TIDMAPI
9 June 2011
API Group plc
("API" or the "Group")
Final Results
API Group plc (AIM: API), the specialist foils and packaging materials group,
today releases final results for the year ended 31 March 2011.
* Full year sales ahead 26.2% to GBP100.0m (2010: GBP79.2m).
* Operating profits from continuing operations doubled to GBP5.2m (2010: GBP2.6m,
including GBP0.6m exceptional costs).
* All business units profitable, with particularly strong sales and profit
growth from Laminates. Foils margins impacted by exceptional increases in
raw material costs.
* Profit before tax from continuing operations of GBP2.9m (2010: GBP0.3m loss).
* Loss attributable to API shareholders from discontinued operations of GBP0.6m
following disposal of stake in 51% owned Chinese subsidiary.
* IAS 19 pension deficit (net of deferred tax) down to GBP7.2m ( GBP11.8m).
* Basic earnings per share from continuing operations of 3.5p (2010: 3.4p).
* Cash flow from operating activities GBP8.5m (2010: - GBP0.8m).
* Net debt down from GBP18.5m to GBP8.5m. Net debt to EBITDA at 1.1x (2010:
3.9x).
Commenting, API's non-executive Chairman, Richard Wright said:
"The year has seen a step change in many aspects of the Group's financial
position and it is particularly encouraging that, despite facing the challenge
of unprecedented increases in the cost of raw materials, the Group has delivered
its best trading performance for a number of years.
Results will continue to be influenced by the uncertain economic climate and by
customer decisions affecting our more significant supply positions. In the
meantime, management is focussed on improving the quality and resilience of our
earnings, and restoring margins in our Foils businesses is a particular
priority.
Overall, recent progress has been encouraging and the Board continues to see
good potential for additional profit growth and value creation."
Enquiries:
Andrew Turner Chief Executive +44 (0) 1625 650334
API Group plc
Chris Smith Finance Director +44 (0) 1625 650334
API Group plc
Tony Rawlinson / Avi Robinson Nominated Adviser +44 (0) 20 7148 7900
Cairn Financial Advisers LLP
James Serjeant Broker +44 (0) 20 7260 1000
Numis Securities Limited
Chairman's Statement
This statement to shareholders comes at the end of a year which has seen a step
change in many aspects of the Group's financial position and it is particularly
encouraging that, despite facing the challenge of unprecedented increases in the
cost of raw materials, the Group has delivered its best trading performance for
a number of years.
For the year ended 31 March 2011, full year sales of GBP100.0m are up 26.2% (25.7%
at constant exchange rates) compared to the previous 12 month period. Operating
profits from continuing operations increased by GBP2.6m to GBP5.2m. Year end net
debt of GBP8.5m was GBP10.0m lower than March 2010, with the ratio of net debt to
EBITDA reduced to 1.1x. Gearing of 56% compares to 107% at the prior year end.
Following the encouraging trading seen at the interim stage, further progress
was made in the second half of the year with sales advancing an additional
12.5%.
The Laminates business has been the key driver behind the increase in activity,
with full year revenues rebounding by 58.3% from the weakened levels of
2009/10. The unit responded to strong demand from established customers in the
alcoholic drinks and tobacco sectors while keeping a tight grip on production
costs, delivering an EBIT margin of 11.8% (2010: 7.3%) and operating profits of
GBP5.2m compared to GBP2.0m last year. I was recently delighted to present the API
Chairman's award to the whole Laminates team in recognition of their
contribution to the Group's performance in 2010/11.
We indicated in our interim statement that the Foils businesses were starting to
be impacted by significant and exceptional increases in the costs of raw
materials; a trend which accelerated through the second half. A key factor was
the tightening in availability of thin gauge polyester film caused by a number
of established suppliers withdrawing from the market and from under-investment
in new capacity during the global financial crisis. Competition for supplies
led market prices to increase in excess of 100% compared to a year earlier.
Swingeing new import tariffs exacerbated the situation in the US. Suppliers
also rationalised capacity on other key raw materials, resulting in increased
costs for solvents, resins and pigments. API was left with no choice but to
raise prices to customers; the first significant general price rise for several
years in our highly competitive sector.
The inevitable time lag between input cost rises and the impact of our own
pricing actions suppressed profits in the Foils businesses during the second
half. Foils Europe consequently saw operating profits fall by 43.3% to GBP1.4m
despite revenues increasing by 10.9%. Foils Americas continued its steady
recovery from the low point of the 2008 economic crisis and profits improved to
GBP0.2m from a GBP0.1m loss last time in spite of a similar margin squeeze to that
experienced in Europe.
The disposal of the Group's interest in its 51% owned subsidiary in China in
January 2011 was a key step in the turnaround of the Group's financial
performance. While the Chinese venture made a positive contribution to the
Group over the full 12 year period of API's involvement, increased competition
in the local foil market and erosion of margins on export business meant that
trading losses in recent years had become unsustainable. The Board took the
view that the Group's resources would be more profitably deployed in our
remaining businesses and therefore decided to dispose of our interest to one of
the existing minority partners. The Board extends its appreciation to our
former Chinese partners with whom good relations have been maintained throughout
the joint venture and we offer our good wishes for the future success of the
business under the new structure of ownership.
In addition to the improvement in the Group's debt position, the IAS 19 pension
deficit reduced by GBP6.7m, mostly due to lower inflation assumptions affecting
the closed UK defined benefit scheme We continue to work actively with the
scheme trustees to seek ways of reducing the Group's exposure to volatility in
the assessment of our ongoing obligations.
Dividend
In view of the continuing priority being given to debt reduction, the Board is
not recommending the payment of a dividend.
Board
There were no changes in the composition of the Board since the last Annual
Report. The Board continues to function well and benefits from the
participation of the directors nominated by our two leading shareholders.
Our People
The Board would like to thank all the Group's employees for their hard work and
valuable contribution to the improved business performance seen over the past
year.
Outlook
Trading during the early months of the new financial year has been broadly in
line with the second half of 2010/11. At this stage, the strong run of demand
at API Laminates is continuing and orders on all the Group's manufacturing
plants are at a good level.
The situation on raw material costs and availability remains a concern. While
upward pressure on polyester film prices is expected to ease as new capacity
comes on stream, pressures affecting other raw materials have if anything
intensified in response to higher oil prices and a more concentrated supply
base.
Results will inevitably be influenced by developments in the rather uncertain
global economic environment as well as customer decisions affecting our more
significant supply positions. In the meantime, management focus will be on cost
containment, margin recovery in the Foils businesses and continuing to develop
the quality and resilience of the Group's operations as a platform for long term
profitable growth.
Richard C. Wright
Non-Executive Chairman
Business Review
Basis of Presentation of Group Results
As a consequence of the Group's disposal of its interest in Shanghai Shen Yong
Stamping Foil Company Limited, results for the China business unit, whilst still
being reported on a fully consolidated basis, have been classified under
discontinued operations in the income statement and comparatives re-stated
accordingly.
Continuing operations now comprise the European packaging laminates business,
foil manufacturing and distribution operations based in North America and Europe
and foils distribution units located in the Asia Pacific region. The latter
have been incorporated into European Foils for reporting purposes.
Group Operating Results
For the 12 months to March 2011, Group sales from continuing operations were
GBP100.0m, which at constant exchange rates represents a 25.7% increase on the
prior year (26.2% at actual rates). Year on year growth recorded in the second
half of 28.2% exceeded first half growth of 22.9% (all at constant exchange
rates) due to a combination of increased volumes and higher selling prices.
Operating profit from continuing operations before exceptional items was GBP5.2m,
up from GBP3.3m in the previous 12 months. No exceptional items have been
recorded compared to costs of GBP0.6m in the year to 31 March 2010.
The Group enjoyed a strong resurgence in demand in the Laminates business which
delivered a profit increase of GBP3.2m compared to the prior year. This was
offset by margin pressures in the Foils businesses as a result of significant
raw material cost increases during the second half, partly offset by price
increases passed on to customers towards the end of the period. Foils Europe
saw operating profits fall GBP1.1m whilst Foils Americas improved by GBP0.3m as
volume recovery more than offset the impact of lower margins. Central costs
increased GBP0.5m.
Foils Europe
The European Foils division now includes the results of the Asia Pacific
distribution businesses. Revenues originating in the business were 10.9% higher
at GBP37.0m (11.0% at constant FX) but operating profits ended the year 43.3%
lower at GBP1.4m. The business suffered margin erosion from exceptional
increases in raw material prices as well as less favourable currency exchange
rates compared to the previous year. Raw material price pressures intensified
as the year progressed and two rounds of general selling price increases were
necessary to protect margins. Given the pace of developments on the raw
material side and the competitive nature of the foils market, there was a lag in
passing through the necessary increases. The consequent squeeze on margins is
estimated to have resulted in GBP0.9m of lost profit during the year. The year on
year exchange rate impact is calculated at an adverse GBP0.3m.
Excluding the contribution from higher selling prices, external sales increased
by 2.8% with an additional 5.3% growth contributed by inter-company sales to
Laminates. Sales mix improved with the pipeline of holographics projects
delivering increased volumes in the second half year. Sales from the Asia
Pacific distribution businesses were ahead by 15%, primarily as a result of
strong trading in Hong Kong and Australia.
Operating costs increased to cater for higher production volumes and continued
investment in product R&D and the sales function, leaving operating margins at
3.9% compared with 7.5% for the previous year.
Foils Americas
Sales of GBP23.2m were 15.7% higher than last year (13.2% higher at constant
exchange rates). Underlying sales, excluding the impact of increasing prices,
were ahead 9.3%. The key contributor to growth was strong demand for API's
market-leading metallic ink intermediary. Otherwise, improving conditions in
the packaging sector were offset by further decline in sales to greeting cards
customers.
As with our European Foils business, margins were undermined by raw material
cost rises and the time lag in passing these through to customers in higher
selling prices with an estimated net impact of GBP0.7m. However, in this case,
the margin squeeze was more than offset by operational leverage on increased
volumes. Despite one-off re-organisation costs of GBP0.2m, operating profit for
the full year improved by GBP0.3m to GBP0.2m (2010: GBP0.1m loss). Progress in the
second half was encouraging after a break-even result at the interim stage.
Laminates
API Laminates added another strong half year to the one reported at the interim
stage. Second half revenues were 73.3% higher than the same period last year
and the full year growth rate was 58.3%. Higher activity levels for new
packaging designs across a number of sectors, restocking of the supply chain in
the alcoholic drink sector and a number of high volume contract wins,
particularly with tobacco end users, were the main drivers behind the
performance.
The business responded well to the upsurge in demand. Quality and service
levels were maintained and costs were kept under tight control to deliver a
GBP3.2m improvement in operating profits to GBP5.2m and an operating margin of
11.8% (2010: 7.3%).
Central Costs
Central costs in the year were up GBP0.5m due to costs relating to short and long
term incentive arrangements ( GBP0.4m) and a non recurring one off gain in the
prior year of GBP0.2m.
Exceptional Items
No exceptional items have been disclosed for the 12 months to 31 March 2011. In
the previous year, there was a charge of GBP0.6m relating to cost reduction
programmes in the UK and North America.
Discontinued Operations
The Group disposed of its 51% ownership in Shanghai Shen Yong Stamping Foil Co.
Ltd on 24 January 2011. As a consequence, trading results to the date of
disposal, including prior period comparatives, and the accounting entries
relating to the disposal have been classified under discontinued operations.
The results of the China business to the date of disposal include operating
losses and interest costs of GBP1.5m and an impairment charge of GBP5.9m recorded at
the interim stage to reflect the fair value of assets less the costs to sell.
These charges represent 100% of the impact from the China business. API
Shareholders share of the losses amounts to GBP3.8m which has been offset by a
gain on disposal of discontinued businesses of GBP3.2m. Included in the GBP3.2m
figure is a gain of GBP2.6m, transferred from the Foreign Exchange Reserve, which
has arisen from appreciation in the sterling value of Chinese assets as a result
of the strengthening Chinese currency during the lifetime of API's investment.
Further details are provided in Note 6 to these statements.
Impairment
With the exception of the impairment to fixed assets in China, the Board
considers that no other impairments to goodwill or asset carrying values are
necessary.
Finance Costs
Net finance costs for the 12 months ended 31 March 2011 were GBP2.3m including a
GBP1.0m non-cash charge relating to defined benefit pension schemes. Interest on
the Group's borrowings reduced by GBP0.5m as a result of lower average interest
rates and reduced debt levels. During the year, the Group repaid in full its
high margin PIK loans in the UK and rates on the balance of the UK debt reduced
by 0.75% on achieving target debt-cover ratios. Pension finance costs, which
reduced GBP0.2m, relate to non-cash accounting entries associated with higher
returns on UK pension scheme assets. Further details are provided in Note 4 to
these statements.
Taxation
For the 12 months to 31 March 2011, a tax charge of GBP0.3m was incurred, compared
with a tax credit of GBP2.8m for the previous year.
As a result of improved profit levels in the continuing businesses, the Group
recognised additional deferred tax assets of GBP2.9m at 31 March 2010. For the
year to 31 March 2011, further tax assets of GBP1.1m have been recognised in light
of continuing profitability which offsets a deferred tax charge of GBP1.0m.
Deferred tax assets associated with pension liabilities reduced from GBP4.6m at
March 2010 to GBP2.5m at 31 March 2011 in line with the fall in the net pension
deficit.
Earnings per Share
Basic earnings per share from continuing operations were 3.5p. This compares to
3.4p for the year ending 31 March 2010, after a 3.8p credit relating to
recognition of deferred tax assets.
Capital Management
The primary purpose of the Group's capital management is to ensure the
maintenance of healthy capital ratios in order to support day-to-day business
operations and the achievement of strategic objectives. The Group manages its
capital structure and makes adjustments to it in the light of changes in
economic conditions and the financial position of the Group. Capital, which
comprises total equity, is monitored using normal financial ratios, primarily
gearing for the Group overall and a debt cover ratio associated with the main
bank facilities in the UK. The ratios at 31 March 2011 are disclosed in
subsequent sections of this Business Review.
During the year ending 31 March 2010, as part of the refinancing of the Group's
main UK bank facilities, warrants for ordinary shares were issued to Barclays
plc at an exercise price of 1p and representing 4.8% of post warrant share
capital. These Warrants were exercised in full in October 2010.
Cash Flow and Net Debt
For the 12 month period to 31 March 2011, the Group reported a net cash inflow
from operating activities of GBP8.5m compared to an outflow of GBP0.8m for the year
to 31 March 2010.
Despite higher activity levels, year end working capital for continuing
operations was lower by GBP0.9m compared to 12 months earlier. Working capital
efficiency, measured by reference to the trailing three month average level of
sales, was 8.7% compared to 12.9% at 31 March 2010.
Cash flows relating to capital investment in the year amounted to GBP1.2m (2010:
GBP1.2m). Depreciation for the year was GBP2.9m.
Interest expense cash flow remained flat year on year at GBP1.5m. Timing
differences on loan maturities are the key reason cash interest costs did not
reduce in line with the reduction recorded in the income statement.
Net debt (financial liabilities excluding the fair value of derivatives, less
cash) reduced during the year by GBP10.0m to GBP8.5m at 31 March 2011. Of this debt
reduction, cash proceeds from the disposal of the investment in China accounted
for GBP1.8m and debt transferred to the acquirer for a further GBP2.4m.
Gearing reduced to 56% at 31 March 2011 compared to 107% one year earlier and
the ratio of the Group's net debt to EBITDA fell to 1.1x (2010: 3.9x).
Borrowings and Liquidity
The Group's policy is to ensure that bank facilities and other funding are
sufficient to meet foreseeable peak borrowing requirements. Facilities are in
place to independently finance the Group's main operations based in the UK and
North America.
The Group's UK banking facilities are with Barclays Bank plc and are in place
until July 2013. Facilities at 31 March 2011 totalled GBP14.1m comprising an
amortising loan of GBP6.8m repayable over the term of the facility with a final
GBP4.25m due in July 2013, a term loan of GBP3.75m repayable July 2013 and a multi-
option overdraft facility of GBP3.5m renewable in November 2011. UK borrowings
are secured against the Group's UK assets and are subject to four quarterly
financial covenant targets.
New North American banking facilities with Wells Fargo Bank were established in
May 2010 and comprise a $2.1m amortising loan and a $5.5m asset based overdraft
facility. Borrowings are secured on working capital, the Kansas property and
plant and equipment and are subject to quarterly covenant targets.
Foreign Currency Exchange Rates
Exchange rates used for the translation of results and assets of US, Euro zone
and China based operations are shown below.
+------------------------------+---------------------------+
| Average | Closing |
+----------+-------------+----------------+-------------+-------------+
|Rate to GBP1| 12 months to| 12 months to| As at| As at|
| |31 March 2011|31 March( ) 2010|31 March 2011|31 March 2010|
+----------+-------------+----------------+-------------+-------------+
|US $ | 1.56| 1.59| 1.60| 1.52|
+----------+-------------+----------------+-------------+-------------+
|Euro | 1.18| 1.13| 1.13| 1.12|
+----------+-------------+----------------+-------------+-------------+
|RMB | 10.36| 10.86| 10.50| 10.35|
+----------+-------------+----------------+-------------+-------------+
Pensions
The Group operates a number of pension schemes for the benefit of its past and
current employees. UK and US defined benefit pension plans, both of which are
closed to future accrual, are accounted for under IAS 19. At 31 March 2011 the
Group's IAS 19 gross pension liability was assessed at GBP9.7m (2010: GBP16.4m) with
a net liability of GBP7.2m (2010: GBP11.8m) after accounting for a deferred tax
asset of GBP2.5m (2010: GBP4.6m).
The UK scheme, the API Group plc Pension and Life Assurance Fund, has
approximately 1,620 pensioners and deferred members and accounts for GBP9.0m
(2010: GBP15.7m) of the total gross pension liability. The valuation of the UK
scheme benefited from above target asset investment performance ( GBP0.7m) and a
change to the basis of inflation rates used to calculate liabilities ( GBP8.0m).
The latter reflects a change in policy by the UK Government to link 'statutory
inflation' to the published CPI measure rather than RPI. Discount rates used to
value the scheme liabilities have remained broadly unchanged at 5.55% compared
to 5.65% at 31 March 2010. The UK scheme has admitted no new members since
October 2006 and the scheme was closed to future service accrual on 31 December
2008.
The UK scheme's actuaries are currently in the process of preparing the latest
triennial valuation as of 30 September 2010. The previous valuation, at 30
September 2007, calculated a funding deficit of GBP8.7m on a continuing basis.
Following the 2007 valuation, the company and Scheme Trustees agreed a funding
plan and schedule of contributions aimed at reducing the deficit to zero over a
10 year period. During the year to 31 March 2011, the Group made additional
contributions into the scheme of GBP0.4m. This contribution rate has increased to
GBP0.7m per year from January 2011. The company also pays all pension related
administration fees on behalf of the Fund.
The US defined benefit scheme was closed to new entrants and future accrual in
2004. Members comprise approximately 170 current and past employees. Details
of the net deficit of GBP0.7m (2010: GBP0.7m) are included in Note 10 to these
statements.
Current and past US employees covered by union contracts at the Group's
manufacturing facility in Rahway, New Jersey are members of a multi-employer
defined benefit pension plan. This scheme remains open and operates under the
terms of the site's collective bargaining agreement. In accordance with IAS 19,
this scheme is accounted for as a defined contribution plan.
Group Income Statement
for the year ended 31 March 2011
Year ended
31 March Year ended
2011 31 March 2010
Note GBP'000 GBP'000
Continuing operations
Revenue 2 99,963 79,192
Cost of sales (76,386) (60,541)
-------------- ----------------
Gross profit 23,577 18,651
Distribution costs (3,284) (2,307)
Administrative expenses (15,099) (13,078)
-------------- ----------------
Operating profit before exceptional items 2 5,194 3,266
Exceptional items 3 - (626)
-------------- ----------------
Operating profit from continuing operations 5,194 2,640
Finance revenue 4 17 40
Finance costs 4 (2,354) (3,018)
-------------- ----------------
(2,337) (2,978)
-------------- ----------------
Profit/(loss) on continuing activities
before taxation 2,857 (338)
Tax (expense)/credit 5 (265) 2,804
-------------- ----------------
Profit from continuing operations 2,592 2,466
Discontinued operations
Loss from discontinued operations 6 (4,124) (4,358)
-------------- ----------------
Loss for the year (1,532) (1,892)
-------------- ----------------
Profit/(loss) attributable to equity
holders of the
parent
* continuing operations 2,592 2,466
* discontinued operations (612) (2,342)
-------------- ----------------
1,980 124
Loss attributable to non-controlling
interest
* discontinued operations (3,512) (2,016)
-------------- ----------------
Loss for the year (1,532) (1,892)
-------------- ----------------
Earnings per share (pence)
Basic earnings per share from continuing 7
operations 3.5 3.4
Diluted earnings per share from continuing 7
operations 3.4 3.2
Basic earnings per share on profit for the
year 7 2.7 0.2
Diluted earnings per share on profit for the
year 7 2.6 0.2
Group Statement of Comprehensive Income
Year ended
31 March 2011 Equity holders of the Non-controlling
parent interests Total
GBP'000 GBP'000 GBP'000
Profit/(loss)
for the year 1,980 (3,512) (1,532)
------------------------ ------------------------ --------------------------------
Exchange
differences
on
retranslation
of foreign
operations (379) (13) (392)
Loss arising
on net asset
hedge (121) - (121)
Change in
fair value of
effective
cash flow
hedges (329) - (329)
Actuarial
gains on
defined
benefit
pension plans 6,586 - 6,586
Tax on items
relating to
components of
other
comprehensive
income (2,104) - (2,104)
------------------------ ------------------------ --------------------------------
Other
comprehensive
income for
the year, net
of tax 3,653 (13) 3,640
------------------------ ------------------------ --------------------------------
Total
comprehensive
income for
the year 5,633 (3,525) 2,108
------------------------ ------------------------ --------------------------------
Year ended
31 March 2010 Equity holders of the Non-controlling
parent interests Total
GBP'000 GBP'000 GBP'000
Profit/(loss)
for the year 124 (2,016) (1,892)
------------------------ ------------------------ --------------------------------
Exchange
differences
on
retranslation
of foreign
operations (878) (382) (1,260)
Gain arising
on net asset
hedge 695 - 695
Change in
fair value of
effective
cash flow
hedges 108 - 108
Actuarial
losses on
defined
benefit
pension plans (9,085) - (9,085)
Tax on items
relating to
components of
other
comprehensive
income 2,544 - 2,544
------------------------ ------------------------ --------------------------------
Other
comprehensive
income for
the year, net
of tax (6,616) (382) (6,998)
------------------------ ------------------------ --------------------------------
Total
comprehensive
income for
the year (6,492) (2,398) (8,890)
------------------------ ------------------------ --------------------------------
Group Balance Sheet
at 31 March 2011
31 March 2011 31 March 2010
Note GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 8 16,804 28,772
Intangible assets - goodwill 5,188 5,188
Trade and other receivables 94 134
Deferred tax assets 5 5,478 7,738
--------------- --------------
27,564 41,832
--------------- --------------
Current assets
Trade and other receivables 16,848 16,697
Inventories 12,409 13,110
Cash at bank and in hand 4,175 1,041
--------------- --------------
33,432 30,848
--------------- --------------
--------------- --------------
Total assets 60,996 72,680
--------------- --------------
Liabilities
Current liabilities
Trade and other payables 21,952 18,444
Financial liabilities 9 2,830 5,416
Income tax payable 365 346
--------------- --------------
25,147 24,206
--------------- --------------
Non-current liabilities
Financial liabilities 9 10,514 14,404
Deferred tax liabilities 5 238 256
Provisions 85 97
Deficit on defined benefit pension plans 10 9,719 16,406
--------------- --------------
20,556 31,163
--------------- --------------
--------------- --------------
Total liabilities 45,703 55,369
--------------- --------------
--------------- --------------
Net assets 15,293 17,311
--------------- --------------
Equity
Called up share capital 766 701
Share premium 7,136 7,136
Other reserves 8,565 8,595
Foreign exchange reserve 259 3,309
Retained loss (1,433) (7,805)
--------------- --------------
API Group shareholders' equity 15,293 11,936
Non-controlling interest - 5,375
--------------- --------------
Total equity 15,293 17,311
--------------- --------------
Group Statement of Changes in Equity
for the year ended 31 March 2011
| | | | | | Total
| Equity| | | Foreign| | share-
| share| Share| Other| exchange| Retained| holders'
| capital| premium| reserves| reserve| earnings| equity
=---------------+---------+---------+----------+----------+----------+---------
| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000
=---------------+---------+---------+----------+----------+----------+---------
At 1 April 2009| 701| 7,136| 8,595| 3,492| (1,526)| 18,398
=---------------+---------+---------+----------+----------+----------+---------
Profit for the | | | | | |
year | -| -| -| -| 124| 124
=---------------+---------+---------+----------+----------+----------+---------
Other | | | | | |
comprehensive | | | | | |
income: | | | | | |
=---------------+---------+---------+----------+----------+----------+---------
Exchange | | | | | |
differences on | | | | | |
retranslation | | | | | |
of foreign | | | | | |
operations | -| -| -| (878)| -| (878)
=---------------+---------+---------+----------+----------+----------+---------
Gain arising on| | | | | |
net asset hedge| -| -| -| 695| -| 695
=---------------+---------+---------+----------+----------+----------+---------
Change in fair | | | | | |
value of | | | | | |
effective cash | | | | | |
flow hedges | -| -| -| -| 108| 108
=---------------+---------+---------+----------+----------+----------+---------
Actuarial | | | | | |
losses on | | | | | |
defined benefit| | | | | |
pension plans | -| -| -| -| (9,085)| (9,085)
=---------------+---------+---------+----------+----------+----------+---------
Tax on items | | | | | |
relating to | | | | | |
components of | | | | | |
other | | | | | |
comprehensive | | | | | |
income | -| -| -| -| 2,544| 2,544
=---------------+---------+---------+----------+----------+----------+---------
Total | | | | | |
comprehensive | | | | | |
expense for the| | | | | |
year | -| -| -| (183)| (6,309)| (6,492)
=---------------+---------+---------+----------+----------+----------+---------
Share based | | | | | |
payments | -| -| -| -| 30| 30
=---------------+---------+---------+----------+----------+----------+---------
At 31 March | | | | | |
2010 | 701| 7,136| 8,595| 3,309| (7,805)| 11,936
=---------------+---------+---------+----------+----------+----------+---------
Profit for the | | | | | |
year | -| -| -| -| 1,980| 1,980
=---------------+---------+---------+----------+----------+----------+---------
Other | | | | | |
comprehensive | | | | | |
income: | | | | | |
=---------------+---------+---------+----------+----------+----------+---------
Exchange | | | | | |
differences on | | | | | |
retranslation | | | | | |
of foreign | | | | (379)| |
operations | -| -| -| | -| (379)
=---------------+---------+---------+----------+----------+----------+---------
Loss arising on| | | | | |
net asset hedge| -| -| -| (121)| -| (121)
=---------------+---------+---------+----------+----------+----------+---------
Change in fair | | | | | |
value of | | | | | |
effective cash | | | | | |
flow hedges | -| -| -| -| (329)| (329)
=---------------+---------+---------+----------+----------+----------+---------
Actuarial gains| | | | | |
on defined | | | | | |
benefit pension| | | | | |
plans | -| -| -| -| 6,586| 6,586
=---------------+---------+---------+----------+----------+----------+---------
Tax on items | | | | | |
relating to | | | | | |
components of | | | | | |
other | | | | | |
comprehensive | | | | | |
income | -| -| -| -| (2,104)| (2,104)
=---------------+---------+---------+----------+----------+----------+---------
Total | | | | | |
comprehensive | | | | | |
income for the | | | | | |
year | -| -| -| (500)| 6,133| 5,633
=---------------+---------+---------+----------+----------+----------+---------
Transfer to | | | | | |
income | | | | | |
statement on | | | | | |
disposal of | | | | | |
subsidiaries | -| -| -| (2,550)| -| (2,550)
=---------------+---------+---------+----------+----------+----------+---------
Issue of shares| 65| -| -| -| -| 65
=---------------+---------+---------+----------+----------+----------+---------
Shares acquired| | | | | |
by Employee | | | | | |
Benefit Trust | -| -| (30)| -| -| (30)
=---------------+---------+---------+----------+----------+----------+---------
Share based | | | | | |
payments | -| -| -| -| 239| 239
=---------------+---------+---------+----------+----------+----------+---------
At 31 March | | | | | |
2011 | 766| 7,136| 8,565| 259| (1,433)| 15,293
+---------+---------+----------+----------+----------+---------
| | | | Non-controlling| |
| |Shareholders' equity| | interest| |Total equity
=--------------------+-+--------------------+-+-----------------+-+------------
| | GBP'000| | GBP'000| | GBP'000
=--------------------+-+--------------------+-+-----------------+-+------------
At 1 April 2009 | | 18,398| | 7,773| | 26,171
=--------------------+-+--------------------+-+-----------------+-+------------
Total comprehensive | | | | | |
income for the year | | (6,492)| | (2,398)| | (8,890)
=--------------------+-+--------------------+-+-----------------+-+------------
Share based payments| | 30| | -| | 30
=--------------------+-+--------------------+-+-----------------+-+------------
At 31 March 2010 | | 11,936| | 5,375| | 17,311
=--------------------+-+--------------------+-+-----------------+-+------------
Total comprehensive | | | | | |
income for the year | | 5,633| | (3,525)| | 2,108
=--------------------+-+--------------------+-+-----------------+-+------------
Transfer to income | | | | | |
statement on | | | | | |
disposal of | | | | | |
subsidiaries | | (2,550)| | -| | (2,550)
=--------------------+-+--------------------+-+-----------------+-+------------
Elimination of | | | | | |
minority interest on| | | | | |
disposal | | | | (1,850)| | (1,850)
=--------------------+-+--------------------+-+-----------------+-+------------
Issue of shares | | 65| | -| | 65
=--------------------+-+--------------------+-+-----------------+-+------------
Shares acquired by | | | | | |
Employee Benefit | | | | | |
Trust | | (30)| | -| | (30)
=--------------------+-+--------------------+-+-----------------+-+------------
Share based payments| | 239| | -| | 239
=--------------------+-+--------------------+-+-----------------+-+------------
At 31 March 2011 | | 15,293| | -| | 15,293
| +--------------------+ +-----------------+ +------------
Group Cash Flow Statement
for the year ended 31 March 2011
| | Year ended| | Year ended
| |31 March 2011| |31 March 2010
=----------------------------------------------+-+-------------+-+-------------
| | GBP'000| | GBP'000
=----------------------------------------------+-+-------------+-+-------------
| | | |
=----------------------------------------------+-+-------------+-+-------------
Operating activities | | | |
=----------------------------------------------+-+-------------+-+-------------
Group profit/(loss) before tax from continuing| | | |
operations | | 2,857| | (338)
=----------------------------------------------+-+-------------+-+-------------
Adjustments to reconcile Group profit/(loss) | | | |
before tax to | | | |
net cash flow from operating activities | | | |
Operating loss from discontinued activities | | (7,215)| | (7,752)
=----------------------------------------------+-+-------------+-+-------------
Net finance costs | | 2,337| | 2,978
=----------------------------------------------+-+-------------+-+-------------
Depreciation of property, plant and equipment | | 2,942| | 3,820
=----------------------------------------------+-+-------------+-+-------------
Impairment of property, plant and equipment | | 5,850| | 5,083
=----------------------------------------------+-+-------------+-+-------------
Loss on disposal of property, plant and | | | |
equipment | | 28| | 10
=----------------------------------------------+-+-------------+-+-------------
Movement in fair value foreign exchange | | | |
contracts | | 78| | -
=----------------------------------------------+-+-------------+-+-------------
Share-based payments | | 239| | 30
=----------------------------------------------+-+-------------+-+-------------
Difference between pension contributions paid | | | |
and amounts recognised in the income statement| | (1,037)| | (854)
=----------------------------------------------+-+-------------+-+-------------
Increase in inventories | | (2,047)| | (590)
=----------------------------------------------+-+-------------+-+-------------
Increase in trade and other receivables | | (2,588)| | (2,302)
=----------------------------------------------+-+-------------+-+-------------
Increase/(decrease) in trade and other | | | |
payables | | 7,201| | (862)
=----------------------------------------------+-+-------------+-+-------------
Movement in provisions | | (12)| | 36
=----------------------------------------------+-+-------------+-+-------------
Cash generated from/(used in) operations | | 8,633| | (741)
=----------------------------------------------+-+-------------+-+-------------
Income taxes paid | | (140)| | (96)
=----------------------------------------------+-+-------------+-+-------------
Net cash flow from operating activities | | 8,493| | (837)
=----------------------------------------------+-+-------------+-+-------------
| | | |
=----------------------------------------------+-+-------------+-+-------------
Investing activities | | | |
=----------------------------------------------+-+-------------+-+-------------
Interest received | | 17| | 40
=----------------------------------------------+-+-------------+-+-------------
Purchase of property, plant and equipment | | (1,153)| | (1,193)
=----------------------------------------------+-+-------------+-+-------------
Sale of property, plant and equipment | | 21| | 30
=----------------------------------------------+-+-------------+-+-------------
Sale of subsidiary undertakings | | 1,783| | -
=----------------------------------------------+-+-------------+-+-------------
Cash and cash equivalents of subsidiary | | | |
undertakings sold | | (296)| | -
=----------------------------------------------+-+-------------+-+-------------
Payment of legal costs in respect of | | | |
discontinued operations | | -| | (12)
=----------------------------------------------+-+-------------+-+-------------
Net cash flow from investing activities | | 372| | (1,135)
=----------------------------------------------+-+-------------+-+-------------
| | | |
=----------------------------------------------+-+-------------+-+-------------
Financing activities | | | |
=----------------------------------------------+-+-------------+-+-------------
Interest paid | | (1,480)| | (1,458)
=----------------------------------------------+-+-------------+-+-------------
Dividends paid to minority interests | | -| | (434)
=----------------------------------------------+-+-------------+-+-------------
Proceeds from share issues | | 65| | -
=----------------------------------------------+-+-------------+-+-------------
Purchase of shares by Employee Benefit Trust | | (30)| | -
=----------------------------------------------+-+-------------+-+-------------
New borrowings | | 1,214| | 7,131
=----------------------------------------------+-+-------------+-+-------------
Repayment of borrowings | | (5,382)| | (3,850)
=----------------------------------------------+-+-------------+-+-------------
Net cash flow from financing activities | | (5,613)| | 1,389
=----------------------------------------------+-+-------------+-+-------------
| | | |
=----------------------------------------------+-+-------------+-+-------------
Increase/(decrease) in cash and cash | | | |
equivalents | | 3,252| | (583)
=----------------------------------------------+-+-------------+-+-------------
Effect of exchange rates on cash and cash | | | |
equivalents | | 13| | (114)
=----------------------------------------------+-+-------------+-+-------------
Cash and cash equivalents at the beginning of | | | |
the period | | (546)| | 151
=----------------------------------------------+-+-------------+-+-------------
Cash and cash equivalents at the end of the | | | |
period | | 2,719| | (546)
=----------------------------------------------+-+-------------+-+-------------
| | | |
Cash and cash equivalents comprise the following:
31 March
31 March 2011 2010
GBP'000 GBP'000
Cash at bank and in hand 4,175 1,041
Bank overdrafts (1,456) (1,587)
----------------------- ------------------------
2,719 (546)
----------------------- ------------------------
NOTES TO THE FINANCIAL STATEMENTS
1. Preparation of financial statements
Publication of abridged accounts
The Group's financial statements for the year ended 31 March 2011 were
authorised for issue by the Board of Directors on 8 June 2010 and the balance
sheet was signed on the Board's behalf by A Turner.
The final results announcement figures for the year ended 31 March 2011 and the
comparative figures for the year ended 31 March 2010 are an abridged version of
the Group's statutory accounts which carry an unmodified audit report. They do
not constitute statutory accounts within the meaning of sections 434 to 436 of
the Companies Act 2006 and no statutory accounts have yet been filed with the
Registrar of Companies for the year ended 31 March 2011. Statutory accounts for
the year ended 31 March 2010 have been filed with the Registrar of Companies.
The auditor's report on these accounts was unqualified and did not contain an
emphasis of matter, nor did it contain a statement under section 498 of the
Companies Act 2006. The statutory accounts for the year ended 31 March 2011 will
be delivered to the registrar of Companies following the Company's Annual
General Meeting.
The Annual Report and Accounts for the year ended 31 March 2011 will be posted
to shareholders by 27 June 2011 prior to the Annual General Meeting on 27 July
2011. Copies of the Annual Report and Accounts will be available to members of
the public from 28 June 2011 at the Group's registered office at Second Avenue,
Poynton Industrial Estate, Poynton, Cheshire SK12 1ND.
API Group plc is a public company incorporated and domiciled in England &
Wales. The company's ordinary shares are traded on the Alternative Investment
Market of the London Stock Exchange.
Basis of preparation
The Group's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) issued by the International
Accounting Standards Board (IASB) as adopted by the European Union as they apply
to the financial statements of the Group for the year ended 31 March 2011 and
applied in accordance with the Companies Act 2006. The Group has applied
optional exemptions available to it under IFRS 1.
The principal accounting policies which apply in preparing the financial
statements for the year ended 31 March 2011 are consistent with those disclosed
in the Group's audited accounts for the year ended 31 March 2010.
The consolidated financial statements are presented in sterling and all values
are rounded to the nearest thousand ( GBP'000) except when otherwise indicated.
Going concern
The Group meets its day-to-day working capital requirements through overdraft
and loan facilities, as detailed in Note 17 of the consolidated financial
statements. The principal facilities relate to the UK and the US. In November
2009, the UK facilities were extended to July 2013. In May 2010, new facilities
were put in place in the US business which extend to October 2013.
While the Group has demonstrated some recovery over the financial year ended 31
March 2011, the unsettled general economic environment in its main European and
US markets could adversely affect demand for its products. The Group's
forecasts and projections, allowing for a possible deterioration in trading
performance, show that the Group has a reasonable expectation of being able to
operate within the level of currently available facilities.
Accordingly, as set out in the Directors' Report, the accounts have been
prepared on the going concern basis.
Accounting policies
The principal accounting policies which apply in preparing the financial
statements for the year ended 31 March 2011 are consistent with those disclosed
in the Group's audited accounts for the year ended 31 March 2010.
A number of new and amended standards and interpretations came into effect for
accounting periods commencing on or after 1 April 2010. Insofar as they are
relevant to the Group's operations, adoption of these standards and
interpretations did not have any material effect on the financial statements of
the Group.
2. Segmental analysis
The Group produces monthly management information to enable the Board, including
the Chief Executive Officer, to monitor the financial performance of its
constituent parts. This information is analysed by business unit. In previous
years, the Asia Pacific unit included the China business and the Asia Pacific
distribution units. Following the disposal of the China business, the results
for the residual businesses within that region have been grouped together with
those of Foils Europe as they are now under common management.
Revenue
Year ended
Year ended 31 March
31 March 2011 2010
GBP'000 GBP'000
Continuing operations
Total revenue by origin
Foils Europe * 36,959 33,328
Foils Americas 23,151 20,020
Laminates 44,321 28,000
------------------------------ ----------------
104,431 81,348
------------------------------ ----------------
Inter-segmental revenue
Foils Europe * 3,705 1,687
Foils Americas 733 469
Laminates 30 -
------------------------------ ----------------
4,468 2,156
------------------------------ ----------------
External revenue by origin
Foils Europe * 33,254 31,641
Foils Americas 22,418 19,551
Laminates 44,291 28,000
------------------------------ ----------------
Segment revenue 99,963 79,192
------------------------------ ----------------
*Foils Europe incorporates the continuing Asia
Pacific businesses
Revenue by products
Total revenue
Foils 57,833 51,565
Laminates 44,321 28,000
------------------------------ ----------------
102,154 79,565
------------------------------ ----------------
Inter-segmental revenue
Foils 2,161 373
Laminates 30 -
------------------------------ ----------------
2,191 373
------------------------------ ----------------
External revenue
Foils 55,672 51,192
Laminates 44,291 28,000
------------------------------ ----------------
99,963 79,192
------------------------------ ----------------
External revenue by destination
Continuing operations
UK 36,881 25,967
Rest of Europe 33,213 28,476
Americas 21,264 18,697
Asia Pacific 7,898 4,602
Africa 707 1,450
---------- ----------
99,963 79,192
---------- ----------
Discontinued operations
Europe 895 227
Asia Pacific 6,530 5,155
---------- ----------
7,425 5,382
---------- ----------
All revenue is derived from the sale of goods.
During the year ended 31 March 2011 there were two major customers, reported
within the Laminates segment, which comprised 10% or more of the total external
revenue, amounting to GBP14,696,000 and GBP11,880,000 respectively (2010: one major
customer within the Laminates segment amounting to GBP11,761,000).
Segment result
| Year ended| |Year ended
| 31 March| | 31 March
| 2011| | 2010
=------------------------------------------------+------------+-+------------
| | |
=------------------------------------------------+------------+-+------------
| GBP'000| | GBP'000
=-----------------------------------------------++------+-----+-+------------
Continuing operations | | |
Operating profit/(loss) | | |
=-----------------------------------------------+-------+-------++-------+---
Foils Europe * | 1,424| | 2,510|
=-----------------------------------------------+-------+--------+-------+---
Foils Americas | 244| | (64)|
=-----------------------------------------------+-------+--------+-------+---
Laminates | 5,245| | 2,034|
=-----------------------------------------------+-------+--------+-------+---
Segment result | 6,913| | 4,480|
=-----------------------------------------------+-------+--------+-------+---
| | | |
Central costs |(1,719)| |(1,214)|
=-----------------------------------------------+-------+--------+-------+---
| | | |
=-----------------------------------------------+-------+--------+-------+---
Total operating profit before exceptional items| 5,194| | 3,266|
+-------+ +-------+
Central costs comprise primarily of salary and other employment costs
relating to the central management of the Group.
Assets
Foils Europe * 24,765 23,825
Foils Americas 14,385 14,877
Laminates 11,637 9,480
-------- ---------------------------------------
Segment assets 50,787 48,182
Discontinued operations - 15,079
Unallocated 10,209 9,419
-------- ---------------------------------------
60,996 72,680
-------- ---------------------------------------
* Foils Europe incorporates the continuing Asia Pacific businesses
3. Exceptional items
The charge included in continuing operations in the previous period comprises
redundancy and other costs incurred for rationalising the Group's activities in
line with reduced demand.
4. Finance revenue and finance costs
Year ended Year ended
31 March 2011 31 March 2010
GBP'000 GBP'000
Finance revenue
Interest receivable on bank
and other short term cash
deposits 2 2
Other interest receivable 15 38
------------------------- ------------------------
17 40
------------------------- ------------------------
Finance costs
Interest payable on bank loans
and overdrafts (1,356) (1,831)
Other interest payable (24) (49)
Finance cost in respect of
defined benefit pension plans (974) (1,138)
------------------------- ------------------------
(2,354) (3,018)
------------------------- ------------------------
5. Taxation
(a) Tax on profit/(loss) on ordinary activities
Year ended Year ended
31 March 2011 31 March 2010
GBP'000 GBP'000
Tax (expensed)/credited in the income
statement
Continuing operations
Current income tax
UK Corporation tax - refund in respect of
prior years - 46
Overseas tax - current year expense (135) (134)
- adjustments in respect of prior years (37) -
------- ---------------------------
Total current income tax expense (172) (88)
------- ---------------------------
Deferred tax
Origination and reversal of temporary
differences
- defined benefit pension plan (17) 80
- tax losses 466 1,383
- capital allowances (443) 1,429
- effect of change in deferred tax rate (99) -
------- ---------------------------
Total deferred tax (expense)/credit (93) 2,892
------- ---------------------------
Tax (expense)/credit on continuing operations (265) 2,804
------- ---------------------------
Discontinued operations
Reversal of prior-year tax expense - 3,505
--------- --------
Total tax (expense)/credit in the income statement (265) 6,309
--------- --------
The reversal of prior-year foreign tax charge in 2010 relates to the Group's
subsidiary in China (now disposed - see Note 6). In the year to 31 March 2009, a
provision of Rmb 38m was made in respect of the profit on sale of surplus
property in Shanghai after the relocation of operations to a new site. During
the year to 31 March 2010, it was confirmed that no specific land taxation was
payable on this transaction. Accordingly, the provision was released.
Tax (expense)/credit on items taken directly to or transferred from equity
Deferred tax
Year ended Year ended
31 March 2011 31 March 2010
GBP'000 GBP'000
Actuarial gains and losses on pension schemes
- in respect of the current period (1,845) 2,544
- effect of change in deferred tax rate (259) -
--------------- --------------
(2,104) 2,544
--------------- --------------
(b) Deferred tax
The deferred tax included in the balance sheet is analysed as follows:
31 March
31 March 2011 2010
GBP'000 GBP'000
Deferred tax liability
Revaluation of fixed assets (238) (256)
--------------------- ----------------------
Deferred tax asset
Defined benefit pension plans 2,527 4,594
Tax losses 2,036 1,715
Capital allowances 915 1,429
--------------------- ----------------------
5,478 7,738
--------------------- ----------------------
6. Discontinued operations
In the financial statements for the year ended 31 March 2010, it was announced
that the Board had commenced a strategic review of the Group's investment in its
51% owned subsidiary based in China. As a result of that review, a decision was
taken to eliminate exposure to continuing losses by selling the Group's stake in
the venture. This was accomplished in January 2011. In accordance with IFRS 5,
the results of the China business, including prior year comparatives, have
therefore been presented as discontinued operations.
The results of the China business to the date of the sale (24 January 2011) are
presented below:
Year ended
31
Year ended March
31 March 2011 2010
GBP'000 GBP'000
Revenue - External 7,425 5,382
- Inter-Group 619 1,339
----------------------- ---------
8,044 6,721
Cost of sales (8,098) (7,625)
----------------------- ---------
Gross loss (54) (904)
Other operating costs (1,311) (1,498)
----------------------- ---------
Operating loss before exceptional items (1,365) (2,402)
Exceptional items
Impairment of property, plant and
equipment (see Note 8) (5,850) (5,083)
Relocation of China factory - (267)
----------------------- ---------
Operating loss from discontinued
operations (7,215) (7,752)
Finance costs (138) (111)
----------------------- ---------
Loss on discontinued activities before
taxation (7,353) (7,863)
Tax credit (see note 5) - 3,505
----------------------- ---------
Loss on discontinued activities after
taxation (7,353) (4,358)
----------------------- ---------
Impairment of property, plant and equipment
At 31 March 2010, following 2 years of significant losses, the carrying value of
the property, plant and equipment of the China business was written down to
reflect its fair value less costs to sell, resulting in an impairment charge of
GBP5,083,000. Following the decision to exit the venture and its reclassification
as a disposal group held for sale, assets were further impaired to bring the
value down to the expected realisable proceeds from the sale, which resulted in
an additional write down of property, plant and equipment at 30 September 2010
of GBP5,850,000. The Group's 51% share of this impairment was GBP2,984,000 (31 March
2010: GBP2,592,000), with a corresponding reduction in the minority interest of
GBP2,866,000 (31 March 2010: GBP2,491,000).
(Loss)/profit from discontinued operations
Year ended
Year ended 31 March
31 March 2011 2010
GBP'000 GBP'000
Loss after taxation of China
business (see above) (7,353) (4,358)
Profit on disposal of discontinued
operations 3,229 -
----------------------- ---------
Loss on discontinued operations per
the Income Statement (4,124) (4,358)
----------------------- ---------
The profit on disposal of discontinued operations is made up as follows:
GBP'000
Profit on disposal of China business 444
Exchange gains on translation relating to the China business
transferred from the foreign exchange reserve 2,550
-------
Profit on disposal of China business after transfer from foreign
exchange reserve 2,994
Adjustment to prior year losses on disposal of discontinued businesses 235
-------
3,229
-------
The adjustment to prior-year losses on disposal of discontinued businesses
relates to the reversal of accrued legal fees connected with a prior business
disposal.
On the date of disposal, the net assets, consideration and profit on disposal of
the China business were as follows:
GBP'000
Property, plant and equipment 3,792
Inventories 2,594
Trade and other receivables 2,303
Cash at bank and in hand 296
Creditors and other payables (3,127)
Financial liabilities payable within one year (2,688)
--------
Net assets of China business on disposal 3,170
Non controlling interests (1,850)
--------
Net assets of China business on disposal attributable to equity
holders of parent 1,320
--------
Cash consideration on disposal 1,920
Disposal costs (156)
--------
Net consideration 1,764
--------
--------
Profit on disposal of China business 444
--------
Net cash flows relating to discontinued activities
The net cash flows attributable to discontinued operations are as follows:
Year ended
Year ended 31 March
31 March 2011 2010
GBP'000 GBP'000
Operating activities 783 (2,270)
Investing activities 1,477 (673)
Financing activities (813) 1,269
------------------------- -----------
1,447 (1,674)
------------------------- -----------
7. Earnings per ordinary share
Basic earnings per share is calculated by dividing the net profit/(loss) for the
year attributable to ordinary equity holders of the Parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the net profit/(loss)
attributable to ordinary equity holders of the Parent by the weighted average
number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on the conversion of all dilutive
potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
Year ended Year ended
31 March 2011 31 March 2010
GBP'000 GBP'000
Profit attributable to equity
holders of the Parent -
continuing operations 2,592 2,466
Loss attributable to equity
holders of the Parent -
discontinued operations (612) (2,342)
----------------------- -------------------------
Net profit attributable to
equity holders of the Parent 1,980 124
----------------------- -------------------------
No No
Basic weighted average number
of ordinary shares 73,447,050 73,338,070
Dilutive effect of employee
share options 2,443,955 2,753,466
----------------------- -------------------------
Diluted weighted average number
of shares 75,891,005 76,091,536
----------------------- -------------------------
The weighted average number of shares excludes the 3,058,221 shares owned by the
API Group plc No.2 Employee Benefit Trust (2010: 58,221).
In September 2010, 3,000,000 shares were issued to the API Group plc No.2
Employee Benefit Trust in respect of the Long-term Incentive Plan (see Note 20).
Warrants for 3,506,336 ordinary shares were issued to Barclays Bank plc in
November 2009 in conjunction with the extension of UK bank facilities. These
were exercised in October 2010 at a price of 1 pence per share.
The weighted average number of shares in the current and previous periods has
been adjusted to reflect the exercise of the warrants at below the market price
of 15.5 pence at the date of exercise.
There have been no other transactions involving ordinary shares or potential
ordinary shares between the reporting date and the date of completion of these
financial statements.
Earnings/(loss) per ordinary share
Year ended
Year ended 31 March
31 March 2011 2010
pence pence
Continuing operations
Basic earnings per share 3.5 3.4
Diluted earnings per share 3.4 3.2
Discontinued operations
Basic loss per share (0.8) (3.2)
Diluted loss per share (0.8) (3.0)
Total
Basic earnings per share 2.7 0.2
Diluted earnings per share 2.6 0.2
8. Property, plant and equipment
Long
Leasehold Office
Freehold Freehold Land & Plant & and IT
Land Buildings Buildings machinery equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April
2009 2,381 8,477 10,650 61,140 8,852 91,500
Additions - - 18 476 435 929
Disposals - - (146) (268) (2,320) (2,734)
Foreign
currency
adjustment (116) (423) (492) (1,524) (106) (2,661)
------------------------------------------------------------------
At 31 March
2010 2,265 8,054 10,030 59,824 6,861 87,034
Additions - 14 - 950 189 1,153
Disposals - - - (86) (370) (456)
Disposal of
subsidiary - - (8,330) (13,124) - (21,454)
Foreign
currency
adjustment (107) (391) (7) (736) (120) (1,361)
------------------------------------------------------------------
At 31 March
2011 2,158 7,677 1,693 46,828 6,560 64,916
------------------------------------------------------------------
Depreciation
At 1 April
2009 - 2,985 1,208 42,175 6,790 53,158
Provided
during the
year - 229 577 2,608 406 3,820
Impairment
during the
period - - - 5,083 - 5,083
Disposals - - (146) (228) (2,320) (2,694)
Foreign
currency
adjustment - (224) (8) (780) (93) (1,105)
------------------------------------------------------------------
At 31 March
2010 - 2,990 1,631 48,858 4,783 58,262
Provided
during the
year - 226 240 1,956 520 2,942
Impairment
during the
period - - 4,438 1,412 - 5,850
Disposals - - - (85) (322) (407)
Disposal of
subsidiary - - (5,442) (12,220) - (17,662)
Foreign
currency
adjustment - (226) (1) (539) (107) (873)
------------------------------------------------------------------
At 31 March
2011 - 2,990 866 39,382 4,874 48,112
------------------------------------------------------------------
Net book value
at 31 March
2011 2,158 4,687 827 7,446 1,686 16,804
------------------------------------------------------------------
Net book value
at 31 March
2010 2,265 5,064 8,399 10,966 2,078 28,772
------------------------------------------------------------------
Net book value
at 31 March
2009 2,381 5,492 9,442 18,965 2,062 38,342
------------------------------------------------------------------
9. Financial liabilities
31 March 2011 31 March 2010
GBP'000 GBP'000
Current
Bank overdrafts 1,456 1,587
Current instalments due on bank loans 779 3,679
Interest rate swaps 97 150
Forward foreign exchange contracts 498 -
-------------------- ----------------------
2,830 5,416
-------------------- ----------------------
Non-current
Non-current instalments due on bank
loans 10,451 14,302
Interest rate swaps 63 102
-------------------- ----------------------
10,514 14,404
-------------------- ----------------------
In the UK, the Group has taken out an interest rate swap for the period 2 August
2010 to 1 November 2012 for a fixed amount of GBP5m. In the US interest rate
swaps have been taken out for the period 1 July 2010 to 30 October 2013 for
fixed and amortising amounts totalling $3.3m at 31 March 2011.
Bank loans
Bank loans comprise the following:
31 March 2011 31 March 2010
GBP'000 GBP'000
Term loans (UK) 10,196 14,372
Term loans (China) - 3,380
Term loan (US) 1,034 229
-------------------- ----------------------
11,230 17,981
Less: current instalments due on bank
loans (779) (3,679)
-------------------- ----------------------
10,451 14,302
-------------------- ----------------------
The Group's banking facilities comprise:
UK facilities
The Group's lending arrangements in the UK are with Barclays Bank plc. At 31
March 2011, UK facilities comprised a term loan of GBP6.4m repayable between April
2011 and July 2013 (2010: GBP6.6m repayable between October 2010 and July 2013)
and a term loan of GBP3.8m repayable in July 2013 (2010: GBP3.8m repayable in July
2013). At 31 March 2010, there was a higher margin term loan of GBP4.0m
denominated in US Dollars repayable in July 2013. During the year this loan was
repaid early following repatriation of funds from the US and receipt of funds on
the sale of the China business. In addition there is a multi option overdraft
facility of GBP3.5m (2010: GBP3.5m). Interest cost for the period averaged 5.0%
(2010: 5.0%) above LIBOR for term loans and 3.6% (2010: 3.8%) above Base Rate
for the overdraft. The total debt under committed and revolving facilities is
subject to four quarterly financial covenant targets reflecting the financial
performance of the Group excluding the impact of the US and China business
units. Covenants are for Debt Cover, Total Service Payments Cover, Senior
Interest Cover and Tangible Net Worth. At 31 March 2011, Debt Cover, the ratio
of net debt to 12 month trailing EBITDA was 1.0x (2010: 2.61x) and this and all
other covenant ratios were comfortably within the targets.
US facilities
The US facilities, which are with Wells Fargo, were the subject of a refinancing
exercise in May 2010. At 31 March 2011, they comprised amortising loans of $1.8m
repayable between April 2011 and October 2013 (2010: $0.3m repayable between
April 2010 and May 2010) and a revolving credit facility of up to $5.5m (2010:
$5.0m), depending on the level of working capital. Interest cost for the period
averaged 4.5% above LIBOR (2010: 4.0% above prime) for the term loans and 3.8%
above LIBOR (2010: 3.5% above prime) for the credit facility. The total debt
outstanding is subject to quarterly covenant obligations relating to
profitability, net worth and cash flow. During the year to 31 March 2011 the US
business met all its covenant obligations with the exception of one measure in
the quarter to December 2010, for which a formal waiver was agreed with the
lender.
10. Pensions and other post-retirement benefits
The Group operates a number of pension schemes. Current UK employees
participate in a defined contribution scheme. Overseas employees participate in
a variety of different pension arrangements of the defined contribution type and
are funded in accordance with local practice. A non contributory scheme is
operated for members of the North New Jersey Teamsters 11 Union employed at the
Company's site in Rahway, New Jersey. This scheme is a multi-employer defined
benefit scheme which is accounted for as a defined contribution scheme, as the
information available from the scheme administrators is insufficient for it to
be accounted for as a defined benefit scheme. Under the rules of the scheme the
employer is not liable for any deficit of the scheme unless it withdraws from
the scheme.
In the UK, a defined benefit pension scheme, the API Group Pension and Life
Assurance Scheme, was closed to future accrual in December 2008. This was a
funded pension scheme for the Company and its UK subsidiaries providing benefits
based on final pensionable earnings, funded by the payment of contributions to a
separately administered trust fund. A second defined benefit scheme, operated in
the US, the API Foils, Inc. North American Pension Plan, is also closed to
future accrual.
The assets and liabilities of the defined benefit schemes are:
31 March
2011 31 March 2010
GBP'000 GBP'000
Equities 43,119 39,651
Bonds 29,278 30,151
Property 72 54
Cash 139 65
------------------------- --------------------
Fair value of scheme assets 72,608 69,921
Present value of scheme
liabilities (82,327) (86,327)
------------------------- --------------------
Net pension liability (9,719) (16,406)
------------------------- --------------------
Pension contributions are determined with the advice of an independent qualified
actuary on the basis of triennial valuations using the projected unit method.
Scheme assets are stated at their market values at the respective balance sheet
dates and overall expected rates of return are established by applying published
brokers' forecasts to each category of scheme assets.
| United Kingdom| | United States
=--------------------+--------+-+--------+-+--------+-+------------------------
|31 March| |31 March| |31 March| | 31 March
=--------------------+--------+-+--------+-+--------+-+------------------------
| 2011| | 2010| | 2011| | 2010
=--------------------+--------+-+--------+-+--------+-+------------------------
| %| | %| | %| | %
=--------------------+--------+-+--------+-+--------+-+------------------------
Main assumptions | | | | | | |
=--------------------+--------+-+--------+-+--------+-+------------------------
Rate of increase in | | | | | | |
pensions in payment | 2.50| | 3.50| | 3.00| | 3.00
=--------------------+--------+-+--------+-+--------+-+------------------------
Rate of increase to | | | | | | |
deferred pensions | 2.50| | 3.30| | 3.00| | 3.00
=--------------------+--------+-+--------+-+--------+-+------------------------
Inflation | 2.50| | 3.50| | 3.00| | 3.00
=--------------------+--------+-+--------+-+--------+-+------------------------
Discount rate | 5.55| | 5.65| | 5.00| | 5.50
=--------------------+--------+-+--------+-+--------+-+------------------------
Expected rates of | | | | | | |
return on scheme | | | | | | |
assets | 6.32| | 6.50| | 7.50| | 7.50
=--------------------+--------+-+--------+-+--------+-+------------------------
Equities | 7.30| | 7.50| | | |
=--------------------+--------+-+--------+-+--------+-+------------------------
Bonds | 4.85| | 5.40| | | |
=--------------------+--------+-+--------+-+--------+-+------------------------
Post-retirement | | | | | | |
mortality (in | | | | | | |
years): | | | | | | |
=--------------------+--------+-+--------+-+--------+-+------------------------
Current pensioners | | | | | | |
at 65 - male | 20.0| | 19.3| | | |
=--------------------+--------+-+--------+-+--------+-+------------------------
Current pensioners | | | | | | |
at 65 - female | 22.1| | 21.9| | | |
=--------------------+--------+-+--------+-+--------+-+------------------------
Future pensioners at| | | | | | |
65 - male | 21.8| | 20.9| | | |
=--------------------+--------+-+--------+-+--------+-+------------------------
Future pensioners at| | | | | | |
65 - female | 24.1| | 23.4| | | |
These major assumptions have been selected after consultation with the Group's
UK pension advisors, KPMG LLP and the Group's US actuaries, Prudential
Retirement.
The rate of increase in pensions and the inflation rate assumptions in the UK
are based on statistics published by the Bank of England for long-term estimates
of the Retail Price Index. At 31 March 2011, the relevant inflation rate based
on the RPI for the duration of the UK Scheme was 3.5%. During the year, the
statutory basis of indexation used for by the Scheme was revised from the Retail
Price Index ("RPI") to the Cost Price Index ("CPI"). It is estimated that the
long-term CPI is approximately 1% lower than the long-term RPI, resulting in a
reduction of the inflation rate assumption to 2.5%. A 0.1% variation in the
inflation rate would result in a change in the present value of the scheme
liabilities of approximately GBP0.9m (2010: GBP0.9m).
The discount rate for the UK scheme has been set by reference to the iBoxx AA
corporate bond 15-year index. The rate has been modified to take account of the
duration of the scheme, which is approximately 18 years. A 0.1% variation in
the discount rate would result in a change in the present value of the scheme
liabilities of approximately GBP1.4m (2010: GBP1.5m).
In the UK, the mortality assumptions are based on nationally published tables
using 130% of the S1P*A YoB CMI 2009 model with 1.25% long term rate of
improvement (2010: PA YoB tables LC with 0.75% underpin). In the US, mortality
assumptions are in accordance with the IRS Static Mortality tables for the
relevant year.
Following closure of the UK Scheme to future accrual, the Group has agreed to
make contributions up to 2019 in order to make up the funding shortfall. The
expected contributions for the year ended 31 March 2012 are GBP700,000.
Changes in the present value of the defined benefit obligations are analysed as
follows:
Year ended Year ended
31 March 31 March
2011 2010
GBP'000 GBP'000
At 31 March 2010 86,327 63,840
Interest cost 4,791 4,232
Benefits paid (2,791) (3,796)
Actuarial gains and losses (5,864) 22,155
Foreign currency differences (136) (104)
---------------------- ----------------------
At 31 March 2011 82,327 86,327
---------------------- ----------------------
Changes in the fair value of the defined benefit assets are analysed as follows:
Year ended Year ended
31 March 31 March
2011 2010
GBP'000 GBP'000
At 31 March 2010 69,921 56,759
Expected return on plan assets 4,401 3,541
Employer contributions 451 406
Benefits paid (2,791) (3,796)
Actuarial gains and losses 722 13,070
Foreign currency differences (96) (59)
---------------------- ----------------------
At 31 March 2011 72,608 69,921
---------------------- ----------------------
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: API Group PLC via Thomson Reuters ONE
[HUG#1522276]
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