Final Results

API Group PLC
23 November 2000


          Preliminary results for the 12 months to 30 September 2000


  * Group sales of £188.8m (£176.7m)


  * Profits before tax, goodwill amortisation and exceptional items of £
    11.6m (£18.3m), reflecting particularly difficult conditions in second
    half as predicted in the Board's July trading statement


  * Exceptional charges total £14.6m


  * Pricing pressure, due to strength of Sterling against the Euro, and
    increasing raw material prices affect results


  * Following the departure of the previous Chief Executive in July, the
    Board has undertaken a strategic review of the Foils and Laminates
    Division and is undertaking site rationalisation expected to produce
    annualised benefits of £5m


  * Adjusted earnings per share of 22.4p (37.9p)


  * Final dividend maintained, making a total of 15.19p (14.6p)


  * Balance sheet strong with gearing of 12%


  * Appointment of new Chief Executive who will join early in 2001


Commenting on the results, Executive Chairman Moger Woolley said:


'At the time of the Chief Executive's departure in July we warned of a
deterioration in trading, which is reflected in these results. The Board and
management team has acted quickly to reorganise the Group to reduce its cost
base, to recover the profitability of the existing business and to prioritise
areas for future development.


'We have acted quickly in seeking a new Chief Executive and are close to
confirming an appointment.'



EXTRACT OF THE EXECUTIVE CHAIRMAN'S REVIEW

THE YEAR'S RESULTS

As indicated in the announcement published on 10 July 2000, the Group
experienced deteriorating trading conditions during the year, particularly in
the second half. This led to a decline in profit before tax, goodwill
amortisation, and exceptional items to £11.6m (£18.3m) on sales of £188.8m (£
176.7m). 'Headline' pre-tax profits in the second half fell to £4.9m (£11.8m).


Adjusting for the effect of acquisitions, full year sales volumes are similar
to 1999 but conditions in the second half deteriorated markedly, with sales
down 5% compared with the previous year. The decline in gross margin from
27.9% to 24.3% reflects mainly, increasing raw material costs and the
continued pressure on sales prices, a significant element of which was
attributable to the strength of the pound in relation to the euro.

The Group incurred a pre-tax loss of £4.1m (£15.9m profit) after charging
exceptional costs of £14.6m (£1.5m). These exceptional costs relate to:


        - restructuring a number of the Group's businesses (£12.1m, of which

         £9.7m relates to the metallised paper operations);

        - the write down to market price on 30 September 2000, of API

        Group plc shares purchased and held by the employee share option plan

        (£1.0m);

        - costs associated with the termination of the former Chief
        Executive's

        service contract (£0.8m);

        - the investigation and evaluation of options to realise shareholder
        value,

        including the possibility of a sale to a financial buyer (£0.7m).

Adjusted earnings per share (before goodwill and exceptional costs) were 22.4p
(37.9p) with FRS 3 earnings showing a loss of 21.5p (earnings 32.8p). The
recommended final dividend is being maintained at 8.64p bringing the total for
the year to 15.19p (14.6p), an increase of 4%. The maintenance of the final
dividend was predicted in the July trading statement and is covered 1.5 times
by adjusted earnings per share.

Following the former Chief Executive's departure, the Board has been
undertaking a strategic review of the Group. As part of this exercise the
Board concluded it needed to rationalise the Group's manufacturing facilities,
with the objective of improving its profitability. This exercise has not yet
been finalised in respect of the Converted Products division. However, the
Group is already reorganising the following sites within the Foils and
Laminates division:


            -     the metallised paper operation based at Lyme Green in
            Macclesfield incurred losses of £1.5m (of which £0.9m was in the
            second half) against an expectation of profits on increased
            volumes. To halt this decline, manufacturing operations at this
            site will cease in December 2000 and be progressively transferred
            to the division's Caerphilly site, with completion of the transfer
            expected by April 2001;

            -     the hot stamping foil operations are being moved from
            Salford to Livingston in Scotland, which will be completed by
            April 2001.

In addition, the Board is also announcing today the closure in May 2001 of the
laminates manufacturing site at Rochdale with essential equipment being
integrated into the Poynton site near Macclesfield.

Once the moves have been completed and production capacity reinstated, the
full year benefits are anticipated to be in excess of £5m. In addition to the
exceptional costs already charged in 2000, further costs of £3m are expected
to be recognised in the 2001 accounts with respect to the closure of the
Rochdale site and trading losses attributable to the cessation of business at
the metallisation plant in Lyme Green. The total one-off costs incurred in
these rationalisations over the two years are expected to total £13.9m, of
which £6.4m relates to non-recurring redundancy charges and other cash
expenditure, and £7.5m to non-cash costs for the write down of assets.

The consolidated businesses will benefit from increased manufacturing
flexibility, improved capacity utilisation, integrated business systems and
focused technical resource enabling the increased profitability to be
achieved. These improvements will also support API's continuing commitment to
customer service, product quality and technical innovation.

Despite the effects of the reduction in profits and the cost of exceptional
items (resulting in a fall in shareholders' funds by £8.1m to £99.0m), the
Group's balance sheet remains healthy with gearing of 12%. Net tangible assets
per share amount to 233p (263p). Cash outflow during the year totalled £16.0m
taking net debt to £12.0m.

The capital expenditure programme totalled £11.0m, some £3.6m ahead of
depreciation. Cash outflow also reflected the extent of the decline in
profitability in the second half year with the ensuing reduction in sales
volumes having a short-term adverse impact on the levels of stock being held.
Stocks have increased by £8m, of which £2m is raw material purchased ahead of
price increases, with the majority of the remaining increase resulting from a
programme of building up stocks in anticipation of the forecasted sales levels
in August and September which failed to materialise. This increase is short
term and stocks are planned to fall by £6m during the new financial year.



REVIEW OF OPERATIONS

Management

In July, when Mr Smith, the former Group Chief Executive, left the Company and
pending the appointment of a new Group Chief Executive, I became Executive
Chairman, with the management team reporting directly to me. We have completed
a detailed review of the business and have commenced a programme of actions to
restore both the profitability of the existing businesses and to prioritise
areas for future development.

Foils and Laminates

Operating profits declined to £8.9m (£14.0m) (before goodwill and exceptional
costs) on sales up 9% to £137.4m (£126.6m), producing an operating margin of
6.4% (11.1%). On a like for like basis, adjusting for the full year's results
of Shen Yong and the acquisition of the Van Leer Metallised Paper business
based in Caerphilly, sales fell by 3%, and operating profits fell by 50%,
giving an operating margin of 5.5% (10.6%).

The shortfall in the profits of the division is due to:


        - a fall in demand for laminates from the tobacco and drinks sectors
        (reducing

        operating profits by approximately £1.0m);

        - European currency-related pressure on foils sales for premium
        packaging

        (£1.2m);

        - currency-related pressure on sales prices for metallised paper
        products to the

        drinks label sector and increased claims from customers following
        quality issues

        in manufacture (£1.3m);

        - a reduction in profits in the USA foils business due to the fall in
        demand for

        certain high margin speciality products and increased technical and
        sales

        overheads, reflecting the cost of additional resources invested in
        developing new

        high margin products including holographic products (£2.5m).

This shortfall was, in part, offset by the improved performance of Shen Yong,
acquired in March 1999, which contributed profits of £2.5m, an increase of £
1.3m over the previous year. On a like for like full year basis, Shen Yong
improved its results by 25%. The management team at Shen Yong is working well
with API management with the consequence that all key production and quality
measures have shown marked improvement during the year. This lays the
foundations for sourcing materials from China for lower priced products for
traditional markets, thereby relieving competitive price pressures on the
European and USA foils manufacturing businesses.

In general terms, the markets served by Foils and Laminates are relatively
flat, although the Group has identified good growth opportunities in dieless
foils and holographic products. Dieless foils are unique to API, and offer
converters increased flexibility and reduced costs. API's established
holography business performed well, and promises increased sales and
profitability in this sector. The Group is investing in its holographic
facilities in the USA, Europe and China, to provide a worldwide capability in
this growth market.

Converted Products

The division comprises Tenza's self adhesive products business (now
incorporating Data's variable information operation), Learoyd's flexible
plastic packaging, plastic component mouldings and polypropylene extrusion and
API Coated Products (producing silicone release coated papers and films).

Operating profit fell to £3.4m (£4.6m) on sales up 2% to £51.3m (£50.1m),
producing an operating margin of 6.6% (9.2%). Pressure on selling prices and
raw material cost increases eroded the volume gain, being responsible for most
of the fall in operating profits.

While Tenza and API Coated Products were successful in mitigating most of the
currency-related selling price reductions and the upward trend in material
costs, Learoyd Packaging suffered a very disappointing 50% reduction in
profits due to competition led price erosion and poor sales of its security
bag products, particularly in the USA. Within the Learoyd Group, Morris
Plastics, the plastic component moulding business, endured a frustrating year
with product quality suffering due to tooling breakdown, which has only now
been resolved, following delayed delivery of new equipment from the tool
manufacturer.

The management of the division has been reorganised reporting to Richard
Vaughan, a member of the divisional executive team, and they have a clear
priority of improving the overall performance of the division. Although, the
Board's strategic review of this division has not yet been completed, the
management team has embarked on a programme for reducing the cost base,
increasing intra divisional business, coordinating international distribution
channels and streamlining the process for the introduction of new products
from the recently installed ten colour press at Learoyd Packaging and the new
polypropylene co-extrusion line at Filmcast. Work is also underway to support
the recovery in the Morris Plastics business.

PROSPECTS

The outlook remains challenging, particularly with the continued weakness of
the euro, but the measures the Board is putting in place are expected to
improve significantly the ongoing performance of the Group. The major
initiatives include:

  * A major cost reduction programme which includes


            -     the consolidation of metallised paper manufacturing into
            Caerphilly;

            -     the consolidation of the Group's laminating operations at
            Poynton, and

            -     further integration of UK foils manufacturing at Livingston.

  * Reduction in the cost base of the US foils operations.
  * Rationalisation and more effective management of the Group's converted
    products businesses, together with achieving growth from the recent
    investments in new capacity.
  * The sourcing of low-cost product from the Group's Chinese operation.
  * Increased emphasis and investment in China, USA and Europe on the
    development of holography for both decorative and security applications
    where long-term growth opportunities remain excellent.

The Board is making good progress in its search for a new Chief Executive and
is confident that an appointment will be confirmed shortly.


J. Moger Woolley, Group Executive Chairman

23 November 2000



Enquiries:

Moger Woolley, Executive Chairman          Tel: [phone] (23/11/00)
Dennis Holt, Group Finance Director        Tel: [phone] (thereafter)
API Group plc

Richard Mountain/Tim Spratt
Financial Dynamics                         Tel: [phone]




GROUP PROFIT & LOSS ACCOUNT

for the year ended 30 September 2000 (unaudited)


                                  12 months to 30 September 2000            12
                                                                        months
                                                                            to
                             Continuing              Exceptional             3
                                                                       October
                           Operations  Acquisitions     Items    Total    1999
                                £'000        £'000      £'000    £'000   £'000

Turnover                      179,714        9,058         -  188,772  176,700
Cost of sales                (135,759)      (8,283)  (11,767)(155,809)(128,341)
including goodwill             (1,007)        (105)        -   (1,112)    (948)
amortisation

Gross (loss) / profit          43,955          775   (11,767)  32,963   48,359
Distribution costs             (7,519)        (281)        -   (7,800)  (6,536)
Administrative expenses       (24,934)        (846)   (2,740) (28,520) (25,999)

Operating (loss) / profit      11,502         (352)  (14,507)  (3,357)  15,824
(Loss) / profit on disposal
of land and buildings               -            -       (97)     (97)     405

(Loss) / profit on ordinary
activities before interest     11,502         (352)  (14,604)  (3,454)  16,229
and taxation

Net interest expense                                             (677)    (323)

(Loss) / profit on ordinary
activities before taxation                                     (4,131)  15,906
                                                                         
Taxation                                                       (1,885)  (4,453)

(Loss) / profit on ordinary
activities after taxation                                      (6,016)  11,453

Profit attributable to
minority                                                       (1,144)    (492)

equity interest

(Loss) /profit for the                                         (7,160)  10,961
financial year

Preference dividends                                                -       (9)

(Loss) / profit attributable
to                                                             (7,160)  10,952

Ordinary shareholders

Ordinary dividends                                             (5,060)  (4,886)

Balance transferred (from)/to
                                                              (12,220)   6,066
Reserves

Earnings per ordinary 25p share                                (21.5)p    32.8p

Basic                                                                   
                                                               (21.5)p    32.6p
Diluted                                                            
                                                                        

Adjusted earnings per ordinary 25p share

(before exceptional items net of tax and goodwill
amortisation)                                                             37.9p
                                                                    
Basic                                                            22.4p    37.8p
                                                                   
Diluted                                                          22.4p

Dividends per ordinary 25p share                                15.19p    14.6p





GROUP BALANCE SHEET

at 30 September 2000 (unaudited)


                                                         30 September 3 October
                                                                 2000      1999
                                                                £'000     £'000

Fixed assets
Intangible assets                                              20,162    18,093
Tangible assets                                                61,722    58,083
Investments                                                     1,499     1,823
                                                               83,383    77,999

Current assets
Stocks                                                         30,355    19,584
Debtors                                                        52,444    51,518
Cash at bank and in hand                                        8,502    12,002

                                                               91,301    83,104

Creditors - amounts falling due within one year
Creditors                                                    (59,309)  (41,185)
Current taxation                                              (1,600)   (2,847)
Dividends                                                     (2,874)   (2,890)

                                                             (63,783)  (46,922)

Net current assets                                             27,518    36,182

Total assets less current liabilities                         110,901   114,181

Creditors - amounts falling due after more than one year        (304)     (409)

Provisions for liabilities and charges                        (4,197)     (814)

Deferred credit - government grants                             (274)         -
                                                              106,126   112,958

Minority interests                                            (7,083)   (5,813)

Total net assets                                               99,043   107,145


Share capital and reserves
Called up share capital                                         8,463     8,463
Share premium account                                          50,563    50,563
Revaluation reserve                                             2,616     2,616
Capital redemption reserve                                        549       549
Profit and loss account                                        36,852    44,954

Equity shareholders' funds                                     99,043   107,145





CASH FLOW STATEMENT

for the year ended 30 September 2000 (unaudited)


                                                                     2000  1999
                                                                    £'000 £'000
Reconciliation of operating profit to net cash (outflow) / inflow
from operating activities

Operating (loss) / profit                                        (3,357) 15,824
Amortisation and depreciation less government grants              8,560   7,117
Impairment charge against fixed assets and investments            7,806       -
(Profit)/loss on disposal of fixed assets                          110     (35)
Decrease/(increase) in stocks                                   (8,423)    (68)
Decrease/(increase) in debtors                                    (413)  3,503
Increase / (decrease) in creditors                               1,037  (4,075)
Increase in provisions                                            3,383     222

Net cash inflow from operating activities                         8,703  22,488


Cash outflow of £1,722,000 (1999: £1,866,000) resulted from the exceptional
reorganisation charges incurred during the year.



                                                  2000    2000    1999    1999
                                                 £'000   £'000   £'000   £'000
Cash flow statement
Net cash inflow from operating activities                8,703          22,488

Returns on investments and servicing of
finance
Interest paid                                    (820)           (111)
Interest received                                  143              90
Dividends paid to minority interests             (529)               -
Interest element of finance lease rentals            -           (302)
Preference dividend paid                             - (1,206)     (9)   (332)

Taxation
UK                                             (2,880)         (4,058)
Overseas                                       (1,067) (3,947)   (838) (4,896)

Capital expenditure and financial investment
Payments to acquire tangible fixed assets      (12,648)         (8,346)
Receipts from sale of tangible fixed assets      1,390             419
Payments to acquire investments                   (629)         (1,200)
Receipt of government grants                       274 (11,613)       - (9,127)

Acquisitions and disposals (Note C)                    (3,798)          (4,808)

Equity dividends paid                                  (5,076)          (4,652)

Net cash outflow before financing                     (16,937)         (1,327)

Financing
Cancellation of preference shares                   -            (549)
Capital element of finance lease rental
payments                                         (33)     (33) (4,478) (5,027)

Decrease in cash in the period                        (16,970)         (6,354)
Exchange movement                                         859             (62)

Balance sheet movement in net cash                    (16,111)         (6,416)



CASH FLOW STATEMENT

for the year ended 30 September 2000 (unaudited)



Notes to the cash flow statement

A. Analysis of net funds / (debt)
                                           Cash          Exchange
                                1999       Flow        Difference          2000
                               £'000      £'000             £'000         £'000

Cash at bank and in hand      12,002    (4,359)               859         8,502
Bank overdrafts              (7,933)   (12,611)                 -      (20,544)
                               4,069   (16,970)               859      (12,042)

Finance leases                  (33)         33                 -             -

                               4,036   (16,937)               859      (12,042)

B. Reconciliation of net cash flow to movement in net funds / (debt)
                                                                 2000      1999
                                                                £'000     £'000

Decrease in net cash                                         (16,970)   (6,354)
Repayment of capital elements of finance leases                    33     4,478

Change in net funds / (debt) resulting from cash flows       (16,937)   (1,876)
Exchange differences                                              859     (260)

Movement in net funds / (debt)                               (16,078)   (2,136)
Net funds at start of year                                      4,036     6,172

Net funds / (debt) at end of year                            (12,042)     4,036



C. Analysis of the net outflow of cash in respect of the acquisition of
subsidiary undertakings and businesses

                                                      Van Leer Metallised
                                             Gold        Paper Caerphilly

                           Goodstrack Impressions                         Total
                 Chromagem
                     £'000      £'000       £'000                   £'000 £'000
2000
Cash                 1,811        180         128                   1,764 3,883
consideration
paid
Cash at bank and
in hand               (85)          -           -                       -  (85)

Acquired
Net outflow in
respect of           1,726        180         128                   1,764 3,798

Acquisitions
                              Shen                       Gold
                              Yong   Label World  Impressions  Learoyd    Total
                             £'000         £'000        £'000    £'000    £'000
1999
Cash consideration paid      6,962           388          123       33    7,506
Cash at bank and in hand   (2,698)             -            -        -  (2,698)
                           
Acquired
Net outflow in respect of    4,264           388          123       33    4,808
                             
Acquisitions





OTHER STATEMENTS (unaudited)


                                                           12 months  12 months
                                                                  to         to
                                                                  30  3 October
                                                           September
                                                                2000       1999
                                                               £'000      £'000

Statement of total recognised gains and losses

(Loss) / profit attributable to members of the parent        (7,160)     10,961
company

Currency translation differences on foreign currency net       4,118        287
investments

Total gains and losses recognised since last annual
report and                                                   (3,042)     11,248
accounts






Reconciliation of movements in shareholders' funds

(Loss) / profit attributable to members of the parent        (7,160)     10,961
company
Cancellation of preference shares                                  -      (549)
Dividends                                                    (5,060)    (4,895)
Exchange differences                                           4,118        287

Net (decrease) / increase to shareholders' funds             (8,102)      5,804
Opening shareholders' fund                                   107,145    101,341

Closing shareholders' funds                                   99,043    107,145




NOTES TO THE ACCOUNTS (unaudited)

SEGMENTAL ANALYSIS

Analysis of turnover by destination
                                                           2000            1999
                                                          £'000           £'000

United Kingdom                                           88,145          89,083
France                                                    9,799           8,427
Germany                                                  10,198           7,119
Scandinavia                                               7,422           7,865
Other European countries                                 21,691          16,621
Americas                                                 33,031          34,714
Rest of World                                            18,486          12,871

                                                        188,772         176,700

Analysis of turnover, (loss) / profit before interest and tax, and net assets
by origin
                                            (Loss) / profit          Net
                              Turnover           before
                                                                  operating
                                            interest and tax       assets
                              2000   1999       2000      1999    2000    1999
                             £'000    £'000    £'000     £'000   £'000   £'000

United Kingdom             141,774  133,384    7,608    13,019  70,512  67,768
Continental Europe           2,506    2,281      195        73     494   1,324
Americas                    33,388   35,858    1,839     4,429  25,930  21,017
Rest of World               11,104    5,177    2,620     1,117   7,527   5,244
                            188,772 176,700   12,262    18,638 104,463  95,353
Exceptional items and            -      -    (15,716)   (2,409)      -       -
goodwill
Non operating assets             -      -          -         -  (5,420) 11,792

                           188,772 176,700    (3,454)   16,229  99,043 107,145


Turnover originating in the United Kingdom includes £54,196,000 of sales to
overseas destinations (1999: £44,956,000). £15,016,000 (1999: £1,699,000) of
the exceptional items and goodwill arise in the UK, £610,000 (1999: £655,000)
arise in the Americas and £90,000 (1999: £55,000 ) arise in the Rest of the
World.

Analysis of turnover, (loss) / profit before interest and tax, and net assets
by activity
                                               (Loss) / profit        Net
                                   Turnover         before
                                                                   Operating
                                               interest and tax     assets
                                   2000    1999      2000    1999   2000   1999
                                  £'000   £'000     £'000   £'000  £'000  £'000

Foils and laminates
Continuing operations           128,371  126,597   9,206  14,034  72,470 71,482
Acquisitions                      9,058        -    (352)      -   4,352      -
                                137,429  126,597   8,854  14,034  76,822 71,482
Converted products and variable
information                      51,343   50,103   3,408   4,604  27,641 23,871
                                188,772  176,700  12,262  18,638 104,463 95,353
Exceptional items and goodwill        -       -  (15,716) (2,409)      -      -
Non operating assets                  -       -        -       - (5,420) 11,792

                                188,772  176,700  (3,454) 16,229 99,043 107,145


Net operating assets comprise total assets excluding goodwill less current
liabilities and exclude dividend, taxation and all assets and liabilities of a
financing nature. £14,434,000 of the exceptional items and goodwill relate to
the foils and laminates division (1999: £2,169,000) and £1,282,000 relate to
the converted products and variable information division (1999: £240,000).




NOTES TO THE ACCOUNTS (Cont'd)




Dividends


If approved, the final ordinary dividend will be paid on 12 February 2001 to
shareholders on the register on 12 January 2001.




Basis of preparation


The accounts have been prepared on the basis of the accounting policies as set
out in the 1999 Annual Report and Accounts.




Publication of abridged accounts


The preliminary announcement figures for the year ended 30 September 2000 are
unaudited. The preliminary announcement has been reviewed by the Group's
auditors, Ernst & Young, having regard to Bulletin 1998/7 'The auditors'
association with preliminary announcements'. The Group's auditors have agreed
to the preliminary announcement being notified to the London Stock Exchange.


Comparative figures for the year ended 3 October 1999 are an abridged version
of the Group's statutory accounts which carry an unqualified audit report and
do not contain a statement under S237 (2) or (3) of the Companies Act 1985.
The Group's audited statutory accounts for the year ended 3 October 1999 have
been filed with the Registrar of Companies.


The Annual Report and Accounts for the year ended 30 September 2000 will be
posted to shareholders by 8 January 2001 prior to the Annual General Meeting
on 8 February 2001. Copies of the Annual Report and Accounts will be available
to members of the public from 10 January 2001 at the Group's registered office
at Silk House, Park Green, Macclesfield, Cheshire SK11 7NU.