Interim Results
API Group PLC
30 May 2007
30 May 2007
API GROUP PLC
INTERIM STATEMENT FOR THE SIX MONTHS ENDED 31 MARCH 2007
• Results in line with AGM statement in March 2007
• Sales reduced by 1.4% to £50.4m (2006: £51.1m) reflecting movements in
exchange rates. At constant rates, sales slightly up on prior year
• Growth occurred across much of the Group, but was offset by a 10%
decline in sales of non-holographic foils in Europe
• Operating result before exceptional items unchanged on prior year at
break-even (2006: £nil) as progress in North America and Asia-Pacific was offset
by disappointing performance in Europe
• Net borrowings increased by £5.3m to £20.8m as improvements in
operational cash flow were offset by capital expenditure in China and seasonal
factors
• Progress with the new foils manufacturing facility in China in line
with expectations, with production due to commence later this year
Commenting on the results, Richard Wright, the Group's Non-Executive Chairman,
said:
'With the exception of our non-holographic foils business in Europe, each of the
Group's businesses performed in-line with our expectations and continue to do
so. We remain optimistic of an improvement in our European foils business
following the resumption of supply from China and are also beginning to realise
the benefits of restructuring activities in Laminates. We expect the results for
the forthcoming twelve month period to be in line with current expectations and
to represent an improvement over the same period of the previous year.'
Enquiries:
API Group plc 01625 858700
David Walton, Chief Executive
Financial Dynamics 020 7831 3113
Tim Spratt / Nicola Biles
CHAIRMAN'S STATEMENT
The results for the six months ended 31 March 2007 are in line with the Board's
expectations and with the statement made at the Annual General Meeting on 30
March 2007. The operating performance before exceptional items was comparable
with that achieved in the same period of the previous year as progress with
strategic initiatives in North America and Asia Pacific was offset by a
continued disappointing performance in certain European businesses.
Sales for the six months to 31 March 2007 eased by 1.4% to £50.4m (2006:
£51.1m). However, at constant exchange rates, sales were slightly ahead of the
same period in the previous year. Sales growth occurred in the majority of the
Group's businesses, but was offset by a 10% decline in sales of non-holographic
foils in Europe.
The operating result before exceptional items remained virtually unchanged at
£nil (2006: £nil).
Exceptional items of £0.8m (2006: £0.4m) related principally to restructuring of
the manufacturing activities at Laminates.
Net financing costs increased to £1.2m (2006: £0.7m) due to the combined effect
of interest rate increases and higher average borrowings. Financing included a
net charge of £0.3m (2006: £nil) relating to pension plan balances.
Cash Flow and Borrowings
Cash used in continuing operations reduced to £0.5m (2006: outflow £2.7m) as a
result of improved working capital management. Capital expenditure amounted to
£3.6m (2006: £2.7m), with the increase in expenditure almost entirely
attributable to the investment in the new factory complex near Shanghai, China.
Net borrowings at 31 March 2007 were £20.8m, compared with £15.5m at 30
September 2006. The increase of £5.3m is principally attributable to seasonal
factors and the high level of capital investment in the new facility in China.
Review of Operations
Asia-Pacific
Sales in Asia Pacific reduced by 6.7% to £6.6m (2006: £7.1m) reflecting the
movement in the Chinese Renmimbi exchange rate. On an underlying basis, sales
were virtually unchanged. Operating profits reduced to £0.4m (2006: £0.7m) due
to lower export sales into European and US markets.
Progress with the new foils manufacturing facility near Shanghai continues to be
in-line with our expectations, with construction scheduled for completion in
mid-2007 and production of foil due to commence later this year. Once in full
production, the Chinese facility will be the Group's single largest
manufacturing centre and will represent almost 50% of its total available foil
production capacity by the end of 2008.
In the first six months of this period, the Chinese foils business performed
well in its traditional domestic markets and achieved further growth in exports
to Russia and India. However, export sales to western markets were lower due to
difficulties encountered with the introduction of a new range of products
manufactured in China, but intended for sale principally in Europe and the US.
The issues have now been resolved and production was successfully resumed at the
end of February.
North America
Sales in North America reduced by 16% to £10.8m (2006: £12.9m). Approximately
half of the reduction was attributable to lower sales of laminates into the US
tobacco sector, with the remainder attributable to movements in the US Dollar
exchange rate. The US foils business itself performed strongly, achieving
underlying sales growth of 6%. Operating profits from the region improved
slightly to £0.6m (2006: £0.5m).
During the period under review, the US foils business successfully grew its
share of the general carton and label sectors and consolidated its position as a
leading supplier of raw material for use in the manufacture of metallic inks.
Growth in these areas more than offset the slight decline experienced in
traditional sectors such as greetings cards and book publishing, where
manufacturers are increasingly looking to source from the Far East.
Europe
Sales in Europe increased by 14.1% to £31.5m (2006: £27.6m). Good growth in
sales of laminates and holographic foils was partially offset by a decline in
sales of metallic foils and pigment products. Operating profit before
exceptional items improved by £0.8m to a profit of £0.5m (2006: loss £0.3m),
principally due to an improved performance from Laminates.
The laminates business benefited from the refocusing of its sales efforts
leading to growth in the traditional markets of drinks and tobacco and an
increase in our presence in more rewarding sectors such as personal care and
pharmaceutical products. Further restructuring of the manufacturing activities
was carried out and this, together with the improved sales performance,
contributed to an improvement in the operating result before exceptional items
to just below break-even.
The demand for our holographic foil products continued to be robust and we were
able to capitalise on the market leading performance of certain areas of our
product range. In contrast, sales of metallic and pigment foils declined in the
face of intense competition and temporarily reduced availability of products
sourced from our facility in China.
Dividend
The Board is not recommending the payment of an interim dividend (2006: no
payment).
Outlook
With the exception of our non-holographic foils business in Europe, each of the
Group's businesses performed in-line with expectations during the first six
months and they continue to do so. We remain optimistic of an improvement in
performance in Europe following the resumption of supply from China and the
establishment of a distribution centre in the strategically important Italian
market which commenced trading in April of this year. In Laminates, we expect to
begin to realise the benefits of the restructuring and process improvement
initiatives undertaken during the first six months of this accounting period and
are confident of further progress.
As indicated in the preliminary statement, the Group's accounting reference date
has been changed to 31 March and the Group is currently in an 18 month
accounting period. The Board expects the results of the Group for the remaining
twelve months of the accounting period to be in line with current expectations
and to represent an improvement over the same period of the previous year.
Richard Wright
Non-Executive Chairman
30 May 2007
Group Income Statement
for the six months ended 31 March 2007
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 March 31 March 30 September
2007 2006 2006
Note £'000 £'000 £'000
Continuing operations
Revenue 1 50,392 51,118 101,979
Cost of sales (40,804) (40,653) (80,656)
Gross profit 9,588 10,465 21,323
Other operating costs (9,617) (10,488) (20,329)
Operating (loss) / profit (29) (23) 994
before exceptional items
1
Exceptional items:
Restructuring 3 (801) (443) (863)
Operating (loss) / profit from (830) (466) 131
continuing operations
Finance revenue 26 51 85
Finance costs (967) (772) (1,698)
Other finance expense - (312) 12 (311)
pensions
(1,253) (709) (1,924)
Loss on continuing activities (2,083) (1,175) (1,793)
before taxation
Taxation - UK 5 (119) (149) (122)
- Overseas 5 (257) (292) (613)
Loss from continuing (2,459) (1,616) (2,528)
operations
Discontinued operations
Loss from discontinued 6 - (103) (230)
operations
Loss for the period (2,459) (1,719) (2,758)
Attributable to:
Profit attributable to 198 318 695
minority equity interests
Loss attributable to equity (2,657) (2,037) (3,453)
holders of the parent
Total loss for the period (2,459) (1,719) (2,758)
Earnings per share (pence)
Basic loss per share from 4 (7.7) (5.6) (9.4)
continuing operations
Diluted loss per share from (7.6) (5.5) (9.1)
continuing operations
4
Basic loss per share on loss 4 (7.7) (5.9) (10.1)
for the period
Diluted loss per share from 4 (7.6) (5.8) (9.8)
loss for the period
Group Balance Sheet
at 31 March 2007
Unaudited31 Unaudited Audited
March 2007 31 March 30 September
2006 2006
Note £'000 £'000 £'000
Assets
Non-current assets
Property plant and equipment 31,856 29,812 30,500
Intangible assets 6,480 6,480 6,480
Deferred tax asset on defined 3,311 2,760 3,263
benefit pension plan
Financial assets 42 - -
41,689 39,052 40,243
Current assets
Trade and other receivables 19,386 19,676 20,112
Inventories 11,907 13,515 13,195
Cash 3,236 7,326 4,909
34,529 40,517 38,216
Total assets 76,218 79,569 78,459
Liabilities
Current liabilities
Trade and other payables 20,310 20,887 22,306
Financial liabilities 5,431 1,264 1,758
Income tax payable 370 390 379
Provisions 144 336 306
26,255 22,877 24,749
Non-current liabilities
Financial liabilities 18,629 18,742 18,674
Deferred tax liabilities 659 818 659
Provisions 88 103 93
Defined benefit pension plan 11,036 9,199 10,879
deficit
30,412 28,862 30,305
Total liabilities 56,667 51,739 55,054
Net assets 19,551 27,830 23,405
Equity
Called up share capital 8,612 8,612 8,612
Share premium 244 244 244
Capital redemption reserve 549 549 549
ESOP reserve (251) (251) (251)
Foreign exchange reserve (1,229) 659 (366)
Retained earnings 6,127 12,086 9,179
Total shareholders' equity 7 14,052 21,899 17,967
Minority interest in equity 7 5,499 5,931 5,438
Total equity 19,551 27,830 23,405
Group Cash Flow Statement
for the six months ended 31 March 2007
Unaudited Unaudited Audited
6 months 6 months 12 months
to 31 to 31 to 30
March March September
2007 2006 2006
£'000 £'000 £'000
Operating activities
Group operating (loss) / profit (830) (466) 131
Adjustments to reconcile group
operating (loss) / profit to net cash
flows from operating activities
Operating loss from discontinued - (103) (230)
operations
Depreciation and impairment of 1,703 1,780 3,457
property, plant and equipment
Profit on disposal of property, plant - (11) (22)
and equipment
Share-based payments 86 74 131
Difference between pension (508) (432) (835)
contributions paid and amounts
recognised in the income statement
Decrease / (increase) in inventories 1,072 (727) (870)
Decrease / (increase) in trade and 483 244 (523)
other receivables
Decrease in trade and other payables (2,190) (2,501) (1,120)
Movement in provisions (5) (261) (293)
Cash used in operations (189) (2,403) (174)
Income taxes paid (266) (294) (656)
Net cash flow from operating (455) (2,697) (830)
activities
Investing activities
Interest received 20 51 85
Purchase of property, plant and (3,647) (2,681) (6,140)
equipment
Sale of property, plant and equipment - - 244
Payments to acquire investments (42) - -
Net cash flow from investing (3,669) (2,630) (5,811)
activities
Financing activities
Interest paid (961) (822) (2,047)
Dividends paid to minority interests - - (487)
Proceeds from share issues - 53 53
New borrowings 5,191 2,906 1,956
Net cash flow from financing 4,230 2,137 (525)
activities
Increase / (decrease) in cash and 106 (3,190) (7,166)
cash equivalents
Effect of exchange rates on cash and (216) 120 116
cash equivalents
Cash and cash equivalents at the 3,346 10,396 10,396
beginning of the period
Cash and cash equivalents at the end 3,236 7,326 3,346
of the period
Group Statement of Recognised Income and Expenditure
for the six months ended 31 March 2007
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 March 31 March 30 September
2007 2006 2006
£'000 £'000 £'000
Exchange differences on retranslation (1,000) 373 (972)
of foreign operations
Actuarial (losses) / gains on defined (647) 872 (1,311)
benefit pension plans
Tax on actuarial gains on defined 166 (242) 393
benefit pension plans
Net (expense) / income recognised (1,481) 1,003 (1,890)
directly in equity
Loss for the period (2,459) (1,719) (2,758)
Total recognised income and expense (3,940) (716) (4,648)
relating to the period
Attributable to:
Equity holders of the parent (4,001) (1,187) (5,176)
Minority equity interests 61 471 528
(3,940) (716) (4,648)
Notes
1 Segmental Analysis
Primary reporting format - geographic segments: At 31 March 2007, the Group is
organised into three distinct independently managed geographic segments, Asia
Pacific, North America and Europe. The following table presents revenue and
profit information for these segments.
6 months 6 months 6 months to 6 months
to 31 March to 31 March 31 March to 31 March
2007 2006 2006 2006
£'000 £'000 £'000 £'000
Continuing Continuing Discontinued Total
and Total
By Geographical segment
Total revenue by origin
Asia Pacific 5,761 6,774 - 6,774
North America 12,053 12,703 122 12,825
Europe 37,479 36,643 - 36,643
55,293 56,120 122 56,242
Inter-segmental sales
Asia Pacific 343 985 - 985
North America 207 334 - 334
Europe 4,351 3,683 - 3,683
4,901 5,002 - 5,002
External sales by origin
Asia Pacific 5,418 5,789 - 5,789
North America 11,846 12,369 122 12,491
Europe 33,128 32,960 - 32,960
50,392 51,118 122 51,240
External sales by
destination
UK 17,560 17,053 14 17,067
Continental Europe 13,899 11,987 - 11,987
Americas 10,808 12,933 99 13,032
Asia Pacific 6,597 7,071 9 7,080
Rest of World 1,528 2,074 - 2,074
50,392 51,118 122 51,240
Profit / (loss) from
operations
Asia Pacific
before exceptional items 380 736 - 736
exceptional items - - - -
380 736 - 736
North America
before exceptional items 608 537 (98) 439
exceptional items - - (5) (5)
608 537 (103) 434
Europe
before exceptional items 480 (285) - (285)
exceptional items (801) (399) - (399)
(321) (684) - (684)
Central costs
before exceptional items (1,497) (1,011) - (1,011)
exceptional items - (44) - (44)
(1,497) (1,055) - (1,055)
Total loss from operations (29) (23) (98) (121)
before exceptional items
Total loss from operations (830) (466) (103) (569)
Notes
2 Presentation of interim financial statements
Authorisation of financial statements
The consolidated financial statements of API Group plc for the six months ended
31 March 2007 were authorised for issue in accordance with a resolution of the
directors on 21 May 2007. API Group plc is a public limited company incorporated
in the United Kingdom whose shares are publicly traded.
Basis of preparation
These consolidated interim financial statements are presented in sterling and
all values are rounded to the nearest thousand (£'000) except when otherwise
indicated.
The financial information contained in this interim statement is unaudited and
does not constitute statutory accounts as defined in section 240 of the
Companies Act 1985. The audited annual financial statements for the year ended
30 September 2006, which represent the statutory accounts for that year, and on
which the auditors gave an unqualified opinion, have been filed with the
Registrar of Companies.
Interim Statement
The interim statement is being mailed to shareholders on 14 June 2007 and will
be available at the company's registered office, Second Avenue, Poynton
Industrial Estate, Poynton, Stockport, Cheshire, SK12 1ND.
3 Exceptional items
6 months 6 months 12 months
to 31 to 31 to 30
March 2007 March 2006 September 2006
£'000 £'000 £'000
Exceptional items charged against
operating (loss) / profit comprise
Restructuring of operating businesses 801 412 651
Charlotte facility closure costs - - 242
London office closure costs - 31 7
Release of provision for vacant - - (37)
property
801 443 863
Exceptional items are material items which derive from events or transactions
that fall within the ordinary activities of the Group and which need to be
disclosed by virtue of their size or incidence.
Restructuring of operating businesses
During the period the group incurred costs of £801,000 in respect of
restructuring costs, mainly as a result of employee redundancy and other one-off
costs associated with business improvement measures within the laminates
business.
Notes
4 Earnings per share
6 months 6 months 12 months
to 31 March to 31 to 30
2007 March 2006 September 2006
£'000 £'000 £'000
Net loss attributable to equity (2,657) (1,934) (3,223)
holders of the parent - continuing
operations
Loss attributable to equity holders - (103) (230)
of the parent - discontinued
operations
Net loss attributable to equity (2,657) (2,037) (3,453)
holders of the parent
6 months 6 months 12 months
to 31 March to 31 to 30 September
2007 March 2006 2006
No No No
Basic weighted average number of 34,391,292 34,327,701 34,359,671
ordinary shares
Dilutive effect of employee share 621,320 559,801 903,820
options
Diluted weighted average ordinary 35,012,612 34,887,502 35,263,491
shares
Earnings per share 6 months 6 months 12 months
to 31 March to 31 to 30
2007 March 2006 September 2006
pence pence pence
Continuing operations
Basic loss per share (7.7) (5.6) (9.4)
Diluted loss per share (7.6) (5.5) (9.1)
Discontinued operations
Basic loss per share - (0.3) (0.7)
Diluted loss per share - (0.3) (0.7)
Total
Basic loss per share (7.7) (5.9) (10.1)
Diluted loss per share (7.6) (5.8) (9.8)
The weighted average number of shares excludes the shares owned by the API Group
plc No.2 Employee Benefit Trust.
5 Taxation
6 months 6 months 12 months
to 31 to 31 to 30
March 2007 March 2006 September 2006
£'000 £'000 £'000
Current income tax
Foreign tax (257) (292) (613)
Total current income tax (257) (292) (613)
Deferred tax
Origination and reversal of temporary (119) (149) (402)
differences
Adjustment to previous year - - 280
Total deferred tax (119) (149) (122)
Tax charge in the income statement (376) (441) (735)
Notes
6 Discontinued operations
6 months 6 months 12 months
to 31 to 31 to 30
March 2007 March 2006 September 2006
£'000 £'000 £'000
Revenue - 122 129
Expenses - (225) (359)
Operating loss and loss after tax for - (103) (230)
the period for discontinued
operations
Loss for the period from discontinued - (103) (230)
operations
Discontinued operations in prior periods represent the results of Chromagem, a
subsidiary which ceased trading.
7 Changes in equity
Shareholders' Minority Total
equity interest equity
£'000 £'000 £'000
Balance at 1 October 2005 22,959 5,460 28,419
Total recognised income and expense (1,187) 471 (716)
for the period
Exercise of employee share options 53 - 53
Share based payment 74 - 74
Balance at 31 March 2006 21,899 5,931 27,830
Total recognised income and expense (3,989) 57 (3,932)
for the period
Dividends - (550) (550)
Share based payment 57 - 57
Balance at 30 September 2006 17,967 5,438 23,405
Total recognised income and expense (4,001) 61 (3,940)
for the period
Share based payment 86 - 86
Balance at 31 March 2007 14,052 5,499 19,551
8 Contingent liabilities
The consideration for the sale of the Converted Products Division, which was
sold in January 2005, included a deferred element totalling £2.0 million, which
was due for payment in January 2007. At this time, an amount of £1.25 million
was paid by the purchaser, with the remaining £750,000 withheld.
This amount is guaranteed by an independent insurance company but it has, to
date, declined to make payment. The Directors consider that this amount may not
be lawfully withheld and are vigorously pursuing legal action in respect of the
outstanding £750,000. Legal advice obtained indicates that a successful recovery
is probable and consequently, no provision against the recoverability of the
outstanding deferred consideration has been made in the accounts.
Independent Review Report
To API Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 March 2007 which comprises Group Income Statement, Group
Balance Sheet, Group Cash Flow Statement, Group Statement of Recognised Income
and Expenditure, and the related notes 1 to 8. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
This report is made solely to the company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company, for our work,
for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of group management and applying analytical procedures to the financial
information and underlying financial data, and based thereon, assessing whether
the accounting policies and presentation have been consistently applied, unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards on Auditing (UK and Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2007.
Ernst & Young LLP
Manchester
30 May 2007
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 31st May 2024
COMPANIES COVERED:
Latest directors dealings
- 2 days ago FDM Group (Holdings)
- 2 days ago Neo Energy Metals
- 2 days ago DCC (CDI)
- 2 days ago 3i Group
- 2 days ago 3i Group