Half-yearly report

8 December 2011 API Group plc ("API" or the "Group") Interim results for the six months ended 30 September 2011 * First half revenues of £58.5m, 24% ahead of last year. * Operating profits from continuing operations 51% higher at £3.8m, operating margin 6.4%. * No exceptional charge for flood damage at New Jersey manufacturing facility compared to initial estimate of a £700k net loss. * Profit before tax up 123% to £2.9m (2010: £1.3m from continuing operations). * Basic earnings per share 3.6p (2010: 1.5p). * IAS 19 pension deficit (net of deferred tax) down to £5.1m from £11.1m last year and £7.2m at March 2011. * Net debt £10.0m compared to £14.4m at 30 September 2010 and £8.9m at 31 March 2011.  Net debt to EBITDA 1.0x (2010: 1.7x). * Laminates investment on track, with expected start-up in April 2012 and incremental revenues of £15-20m pa. Commenting, API's Chief Executive, Andrew Turner said: "I am pleased to report that the Group has maintained its momentum of sales growth and profit improvement in spite of the challenging economic climate and volatile raw material prices.  Management remains focused on improving the quality and resilience of the businesses and further enhancing our product and service offering to customers. "We are conscious that the ongoing sovereign debt crisis could affect confidence in our customer base and consumer end markets, although the Group's improved financial condition leaves it better placed to weather any difficulties that may lie ahead." Enquiries: +----------------+---------------------------------+----------------------+ | Andrew Turner | Chief Executive, API Group plc | +44 (0) 1625 650334 | +----------------+---------------------------------+----------------------+ | Chris Smith | Finance Director, API Group plc | +44 (0) 1625 650334 | +----------------+---------------------------------+----------------------+ | Tony Rawlinson | Nominated Adviser | +44 (0) 20 7148 7900 | | | Cairn Financial Advisers LLP | | +----------------+---------------------------------+----------------------+ | James Serjeant | Broker | +44 (0) 20 7260 1000 | | | Numis Securities | | +----------------+---------------------------------+----------------------+ REPORT ON THE INTERIM RESULTS FOR THE 6 MONTH PERIOD ENDED 30 SEPTEMBER 2011 GROUP INCOME STATEMENT Revenue from continuing operations of £58.5m was 25% higher at constant exchange rates compared to the same period last year and 24% ahead at actual rates.  In comparison to the preceding six month period, revenues were up 11%. Higher volumes accounted for 15% revenue growth, with the balance coming from higher selling prices.  Price increases broadly recovered the impact of the significant raw material price rises experienced in 2011. Operating profits from continuing operations of £3.8m increased £1.3m compared to the first half of last year, representing an operating margin of 6.4%. Gross profit margin fell from 24.3% to 23.6% due to the dilution effect of higher material costs and selling prices.  Adjusted for raw material cost pass- through, gross profit margin would have been 1.5% ahead at 25.8%. The Group has continued to keep its operating costs under control, with production and overhead expenses increasing by only 4% to accommodate the 15% growth in volumes. In this Interim Report, segmental reporting has been expanded to report on four operating divisions.  During the period, the management of API Holographics, based in Salford, UK, was separated from Foils Europe to provide increased focus on the different growth strategies appropriate to the security holographic and decorative foils markets.   Under the new structure, Foils Europe now comprises the manufacturing facility at Livingston, Scotland and the six foil distribution businesses in France, Italy, Germany, Australia, New Zealand and Hong Kong.  Prior year comparative figures have been adjusted in line with the new basis of reporting. All the Group's businesses increased revenues, both year on year and compared to the preceding six months, with Laminates ahead 44% and 10% respectively. Growth in operating profits was particularly encouraging in Foils Americas and Holographics, while Laminates delivered another impressive set of results.  Foils Europe was the only disappointment, with operating profits down by £0.5m, although still £0.3m ahead of the preceding six months. In October, the Group announced that its manufacturing facility in New Jersey, US, had sustained significant damage and disruption caused by Hurricane Irene.  At the time, it was estimated that the net financial impact could be up to £0.7m.  After further assessment and dialogue with insurers, that estimate has been revised downward and, whilst there may still be some cash cost, the charge to the income statement is now expected to be zero. The Group's net financing costs of £0.9m were down £0.3m due to lower average debt and interest rates.   Pension related charges were in line with last year. Profit after tax for continuing operations was £2.6m, compared to £1.1m at the interim stage last year. The tax charge of £0.2m represents a rate of 9% on profit before tax, in line with the effective rate for the year to 31 March 2011.  A deferred tax charge in the UK of £0.6m was partly offset by recognition of a further £0.4m of tax assets in light of continuing profitability. Basic earnings per share from continuing operations were 3.6p (2010: 1.5p). REVIEW OF OPERATIONS Foils Europe Despite 5% lower volumes, Foils Europe revenues increased by 6% to £15.2m (4% at constant exchange rates) as a consequence of higher selling prices.  The Italian distribution operation enjoyed further growth, partially compensating for weaker demand levels in other territories, especially the UK and France.  Overall, the business continued to make good progress in the label sector but this was offset by reduced sales to other packaging and print segments and to third party distributors. Selling price increases, initiated during late 2010, were effective in recovering the impact of the earlier rises in polyester film costs.  However, as film prices started to moderate, the business experienced a rapid escalation in solvent costs due to capacity outages at producers.  As a consequence, the recovery in margins from higher selling prices was less than expected.  With lower volumes and slightly higher operating costs, profits were a modest £0.3m; £0.25m ahead of the previous six months but £0.5m lower than the first half of last year. Foils Americas Reported sales revenues for Foils Americas rose 7% to £12.5m.  At constant exchange rates sales were 13% up on the first half of last year and 10% higher than the prior six months, due primarily to the pass-through of higher raw material costs in increased selling prices.  Volumes were flat overall as demand for the business's market leading metallic flake intermediary compensated for lower activity on foils for the packaging and graphics sectors.  With the reversal of margin erosion suffered last year from rapidly increasing raw material costs, as well as improved sales mix and lower operating expenses, profits increased to £0.7m (ROS of 5.5%) from break even at the interim stage last year and £0.2m in the six months to March 2011. Holographics Holographics sales grew by 48% compared to the same period last year and were 11% higher than the previous six months.  Third party sales, predominantly foils and films for brand protection and security applications, were ahead by 43%, benefitting from increased spend on product development and sales & marketing.  Sales of decorative holographic products to sister companies within the Group increased by 57%, due especially to a significant packaging development project satisfied jointly with API Laminates. Added value margins improved in the period as pricing caught up with earlier increases in raw material costs.  The business benefited strongly from the impact of higher volumes on production efficiencies and fixed cost recovery, resulting in first half operating profits of £0.9m (ROS of 14%), up from £0.2m for the same period last year and £0.4m for the preceding six months. Laminates Laminates revenues increased to £27.7m as a number of key development projects moved to full production, a rise of 44% on the same period last year and 10% higher than the preceding six months.  Growth over the second half of last year was predominantly due to demand from the tobacco sector, whilst orders for alcoholic drinks packaging remained buoyant.  Approximately 25% of year-on-year growth was the result of increased costs being passed through to customers for higher specification and higher priced raw materials.  Further input cost increases of £0.5m were absorbed by the business in order to secure a number of key supply positions.  As a result, the drop-through to operating profit from the headline sales growth was restricted to £0.4m.  The business continued to keep a firm control of operating expenses and completed the first half year with profits of £2.8m (2010: £2.4m), an ROS of 10.1%. Following the Company's announcement in July 2011 outlining a major new supply agreement, the business is progressing with its investment in new production equipment and remains on track to start supplies in April 2012. CASH FLOW AND BORROWINGS The Group experienced a net cash inflow from operating activities of £0.3m, compared to £2.7m for the same period last year.  Positive cash flow from improved trading results was offset by a working capital outflow of £3.8m (£0.1m last year) to support increased activity and a re-alignment of payment terms with suppliers.  Working capital efficiency, measured by reference to trailing three month sales, ended the period at 11.9% compared to 11.4% a year earlier and 8.9% at March 2011. Capital expenditure of £1.2m was £0.6m higher than the first six months of last year, with £0.9m relating to the customer-led investment project in Laminates.  A further £1.2m is due to be spent on this project by the end of the financial year. Group net debt, at £10.0m, compares to £8.5m at 31 March 2011, and £14.4m at 30 September 2010. The Group's main lending arrangements are with Barclays Bank plc in the UK and Wells Fargo in the US.  Both facilities are in place until July 2013.  Gearing at 30 September 2011 was 50% compared to 148% 12 months earlier and 56% at 31 March 2011.  The ratio of the Group's net debt to trailing 12 month EBITDA fell to 1.0x compared to 1.7x at the interim stage last year. PENSION DEFICIT The IAS 19 valuation of the UK and US defined benefit pension schemes fell to £6.9m, from £15.3m at 30 September 2010 and £9.7m at March 2011.  Net of associated deferred tax assets, the deficit is now valued at £5.2m, down from £11.2m at September last year. In the latest six months period, scheme assets were affected by the general fall in equity values.  However, this was more than compensated by a reduction of £6.5m in liabilities relating to the UK scheme, where member data has been updated in line with the latest triennial funding valuation.  The impact on scheme liabilities from movements in discount rates and inflation assumptions during the six months since March 2011 was broadly neutral.  Market yields on benchmark AA rated corporate bonds fell by 0.3% whilst estimates of long term CPI inflation also reduced, by 0.4% to 2.1%. The result of the UK scheme's 2010 triennial funding valuation is due to be approved by 31 December 2011.  The process is well advanced and the Company anticipates no change to its current level of funding contributions. OUR PEOPLE The Group continues to focus on providing customers with higher quality, more cost effective products and services.  Our success in meeting our aspirations depends on the skill and commitment of our entire workforce.  The Board therefore extends its thanks to all members of the API team for the progress which has been made in the last six months and for their continued contribution to the growth and development of the business. OUTLOOK With raw material prices softening, the Foils businesses are expected to make further progress on margin recovery.  On the other hand, a broad exposure to consumer spending in the US and Europe means that demand could be affected by macro-economic uncertainty and the prospect of slowing economic growth, especially in the Eurozone. The prospects for Laminates and Holographics are less tied to the general economy.  Whilst a key project affecting both units is coming to a close, order books are holding up well and the pipeline of new business is encouraging. API Laminates is busy gearing up for its new major supply contract.  The project remains on schedule for the start-up of supplies from April 2012 and, as previously announced, is expected to deliver additional revenues of £15-20m per annum. In spite of the higher capital expenditure to support the Laminates project, it is anticipated that the Group's overall level of debt will continue to reduce through the second half. Notwithstanding more extreme macro-economic scenarios, the Board remains confident that full year results will meet expectations and that the Group is well placed for further profitable growth over the medium term. GROUP INCOME STATEMENT for the six months ended 30 September 2011     Unaudited   Unaudited   Audited 6 months to    30 6 months to       Year to September    2011 30 September        31 March       2010 2011   Note £'000   £'000   £'000 -------------------------------------------------------------------------------- Continuing operations Revenue 2 58,545   47,032   99,963 Cost of sales   (44,752)   (35,598)   (76,386) -------------------------------------------------------------------------------- Gross profit   13,793   11,434   23,577 Other operating   (10,028)   (8,939)   (18,383) costs -------------------------------------------------------------------------------- Operating profit 2 3,765   2,495   5,194 from continuing operations Finance revenue 3 7   8   17 Finance costs 3 (884)   (1,159)   (2,354) --------------------------------------------------------------------------------     (877)   (1,151)   (2,337) -------------------------------------------------------------------------------- Profit from   2,888   1,344   2,857 continuing operations before taxation Tax expense 4 (246)   (269)   (265) -------------------------------------------------------------------------------- Profit from   2,642   1,075   2,592 continuing operations Discontinued operations Loss from 5                     (6,656)   (4,124) discontinued  - operations -------------------------------------------------------------------------------- Profit / (loss) for   2,642   (5,581)   (1,532) the period -------------------------------------------------------------------------------- Profit / (loss) attributable to equity holders of the parent     - continuing   2,642   1,075   2,592 operations     - discontinued                       (3,348)   (612) operations  - --------------------------------------------------------------------------------     2,642   (2,273)   1,980 Loss attributable to non-controlling interest     - discontinued                       (3,308)   (3,512) operations  - -------------------------------------------------------------------------------- Profit / (loss) for   2,642   (5,581)   (1,532) the period -------------------------------------------------------------------------------- Earnings per share (pence) Basic earnings per 6 3.6   1.5   3.5 share from continuing operations Diluted earnings per 6 3.5   1.4   3.4 share from continuing operations Basic earnings / 6 3.6   (3.2)   2.7 (loss) per share on profit / (loss) for the period Diluted earnings / 6 3.5   (3.0)   2.6 (loss) per share on profit / (loss) for the period -------------------------------------------------------------------------------- GROUP STATEMENT OF COMPREHENSIVE INCOME for the six months ended 30 September 2011     Unaudited   Unaudited   Audited 6 months to   6 months to       Year to  30 September   30 September        31 March      2011     2010     2011     £'000   £'000   £'000 -------------------------------------------------------------------------------- Profit / (loss) for the period   2,642   (5,581)   (1,532) -------------------------------------------------------------------------------- Exchange differences on retranslation of foreign operations   186   (309)   (392) Exchange differences arising on net asset hedge      -   (121)   (121) Change in fair value of effective cash flow hedges   462   (209)   (329) Actuarial gains on defined benefit pension plans   2,410   1,105   6,586 Movement in deferred tax asset relating to defined benefit pension plans (627)   (496)   (2,104) -------------------------------------------------------------------------------- Other comprehensive income for the period   2,431   (30)   3,640 -------------------------------------------------------------------------------- Total comprehensive income and expense for the period, net of tax 5,073   (5,611)   2,108 -------------------------------------------------------------------------------- Attributable to: Equity holders of the parent   5,073   (2,293)   5,633 Non-controlling interest      -   (3,318)   (3,525) --------------------------------------------------------------------------------     5,073   (5,611)   2,108 -------------------------------------------------------------------------------- GROUP BALANCE SHEET at 30 September 2011     Unaudited   Unaudited   Audited 30 September       30 September     31 March     2011 2010 2011   Note £'000   £'000   £'000 -------------------------------------------------------------------------------- Assets Non-current assets Property, plant and equipment   17,239   17,567   16,804 Intangible assets - goodwill   5,188   5,188   5,188 Trade and other receivables   59   122   94 Deferred tax assets   4,684   7,045   5,478 --------------------------------------------------------------------------------     27,170   29,922   27,564 -------------------------------------------------------------------------------- Current assets Trade and other receivables   17,631   16,602   16,848 Inventories   11,913   9,521   12,409 Other financial assets   172   -   - Cash and short-term deposits 7 3,185   1,572   4,175 --------------------------------------------------------------------------------     32,901   27,695   33,432 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Assets of disposal group held for sale    -   8,642          - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total assets   60,071   66,259   60,996 -------------------------------------------------------------------------------- Liabilities Current liabilities Trade and other payables   18,547   16,637   21,952 Financial liabilities 8 3,695   2,798   2,830 Income tax payable   378   402   365 --------------------------------------------------------------------------------     22,620   19,837   25,147 -------------------------------------------------------------------------------- Non-current liabilities Financial liabilities 8 9,767   13,614   10,514 Deferred tax liabilities   238   256   238 Provisions   81   93   85 Deficit on defined benefit pension plans 9 6,943   15,251   9,719 --------------------------------------------------------------------------------     17,029   29,214   20,556 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Liabilities attributable to disposal group held for sale    -   5,449              - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total liabilities   39,649   54,500   45,703 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net assets   20,422   11,759   15,293 -------------------------------------------------------------------------------- Equity Called up share capital   766   701   766 Share premium   7,136   7,136   7,136 Other reserves   8,816   8,595   8,565 Foreign exchange reserve   445   2,889   259 Retained earnings   3,259   (9,619)   (1,433) -------------------------------------------------------------------------------- API Group shareholders' equity   20,422   9,702   15,293 Non-controlling interest    -   2,057              - -------------------------------------------------------------------------------- Total equity   20,422   11,759   15,293 -------------------------------------------------------------------------------- GROUP STATEMENT OF CHANGES IN EQUITY for the six months ended 30 September 2011 Equity Foreign Total share Share Other exchange Retained shareholders'   capital   premium   reserves   reserve   earnings   equity   £'000   £'000   £'000   £'000   £'000   £'000 -------------------------------------------------------------------------------- Balance at 1 April 2010 701   7,136   8,595 3,309   (7,805)   11,936 Total recognised income and expense for the period      -        -        - (420)   (1,873)   (2,293) Share based payments -   -   -   -   59   59 -------------------------------------------------------------------------------- Balance at 30 September 2010 701   7,136   8,595   2,889   (9,619)   9,702 Total recognised income and expense for the period      -        -        - (80)   8,006   7,926 Transfer to income statement on disposal of subsidiaries      -        -        - (2,550)        -   (2,550) Issue of shares 65   -   -   -   -   65 Shares acquired by Employee Benefit Trust      -        -   (30)      -        -   (30) Share based payments -   -   -   -   180   180 -------------------------------------------------------------------------------- Balance at 31 March 2011 766   7,136   8,565   259   (1,433)   15,293 Total recognised income and expense for the period      -        -        - 186   4,887   5,073 Shares acquired by Employee Benefit Trust      -        -   (11)      -        -   (11) Transferred on exercise of share options      -        -   262      -   (262)              - Share based payments -   -   -   -   67   67 -------------------------------------------------------------------------------- Balance at 30 September 2011 766   7,136   8,816   445   3,259   20,422 -------------------------------------------------------------------------------- GROUP CASH FLOW STATEMENT for the six months ended 30 September 2011     Unaudited   Unaudited   Audited 6 months to   6 months to       Year to  30 September   30 September        31 March      2011     2010     2011   Note £'000   £'000   £'000 -------------------------------------------------------------------------------- Operating activities Group profit before   2,888   1,344   2,857 tax from continuing operations Adjustments to reconcile Group profit before tax from continuing operations to net cash flow from operating activities: Operating loss from                   (6,801)   (7,215) discontinued    - operations Net finance costs   877   1,151   2,337 Depreciation of   1,212   1,688   2,942 property, plant and equipment Impairment of                     5,850   5,850 property, plant and    - equipment (Profit) / loss on                     (12)   28 disposal of    - property, plant and equipment Movement in fair   (112)   -   78 value foreign exchange contracts Share-based   67   59   239 payments Difference between pension contributions paid and amounts recognised in the income statement (776)   (435)   (1,037) Decrease /   533   1,279   (2,047) (increase) in inventories Increase in trade   (719)   (2,650)   (2,588) and other receivables (Decrease) /   (3,669)   1,281   7,201 increase in trade and other payables Movement in   (4)   (4)   (12) provisions -------------------------------------------------------------------------------- Cash generated from   297   2,750   8,633 operations Income taxes paid   (41)   (37)   (140) -------------------------------------------------------------------------------- Net cash flow from   256   2,713   8,493 operating activities -------------------------------------------------------------------------------- Investing activities Interest received   7   8   17 Purchase of   (1,192)   (567)   (1,153) property, plant and equipment Sale of property,                     49   21 plant and equipment    - Sale of subsidiary   -   -   1,783 undertakings Cash and cash   -   -   (296) equivalents of subsidiary undertakings sold -------------------------------------------------------------------------------- Net cash flow from   (1,185)   (510)   372 investing activities -------------------------------------------------------------------------------- Financing activities Interest paid   (384)   (852)   (1,480) Proceeds from share   -   -   65 issues Purchase of shares   (11)   -   (30) by Employee Benefit Trust                     1,562   1,214 New borrowings    - Repayment of   (393)   (2,669)   (5,382) borrowings -------------------------------------------------------------------------------- Net cash flow from   (788)   (1,959)   (5,613) financing activities -------------------------------------------------------------------------------- (Decrease) /   (1,717)   244   3,252 increase in cash and cash equivalents Effect of exchange   (50)   86   13 rates on cash and cash equivalents Cash and cash   2,719   (546)   (546) equivalents at the beginning of the period -------------------------------------------------------------------------------- Cash and cash 7 952   (216)   2,719 equivalents at the end of the period -------------------------------------------------------------------------------- NOTES TO THE INTERIM FINANCIAL STATEMENTS 1 (a) Corporate information The consolidated interim financial statements of API Group plc for the six months ended 30 September 2011 were authorised for issue in accordance with a resolution of the directors on 7 December 2011. API Group plc is a public limited company incorporated and domiciled in England and Wales.  The Company's shares are traded on the Alternative Investment Market of the London Stock Exchange. The principal activities of the Group are the manufacture and distribution of specialty foils, films and laminated materials. (b) Basis of preparation The interim consolidated financial statements of the Group for the six months ended 30 September 2011 have been prepared in accordance with IAS 34 Interim Financial Reporting. These interim consolidated financial statements are unaudited.  They do not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and therefore do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's latest annual financial statements as at 31 March 2011 which were prepared in accordance with International Financial Reporting Standards as adopted by the EU.  The audited annual financial statements for the year ended 31 March 2011, which represent the statutory accounts for that period, and on which the auditors gave an unqualified opinion, have been filed with the Registrar of Companies. The Directors consider that, after making appropriate enquiries, there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis in preparing these financial statements. The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 March 2011. 2. SEGMENTAL INFORMATION The Group produces monthly management information to enable the Board, including the Chief Executive Officer, to monitor the financial performance of its constituent parts.  This information is analysed by business unit.  Following the disposal of the China business, the residual businesses within the Asia Pacific unit are now managed and reported within the Foils Europe business unit.  The Holographics business unit is now managed and reported separately from Foils Europe and comparative figures have been adjusted accordingly.     Unaudited   Unaudited   Audited   6 months to   6 months to       Year to  30 September   30 September        31 March    2011     2010     2011 Continuing operations   £'000 £'000   £'000 ------------------------------------------------------------------------- Total revenue by origin Foils Europe   15,170   14,284   28,429 Foils Americas   12,512   11,691   23,151 Holographics   6,848   4,616   10,775 Laminates   27,672   19,233   44,321 -------------------------------------------------------------------------     62,202   49,824   106,676 ------------------------------------------------------------------------- Inter-segmental revenue Foils Europe   495   562   1,095 Foils Americas   296   419   733 Holographics   2,827   1,797   4,855 Laminates   39   14   30 -------------------------------------------------------------------------     3,657   2,792   6,713 ------------------------------------------------------------------------- External revenue by origin Foils Europe   14,675   13,722   27,334 Foils Americas   12,216   11,272   22,418 Holographics   4,021   2,819   5,920 Laminates   27,633   19,219   44,291 -------------------------------------------------------------------------     58,545   47,032   99,963 ------------------------------------------------------------------------- Segment result Operating profit/(loss) Foils Europe   274   797   857 Foils Americas   688   4   244 Holographics   948   155   567 Laminates   2,792   2,392   5,245 ------------------------------------------------------------------------- Segment result   4,702   3,348   6,913 Central costs   (937)   (853)   (1,719) ------------------------------------------------------------------------- Total operating profit   3,765   2,495   5,194 ------------------------------------------------------------------------- 3. FINANCE REVENUE AND FINANCE COSTS     Unaudited   Unaudited   Audited 6 months to   6 months to       Year to  30 September   30 September          31 March      2011   2010     2011     £'000   £'000   £'000 -------------------------------------------------------------------------------- Finance revenue Interest receivable on bank and other short term deposits   1   -   2 Other interest receivable   6   8   15 --------------------------------------------------------------------------------     7   8   17 -------------------------------------------------------------------------------- Finance costs Interest payable on bank loans and overdrafts   (486)   (744)   (1,356) Other interest payable   (7)   (4)   (24) Finance cost in respect of defined benefit pension plans   (391)   (411)   (974) --------------------------------------------------------------------------------     (884)   (1,159)   (2,354) -------------------------------------------------------------------------------- 4. TAXATION     Unaudited   Unaudited   Audited 6 months to   6 months to       Year to  30 September   30 September          31 March      2011   2010     2011     £'000   £'000   £'000 -------------------------------------------------------------------------------- Current income tax Overseas tax - current year charge   (57)   (67)   (135)                     - adjustments in respect of prior-year tax charge    -   (34)   (37) -------------------------------------------------------------------------------- Total current income tax charge   (57)   (101)   (172) -------------------------------------------------------------------------------- Deferred tax Origination and reversal of temporary differences   (189)   (168)   (93) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total charge in the Income Statement   (246)   (269)   (265) -------------------------------------------------------------------------------- 5. DISCONTINUED OPERATIONS Discontinued operations in respect of the comparative periods relate primarily to the Group's investment in a 51% owned subsidiary in China, which was sold by the Group in January 2011.     Unaudited   Unaudited   Audited 6 months to    30 6 months to       Year to September    2011 30 September        31 March       2010 2011     £'000   £'000   £'000 --------------------------------------------------------------------------------                       4,128   7,425 Revenue - External  -              - Inter-                       585   619 Group  - --------------------------------------------------------------------------------                       4,713   8,044    -                       (4,842)   (8,098) Cost of sales  - --------------------------------------------------------------------------------                       (129)   (54) Gross loss  -                       (822)   (1,311) Other operating costs  - -------------------------------------------------------------------------------- Operating loss before                       (951)   (1,365) exceptional items  - Exceptional items - impairment of                     (5,850)   (5,850) property, plant and  - equipment -------------------------------------------------------------------------------- Operating loss from                       (6,801)   (7,215) discontinued  - operations                       (90)   (138) Finance costs  - -------------------------------------------------------------------------------- Loss from                       (6,891)   (7,353) discontinued  - activities before taxation Taxation   -   -   - -------------------------------------------------------------------------------- Loss from discontinued activities after taxation of China business  -   (6,891)   (7,353) Profit on disposal of discontinued operations (see below)  -   235   3,229 -------------------------------------------------------------------------------- Loss from discontinued operations per the income statement  -   (6,656)   (4,124) -------------------------------------------------------------------------------- The profit on disposal of discontinued operations is made up as follows:     Unaudited   Unaudited   Audited     6 months to   6 months to       Year to  30 September   30 September          31 March  2011   2010     2011     £'000   £'000   £'000 -------------------------------------------------------------------------------- Profit on disposal of China business - -   444 Exchange gains on translation relating to the China business transferred from the foreign exchange reserve          -          - 2,550 -------------------------------------------------------------------------------- Profit on disposal of China business after transfer from the foreign exchange reserve          -          - 2,994 Adjustment to prior year losses on disposal of discontinued businesses            - 235 235 --------------------------------------------------------------------------------     -   235   3,229 -------------------------------------------------------------------------------- The adjustment to prior year losses on disposal of discontinued businesses relates to the reversal of accrued legal fees connected with a prior business disposal. The net cash flows attributable to discontinued business were as follows:     Unaudited   Unaudited   Audited   6 months to   6 months to       Year to  30 September   30 September          31 March    2011   2010     2011     £'000   £'000   £'000 ---------------------------------------------------- Operating                     542   783 activities    - Investing                     (36)   1,477 activities    - Financing activities    -   (480)   (813) ----------------------------------------------------      -   26   1,447 ---------------------------------------------------- 6. EARNINGS PER SHARE     Unaudited   Unaudited   Audited 6 months to   6 months to       Year to  30 September   30 September        31 March      2011   2010 2011     £'000   £'000   £'000 -------------------------------------------------------------------------------- Net profit attributable to equity holders of the 2,642   1,075   2,592 parent company - continuing operations Loss attributable to equity holders of the                   (3,348)   (612) parent company -    - discontinued operations -------------------------------------------------------------------------------- Net profit / (loss) attributable to equity 2,642   (2,273)   1,980 holders of the parent company --------------------------------------------------------------------------------     Unaudited   Unaudited   Audited 6 months to   6 months to       Year to  30 September   30 September        31 March      2011   2010 2011     £'000   £'000   £'000 -------------------------------------------------------------------------------- Basic weighted average 73,609,201   70,068,505   73,447,050 number of ordinary shares Dilutive effect of 1,283,688   3,025,425   2,443,955 employee share options Dilutive effect of -   3,506,336   - warrants -------------------------------------------------------------------------------- Diluted weighted average 74,892,889   76,600,266   75,891,005 number of ordinary shares -------------------------------------------------------------------------------- The weighted average number of shares excludes the 3,000,000 shares owned by the API Group plc No.2 Employee Benefit Trust (30 September 2010: 58,221 and 31 March 2011: 3,058,221).     Unaudited   Unaudited   Audited 6 months to   6 months to     Year to  30 September   30 September        31    2011     2010 March       2011 Earnings per share   pence pence   pence ------------------------------------------------------------------------- Continuing operations Basic earnings   3.6   1.5   3.5 per share Diluted earnings   3.5   1.4   3.4 per share Discontinued operations Basic loss per                   (4.7)   (0.8) share      - Diluted loss per                   (4.4)   (0.8) share      - Total Basic earnings /   3.6   (3.2)   2.7 (loss) per share Diluted earnings / (loss) per 3.5   (3.0)   2.6 share ------------------------------------------------------------------------- 7. CASH AND CASH EQUIVALENTS     Unaudited   Unaudited   Audited 30 September     30 September     31 March       2011 2010 2011     £'000   £'000   £'000 -------------------------------------------------------------------------------- Included in balance sheet Cash and short-term deposits   3,185   1,572   4,175 Bank overdrafts   (2,233)   (1,969)   (1,456) --------------------------------------------------------------------------------     952   (397)   2,719 Included in assets of disposal group   -   181   - --------------------------------------------------------------------------------     952   (216)   2,719 -------------------------------------------------------------------------------- 8. FINANCIAL LIABILITIES     Unaudited   Unaudited   Audited 30 September     30 September     31 March       2011 2010 2011     £'000   £'000   £'000 -------------------------------------------------------------------------------- Current Included in balance sheet Bank overdrafts   2,233   1,969   1,456 Current instalments on bank loans   1,239   520   779 Interest rate swaps   145   126   97 Forward currency exchange contracts   78   183   498 --------------------------------------------------------------------------------     3,695   2,798   2,830 Included in liabilities of disposal group   -   2,940   - --------------------------------------------------------------------------------     3,695   5,738   2,830 -------------------------------------------------------------------------------- Non-current Included in balance sheet Non-current instalments due on bank loans   9,732   13,462   10,451 Interest rate swaps   34   152   63 --------------------------------------------------------------------------------     9,766   13,614   10,514 -------------------------------------------------------------------------------- 9. DEFINED BENEFIT PENSION PLAN DEFICIT The Group operates two defined benefit schemes, the API Group Pension and Life Assurance Scheme in the UK and the API Foils Inc North American Pension Plan in the US.  Both of these schemes are closed to future accrual.  The assets and liabilities of these defined benefit schemes are:     Unaudited   Unaudited   Audited 30 September     30 September     31 March     2011       2011 2010     £'000   £'000   £'000 ------------------------------------------------------------------------------- United Kingdom Fair value of scheme assets 67,341   68,153   70,813 Present value of scheme liabilities (73,595)   (82,745)   (79,843) ---------------- ---------------- -------------------     (6,254)   (14,592)   (9,030) ---------------- ---------------- ------------------- United States Fair value of scheme assets 1,867   1,713   1,795 Present value of scheme liabilities (2,556)   (2,372)   (2,484) ---------------- ---------------- -------------------     (689)   (659)   (689) ---------------- ---------------- ------------------- ---------------- ---------------- ------------------- Net pension liability   (6,943)   (15,251)   (9,719) ---------------- ---------------- ------------------- The movements in the net pension liability are as follows: Opening liability   9,719   16,406   16,406 Net cost recognised in arriving at operating profit -   -   - Net cost recognised in finance costs 391   411   974 Taken to Statement of Comprehensive Income (2,410)   (1,106)   (6,586) Contributions from and scheme expenses borne by employers (776)   (434)   (1,035) Exchange differences   19   (26)   (40) ---------------- ---------------- ------------------- Closing liability   6,943   15,251   9,719 ---------------- ---------------- ------------------- The main assumptions used in valuing the present value of the scheme liabilities in the UK are as follows: Rate of increases in pensions in payment and deferred pensions 2.10%   2.30%   2.50% Inflation (CPI)   2.10%   2.40%   2.50% Discount rate   5.25%   5.15%   5.55% This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: API Group PLC via Thomson Reuters ONE [HUG#1569886]

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