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De La Rue full-year profit hit by loss of post-Brexit passports

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De La Rue full-year profit hit by loss of post-Brexit passports
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By Justin George Varghese

(Reuters) – British banknotes and passports maker De La Rue’s <DLAR.L> full-year operating profit fell 11 percent, in line with its lowered guidance, after it spent money on a failed bid to print post-Brexit UK passports and made less profit on its paper business.

De La Rue’s adjusted operating profit fell to 62.8 million pounds in the year ended March 31, from 70.7 million pounds a year earlier. The company said it expected this year’s profit to be in line with last year’s.

“While losing the new UK passport tender was disappointing, it does not change our goals, nor does it detract from the underlying performance of the Group which remains strong,” said chief executive Martin Sutherland.

De La Rue shares were expected to open around 1 percent lower, according to traders.

Full-year revenue rose 7 percent to 494 million pounds, and the company maintained its full-year dividend per share at 25 pence from last year.

De La Rue warned last month that underlying operating profit for the year would be in the low to mid 60s of millions of pounds. It sold its paper business last year to reduce volatility and is focusing on less capital-intensive technology.

The 60 million pounds in proceeds for the sale, along with a huge reduction in pension liabilities due to a change in the inflation measure it uses to calculate the deficit, helped it more than halve net debt to 49.9 million pounds, its lowest in five years.

“The stronger balance sheet creates greater flexibility for the Group to allocate capital to deliver long term shareholder value,” De La Rue said.

De La Rue lost a contract for Britain’s new post-Brexit blue passports to Franco-Dutch digital security group Gemalto <GTO.AS> last month, leading to a 4 million-pound writeoff. It said last month it would not challenge the decision.

The company’s troubles have been compounded with the resignation of chief financial officer Jitesh Sodha in March following a previous profit warning. De La Rue said on Wednesday Helen Willis, most recently CFO of electronics distributor Premier Farnell, would take over as interim finance chief.

Revenue at De La Rue’s currency business, its biggest unit which specialises in printing, security threads and holographic features for banknotes, rose by 6 percent year-on-year, but adjusted operating profit fell 10 percent.

(Reporting By Justin George Varghese in Bengaluru; Editing by Georgina Prodhan)

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