DE LA Rue, the Hampshire-based cash and cards systems group, was driven into the red last year after a massive re-organisation of business hit the company with a £50 million bill.

The group, which is a share-holder in the Camelot lottery company, reported losses before tax of £7.4 million for the year to March 31, against a profit of £73.6 million in the previous year. De La Rue was hit by £48.5 million in costs after overhaul-ing its banknote printing business and its cash systems business.

The group also saw its share of profits in Camelot fall to £14 million from £17 million. De La Rue said it expected Camelot profits to keep falling as a results of the structure of the lottery licence.

Total turnover was down to £737.9 from £790.2 million.

But the profits slip in much of its business was not reflect-ed in the group's card systems business which enjoyed a surge in sales.

The card systems division has been boosted by the two high-growth sectors of mobile phones and Pay-TV, both of which use security cards to control their use. Card system sales were up by 31 per cent.

Excluding the exceptional costs, De La Rue saw group profits before tax slip to £57.1 million, a fall of 39 per cent on last year.

But Ian Much, chief executive, said the profits fig-ures in the second half was double that of the first half pointing to a company on the road to recovery.

The banknote business was overhauled after fierce competition drove down profit margins.

The overhaul, which cost £18.7 million in the last financial year, is now complete, the company said, and the group was on target to realise annual savings of £9 million a year.

The overhaul in the cash handling systems business was announced in March and will involve 500 redundancies, which are currently the subject of talks with employee representatives.

The total cost of the cash systems overhaul will be £46 mil-lion.

The group also spent £3.9 million relocating its head office from London to Basingstoke.

Despite the fall in profits the De La Rue board is keeping it dividend unchanged.

Shareholders will receive a final dividend of 8p, taking the total dividend to 12p, unchanged from last year.

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