At the same time, De La Rue issued its second profit warning in a month as its counts the cost of losing out on the £490m contract to the French-Dutch firm Gemalto.

The company, which also makes the new polymer bank notes, warned that underlying operating profit was now expected to be in low to mid £60m range for the year to 31 March. It followed a profits warning less than month ago, when De La Rue predicted profits of between £71m and £73m.

The firm said the lower profits expectation reflected “the write off of the [about] £4m bid costs related to the UK passport tender and delays in the shipment of certain contracts in the last week of the period”.

De La Rue’s decision to walk away comes just two weeks after it said it would appeal against the Passport Office’s controversial decision on the new blue passport.

De La Rue said on Wednesday it would continue to make the current burgundy version of the UK passport under its existing contract.

“The group today announces it will not appeal against HMPO’s decision on the UK passport tender. 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.”

Angela Monaghan