De La Rue Plc, the other member of the national lottery roundtable at Camelot Plc to report yesterday, saw its shares fall as its results failed to excite the markets. The 14 pence drop to 905 pence was probably due to a combination of figures as expected, a bit of profit-taking, and a warning from the company that the short-term environment was challenging. The company reiterated the warning it gave in March for the current year, saying that earnings growth would only be modest. Pre-tax profits for the banknote and specialist printer rose 13% to ú146.6m, after a one-off reorganisation charge of ú4.9m. Turnover rose 26% to ú747.1m. The warning in March caused the shares to fall 103 pence (CI No 2,618), when the company also announced its intention to sell the non-security paper-making business and assets of the Portals Plc group, which it acquired last year, having integrated the security paper part. Chief executive Jeremy Marshall said that banknote productions and sales were at record levels, with the security paper and print division reporting operating profits up 10% to ú85.1m from turnover up 51% at ú323.5m. The transaction systems unit increased its profits by 78% to ú8.9m, predominantly on the back of electral contracts won for identity systems in South Africa and Mozambique. More growth is exepected from its developing markets, but not at such a rate. Among the associated companies, De La Rue Giori reported a buoyant year, especially with customers from eastern Europe. The ubiquitous UK national lottery earned the company profits of ú2.4m from the 22.5% stake that its associates hold. De La Rue started the year with ú267.7m net cash, and finished with net borrowings of ú118.4m after the Portals acquisition. The company is unsure of its short-term prospects, but said that each of the divisions, particularly after the Portals acquisition, is well-placed within its respective markets. A full dividend of 23 pence will be paid, representing a 15% increase over last year.
