In its interim results for the six months to 30 September announced today (25 November) the security printing group also announced that, despite the massive financial hit and job losses related to losing the passport work to an overseas competitor, it would also have to pay the UK government a whopping £12m rebate payment related to the contract.

De La Rue carried on producing passports for longer than initially envisaged after it lost the contract, and also helped the Home Office with contingency plans in case of a hard Brexit. 

Completion of the transfer to new supplier Gemalto was eventually completed during the period. 

The results also revealed that the controversial decision to shut down its banknote printing operation in Gateshead had cost De La Rue £8.1m. 

The Gateshead changes were part of its wide-ranging ‘Turnaround Plan’ announced over the summer, which the group said was on track to deliver £23m of savings in the full year.

The equipment from Gateshead is being relocated to De La Rue’s other sites. De La Rue said it had “the same capacity while operating with four currency print factories, down from five.”

The group also said that its Currency division was expected to use 100% of its “available polymer and banknote printing capacity” for the second half.

The like-for-like results were complicated by the passport contract loss and sale of its International Identity Solutions business last year.

Adjusted revenue, excluding pass-through sales on paper contracts, was down 15.1% at £174.7m.

Currency sales were more or less flat, down 2.1% at £126m. Authentication, where De La Rue has high hopes for future growth and profits, slipped 9.2% to £31.7m.

However, De La Rue said it had signed multi-year contracts in Authentication during the period, “with lifetime values of more than £120m”, while two contracts had been impacted with reduced volumes as a result of the pandemic.

“We are in discussions with several governments regarding the roll-out of tobacco and drinks tax stamp schemes and in early discussion regarding Covid-19 immunity certification schemes. We continue to invest in software capabilities, service provision and R&D focused on IP generation and are exploring blockchain technologies,” De La Rue stated. 

Its share price spiked earlier this year on the back of hopes that its technology could be used to ease restrictions by certifying people with Covid-19 immunity. 

De La Rue is understood to be in talks with governments and corporations about its certification tech in relation to the pandemic. 

The dwindling Identity Solutions business more than halved in size, with sales down nearly 60% at £17m.

The group's statutory operating profit was £4.6m compared with a £9.2m loss the prior year.

De La Rue also said that the gross profit for its two ongoing divisions, Authentication and Currency, improved to £38.1m from £34.1m.

Net debt was cut to £21.6m compared with £170.7m the prior year.

Chief executive Clive Vacher said he was satisfied with the group’s progress, and praised the “dedication and resilience” of employees in dealing with the Covid-19 situation.

“Our first half results have shown a substantial improvement in the Group's performance, with very strong growth in adjusted operating profit as we increase efficiencies, resulting in positive cash generation from operating activities. I am satisfied with the progress of the Turnaround Plan so far, which is yielding positive improvements across the company.”

He said the outlook was in line with expectations.

"Our two ongoing divisions, Authentication and Currency, are performing well. We are building strong order books and have secured a number of important strategic wins in the first half of the year.”

Shares in De La Rue fell on the news, and were down 7.7% at 166.89p at the time of writing.