Preliminary Results
3(rd) June 2010
API Group plc
Preliminary results for the year ended 31 March 2010
API Group plc (AIM: API), the specialist foils and packaging materials group,
today releases preliminary results for the year ended 31 March 2010.
·        Full year sales of £84.6m; 12.5% lower at constant exchange rates.
·        Operating profits up from £0.1m to £0.9m.
·        Strong rebound in the second half of the financial year, with
operating profits of £1.9m (first half loss: £1.0m) on sales 9.7% ahead of the
first six months.
·        Loss on continuing operations before tax and exceptional items of
£2.2m (2009: £2.5m).
·        £5.1m impairment of fixed assets in China (£2.6m after adjustment for
minority interests).
·        IAS pension deficit, net of deferred tax, increased by £6.7m to
£11.8m.
·        Earnings per share of 0.2p compared to a loss of 5.5p per share for
2008/9.
·        Net debt increased £3.8m as a result of negative cash flows in China
and general increase in working capital to support second half sales growth.
·        New 3.5 year banking facilities in the UK and US. Completion of
exercise to re-balance debt across the Group. Full covenant compliance.
Commenting, API's Non-Executive Chairman, Richard Wright said:
"Following difficult trading conditions in the first six months, I am pleased to
report a much healthier operating performance in the second half of the
financial year. Overall, the Group has continued to make progress despite the
challenging economic environment and, while we have more work to do in China,
the performance of our European businesses has been particularly encouraging.
Overall, results have started to show the benefit of our reduced cost base as
volumes have improved and we would expect that trend to continue as markets
recover further."
Enquiries:
+---------------------------+-----------------------------+--------------------+
|Andrew Turner |Chief Executive |+44 (0) 1625 650334 |
| |API Group plc | |
+---------------------------+-----------------------------+--------------------+
|Chris Smith |Finance Director |+44 (0) 1625 650334 |
| |API Group plc | |
+---------------------------+-----------------------------+--------------------+
|Philip Secrett / Colin |Grant Thornton Corporate |+44 (0) 20 7383 5100|
|Aaronson |Finance | |
+---------------------------+-----------------------------+--------------------+
|James Serjeant |Numis Securities |+44 (0) 20 7260 1000|
+---------------------------+-----------------------------+--------------------+
Chairman's Statement
Following difficult trading conditions in the first six months, I am pleased to
report a much healthier operating performance by the Group in the second half of
the financial year, ending 31 March 2010.  Operating losses of £1.0m at the
interim stage were reversed in the second six months, resulting in a full year
operating profit of £0.9m. Overall, the Group has continued to make progress
despite facing challenging economic conditions.
Full year sales of £84.6m were 12.5% lower than the prior year, on a constant
exchange rate basis. Second half revenues increased by 9.7% compared with the
first six months of the financial year and were 2.4% ahead of the second half
last year (again at constant exchange rates).
Our European businesses traded profitably throughout the year and improved their
operating margins by 0.8% to 7.7%, despite a difficult first half and a slowdown
in sales at Laminates. The US business returned to profitability in the second
half due to improved sales mix and lower costs, ending the year just short of
break even at the operating level. Full year losses in Asia Pacific narrowed
slightly but did not make the progress expected as margin pressures negated much
of the contribution from volume growth in the second half of the financial year.
Operating results have continued to benefit from the decisive action taken on
costs during the past two years, with a year-on-year impact of £4.0m. These
cost measures and lower input prices drove the improvement in profitability,
against a back drop of lower overall volumes.
However the Group's 51% owned subsidiary in China had another difficult year.
While production was stabilised in the new manufacturing facility and some
progress was made in rebuilding volumes, the impact on profitability was
disappointing. In view of continuing heavy losses, the Board carried out an
impairment review of the Chinese assets leading to a non-cash charge of £5.1m,
or £2.6m after adjusting for minority interests. The Board has also commenced a
strategic review of its investment in China.
During the year, Group net debt increased by £3.8m to £18.5m, primarily as a
result of residual capital expenditure and trading losses in China and a general
increase in working capital to support the higher level of sales as we exited
the financial year.
The Group's funding position has been materially enhanced by the agreement of
new banking facilities in both the UK and US, each with a term of 3.5 years. As
well as providing greater funding stability, these developments conclude a two
year programme to rebalance debt between the Group's three separately financed
regions and to eliminate any disproportionate exposure to indebtedness in the
UK.
Noting the significant increase in the IAS19 deficit associated with the Group's
legacy defined benefit pension schemes, the Board continues to work closely with
the scheme trustees to monitor investment performance and to explore
opportunities for managing the scheme liabilities.
Dividend
In the light of the Group's trading performance and the priority given to debt
reduction, the Board is not recommending the payment of a dividend.
Board
There were no changes in the composition of the Board since the last Annual
Report.
Our People
The Board wishes to express its gratitude to the Group's employees who have
demonstrated exceptional commitment and loyalty during a time of economic
turbulence. Their hard work and receptiveness to change have ensured that the
business has continued to move forward positively, in spite of challenging
market conditions.
Outlook
While the trading environment has been steadily improving, confidence remains
fragile in many of the Group's markets.
So far, sales during the early part of the new financial year have maintained
the progress made during the second half of last year and the competitiveness of
our UK manufacturing operations continues to benefit from the weakness of
Sterling. On the other hand, the foils market remains very competitive and
recent strong increases in raw material prices are likely to put margins under
pressure in both the US and Europe.
API Laminates has a number of projects at an advanced stage which, if they come
to fruition, have the potential to provide a significant uplift in volumes for
that business.
In addition to eliminating the losses in China, management's key focus remains
on maximising opportunities to grow sales revenue while maintaining vigilance on
costs.
Richard Wright
Non-Executive Chairman
 Business Review
Group Operating Results
For the 12 months to 31 March 2010, Group sales were £84.6m, representing a
reduction of 9.5% compared with the prior year or 12.5% at constant exchange
rates. Year-on-year sales growth was 2.4% in the second half (at constant
exchange rates), partially reversing a first half decline of 25.2%.
Operating profit from continuing operations and before exceptional items was
£0.9m, up from £0.1m in the previous 12 months. If results had been translated
at prior year exchange rates, the improvement in operating profit would have
been £1.0m.
For the Group as a whole, the impact of reduced revenues was more than offset by
cost saving measures from prior and current year initiatives (£4.0m) and lower
average energy and raw material costs (£1.2m). The benefit to margins on UK
manufactured goods, arising from Sterling's relative weakness against the Euro,
is estimated at £1.0m.
At a regional level, full year operating profits in Europe were unchanged, while
gains were registered in North America (£0.2m), Asia Pacific (£0.3m) and from
central costs (£0.3m).
Europe: Foils
Third party sales originating in the European Foils business were £28.7m, up
1.2% on prior year (-1.1% at constant exchange rates).  After a 13.5% decline
in the first half (at constant exchange rates), sales recovered steadily in the
balance of the financial year. Second half sales came in 13.0% ahead of the
same period last year, with Italy and Security Holographics performing
especially well.
Operating profits before exceptional items improved by £0.7m to £2.5m a result
of lower operating costs, improved efficiencies at the Salford production unit,
lower average raw material and utility costs and more favourable exchange rates
applicable to UK manufactured products sold in the euro-zone. Operating margin
on total sales increased by 2.5% to 7.9%.
Europe: Laminates
Laminates full year revenues were 21.0% lower than prior year at £28.0m. The
business was adversely affected by a lack of promotional and packaging
development activity amongst brand owners in the premium consumer goods sector.
Demand increased in the second half of the financial year, with sales 7.0% ahead
of the first half although still 8.0% behind the second half last year.
Full year operating profits of £2.0m were £0.7m lower than the prior year,
although operating margins were just 0.5% lower at 7.3% as a result of improved
sales mix and tight control of costs.
North America
Reported revenues from US operations of £19.6m were 6.9% below last year and
13.8% lower at constant exchange rates. The US business was hit hard by the
economic recession with sales down 30.5% in the first six months, recovering in
the second half by 6.2% compared to the first half year.
Cost reduction measures, including the carry-over benefit from prior year
actions, combined with improved sales mix and lower material and utility prices
led to a return to profit in the second half and a reduction in full year losses
from £0.3m to £0.1m.
Asia Pacific
Sales originating in Asia Pacific of £8.3m were down 4.0% compared to the
previous 12 months (-12.2% at constant exchange rates).  Third party revenues
in China were 18.0% lower at constant exchange rates. Including shipments to
other API businesses, the decline in China sales was 11.3% after volumes in the
second half of the financial year recovered by 19.3% compared to the first
half. Elsewhere in the region, Australia had a strong year, partly offset by
reduced sales in New Zealand.
Reported operating losses in the region reduced by £0.3m to £2.3m as a result of
lower regional management costs and a higher contribution from Australia. At
constant exchange rates, the year-on-year improvement would have been £0.4m.
In China, contribution from the second half growth in volumes was negated by
steep increases in raw material costs, price erosion on domestic sales and the
impact of unfavourable exchange rate movements on export margins.
As a result of continuing heavy losses, the Board has impaired the fixed assets
of the business in Shanghai in the period's financial statements and commenced a
strategic review of options for the Group's investment in its 51% owned Chinese
subsidiary.
Central Costs
Central costs before exceptional items reduced by £0.3m to £1.2m mostly as a
result of the full year effect of cost saving initiatives started last year.
Exceptional Items
Exceptional items for the 12 months to 31 March 2010 of £6.0m includes a
non-cash impairment charge of £5.1m in relation to the carrying value of plant
and equipment at the Group's subsidiary in Shanghai. Of this, 49% is for the
account of minority shareholders in the venture, leaving the impact on the
Group's shareholders at £2.6m. Further details are provided in note 3.
The remaining £0.9m includes £0.6m of expenses associated with cost reduction
programmes in UK and US operations initiated in 2008. An additional £0.3m was
incurred in relation to the Shanghai factory relocation project which completed
during 2009.
Impairment
With the exception of the impairment to fixed assets in China, the Board
considers that no other impairments to goodwill or asset carrying values are
necessary.
Finance Costs
Net finance costs for the 12 months ended 31 March 2010 were £3.1m, including
£1.1m in respect of defined benefit pension schemes. Compared with the prior
year, finance costs increased by £0.2m with interest payable on bank loans
decreasing by £0.1m and pension fund finance costs increasing by £0.4m. The
increase in pension fund interest relates to non cash accounting entries
associated with lower net returns on UK pension scheme assets. Note 9 provides
further information on pension scheme financing costs.
Loss before Taxation
The loss before taxation amounted to £8.2m, compared to a profit of £2.2m in the
year ended 31 March 2009. The difference is a result of exceptional costs of
£6.0m against a net gain of £4.7m in the previous year. Excluding the impact of
exceptional items, the loss before tax was £2.2m compared to a loss of £2.5m in
the prior year.
Taxation
For the year to 31 March 2010, a tax credit of £6.3m has been credited to the
profit and loss account compared with a charge of £4.3m for the 12 months to 31
March 2009.
A provision of £3.3m was taken in the accounts for the year ending 31 March
2009 in respect of a potential tax liability on the sale of land in Shanghai
after the Company's manufacturing operations were relocated to a new site. On
completion of a review by the authorities, it was determined that no tax
liability had arisen and the provision has therefore been reversed.
A tax credit of £2.9m reflects increased recognition of deferred tax assets as
trading results have improved in the US and Europe and compares to a tax charge
in respect of deferred tax assets of £1.0m in the prior year. Of the £2.9m,
£2.6m relates to operations based in the UK and £0.3m relates to the US.
Earnings per Share
Basic and diluted earnings per share from continuing operations amounted to
0.2p for the 12 months to 31 March 2010 compared to a loss per share of 3.7p for
the year to 31 March 2009. Including discontinued operations, earnings per
share was unchanged at 0.2p compared to a loss per share of 5.5p in the prior
year.
Cash Flow and Net Debt
For the 12 month period to 31 March 2010, the Group reported a net cash outflow
from operating activities of £0.8m compared to an inflow of £6.4m for the year
to 31 March 2009.
Working capital increased by £3.7m, primarily reflecting a higher exit rate of
activity and a partial reversal of the £5.8m reduction during the prior year.
Year end working capital efficiency, measured by reference to the trailing three
month annualised sales, was 16.8% compared to 15.0% at 31 March 2009.
Capital investment in the year amounted to £1.2m compared to £4.1m for the year
ended 31 March 2009 and depreciation of £3.8m as the Group continued to focus on
cost management and improving utilisation of existing installed capacity.
Annual cash interest expense reduced by £1.0m to £1.5m due primarily to timing
differences on loan maturities and costs associated with refinancing.
Net debt increased during the year by £3.8m to £18.5m at 31 March 2010.
Capital expenditure, trading losses and dividend payments, all relating to
China, accounted for £3.1m of the increase.
Gearing increased to 107% compared to 56% at 31 March 2009, including a 31%
impact arising from the increase in the IAS19 pension deficit and the associated
reduction in reported net assets.
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 geographic regions, the UK,
North America and China.
The Group extended its main UK banking agreement in November 2009 for a 3.5 year
period to July 2013. Facilities at 31 March 2010 totalled £17.9m including an
amortising term loan of £7.0m repayable from October 2010 to July 2013 (£4.25m
due on or after April 2013), a term loan of £7.4m repayable July 2013 and a
multi-option overdraft facility of £3.5m renewable in November 2010. UK
borrowings are secured against the Group's UK assets.
As part of the UK refinancing, warrants for ordinary shares were issued to
Barclays plc at an exercise price of 1p and representing 4.8% of post warrant
share capital.
The North America banking facilities at 31 March 2010 comprised a term loan of
$0.35m repayable within 1 year and a variable asset-based facility up to $5.0m
depending on the level of working capital. At 31 March 2010 the amount
available was $2.1m with lending secured on US working capital, plant and
equipment. Since the year end, the US business has completed a new 3.5 year
agreement comprising a $2.1m amortising loan and a $5.5m asset based overdraft
facility. These new facilities are secured on working capital, plant and
equipment and the Kansas property.
In China, a revolving working capital facility of RMB 42m (approximately £4.0m)
is secured against property assets and is repayable within 1 year.
Bank Covenants
The Group's main lending arrangements are with Barclays Bank plc in the UK.
Total lending under committed and revolving facilities is subject to four
quarterly financial covenant targets reflecting the financial performance of the
Group, after excluding the US and China businesses. Covenants are for Debt
Cover, Total Service Payments Cover, Senior Interest Cover and Tangible Net
Worth. New covenant limits were established for the full 3.5 years during the
facilities re-negotiation in November 2009. At 31 March 2010, Debt Cover, the
ratio of net debt to 12 month trailing EBITDA was 2.61 (2009: 2.74) and this and
all other covenant ratios were comfortably within facility limits.
US facilities are subject to covenant obligations relating to profitability and
net worth. Throughout the year to 31 March 2010 the US business met its
covenant obligations to the lender, HSBC.
The China facilities are subject to a limited number of general financial
covenants which have been complied with throughout the year.  In light of the
continued poor trading performance of the Chinese business, quarterly business
reviews with the Bank of China were instituted during April 2010.
Foreign Currency Exchange Rates
Exchange rates used for the translation of results and assets of US, Euro and
China based operations are shown below.
+--------------------------------+---------------------------+
 |Average |Closing |
+----------+-------------+-+----------------+-------------+-------------+
|Rate to £1|12 months to | |12 months to |As at |As at |
| |31 March 2010| | 31 March  2009|31 March 2010|31 March 2009|
+----------+-------------+-+----------------+-------------+-------------+
|US $ |1.59 |Â |1.72 |1.52 |1.43 |
+----------+-------------+-+----------------+-------------+-------------+
|Euro |1.13 |Â |1.21 |1.12 |1.08 |
+----------+-------------+-+----------------+-------------+-------------+
|RMB |10.86 |Â |11.81 |10.35 |9.79 |
+----------+-------------+-+----------------+-------------+-------------+
Pensions
The Group operates a number of pension schemes for the benefit of its past and
current employees. At 31 March 2010 the Group's IAS19 gross pension liability
was assessed at £16.4m (2009: £7.1m) with a net liability of £11.8m (2009:
£5.1m) after accounting for a deferred tax asset of £4.6m (2009: £2.0m). While
scheme asset values improved significantly during the year (+£13.1m), this was
insufficient to compensate for an increase in assessed liabilities of £22.5m
arising from a less favourable outlook on inflation and discount rates.
The API Group plc Pension and Life Assurance Fund is a defined benefit scheme
operated by the Group in the UK which has been closed to new members since
October 2006 and was closed to future service accrual on 31 December 2008. The
IAS19 liability at 31 March 2010 relating to this scheme was £15.7m (2009:
£6.3m).  Liabilities have been calculated using assumptions on discount rates
of 5.65% (2009: 6.85%) and an inflation rate of 3.5% (2009: 2.8%).
The UK scheme's last triennial valuation, at 30 September 2007, calculated a
funding deficit of £8.7m on a continuing basis. Following that valuation, the
Company and Scheme Trustees agreed a funding plan and schedule of contributions
aimed at reducing the deficit to zero over a 10 year period. During the year to
31 March 2010, the Group made additional contributions into the scheme of
£0.3m. This contribution rate will increase to £0.7m per year from January
2011. The Company also pays all pension related administration fees on behalf of
the Fund. Â The next valuation is scheduled for September 2010.
A small number of current and past US employees are members of a closed, defined
benefit pension plan. Details of the net deficit of £0.7m (2009: £0.8m) are
included in Note 9. In addition, current and past employees covered by union
contracts at the Group's manufacturing site in Rahway, New Jersey are members of
a multi-employer defined benefit pension plan which remains open to future
accrual and new membership under the terms of the site's collective bargaining
agreement.
Group Income Statement
for the year ended 31 March 2010
Year ended  Year ended
   31 March 2010   31 March 2009
 Note £'000  £'000
Continuing operations
Revenue 2 84,574 Â 93,451
Cost of sales  (66,627)  (74,780)
---------------- ----------------
Gross profit  17,947  18,671
Distribution costs  (2,307)  (2,806)
Administrative expenses  (14,776)  (15,771)
---------------- ----------------
Operating profit before exceptional items 2 864 Â 94
Exceptional items 3 (5,976) Â 4,699
---------------- ----------------
Operating (loss)/profit from continuing
operations  (5,112)  4,793
Finance revenue 4 40 Â 310
Finance costs 4 (3,129) Â (2,875)
---------------- ----------------
  (3,089)  (2,565)
---------------- ----------------
(Loss)/profit on continuing activities
before taxation  (8,201)  2,228
Tax credit/(expense) 5 6,309 Â (4,314)
---------------- ----------------
Loss from continuing operations  (1,892)  (2,086)
Discontinued operations
Loss from discontinued operations 6 - Â (1,298)
---------------- ----------------
Loss for the period  (1,892)  (3,384)
---------------- ----------------
Attributable to:
Profit/(loss) attributable to equity
holders of the parent  124  (3,861)
(Loss)/profit attributable to minority
equity interest  (2,016)  477
---------------- ----------------
Total loss for the period  (1,892)  (3,384)
---------------- ----------------
Earnings per share (pence)
Basic and diluted earnings/(loss) per
share from continuing operations 7 0.2 Â (3.7)
Basic and diluted earnings/(loss) per
share on profit/(loss) for the period 7 0.2 Â (5.5)
Group Statement of Comprehensive Income
for the year ended 31 March 2010
Year ended   Year ended
  31 March 2010  31 March 2009
               £'000              £'000
Loss for the period     (1,892)  (3,384)
--------------------- --------------------
Exchange differences on
retranslation of foreign operations  (565)  5,973
Change in fair value of effective
cash flow hedge (interest rate swap) Â 108 Â (360)
Actuarial losses on defined benefit
pension plans  (9,085)  (3,925)
Tax on items taken directly to or
transferred from equity  2,544  1,099
--------------------- --------------------
Other comprehensive (expense)/income
for the period, net of tax  (6,998)  2,787
--------------------- --------------------
Total recognised expense for the
year  (8,890)  (597)
--------------------- --------------------
Attributable to:
Equity holders of the parent  (6,492)  (3,367)
Minority equity interests  (2,398)  2,770
--------------------- --------------------
  (8,890)  (597)
--------------------- --------------------
Group Balance Sheet
at 31 March 2010
  31 March 2010  31 March 2009
 Note £'000  £'000
Assets
Non-current assets
Property, plant and equipment  28,772  38,342
Intangible assets - goodwill  5,188  5,188
Trade and other receivables  134  209
Deferred tax assets 5 7,738 Â 2,318
--------------- --------------
  41,832  46,057
--------------- --------------
Current assets
Trade and other receivables  16,697  14,492
Inventories  13,110  12,699
Cash at bank and in hand  1,041  2,234
--------------- --------------
  30,848  29,425
--------------- --------------
--------------- --------------
Total assets 2 72,680 Â 75,482
--------------- --------------
Liabilities
Current liabilities
Trade and other payables  18,444  20,368
Financial liabilities 8 5,416 Â 5,747
Income tax payable  346  4,259
--------------- --------------
  24,206  30,374
--------------- --------------
Non-current liabilities
Financial liabilities 8 14,404 Â 11,539
Deferred tax liabilities 5 256 Â 256
Provisions  97  61
Deficit on defined benefit pension plans 9 16,406 Â 7,081
--------------- --------------
  31,163  18,937
--------------- --------------
--------------- --------------
Total liabilities  55,369  49,311
--------------- --------------
--------------- --------------
Net assets  17,311  26,171
--------------- --------------
Equity
Called up share capital  701  701
Share premium  7,136  7,136
Other reserves  8,595  8,595
Foreign exchange reserve  3,309  3,492
Retained loss  (7,805)  (1,526)
--------------- --------------
API Group shareholders' equity  11,936  18,398
Minority interest  5,375  7,773
--------------- --------------
Total equity  17,311  26,171
--------------- --------------
Group Statement of Changes in Equity
for the year ended 31 March 2010
 |  |  |  |  |  |
------------------+---------------+---------------+---------------+---------------+---------------+---------------
| | | | Foreign| | Total
| Equity share| | | exchange| Retained| share-holders'
 | capital| Share premium| Other reserves| reserve| earnings| equity
------------------+---------------+---------------+---------------+---------------+---------------+---------------
|Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â |Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â |Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â |Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â |Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â |
 | £'000| £'000| £'000| £'000| £'000| £'000
------------------+---------------+---------------+---------------+---------------+---------------+---------------
 |  |  |  |  |  |
------------------+---------------+---------------+---------------+---------------+---------------+---------------
At 1 April 2008 |8,998 |7,136 |298 |(188) |5,568 |21,812
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Loss for the year|- |- |- |- |(3,861) |(3,861)
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Other | | | | | |
comprehensive | | | | | |
income/(expense):|Â |Â |Â |Â |Â |
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Exchange | | | | | |
differences on | | | | | |
retranslation of | | | | | |
foreign | | | | | |
operations |- |- |- |3,680 |- |3,680
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Change in fair | | | | | |
value of | | | | | |
effective cash | | | | | |
flow hedge | | | | | |
(interest rate | | | | | |
swap) |- |- |- |- |(360) |(360)
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Actuarial losses | | | | | |
on defined | | | | | |
benefit pension | | | | | |
plans |- |- |- |- |(3,925) |(3,925)
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Tax on items | | | | | |
taken directly to| | | | | |
equity |- |- |- |- |1,099 |1,099
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Total | | | | | |
comprehensive | | | | | |
income/(expense) | | | | | |
for the year |- |- |- |3,680 |(7,047) |(3,367)
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Buy back of | | | | | |
deferred shares |(8,297) |- |8,297 |- |- |-
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Share based | | | | | |
payments |- |- |- |- |(47) |(47)
------------------+---------------+---------------+---------------+---------------+---------------+---------------
At 31 March 2009 |701 |7,136 |8,595 |3,492 |(1,526) |18,398
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Profit for the | | | | | |
year |- |- |- |- |124 |124
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Other | | | | | |
comprehensive | | | | | |
income/(expense):|Â |Â |Â |Â |Â |
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Exchange | | | | | |
differences on | | | | | |
retranslation of | | | | | |
foreign | | | | | |
operations |- |- |- |(183) |- |(183)
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Change in fair | | | | | |
value of | | | | | |
effective cash | | | | | |
flow hedge | | | | | |
(interest rate | | | | | |
swap) |- |- |- |- |108 |108
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Actuarial losses | | | | | |
on defined | | | | | |
benefit pension | | | | | |
plans |- |- |- |- |(9,085) |(9,085)
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Tax on items | | | | | |
taken directly to| | | | | |
equity |- |- |- |- |2,544 |2,544
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Total | | | | | |
comprehensive | | | | | |
expense for the | | | | | |
year |- |- |- |(183) |(6,309) |(6,492)
------------------+---------------+---------------+---------------+---------------+---------------+---------------
Share based | | | | | |
payments |- |- |- |- |30 |30
------------------+---------------+---------------+---------------+---------------+---------------+---------------
At 31 March 2010 |701 |7,136 |8,595 |3,309 |(7,805) |11,936
+---------------+---------------+---------------+---------------+---------------+---------------
 | |  | |  | |
--------------------+-+------------------+-+---------------+-+-----------------
 | | Shareholders'| | Minority| | Total equity
| | equity| | interest| |
--------------------+-+------------------+-+---------------+-+-----------------
| |Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â | |Â Â Â Â Â Â Â Â Â Â Â Â | |
 | |£'000 | |£'000 | |£'000
--------------------+-+------------------+-+---------------+-+-----------------
 | |  | |  | |
--------------------+-+------------------+-+---------------+-+-----------------
At 1 April 2008 |Â |21,812 |Â |5,887 |Â |27,699
--------------------+-+------------------+-+---------------+-+-----------------
Total comprehensive|Â | | | | |
(expense)/income | | | | | |
for the year | |(3,367) |Â |2,770 |Â |(597)
--------------------+-+------------------+-+---------------+-+-----------------
Dividends |Â |- |Â |(884) |Â |(884)
--------------------+-+------------------+-+---------------+-+-----------------
Share based |Â | | | | |
payments | |(47) |Â |- |Â |(47)
--------------------+-+------------------+-+---------------+-+-----------------
At 31 March 2009 |Â |18,398 |Â |7,773 |Â |26,171
--------------------+-+------------------+-+---------------+-+-----------------
Total comprehensive|Â | | | | |
expense for the | | | | | |
year | |(6,492) |Â |(2,398) |Â |(8,890)
--------------------+-+------------------+-+---------------+-+-----------------
Share based |Â | | | | |
payments | |30 |Â |- |Â |30
--------------------+-+------------------+-+---------------+-+-----------------
At 31 March 2010 |Â |11,936 |Â |5,375 |Â |17,311
| +------------------+ +---------------+ +-----------------
Group Cash Flow Statement
for the year ended 31 March 2010
| |Year ended | |Year ended
 | |31 March 2010| |31 March 2009
-----------------------------------------------+-+-------------+-+-------------
 | |£'000 | |£'000
-----------------------------------------------+-+-------------+-+-------------
 | | | |
-----------------------------------------------+-+-------------+-+-------------
Operating activities |Â |Â |Â |
-----------------------------------------------+-+-------------+-+-------------
Group operating (loss)/profit |Â |(5,112) |Â |4,793
-----------------------------------------------+-+-------------+-+-------------
Adjustments to reconcile group operating | | | |
profit/(loss) to | | | |
net cash flows from operating activities |Â |Â |Â |
-----------------------------------------------+-+-------------+-+-------------
Depreciation of property, plant and equipment |Â |3,820 |Â |3,905
-----------------------------------------------+-+-------------+-+-------------
Impairment of property, plant and equipment |Â |5,083 |Â |-
-----------------------------------------------+-+-------------+-+-------------
Impairment of goodwill |Â |- |Â |1,292
-----------------------------------------------+-+-------------+-+-------------
Loss/(profit) on disposal of property, plant | | | |
and equipment |Â |10 |Â |(7,780)
-----------------------------------------------+-+-------------+-+-------------
Share-based payments |Â |30 |Â |(47)
-----------------------------------------------+-+-------------+-+-------------
Difference between pension contributions paid | | | |
and amounts recognised in the income statement|Â |(854) |Â |(1,021)
-----------------------------------------------+-+-------------+-+-------------
(Increase)/decrease in inventories |Â |(590) |Â |1,310
-----------------------------------------------+-+-------------+-+-------------
(Increase)/decrease in trade and other | | | |
receivables |Â |(2,302) |Â |5,224
-----------------------------------------------+-+-------------+-+-------------
Decrease in trade and other payables |Â |(862) |Â |(731)
-----------------------------------------------+-+-------------+-+-------------
Movement in provisions |Â |36 |Â |(92)
-----------------------------------------------+-+-------------+-+-------------
Cash (used in)/generated from operations |Â |(741) |Â |6,853
-----------------------------------------------+-+-------------+-+-------------
Income taxes paid |Â |(96) |Â |(405)
-----------------------------------------------+-+-------------+-+-------------
Net cash flow from operating activities |Â |(837) |Â |6,448
-----------------------------------------------+-+-------------+-+-------------
 | | | |
-----------------------------------------------+-+-------------+-+-------------
Investing activities |Â |Â |Â |
-----------------------------------------------+-+-------------+-+-------------
Interest received |Â |40 |Â |35
-----------------------------------------------+-+-------------+-+-------------
Purchase of property, plant and equipment |Â |(1,193) |Â |(4,110)
-----------------------------------------------+-+-------------+-+-------------
Sale of property, plant and equipment |Â |30 |Â |8,706
-----------------------------------------------+-+-------------+-+-------------
Payment of legal costs in respect of | | | |
discontinued operations |Â |(12) |Â |(1,171)
-----------------------------------------------+-+-------------+-+-------------
Net cash flow from investing activities |Â |(1,135) |Â |3,460
-----------------------------------------------+-+-------------+-+-------------
 | | | |
-----------------------------------------------+-+-------------+-+-------------
Financing activities |Â |Â |Â |
-----------------------------------------------+-+-------------+-+-------------
Interest paid |Â |(1,458) |Â |(2,512)
-----------------------------------------------+-+-------------+-+-------------
Dividends paid to minority interests |Â |(434) |Â |(620)
-----------------------------------------------+-+-------------+-+-------------
New borrowings |Â |7,131 |Â |1,693
-----------------------------------------------+-+-------------+-+-------------
Repayment of borrowings |Â |(3,850) |Â |(9,594)
-----------------------------------------------+-+-------------+-+-------------
Net cash flow from financing activities |Â |1,389 |Â |(11,033)
-----------------------------------------------+-+-------------+-+-------------
 | | | |
-----------------------------------------------+-+-------------+-+-------------
Decrease in cash and cash equivalents |Â |(583) |Â |(1,125)
-----------------------------------------------+-+-------------+-+-------------
Effect of exchange rates on cash and cash | | | |
equivalents |Â |(114) |Â |261
-----------------------------------------------+-+-------------+-+-------------
Cash and cash equivalents at the beginning of | | | |
the period |Â |151 |Â |1,015
-----------------------------------------------+-+-------------+-+-------------
Cash and cash equivalents at the end of the | | | |
period |Â |(546) |Â |151
-----------------------------------------------+-+-------------+-+-------------
 | | | |
Cash and cash equivalents comprise the following:
   31 March  h
        31 March 2010  2009  9
             £'000                 £'000
Cash at bank and in hand 1,041 Â 2,234
Bank overdrafts (1,587) Â Â (2,083)
----------------------- --------------------------
 (546)  151
----------------------- --------------------------
Notes to the consolidated financial statements
1. Preparation of financial statements
Publication of abridged accounts
The Group's financial statements for the year ended 31 March 2010 were
authorised for issue by the Board of Directors on 2 June 2010 and the balance
sheet was signed on the Board's behalf by A Turner.
The preliminary announcement figures for the year ended 31 March 2010 and the
comparative figures for the year ended 31 March 2009 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 2010. Statutory accounts for
the year ended 31 March 2009 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 2010 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 2010 will be posted
to shareholders by 21 June 2010 prior to the Annual General Meeting on 21 July
2010. Copies of the Annual Report and Accounts will be available to members of
the public from 22 June 2010 at the Group's registered office at Second Avenue,
Poynton Industrial Estate, Poynton, Cheshire SK12 1ND.
API Group plc is a public company incorporated and domiciled in England &
Wales. The company's ordinary shares are traded on the Alternative Investment
Market of the London Stock Exchange.
Basis of preparation
The Group's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) issued by the International
Accounting Standards Board (IASB) as adopted by the European Union as they apply
to the financial statements of the Group for the year ended 31 March 2010 and
applied in accordance with the Companies Act 2006. The Group has applied
optional exemptions available to it under IFRS 1.
The principal accounting policies which apply in preparing the financial
statements for the year ended 31 March 2010 are consistent with those disclosed
in the Group's audited accounts for the year ended 31 March 2009.
The consolidated financial statements are presented in sterling and all values
are rounded to the nearest thousand (£'000) except when otherwise indicated.
The Group meets its day-to-day working capital requirements through overdraft
and loan facilities, as detailed in Note 8. The principal facilities relate to
the UK. In November 2009, these were extended to July 2013. Since the
year-end, new facilities were put in place in the US business which extend to
November 2013.
While the Group's end markets have demonstrated some recovery in the second half
of the financial year to March 2010, a sustained recovery remains uncertain.
The Group's forecasts and projections, allowing for possible deterioration of
trading performance, show that the Group has a reasonable expectation of being
able to operate within the level of currently available facilities and within
the covenant targets.
Accordingly, 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 2010 are consistent with those disclosed
in the Group's audited accounts for the year ended 31 March 2009.
During the current year, the Group has adopted IAS 1 Revised Presentation of
Financial Statements (effective 1 January 2009). The revised Standard separates
owner and non-owner changes in equity. The Statement of Changes in Equity
includes only details of transactions with owners, with non-owner changes in
equity shown as a single line. In addition, the Standard introduces the
Statement of Comprehensive Income. It presents all items of Comprehensive
Income, either in one statement, or as two linked statements. The Group has
elected to present two statements.
The Group also adopted IFRS 8 Operating Segments (effective 1 January 2009).
 This Standard requires disclosure of information about the Group's operating
segments and replaces the requirement to determine primary and secondary
reporting segments of the Group. Adoption of this Standard does not have any
effect on the financial position or performance of the Group. Summary segmental
information is presented in Note 2.
In addition, a number of new and amended standards and interpretations came into
effect for accounting periods commencing on or after 1 April 2009. Insofar as
they are relevant to the Group's operations, adoption of these standards and
interpretations did not have any material effect on the financial statements of
the Group.
2. Segmental analysis
The Group produces monthly management information to enable the Board, including
the Chief Executive Officer to monitor the financial performance of the
constituent parts of the Group. This information is analysed by three distinct
independently managed segments in accordance with the location of assets:
Europe, North America and Asia Pacific, with the Europe segment being analysed
further by the major product categories of Foils and Laminates.
Revenue
Year ended
       31 March Year ended
  2010  31 March 2009
     Continuing and
 Continuing and Total Total  nd Total
  £'000  £'000
Total revenue by origin
Europe
   Foils  31,124  32,453
   Laminates  28,000  35,424
   Intra-Europe  (373)  (2,440)
--------------------- --------------------
  58,751  65,437
North America  20,020  21,855
Asia Pacific  9,239  9,399
--------------------- --------------------
  88,010  96,691
--------------------- --------------------
Inter-segmental revenue
Europe
   Foils  2,427  4,086
   Laminates  -  -
   Intra-Europe  (373)  (2,440)
--------------------- --------------------
  2,054  1,646
North America  469  852
Asia Pacific  913  742
--------------------- --------------------
  3,436  3,240
--------------------- --------------------
External revenue by origin
Europe
   Foils  28,697  28,367
   Laminates  28,000  35,424
--------------------- --------------------
  56,697  63,791
North America  19,551  21,003
Asia Pacific  8,326  8,657
--------------------- --------------------
Segment revenue  84,574  93,451
--------------------- --------------------
Revenue by products
Total revenue
Foils  56,947  60,425
Laminates  28,000  35,424
--------------------- --------------------
  84,947  95,849
--------------------- --------------------
Inter-segmental revenue
Foils  373  2,398
Laminates  -  -
--------------------- --------------------
  373  2,398
--------------------- --------------------
External revenue
Foils  56,574  58,027
Laminates  28,000  35,424
--------------------- --------------------
  84,574  93,451
--------------------- --------------------
2. Segmental analysis (continued)
Revenue (continued)
Year ended Year ended
         31 March 2010  31 March 2009
  Continuing and
 Continuing and Total Total
  £'000  £'000
External revenue by
destination
UK Â 25,967 Â 31,828
Rest of Europe  28,703  29,341
Americas  18,697  19,831
Asia Pacific  9,757  10,471
Africa  1,450  1,980
----------------------- ---------------------
  84,574  93,451
----------------------- ---------------------
No revenue arises from discontinued businesses in the years ended 31 March 2010
and 31 March 2009.
All revenue is derived from the sale of goods.
During the years ended 31 March 2010 and 31 March 2009 there was one major
customer, reported in the Laminates segment, which comprised 10% or more of the
total external revenue, amounting to £11,761,000 (2009: £12,156,000).
Segment result
Year ended  Year ended
  31 March 2010   31 March 2009
 Continuing and Total  Continuing and Total
 £'000  £'000
Operating profit/(loss)
Europe
   Foils 2,471   1,753
   Laminates 2,034   2,772
------------------------ ---------------------
                 4,505   4,525
North America   (64)   (276)
Asia Pacific      (2,363)  (2,612)
------------------------ ---------------------
Segment result 2,078 Â 1,637
Central costs (1,214) Â (1,543)
------------------------ ---------------------
Total operating profit before
exceptional items 864 Â 94
------------------------ ---------------------
Assets
Europe
   Foils  21,798  22,788
   Laminates  9,480  8,715
---------- ---------
  31,278  31,503
North America  14,877  16,017
Asia Pacific  17,106  23,410
---------- ---------
Segment assets  63,261  70,930
Unallocated  9,419  4,552
---------- ---------
  72,680  75,482
---------- ---------
3. Exceptional items
 Year ended       Year ended
 31 March 2010  31 March 2009
              £'000               £'000
Exceptional items credited to/(charged
against) operating profit comprise:
Relocation of China factory (267) Â 6,537
Impairment of property, plant and
equipment (5,083) Â -
Impairment of goodwill - Â (1,292)
Restructuring of operating businesses (626) Â (546)
--------------------- --------------------
 (5,976)  4,699
--------------------- --------------------
Relocation of China factory
The charge in respect of the current year relates primarily to consultancy
costs. Prior year figures comprise a net gain of £7,827,000 on sale of vacated
land at the old factory location and relocation and restructuring costs of
£1,290,000 associated with the move.
Impairment of property, plant and equipment
An impairment charge has been taken in the period accounts in respect of
manufacturing operations in China. Following the last two years of significant
losses and based on the forward assumptions for the cash flows of the China
business, the carrying value of the property plant and equipment could not be
justified compared to the value in use calculations. As the fair value less
costs to sell is in excess of the value in use calculations, the fair value has
been used. As a result, the value of property plant and equipment of the China
business (£14.8m) has been written down by £5.1m at 31 March 2010. A reduction
in the minority interest representing 49% of this impairment has also been
recorded (£2.5m).
Impairment of goodwill
In the year to 31 March 2009, goodwill associated with the company's investment
in China was impaired and written down to zero value.
Restructuring of operating businesses
Restructuring costs comprise redundancy and other costs incurred in in
rationalising the Group's activities in line with reduced demand, primarily
within UK and US operations.
4. Finance revenue and finance costs
      Year ended Year ended
 31 March 2010  31 March 2009
                 £'000  £'000
Finance revenue
Interest receivable on bank and other
short term cash deposits 2 Â 35
Other interest receivable 38 Â -
Gains arising on forward foreign
currency contracts - Â 30
Gain on interest rate swap - Â 245
------------------------- --------------
 40  310
------------------------- --------------
Finance costs
Interest payable on bank loans and
overdrafts (1,942) Â (2,011)
Other interest payable (49) Â (138)
Finance cost in respect of defined
benefit pension plans (1,138) Â (726)
------------------------- --------------
 (3,129)  (2,875)
------------------------- --------------
5. Taxation
(a) Tax on loss on ordinary activities
      Year ended       Year ended
 31 March 2010  31 March 2009
                  £'000                   £'000
Tax (charged)/credited in
the income statement
Current income tax
UK Corporation tax - refund
in respect of prior-years 46 Â -
Foreign tax - current year
charge (134) Â (3,442)
                   -
reversal of prior-year tax
charge 3,505 Â 136
------------------------- ---------------------------
Total current income tax
credit/(charge) 3,417 Â (3,306)
------------------------- ---------------------------
Deferred tax
Origination and reversal of
temporary differences
- defined benefit pension
plan 80 Â (134)
- tax losses 1,383 Â (779)
- capital allowances 1,429 Â 107
- other short term
temporary differences - Â (202)
------------------------- ---------------------------
Total deferred tax
credit/(charge) 2,892 Â (1,008)
------------------------- ---------------------------
Tax credit/(charge) in the
income statement
(continuing operations) 6,309 Â (4,314)
------------------------- ---------------------------
The reversal of prior-year foreign tax charge relates to the Group's subsidiary
in China. In the year to 31 March 2009, a provision of Rmb 38m was made in
respect of the profit on sale of surplus property in Shanghai after the
relocation of operations to a new site. During the 12 months to 31 March 2010,
documentation has been received from the Chinese authorities which confirms that
no specific land taxation is payable in respect of this transaction.
Accordingly, the provision has been released.
The deferred tax credit largely relates to the UK. The UK group has now traded
profitably for the last 2 years and projections indicate that this will continue
for the foreseeable future. Accordingly, a deferred tax asset has been
recognised which represents approximately 3 years' profits at a rate of 28%.
(b) Deferred tax
The deferred tax included in the balance sheet is as follows:
31 March
        31 March 2010         2009
              £'000                 £'000
Deferred tax liability
Revaluation of fixed assets (256) Â (256)
----------------------- -----------------------
Deferred tax asset
Defined benefit pension plans 4,594 Â 1,983
Tax losses 1,715 Â 335
Capital allowances 1,429 Â -
----------------------- -----------------------
 7,738  2,318
----------------------- -----------------------
6. Discontinued operations
 Year ended
         31
 Year ended March
        31 March 2010   2009
 £'000  £'000
Profit/(loss) after tax for the period
from discontinued operations - Â -
Loss on disposal of discontinued
operations - Â (1,298)
----------------------- ---------
Loss for the period from discontinued
operations - Â (1,298)
----------------------- ---------
The loss on disposal of discontinued operations in the prior period relates to
legal fees incurred in defending a claim for breach of warranties in connection
with a business disposal made by the Group in 2005. The claim was settled in
March 2009.
7. Earnings per ordinary share
Basic earnings per share is calculated by dividing the net profit/(loss) for the
year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the net profit/(loss)
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on the conversion of all dilutive
potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
 Year ended
 Year ended          31 March
        31 March 2010   2009
             £'000              £'000
Net profit/(loss) attributable to
equity holders of the parent -
continuing operations 124 Â (2,563)
Loss attributable to equity holders
of the parent - discontinued
operations - Â (1,298)
----------------------- -------------------
Net profit/(loss) attributable to
equity holders of the parent 124 Â (3,861)
----------------------- -------------------
Year ended
 Year ended 31 March
        31 March 2010  2009
 No  No
Basic weighted average number of ordinary
shares 70,068,505 Â 70,068,505
Dilutive effect of employee share options 3,049,008 Â -
Dilutive effect of warrants 3,506,336 Â -
----------------------- -----------
Diluted weighted average number of shares 76,623,849 Â 70,068,505
----------------------- -----------
The warrants are those issued to Barclays in conjunction with the extension of
the UK banking facilities.
In 2009, the diluted weighted average number of shares is equivalent to the
basic weighted average number of shares, as a dilution would reduce the loss per
share.
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.
The weighted average number of shares excludes the shares owned by the API Group
plc No.2 Employee Benefit Trust (58,221; 2009: 58,221).
In the current year the basic and diluted earnings per share are equivalent,
within one decimal place. In 2009, the basic and diluted losses per share are
equivalent as the average number of shares is the same in both cases.
Earnings/(loss) per ordinary share
 Year ended
 Year ended             31 March
 31 March 2010   2009
            pence                pence
Continuing operations
Basic and diluted earnings/(loss) per
share 0.2 Â (3.7)
Discontinued operations
Basic and diluted earnings/(loss) per
share - Â (1.8)
Total
Basic and diluted earnings/(loss) per
share 0.2 Â (5.5)
8. Financial liabilities
         31 March
        31 March 2010   2009
             £'000                 £'000
Current
Bank overdrafts 1,587 Â 2,083
Current instalments due on
bank loans 3,679 Â 3,394
Interest rate swap 150 Â 270
----------------------- --------------------------
 5,416  5,747
----------------------- --------------------------
Non-current
Non-current instalments due on
bank loans 14,302 Â 11,449
Interest rate swap 102 Â 90
----------------------- --------------------------
 14,404  11,539
----------------------- --------------------------
In the UK, the Group has taken out an amortising interest rate swap contract on
borrowings of £5m as at 31 March 2010. This swaps floating rate borrowings at 1
month LIBOR with a fixed rate of 6.08% until 1 August 2010. A further interest
rate swap for a fixed amount of £5m has been taken out for the period 1 August
2010 until 1 November 2012. This swaps floating rate borrowings at 1 month
LIBOR with a fixed rate of 2.96%.
Bank loans
Bank loans comprise the following:
         31 March
        31 March 2010   2009
             £'000                 £'000
Term loans (UK) 14,372 Â 12,314
Term loans (China) 3,380 Â 2,042
Term loan (US) 229 Â 487
----------------------- --------------------------
 17,981  14,843
Less: current instalments due
on bank loans (3,679) Â (3,394)
----------------------- --------------------------
 14,302  11,449
----------------------- --------------------------
The Group's banking facilities comprise:
UK facilities
Following their renewal in November 2009, UK facilities comprise a term loan of
£7.0m repayable between October 2010 and July 2013 (2009: £5.5m repayable
between July 2009 and July 2010) and term loans of £7.4m repayable in July 2013
(2009: £7.5m repayable in July 2010). At 31 March 2010, £3.65m (2009: £7.5m) of
the term loans were denominated in US Dollars. In addition there is a multi
option overdraft facility of £3.5m (2009: £5.5m). Interest cost for the period
averaged 5.0% (2009: 2.35%) above LIBOR for term loans and 3.8% (2009: 2.35%)
above Base Rate for overdrafts.
China facilities
Under a facility of RMB 42.5m, fixed term loans totalling RMB 35m are
outstanding at 31 March 2010 (2009: RMB 20m). These loans are all repayable
within 12 months. The rate of interest is fixed at 4.8%.
US facilities
At 31 March 2010, US facilities comprised an amortising loan of $0.35m (2009:
$0.7m) repayable within 12 months and an overdraft facility of $5.0m (2009:
$5.0m), depending on the level of working capital. Interest rates for the
period were 4.0% (2009:0.75%) above prime for the term loan and 3.5% (2009:0.5%)
above prime for the overdraft. Since the year-end, the borrowings under these
facilities have been repaid and replaced with a new facility, comprising a $2.1m
amortising loan repayable by November 2013 and an overdraft facility of up to
$5.5m depending on the level of working capital.
In May 2010, following the completion of the US refinancing, $3.75m was
repatriated to the UK parent company. These funds have been partly used to
prepay a portion of the higher margin loans on the main UK bank facilities,
reducing total Group interest charges going forward and providing increased cash
and covenant headroom.
9. Deficit on defined benefit pension plans
The Group operates two defined benefit schemes, the API Group Pension and Life
Assurance Scheme in the UK and the API Foils Inc North American Pension Plan in
the US. Both of these schemes are closed to future accrual. The assets and
liabilities of the define benefit schemes are as follows:
         31 March
        31 March 2010   2009
             £'000              £'000
United Kingdom
Fair value of scheme assets 68,142 Â 55,312
Present value of scheme
liabilities (83,863) Â Â Â Â (61,630)
----------------------- -----------------------
 (15,721)  (6,318)
----------------------- -----------------------
United States
Fair value of scheme assets 1,779 Â 1,447
Present value of scheme
liabilities  (2,464)  (2,210)
 (685)  (763)
----------------------- -----------------------
Net pension liability  (16,406)  (7,081)
----------------------- -----------------------
The movements in the net pension liability are as follows:
Fair value of scheme assets
At beginning of year 56,759 Â 66,310
Expected return on net assets 3,541 Â 4,261
Employer contributions 406 Â 885
Contributions by employees - Â 336
Benefits paid (3,796) Â (3,675)
Actuarial gains and losses 13,070 Â (11,825)
Foreign currency differences (59) Â 467
----------- -----------
 69,921  56,759
----------- -----------
Present value of scheme liabilities
At beginning of year 63,840 Â 69,792
Current service cost - Â 363
Contributions by employees - Â 336
Gains on curtailment - Â (135)
Interest cost 4,232 Â 4,441
Benefits paid (3,796) Â (3,675)
Actuarial gains and losses 22,155 Â (7,899)
Foreign currency differences (103) Â 617
----------- ----------
 86,328  63,840
----------- ----------
[HUG#1421265]
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