De La Rue plc (LON:DLAR) shares fell on Wednesday morning as the company announced it will drop its appeal against the award of a tender for the post-Brexit UK passport to another company and said it is ‘cautious’ about the outturn for the full year.
The secure printer said it has considered all options and decided not to appeal against the government’s decision to award the £490mln post-Brexit passport production contract to Franco-Dutch firm Gemalto.
READ: De La Rue challenges UK government on award of £490mln post-Brexit passport contract
De La Rue said it 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.
However, in a pre-close trading update, the small cap firm said its full-year underlying operating profit is anticipated to be in the low-to-mid £60mln range for the year ended 31 March 2018, reflecting a write-off of the around £4mln in bid costs related to the UK passport tender and delays in the shipment of certain contracts in the last week of the period.
However, it added that full-year group revenue is expected to increase by circa 6% year-on-year, with growth across all product lines.
The firm also said: "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."
It added the paper transaction it announced on February 1 was completed on 30 March 2018 and this has strengthened the group's balance sheet, with net debt significantly reduced to around £55mln as at 31 March 2018.
In early morning trading, De La Rue’s shares were down 4.4% to 470.5p.