De La Rue to change focus after losing out on UK passport contract

Banknote printer De La Rue announced changes to its passport division on Tuesday following the loss of a key UK passport contract as it posted a drop in first-half profit.

In the six months to 30 September, group revenue rose 5% to £257.6m but pre-tax profit declined to £7.1m from £18.9m the year before as operating expenses increased. Meanwhile, adjusted operating profit fell 36% to £17m, mostly reflecting a less favourable mix of orders.

Net debt increased by £44.4m to £94.3m, which was above the company's expectations and primarily due to the timing of deliveries in the half year. The interim dividend was maintained at 8.3p a share.

The company said that given how it lost out to France's Gemalto earlier this year on the £500m tender to make the new blue British passports, it has completed a detailed review of its strategy, which reaffirms the core elements but introduces a change in focus, primarily in the Identity Solutions business.

Chief executive officer Martin Sutherland said: "Over the last six months we have conducted a thorough review of our strategy and market positions. In the light of the UK passport decision, we have concluded that we will refocus our identity business on the supply of higher margin security features and components. We believe we can continue to drive cost efficiencies across the group and achieve growth in Security Features, Polymer and PA&T.

"We maintain a strong order book and pipeline which provides good visibility for the second half of this year and into next year. With good revenue coverage from the group's 12 month order book of £365m and based on the orders planned for production and shipment in the second half, we are confident that we will meet our expectations for the full year."

At 1440 GMT, the shares were down 2.4% to 451p.