Final Results

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 £100.0m (2010: £79.2m). * Operating profits from continuing operations doubled to £5.2m (2010: £2.6m, including £0.6m 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 £2.9m (2010: £0.3m loss). * Loss attributable to API shareholders from discontinued operations of £0.6m following disposal of stake in 51% owned Chinese subsidiary. * IAS 19 pension deficit (net of deferred tax) down to £7.2m (£11.8m). * Basic earnings per share from continuing operations of 3.5p (2010: 3.4p). * Cash flow from operating activities £8.5m (2010: -£0.8m). * Net debt down from £18.5m to £8.5m.  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 £100.0m are up 26.2% (25.7% at constant exchange rates) compared to the previous 12 month period.  Operating profits from continuing operations increased by £2.6m to £5.2m.  Year end net debt of £8.5m was £10.0m 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 £5.2m compared to £2.0m 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 £1.4m 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 £0.2m from a £0.1m 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 £6.7m, 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 £100.0m, 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 £5.2m, up from £3.3m in the previous 12 months.  No exceptional items have been recorded compared to costs of £0.6m 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 £3.2m 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 £1.1m whilst Foils Americas improved by £0.3m as volume recovery more than offset the impact of lower margins. Central costs increased £0.5m. 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 £37.0m (11.0% at constant FX) but operating profits ended the year 43.3% lower at £1.4m.   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 £0.9m of lost profit during the year.  The year on year exchange rate impact is calculated at an adverse £0.3m. 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 £23.2m 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 £0.7m.  However, in this case, the margin squeeze was more than offset by operational leverage on increased volumes. Despite one-off re-organisation costs of £0.2m, operating profit for the full year improved by £0.3m to £0.2m (2010: £0.1m 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 £3.2m improvement in operating profits to £5.2m and an operating margin of 11.8% (2010: 7.3%). Central Costs Central costs in the year were up £0.5m due to costs relating to short and long term incentive arrangements (£0.4m) and a non recurring one off gain in the prior year of £0.2m. 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 £0.6m 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 £1.5m and an impairment charge of £5.9m 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 £3.8m which has been offset by a gain on disposal of discontinued businesses of £3.2m.  Included in the £3.2m figure is a gain of £2.6m, 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 £2.3m including a £1.0m non-cash charge relating to defined benefit pension schemes.  Interest on the Group's borrowings reduced by £0.5m 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 £0.2m, 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 £0.3m was incurred, compared with a tax credit of £2.8m for the previous year. As a result of improved profit levels in the continuing businesses, the Group recognised additional deferred tax assets of £2.9m at 31 March 2010. For the year to 31 March 2011, further tax assets of £1.1m have been recognised in light of continuing profitability which offsets a deferred tax charge of £1.0m. Deferred tax assets associated with pension liabilities reduced from £4.6m at March 2010 to £2.5m 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 £8.5m compared to an outflow of £0.8m for the year to 31 March 2010. Despite higher activity levels, year end working capital for continuing operations was lower by £0.9m 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 £1.2m (2010: £1.2m).  Depreciation for the year was £2.9m. Interest expense cash flow remained flat year on year at £1.5m.  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 £10.0m to £8.5m at 31 March 2011.  Of this debt reduction, cash proceeds from the disposal of the investment in China accounted for £1.8m and debt transferred to the acquirer for a further £2.4m. 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 £14.1m comprising an amortising loan of £6.8m repayable over the term of the facility with a final £4.25m due in July 2013, a term loan of £3.75m repayable July 2013 and a multi- option overdraft facility of £3.5m 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 £1| 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 £9.7m (2010: £16.4m) with a net liability of £7.2m (2010: £11.8m) after accounting for a deferred tax asset of £2.5m (2010: £4.6m). The UK scheme, the API Group plc Pension and Life Assurance Fund, has approximately 1,620 pensioners and deferred members and accounts for £9.0m (2010: £15.7m) of the total gross pension liability.  The valuation of the UK scheme benefited from above target asset investment performance (£0.7m) and a change to the basis of inflation rates used to calculate liabilities (£8.0m). 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 £8.7m 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 £0.4m.  This contribution rate has increased to £0.7m 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 £0.7m (2010: £0.7m) 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 £'000   £'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                  £'000                £'000   £'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                  £'000                £'000   £'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 £'000   £'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 ----------------+---------+---------+----------+----------+----------+---------   | £'000| £'000| £'000| £'000| £'000| £'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 ---------------------+-+--------------------+-+-----------------+-+------------   | | £'000| | £'000| | £'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 -----------------------------------------------+-+-------------+-+-------------   | | £'000| | £'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        £'000                   £'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 (£'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     £'000   £'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 £14,696,000 and £11,880,000 respectively (2010: one major customer within the Laminates segment amounting to £11,761,000). Segment result | Year ended| |Year ended |  31 March| |  31 March   | 2011| | 2010 -------------------------------------------------+------------+-+------------   |  | | -------------------------------------------------+------------+-+------------   | £'000| | £'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                     £'000                     £'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                     £'000                     £'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   £'000   £'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                 £'000                   £'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   £'000   £'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 £5,083,000. 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 £5,850,000. The Group's 51% share of this impairment was £2,984,000 (31 March 2010: £2,592,000), with a corresponding reduction in the minority interest of £2,866,000 (31 March 2010: £2,491,000). (Loss)/profit from discontinued operations   Year ended   Year ended          31 March           31 March 2011             2010   £'000   £'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:     £'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:     £'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   £'000                   £'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                £'000                £'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   £'000 £'000 £'000 £'000 £'000 £'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                £'000                   £'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 £5m.  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                £'000                   £'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 £6.4m repayable between April 2011 and July 2013 (2010: £6.6m repayable between October 2010 and July 2013) and a term loan of £3.8m repayable in July 2013 (2010: £3.8m repayable in July 2013).  At 31 March 2010, there was a higher margin term loan of £4.0m 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 £3.5m (2010: £3.5m).  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                         £'000                 £'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 £0.9m (2010: £0.9m). 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 £1.4m (2010: £1.5m). 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 £700,000. Changes in the present value of the defined benefit obligations are analysed as follows:   Year ended   Year ended         31 March          31 March       2011               2010                      £'000                   £'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                      £'000                   £'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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