British firm drops appeal over British passport contract

Current British passport maker De La Rue has backed down on its appeal against the UK government's d

Current British passport maker De La Rue has backed down on its appeal against the UK government's decision to award the contract for making new blue British passports to a Franco-Dutch company. Picture: Katie Collins/PA Wire - Credit: PA

British firm De La Rue says it will not appeal against the government's controversial decision to choose a Franco-Dutch company to make the new blue UK passports after Brexit.

De La Rue, the current passport provider, said that it had 'considered all the options' but would not challenge the move, which will see the £490m contract handed to Gemalto, a firm headquartered in Amsterdam and listed on the French and Dutch stock exchanges.

De La Rue also confirmed that its full-year earnings would be hit by a write-off of about £4m related to the bid costs for the passport tender.

It said underlying operating profits were now forecast in the 'low to mid £60s million range', against previous expectations for between £71m to £73m.

The firm added: '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 Government has come under heavy fire for its decision to choose a European firm for the contract, but has claimed it will save £120m during the lifetime of the 11-and-a-half-year contract.

Shares in Basingstoke-based De La Rue fell as much as 8% after the announcement and details of the profit blow.

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De La Rue had initially vowed to appeal against the decision, with executives at the firm reportedly saying they believed Gemalto won the contract simply because it undercut its rivals.

Gemalto already produces the UK's photo driving licence. The firm – which is being acquired by French defence group Thales – has a number of sites in the UK, including factories in Heywood and Fareham.