Interim Results
(Thomson Reuters ONE) -
2nd December 2010
API Group plc - Interim results for the six months ended 30 September 2010
* Sales from continuing operations 24% ahead of last year at £47.0m (23% ahead
at constant exchange rates).
* Operating profits from continuing operations of £2.5m, against a loss of
£0.2m at the interim stage last year.
* All business units ahead of last year with a particularly strong performance
from Laminates. Foil margins down on preceding six months due to escalating
raw material costs.
* Profit before tax of £1.3m (2009/10 first half: loss of £1.8m).
* Net operating cash flow in the period of £2.7m reducing net debt to £14.4m
compared to £18.5m at March 2010 and £16.0m at September 2009. Debt cover
ratio on main UK borrowings down from 2.6 at March 2010 to 1.7.
* Decision to exit loss-making, foil manufacturing operation in China. Sale
of the Group's 51% shareholding at an advanced stage with completion
expected in December 2010.
* Loss from discontinued operations of £6.7m (£3.3m attributable to minority
interests), primarily asset write-downs and trading losses in China.
Commenting, API's Chief Executive, Andrew Turner said:
"The Group has continued to benefit from the recovery in market volumes after
the streamlining of the cost base during 2008 and 2009. Exiting the loss-making
joint venture in China will further strengthen the Group's performance.
Management is now focused on improving the quality and resilience of the
continuing businesses and exploiting opportunities for profitable growth.
While escalating raw material costs present a challenge in the short term, the
strong upturn in volumes at Laminates is particularly encouraging."
Enquiries:
+---------------------------+-----------------------------+--------------------+
|Andrew Turner |Chief Executive, API Group |+44 (0) 1625 650334 |
| |plc | |
+---------------------------+-----------------------------+--------------------+
|Chris Smith |Finance Director, API Group |+44 (0) 1625 650334 |
| |plc | |
+---------------------------+-----------------------------+--------------------+
|Philip Secrett / Colin |Grant Thornton Corporate |+44 (0) 20 7383 5100|
|Aaronson |Finance | |
+---------------------------+-----------------------------+--------------------+
|James Serjeant |Numis Securities |+44 (0) 20 7260 1000|
+---------------------------+-----------------------------+--------------------+
REPORT ON THE INTERIM RESULTS
FOR THE 6 MONTH PERIOD ENDED 30 SEPTEMBER 2010
GROUP INCOME STATEMENT
The presentation of the income statement has been amended to reflect an expected
change in the Group's portfolio of businesses. In June 2010, the Group announced
a strategic review of its 51% interest in Shanghai Shen Yong Stamping Foil
Company Limited located in China. During the review, the Board considered all
options for turning around the results of the operation, assessed future
prospects and investment needs and concluded that it would be in the best
interests of shareholders to exit the venture. Subsequently, a sale process was
conducted and at the time of going to press, negotiations were at an advanced
stage to divest the Group's shareholding. Results of the China subsidiary have
therefore been classified as discontinued in the income statement and
comparatives re-stated to reflect this treatment.
Continuing operations now comprise the European laminated packaging material
business, foil manufacturing and distribution operations based in the US and
Europe and foils distribution units located in the Asia Pacific region. The
latter have been incorporated into Foils Europe for reporting purposes.
Revenues from continuing operations, at £47.0m, were 23% higher than the same
period last year at constant exchange rates and 24% higher at actual exchange
rates. Revenues were also 14% ahead of the preceding six month period. All
businesses saw revenues rise year on year, with Laminates increasing sales by
42%, Foils Europe by 12% and Foils US by 20%. Operating profits from continuing
operations, before exceptional items, increased from £0.2m to £2.5m, translating
to an overall operating margin of 5.3%.
For the Group as a whole, profits increased as a result of the contribution from
higher revenues while improved sales mix partly offset the impact of rapidly
increasing raw material costs towards the end of the period.
Production costs rose by just over 5% to accommodate the 24% growth in revenues
and non factory overhead costs increased by £0.7m as a result of measures to
strengthen the sales force in anticipation of more favourable market conditions
combined with higher accruals for management incentive programs in line with the
improved results.
All business units contributed to the improvement in the Group's results, with
Laminates ahead £1.7m and the foils businesses in Europe and the US ahead £0.5m
and £0.3m respectively. Compared to the preceding six months, operating profits
were down £0.5m, despite higher volumes, due to increased raw material costs and
non factory overhead costs.
There were no exceptional items in the period, compared to the £0.4m of re-
organisation costs incurred in the first half of 2009/10.
Net financing costs of £1.1m were down £0.5m due to reduced debt service costs
(£0.3m) and lower pension related charges (£0.2m).
Net profit after tax from continuing operations was £1.1m compared to a loss of
£1.8m in the six months to September 2009. Relative to the second half of last
year, net profits from continuing operations were broadly unchanged after
adjusting for the recognition of an additional £2.8m of deferred tax assets at
March 2010.
Earnings per share for continuing operations were 1.5p (2009: loss of 2.5p).
REVIEW OF OPERATIONS
Europe: Laminates
After a quiet 2009/10, Laminates experienced a significant rebound in activity.
At £19.2m, interim sales were 42% ahead of the last year and 33% up on the
preceding six months. Investment in packaging development services paid
dividends, with a number of important projects coming to fruition, adding to a
recovery in demand for core product lines in the alcoholic drinks segment. With
improved sales mix and excellent cost control, operating results ended the first
half at £2.4m compared to £0.7m for the same period last year.
Europe: Foils
The Foils Europe reporting segment now includes results from the residual
operations in Asia Pacific since the Group's subsidiary in China has been
classified as discontinued.
Foils Europe sales, at £17.6m, were 12% higher at constant exchange rates
compared to the same period last year and unchanged on the preceding six month
period. Overall volumes, primarily reflecting activity in the packaging sector,
stabilised after a period of recovery and restocking post the 2008/9 recession.
All territories were ahead against last year's first half. Compared to the
second half of last year, further growth was registered in France, the UK, Hong
Kong and Australia whilst sales fell back in Italy. Security Holographics
revenues also declined against the previous six months due to the timing of
orders for certain key contracts.
Foils Europe operating profits increased from £0.4m to £1.0m, representing an
operating margin of 5.4%. The improvement was due to the contribution from
higher sales. Compared to a particularly strong preceding six months, profits
were down by just over a half due to weaker sales mix and especially increased
raw material costs. Market prices for polyester film increased by more than
50% over the period and are continuing to escalate due to global constraints on
supply which are not expected to abate until significant new capacity comes on
stream during late 2011/early 2012. So far, action to raise selling prices has
not kept pace with the speed and severity of cost increases, which has in turn
led to an erosion of margins. After successfully implementing one round of
price increases, management is now pressing ahead with a second round, with the
intention of restoring margins to acceptable levels.
North America
Sales from US operations continued their steady recovery from the collapse
experienced in late 2008. Revenues, at £11.7m, were 15% ahead of the same
period last year at constant exchange rates and 8.5% higher than the preceding
six months. Sales to the label and ink sectors were particularly encouraging,
partly offset by a drop in shipments to greeting card customers. Operating
results improved to breakeven from a loss of £0.3m at the interim stage last
year, although profits fell back compared to last year's second half as sales
growth was primarily satisfied from inventory draw-down and margins were eroded
by rising raw material costs. The US foils business is facing the same
challenge as Foils Europe in dealing with escalating polyester costs,
exacerbated by the ill-timed imposition of new import tariffs by the US
Department of Commerce. Pricing action is being taken to ensure rising input
costs are passed through to customers and margins restored to previous levels.
DISCONTINUED OPERATIONS
Third party sales originating from the operation in China were £4.1m, an
increase of 59% over last year and 33% over the preceding six months at constant
exchange rates. Despite the improved volumes and a lower depreciation charge
following the impairment of fixed assets at March 2010, losses reduced only
marginally to £1.0m due to declining margins and the impact of higher raw
material costs.
As with the income statement, the balance sheet has been re-classified and now
shows the China business as a disposal group and valued in line with expected
proceeds from the sale of the Group's 51% shareholding. As a result, assets have
been impaired by a further £5.9m, or £3.0m after accounting for minority
interests.
CASH FLOW AND BORROWINGS
Group net cash flow from operating activities was £2.7m (2009:£0.4m) including a
contribution from discontinued activities of £0.5m. Working capital was held
broadly flat in spite of the significant upturn in activity. As a result,
working capital efficiency, measured by reference to trailing three month sales,
improved to 11.2% from 12.7% at March 2010.
Capital expenditure at £0.6m was all spent in the continuing businesses, a £0.2m
increase over the same period last year. As the financial condition of the
Group improves, it is expected that the Board will start to consider an increase
in the rate of capital expenditure, especially in support of initiatives to
enhance the product range and to take advantage of growth opportunities.
Group net debt fell from £18.5m at March 2010 to £14.4m at 30 September 2010
assisted by the re-classification of £3.2m of net debt in China.
The Group's main lending arrangements are with Barclays Bank plc in the UK and
Wells Fargo in the US. Both facilities are in place until July 2013. In the
period since 31 March 2010, all covenant requirements were comfortably met. At
30 September 2010, debt cover, the ratio of borrowings to trailing 12 month
EBITDA, on the main UK facility was 1.7 times compared with 4.5 at September
2009 and 2.6 at March 2010.
PENSION DEFICIT
The IAS 19 valuation of the UK and US defined benefit pension schemes reduced
from £16.4m at March 2010 to £15.3m at 30 September 2010. Scheme assets were
broadly unchanged over the six month period with falling equity values offset by
growth in the value of bond investments.
Scheme liabilities reduced from £86.3m to £85.1m during the half year as
assumptions on UK inflation more than compensated for a lower discount rate.
The discount rate used to calculate the present value of future pension
obligations is benchmarked to market yields on AA rated corporate bonds. Yields
fell by 0.5% in the six months to 30 September 2010.
There were two changes to inflation assumptions, which contributed to a
reduction in calculated scheme liabilities. First, the long term outlook for UK
inflation fell by 0.6% and secondly, the basis of indexation used for certain UK
scheme benefits was revised from the RPI measure of inflation to the lower CPI.
The latter change is a consequence of an announcement by the UK government in
July 2010 to the effect that CPI is to be adopted as the basis of "statutory
inflation". A detailed review of the impact of that decision on the API scheme
has been carried and, after receiving independent advice, the Board is satisfied
that it is valid to adopt CPI for certain elements of the scheme. The effect of
the change from RPI to CPI is an estimated reduction in scheme liabilities of
£4.5m.
EMPLOYEES
The Board would like to recognise the contribution made by all employees to the
improvement in the Group's performance and financial condition. Their continued
flexibility and commitment is essential in providing customers with the high
quality, cost effective products and services on which the growth and
development of the business is founded.
OUTLOOK
Laminates' strong performance is expected to be maintained over the coming
months, although the second half is traditionally weaker in certain key market
sectors.
There is no sign of an easing in the pressure on margins in the foils businesses
as raw material costs continue to escalate due to the global capacity imbalance
affecting polyester film supply. Whilst further increases in selling prices are
essential to recover these exceptional cost increases, any time lag will
inevitably impact results. Second half profitability in Foils Europe will
benefit from an improved mix, reflecting a particularly strong order book for
higher added value holographic products.
Further progress is expected on debt reduction, based on trading results,
receipts from the China disposal and a modest level of capital investment.
GROUP INCOME STATEMENT
for the six months
ended 30 September
2010
Unaudited Unaudited Audited
6 months to 30 6 months to Year to
September 2010 30 September 31 March
2009 2010
Note £'000 £'000 £'000
--------------------------------------------------------------------------------
Continuing operations
Revenue 2 47,032 37,866 79,192
Cost of sales (35,598) (30,001) (60,541)
--------------------------------------------------------------------------------
Gross profit 11,434 7,865 18,651
Other operating costs (8,939) (7,635) (15,385)
--------------------------------------------------------------------------------
Operating profit 2 2,495 230 3,266
before exceptional
items
3 (423) (626)
Exceptional items -
--------------------------------------------------------------------------------
Operating profit / 2,495 (193) 2,640
(loss) from continuing
operations
4 8 40
Finance revenue -
Finance costs 4 (1,159) (1,616) (3,018)
--------------------------------------------------------------------------------
(1,151) (1,616) (2,978)
--------------------------------------------------------------------------------
Profit / (loss) on 1,344 (1,809) (338)
continuing activities
before taxation
Tax (expense) / credit 5 (269) 38 2,804
--------------------------------------------------------------------------------
Profit / (loss) from
continuing operations 1,075 (1,771) 2,466
Discontinued
operations
(Loss) / profit from 6 (6,656) 2,001 (4,358)
discontinued
operations
--------------------------------------------------------------------------------
(Loss) / profit for
the period (5,581) 230 (1,892)
--------------------------------------------------------------------------------
(Loss) / profit
attributable to equity
holders of the parent
- continuing 1,075 (1,771) 2,466
operations
- discontinued (3,348) 960 (2,342)
operations
(Loss) / profit
attributable to
minority equity
interest
- discontinued (3,308) 1,041 (2,016)
operations
--------------------------------------------------------------------------------
(Loss) / profit for
the period (5,581) 230 (1,892)
--------------------------------------------------------------------------------
Earnings per share
(pence)
Basic earnings / 7 1.5 (2.5) 3.5
(loss) per share from
continuing operations
Diluted earnings / 7 1.4 (2.5) 3.3
(loss) per share from
continuing operations
Basic (loss) / 7 (3.2) (1.2) 0.2
earnings per share on
(loss) / profit for
the period
Diluted (loss) / 7 (3.0) (1.2) 0.2
earnings per share on
(loss) / profit for
the period
--------------------------------------------------------------------------------
GROUP STATEMENT OF
COMPREHENSIVE INCOME
for the six months ended 30
September 2010
--------------------------------------------------------------------
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 2009 31 March
2010 2010
£'000 £'000 £'000
--------------------------------------------------------------------------------
(Loss) / profit for the
period (5,581) 230 (1,892)
--------------------------------------------------------------------------------
Exchange differences on
retranslation of foreign
operations (430) (1,870) 5,973
Change in fair value of
effective cash flow hedges (209) 120 (360)
Actuarial gains / (losses) on
defined benefit pension plans 1,105 (3,968) (3,925)
Movement in deferred tax
asset relating to defined
benefit pension plans (496) 1,111 1,099
--------------------------------------------------------------------------------
Other comprehensive (loss) /
income for the period (30) (4,607) 2,787
--------------------------------------------------------------------------------
Total comprehensive (loss)
/ income and expense for
the period, net of tax (5,611) (4,377) 895
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the
parent (2,293) (4,663) (1,875)
Minority equity interest (3,318) 286 2,770
--------------------------------------------------------------------------------
(5,611) (4,377) 895
--------------------------------------------------------------------------------
GROUP BALANCE SHEET
at 30 September 2010
Unaudited Unaudited Audited
30 September 30 September 31 March
2010 2009 2010
Note £'000 £'000 £'000
--------------------------------------------------------------------------------
Assets
Non-current assets
Property, plant and
equipment 17,567 33,969 28,772
Intangible assets -
goodwill 5,188 5,188 5,188
Trade and other
receivables 122 176 134
Deferred tax assets 7,045 3,419 7,738
--------------------------------------------------------------------------------
29,922 42,752 41,832
--------------------------------------------------------------------------------
Current assets
Trade and other
receivables 16,602 13,728 16,697
Inventories 9,521 11,008 13,110
Cash and short-term
deposits 8 1,572 1,387 1,041
--------------------------------------------------------------------------------
27,695 26,123 30,848
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Assets of disposal
group held for sale 6 8,642 - -
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total assets 66,259 68,875 72,680
--------------------------------------------------------------------------------
Liabilities
Current liabilities
Trade and other
payables 16,637 17,530 18,444
Financial liabilities 9 2,798 17,721 5,416
Income tax payable 402 372 346
--------------------------------------------------------------------------------
19,837 35,623 24,206
--------------------------------------------------------------------------------
Non-current
liabilities
Financial liabilities 9 13,614 - 14,404
Deferred tax
liabilities 256 256 256
Provisions 93 57 97
Deficit on defined
benefit pension plans 10 15,251 11,133 16,406
--------------------------------------------------------------------------------
29,214 11,446 31,163
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liabilities
attributable to
disposal group held
for sale 6 5,449 - -
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total liabilities 54,500 47,069 55,369
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net assets 11,759 21,806 17,311
--------------------------------------------------------------------------------
Equity
Called up share
capital 701 701 701
Share premium 7,136 7,136 7,136
Other reserves 8,595 8,595 8,595
Foreign exchange
reserve 2,889 2,377 3,309
Retained earnings (9,619) (5,062) (7,805)
--------------------------------------------------------------------------------
API Group
shareholders' equity 9,702 13,747 11,936
--------------------------------------------------------------------------------
Total equity 11,759 21,806 17,311
--------------------------------------------------------------------------------
GROUP
STATEMENT OF
CHANGES IN
SHAREHOLDERS'
EQUITY
for the six
months ended
30 September
2010
Equity Foreign Total
share Share Other exchange Retained shareholders'
capital premium reserves reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Balance at 1
April 2009 701 7,136 8,595 3,492 (1,526) 18,398
Total
recognised
income and
expense for
the period - - - (1,115) (3,548) (4,663)
Share based
payments - - - - 12 12
--------------------------------------------------------------------------------
Balance at
30 September
2009 701 7,136 8,595 2,377 (5,062) 13,747
Total
recognised
income and
expense for
the period - - - 932 (2,761) (1,829)
Share based
payments - - - - 18 18
--------------------------------------------------------------------------------
Balance at
31 March 2010 701 7,136 8,595 3,309 (7,805) 11,936
Total
recognised
income and
expense for
the period - - - (420) (1,873) (2,293)
Share based
payments - - - - 59 59
--------------------------------------------------------------------------------
Balance at
30 September
2010 701 7,136 8,595 2,889 (9,619) 9,702
--------------------------------------------------------------------------------
GROUP CASH FLOW
STATEMENT
for the six months
ended 30 September
2010
--------------------------------------------------------------------
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2010 2009 2010
Note £'000 £'000 £'000
--------------------------------------------------------------------------------
Operating
activities
Operating profit / 2,495 (193) 2,640
(loss) from
continuing
activities
Adjustments to reconcile
operating profit / (loss) from
continuing activities to net
cash flow from operating
activities:
Operating loss from (6,801) (1,467) (7,752)
discontinued
activities
Depreciation of 1,688 1,975 3,820
property, plant and
equipment
Impairment of
property, plant and
equipment 5,850 - 5,083
(Profit) / loss on (12) 19 10
disposal of
property, plant and
equipment
Movement in foreign
exchange hedging
contracts - 42 -
Share-based 59 12 30
payments
Difference between
pension
contributions paid
and amounts
recognised in the
income statement (435) (174) (854)
Decrease / 1,279 1,157 (590)
(increase) in
inventories
(Increase) / (2,650) 285 (2,302)
decrease in trade
and other
receivables
Increase / 1,281 (1,280) (862)
(decrease) in trade
and other payables
Movement in (4) (4) 36
provisions
--------------------------------------------------------------------------------
Cash generated from
operations 2,750 372 (741)
Income taxes (paid)
/ recovered (37) 61 (96)
--------------------------------------------------------------------------------
Net cash flow from
operating
activities 2,713 433 (837)
--------------------------------------------------------------------------------
Investing
activities
Interest received 8 - 40
Purchase of (567) (696) (1,193)
property, plant and
equipment
Sale of property, 49 24 30
plant and equipment
Payment of legal (281) (12)
costs in respect of -
discontinued
operations
--------------------------------------------------------------------------------
Net cash flow from
investing
activities (510) (953) (1,135)
--------------------------------------------------------------------------------
Financing
activities
Interest paid (852) (849) (1,458)
Dividends paid to (434) (434)
minority interests -
New borrowings 1,562 1,124 7,131
Repayment of (2,669) (768) (3,850)
borrowings
--------------------------------------------------------------------------------
Net cash flow from
financing
activities (1,959) (927) 1,389
--------------------------------------------------------------------------------
Increase / 244 (1,447) (583)
(decrease) in cash
and cash
equivalents
Effect of exchange 86 (93) (114)
rates on cash and
cash equivalents
Cash and cash (546) 151 151
equivalents at the
beginning of the
period
--------------------------------------------------------------------------------
Cash and cash 8 (216) (1,389) (546)
equivalents at the
end of the period
--------------------------------------------------------------------------------
NOTES TO THE INTERIM FINANCIAL
STATEMENTS
--------------------------------------------------------------------------------
1. (a) Corporate information
The consolidated interim financial statements of API Group plc for the six
months ended 30 September 2010 were authorised for issue in accordance with a
resolution of the directors on 1 December 2010.
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 2010 have been prepared in accordance with IAS 34 Interim
Financial Reporting.
These interim consolidated financial statements are unaudited. They do not
constitute statutory accounts as defined in section 434 of the Companies Act
2006 and therefore do not include all the information and disclosures required
in the annual financial statements and should be read in conjunction with the
Group's latest annual financial statements as at 31 March 2010 which were
prepared in accordance with International Financial Reporting Standards as
adopted by the EU. The audited annual financial statements for the year ended
31 March 2010, which represent the statutory accounts for that period, and on
which the auditors gave an unqualified opinion, have been filed with the
Registrar of Companies.
The Directors consider that after making appropriate enquiries that there is
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and therefore continue to adopt
the going concern basis in preparing these financial statements.
The accounting policies adopted in the preparation of the interim consolidated
financial statements are consistent with those followed in the preparation of
the Group's annual financial statements for the year ended 31 March 2010.
2. SEGMENTAL INFORMATION
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 two separately managed geographical
segments, with the Europe segment being analysed further by the major product
categories of Foils and Laminates.
Unaudited Unaudited Audited
6 months to 6 months Year to
30 to 30 31 March
September September 2010
2010 2009
Continuing
operations £'000 £'000 £'000
----------------------------------------------------------------------------------------
Total revenue
by origin
Europe
Foils * 17,613 15,738 33,328
Laminates 19,233 13,524 28,000
Intra-
Europe (225) (188) (373)
----------------------------------------------------------------------------------------
36,621 29,074 60,955
North America 11,691 9,752 20,020
----------------------------------------------------------------------------------------
48,312 38,826 80,975
----------------------------------------------------------------------------------------
Inter-
segmental
revenue
Europe
Foils * 1,072 935 1,687
Laminates 14 - -
Intra-
Europe (225) (188) (373)
----------------------------------------------------------------------------------------
861 747 1,314
North America 419 213 469
----------------------------------------------------------------------------------------
1,280 960 1,783
----------------------------------------------------------------------------------------
External
revenue by
origin
Europe
Foils * 16,541 14,803 31,641
Laminates 19,219 13,524 28,000
----------------------------------------------------------------------------------------
35,760 28,327 59,641
North America 11,272 9,539 19,551
----------------------------------------------------------------------------------------
47,032 37,866 79,192
----------------------------------------------------------------------------------------
Segment
result
Operating
profit/(loss)
Europe
Foils * 952 438 2,510
Laminates 2,392 736 2,034
----------------------------------------------------------------------------------------
3,344 1,174 4,544
North America 4 (278) (64)
----------------------------------------------------------------------------------------
Segment
result 3,348 896 4,480
Central costs (853) (666) (1,214)
----------------------------------------------------------------------------------------
Total
operating
profit before
exceptional
items 2,495 230 3,266
----------------------------------------------------------------------------------------
* Europe - Foils incorporates the continuing Asia Pacific
businesses.
3. EXCEPTIONAL ITEMS
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.
The charges included in continuing operations in the comparative periods comprise
redundancy and other costs incurred in rationalising the Group's activities in line with
reduced demand.
4. FINANCE REVENUE AND FINANCE COSTS
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 30 September 31
September 2009 March
2010 2010
£'000 £'000 £'000
-------------------------------------------------------------------------------------------
Finance revenue
Interest receivable on bank and other short
term deposits - - 2
Other interest receivable 8 - 38
-------------------------------------------------------------------------------------------
8 - 40
-------------------------------------------------------------------------------------------
Finance costs
Interest payable on bank loans and
overdrafts (744) (1,041) (1,831)
Other interest payable (4) - (49)
Finance cost in respect of defined benefit
pension plans (411) (575) (1,138)
-------------------------------------------------------------------------------------------
(1,159) (1,616) (3,018)
-------------------------------------------------------------------------------------------
5. TAXATION
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 30 September 31 March
September 2009 2010
2010
£'000 £'000 £'000
-------------------------------------------------------------------------------------------
Current income tax
UK Corporation tax - refund in respect of
prior years - 46 46
Overseas tax - current year charge (67) (53) (134)
- adjustments in respect
of prior-year tax charge (34) - -
-------------------------------------------------------------------------------------------
Total current income tax charge (101) (7) (88)
-------------------------------------------------------------------------------------------
Deferred tax
Origination and reversal of temporary
differences (168) 45 2,892
Total Deferred Tax (168) 45 2,892
Total (charge)/credit in the Income
Statement (269) 38 2,804
-------------------------------------------------------------------------------------------
Total deferred tax (168) 45 2,892
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Total (charge) / credit in the Income
Statement (269) 38 2,804
-------------------------------------------------------------------------------------------
6. DISCONTINUED
OPERATIONS
In the financial statements for the year ended 31 March 2010, it was announced
that the Board had commenced a strategic review of the Group's investment in its
51% owned subsidiary based in China. As a result of that review, a decision has
been taken to eliminate the Group's exposure to the continuing losses being
incurred in China. Negotiations to sell the Group's shareholding are at an
advanced stage with completion expected in December 2010. In accordance with
IFRS 5, the results of the China business within the Asia Pacific reporting
segment have been classified as discontinued and the comparative numbers for the
six months to 30 September 2009 and the year to 31 March 2010 have been
reclassified. The China business has been classified as a disposal group held
for sale on the balance sheet at 30 September 2010.
The results of the
China business are
presented below:
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 2010 30 September 31 March
2009 2010
£'000 £'000 £'000
--------------------------------------------------------------------------------
Revenue - External 4,128 2,465 5,382
- Inter-
Group 585 612 1,339
--------------------------------------------------------------------------------
4,713 3,077 6,721
Cost of sales (4,257) (2,971) (6,286)
--------------------------------------------------------------------------------
Gross loss (129) (506) (904)
Other operating costs (822) (694) (1,498)
--------------------------------------------------------------------------------
Operating loss before
exceptional items (951) (1,200) (2,402)
Exceptional items
Impairment of
property, plant and
equipment (5,850) - (5,083)
Relocation of China
factory - (267) (267)
--------------------------------------------------------------------------------
Operating loss from
discontinued
operations (6,801) (1,467) (7,752)
Finance costs (90) (52) (111)
--------------------------------------------------------------------------------
Loss on discontinued
activities before
taxation (6,891) (1,519) (7,863)
Tax credit - reversal
of prior-year tax
charge - 3,520 3,505
--------------------------------------------------------------------------------
(Loss) / profit on
discontinued
activities after
taxation (6,891) 2,001 (4,358)
--------------------------------------------------------------------------------
Impairment of
property, plant and
equipment
In the year ended 31 March 2010, following two years of significant losses, the
carrying value of the property, plant and equipment of the China business was
written down to its fair value less costs to sell, resulting in an impairment of
the property, plant and equipment of £5,083,000. Following the decision to exit
the China business and its reclassification as a disposal group held for sale, a
further impairment review has been carried out. A reassessment of the fair
value of the disposal group less costs to sell has resulted in an additional
write down of the property, plant and equipment in the six months ended 30
September 2010 amounting to £5,850,000. The Group's 51 % share of this
impairment is £2,984,000 (31 March 2010: £2,592,000), with a corresponding
reduction in the minority interest of £2,866,000 (31 March 2010: £2,491,000).
Tax credit - reversal
of prior-year tax
charge
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
was received from the Chinese authorities which confirmed that no specific land
taxation was payable on this transaction. Accordingly, the provision was
released.
(Loss)/profit from
discontinued
operations
Unaudited Unaudited Audited
6 months to 30 6 months to Year to
September 2010 30 September 31 March
2009 2010
£'000 £'000 £'000
--------------------------------------------------------------------------------
(Loss) / profit after
taxation of China
business (see page *) (6,891) 2,001 (4,358)
Adjustment to prior-
year losses on
disposal of
discontinued
businesses 235 - -
--------------------------------------------------------------------------------
Loss on discontinued
operations per the
Income Statement (6,656) 2,001 (4,358)
--------------------------------------------------------------------------------
The adjustment to prior-year losses on disposal of discontinued businesses
relates to the reversal of accrued legal fees connected to a business disposal
in 2005.
Assets and liabilities
of disposal group held
for sale
The assets and liabilities of the China business are as follows:
Unaudited
30 September
2010
£'000
--------------------------------------------------------------------------------
Assets
Property, plant and
equipment 3,826
Trade and other
receivables 2,482
Inventories 2,153
Cash and short-term
deposits 181
-----------------
8,642
-----------------
Liabilities
Trade and other
payables 2,509
Financial liabilities 2,940
-----------------
5,449
-----------------
Net cash flows
relating to
discontinued
activities
The net cash flows attributable to the China business are as follows:
Unaudited Unaudited Audited
6 months to 30 6 months to Year to
September 2010 30 September 31 March
2009 2010
£'000 £'000 £'000
----------------------------------------------------------
Operating activities 542 (856) (2,270)
Investing activities (36) (316) (673)
Financing activities (480) 410 1,269
----------------------------------------------------------
26 (762) (1,674)
----------------------------------------------------------
7. EARNINGS PER
SHARE
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2010 2009 2010
£'000 £'000 £'000
Profit / (loss)
attributable to equity
holders of the parent 1,075 (1,771) 2,466
company - continuing
operations
(Loss) / profit
attributable to equity
holders of the parent (3,348) 960 (2,342)
company - discontinued
operations
--------------------------------------------------------------------------------
Net (loss) / profit
attributable to equity (2,273) (811) 124
holders of the parent
company
--------------------------------------------------------------------------------
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2010 2009 2010
No. No. No.
--------------------------------------------------------------------------------
Basic weighted average 70,068,505 70,068,505 70,068,505
number of ordinary shares
Dilutive effect of
employee share 3,025,425 - 2,798,466
options
Dilutive effect of 3,506,336 1,210,406
warrants -
--------------------------------------------------------------------------------
Diluted weighted average 76,600,266 70,068,505 74,077,377
number of ordinary shares
--------------------------------------------------------------------------------
The weighted average number of shares excludes the shares owned by the API Group
plc No.2 Employee Benefit Trust (58,221; 30 September 2009 and 31 March
2010: 58,221).
The warrants for 3,506,336 ordinary shares were exercised in October 2010.
As any dilution would have the effect of reducing the loss per share, the
diluted weighted average number of shares for the six months ended 30 September
2009 is equivalent to the basic weighted average number of shares.
Unaudited Unaudited Audited
6 months to 6 months to Year to 31
30 September 30 September March
2010 2009 2010
Earnings per share £'000 £'000 £'000
--------------------------------------------------------------------------------
Continuing
operations
Basic earnings / 1.5 (2.5) 3.5
(loss) per share
Diluted earnings / 1.4 (2.5) 3.3
(loss) per share
Discontinued
operations
Basic earnings / (4.7) 1.3 (3.3)
(loss) per share
Diluted earnings / (4.4) 1.3 (3.1)
(loss) per share
Total
Basic earnings / (3.2) (1.2) 0.2
(loss) per share
Diluted earnings / (3.0) (1.2) 0.2
(loss) per share
--------------------------------------------------------------------------------
8. CASH AND CASH
EQUIVALENTS
Unaudited Unaudited Audited
30 September 30 31 March
2010 September 2010
Unternehmensinformation / Kurzprofil:
Datum: 02.12.2010 - 08:00 Uhr
Sprache: Deutsch
News-ID 49322
Anzahl Zeichen: 65582
contact information:
Town:
Stockport
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 233 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Interim Results"
steht unter der journalistisch-redaktionellen Verantwortung von
API Group PLC (Nachricht senden)
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