De La Rue announces it will not fight loss of UK passport contract

De La Rue UK Passport
De La Rue have lost out on the contract to produce the post-Brexit UK passport.

In a statement released today, De La Rue, the UK based company which also operates in Kenya, has announced it will not appeal the British government’s decision to award the contract for producing British passports to a company based in France.

Previously, the country has said it believes it came ahead of its Franco-Dutch rival in the UK passport bid on both quality and security, and was undercut only on price.

The statement in full reads:

Further to the announcement on 20 March 2018, De La Rue plc (“De La Rue” or the “Group”) today provides an unaudited post-close trading update for the year ended 31 March 2018.

Full year revenue for the Group is expected to increase by c6% year on year, with growth across all product lines. Full year underlying operating profit is anticipated to be in the low to mid £60s million range, reflecting the write off of the c£4m bid costs related to the UK passport tender and delays in the shipment of certain contracts in the last week of the period.

At this early stage of the new financial year, the Group is cautious about the outturn for the full year, however starts off with a satisfactory order book underpinned by 16% growth in total order intake driven by strong growth in Identity Solutions and Product Authentication.

The paper transaction announced on 1 February was completed on 30 March 2018. This has strengthened the Group’s balance sheet, with net debt significantly reduced to c£55m as at 31 March 2018.

Further to the announcement on 22 March 2018 and having considered all options, the Group today announces it will not appeal against HMPO’s decision on the UK passport tender. 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 Board will give further details on the ongoing business and prospects for the coming year at the full year results.

The Group will issue its 2017/18 full year results at 7a.m. BST Wednesday 30 May 2018. Analyst presentation and conference call details will be provided two weeks prior to the announcement.

This announcement has been determined to contain inside information.

The decision to award to the contract to a foreign company has proved very controversial, especially as many European countries, including France where the winning operation is based, cite security concerns to avoid having to put the contracts out to tender.

On Monday, Conservative MP Jacob Rees-Mogg was discussing the issue on LBC.

“My concern is a constituency concern because De Le Rue has a factory in North East Somerset and I obviously want that factory to prosper and provide employment in North East Somerset.” he said.

“It is unfortunate that De Le Rue’s bid was £120 million higher than the bid by the Dutch and French consortium and the Government should perhaps go back to De Le Rue and say can you match the price that we are being offered.

“The Government has to be careful with taxpayers money,” he added.

De La Rue has been working in Kenya since before the country’s independence, during which time it has delivered many varied and significant projects including the first national identity card system and most notably, the print and production of Kenya’s banknotes.