TIDMAPI
8 December 2011
API Group plc
("API" or the "Group")
Interim results for the six months ended 30 September 2011
* First half revenues of GBP58.5m, 24% ahead of last year.
* Operating profits from continuing operations 51% higher at GBP3.8m, operating
margin 6.4%.
* No exceptional charge for flood damage at New Jersey manufacturing facility
compared to initial estimate of a GBP700k net loss.
* Profit before tax up 123% to GBP2.9m (2010: GBP1.3m from continuing
operations).
* Basic earnings per share 3.6p (2010: 1.5p).
* IAS 19 pension deficit (net of deferred tax) down to GBP5.1m from GBP11.1m last
year and GBP7.2m at March 2011.
* Net debt GBP10.0m compared to GBP14.4m at 30 September 2010 and GBP8.9m at 31
March 2011. Net debt to EBITDA 1.0x (2010: 1.7x).
* Laminates investment on track, with expected start-up in April 2012 and
incremental revenues of GBP15-20m pa.
Commenting, API's Chief Executive, Andrew Turner said:
"I am pleased to report that the Group has maintained its momentum of sales
growth and profit improvement in spite of the challenging economic climate and
volatile raw material prices. Management remains focused on improving the
quality and resilience of the businesses and further enhancing our product and
service offering to customers.
"We are conscious that the ongoing sovereign debt crisis could affect confidence
in our customer base and consumer end markets, although the Group's improved
financial condition leaves it better placed to weather any difficulties that may
lie ahead."
Enquiries:
+----------------+---------------------------------+----------------------+
| Andrew Turner | Chief Executive, API Group plc | +44 (0) 1625 650334 |
+----------------+---------------------------------+----------------------+
| Chris Smith | Finance Director, API Group plc | +44 (0) 1625 650334 |
+----------------+---------------------------------+----------------------+
| Tony Rawlinson | Nominated Adviser | +44 (0) 20 7148 7900 |
| | Cairn Financial Advisers LLP | |
+----------------+---------------------------------+----------------------+
| James Serjeant | Broker | +44 (0) 20 7260 1000 |
| | Numis Securities | |
+----------------+---------------------------------+----------------------+
REPORT ON THE INTERIM RESULTS
FOR THE 6 MONTH PERIOD ENDED 30 SEPTEMBER 2011
GROUP INCOME STATEMENT
Revenue from continuing operations of GBP58.5m was 25% higher at constant exchange
rates compared to the same period last year and 24% ahead at actual rates. In
comparison to the preceding six month period, revenues were up 11%.
Higher volumes accounted for 15% revenue growth, with the balance coming from
higher selling prices. Price increases broadly recovered the impact of the
significant raw material price rises experienced in 2011.
Operating profits from continuing operations of GBP3.8m increased GBP1.3m compared
to the first half of last year, representing an operating margin of 6.4%.
Gross profit margin fell from 24.3% to 23.6% due to the dilution effect of
higher material costs and selling prices. Adjusted for raw material cost pass-
through, gross profit margin would have been 1.5% ahead at 25.8%.
The Group has continued to keep its operating costs under control, with
production and overhead expenses increasing by only 4% to accommodate the 15%
growth in volumes.
In this Interim Report, segmental reporting has been expanded to report on four
operating divisions. During the period, the management of API Holographics,
based in Salford, UK, was separated from Foils Europe to provide increased focus
on the different growth strategies appropriate to the security holographic and
decorative foils markets. Under the new structure, Foils Europe now comprises
the manufacturing facility at Livingston, Scotland and the six foil distribution
businesses in France, Italy, Germany, Australia, New Zealand and Hong Kong.
Prior year comparative figures have been adjusted in line with the new basis of
reporting.
All the Group's businesses increased revenues, both year on year and compared to
the preceding six months, with Laminates ahead 44% and 10% respectively.
Growth in operating profits was particularly encouraging in Foils Americas and
Holographics, while Laminates delivered another impressive set of results.
Foils Europe was the only disappointment, with operating profits down by GBP0.5m,
although still GBP0.3m ahead of the preceding six months.
In October, the Group announced that its manufacturing facility in New Jersey,
US, had sustained significant damage and disruption caused by Hurricane Irene.
At the time, it was estimated that the net financial impact could be up to
GBP0.7m. After further assessment and dialogue with insurers, that estimate has
been revised downward and, whilst there may still be some cash cost, the charge
to the income statement is now expected to be zero.
The Group's net financing costs of GBP0.9m were down GBP0.3m due to lower average
debt and interest rates. Pension related charges were in line with last year.
Profit after tax for continuing operations was GBP2.6m, compared to GBP1.1m at the
interim stage last year.
The tax charge of GBP0.2m represents a rate of 9% on profit before tax, in line
with the effective rate for the year to 31 March 2011. A deferred tax charge in
the UK of GBP0.6m was partly offset by recognition of a further GBP0.4m of tax
assets in light of continuing profitability.
Basic earnings per share from continuing operations were 3.6p (2010: 1.5p).
REVIEW OF OPERATIONS
Foils Europe
Despite 5% lower volumes, Foils Europe revenues increased by 6% to GBP15.2m (4% at
constant exchange rates) as a consequence of higher selling prices. The Italian
distribution operation enjoyed further growth, partially compensating for weaker
demand levels in other territories, especially the UK and France. Overall, the
business continued to make good progress in the label sector but this was offset
by reduced sales to other packaging and print segments and to third party
distributors.
Selling price increases, initiated during late 2010, were effective in
recovering the impact of the earlier rises in polyester film costs. However, as
film prices started to moderate, the business experienced a rapid escalation in
solvent costs due to capacity outages at producers. As a consequence, the
recovery in margins from higher selling prices was less than expected. With
lower volumes and slightly higher operating costs, profits were a modest GBP0.3m;
GBP0.25m ahead of the previous six months but GBP0.5m lower than the first half of
last year.
Foils Americas
Reported sales revenues for Foils Americas rose 7% to GBP12.5m. At constant
exchange rates sales were 13% up on the first half of last year and 10% higher
than the prior six months, due primarily to the pass-through of higher raw
material costs in increased selling prices. Volumes were flat overall as demand
for the business's market leading metallic flake intermediary compensated for
lower activity on foils for the packaging and graphics sectors. With the
reversal of margin erosion suffered last year from rapidly increasing raw
material costs, as well as improved sales mix and lower operating expenses,
profits increased to GBP0.7m (ROS of 5.5%) from break even at the interim stage
last year and GBP0.2m in the six months to March 2011.
Holographics
Holographics sales grew by 48% compared to the same period last year and were
11% higher than the previous six months. Third party sales, predominantly foils
and films for brand protection and security applications, were ahead by 43%,
benefitting from increased spend on product development and sales & marketing.
Sales of decorative holographic products to sister companies within the Group
increased by 57%, due especially to a significant packaging development project
satisfied jointly with API Laminates.
Added value margins improved in the period as pricing caught up with earlier
increases in raw material costs. The business benefited strongly from the
impact of higher volumes on production efficiencies and fixed cost recovery,
resulting in first half operating profits of GBP0.9m (ROS of 14%), up from GBP0.2m
for the same period last year and GBP0.4m for the preceding six months.
Laminates
Laminates revenues increased to GBP27.7m as a number of key development projects
moved to full production, a rise of 44% on the same period last year and 10%
higher than the preceding six months. Growth over the second half of last year
was predominantly due to demand from the tobacco sector, whilst orders for
alcoholic drinks packaging remained buoyant. Approximately 25% of year-on-year
growth was the result of increased costs being passed through to customers for
higher specification and higher priced raw materials. Further input cost
increases of GBP0.5m were absorbed by the business in order to secure a number of
key supply positions. As a result, the drop-through to operating profit from
the headline sales growth was restricted to GBP0.4m. The business continued to
keep a firm control of operating expenses and completed the first half year with
profits of GBP2.8m (2010: GBP2.4m), an ROS of 10.1%.
Following the Company's announcement in July 2011 outlining a major new supply
agreement, the business is progressing with its investment in new production
equipment and remains on track to start supplies in April 2012.
CASH FLOW AND BORROWINGS
The Group experienced a net cash inflow from operating activities of GBP0.3m,
compared to GBP2.7m for the same period last year. Positive cash flow from
improved trading results was offset by a working capital outflow of GBP3.8m ( GBP0.1m
last year) to support increased activity and a re-alignment of payment terms
with suppliers. Working capital efficiency, measured by reference to trailing
three month sales, ended the period at 11.9% compared to 11.4% a year earlier
and 8.9% at March 2011.
Capital expenditure of GBP1.2m was GBP0.6m higher than the first six months of last
year, with GBP0.9m relating to the customer-led investment project in Laminates.
A further GBP1.2m is due to be spent on this project by the end of the financial
year.
Group net debt, at GBP10.0m, compares to GBP8.5m at 31 March 2011, and GBP14.4m at 30
September 2010.
The Group's main lending arrangements are with Barclays Bank plc in the UK and
Wells Fargo in the US. Both facilities are in place until July 2013. Gearing
at 30 September 2011 was 50% compared to 148% 12 months earlier and 56% at 31
March 2011. The ratio of the Group's net debt to trailing 12 month EBITDA fell
to 1.0x compared to 1.7x at the interim stage last year.
PENSION DEFICIT
The IAS 19 valuation of the UK and US defined benefit pension schemes fell to
GBP6.9m, from GBP15.3m at 30 September 2010 and GBP9.7m at March 2011. Net of
associated deferred tax assets, the deficit is now valued at GBP5.2m, down from
GBP11.2m at September last year.
In the latest six months period, scheme assets were affected by the general fall
in equity values. However, this was more than compensated by a reduction of
GBP6.5m in liabilities relating to the UK scheme, where member data has been
updated in line with the latest triennial funding valuation. The impact on
scheme liabilities from movements in discount rates and inflation assumptions
during the six months since March 2011 was broadly neutral. Market yields on
benchmark AA rated corporate bonds fell by 0.3% whilst estimates of long term
CPI inflation also reduced, by 0.4% to 2.1%.
The result of the UK scheme's 2010 triennial funding valuation is due to be
approved by 31 December 2011. The process is well advanced and the Company
anticipates no change to its current level of funding contributions.
OUR PEOPLE
The Group continues to focus on providing customers with higher quality, more
cost effective products and services. Our success in meeting our aspirations
depends on the skill and commitment of our entire workforce. The Board
therefore extends its thanks to all members of the API team for the progress
which has been made in the last six months and for their continued contribution
to the growth and development of the business.
OUTLOOK
With raw material prices softening, the Foils businesses are expected to make
further progress on margin recovery. On the other hand, a broad exposure to
consumer spending in the US and Europe means that demand could be affected by
macro-economic uncertainty and the prospect of slowing economic growth,
especially in the Eurozone.
The prospects for Laminates and Holographics are less tied to the general
economy. Whilst a key project affecting both units is coming to a close, order
books are holding up well and the pipeline of new business is encouraging.
API Laminates is busy gearing up for its new major supply contract. The project
remains on schedule for the start-up of supplies from April 2012 and, as
previously announced, is expected to deliver additional revenues of GBP15-20m per
annum.
In spite of the higher capital expenditure to support the Laminates project, it
is anticipated that the Group's overall level of debt will continue to reduce
through the second half.
Notwithstanding more extreme macro-economic scenarios, the Board remains
confident that full year results will meet expectations and that the Group is
well placed for further profitable growth over the medium term.
GROUP INCOME
STATEMENT
for the six months
ended 30 September
2011
Unaudited Unaudited Audited
6 months to 30 6 months to Year to
September 2011 30 September 31 March
2010 2011
Note GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Continuing
operations
Revenue 2 58,545 47,032 99,963
Cost of sales (44,752) (35,598) (76,386)
=-------------------------------------------------------------------------------
Gross profit 13,793 11,434 23,577
Other operating (10,028) (8,939) (18,383)
costs
=-------------------------------------------------------------------------------
Operating profit 2 3,765 2,495 5,194
from continuing
operations
Finance revenue 3 7 8 17
Finance costs 3 (884) (1,159) (2,354)
=-------------------------------------------------------------------------------
(877) (1,151) (2,337)
=-------------------------------------------------------------------------------
Profit from 2,888 1,344 2,857
continuing
operations before
taxation
Tax expense 4 (246) (269) (265)
=-------------------------------------------------------------------------------
Profit from 2,642 1,075 2,592
continuing
operations
Discontinued
operations
Loss from 5 (6,656) (4,124)
discontinued -
operations
=-------------------------------------------------------------------------------
Profit / (loss) for 2,642 (5,581) (1,532)
the period
=-------------------------------------------------------------------------------
Profit / (loss)
attributable to
equity holders of
the parent
- continuing 2,642 1,075 2,592
operations
- discontinued (3,348) (612)
operations -
=-------------------------------------------------------------------------------
2,642 (2,273) 1,980
Loss attributable to
non-controlling
interest
- discontinued (3,308) (3,512)
operations -
=-------------------------------------------------------------------------------
Profit / (loss) for 2,642 (5,581) (1,532)
the period
=-------------------------------------------------------------------------------
Earnings per share
(pence)
Basic earnings per 6 3.6 1.5 3.5
share from
continuing
operations
Diluted earnings per 6 3.5 1.4 3.4
share from
continuing
operations
Basic earnings / 6 3.6 (3.2) 2.7
(loss) per share on
profit / (loss) for
the period
Diluted earnings / 6 3.5 (3.0) 2.6
(loss) per share on
profit / (loss) for
the period
=-------------------------------------------------------------------------------
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the six months
ended 30 September
2011
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Profit / (loss) for
the period 2,642 (5,581) (1,532)
=-------------------------------------------------------------------------------
Exchange differences
on retranslation of
foreign operations 186 (309) (392)
Exchange differences
arising on net asset
hedge - (121) (121)
Change in fair value
of effective cash
flow hedges 462 (209) (329)
Actuarial gains on
defined benefit
pension plans 2,410 1,105 6,586
Movement in deferred tax
asset relating to defined
benefit pension plans (627) (496) (2,104)
=-------------------------------------------------------------------------------
Other comprehensive
income for the
period 2,431 (30) 3,640
=-------------------------------------------------------------------------------
Total comprehensive income
and expense for the period,
net of tax 5,073 (5,611) 2,108
=-------------------------------------------------------------------------------
Attributable to:
Equity holders of
the parent 5,073 (2,293) 5,633
Non-controlling
interest - (3,318) (3,525)
=-------------------------------------------------------------------------------
5,073 (5,611) 2,108
=-------------------------------------------------------------------------------
GROUP BALANCE SHEET
at 30 September 2011
Unaudited Unaudited Audited
30 September 30 September 31 March
2011 2010 2011
Note GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Assets
Non-current assets
Property, plant and
equipment 17,239 17,567 16,804
Intangible assets -
goodwill 5,188 5,188 5,188
Trade and other
receivables 59 122 94
Deferred tax assets 4,684 7,045 5,478
=-------------------------------------------------------------------------------
27,170 29,922 27,564
=-------------------------------------------------------------------------------
Current assets
Trade and other
receivables 17,631 16,602 16,848
Inventories 11,913 9,521 12,409
Other financial
assets 172 - -
Cash and short-term
deposits 7 3,185 1,572 4,175
=-------------------------------------------------------------------------------
32,901 27,695 33,432
=-------------------------------------------------------------------------------
=-------------------------------------------------------------------------------
Assets of disposal
group held for sale - 8,642 -
=-------------------------------------------------------------------------------
=-------------------------------------------------------------------------------
Total assets 60,071 66,259 60,996
=-------------------------------------------------------------------------------
Liabilities
Current liabilities
Trade and other
payables 18,547 16,637 21,952
Financial liabilities 8 3,695 2,798 2,830
Income tax payable 378 402 365
=-------------------------------------------------------------------------------
22,620 19,837 25,147
=-------------------------------------------------------------------------------
Non-current
liabilities
Financial liabilities 8 9,767 13,614 10,514
Deferred tax
liabilities 238 256 238
Provisions 81 93 85
Deficit on defined
benefit pension plans 9 6,943 15,251 9,719
=-------------------------------------------------------------------------------
17,029 29,214 20,556
=-------------------------------------------------------------------------------
=-------------------------------------------------------------------------------
Liabilities
attributable to
disposal group held
for sale - 5,449 -
=-------------------------------------------------------------------------------
=-------------------------------------------------------------------------------
Total liabilities 39,649 54,500 45,703
=-------------------------------------------------------------------------------
=-------------------------------------------------------------------------------
Net assets 20,422 11,759 15,293
=-------------------------------------------------------------------------------
Equity
Called up share
capital 766 701 766
Share premium 7,136 7,136 7,136
Other reserves 8,816 8,595 8,565
Foreign exchange
reserve 445 2,889 259
Retained earnings 3,259 (9,619) (1,433)
=-------------------------------------------------------------------------------
API Group
shareholders' equity 20,422 9,702 15,293
Non-controlling
interest - 2,057 -
=-------------------------------------------------------------------------------
Total equity 20,422 11,759 15,293
=-------------------------------------------------------------------------------
GROUP STATEMENT OF CHANGES IN
EQUITY
for the six months
ended 30 September
2011
Equity Foreign Total
share Share Other exchange Retained shareholders'
capital premium reserves reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Balance at
1 April 2010 701 7,136 8,595 3,309 (7,805) 11,936
Total
recognised
income and
expense for
the period - - - (420) (1,873) (2,293)
Share based
payments - - - - 59 59
=-------------------------------------------------------------------------------
Balance at
30 September
2010 701 7,136 8,595 2,889 (9,619) 9,702
Total
recognised
income and
expense for
the period - - - (80) 8,006 7,926
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 - - - - 180 180
=-------------------------------------------------------------------------------
Balance at
31 March
2011 766 7,136 8,565 259 (1,433) 15,293
Total
recognised
income and
expense for
the period - - - 186 4,887 5,073
Shares
acquired by
Employee
Benefit
Trust - - (11) - - (11)
Transferred
on exercise
of share
options - - 262 - (262) -
Share based
payments - - - - 67 67
=-------------------------------------------------------------------------------
Balance at
30 September
2011 766 7,136 8,816 445 3,259 20,422
=-------------------------------------------------------------------------------
GROUP CASH FLOW
STATEMENT
for the six months
ended 30 September
2011
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
Note GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Operating
activities
Group profit before 2,888 1,344 2,857
tax from continuing
operations
Adjustments to reconcile Group
profit before tax from
continuing operations to net
cash flow from operating
activities:
Operating loss from (6,801) (7,215)
discontinued -
operations
Net finance costs 877 1,151 2,337
Depreciation of 1,212 1,688 2,942
property, plant and
equipment
Impairment of 5,850 5,850
property, plant and -
equipment
(Profit) / loss on (12) 28
disposal of -
property, plant and
equipment
Movement in fair (112) - 78
value foreign
exchange contracts
Share-based 67 59 239
payments
Difference between
pension
contributions paid
and amounts
recognised in the
income statement (776) (435) (1,037)
Decrease / 533 1,279 (2,047)
(increase) in
inventories
Increase in trade (719) (2,650) (2,588)
and other
receivables
(Decrease) / (3,669) 1,281 7,201
increase in trade
and other payables
Movement in (4) (4) (12)
provisions
=-------------------------------------------------------------------------------
Cash generated from 297 2,750 8,633
operations
Income taxes paid (41) (37) (140)
=-------------------------------------------------------------------------------
Net cash flow from 256 2,713 8,493
operating
activities
=-------------------------------------------------------------------------------
Investing
activities
Interest received 7 8 17
Purchase of (1,192) (567) (1,153)
property, plant and
equipment
Sale of property, 49 21
plant and equipment -
Sale of subsidiary - - 1,783
undertakings
Cash and cash - - (296)
equivalents of
subsidiary
undertakings sold
=-------------------------------------------------------------------------------
Net cash flow from (1,185) (510) 372
investing
activities
=-------------------------------------------------------------------------------
Financing
activities
Interest paid (384) (852) (1,480)
Proceeds from share - - 65
issues
Purchase of shares (11) - (30)
by Employee Benefit
Trust
1,562 1,214
New borrowings -
Repayment of (393) (2,669) (5,382)
borrowings
=-------------------------------------------------------------------------------
Net cash flow from (788) (1,959) (5,613)
financing
activities
=-------------------------------------------------------------------------------
(Decrease) / (1,717) 244 3,252
increase in cash
and cash
equivalents
Effect of exchange (50) 86 13
rates on cash and
cash equivalents
Cash and cash 2,719 (546) (546)
equivalents at the
beginning of the
period
=-------------------------------------------------------------------------------
Cash and cash 7 952 (216) 2,719
equivalents at the
end of the period
=-------------------------------------------------------------------------------
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1 (a) Corporate
information
The consolidated interim financial statements of API Group plc for the six
months ended 30 September 2011 were authorised for issue in accordance with a
resolution of the directors on 7 December 2011.
API Group plc is a public limited company incorporated and domiciled in England
and Wales. The Company's shares are traded on the Alternative Investment Market
of the London Stock Exchange.
The principal activities of the Group are the manufacture and distribution of
specialty foils, films and laminated materials.
(b) Basis of
preparation
The interim consolidated financial statements of the Group for the six months
ended 30 September 2011 have been prepared in accordance with IAS 34 Interim
Financial Reporting.
These interim consolidated financial statements are unaudited. They do not
constitute statutory accounts as defined in section 434 of the Companies Act
2006 and therefore do not include all the information and disclosures required
in the annual financial statements and should be read in conjunction with the
Group's latest annual financial statements as at 31 March 2011 which were
prepared in accordance with International Financial Reporting Standards as
adopted by the EU. The audited annual financial statements for the year ended
31 March 2011, which represent the statutory accounts for that period, and on
which the auditors gave an unqualified opinion, have been filed with the
Registrar of Companies.
The Directors consider that, after making appropriate enquiries, there is a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and therefore continue to adopt
the going concern basis in preparing these financial statements.
The accounting policies adopted in the preparation of the interim consolidated
financial statements are consistent with those followed in the preparation of
the Group's annual financial statements for the year ended 31 March 2011.
2. SEGMENTAL
INFORMATION
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. Following the disposal of the China business, the
residual businesses within the Asia Pacific unit are now managed and
reported within the Foils Europe business unit. The Holographics
business unit is now managed and reported separately from Foils Europe
and comparative figures have been adjusted accordingly.
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
Continuing
operations GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------
Total revenue by
origin
Foils Europe 15,170 14,284 28,429
Foils Americas 12,512 11,691 23,151
Holographics 6,848 4,616 10,775
Laminates 27,672 19,233 44,321
=------------------------------------------------------------------------
62,202 49,824 106,676
=------------------------------------------------------------------------
Inter-segmental
revenue
Foils Europe 495 562 1,095
Foils Americas 296 419 733
Holographics 2,827 1,797 4,855
Laminates 39 14 30
=------------------------------------------------------------------------
3,657 2,792 6,713
=------------------------------------------------------------------------
External revenue by
origin
Foils Europe 14,675 13,722 27,334
Foils Americas 12,216 11,272 22,418
Holographics 4,021 2,819 5,920
Laminates 27,633 19,219 44,291
=------------------------------------------------------------------------
58,545 47,032 99,963
=------------------------------------------------------------------------
Segment result
Operating
profit/(loss)
Foils Europe 274 797 857
Foils Americas 688 4 244
Holographics 948 155 567
Laminates 2,792 2,392 5,245
=------------------------------------------------------------------------
Segment result 4,702 3,348 6,913
Central costs (937) (853) (1,719)
=------------------------------------------------------------------------
Total operating
profit 3,765 2,495 5,194
=------------------------------------------------------------------------
3. FINANCE REVENUE
AND FINANCE COSTS
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Finance revenue
Interest
receivable on bank
and other short
term deposits 1 - 2
Other interest
receivable 6 8 15
=-------------------------------------------------------------------------------
7 8 17
=-------------------------------------------------------------------------------
Finance costs
Interest payable
on bank loans and
overdrafts (486) (744) (1,356)
Other interest
payable (7) (4) (24)
Finance cost in
respect of defined
benefit pension
plans (391) (411) (974)
=-------------------------------------------------------------------------------
(884) (1,159) (2,354)
=-------------------------------------------------------------------------------
4. TAXATION
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Current income tax
Overseas tax -
current year
charge (57) (67) (135)
-
adjustments in respect of
prior-year tax charge - (34) (37)
=-------------------------------------------------------------------------------
Total current
income tax charge (57) (101) (172)
=-------------------------------------------------------------------------------
Deferred tax
Origination and
reversal of
temporary
differences (189) (168) (93)
=-------------------------------------------------------------------------------
=-------------------------------------------------------------------------------
Total charge in
the Income
Statement (246) (269) (265)
=-------------------------------------------------------------------------------
5. DISCONTINUED
OPERATIONS
Discontinued operations in respect of the comparative periods relate primarily
to the Group's investment in a 51% owned subsidiary in China, which was sold by
the Group in January 2011.
Unaudited Unaudited Audited
6 months to 30 6 months to Year to
September 2011 30 September 31 March
2010 2011
GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
4,128 7,425
Revenue - External -
- Inter- 585 619
Group -
=-------------------------------------------------------------------------------
4,713 8,044
-
(4,842) (8,098)
Cost of sales -
=-------------------------------------------------------------------------------
(129) (54)
Gross loss -
(822) (1,311)
Other operating costs -
=-------------------------------------------------------------------------------
Operating loss before (951) (1,365)
exceptional items -
Exceptional items -
impairment of (5,850) (5,850)
property, plant and -
equipment
=-------------------------------------------------------------------------------
Operating loss from (6,801) (7,215)
discontinued -
operations
(90) (138)
Finance costs -
=-------------------------------------------------------------------------------
Loss from (6,891) (7,353)
discontinued -
activities before
taxation
Taxation - - -
=-------------------------------------------------------------------------------
Loss from
discontinued
activities after
taxation of China
business - (6,891) (7,353)
Profit on disposal of
discontinued
operations (see
below) - 235 3,229
=-------------------------------------------------------------------------------
Loss from
discontinued
operations per the
income statement - (6,656) (4,124)
=-------------------------------------------------------------------------------
The profit on disposal of discontinued operations is made up as follows:
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 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
the foreign exchange reserve - - 2,994
Adjustment to prior
year losses on
disposal of
discontinued
businesses - 235 235
=-------------------------------------------------------------------------------
- 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.
The net cash flows attributable to discontinued business were as follows:
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 GBP'000
----------------------------------------------------
Operating 542 783
activities -
Investing (36) 1,477
activities -
Financing
activities - (480) (813)
----------------------------------------------------
- 26 1,447
----------------------------------------------------
6. EARNINGS
PER SHARE
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Net profit attributable
to equity holders of the 2,642 1,075 2,592
parent company -
continuing operations
Loss attributable to
equity holders of the (3,348) (612)
parent company - -
discontinued operations
=-------------------------------------------------------------------------------
Net profit / (loss)
attributable to equity 2,642 (2,273) 1,980
holders of the parent
company
=-------------------------------------------------------------------------------
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Basic weighted average 73,609,201 70,068,505 73,447,050
number of ordinary shares
Dilutive
effect of 1,283,688 3,025,425 2,443,955
employee share
options
Dilutive
effect of - 3,506,336 -
warrants
=-------------------------------------------------------------------------------
Diluted weighted average 74,892,889 76,600,266 75,891,005
number of ordinary shares
=-------------------------------------------------------------------------------
The weighted average number of shares excludes the 3,000,000 shares owned by the
API Group plc No.2 Employee Benefit Trust (30 September 2010: 58,221 and 31
March 2011: 3,058,221).
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31
2011 2010 March
2011
Earnings per
share pence pence pence
=------------------------------------------------------------------------
Continuing
operations
Basic earnings 3.6 1.5 3.5
per share
Diluted earnings 3.5 1.4 3.4
per share
Discontinued
operations
Basic loss per (4.7) (0.8)
share -
Diluted loss per (4.4) (0.8)
share -
Total
Basic earnings / 3.6 (3.2) 2.7
(loss) per share
Diluted earnings
/ (loss) per 3.5 (3.0) 2.6
share
=------------------------------------------------------------------------
7. CASH AND CASH
EQUIVALENTS
Unaudited Unaudited Audited
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Included in balance
sheet
Cash and short-term
deposits 3,185 1,572 4,175
Bank overdrafts (2,233) (1,969) (1,456)
=-------------------------------------------------------------------------------
952 (397) 2,719
Included in assets of
disposal group - 181 -
=-------------------------------------------------------------------------------
952 (216) 2,719
=-------------------------------------------------------------------------------
8. FINANCIAL LIABILITIES
Unaudited Unaudited Audited
30 September 30 September 31 March
2011 2010 2011
GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Current
Included in balance
sheet
Bank overdrafts 2,233 1,969 1,456
Current instalments on
bank loans 1,239 520 779
Interest rate swaps 145 126 97
Forward currency
exchange contracts 78 183 498
=-------------------------------------------------------------------------------
3,695 2,798 2,830
Included in liabilities
of disposal group - 2,940 -
=-------------------------------------------------------------------------------
3,695 5,738 2,830
=-------------------------------------------------------------------------------
Non-current
Included in balance
sheet
Non-current instalments
due on bank loans 9,732 13,462 10,451
Interest rate swaps 34 152 63
=-------------------------------------------------------------------------------
9,766 13,614 10,514
=-------------------------------------------------------------------------------
9. DEFINED BENEFIT PENSION
PLAN DEFICIT
The Group operates two defined benefit schemes, the API Group Pension and Life
Assurance Scheme in the UK and the API Foils Inc North American Pension Plan
in the US. Both of these schemes are closed to future accrual. The assets
and liabilities of these defined benefit schemes are:
Unaudited Unaudited Audited
30 September 30 September 31 March 2011
2011 2010
GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
United Kingdom
Fair value of scheme
assets 67,341 68,153 70,813
Present value of scheme
liabilities (73,595) (82,745) (79,843)
---------------- ---------------- -------------------
(6,254) (14,592) (9,030)
---------------- ---------------- -------------------
United States
Fair value of scheme
assets 1,867 1,713 1,795
Present value of scheme
liabilities (2,556) (2,372) (2,484)
---------------- ---------------- -------------------
(689) (659) (689)
---------------- ---------------- -------------------
---------------- ---------------- -------------------
Net pension liability (6,943) (15,251) (9,719)
---------------- ---------------- -------------------
The movements in the net
pension liability are as
follows:
Opening liability 9,719 16,406 16,406
Net cost recognised in
arriving at operating
profit - - -
Net cost recognised in
finance costs 391 411 974
Taken to Statement of
Comprehensive Income (2,410) (1,106) (6,586)
Contributions from and
scheme expenses borne by
employers (776) (434) (1,035)
Exchange differences 19 (26) (40)
---------------- ---------------- -------------------
Closing liability 6,943 15,251 9,719
---------------- ---------------- -------------------
The main assumptions used in valuing the present value of the scheme
liabilities in the UK are as follows:
Rate of increases in
pensions in payment and
deferred pensions 2.10% 2.30% 2.50%
Inflation (CPI) 2.10% 2.40% 2.50%
Discount rate 5.25% 5.15% 5.55%
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#1569886]
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