Cadbury wins pounds 10m in Lottery

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The Independent Online
TOM STEVENSON

City Editor

Cadbury Schweppes will fuel the increasingly vocal opposition to the National Lottery today when full-year figures reveal that it has recovered an pounds 11.5m investment in the game within its first year of operation.

Analysts expect the drinks and confectionery group to announce a profit of more than pounds 10m from its 22.5 per cent stake in Camelot, the Lottery's organiser. In the current year its return is expected to jump again to about pounds 15m.

It will be the latest controversy in Cadbury's involvement with the Lottery. Last month a row erupted between Cadbury and a group of retailers, including J Sainsbury, which demanded an Office of Fair Trading inquiry into Camelot's use of Cadbury's retail database in awarding the first round of 10,000 terminals.

The retailers claimed that this discriminated against non-Cadbury customers. Camelot denied any link existed between whether a shop was awarded a terminal and whether it was a Cadbury customer.

The unexpected success of the Lottery means it has proven a bonanza for the five companies that originally invested in Camelot - GTech, De La Rue, Racal, ICL and Cadbury. All except ICL have 22.5 per cent stakes, with the computer giant holding just 10 per cent.

Although the investments have provided Lottery-style returns for the five companies, their defenders point out that the stakes were far from risk-free. When the money was put into Camelot, it was far from clear that the consortium would be selected to run the Lottery.

Attractive though the return is, the cash return to Cadbury is actually a lot less than the notional profit. Camelot paid out a pounds 9.5m dividend last year, of which Cadbury's share was just over pounds 2m. It is anyway fairly insignificant in the context of pre-tax profits for the year to December which are expected to show a 10 per cent rise to about pounds 525m.

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