Interim Results

RNS Number : 6710Y

API Group PLC

03 December 2014

 



Press Release

3 December 2014

API Group plc

("API" or the "Group")

Interim Results

API Group plc (AIM:API), a leading manufacturer of specialist foils and packaging materials, announces its interim results for the six months ended 30 September 2014.

Highlights

·	Revenues of £56.4m, compared to £56.9m for first half last year; 1.6% ahead at constant exchange rates
·	Operating profits, before exceptional items, £2.8m (2013: £3.5m)
·	No exceptional items (2013: £0.3m)
·	Profit before tax £2.3m (2013: £2.9m pre-exceptional, £2.6m post-exceptional)
·	Underlying diluted earnings per share 2.4p (2013: 3.8p)
·	Interim dividend increased by 7% to 0.75p, reflecting confidence in Group's cash flow and prospects
·	Laminates and Foils Europe profits unchanged.  Contribution from Holographics turnaround offset by swing into losses at Foils Americas on significantly reduced shipments to metallic pigment customers
·	Capital additions of £3.2m (2013: £2.0m) to increase capacity and capability in foils
·	Net debt of £5.7m (2013: £5.6m)

Commenting on the results, Andrew Turner, Group Chief Executive of API Group plc, said:

"The downturn in the US foils business materially impacted the Group's results for the half year.  The positives are the strong revenue performance at Laminates and resilience at Foils Europe in the face of sluggish markets on the Continent, as well as the profit turnaround at Holographics. 

"Against a background of tough current trading, the on-going capital investment programme in the foils businesses is designed to increase capacity and efficiency, extend product capabilities and improve longer term prospects for growth."

- Ends -

For further information:

API Group plc
Andrew Turner, Group Chief Executive	Tel: [phone]
Chris Smith, Group Finance Director	www.apigroup.com

Numis Securities (Broker)
James Serjeant	Tel: [phone]
	www.numis.com

Cairn Financial Advisers (Nominated Adviser)
Tony Rawlinson / Avi Robinson	Tel: [phone]
	www.cairnfin.com

Media enquiries:

Abchurch
Henry Harrison-Topham / Quincy Allan	Tel: [phone]
[e-mail]	www.abchurch-group.com

REPORT ON THE INTERIM RESULTS

FOR THE 6 MONTH PERIOD ENDED 30 SEPTEMBER 2014

Group Income Statement

Group revenues for the six months to September 2014 were £56.4m (2013: £56.9m), down on a reported basis by 0.9% but ahead by 1.6% at constant exchange rates.  Growth at Laminates was offset by a decline in demand for metallic pigment products at Foils Americas.

Gross margin, at 22.5%, was 2.6% lower than last year's first half, due to a change in the mix of sales between the divisions and within Laminates and lower fixed cost recovery at Foils Americas, partly offset by reduced production and energy costs.

Selling, general and administration costs were £0.6m lower due to reduced spending in Holographics, lower accruals for incentive payments and the impact of currency translation.  Pre-exceptional operating profits for the six month period of £2.8m compared to £3.5m at the interim stage last year, as lower costs were more than offset by the less favourable mix of sales.  Across the divisions, operating profits at Foils Europe and Laminates were substantively unchanged, whilst a £0.5m turnaround at Holographics was more than offset by a £1.4m adverse swing at Foils Americas.  Central costs were lower by £0.2m.

Compared to the second half of last year, revenues were 2% lower at constant FX and pre-exceptional operating profits were down by 30% due primarily to lower sales in the foils businesses, especially Foils Americas.

No exceptional costs were incurred in the six months to 30 September 2014, compared to a charge of £0.3m booked last year in connection with restructuring the UK Foils operations.  As a result of lower cash interest costs, the net finance charge was £0.1m lower, at £0.5m, including a non-cash cost of £0.3m relating to defined benefit pension liabilities.  Interim profit before tax of £2.3m compares to last year's pre-exceptional £2.9m and £2.6m on a post-exceptional basis.

Tax of £0.4m (2013: £0.0m) comprised an accrual for corporation tax in the UK and Europe of £0.3m (2013: £0.2m) and deferred tax charge of £0.1m (2013: -£0.2m).  The tax rate of 20% was inflated by the absence of further tax relief being recognised on losses in the US.  Underlying earnings per share (diluted) amounted to 2.4p compared to 3.8p for the first half last year.

 

Review of Operations

Laminates

The Group's largest division continued the strong momentum seen in the second half of last financial year.  Revenues of £32.3m were 15% higher than last year's first half and were 4% ahead of the preceding six months.  There was strong demand from a number of key tobacco customers and full loading of the new laminator as a result of the major new supply contract which commenced last year.

Despite higher sales, operating profits were unchanged at £3.3m (2013: £3.3m) due to changes in the product mix and some one-off factors impacting comparative costs and margins.  The ratio of operating profit to sales declined by 1.4% to 10.2%.

The business remains focussed on volume opportunities with customers in the premium branded consumer goods segment and on maximising the utilisation and effectiveness of its manufacturing assets.

Foils Europe

Foils Europe revenues were down 4% on a constant currency basis, at £13.4m.  Subdued demand on the continent impacted sales in Germany, France, Poland and Spain although this was partly offset by further gains in Italy.  The new UK supply hub performed well, although year-on-year sales growth was constrained by a lower level of customer activity associated with product launches and rebranding.

The impact of lower volumes was fully compensated by a more favourable sales mix, leaving operating profits unchanged at £0.9m and operating margins of 6.4% compared to 6.3% at the interim stage last year.

During the period, progress was made on a number of operational improvement projects, including the installation and commissioning of a new metalliser at Livingston and the successful roll-out of the Group's new ERP system in France and Poland.  In addition, two important new foil grades were launched, to which the initial customer response has been positive.  The pace of change is planned to continue in the second half with the ERP implementation at the two UK sites and installation of the new coating line in Livingston.

Foils Americas

As predicted at the final results stage last year and in September's trading update, Foils Americas revenues for the six months to 30 September 2014 were significantly impacted by a decline in demand from customers in the metallic pigment segment.  Progress in recovering sales in the core graphics market to compensate for the lost pigment volume was slower than expected.  As a result, divisional revenues were down by 24% on a constant currency basis and 30% at actual FX rates to £8.3m.

Action was taken to reduce costs, yielding year-on-year savings of £0.4m (at constant FX).  Nevertheless, the unit recorded a loss of £0.4m compared to an operating profit of £1.1m in the first half of last year (£1.0m at this year's FX rates).

A new metalliser was commissioned in Lawrence towards the end of the period which will provide enhanced capabilities relevant to both the metallic pigment sector and the core graphics foils market, which should benefit business development prospects over the medium term.

Holographics

Holographics consolidated the break-even position achieved in the final quarter of the last financial year, eliminating losses of £0.5m reported for last year's first half.

Revenues were 5% lower at £4.3m (2013: £4.5m) due to reduced orders against continuing supply agreements with security customers, partly offset by increased volumes of decorative holographic products supplied to sister companies within the Group.

During the period, the division strengthened its sales and marketing team, with key appointments from inside the security holographics sector.  A new product range was launched using optical features originated at the Group's recently established holographic origination centre in the Czech Republic.  In addition, the manufacturing site at Salford was accredited to the new international security standard for security printing processes, ISO 14298.

Cash Flow and Borrowings

Reported net cash-flow from operating activities for the six months to September 2014 amounted to a net outflow of £1.6m (2013: £0.6m outflow), with the year-on-year change due primarily to lower net profits (£0.3m), higher income taxes paid (£0.2m) and a small increase in working capital (£0.3m).  Period-end working capital efficiency, measured by the ratio to sales, was consistent with September 2013 at 11.2%.

The Group is part way through a significant capital expenditure programme primarily aimed at enhancing capacity, capability and effectiveness of the foils businesses.  Cash capital additions in the six months to September 2014 amounted to £3.2m (2013: £2.4m) including completing the installation of new metallisation equipment at both Foils Americas' plant in Lawrence, Kansas and Foils Europe's manufacturing site in Livingston, Scotland.  Stage payments were also made relating to a new coating line for Livingston and expenditure continued on the Group's ERP implementation which is currently being rolled out in Foils Europe.  Full year capital expenditure is expected to be close to £6.0m, including second half expenditure to complete the UK coater project.

After the reintroduction of the dividend, the final dividend payable in respect of the year ended 31 March 2014 impacted cash flow in the first six months of this financial year by £1.0m (2013: £0.0m).

Group net debt at 30 September 2014 was £5.7m, compared to £5.6m one year earlier and net cash of £0.2m at 31 March 2014.  The Group continues to manage its cash position closely with gearing at the period end of 23%, unchanged from twelve months ago and the ratio of net debt to trailing 12 month EBITDA also unchanged at 0.6x.

The US business' existing funding with Wells Fargo expires in April 2015 and the Group is currently in the process of arranging new facilities.

Dividend

The Board re-introduced dividend payments at the interim stage last year after a break of more than 10 years.  In spite of the weaker profit performance in the current financial year, the Board remains confident about the Group's prospects and committed to an affordable, progressive dividend policy.  The interim dividend is therefore being increased by 7.1% to 0.75 pence per share and will be paid on 12 January 2015 to shareholders on the register as at 12 December 2014, with an ex-dividend date of 11 December 2014.

Pension Deficit

The gross deficit on UK and US defined-benefit pension plans, as calculated under IAS19, increased by £2.4m to £15.8m compared to the position at 31 March 2014.  Above-plan returns on scheme assets were more than offset by the impact of lower corporate bond yields on the valuation of liabilities.  The associated deferred tax asset increased by £0.5m, leaving a net reported deficit of £12.4m compared to £10.5m at March 2014.  In respect of the UK scheme, a funding ratio of 85% was down 1% on the position at 31 March 2014.

Board

As announced previously, after more than 14 years on the Board as a non-executive director and then Chairman, Richard Wright stood down as a director at the end of October 2014.  The Board is grateful for Richard's dedication to serving the interests of the Group and its shareholders and especially his stewardship during the challenges of the mid to late 2000's and the subsequent restoration of the Group's fortunes.  The search for a new Chairman is ongoing and further announcements will be made in due course.

Chris Smith, who has been Group Finance Director since 2008 advised the Board in July 2014 of his intention to step down, having been selected for the position of Chief Financial Officer at McBride plc.  Chris will complete his tenure on 12 December 2014 and the Board thanks him for his wide-ranging contribution to the development of the Group and wishes him every success in his new role.  An announcement on the replacement Finance Director will be made in due course.  To cover the period until a permanent appointment is made, Loraine Hughes has joined the Group as Interim Finance Director.

Outlook

The Group has experienced tough trading conditions so far in the second half, with the outlook for profits this financial year slightly down on previous expectations.

Progress at Foils Europe continues to be held back by sluggish markets on the Continent and the benefit from a slow recovery in metallic pigment orders at Foils Americas will be partly offset by the seasonally weaker second half in the US market for graphics foils.

Third quarter sales at Holographics are expected to drop below breakeven level, although there is the prospect for the shortfall to be recovered in the final last quarter with the start-up of shipments on two new supply contracts.

Laminates is continuing to experience strong order levels on established supply agreements although the impact on profits is expected to be diluted by a less favourable sales mix.

Beyond the current financial year, the recovery in US metallic pigment volumes is expected to continue and both the US and European foils businesses should benefit from recent new product launches and investments in new, more efficient capacity and additional supply capabilities.

Group Income Statement

for the six month period ended 30 September 2014

	Note		Unaudited Six months to 30 September 2014 £'000	Unaudited Six months to 30 September 2013 £'000	Audited Year to 31 March 2014 £'000
Revenue	2	56,374		56,897	114,712
Cost of sales		(43,711)		(42,621)	(86,617)
Gross profit		12,663		14,276	28,095
Distribution costs		(1,880)		(2,176)	(3,952)
Administrative expenses (excluding exceptional items)		(8,011)		(8,645)	(16,716)
Operating profit before exceptional items	2	2,772		3,455	7,427
Exceptional items	3	-		(300)	(705)
Operating profit		2,772		3,155	6,722
Net finance costs	4	(517)		(567)	(1,130)
Profit before taxation		2,255		2,588	5,592
Tax (expense)/credit	5	(429)		20	(150)
Profit for the period		1,826		2,608	5,442
Earnings per share (pence)
Basic earnings per share on profit for the period	6	2.5		3.5	7.4
Underlying basic earnings per share on profit for the period	6	2.5		3.9	8.1
Diluted earnings per share on profit for the period	6	2.4		3.4	7.1
Underlying diluted earnings per share on profit for the period	6	2.4		3.8	7.8

Group statement of comprehensive income

for the six months ended 30 September 2014

	Unaudited Six months to 30 September 2014 £'000	Unaudited Six months to 30 September 2013 (restated1) £'000	Audited Year to 31 March 2014 (restated1) £'000
Profit for the period	1,826	2,608	5,442
Exchange differences on retranslation of foreign operations	135	(1,037)	(1,442)
Change in fair value of effective cash flow hedges	527	638	863
Re-measurement (losses)/gains on defined benefit pension plans	(2,690)	314	(513)
Tax on items relating to components of other comprehensive income	398	(561)	(350)
Other comprehensive income for the period, net of tax	(1,630)	(646)	(1,442)
Total comprehensive income for the period attributable to equity holders of the Parent	196	1,962	4,000

¹ Restated in accordance with IFRS 11 Joint Arrangements. See Note 1 (c).

Group balance sheet

at 30 September 2014

	Note	Unaudited 30 September 2014 £'000	Unaudited 30 September 2013 (restated1) £'000	Audited 31 March 2014 (restated1) £'000
Assets
Non-current assets
Property, plant and equipment		24,050	21,413	21,776
Intangible assets - goodwill		5,602	5,631	5,626
Financial assets		78	46	-
Deferred tax assets		6,891	6,198	6,412
		36,621	33,288	33,814
Current assets
Trade and other receivables		16,518	17,695	16,633
Inventories		13,594	12,925	12,126
Other financial assets		1,095	531	594
Cash and short-term deposits	8	6,210	1,490	8,691
		37,417	32,641	38,044
Total assets		74,038	65,929	71,858
Liabilities
Current liabilities
Trade and other payables		19,564	20,254	22,665
Financial liabilities	9	1,752	6,769	432
Income tax payable		755	494	635
		22,071	27,517	23,732
Non-current liabilities
Financial liabilities	9	10,132	465	8,033
Deferred tax liabilities		405	287	306
Provisions		52	62	56
Deficit on defined benefit pension plans	10	15,777	12,733	13,364
		26,366	13,547	21,759
Total liabilities		48,437	41,064	45,491
Net assets		25,601	24,865	26,367
Equity
Called up share capital		767	767	767
Share premium		7,136	7,136	7,136
Other reserves		8,822	8,816	8,818
Foreign exchange reserve		(361)	(91)	(496)
Retained earnings		9,237	8,237	10,142
Total shareholders' equity		25,601	24,865	26,367

¹ Restated in accordance with IFRS 11 Joint Arrangements. See Note 1 (c).

Group statement of changes in equity

for the six month period ended 30 September 2014

	Equity share capital £'000	Share premium £'000	Other reserves £'000	Foreign exchange reserve £'000	Retained earnings £'000	Total shareholders' equity £'000
At 1 April 2013 (restated1)	767	7,136	8,816	946	5,252	22,917
Profit for the period	-	-	-	-	2,608	2,608
Other comprehensive income for the period, net of tax (restated1)	-	-	-	(1,037)	391	(646)
Shares acquired by Employee Benefit Trust	-	-	(32)	-	-	(32)
Share-based payments	-	-	-	-	18	18
Transferred on exercise of share options	-	-	32	-	(32)	-
Balance at 30 September 2013	767	7,136	8,816	(91)	8,237	24,865
Profit for the period	-	-	-	-	2,834	2,834
Other comprehensive income for the period, net of tax (restated1)	-	-	-	(405)	(391)	(796)
Share-based payments	-	-	-	-	(18)	(18)
Transferred on exercise of LTIP	-	-	2	-	(2)	-
Dividends	-	-	-	-	(518)	(518)
Balance at 31 March 2014	767	7,136	8,818	(496)	10,142	26,367
Profit for the period	-	-	-	-	1,826	1,826
Other comprehensive income for the period, net of tax	-	-	-	135	(1,765)	(1,630)
Transferred on exercise of LTIP	-	-	4	-	(4)	-
Dividends	-	-	-	-	(962)	(962)
Balance at 30 September 2014	767	7,136	8,822	(361)	9,237	25,601

¹ Restated in accordance with IFRS 11 Joint Arrangements. See Note 1 (c).

Group cash flow statement

For the six month period ended 30 September 2014

	Note	Unaudited Six months to 30 September 2014 £'000	Unaudited Six months to 30 September 2013 (restated1) £'000	Audited Year to 31 March 2014 (restated1) £'000
Operating activities
Group profit before tax		2,255	2,588	5,592
Adjustments to reconcile Group profit before tax to net cash flow from operating activities:
Net finance costs		517	567	1,130
Depreciation of property, plant and equipment		1,142	1,132	2,386
Profit on disposal of property, plant and equipment		(2)	(5)	(4)
Movement in fair value foreign exchange contracts		(65)	(7)	44
Share-based payments		-	18	-
(Increase)/decrease in inventories		(1,539)	(458)	221
Increase in trade and other receivables		(47)	(2,226)	(1,271)
(Decrease)/increase in trade and other payables		(2,813)	(1,405)	855
Decrease in provisions		(4)	(4)	(10)
Cash generated from operations		(556)	200	8,943
Interest paid		(208)	(226)	(396)
Pension contributions and scheme expenses paid		(585)	(528)	(973)
Income taxes paid		(227)	(53)	(155)
Net cash flow from operating activities		(1,576)	(607)	7,419
Investing activities
Interest received		1	1	2
Purchase of property, plant and equipment		(3,259)	(2,261)	(3,748)
Investment in joint operation		-	(153)	(251)
Sale of property, plant and equipment		4	5	4
Net cash flow used in investing activities		(3,254)	(2,408)	(3,993)
Financing activities
Dividends paid		(962)	-	(518)
Purchase of shares by Employee Benefit Trust		-	(32)	(32)
New borrowings		2,645	-	12,340
Arrangement fees for new borrowings		-	-	(183)
Repayment of borrowings		(94)	(1,792)	(12,567)
Net cash flow from/(used in) financing activities		1,589	(1,824)	(960)
(Decrease)/increase in cash and cash equivalents		(3,241)	(4,839)	2,466
Effect of exchange rates on cash and cash equivalents		(54)	(69)	(103)
Cash and cash equivalents at the beginning of the period		8,459	6,096	6,096
Cash and cash equivalents at the end of the period	8	5,164	1,188	8,459

¹ Restated in accordance with IFRS 11 Joint Arrangements. See Note 1 (c).

Notes to the interim financial statements

for the six month period ended 30 September 2014

1. Group accounting policies

(a) Corporate information

The consolidated interim financial statements of API Group plc for the six months ended 30 September 2014 were authorised for issue in accordance with a resolution of the Directors on 2 December 2014.

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 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union.

These interim consolidated financial statements are unaudited.  They do not constitute statutory accounts as defined in Section 435 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 2014 which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.  The audited annual financial statements for the year ended 31 March 2014, which represent the statutory accounts for that period have been filed with the Registrar of Companies.  The auditor reported on those accounts.  The audit report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

UK banking facilities with HSBC extend  to 31 December 2017 whilst  US facilities are scheduled for renewal in April 2015. After making appropriate enquiries, the Directors consider that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  The Directors therefore continue to adopt the going concern basis in preparing these financial statements.

(c) Significant accounting policies

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 2014, except for the adoption of IFRS 11 Joint Arrangements with effect from 1 April 2014.  Comparative figures for the six months to 30 September 2013 and the year to 31 March 2014 have been restated.  The impact of adopting IFRS 11 is described below.

IFRS 11 Joint Arrangements

The key impact of IFRS 11 is the requirement of a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations arising from the agreement. IFRS 11 classifies joint arrangements into two types - joint operations and joint ventures.  IFRS 11 requires a joint operator to recognise and measure the assets and liabilities (and recognise the related revenue and expenses) in relation to its interest in the arrangement.

The Group has a 50% interest in a company, API Optix s.r.o. ("APIO).  This joint arrangement is considered to be a joint operation under IFRS 11 and, under the transitional requirements of IFRS 11, the comparatives for the period ended 30 September 2013 and the year ended 31 March 2014 have been restated.

The balance sheets at 30 September 2013 and 31 March 2014 have been restated to recognise the Group's assets and liabilities in relation to its interest in APIO.  No adjustments have been made to the income statement for either the six months ended 30 September 2013 or the year ended 31 March 2014 as APIO operated at breakeven and the related revenue and expenditure are not significant to the Group.  Exchange differences on retranslation of APIO's operations have been recognised in other comprehensive income; a charge of £52,000 in the year ended 31 March 2014 and a charge of £29,000 in the six months ended 30 September 2013.  Equity shareholders' funds have reduced by £41,000 at 30 September 2013 and by £64,000 at 31 March 2014 for the cumulative exchange differences on retranslation of APIO's operations.

2. Segmental information

	Unaudited Six months to 30 September 2014 £'000	Unaudited Six months to 30 September 2013 £'000	Audited Year to 31 March 2014 £'000
Total revenue by origin
Laminates	32,306	28,097	59,237
Foils Europe	13,410	14,380	28,580
Foils Americas	8,319	11,927	21,819
Holographics	4,269	4,505	8,888
	58,304	58,909	118,524
Inter-segmental revenue
Laminates	-	-	13
Foils Europe	260	334	707
Foils Americas	239	312	567
Holographics	1,431	1,366	2,525
	1,930	2,012	3,812
External revenue by origin
Laminates	32,306	28,097	59,224
Foils Europe	13,150	14,046	27,873
Foils Americas	8,080	11,615	21,252
Holographics	2,838	3,139	6,363
	56,374	56,897	114,712
Segment result
Operating profit before exceptional items
Laminates	3,306	3,260	6,680
Foils Europe	852	901	2,130
Foils Americas	(361)	1,055	1,699
Holographics	(49)	(548)	(724)
Segment result	3,748	4,668	9,785
Central costs	(976)	(1,213)	(2,358)
Total operating profit before exceptional items	2,772	3,455	7,427

3. Exceptional items

	Unaudited Six months to 30 September 2014 £'000	Unaudited Six months to 30 September 2013 £'000	Audited Year to 31 March 2014 £'000
Restructuring of operating businesses	-	(300)	(705)
	-	(300)	(705)

Restructuring of operating businesses in the previous year related primarily to redundancy, severance settlements and other costs associated with business restructuring in the Foils Europe, Laminates and Holographics businesses.

4. Finance revenue and finance costs

	Unaudited Six months to 30 September 2014 £'000	Unaudited Six months to 30 September 2013 £'000	Audited Year to 31 March 2014 £'000
Finance revenue
Interest receivable on bank and other short-term deposits	1	1	1
Other interest receivable	-	-	1
	1	1	2
Finance costs
Interest payable on bank loans and overdrafts	(221)	(280)	(533)
Other interest payable	(10)	(8)	(41)
Finance cost in respect of defined benefit pension plans	(287)	(280)	(558)
	(518)	(568)	(1,132)
Net finance costs	(517)	(567)	(1,130)

5. Taxation

	Unaudited Six months to 30 September 2014 £'000	Unaudited Six months to 30 September 2013 £'000	Audited Year to 31 March 2014 £'000
Current income tax
UK corporation tax - current year charge	(302)	(127)	(330)
UK corporation tax - adjustment to prior years	-	-	75
Overseas tax - current year charge	(48)	(54)	(164)
	(350)	(181)	(419)
Deferred tax
Origination and reversal of temporary differences	(79)	237	418
Effect of change in tax rate	-	(36)	(149)
	(79)	201	269
Total (expense)/credit in the income statement	(429)	20	(150)

6. Earnings per share

Basic earnings per share is calculated by dividing the net profit for the period attributable to ordinary equity holders of the Parent by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity holders of the Parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

Earnings used to calculate adjusted basic and diluted earnings per share exclude exceptional items, net of tax.  The following reflects the income and share data used in the basic and diluted earnings per share computations:

	Unaudited Six months to 30 September 2014 £'000	Unaudited Six months to 30 September 2013 £'000	Audited Year to 31 March 2014 £'000
Net profit attributable to equity holders of the Parent	1,826	2,608	5,442
Adjustments to arrive at underlying earnings:
Exceptional items	-	300	705
Tax credit on exceptional items	-	-	(162)
Underlying earnings	1,826	2,908	5,985

	Unaudited Six months to 30 September 2014 number	Unaudited Six months to 30 September 2013 number	Audited Year to 31 March 2014 number
Basic weighted average number of ordinary shares	74,021,746	73,786,981	73,892,566
Dilutive effect of employee share options and contingent shares	3,130,184	3,376,309	3,265,060
Diluted weighted average number of ordinary shares	77,151,930	77,163,290	77,157,626

The calculation of the basic weighted average number of shares excludes the shares owned by the API Group plc No.2 Employee Benefit Trust (30 September 2014: 2,399,009; 30 September 2013 and 31 March 2014: 2,750,000). These contingent shares are included in the calculation of the diluted weighted average number of shares.

	Unaudited Six months to 30 September 2014 pence	Unaudited Six months to 30 September 2013 pence	Audited Year to 31 March 2014 pence
Earnings per share
Basic earnings per share	2.5	3.5	7.4
Underlying basic earnings per share	2.5	3.9	8.1
Diluted earnings per share	2.4	3.4	7.1
Underlying diluted earnings per share	2.4	3.8	7.8

7. Dividends

An interim dividend of 0.75 pence per share (2013: 0.7 pence) was approved by the Board on 2 December 2014, payable on 12 January 2015 to equity holders on the register at the close of business on 12 December 2014.  This dividend has not been provided for in these interim financial statements.

8. Cash and cash equivalents

	Unaudited 30 September 2014 £'000	Unaudited 30 September 2013 (restated1) £'000	Audited 31 March 2014 (restated1) £'000
Cash and short-term deposits	6,210	1,490	8,691
Bank overdrafts	(1,046)	(302)	(232)
	5,164	1,188	8,459

¹ Restated in accordance with IFRS 11 Joint Arrangements. See Note 1 (c).

9. Financial liabilities

	Unaudited 30 September 2014 £'000	Unaudited 30 September 2013 £'000	Audited 31 March 2014 £'000
Current
Bank overdrafts	1,046	302	232
Current instalments due on bank loans	706	6,296	187
Interest rate swaps	-	4	-
Forward currency exchange contracts	-	167	13
	1,752	6,769	432
Non-current			-
Non-current instalments due on bank loans	10,132	465	8,033
Interest rate swaps	-	-	-
	10,132	465	8,033

10. Defined benefit pension plan deficit

	Unaudited 30 September 2014 £'000	Unaudited 30 September 2013 £'000	Audited 31 March 2014 £'000
United Kingdom
Fair value of scheme assets	82,558	77,231	80,011
Present value of scheme liabilities	(97,459)	(89,209)	(92,631)
	(14,901)	(11,978)	(12,620)
United States
Fair value of scheme assets	2,159	2,011	2,087
Present value of scheme liabilities	(3,035)	(2,766)	(2,831)
	(876)	(755)	(744)
Net pension liability	(15,777)	(12,733)	(13,364)
The movements in the net pension liability are as follows:
Opening liability	13,364	13,349	13,349
Scheme expenses recognised in operating profit	266	330	675
Net cost recognised in finance costs	287	280	558
Taken to statement of comprehensive income	2,690	(314)	513
Contributions from and scheme expenses borne by employers	(851)	(850)	(1,648)
Exchange differences	21	(62)	(83)
Closing liability	15,777	12,733	13,364
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	2.20%	2.30%	2.35%
Inflation - CPI	2.20%	2.30%	2.35%
Discount rate	4.00%	4.40%	4.40%

- Ends -

 

END

 

 

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