Confident Portals in pounds 19m venture

STRONG orders for banknote paper helped Portals to better-than-expected pre-tax profits of pounds 31m in 1993, a 21.6 per cent rise.

The specialist paper group has signalled its confidence in future demand by announcing a pounds 19m investment in a 4,000-tonne banknote paper machine to come on stream at the beginning of 1996.

Sales and profits rose in both its divisions. In paper operating profits reached a new record of pounds 22.2m, with orders strong for other high security paper as well as banknotes.

The company said these businesses were benefiting from increased demand for features such as watermarks and security threads. Demand for its teabag paper was also buoyant.

Profits at the group's environmental protection division, combining engineering, chemicals and water and air hygiene services, rose slightly to pounds 8.6m after a strong performance in 1992. John Lloyd, Portals' managing director, said the division had successfully ridden out difficulties in Continental markets.

Portals' shares reacted to the results with a 29p rise to 608p. Tim Rothwell, an analyst at BZW, said: 'We were very encouraged. Portals' challenge is to produce as much as they can to meet demand.' He also predicted an improvement in margins in paper-making.

The group ended 1993 with net cash of pounds 16m. It made one acquisition, of a packaging tapes business, last year but Mr Lloyd said: 'The focus is on organic growth of both divisions.' Capital expenditure in 1994 would be higher than usual because of the investment in the new banknote paper machine.

The dividend is increased from 14.5p to 16p.