Final Results
| Press Release | 29 May 2012 |
API Group plc
("API" or the "Group")
Final Results
API Group plc (AIM:API), a leading manufacturer of specialist foils and packaging materials, announces its final results for the year ended 31 March 2012.
Financial Highlights
| 14% growth in revenues to £113.9m (2011: £100.0m) | |
| Operating profits advanced by 32% to £6.9m (2011: £5.2m) | |
| Improved results at Holographics (+£1.0m), Foils Americas (+£0.9m) and Laminates (+£0.5m). Profits at Foils Europe declined by £0.5m | |
| Profit before tax increased by 77% to £5.1m (2011: £2.9m) | |
| Basic earnings per share of 6.7 pence (2011: 3.5 pence) | |
| IAS 19 pension deficit (net of deferred tax) down by £0.7m to £6.5m | |
| Cash flow from operating activities £8.7m (2011: £8.5m) | |
| Net debt down to £3.6m compared to £8.5m at March 2011 | |
| Increased capital investment, with additions of £3.5m (2011: £1.2m) | |
| Shareholder's funds increased by £6.0m (39%) to £21.3m | |
| Installation of the new laminator completed to schedule in April, shipments for the new supply contract expected from late June |
Commenting on the results, Richard Wright, Chairman of API Group plc, said: "It is pleasing to report another substantial improvement in the Group's financial results, in spite of the challenging economic conditions and pressures from higher raw material costs. A second year of strong cash flow has transformed the Group's balance sheet. With a robust pipeline of growth projects and management focus on improving the profitability of the European foils business, the Board is confident of making further progress in the current financial year."
- Ends -
For further information:
| API Group plc | |
| Andrew Turner, Group Chief Executive | Tel: +44 (0) 1625 650 334 |
| Chris Smith, Group Finance Director | www.apigroup.com |
| Numis Securities (Broker) | |
| James Serjeant | Tel: +44 (0) 20 7260 1000 |
| www.numis.com |
| Cairn Financial Advisers (Nominated Adviser) | |
| Tony Rawlinson / Avi Robinson | Tel: +44 (0) 20 7148 7900 |
| www.cairnfin.com |
Media enquiries:
| Abchurch | |
| Julian Bosdet / Henry Harrison-Topham / Sarah Hollins | Tel: +44 (0) 20 7398 7702 |
| henry.ht@abchurch-group.com | www.abchurch-group.com |
Chairman's Statement
Against a background of weak economic conditions affecting most end markets, API is pleased to report another year of significant improvement in financial performance. With debt substantially reduced and positive momentum in sales and profits, the Group has further strengthened its platform for future investment and growth.
Sales for the year ended 31 March 2012 of £113.9m were 14% ahead of the previous 12 month period, operating profits increased by 32% to £6.9m (2011: £5.2m) and profit before tax rose 77% to £5.1m (2011: £2.9m). Basic earnings per share of 6.7p advanced by 3.2p and net debt finished the year at £3.6m compared to £8.5m a year earlier. Despite the adverse impact of exceptionally low bond yields, the IAS pension deficit fell by £0.7m to £6.5m, net of deferred tax.
While Laminates remains the most significant contributor to Group results, year-on-year profit improvement was driven by three of the four business units. Holographics performed particularly strongly on the back of growth in target security markets, registering a £1.0m increase in profits, Foils Americas benefited from an improved sales mix and lower costs to record profits £0.9m ahead of last year and Laminates delivered another excellent performance, with profits up by £0.5m on 24% higher sales. Foils Europe profits were down by £0.5m as recovering margins were offset by weaker volumes, especially in the second half. In due course, the Board expects results to benefit from the increased focus brought about by the recent establishment of separate management teams for Foils Europe and Holographics.
As reported last year, a key challenge facing the business was the short supply and surge in pricing of key raw materials. The situation is now much improved with the supply-demand balance re-established in most material categories, new sources of supply approved and, for the most part, residual cost increases passed through to customers in higher selling prices. It is greatly encouraging that the Group has been able to weather a period of such volatility in raw material costs and that all businesses enter the new financial year with margins substantially restored to previous levels.
Increased Group operating profits converted to strong cash flow with a corresponding reduction in net debt. Year end net debt to EBITDA was down to 0.4x (2011: 1.1x), the healthiest Group financial position for at least a decade. With the confidence of a stronger balance sheet, the Board has been able to approve a number of capital expenditure projects aimed especially at improving the level and resilience of earnings in the Laminates and Holographics units. The Board will continue to examine options for growth oriented capital investment whilst maintaining a conservative stance towards levels of debt.
Shareholders
In February 2012, the Group's two leading shareholders wrote to the Board proposing that a sale process be commenced with the aim of securing a general offer for the issued share capital of API Group plc. Following discussions with these and other large shareholders and after due consideration, the Board issued a statement on 30 March 2012 advising that, barring unforeseen events, such a process would be explored during the third calendar quarter of 2012.
Dividend
In light of the Group's improved financial position, the Board now has greater flexibility in assessing the options for use of funds. At this time payment of a dividend is not being recommended but the Board will continue to keep its policy under review with the aim of maximising returns for shareholders.
Board and Governance
There have been no changes to the composition of the Board since the last Annual Report. The Board and its Committees have functioned well throughout the year. In particular, I would like to thank the Directors nominated by our two leading shareholders for their support during consideration of the sale proposals referred to above.
Our People
On behalf of the Board, I must thank all the Group's employees for their invaluable contribution to the achievements of the last 12 months and the continued progress of the business in the face of such challenging economic conditions.
Outlook
The Board remains cautiously optimistic about the Group's prospects for the new financial year. The general economic climate and uncertainty surrounding the Euro continues to impact consumer confidence and economic growth in the regions and markets served by API. However, end markets for premium products which drive a significant proportion of sales have so far proved relatively resilient.
As the Group enters the new financial year, Laminates volumes remain buoyant on its existing core business and, with installation of the new laminator completed to schedule in April, shipments against the new multi year supply contract are expected to commence from late June.
In the Foils businesses, order levels are steady in most sectors with potential for additional metallised pigment revenues in the US. Holographics is continuing to make progress in security markets offsetting the lower inter-company sales following the end of a significant joint project with Laminates.
Overall, the outlook on volumes and a full year benefit from pricing action taken during 2011/12 to recover increased raw material costs, underpin the Board's confidence in the Group making further progress in the coming year.
Richard C Wright
Chairman
29 May 2012
Business Review
Group Operating Results
Group revenues for the 12 months to March 2012 were £113.9m, an increase of 14.2% at constant exchange rates compared to the previous reporting period (14.0% at actual exchange rates). All business units recorded increases in revenues, with Laminates (+23.7%) and Holographics (+20.8%) having a particularly strong year. The Foils businesses saw generally weak end markets but achieved increased sales revenues due to improved product mix and higher selling prices.
Operating profits increased by £1.7m or 32.4% to £6.9m (2011: £5.2m) with operating margins at 6.0% compared to 5.2% for the previous 12 months.
Three of the Group's four business units increased operating profits. Holographics (+£1.0m) made excellent progress in growing sales in its target security markets; Foils Americas (+£0.9m) enjoyed strong demand for its metallic pigment product and benefited from lower operating costs; and Laminates (+£0.5m) built on the previous year's growth in the tobacco and personal care sectors. Margins in all businesses have now returned to more acceptable levels following the significant raw material cost increases experienced in late 2010/early 2011.
The Group's second half performance was slightly weaker than the preceding six months of 2011/12, although sales and operating profit were still ahead of the second half of 2010/11 by 4.2% and 14.7% respectively (at constant exchange rates).
Foils Europe
The Foils Europe business made limited progress in the period as the expected recovery in margins from higher prices was offset by lower volumes, especially in the second half. Full year sales of £29.2m were 2.6% ahead of last year (1.5% at constant exchange rates). However, after accounting for the pass-through of material costs in higher selling prices, volumes were down 8.3%, leaving sales contribution broadly flat. On a regional basis, sales performance was mixed, with growth in Italy and Australia more than offset by weakness in France, the UK and key export markets in Eastern Europe, Middle East and Africa. Operating costs were higher by £0.4m due to increased selling expenses and poor matching of production costs to demand. The higher costs combined with flat year-on-year sales contribution led to a fall in operating profit to £0.4m compared with £0.9m in 2010/11.
The establishment of a separate management team for Foils Europe was completed during the final quarter of the financial year and is focused on overhauling the service proposition, driving sales growth and aligning costs to volumes. During May 2012, a new sales and distribution hub commenced operations in Warsaw, Poland.
Foils Americas
Foils Americas sales of £23.4m were 3.6% ahead of prior year at constant exchange rates and 1.3% ahead at actual rates. The business benefited from healthy orders for its metallic pigment intermediary (+30.8%) and some recovery in the greeting card segment. Nevertheless, weak demand from the general graphics and packaging sectors and an exit from a number of low margin accounts led to a decline in overall volumes by 7.6%, albeit on a significantly improved mix.
Higher selling prices and favourable sales mix compensated for lower volumes to leave sales contribution broadly unchanged year on year. Operating costs were lower by £0.9m driven by more effective use of coating capacity across the two locations and lower general expenses. The resulting full year profit was £0.9m ahead of 2010/11 at £1.2m, representing an operating margin of 5.0%.
In August 2011, the Foils Americas' New Jersey manufacturing facility suffered severe flooding as a result of Hurricane Irene. Management and staff worked tirelessly to bring production back on stream within just a few days and, despite significant damage to stock and facilities, customers were spared any significant disruption to supplies. Insurance policies ensured that losses incurred as a result of the incident were settled with minimal impact on the Group's income statement and cash position.
Laminates
API Laminates produced another very strong year for the Group with sales of £54.8m, 24% higher than the preceding year (£44.3m) and just less than double the level reported in 2010 (£28.0m). Increased allocation of brand owner marketing spend towards higher added value packaging designs led to growth in demand across the business' three key market sectors. Revenues in pan-European tobacco increased 45.9%, health & beauty was ahead by 35.4% and alcoholic drinks maintained the high levels of activity experienced in 2010/11. Approximately 7% of sales growth was accounted for by the partial pass through of higher input costs relating to specification changes and increased material prices, leaving underlying volumes ahead by 17.3%.
Contribution from higher volumes was diluted by some absorption of input cost increases on certain long term customer contracts plus supply chain inefficiencies experienced in the middle of the year connected with a new product launch. Nevertheless, other costs were tightly controlled and operating profits advanced by £0.5m to £5.7m, representing an operating margin of 10.4%.
Installation of the new lamination machine at Laminates' Poynton manufacturing site was effectively managed, with minimal disruption to ongoing operations. Significant progress was made establishing the raw material supply chain and qualifying the finished product for the new customer supply contract. Volumes are expected to come on stream towards the end of the first quarter of the new financial year.
Holographics
Holographics sales demonstrated strong year-on-year improvement, ending the period 20.8% higher at £13.0m (2011: £10.8m). The business delivered growth of 37.4% in its target segments of security, ID and product authentication assisted by continued investment in sales & marketing and increased management focus. Intra-group sales of decorative holographic products were flat year-on-year, with the second half weaker than the first as a significant film supply arrangement with Laminates came to an end.
Production costs and overheads increased to support the growth in security sales. However, the richer business mix and improved recovery of fixed costs resulted in operating profits £1.0m ahead at £1.6m with an operating margin of 12.4%.
Central Costs
Full year central costs were up £0.3m, including £0.1m relating to the Board's consideration of options in response to certain shareholder actions, re-organisation costs of £0.1m and exchange losses of £0.1m.
Discontinued Operations
In January 2011, the Group disposed of its 51% ownership in Shanghai Shen Yong Stamping Foil Co. Ltd. Prior year comparatives include the results of the China subsidiary as a fully consolidated entity but classified under discontinued operations.
Impairment
The Board considers that no impairments to goodwill or asset carrying values are necessary.
Finance Costs
For the year ended 31 March 2012, net finance costs fell £0.5m to £1.8m. Financing costs relating to the Group's bank borrowings reduced by £0.3m, comprising lower interest charges of £0.4m partly offset by an increase of £0.1m relating to facility fee charges. Pension finance costs fell £0.2m as a result of a lower non-cash pension charge (£0.4m) but higher running costs for PPF levy and investment advisory fees. Further details are provided in Note 9 below.
Taxation
For the year to 31 March 2012, net taxation of £0.1m has been charged to the income statement. This compares to a net tax charge of £0.3m for the previous 12 months.
The Group continues to benefit from accumulated tax losses in the UK and USA. A deferred tax charge of £1.5m (2011: £1.1m) principally on UK profits has been balanced by a deferred tax credit of £1.5m (2011: £1.0m) primarily from increased tax loss recognition relating to Foils Americas' recent improvement in trading performance.
Remaining unrecognised tax losses at 31 March 2012 of £4.2m (2011: £3.6m) in the UK and $12.6m (2011: $15.1m) in the US are in addition to unclaimed capital allowances in the UK of £5.4m (2011: £8.7m).
Deferred tax assets associated with pension liabilities reduced from £2.5m at March 2011 to £2.1m at 31 March 2012 in line with the fall in the net pension deficit and the reduction in the UK corporate tax rate from 26% to 24% for the coming financial year.
A full reconciliation of the total tax charge is shown in Note 5(b) below.
Earnings per Share
Basic earnings per share from continuing operations of 6.7p represents an increase of 91% compared to 3.5p for the year ending 31 March 2011.
Shareholders' Funds
The Group's net assets rose to £21.3m at 31 March 2012, an increase of £6.0m (+39.4%) on the position twelve months earlier.
Cash Flow and Net Debt
The Group had another strong year for cash generation with a net cash inflow from operating activities of £8.7m exceeding the £8.5m generated for the year to 31 March 2011.
Control of working capital is a key aspect of the Group's debt management. At the end of March 2012, working capital efficiency, measured by reference to trailing three month sales (annualised), was 7.9% compared to 8.9% at 31 March 2011. Despite higher sales activity, year-end working capital was £1.0m lower than 12 months earlier.
With a much improved balance sheet, the Board has been able to sanction increased capital spending to enhance the Group's asset base and earnings potential, including the new machine for Laminates announced in July 2011. As a consequence, for the 12 months to March 2012, capital additions amounted to £3.5m, three times the level of the previous year. Cash flows relating to this capital investment amounted to £2.7m (2011: £1.2m) of which the new production line at Laminates accounted for £1.2m (£2011: £0.2m). Depreciation for the year was £2.4m (2011: £2.9m).
Interest expense cash flow reduced by £0.7m to £0.8m for the year.
Net debt (financial liabilities excluding the fair value of derivatives, less cash) reduced substantially for the second consecutive year, closing at £3.6m compared with £8.5m one year earlier and £10.0m at 30 September 2011.
As at 31 March 2012, the Group's debt cover ratio (net debt to trailing 12 month EBITDA) was down to 0.4x (2011: 1.1x, 2010: 3.9x) with gearing (net debt to shareholders funds) at 17% (2011: 56%, 2010: 107%).
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. During the year, the Group extended its facilities with Barclays with temporary increases in term and overdraft loans to meet expected peak cash flows relating to the Laminates investment project and the working capital build to support the associated supply deal. Facilities at 31 March 2012 totalled £16.75m (2011: £14.1m) comprising amortising loans of £8.0m repayable over the term of the facility with a final £4.25m due in July 2013, a term loan of £3.75m repayable in July 2013 and a multi-option overdraft facility of £5.0m renewable in November 2012. UK borrowings are secured against the Group's UK assets and are subject to four quarterly financial covenant targets.
In North America, bank facilities are with Wells Fargo Bank and extend to October 2013. Facilities comprise a $1.5m amortising loan and a $5.5m asset backed overdraft facility. Borrowings are secured on working capital, plant and equipment and the Kansas property and are subject to quarterly covenant targets.
Foreign Currency Exchange Rates
Exchange rates used for the translation of results and assets of US, Euro zone and China based operations are shown below.
| Rate to £1 | US$ | Euro | RMB |
| 31 March 2012 | |||
| Average | 1.59 | 1.16 | - |
| Closing | 1.60 | 1.20 | - |
| 31 March 2011 | |||
| Average | 1.56 | 1.18 | 10.36 |
| Closing | 1.60 | 1.13 | 10.50 |
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 2012 the Group's IAS 19 gross pension liability was calculated at £8.6m (2011: £9.7m). After accounting for a deferred tax asset of £2.1m (2010: £2.5m) the net liability amounts to £6.5m (2011: £7.2m).
The API Group plc Pension and Life Assurance Fund, the UK based fund, has approximately 1,620 pensioners and deferred members and net liabilities assessed at £7.5m (2011: £9.0m). The UK scheme has admitted no new members since October 2006 and the scheme was closed to future service accrual on 31 December 2008. Exceptionally low yields on gilts have pulled down the discount rates used to value scheme liabilities from 5.65% to 4.85%. The resultant increase in liabilities of £9.4m has been mitigated by lower long term inflation assumptions (£2.7m) and an experience gain of £7.2m arising from updated member data used for calculating the scheme liabilities. In addition, the UK scheme benefited from above-target asset investment performance of £0.3m and received a deficit-reduction contribution from the Company of £0.7m (2011: £0.4m).
The UK scheme recently completed its triennial valuation based on its position at 30 September 2010. The valuation calculated a funding deficit of £15.7m with a funding ratio of 81%. As part of the completion of the review, the Company and Scheme Trustees agreed a funding plan which left the schedule of contributions by the Company unchanged from the previous arrangement. Under the new plan, it is estimated that annual contributions of £0.7m per annum, in conjunction with assumed return on scheme assets, will reduce the scheme deficit to zero by June 2019. The Company also continues to pay all pension related administration fees on behalf of the Fund.
In the US, the Company defined benefit scheme was closed to new entrants and future accrual in 2004. Membership is approximately 170 current and past employees. Details of the net deficit of £1.1m (2011: £0.7m) are included in Note 9 below.
At the Group's US manufacturing facility in New Jersey, current and past US employees covered by union contracts are members of a union managed 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 2012
| Year ended 31 March 2012 | Year ended 31 March 2011 | ||||||
| Note | £'000 | £'000 | |||||
| Continuing operations | |||||||
| Revenue | 2 | 113,935 | 99,963 | ||||
| Cost of sales | (87,149) | (76,386) | |||||
| Gross profit | 26,786 | 23,577 | |||||
| Distribution costs | (3,886) | (3,284) | |||||
| Administrative expenses | (16,022) | (15,099) | |||||
| Operating profit from continuing operations | 2,3 | 6,878 | 5,194 | ||||
| Finance revenue | 4 | 13 | 17 | ||||
| Finance costs | 4 | (1,832) | (2,354) | ||||
| (1,819) | (2,337) | ||||||
| Profit on continuing operations before taxation | 5,059 | 2,857 | |||||
| Tax expense | 5 | (105) | (265) | ||||
| Profit from continuing operations | 4,954 | 2,592 | |||||
| Discontinued operations | |||||||
| Loss from discontinued operations | - | (4,124) | |||||
| Profit/(loss) for the year | 4,954 | (1,532) | |||||
| Profit/(loss) attributable to equity holders of the Parent | |||||||
| 4,954 | 2,592 | |||||
| - | (612) | |||||
| 4,954 | 1,980 | ||||||
Loss attributable to non-controlling interest
| - | (3,512) | |||||
| Profit/(loss) for the year | 4,954 | (1,532) | |||||
| Earnings per share (pence) | |||||||
| Basic earnings per share from continuing operations | 6 | 6.7 | 3.5 | ||||
| Diluted earnings per share from continuing operations | 6 | 6.4 | 3.4 | ||||
| Basic earnings per share on profit for the year | 6 | 6.7 | 2.7 | ||||
| Diluted earnings per share on profit for the year | 6 | 6.4 | 2.6 | ||||
Group Statement of Comprehensive Income
for the year ended 31 March 2012
| Year ended 31 March 2012 | Equity holders of the Parent | Non-controlling interests | Total | |||
| £'000 | £'000 | £'000 | ||||
| Profit for the year | 4,954 | - | 4,954 | |||
| Exchange differences on retranslation of foreign operations | (4) | - | (4) | |||
| Change in fair value of effective cash flow hedges | 937 | 937 | ||||
| Actuarial gains on defined benefit pension plans | 300 | - | 300 | |||
Tax on items relating to components of other comprehensive income | (419) | - | (419) | |||
| Other comprehensive income for the year, net of tax | 814 | - | 814 | |||
Total comprehensive income for the year | 5,768 | - | 5,768 | |||
| Year ended 31 March 2011 | Equity holders of the Parent | Non-controlling 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 | |
Group Balance Sheet
at 31 March 2012
| 31 March 2012 | 31 March 2011 | ||
| Note | £'000 | £'000 | |
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 7 | 17,936 | 16,804 |
| Intangible assets - goodwill | 5,188 | 5,188 | |
| Trade and other receivables | 32 | 94 | |
| Deferred tax assets | 5,230 | 5,478 | |
| 28,386 | 27,564 | ||
| Current assets | |||
| Trade and other receivables | 15,485 | 16,848 | |
| Inventories | 12,237 | 12,409 | |
| Other financial assets | 474 | - | |
| Cash and short-term deposits | 10,068 | 4,175 | |
| 38,264 | 33,432 | ||
| Total assets | 2 | 66,650 | 60,996 |
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | 22,261 | 21,952 | |
| Financial liabilities | 8 | 4,522 | 2,830 |
| Income tax payable | 307 | 365 | |
| 27,090 | 25,147 | ||
| Non-current liabilities | |||
| Financial liabilities | 8 | 9,237 | 10,514 |
| Deferred tax liabilities | 307 | 238 | |
| Provisions | 76 | 85 | |
| Deficit on defined benefit pension plans | 9 | 8,618 | 9,719 |
| 18,238 | 20,556 | ||
| Total liabilities | 45,328 | 45,703 | |
| Net assets | 21,322 | 15,293 | |
| Equity | |||
| Called up share capital | 767 | 766 | |
| Share premium | 7,136 | 7,136 | |
| Other reserves | 8,816 | 8,565 | |
| Foreign exchange reserve | 255 | 259 | |
| Retained profit/(loss) | 4,348 | (1,433) | |
| API Group shareholders' equity | 21,322 | 15,293 |
Group Statement of Changes in Equity
for the year ended 31 March 2012
| Equity Share capital | Share premium | Other reserves | Foreign Exchange reserve | Retained earnings | Total share-holders' equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 April 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 operations | - | - | - | (379) | - | (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 |
| Profit for the year | - | - | - | - | 4,954 | 4,954 |
| Other comprehensive income: | ||||||
| Exchange differences on retranslation of foreign operations | - | - | - | (4) | - | (4) |
| Change in fair value of effective cash flow hedges | - | - | - | - | 937 | 937 |
| Actuarial gains on defined benefit pension plans | - | - | - | - | 300 | 300 |
| Tax on items relating to components of other comprehensive income | - | - | - | - | (419) | (419) |
| Total comprehensive income for the year | - | - | - | (4) | 5,772 | 5,768 |
| Issue of shares | 1 | - | - | - | - | 1 |
| Shares acquired by the Company | - | - | - | - | (1) | (1) |
| Shares acquired by Employee Benefit Trust | - | - | (11) | - | - | (11) |
| Transferred on exercise of share options | - | - | 262 | - | (262) | - |
| Share-based payments | - | - | - | - | 185 | 185 |
| Tax relating to items accounted for directly through equity | - | - | - | - | 87 | 87 |
| At 31 March 2012 | 767 | 7,136 | 8,816 | 255 | 4,348 | 21,322 |
Group Statement of Changes in Equity (continued)
for the year ended 31 March 2012
| Shareholders' equity | Non-controlling interest | Total equity | ||
| £'000 | £'000 | £'000 | ||
| At 1 April 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 | |
| Total comprehensive income for the year | 5,768 | - | 5,768 | |
| Issue of shares | 1 | - | 1 | |
| Shares acquired by the Company | (1) | - | (1) | |
| Shares acquired by Employee Benefit Trust | (11) | - | (11) | |
| Share-based payments | 185 | - | 185 | |
| Tax relating to items accounted for directly through equity | 87 | - | 87 | |
| At 31 March 2012 | 21,322 | - | 21,322 |
Group Cash Flow Statement
for the year ended 31 March 2012
| Year ended 31 March 2012 | Year ended 31 March 2011 | ||
| Note | £'000 | £'000 | |
| Operating activities | |||
| Group profit before tax from continuing operations | 5,059 | 2,857 | |
| Adjustments to reconcile Group profit before tax to net cash flow from operating activities Operating loss from discontinued operations | - | (7,215) | |
Net finance costs | 1,819 | 2,337 | |
Depreciation of property, plant and equipment | 2,368 | 2,942 | |
Impairment of property, plant and equipment | - | 5,850 | |
(Profit)/loss on disposal of property, plant and equipment | (2) | 28 | |
Movement in fair value foreign exchange contracts | (83) | 78 | |
| Share-based payments | 185 | 239 | |
| Difference between pension contributions paid and amounts recognised in the income statement | (1,539) | (1,037) | |
| Decrease/(increase) in inventories | 156 | (2,047) | |
| Decrease/(increase) in trade and other receivables | 1,260 | (2,588) | |
| (Decrease)/increase in trade and other payables | (304) | 7,201 | |
| Movement in provisions | (9) | (12) | |
| Cash generated from operations | 8,910 | 8,633 | |
| Income taxes paid | (171) | (140) | |
| Net cash flow from operating activities | 8,739 | 8,493 | |
Investing activities | |||
| Interest received | 13 | 17 | |
| Purchase of property, plant and equipment | (2,736) | (1,153) | |
| Sale of property, plant and equipment | 5 | 21 | |
| Sale of subsidiary undertakings | - | 1,783 | |
| Cash and cash equivalents of subsidiary undertakings sold | - | (296) | |
| Net cash flow from investing activities | (2,718) | 372 | |
Financing activities | |||
| Interest paid | (832) | (1,480) | |
| Proceeds from share issues | 1 | 65 | |
| Purchase of shares by the Company | (1) | - | |
| Purchase of shares by Employee Benefit Trust | (11) | (30) | |
| New borrowings | 1,913 | 1,214 | |
| Repayment of borrowings | (996) | (5,382) | |
| Net cash flow from financing activities | 74 | (5,613) | |
| Increase in cash and cash equivalents | 6,095 | 3,252 | |
| Effect of exchange rates on cash and cash equivalents | 8 | 13 | |
| Cash and cash equivalents at the beginning of the period | 2,719 | (546) | |
| Cash and cash equivalents at the end of the period | 8,822 | 2,719 |
Notes to the consolidated financial statements
1. Group accounting policies
Publication of abridged accounts
The Group's financial statements for the year ended 31 March 2012 were authorised for issue by the Board of Directors on 28 May 2012 and the balance sheet was signed on the Board's behalf by Andrew Turner, Group Chief Executive.
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.
The preliminary announcement figures for the year ended 31 March 2012 and the comparative figures for the year ended 31 March 2011 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 2012. Statutory accounts for the year ended 31 March 2011 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 2012 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 2012 will be posted to shareholders by 21 June 2012 prior to the Annual General Meeting on 19 July 2012. Copies of the Annual Report and Accounts will be available to members of the public from 22 June 2012 at the Group's registered office at Second Avenue, Poynton Industrial Estate, Poynton, Cheshire SK12 1ND.
Basis of preparation and statement of compliance with IFRS
The Group's financial statements have been prepared under the historical cost convention 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 2012 and applied in accordance with the Companies Act 2006. The Group has applied optional exemptions available to it under IFRS 1.
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 8 of the consolidated financial statements. The principal facilities relate to the UK and the US. These facilities currently extend to July 2013 and October 2013 respectively.
The Group has demonstrated further recovery over the financial year ended 31 March 2012. However, the unsettled general economic environment, particularly 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 2012. These policies have been consistently applied to all periods presented unless otherwise stated.
2. Segmental analysis
The Group produces monthly management information to enable the Board, including the Group Chief Executive, to monitor the financial performance of its constituent parts. This information is analysed by business unit. Following the disposal of the China business in 2011, 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.
Revenue
| Year ended 31 March 2012 | Year ended 31 March 2011 | ||||||||||
| £'000 | £'000 | ||||||||||
| Continuing operations | |||||||||||
| Total revenue by origin | |||||||||||
| Foils Europe | 29,158 | 28,429 | |||||||||
| Foils Americas | 23,446 | 23,151 | |||||||||
| Holographics | 13,015 | 10,775 | |||||||||
| Laminates | 54,823 | 44,321 | |||||||||
| 120,442 | 106,676 | ||||||||||
| Inter-segmental revenue | |||||||||||
| Foils Europe | 980 | 1,095 | |||||||||
| Foils Americas | 566 | 733 | |||||||||
| Holographics | 4,868 | 4,855 | |||||||||
| Laminates | 93 | 30 | |||||||||
| 6,507 | 6,713 | ||||||||||
| External revenue by origin | |||||||||||
| Foils Europe | 28,178 | 27,334 | |||||||||
| Foils Americas | 22,880 | 22,418 | |||||||||
| Holographics | 8,147 | 5,920 | |||||||||
| Laminates | 54,730 | 44,291 | |||||||||
| Segment revenue | 113,935 | 99,963 | |||||||||
| External revenue by destination | |||||||||||
| Continuing operations | |||||||||||
| UK | 37,778 | 36,881 | |||||||||
| Rest of Europe | 48,243 | 33,213 | |||||||||
| Americas | 21,105 | 21,264 | |||||||||
| Asia Pacific | 6,062 | 7,898 | |||||||||
| Africa | 747 | 707 | |||||||||
| 113,935 | 99,963 | ||||||||||
| Discontinued operations | |||||||||||
| Europe | - | 895 | |||||||||
| Asia Pacific | - | 6,530 | |||||||||
| - | 7,425 | ||||||||||
All revenue is derived from the sale of goods.
During the year ended 31 March 2012 there were two major customers, reported within the Laminates segment, which comprised 10% or more of the total external revenue, amounting to £19,841,000 (2011: £14,696,000) and £17,601,000 (2011: £11,880,000) respectively.
Segment result
| Year ended 31 March 2012 | Year ended 31 March 2011 | ||||
| £'000 | £'000 | ||||
| Continuing operations Operating profit | |||||
| Foils Europe | 389 | 857 | |||
| Foils Americas | 1,173 | 244 | |||
| Holographics | 1,615 | 567 | |||
| Laminates | 5,704 | 5,245 | |||
| Segment result | 8,881 | 6,913 | |||
| Central costs | (2,003) | (1,719) | |||
| Total operating profit | 6,878 | 5,194 | |||
| Central costs comprise primarily of salaries, other employment costs and corporate advisory fees relating to the central management of the Group. | ||||||
| Year ended 31 March 2012 | Year ended 31 March 2011 | |||||
| £'000 | £'000 | |||||
| Assets | ||||||
| Foils Europe | 17,082 | 18,104 | ||||
| Foils Americas | 13,552 | 14,385 | ||||
| Holographics | 6,915 | 6,661 | ||||
| Laminates | 13,276 | 11,637 | ||||
| Segment assets | 50,825 | 50,787 | ||||
| Unallocated | 15,825 | 10,209 | ||||
| 66,650 | 60,996 | |||||
3.Operating profit
| Year ended 31 March 2012 | Year ended 31 March 2011 | |
| £'000 | £'000 | |
This is stated after charging/(crediting): | ||
| Research and development expenditure expensed during the period | 718 | 722 |
| Depreciation of property, plant and equipment | 2,367 | 2,942 |
| (Profit)/loss on disposal of property, plant and equipment | (2) | 28 |
| Cost of inventories recognised as an expense | 64,246 | 59,141 |
| Including write-down of inventories to net realisable value | 481 | 186 |
| Net foreign currency differences | 8 | (48) |
| Operating lease payments - minimum lease payments | 1,054 | 1,018 |
| Audit of the financial statements | 79 | 77 |
| Other fees payable to the Group's Auditor | ||
| - audit of the UK defined benefit pension scheme | 5 | 5 |
| - local statutory audits for subsidiaries | 73 | 67 |
| - other services | - | 2 |
| Costs associated with major flood at US factory (see below) | 690 | - |
| Insurance recovery in respect of the flood (see below) | (747) | - |
In August 2011, the manufacturing facility in New Jersey, US, sustained significant damage due to flooding caused by Hurricane Irene. The costs relating to the damage have been recovered through insurance.
4. Finance revenue and finance costs
| Year ended 31 March 2012 | Year ended 31 March 2011 | |
| £'000 | £'000 | |
Finance revenue | ||
| Interest receivable on bank and other short term cash deposits | 3 | 2 |
| Other interest receivable | 10 | 15 |
| 13 | 17 | |
Finance costs | ||
| Interest payable on bank loans and overdrafts | (1,045) | (1,356) |
| Other interest payable | (49) | (24) |
| Finance cost in respect of defined benefit pension plans | (738) | (974) |
| (1,832) | (2,354) |
5. Taxation
| (a) Tax on profit/(loss) on ordinary activities | ||||||
| Year ended 31 March 2012 | Year ended 31 March 2011 | |||||
| £'000 | £'000 | |||||
| Tax (expensed)/credited in the income statement | ||||||
| Continuing operations | ||||||
| Current income tax | ||||||
| UK Corporation tax | - | - | ||||
| Overseas tax - current year expense | (101) | (135) | ||||
| - adjustments in respect of prior years | (19) | (37) | ||||
| Total current income tax expense | (120) | (172) | ||||
| Deferred tax | ||||||
| Origination and reversal of temporary differences | ||||||
| - defined benefit pension plan | (209) | (17) | ||||
| - tax losses | (174) | 466 | ||||
| - capital allowances | 448 | (443) | ||||
| - effect of change in tax rate | (50) | (99) | ||||
| Total deferred tax (expense)/credit | 15 | (93) | ||||
| Total tax expense in the income statement | (105) | (265) | ||||
Tax expense on items accounted for through other comprehensive income
Deferred tax
| Actuarial gains and losses on defined pension schemes | (78) | (1,845) | |
| Change in fair value of effective cash flow hedges | (94) | - | |
| Effect of change in tax rate | (247) | (259) | |
| (419) | (2,104) |
Tax credit on items accounted for directly through equity
Deferred tax
| Share-based payments | 87 | - |
(b) Reconciliation of the total tax charge
The tax rate in the income statement for the year is lower than the standard rate of corporation tax in the UK of 26% (2011: 28%). The differences are reconciled below:
| Year ended 31 March 2012 | Year ended 31 March 2011 | |||||
| £'000 | £'000 | |||||
| Profit before taxation from continuing operations | 5,059 | 2,857 | ||||
| Loss before taxation from discontinued operations | - | (4,124) | ||||
| Accounting profit/(loss) before income tax | 5,059 | (1,267) | ||||
| Accounting profit/(loss) multiplied by the UK standard rate of corporation tax of 26% (2011: 28%) | 1,315 | (355) | ||||
| Adjustments to tax charge in respect of prior period | 19 | 37 | ||||
| Adjustments in respect of foreign tax rates | 22 | 18 | ||||
| Increase in deferred tax asset recognised on losses and capital allowances | (1,346) | (1,111) | ||||
| Losses for which deferred tax is not recognised | 43 | 2,131 | ||||
| Other temporary differences for which deferred tax is not recognised | (90) | 196 | ||||
| Effect of change in tax rate | 50 | 99 | ||||
| Expenses not deductible for tax purposes | 92 | 154 | ||||
| Profit on sale of subsidiaries not subject to tax | - | (904) | ||||
| Total tax expense reported in the income statement | 105 | 265 | ||||
(c) Unrecognised tax losses
The Group has unrecognised tax losses arising in the UK of £4,246,000 (2011: £3,355,000) that are available and may be offset against future taxable profits of those businesses in which the losses arose. The UK tax Group also has unrecognised capital allowances of £5,442,000 (2011: £8,677,000) available to offset against future taxable profits at the rate of 18% (2011: 20%) a year on a reducing balance basis. The Group has unrecognised US federal tax losses carried forward of $12,584,000 (2011: $15,124,000), which are available for offset against future profits for a period of between 10 and 20 years.
(d) Deferred tax
The deferred tax included in the balance sheet is analysed as follows:
| 31 March 2012 | 31 March 2011 | ||
| £'000 | £'000 | ||
| Deferred tax liability | |||
| Revaluation of fixed assets | (220) | (238) | |
| Fair value of cash flow hedges | (87) | - | |
| (307) | (238) | ||
| Deferred tax asset | |||
| Defined benefit pension plans | 2,068 | 2,527 | |
| Tax losses | 1,736 | 2,036 | |
| Capital allowances | 1,258 | 915 | |
| Share-based payments | 168 | - | |
| 5,230 | 5,478 | ||
On 21 March 2012 the UK Government announced a reduction in the main rate of UK corporation tax rate to 24% with effect from 1 April 2012. This change became substantively enacted on 29 March 2012 and therefore the effect of the rate reduction creates a reduction in the total deferred tax asset which has been included in the figures shown above. This change will also reduce the Group's future current tax charge accordingly. The UK Government also proposed changes to further reduce the main rate of corporation tax by one per cent per annum to 22% by 1 April 2014. The overall effect of the further reductions from 24% to 22%, if these applied to the total deferred tax balance at 31 March 2012 would be to reduce the deferred tax asset by approximately £297,000.
6. 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 31 March 2012 | Year ended 31 March 2011 | ||
| £'000 | £'000 | ||
| Profit attributable to equity holders of the Parent - continuing operations | 4,954 | 2,592 | |
| Loss attributable to equity holders of the Parent - discontinued operations | - | (612) | |
Net profit attributable to equity holders of the Parent | 4,954 | 1,980 | |
| Year ended 31 March 2012 | Year ended 31 March 2011 | ||
| No | No | ||
Basic weighted average number of ordinary shares | 73,857,692 | 73,447,050 | |
Dilutive effect of employee share options and contingent shares | 3,974,702 | 2,443,955 | |
Diluted weighted average number of shares | 77,832,394 | 75,891,005 |
The basic weighted average number of shares excludes the 3,000,000 shares owned by the API Group plc No.2 Employee Benefit Trust (2011: 3,058,221). These contingent shares are included in the diluted weighted average number of shares.
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 31 March 2012 | Year ended 31 March 2011 | ||
| Pence | pence | ||
Continuing operations | |||
| Basic earnings per share | 6.7 | 3.5 | |
Diluted earnings per share | 6.4 | 3.4 | |
Discontinued operations | |||
| Basic loss per share | - | (0.8) | |
| Diluted loss per share | - | (0.8) | |
Total | |||
| Basic earnings per share | 6.7 | 2.7 | |
| Diluted earnings per share | 6.4 | 2.6 |
7. Property, plant and equipment
| Freehold land | Freehold buildings | Long leasehold land & buildings | Plant & machinery | Office and IT equipment | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Cost | ||||||
| At 1 April 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 |
Additions | - | - | - | 3,230 | 258 | 3,488 |
Disposals | - | - | - | (565) | (145) | (710) |
Foreign currency adjustment | 6 | 23 | - | 6 | (8) | 27 |
At 31 March 2012 | 2,164 | 7,700 | 1,693 | 49,499 | 6,665 | 67,721 |
Depreciation | ||||||
| At 1 April 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 (see note 7) | - | - | 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 |
Provided during the year | - | 203 | 57 | 1,636 | 471 | 2,367 |
Disposals | - | - | - | (561) | (145) | (706) |
Foreign currency adjustment | - | 13 | - | 3 | (4) | 12 |
At 31 March 2012 | - | 3,206 | 923 | 40,460 | 5,196 | 49,785 |
Net book value at 31 March 2012 | 2,164 | 4,494 | 770 | 9,039 | 1,469 | 17,936 |
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 |
Construction work-in-progress
Included in the cost of property, plant and equipment is £2,878,000 (2011: £168,000; 2010: £nil) relating to construction work-in-progress.
Security
The Group's UK borrowings of £11,514,000 (2011: £10,196,000) are secured by fixed and floating charges on the UK assets of the Group including fixed assets to the value of £10,076,000 (2011: £8,397,000). The US loans of £887,000 (2011: £1,034,000) are pledged against property, plant and equipment to the value of £5,598,000 (2011: £6,184,000).
8. Financial liabilities
| 31 March 2012 | 31 March 2011 | ||
| £'000 | £'000 | ||
Current | |||
Bank overdrafts | 1,246 | 1,456 | |
| Current instalments due on bank loans | 3,196 | 779 | |
| Interest rate swaps | 80 | 97 | |
| Forward foreign exchange contracts | - | 498 | |
| 4,522 | 2,830 | ||
Non-current | |||
Non-current instalments due on bank loans | 9,205 | 10,451 | |
Interest rate swaps | 32 | 63 | |
| 9,237 | 10,514 |
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 $3.0m at 31 March 2012 (2011: $3.3m).
Bank loans
Bank loans comprise the following:
| 31 March 2012 | 31 March 2011 | ||
| £'000 | £'000 | ||
Term loans (UK) | 11,514 | 10,196 | |
| Term loans (US) | 887 | 1,034 | |
| 12,401 | 11,230 | ||
Less: current instalments due on bank loans | (3,196) | (779) | |
| 9,205 | 10,451 |
The Group's banking facilities comprise:
UK facilities
The Group's lending arrangements in the UK are with Barclays Bank plc. At 31 March 2012, UK facilities comprised a term loan of £5.7m repayable between April 2012 and July 2013 (2011: £6.4m repayable between April 2011 and July 2013) and a term loan of £3.8m repayable in July 2013 (2011: £3.8m repayable in July 2013). During the year, a new loan of £2.0m was negotiated, repayable between June 2012 and April 2013. In addition there is a multi option overdraft facility of £5.0m (2011: £3.5m). Interest cost for the period averaged 3.4% (2011: 5.0%) above LIBOR for term loans and 3.3% (2011: 3.6%) 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 Foils Americas business unit. Covenants are for Debt Cover, Total Service Payments Cover, Senior Interest Cover and Tangible Net Worth. At 31 March 2012, Debt Cover, the ratio of net debt to 12 month trailing EBITDA was 0.3x (2011: 1.0x) and this and all other covenant ratios were comfortably within targets.
US facilities
The US facilities are with Wells Fargo. At 31 March 2012 they comprised amortising loans of $1.5m repayable between April 2012 and October 2013 (2011: $1.8m repayable between April 2011 and October 2013) and a revolving credit facility of up to $5.5m (2011: $5.5m), depending on the level of working capital. Interest cost for the period averaged 4.5% (2011: 4.5%) above LIBOR for the term loans and 3.8% (2011: 3.8%) above LIBOR 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 2012 the US business met all its covenant obligations. The US facilities are secured on working capital to the value of £5,823,000 (2011: £6,040,000).
9. 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:
At 31 March 2012
| United Kingdom | United States | Total | |||
| £'000 | £'000 | £'000 | |||
Equities | 34,508 | 778 | 35,286 | ||
Bonds | 21,174 | 920 | 22,094 | ||
Hedge Funds | 10,624 | - | 10,624 | ||
Property | - | 71 | 71 | ||
Cash | 6,960 | - | 6,960 | ||
Fair value of scheme assets | 73,266 | 1,769 | 75,035 | ||
Present value of scheme liabilities | (80,821) | (2,832) | (83,653) | ||
Net pension liability | (7,555) | (1,063) | (8,618) |
At 31 March 2011
| United Kingdom | United States | Total | |||
| £'000 | £'000 | £'000 | |||
Equities | 42,347 | 772 | 43,119 | ||
Bonds | 28,327 | 951 | 29,278 | ||
Property | - | 72 | 72 | ||
Cash | 139 | - | 139 | ||
Fair value of scheme assets | 70,813 | 1,795 | 72,608 | ||
Present value of scheme liabilities | (79,843) | (2,484) | (82,327) | ||
Net pension liability | (9,030) | (689) | (9,719) | ||
The amounts recognised in the Group Income Statement and Group Statement of Comprehensive Income for the year are as follows:
Year ended 31 March 2012
| United Kingdom | United States | Total | |||
| £'000 | £'000 | £'000 | |||
Recognised in the Income Statement | |||||
Recognised in arriving at operating profit | - | - | - | ||
Expected return on scheme assets | (4,397) | (119) | (4,516) | ||
Interest cost on scheme liabilities | 4,351 | 119 | 4,470 | ||
Scheme expenses borne by employers | 784 | - | 784 | ||
Other finance cost | 738 | - | 738 | ||
Taken to the Statement of Comprehensive Income | |||||
Actual return on scheme assets | 4,641 | 56 | 4,697 | ||
Less: expected return on scheme assets | (4,397) | (119) | (4,516) | ||
| 244 | (63) | 181 | |||
Other actuarial gains and losses | 485 | (366) | 119 | ||
Actuarial gains and losses recognised in the Statement of Comprehensive Income | 729 | (429) | 300 | ||
Year ended 31 March 2011
| United Kingdom | United States | Total | |||
| £'000 | £'000 | £'000 | |||
Recognised in the Income Statement | |||||
Recognised in arriving at operating profit | - | - | - | ||
Expected return on scheme assets | (4,273) | (128) | (4,401) | ||
Interest cost on scheme liabilities | 4,662 | 129 | 4,791 | ||
Scheme expenses borne by employers | 584 | - | 584 | ||
Other finance cost | 973 | 1 | 974 | ||
Taken to the Statement of Comprehensive Income | |||||
Actual return on scheme assets | 4,960 | 163 | 5,123 | ||
Less: expected return on scheme assets | (4,273) | (128) | (4,401) | ||
| 687 | 35 | 722 | |||
Other actuarial gains and losses | 5,993 | (129) | 5,864 | ||
Actuarial gains and losses recognised in the Statement of Comprehensive Income | 6,680 | (94) | 6,586 | ||
Friday, 31st May 2024
COMPANIES COVERED: Latest directors dealings
|