company with whom De La Rue does business. This is particularly relevant if the company is a private one;
an employee performing work in his spare time for such third parties;
any employee being involved in activities for personal gain which conflict with De La Rue’s business interests;
an employee soliciting any work for personal gain which might conflict with De La Rue’s interests or compete with De La Rue – this might include future consultancy, employment or a directorship with a third party ;
an employee soliciting gifts, hospitality or favours from such third parties or accepting any gift, favour or hospitality where its size or nature is either illegal, disproportionate to normal business practice or could appear to put the employee under a sense of obligation to the donor in conflict with his duty to De La Rue or could cause others to believe that the employee has been so influenced in decision making;
an employee borrowing from any third party who does business with De La Rue other than at arm’s length and on commercial terms;
an employee performing or using or appointing a relative to perform services for De La Rue for reward.

There may be exceptions to the rule prohibiting relatives from doing work for De La Rue. For example, it may be permissible for a student to do a summer job. However no employee may enter into a business relationship with the Company nor may any relative of an employee be employed by the Company without prior approval of the arrangement by the Chief Executive (for Head Office and divisional MDs) or the local Managing Director for employees at other locations . HR must also approve and agree the terms and conditions. However, in no circumstances should an employee be directly responsible for supervising or auditing the work of a relative or agreeing terms and conditions of work for such relative.

Employees are not permitted directly or indirectly to be employed in or otherwise engaged in any business or other activity for monetary gain with another employee of the Company or any subsidiary or associate company of any company in the De La Rue Group even if carried on during their free time without the Company’s prior consent.

Employees should always disclose to their manager the offer of a gift or favour especially one which would appear to have been offered for a corrupt motive or which is of disproportionate cost or value. Excessive gifts or entertainment should be refused or donated to a reputable charity. The procedures are set out in the Group Policy Manual.

Any employee who is uncertain whether any activity which he or she proposes to undertake may constitute a breach of this policy must obtain the Company’s prior consent before participating in such activity.

C. Non-Executive Business Directorships and Similar Appointments

Employees wishing to take up such an appointment must inform the Chief Executive via their divisional Managing Director. There will be no objection provided such an appointment does not conflict with the employee’s ability to carry out his duties properly nor with the reasonable interests of De La Rue.

D. Protecting De La Rue's Assets

Employees must look after De La Rue’s property whether tangible (such as computers, physical plant, stock, furniture etc) or intangible (such as intellectual property, proprietary software, trade secrets, and confidential information). This means using such property for De La Rue’s business (and ensuring that it is properly protected) and not for the employee’s personal benefit or for any illegal purpose. It also means not disclosing without proper authorisation or unless legally required confidential information about De La Rue to third parties. It means ensuring that business records are kept in accordance with the requirements of any applicable law and also with De La Rue’s Document Retention Policy. Abuse of this may be not only a criminal offence but also gross misconduct.

Examples of abuse include:

using De La Rue’s own products for an employee’s personal gain;
using computer equipment to download or send to others pornography or offensive material.

Limited use of De La Rue’s IT systems for personal purposes (provided these are not illegal) is permitted. Please refer to the Company Policy: IT User Policy and User Guidelines.

E. Protecting Third Parties' Confidential Information/Software

De La Rue will receive from time to time confidential information from third parties. All employees must respect the conditions under which such information is supplied. Likewise if De La Rue is licensed by a third party to use its property, all employees must comply with the terms of the licence. This means that, for example, software may not be copied either for use elsewhere in the business or for an employee’s personal benefit.

F. Political Donations

De La Rue does not give donations to political parties. Employees may not use corporate funds for this purpose.

G. Health and Safety and Environment

De La Rue requires its businesses to be operated to comply with applicable laws and regulations and in accordance with industry and De La Rue's own standards and procedures. Businesses are evaluated and benchmarked according to performance. All employees have a responsibility to ensure these requirements are met. For example, if safety equipment is required to operate a machine, employees should ensure that it is used.

H. Employment

De La Rue is an equal opportunity employer. Employees must have the opportunity to develop their career and skills, and promotion will be based solely on their ability to do a particular job. De La Rue will not tolerate discrimination on grounds of age, disability, sexual inclination, gender, religion or race and all businesses are required to follow this principle.

Employees are required to devote their energies whilst at work to pursuing the interests of De La Rue in a lawful manner. Breaches of this may, depending on the circumstances, amount to gross misconduct. Obvious examples are theft of company property, misuse of drugs or alcohol, sexual or racial harassment or bullying of other employees.

Whilst the activities of an employee outside work are not normally the concern of the employer there may be exceptions where such activities reflect on the reputation of De La Rue or the ability of the employee to do his or her job or the trust by De La Rue in the integrity of the employee. Examples of this may include insider dealing, fraud or theft or drug or alcohol abuse.

I. Accounting Standards and Reporting Financial Performance

Detailed controls are set out in the Group Finance Manual. The general principle is that proper records must be kept in a timely fashion and in accordance with International Accounting Standards or, for producing local statutory accounts, UK or relevant overseas Generally Accepted Accounting Principles as consistently applied by De La Rue so that all transactions and assets and liabilities are properly recorded. Group funds must not be held outside De La Rue’s books of account.

From time to time businesses come under performance pressure. It is, however, unacceptable artificially to inflate the results of a period to show a position which is better than actual.

J. BUSINESS COMMUNICATIONS AND EMAIL

All employees must comply with De La Rue’s email policy and must ensure that communications by whatever means (such as email, hard copy, voice mail or orally) and whether internal or external are appropriate and accurate. Inappropriate email may in certain instances be illegal (e.g. using De La Rue’s IT systems to transmit or receive child pornography) or convey the wrong impression about the Group or third parties (e.g. a misleading statement may defame a third party who could sue the company) or be wrong and as a result harm the company. Ensure communications are factually accurate, relevant to De La Rue’s business and not prohibited (e.g. unauthorised communication of inside information to a third party). The overriding test is: if this message was published in a newspaper or used in legal proceedings would I feel comfortable or embarrassed?

3. Implementing the Principles

The Board of De La Rue plc and the Operating Board have approved this Business Code of Conduct. All current and new employees will receive a personal copy but if you have not received your own copy please contact your local Human Resources Department. It is also posted on the Interchange.

Employees who have a query should raise it initially with their immediate or business unit managers. Employees, concerned about the way in which the Business Code is applied or about business practices within De La Rue, can raise such concerns in good faith without fear of being victimised or in accordance with the Procedures set out in the Group Whistleblowing Policy either with designated senior managers or externally (and anonymously if preferred) through a telephone hotline to Expolink. All concerns will be investigated.

September 2007