De La Rue drops plans to appeal against UK blue passports being made abroad

Franco-Dutch company Gemalto will make the new UK blue passports.
Franco-Dutch company Gemalto will make the new UK blue passports.
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British firm De La Rue has said 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 £490million contract handed to Gemalto, which has its headquarters in Amsterdam and is listed on the French and Dutch stock exchanges.

De La Rue, which has a factory in Gateshead, also confirmed that its full-year earnings would be hit by a write-off of about £4million 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 £71million and £73million.

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 £120million 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.

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.

As well as the passport bid hit, De La Rue said earnings have also been impacted by delays in the shipment of "certain contracts" in the last week of March.

"At this early stage of the new financial year, the group is cautious about the out-turn for the full year, however it starts off with a satisfactory order book," it added.

Gemalto, which is headquartered in Paris, 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.