De La Rue drops passport appeal and issues profit warning

The British passport maker that lost out on a contract to make the post-Brexit blue version is dropping an appeal against the decision as it revealed the failed bid had cost £4m.

At the same time, De La Rue issued a second profit warning in a month as it counted the cost of not winning the £490m contract, which was awarded to the Franco-Dutch company Gemalto.

De La Rue, which also makes polymer banknotes, said underlying operating profit was expected to be in the low-to-mid-£60m range for the year to 31 March. A few weeks ago, De La Rue had predicted profit of between £71m and £73m.

The company said the lower profit expectation reflected “the write-off of the [about] £4m bid costs related to the UK passport tender and delays in the shipment of certain contracts in the last week of the period”.

Unite, Britain’s largest union, said De La Rue’s decision to abandon an appeal would come as “a bitter blow” to its workers, who face an uncertain future. The company employs 600 people at its printing factory in Gateshead, with about 100 of those thought to be employed in the passport division.

“Workers will feel let down that the company is not prepared to fight the government’s decision to ship the production of the new blue passport overseas,” said Louisa Bull, a Unite national officer.

“For the past decade, De La Rue has produced the UK’s passports securely without any problems and provided a source of decent, well-paid jobs in the north-east.

“Theresa May and her government is now putting all that at risk with little thought of the consequences or the shockwaves that it will send through the community and local economy.”

De La Rue said it had considered all options before deciding to walk away. The move came two weeks after the company said it would appeal against the Home Office’s controversial decision on the new blue passport.

It said on Wednesday that De La Rue would continue to make the burgundy version of the UK passport.

“De La Rue will continue to fulfil its existing contract and assist with transition to the new supplier, and is therefore expecting no impact on the group’s performance in the next 18 months,” the company said.