API Group plc : Interim Results

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Press Release

3 December 2013

API Group plc

("API" or the "Group")

Interim Results

API Group plc (AIM:API), a leading manufacturer of specialist foils and packaging materials, announces its interim results for the six months ended 30 September 2013.

Financial Highlights

·	Dividend reinstated, reflecting confidence in Group's prospects
·	Revenues of £56.9m, compared to £58.8m for the first half of last year
·	Operating profits, before exceptional items, of £3.5m (2012: £4.7m)
·	Profit before tax and exceptional items of £2.9m (2012: £4.0 m)
·	Diluted earnings per share 3.8p (2012: 5.1p)
·	Improved results in the Foils businesses, despite disruption from major change projects.  Cost reduction programme underway in Holographics to address trading losses.  Satisfactory results at Laminates but behind last year's strong first half
·	Capital additions of £2.4m (2012: £3.0m) and net debt slightly higher at £5.6m (2012: £5.2m)
·	Significant progress in restructuring the UK foils operation, completing investment projects in Holographics and Foils Americas and bringing the new laminates supply contract up to full volumes
·	As previously indicated, the Board expects a stronger second half and some improvement in results for the year as a whole
·	Interim dividend of 0.7p per share, payable January 2014

Commenting on the results, API's Chief Executive, Andrew Turner said:

"Whilst results were, as expected, behind last year's strong first half comparatives, a number of important projects were completed in the period designed to strengthen the operating platform and enhance our proposition to customers.

These improvements, plus the cost reduction programme in Holographics and scheduled capacity additions for both Foils businesses, underpin our confidence in the Group's prospects and the Board's decision to recommence dividend payments after a break of more than ten years."

- Ends -

For further information:

API Group plc
Andrew Turner, Group Chief Executive	Tel: [phone]

Numis Securities (Broker)

Cairn Financial Advisers (Nominated Adviser)

Media enquiries:

Abchurch
Henry Harrison-Topham / Quincy Allan	Tel: [phone]

REPORT ON THE INTERIM RESULTS

FOR THE 6 MONTH PERIOD ENDED 30 SEPTEMBER 2013

GROUP INCOME STATEMENT

Financial statements, including figures for prior year comparatives, have been prepared on the basis of the revised IAS19 pension accounting standard, further details of which are described in note 1(c).

Group revenues for the six months to September 2013 were £56.9m (2012: £58.8m), down 3.1% on the first half of last year and 4.1% lower at constant exchange rates.  Lower sales in Laminates compared to a particularly strong first half last were partly compensated by growth in Foils Europe.

Gross margin declined by 0.8%, to 22.2%, due primarily to lower fixed cost recovery, higher freight and utility costs and the impact of less favourable exchange rates on Euro-denominated sales.  These factors were partly mitigated by improved sales mix.  Selling, general and administration costs were £0.2m higher, predominantly accounted for by increased sales and marketing expenditure and the full year effect of the new divisional management structure (separate management teams for Foils Europe and Holographics).

Costs in the two Foils businesses were impacted by significant operational change projects, specifically the restructuring of foils finishing and distribution operations in the UK and the implementation of a new ERP system in the US.  Higher expenditure on overtime, sub-contract manufacture and outbound freight was incurred to mitigate the impact of any disruption on supplies to customers.

Pre-exceptional operating profits for the six month period came in at £3.5m compared to £4.7m at the interim stage last year, with an approximately equal impact on profits from lower sales and higher costs.  In terms of segment split, profits at Laminates and Holographics were lower by £0.8m and £0.6m respectively, Foils Americas was ahead by £0.1m and Foils Europe advanced by £0.2m.  Central costs were unchanged.

Compared to the second half of last year, sales and pre-exceptional operating profits were ahead by 6.1% and 10% respectively.

For the six months to 30 September 2013, exceptional charges of £0.3m were incurred associated with the restructuring of UK Foils operations.  Exceptional costs last year amounted to £0.4m.

Net finance costs reduced by £0.1m to £0.6m as lower cash interest costs, down from £0.5m to £0.3m, were partly offset by an increase of £0.1m in non-cash interest charges relating to defined benefit pension schemes, as per the new IAS19 accounting standard.

A small tax credit of £0.02m comprised a current tax charge of £0.2m in the UK and certain European countries offset by additional recognition of net tax losses, predominantly in the US.

Underlying earnings per share (diluted) of 3.8p compares to 5.1p at the interim stage last year and 3.3p in last year's second half.

REVIEW OF OPERATIONS

Laminates

Laminates delivered another solid performance, although results were down against strong comparatives from the first half last year.

Sales at £28.1m were 7.2% lower than last year and operating profits were 19.8% lower at £3.3m, representing an operating margin of 11.6%.  The loss of volume on two key brands due to packaging specification changes and a reduced allocation from a key UK customer in the drinks sector was only partially compensated by the ramp-up of the major new supply contract.

Compared to last year's second half, Laminates revenues were 13.2% higher and profits 33.0% ahead.

The business cleared a significant milestone as volumes on the major new supply contract reached target levels after an extended period of product development and qualification.  The higher level of core volume will increase the resilience of Laminates' trading performance and compensate for the anticipated near term impact on margins from production inefficiencies and a less favourable sales mix.

Foils Europe

Foils Europe revenues increased by 9.0% over the first half last year to £14.4m (6.3% ahead at constant FX rates) driven by solid growth in key continental European territories of Italy, France and Germany.  Sales in Poland were ahead more than 200% after the establishment of a new API-owned distribution channel in May 2012.

During the period, a reorganisation of the UK Foils business was completed with the establishment of a new sales and distribution hub in England, aimed at improving service levels to customers and increasing penetration of the home market.  This will enable the facility at Livingston to focus on efficient manufacturing of high quality foils for bulk supply to the distribution network.  The changes resulted in the loss of 25 jobs at Livingston and caused a degree of disruption to operations with an estimated profit impact in the period of £0.25m.  Cost savings associated with the project are expected to be at least £0.3m per annum.

Despite the disruption from the UK restructuring, higher sales led to a 27.4% year-on-year increase in operating profits to £0.9m; an operating margin of 6.3%.

Compared to last year's second half, revenues were 4.0% higher (2.6% at constant FX) but profits declined by 29.4% due the impact of the UK re-organisation, higher costs and a one-off adjustment to customer rebates.

Foils Americas

Foils Americas revenues for the six months to 30 September 2013 were down 3.1% at £11.9m; 5.3% lower at constant exchange rates.

The unit experienced some disruption from the implementation of a new ERP system, which went live on April 1st 2013 followed by an intense period of management focus on project delivery.  Supply interruptions in the first two months impacted sales to small accounts which the business is working to recover now that the operations have been re-stabilised.  System benefits are already evident in terms of supply chain management, control of inventory level and margin management.

Despite additional project-related expenses, overall operating costs were lower by £0.3m due to a non-repeat of last year's accounting charge relating to an increase in the level of inventory.

In spite of the internal challenges faced in the period, operating profits increased slightly to £1.1m, representing an operating margin of 8.8%.

Compared to last year's second half, revenues were 2.3% higher, with a slightly better sales mix resulting in a 22.3% increase in operating profits.

Holographics

Holographics total revenues declined by 9.7% to £4.5m due to the loss of a long-standing supply contract to in-house manufacture by the customer and adverse timing of orders with another key account.  Delays affected the commencement of a number of new business developments, although sales of decorative holographic products to sister API companies recovered strongly from last year's second half.

Operating costs increased by £0.3m due to expenditure on the new origination centre in the Czech Republic and higher sales and marketing spend.  As a result, the unit recorded an operating loss of £0.5m compared to a marginal profit at the interim stage last year.

Compared with last year's second half, sales were down 3.3%, although losses increased by £0.2m due primarily to a non-recurrence of accounting credits associated with changes in inventory levels.

In view of the delays on new business developments, management initiated a cost reduction program with the aim of returning the business to a break-even position at the current level of sales by mid way through the second half.

In the meantime, good progress has been made in executing the previously-announced investment program designed to significantly enhance the proposition to customers in the security and authentication market.  The Czech holographic origination centre is now up and running, a number of key new pieces of equipment have been successfully commissioned and the Salford production facility has been awarded high level security accreditation by the recognised industry body.  After completing the short term cost reduction plan, management's priority is to leverage the benefits of these investments to grow third party revenues whilst at the same time maximising capacity fill by exploiting available opportunities for additional intercompany sales of decorative holographic products.

DIVIDEND

In line with comments made in the Final Results announcement released on 5 June 2013, the Board is pleased to confirm the re-introduction of dividend payments to shareholders.  Dividends were last paid in 2001 and their re-instatement is recognition of the improved financial health of the Group and the Board's confidence in its long term prospects.  A dividend of 0.7 pence per share will be paid on 9 January 2014 to shareholders on the register on 13 December 2013, with an Ex-dividend date of 11 December 2013.

CASH FLOW AND BORROWINGS

Net cash inflow from operating activities of £0.6m was below the £2.7m for the same period last year as a result of lower operating profits and an adverse movement in working capital.  Period-end working capital efficiency, measured by the ratio to sales, was 0.7% adverse, at 11.2%.  This, combined with a higher exit rate of sales, meant that total working capital increased by £1.6m when compared to one year earlier.

Capital expenditure included £0.8m of payments relating to projects capitalised at the end of last financial year, the addition of £1.3m of new assets and £0.3m of further investment in the holographic origination joint venture.  The total cash capital expenditure of £2.4m compares to £3.0m for the same period last year.  Key projects included costs associated with the new ERP system and deposits paid on new metallisers for the two Foils businesses.

Group net debt of £5.6m compares to £5.2m at the interim stage last year and £2.4m at 31 March 2013.  Levels of debt have remained under good control, with gearing at the period end of 23% (2012: 21%) and a ratio of net debt to trailing 12 month EBITDA of 1.2x (2012: 0.9x).

The Group's main borrowing requirements have recently been re-financed and facilities agreed with HSBC for the period to December 2017.  The new £13.5m committed facility benefits from reduced interest margins, lower security requirements and less demanding covenants compared with the previous arrangements.  The US business continues to be supported by funding from Wells Fargo, extending to April 2015.

PENSION DEFICIT

The IAS19 calculated gross deficit on UK and US defined-benefit pension plans reduced slightly to £12.7m from £13.3m at 31 March 2013.  Favourable movement in bond yields and inflation assumptions affecting liability valuation were mainly offset by lower investment returns compared to scheme objectives, in line with the performance of global equity markets.  Associated deferred tax assets reduced by £0.4m, mostly as a result of lower UK corporation tax rates, leaving a net reported deficit of £10.1m compared to £10.3m at March 2013.

The UK plan is currently completing its triennial funding valuation as of 30 September 2013, the conclusion of which is expected during the middle of 2014.

OUR PEOPLE

The Board continues to be grateful for the support and efforts of the API workforce.  The value of the contributions made by employees to the ongoing success and development of the Group is greatly appreciated.

OUTLOOK

In spite of a weaker first half, the Board still expects full year results to show some progress over last year.

The Foils businesses are already benefiting from their respective restructuring and ERP implementation projects completed in the first half and both units are experiencing encouraging levels of customer demand.

Continuation of the strong profit contribution from Laminates is underpinned by healthier core volumes now that the major new supply contract is fully on stream.

Holographics is well advanced with cost reduction measures aimed at restoring the business to a breakeven position ahead of the final quarter.  Recovering lost ground in security and authentication markets will take more time, but will be greatly assisted by the recent investments in enhanced product capabilities and security credentials.

Overall, the business is in much better shape after the progress made during the first six months of the year.  Opportunities for further improvements in operational effectiveness, as well as improving economic conditions, provide confidence in the outlook for the Group in 2014/15 and beyond.

GROUP INCOME STATEMENT
for the six months ended 30 September 2013
		Unaudited	Unaudited	Audited
		6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
			(restated1)	(restated1)
	Note	£'000	£'000	£'000
Revenue	2	56,897	58,782	112,426
Cost of sales		(42,621)	(43,726)	(84,179)
Gross profit		14,276	15,056	28,247
Distribution costs		(2,176)	(2,104)	(4,249)
Administrative expenses (excluding exceptional items)		(8,645)	(8,291)	(16,196)
Operating profit before exceptional items	2	3,455	4,661	7,802
Exceptional items	3	(300)	(394)	(1,029)
Operating profit		3,155	4,267	6,773
Net finance costs	4	(567)	(668)	(1,207)
Profit before taxation		2,588	3,599	5,566
Tax credit/(expense)	5	20	(16)	19
Profit for the period		2,608	3,583	5,585
Earnings per share (pence)
Basic earnings per share on profit for the period	6	3.5	4.9	7.6
Underlying basic earnings per share on profit for the period	6	3.9	5.3	8.8
Diluted earnings per share on profit for the period	6	3.4	4.6	7.2
Underlying diluted earnings per share on profit for the period	6	3.8	5.1	8.4

1Restated in accordance with IAS 19 (revised) Employee benefits.  See Note 1 (c).

GROUP STATEMENT OF COMPREHENSIVE INCOME
	for the six months ended 30 September 2013
			Unaudited	Unaudited	Audited
			6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
				(restated1)	(restated1)
			£'000	£'000	£'000
	Profit for the period		2,608	3,583	5,585
	Exchange differences on retranslation of foreign operations		(1,008)	(192)	703
	Change in fair value of effective cash flow hedges		638	279	(639)
	Actuarial (losses)/gains on defined benefit pension plans		314	(961)	(5,243)
	Tax on items relating to components of other comprehensive income		(561)	31	1,228
	Other comprehensive income for the period, net of tax		(617)	(843)	(3,951)
	Total comprehensive income for the period attributable to equity holders of the Parent		1,991	2,740	1,634

1Restated in accordance with IAS 19 (revised) Employee benefits.  See Note 1 (c).

GROUP BALANCE SHEET
at 30 September 2013
		Unaudited	Unaudited	Audited
		30 September 2013	30 September 2012	31 March 2013
	Note	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		21,206	19,389	21,313
Intangible assets - goodwill		5,188	5,188	5,188
Investment in joint venture interest		684	-	378
Financial assets		46	-	152
Deferred tax assets		6,198	5,498	6,617
		33,322	30,075	33,648
Current assets
Trade and other receivables		17,543	15,960	15,811
Inventories		12,925	12,929	12,864
Other financial assets		531	693	184
Cash and short-term deposits	8	1,476	6,342	6,189
		32,475	35,924	35,048
Total assets		65,797	65,999	68,696
Liabilities
Current liabilities
Trade and other payables		20,081	20,116	22,428
Financial liabilities	9	6,769	10,934	3,766
Income tax payable		494	454	373
		27,344	31,504	26,567
Non-current liabilities
Financial liabilities	9	465	655	5,574
Deferred tax liabilities		287	359	211
Provisions		62	73	66
Deficit on defined benefit pension plans	10	12,733	9,271	13,349
		13,547	10,358	19,200
Total liabilities		40,891	41,862	45,767
Net assets		24,906	24,137	22,929
Equity
Called up share capital		767	767	767
Share premium		7,136	7,136	7,136
Other reserves		8,816	8,816	8,816
Foreign exchange reserve		(50)	63	958
Retained earnings		8,237	7,355	5,252
Total shareholders' equity		24,906	24,137	22,929

GROUP STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 September 2013

	Equity Share capital	Share premium	Other reserves	Foreign exchange reserve	Retained earnings	Total shareholders' equity
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2012	767	7,136	8,816	255	4,348	21,322
Profit for the period (restated1)	-	-	-	-	3,583	3,583
Other comprehensive income for the period, net of tax (restated1)	-	-	-	(192)	(651)	(843)
Share-based payments	-	-	-	-	70	70
Tax relating to items accounted for directly through equity	-	-	-	-	5	5
Balance at 30 September 2012	767	7,136	8,816	63	7,355	24,137
Profit for the period (restated1)	-	-	-	-	2,002	2,002
Other comprehensive income for the period, net of tax (restated1)	-	-	-	895	(4,003)	(3,108)
Shares acquired by Employee Benefit Trust	-	-	(94)	-	-	(94)
Transferred on exercise of share options	-	-	94	-	(94)	-
Share-based payments	-	-	-	-	15	15
Tax relating to items accounted for directly through equity	-	-	-	-	(23)	(23)
Balance at 31 March 2013	767	7,136	8,816	958	5,252	22,929
Profit for the period	-	-	-	-	2,608	2,608
Other comprehensive income for the period, net of tax	-	-	-	(1,008)	391	(617)
Shares acquired by Employee Benefit Trust	-	-	(32)	-	-	(32)
Transferred on exercise of share options	-	-	32	-	(32)	-
Share-based payments	-	-	-	-	18	18
Balance at 30 September 2013	767	7,136	8,816	(50)	8,237	24,906

1Restated in accordance with IAS 19 (revised) Employee benefits.  See Note 1 (c).

GROUP CASH FLOW STATEMENT
for the six months ended 30 September 2013
			Unaudited	Unaudited	Audited
			6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
				(restated1)	(restated1)
	Note		£'000	£'000	£'000
Operating activities
Group profit before tax from continuing operations			2,588	3,599	5,566
Adjustments to reconcile Group profit before tax to net cash flow from operating activities:
Net finance costs			567	668	1,207
Pension scheme expenses			330	352	665
Depreciation of property, plant and equipment			1,132	1,013	2,173
Profit on disposal of property, plant and equipment			(5)	(2)	(5)
Movement in fair value foreign exchange contracts			(7)	(4)	(38)
Share-based payments			18	70	85
Increase in inventories			(458)	(783)	(361)
Increase in trade and other receivables			(2,057)	(656)	(101)
(Decrease) / increase in trade and other payables			(1,478)	(1,538)	68
Movement in provisions			(4)	(3)	(10)
Cash generated from operations			626	2,716	9,249
Interest paid			(226)	(348)	(583)
Pension contributions and scheme expenses paid			(858)	(848)	(1,625)
Income taxes paid			(53)	(24)	(50)
Net cash flow from operating activities			(511)	1,496	6,991

1Restated in accordance with IAS 19 (revised) Employee benefits.  See Note 1 (c).

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 2013 were authorised for issue in accordance with a resolution of the directors on 2 December 2013.

API Group plc is a public limited company incorporated and domiciled in England and Wales.  The Company's shares are traded on the AIM 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 2013 have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union.

These interim consolidated financial statements are unaudited.  They do not constitute statutory accounts as defined in section 435 of the Companies Act 2006 and therefore do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's latest annual financial statements as at 31 March 2013 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 2013, which represent the statutory accounts for that period have been filed with the Registrar of Companies.  The auditors reported on those accounts. Their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006.

At 30 September 2013, the UK borrowing facilities were due to expire on 1 July 2014.  Since the balance sheet date, agreement has been reached with HSBC Bank plc to enter into a committed revolving facility amounting to £13.5m which terminates on 31 December 2017.  The existing UK borrowings have been repaid.  The US facilities are due to be repaid in April 2015. Accordingly, and after making appropriate enquiries, the Directors consider that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  The Directors therefore continue to adopt the going concern basis in preparing these financial statements.

(c) Significant accounting policies

The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 March 2013, except for the adoption of IAS 19 (revised) with effect from 1 April 2013.  Comparative figures for the six months to 30 September 2012 and the year to 31 March 2013 have been restated.  The impact of adopting the revised standard is described below.

IAS 19 (revised) Employee benefits

The key impact of IAS 19 (revised) is the removal of the separate assumptions for expected return on plan assets and discounting of scheme liabilities, replacing them with one single discount rate for the net deficit.  In addition, scheme administration expenses (including the PPF levy) can no longer be treated as part of the finance cost of the scheme liabilities and must now be included in operating costs.

For the six months to 30 September 2013, total profit is £180,000 lower and other comprehensive income is £180,000 higher than it would have been prior to the adoption of IAS 19 (revised).  For the six months to 30 September 2012, restated total profit is £101,000 lower and other comprehensive income is £101,000 higher than it would have been prior to the adoption of IAS 19 (revised).  For the year to 31 March 2013, the restated total profit is £190,000 lower and other comprehensive income is £190,000 higher than it would have been prior to the adoption of IAS 19 (revised).  For the six months to 30 September 2013, the impact of including scheme administration expenses in operating costs is to reduce operating profit by £330,000 (30 September 2012: £352,000; 31 March 2013: £665,000).  These costs are included within Central costs for segmental reporting purposes.

As the Group has always recognised actuarial gains and losses immediately, there is no effect on prior periods' defined benefit obligation and the balance sheet disclosure.

2. SEGMENTAL INFORMATION
	Unaudited	Unaudited	Audited
	6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
		(restated1)	(restated1)
	£'000	£'000	£'000
Total revenue by origin
Laminates	28,097	30,339	55,163
Foils Europe	14,380	13,196	27,021
Foils Americas	11,927	12,310	23,972
Holographics	4,505	4,989	9,646
	58,909	60,834	115,802
Inter-segmental revenue
Laminates	-	-	2
Foils Europe	334	490	757
Foils Americas	312	258	556
Holographics	1,366	1,304	2,061
	2,012	2,052	3,376

External revenue by origin
Laminates	28,097	30,339	55,161
Foils Europe	14,046	12,706	26,264
Foils Americas	11,615	12,052	23,416
Holographics	3,139	3,685	7,585
	56,897	58,782	112,426
Segment result
Operating profit
Laminates	3,260	4,063	6,515
Foils Europe	901	707	1,984
Foils Americas	1,055	1,030	1,893
Holographics	(548)	90	(275)
Segment result	4,668	5,890	10,117
Central costs1	(1,213)	(1,229)	(2,315)
Total operating profit before exceptional items	3,455	4,661	7,802

1Restated in accordance with IAS 19 (revised) Employee benefits.  See Note 1 (c).

3. EXCEPTIONAL ITEMS
	Unaudited	Unaudited	Audited
	6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
	£'000	£'000	£'000
Restructuring of operating businesses	(300)	(224)	(488)
Fees associated with the formal sale process	-	(170)	(541)
	(300)	(394)	(1,029)

Restructuring of operating businesses relates primarily toredundancy and other costs associated with business restructuring in the Foils Europe and Holographics businesses.

4. FINANCE REVENUE AND FINANCE COSTS

	Unaudited	Unaudited	Audited
	6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
		(restated1)	(restated1)
	£'000	£'000	£'000
Finance revenue
Interest receivable on bank and other short term deposits	1	1	2
Other interest receivable	-	1	8
	1	2	10
Finance costs
Interest payable on bank loans and overdrafts	(280)	(463)	(804)
Other interest payable	(8)	(9)	(17)
Net interest expense on defined benefit pension plans	(280)	(198)	(396)
	(568)	(670)	(1,217)
Net finance costs	(567)	(668)	(1,207)

5. TAXATION
	Unaudited	Unaudited	Audited
	6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
		(restated1)	(restated1)
	£'000	£'000	£'000
Current income tax
UK corporation tax - current year charge	(127)	(198)	(75)
Overseas tax - current year charge	(54)	(14)	(80)
	(181)	(212)	(155)
Deferred tax
Origination and reversal of temporary differences	237	196	178
Effect of change in tax rate	(36)	-	(4)
	201	196	174
Total credit/(charge) in the Income Statement	20	(16)	19

1Restated in accordance with IAS 19 (revised) Employee benefits.  See Note 1 (c).

6. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit 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 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.

Earnings used to calculate adjusted basic and diluted earnings per share exclude exceptional items, net of tax. 

The following reflects the income and share data used in the basic and diluted earnings per share computations:

		Unaudited	Unaudited	Audited
		6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
			(restated1)	(restated1)
		£'000	£'000	£'000
Net profit attributable to equity holders of the Parent		2,608	3,583	5,585
Adjustments to arrive at underlying earnings:
Exceptional items		300	394	1,029
Tax credit on exceptional items		-	(32)	(103)
Underlying earnings		2,908	3,945	6,511

		Unaudited	Unaudited	Audited
		6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
		No	No	No
Basic weighted average number of ordinary shares		73,786,981	73,748,730	73,748,730
Dilutive effect of employee share options and contingent shares		3,376,309	3,614,250	3,600,787
Diluted weighted average number of ordinary shares		77,163,290	77,362,980	77,349,517

The calculation of the basic weighted average number of shares excludes the shares owned by the API Group plc No.2 Employee Benefit Trust (30 September 2013:2,750,000; 30 September 2012 and 31 March 2013: 3,000,000).  These contingent shares are included in the calculation of the diluted weighted average number of shares.

	Unaudited	Unaudited	Audited
	6 months to 30 September 2013	6 months to 30 September 2012	Year to 31 March 2013
		(restated1)	(restated1)
Earnings per share	pence	pence	pence
Basic earnings per share	3.5	4.9	7.6
Underlying basic earnings per share	3.9	5.3	8.8
Diluted earnings per share	3.4	4.6	7.2
Underlying diluted earnings per share	3.8	5.1	8.4

1Restated in accordance with IAS 19 (revised) Employee benefits.  See Note 1 (c).

7. DIVIDENDS

An interim dividend of 0.7 pence per share (2012: nil) was approved by the Board on 2 December 2013, payable on 9 January 2014 to equity holders on the register at the close of business on 13 December 2013 with an Ex-Dividend date of 11 December 2013.  This dividend has not been provided for in these financial statements.

8. CASH AND CASH EQUIVALENTS

	Unaudited	Unaudited	Audited
	30 September 2013	30 September 2012	31 March 2013
	£'000	£'000	£'000
Cash and short-term deposits	1,476	6,342	6,189
Bank overdrafts	(302)	(361)	(234)
	1,174	5,981	5,955
9. FINANCIAL LIABILITIES
	Unaudited	Unaudited	Audited
	30 September 2013	30 September 2012	31 March 2013
	£'000	£'000	£'000
Current
Bank overdrafts	302	361	234
Current instalments due on bank loans	6,296	10,527	2,957
Interest rate swaps	4	46	16
Forward currency exchange contracts	167	-	559
	6,769	10,934	3,766
Non-current
Non-current instalments due on bank loans	465	653	5,574
Interest rate swaps	-	2	-
	465	655	5,574

10. DEFINED BENEFIT PENSION PLAN DEFICIT

	Unaudited	Unaudited	Audited
	30 September 2013	30 September 2012	31 March 2013
	£'000	£'000	£'000
United Kingdom
Fair value of scheme assets	77,231	72,671	78,557
Present value of scheme liabilities	(89,209)	(80,933)	(90,880)
	(11,978)	(8,262)	(12,323)
United States
Fair value of scheme assets	2,011	1,793	2,055
Present value of scheme liabilities	(2,766)	(2,802)	(3,081)
	(755)	(1,009)	(1,026)
Net pension liability	(12,733)	(9,271)	(13,349)
The movements in the net pension liability are as follows:
Opening liability	13,349	8,618	8,618
Scheme expenses recognised in operating profit	330	352	665
Net cost recognised in finance costs	280	198	396
Taken to Statement of Comprehensive Income	(314)	961	5,243
Contributions from and scheme expenses borne by employers	(850)	(848)	(1,625)
Exchange differences	(62)	(10)	52
Closing liability	12,733	9,271	13,349

The main assumptions used in valuing the present value of the scheme liabilities in the UK are as follows:

Rate of increases in pensions in payment and deferred pensions		2.30%	1.60%	2.35%
Inflation (CPI)		2.30%	1.50%	2.35%
Discount rate		4.40%	4.40%	4.30%

11. CAPITAL COMMITMENTS

At 30 September 2013 there were contracted amounts not provided in these financial statements of £2,079,000 (30 September 2012: £1,157,000; 31 March 2013: £904,000).  The capital commitments at 30 September 2013 included £1,875,000 in respect of two metallisers for the Foils Europe and Foils Americas divisions respectively.  These are expected to be delivered early in the financial year commencing on 1 April 2014.

- Ends -

This information is provided by RNS

The company news service from the London Stock Exchange

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