6th Dec 2005 07:01
API Group PLC06 December 2005 6 December 2005 API GROUP PLC Preliminary Results for the year ended 30 September 2005 • Results in line with September trading statement. • Continuing businesses produce satisfactory performance. • Sales reduced by 5.3% to £105.6m and operating profit before goodwill and exceptional items reduced to £3.3m (2004: £4.6m). • Significant improvements achieved in Foils businesses in US and Europe, but reduced performance in China. • Performance of Laminates reduced compared with exceptional year in 2004. • Material gains achieved in productivity and efficiency, but offset by substantial increases in oil-related input costs such as utilities and polyester. • Group sales down 30.2% to £118.4m reflecting the impact of discontinued businesses. • Group operating profit before goodwill amortisation and exceptional items improved to £1.8m (2004: £1.4m). • Group operating profit after goodwill amortisation and exceptional items improved to £0.5m (2004: loss £7.6m). • Adjusted loss per share improved to 1.9p (2004: loss 5.7p). • Metallised Paper and Converted Products divisions sold for cash consideration of up to £13.0m, £9.8m of which was received during the period. • Strengthened financial position with net borrowings reduced to £6.7m (2004: £10.5m), representing gearing of 21.6% (2004: 26.4%). • Further progress expected in 2006. Commenting on the results and future, Chairman David Hudd said: "Although this has been a challenging year for API in many ways, much has beenaccomplished. The Group is now focused on two profitable divisions which offergood opportunities for growth, and we have made a number of strategicinvestments. The poorly performing Metallised Paper and Converted Productsbusinesses have been sold and the balance sheet has been strengthened. API is therefore entering the new financial year in a significantly strongerposition, both financially and operationally, than it has been in for manyyears. The Group has strong positions in attractive markets with goodopportunities for growth and margin improvement. We are confident that furtherprogress will be made in 2006." Enquiries: API Group plc 020 7831 3113David Walton, Chief Executive Financial Dynamics 020 7831 3113Tim Spratt/Caroline Wells EXTRACTS FROM CHAIRMAN'S STATEMENT RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 In recent years, the Group has faced considerable challenges as changes havetaken place in global markets for packaging and security products. Emergingcompetition from the Far East and Eastern Europe and more sophisticated marketbehaviour in Europe and the US have accelerated the pace of change and increasedpressure on margins. Some time ago, the Group recognised the need to criticallyreview the sectors and activities in which it operated and to reposition itselfin markets that offered good prospects for long-term growth and profitability. As a consequence, earlier this year, we successfully completed the withdrawalfrom non-core businesses, disposing of the Metallised Paper and ConvertedProducts divisions and realising proceeds of up to £13.0m. The Group is nowconcentrated on its Foils and Laminates activities and has repositioned itselfas a focused provider of specialist packaging materials for premium-brandedgoods, a sector which we believe offers good opportunities for growth and whereit has traditionally been possible to earn higher margins. Shortly after the conclusion of this process, in January 2005, the Groupreceived an approach from Illinois Tool Works, Inc. ("ITW"), a large US-basedindustrial conglomerate. This led to an announcement on 11 February that theBoard was in discussions regarding the possibility of a public offer being madeto acquire the Group. Detailed discussions were held with ITW, but thosediscussions were terminated on 13 April 2005 and a period of uncertainty was putbehind us. The Group's continuing operations performed well in the face of difficult marketconditions. Operating margins in Foils improved by 25% over the previous yeardespite the dramatic rise in oil-based raw material and utility prices, theimpact of the restructuring of the Chinese tobacco industry and the slowdown inEurope over the summer, with particularly good progress made in the US and inthe European holographic foil business. Although both sales and profits weredown in Laminates, this represented a return to normal activity following anexceptional year in 2004 and the return on sales still compares favourably withhistorical levels and industry averages. Although Group sales for the year reduced by 30.2% to £118.4m, this was largelyas a result of the impact of discontinued businesses. Sales in our continuingbusinesses reduced by 5.3% to £105.6m, due to weak demand in European marketsthroughout the summer months and the downturn in China. Group operating profit before goodwill amortisation and exceptional itemsimproved to £1.8m (£1.4m). The loss before tax was £17.0m (£23.8m), althoughthis was after charging exceptional items of £16.0m (£14.5m) in connection withthe disposal of discontinued businesses. Of this, £14.1m (£14.4m) related tonon-cash items. The Group's net borrowings reduced to £6.7m (£10.5m)representing gearing of 21.6% (26.4%). Net assets per share, excludingintangibles, were 89p (118p). The Board is not proposing a dividend. At the next Annual General Meeting, to be held on 1 February 2006, I will beretiring from the Board, having served as a Director for seven years. RichardWright, who joined the Board as a Director in 2001, has considerable experienceof the Group and is currently our Senior Non-Executive Director. Richard willreplace me as Non-Executive Chairman and I wish him, David Walton our ChiefExecutive and the Group every success. This has been a challenging year for the Group in many different ways.Notwithstanding this, much has been accomplished and the Board of Directorswould like to thank our employees who through their hard work, commitment andprofessionalism have made a major contribution to the Group's performance. I ampleased to say that we have entered the new financial year with the Group in asignificantly stronger position, both financially and operationally, than it hasbeen for many years. API is now focused on its core activities, has a clear anddeliverable business strategy and is well positioned to deliver further profitimprovement and sales growth. EXTRACTS FROM CHIEF EXECUTIVE'S REVIEW RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 As a manufacturer of specialised packaging and security products for thetobacco, drinks, luxury and consumer goods markets, the Group has facedconsiderable challenges in recent years. Rapidly evolving markets, moresophisticated customer purchasing behaviour and emerging threats frommanufacturers in Eastern Europe and the Far East have all lead to significantchanges in the competitive landscape, eroding profitability in several of theGroup's businesses. As a result of these changes, it became necessary tocritically review not only the current performance of the Group's activities butalso to consider their long-term prospects and future viability and to makemajor and clear decisions regarding the future direction of the Group. During the year, the Group disposed of its Metallised Paper division and theremaining businesses in its Converted Products division for cash considerationof up to £13.0m. The Metallised Paper business had been heavily loss-making formany years and changes in the competitive environment meant that the prospectsfor return to profitability in the short to medium term were not good. TheConverted Products businesses were involved in the manufacture of specialisedplastic products for which the markets were becoming increasingly commoditised,more competitive and less profitable. The Group is now concentrated on its core Foils and Laminates activities and hassuccessfully repositioned itself as a focused supplier of reflective,metallic-finished and laminated products for use in the packaging of premiumbranded goods. Geographically, we have a strong presence in the US, Europe andthe Far East. In future, we will be pursuing a strategy which is based uponstrengthening our sales, marketing and distribution capabilities in key marketsand sectors, enhancing the technical performance, quality and consistency of ourproduct range, driving down manufacturing costs through process improvement andsourcing an increasing proportion of the products which we sell from lower costeconomies. During 2005, we have been working successfully on a number of key initiatives: • Diversification into higher margin markets - While tobacco and drinks will remain amongst the most important markets for the Group's products, we have made good progress in accelerating the rate of diversification into sectors such as luxury goods, consumer products and pharmaceuticals where higher margins can be obtained. • Establishment of a broader distribution base within Europe - We recently acquired a key distributor in the strategically important German market and are actively looking for opportunities to expand coverage in other key geographical markets. • Improving service levels - We recently reorganised and strengthened our sales and technical capabilities throughout the Group and are already seeing improvements in levels of customer satisfaction. • Enhancing the technical performance of our products - During 2005, our product development group has been working hard to strengthen our product offering. We have initiated a programme of revisions and upgrades to popular, well-established products and during 2005 launched a number of significant new product ranges, particularly in the area of metallics where we have struggled to remain competitive in recent years. • Reducing production costs - Our facilities in Europe and the US are utilising continuous improvement methodologies, such as six-sigma, 5S and LEAN to drive down manufacturing costs and improve quality levels. We are supporting these initiatives with appropriate capital investment. • Strategic sourcing initiatives - We have begun the relocation and significant expansion of our foil manufacturing business in China, which will supply an increasing proportion of the products sold in Europe and the US. In addition, we are collaborating with a number of manufacturers of foils and laminates in the US and Japan to broaden our product offering, particularly in the areas of specialised holographic products and foil products suitable for application to plastic substrates. Each of these initiatives will continue to be a key focus in 2006 as we seek tostrengthen and expand our presence in our chosen markets. In the last year ourtotal capital expenditure was £4.8m (2004: £3.4m). OPERATING RESULTS The key financial data for the year ended 30 September 2005 is as follows: • Sales reduced by 30.2% to £118.4m, while operating profit before goodwill amortisation and exceptional items improved to £1.8m (£1.4m), due principally to the disposal of the Metallised Paper and Converted Products divisions during the year. • The Group's operating profit after goodwill amortisation and exceptional items improved significantly to a profit of £0.5m compared with a loss of £7.6m in the previous year. Continuing Businesses Sales from continuing businesses reduced by 5.3% to £105.6m and operating profitbefore goodwill amortisation and exceptional items reduced to £3.3m (£4.6m) dueto the following factors: • Return to normal levels of activity in the Laminates business, following an exceptional year in 2004. • Reduction in demand for holographic foil in China due to restructuring of the domestic tobacco industry. • General slowdown and reduction in demand in European consumer packaging markets during the summer months. • The failure of a major UK customer. Sales declined by 4.5% to £40.5m in the United Kingdom and by 5.1% to £26.5m inContinental Europe. Following a first half in which sales were 2.6% higher thanthe previous year and in which Foils and Laminates both performed well, weexperienced a marked slowdown during the second half of the year - as wereported in a trading update in September. Demand from manufacturers ofpremium-packaging products was sluggish throughout Europe, affecting both Foilsand Laminates. There was also disruption to the European foils distributionnetwork due to competitor activity which adversely affected sales in southernEurope, particularly in Spain and Italy. Sales in the US declined by 11.0% to £22.2m, but as reported at the half year,this was due to the non-recurrence of one-off contracts for Laminates which hadboosted sales in the prior year. The Group's US foils business continued toperform well during the year, achieving underlying sales growth of 3.5%. Sales increased by 1.3% to £16.4m in the Rest of the World as good growth inAsia-Pacific, India, Russia and other emerging markets offset the reduction intobacco-related sales in China. Operating profit before goodwill amortisation and exceptional items reduced to£3.3m (£4.6m). The Foils and Laminates businesses generated operating profits of£5.5m (£6.8m), representing a return on sales of 5.2% (6.1%), while centralcosts remained stable at £2.2m. The reduction in operating profits was dueprincipally to the return to normal activity in Laminates and lower earningsfrom the sale of holographic foils to the Chinese tobacco industry. In contrast,the US foils business continued to improve steadily, returning to healthy levelsof profitability for the first time in many years, and operating profits nearlydoubled in the European foils businesses. Discontinued Businesses The Group disposed of its heavily loss-making Metallised Paper division inDecember 2004 and the remnants of its Converted Products division in January2005, realising total proceeds of up to £13.0m, of which £9.8m was receivedprior to the year end. A decision has also been taken to discontinue theloss-making Chromagem holographic design business, which is based in the US. The operating loss before goodwill amortisation and exceptional items of thediscontinued businesses was £1.5m (loss £3.1m) on sales of £12.8m (£58.1m). Theperformance of both the Metallised Paper and Converted Products divisions haddeteriorated significantly during the periods prior to their sale. REVIEW OF CONTINUING OPERATIONS Foils The Group's foils businesses produce a range of reflective and holographic,metallic-finished products used by international manufacturers of packaging forpremium branded goods. The Group has a significant share of the market formetallic and pigment foils in the luxury, consumer products, pharmaceutical andtobacco sectors and has a highly regarded holographic capability. The Foilsbusiness is a worldwide operation with manufacturing sites in North America,Europe and China, and sales and distribution facilities in each of its keymarkets. Foil sales decreased by 4.3% compared with the previous year. Approximately twothirds of the reduction occurred in China, where restructuring of the domestictobacco industry adversely affected demand for high margin holographic foils,while the remainder occurred in Europe where market conditions were challengingin the second half of the year. The US foils business performed well, increasingunderlying sales by 3.5% despite strong domestic competition. Operating margins improved by more than 20% compared with the previous yeardespite significant increases in raw material costs and notwithstanding thedeterioration that occurred in China. Raw material costs are closely linked tothe oil price and we experienced considerable increases in these and utilitycosts during the year. While it has proven difficult to recover increasesthrough higher pricing due to competitive pressure, the work which has been doneto improve process efficiency has yielded benefits and profits were upconsiderably in both the US and European businesses. The Chinese foils business experienced a difficult year in 2005. Consolidationof the domestic tobacco industry significantly reduced demand for high-marginholographic foils and the resulting over-capacity in the market led to fierceprice competition that eroded margins on holographic products generally. Whilewe responded aggressively with improved quality and competitive pricing, marketconditions remain tough. In contrast, good progress has been made in domesticmarkets for general-purpose graphics foil. Sales growth in excess of 10% hasbeen achieved in these markets and many innovative new products have beendeveloped and successfully launched. Export sales also increased substantially,with significant volumes now sold into new markets such as India and Russia,together with an increase in export sales throughout the Asia-Pacific regiongenerally. Additionally, the European foils business now imports a highproportion of its graphics foil range from China and bulk shipments to the UShave just commenced. In Europe, the holographic foil business based in Salford performed strongly. Anew management team has been in place since mid-2004 and during this timequality standards and productivity have been steadily improving. These effortshave been rewarded with strong sales growth and significant improvement inmargins. In contrast, the graphics and pigment foils business based in Livingston had adifficult year. Price pressure and increased competition adversely impactedsales in the first half, the business then suffered from the general slowdown inthe packaging sector experienced during the summer months and the situation wasfurther exacerbated by Boxstar Limited, one of its major customers, being putinto administration in September 2005. The management team was strengthenedearlier this year and much has been done to address deficiencies in the productrange and improve manufacturing productivity. These efforts were reflected insome improvement in profitability during the current year, but more importantlya solid foundation has been laid for further progress in 2006. The US foils business continued with its focus on improving productivity andefficiency and maintained its steady upward trend in performance, returning toprofitability for the first time in several years. Increases in raw material andutility costs were successfully absorbed through more effective purchasing,reduced waste and price increases. Good progress has been made in reorganisingmanufacturing and the sales strategy has delivered growth in a number of keyproduct areas. While we will continue to maintain the strong, national identities of each ofour foils businesses, there are good opportunities for our Foils division as anincreasingly international, integrated, world-wide business. Development istherefore underway in a number of areas in support of this strategy includingthe following: • During the year, we commenced a programme of phased capital investment which will see new metallising and embossing capacity come on stream in 2006 in the US and Europe. • We have begun the process of rationalising our product range and consolidating manufacture of each product into a single location. This will enable us to realise economies of scale in manufacturing and improve product quality and consistency. • We continue to progress the relocation of our Chinese facility. We have recently purchased land and expect construction of a new facility to commence during 2006. In addition to improving our capabilities in China, this project will provide us with the opportunity to manufacture large quantities of high-quality graphic foils at low-cost and should significantly improve our ability to compete effectively in the US and European markets. • A number of new products targeted at the volume market in Europe and the US and manufactured in China were launched during the latter stages of 2005 and these are performing ahead of expectations. • We recently completed the acquisition of a key distributor in Germany and are actively looking to expand our presence in a number of other key markets. We continue to believe that the foils business offers good opportunities forgrowth and that further margin improvement is achievable. Laminates The Laminates business produces a range of laminated paperboard products used byinternational packaging manufacturers in the construction of cartons and boxesfor premium branded goods. Often such products incorporate a metallic orholographic finish and consequently there are opportunities for synergies withthe Group's foils business. API has a significant share of the tobacco, drinksand luxury products markets and a developing presence in the consumer productsand pharmaceuticals sectors. Based in the UK, Laminates serves principally theUK and Western European market. The division enjoyed an exceptional year in 2004 due to the high volume ofpromotional work associated with product launches by major tobacco companies.This led to significant one-off projects in the US and Far-East and alsoincreased sales in Europe. In 2005, the mix of business returned to normal andconsequently there was a decline in profitability, although the overall returnon sales continued to compare favourably with that achieved in previous yearsand with industry averages. Although sales and margins were both below the levels achieved during 2004,Laminates performed well during the year in the face of often difficult marketconditions. Sales in the traditional tobacco, drinks and health and beautysectors remained strong, although there was considerable pressure on margins,particularly in the UK, and good progress was made in new product areas such asfood, pharmaceutical and personal care. Like the European foils business,Laminates suffered badly from the general slowdown experienced during the summermonths and was impacted by the collapse of Boxstar Limited. The situation wasfurther exacerbated by industrial action over the summer months at a number ofFinnish paper and board manufacturers, which adversely affected the supply ofpaperboard and impacted our ability to fulfil orders during the seasonallybusier final quarter of the year. Although the tobacco and drinks sectors in the UK and Western Europe willcontinue to be of fundamental importance to Laminates for the foreseeablefuture, we believe that the most attractive opportunities for development lie inmarkets such as luxury goods, pharmaceuticals, personal care and food productswhere we already have a growing presence. The sales force and technical grouphas recently been reorganised and strengthened and will increasingly focus ondeveloping these markets. During 2006, we will bring on stream sheet-fedlamination capability to enable us to become more responsive and flexible andbetter service customers in both traditional and new sectors. During the period,we also successfully implemented Oracle, the Group's new ERP system, and this isalready beginning to yield financial benefits. We continue to believe that there are opportunities to leverage our position asone of Europe's leading manufacturers of laminated products to achieve growth inboth sales and profits. We recognise that the Laminates business is heavilyfocused on traditional markets and we are examining a number of options forexpanding our geographical presence within Europe and for penetration into theattractive US and Far Eastern markets. PROSPECTS Although trading conditions are expected to remain tough in most of the Group'smarkets, we are confident of achieving further improvement in 2006. The US andChinese foils businesses are expected to continue to improve steadily and theEuropean foils business is positioned for growth and margin improvementfollowing the successful launch of a number of new products, increasingavailability of competitively priced products from China and recent expansion ofthe distribution base. While conditions for Laminates remain more challenging,we are optimistic that the recent reorganisation of the sales and technicalteams and the capital investment in sheet-fed laminating capacity will deliverbenefits during 2006. The Group is now repositioned as a focused supplier of reflective,metallic-finished and laminated products for use in the packaging of premiumbranded goods, with a strong presence in the US, Europe and the Far East. Wehave made a number of strategic investments during 2005 that are alreadydelivering benefits to the Group and we will continue to invest in the expansionand development of the Foils and Laminates businesses. The Board believes thatthe Group has strong positions in attractive markets with good opportunities forgrowth and margin improvement and remains confident that further progress willbe made in 2006. GROUP PROFIT & LOSS ACCOUNT for the year ended 30 September 2005 ___________________________________________________________________________________________________________________ 2005 2004 £'000 £'000Group TurnoverContinuing operations 105,570 111,442Discontinued operations 12,780 58,103 118,350 169,545 Operating profit/(loss)Before goodwill amortisation and exceptional itemsContinuing operations 3,271 4,554Discontinued operations (1,520) (3,136) 1,751 1,418Goodwill amortisationContinuing operations (407) (406)Discontinued operations - (44) (407) (450)After goodwill amortisation but before exceptional itemsContinuing operations 2,864 4,148Discontinued operations (1,520) (3,180) 1,344 968Exceptional itemsContinuing operations (430) (1,657)Discontinued operations (454) (6,904) (884) (8,561)Group operating profit / (loss)Continuing operations 2,434 2,491Discontinued operations (1,974) (10,084) 460 (7,593)Share of operating loss in joint venture (55) (91)Total operating profit / (loss): group and share of joint venture 405 (7,684) Loss on disposal of discontinued operationsBefore goodwill (8,120) (100)Goodwill previously charged to reserves (7,917) (14,365) (16,037) (14,465) Loss on ordinary activities before interest and taxationContinuing operations 2,434 2,491Discontinued operations (18,066) (24,640) (15,632) (22,149)Net interest (1,407) (1,696)Loss on ordinary activities before taxation (17,039) (23,845)Taxation (338) (559)Loss on ordinary activities after taxation (17,377) (24,404)Equity minority interests (574) (982)Loss attributable to shareholders (17,951) (25,386)Dividends - -Balance transferred from reserves (17,951) (25,386) Basic and fully diluted loss per share (53.6) (76.3)Adjusted loss per share (before goodwill amortisation and exceptional items) (1.9) (5.7) GROUP BALANCE SHEET as at 30 September 2005 ___________________________________________________________________________________________________________________ 2005 2005 2004 2004 £'000 £'000 £'000 £'000Fixed assets Intangible assets 5,818 5,516Tangible assets 28,692 38,579Investment in joint ventureShare of gross assets - 626Share of gross liabilities - - (136) 490 34,510 44,585 Current assetsStocks 12,869 16,957Debtors 20,677 34,918Cash at bank and in hand 10,396 11,719 43,942 63,594Creditors - amounts falling due within one year (25,668) (41,251)Net current assets 18,274 22,343 Total assets less current liabilities 52,784 66,928 Creditors - amounts falling due after more than one year (14,980) (19,712)Provisions for liabilities and charges (1,367) (1,499)Accruals and deferred income - (323) Net assets 36,437 45,394 Share capital and reservesCalled up share capital 8,592 8,463Share premium account 211 -Revaluation reserve 1,866 2,886Capital redemption reserve 549 549Merger reserve - 14,365ESOP reserve (251) (2,513)Profit and loss account 20,010 16,135Shareholders' funds 30,977 39,885Equity minority interests 5,460 5,509 36,437 45,394 GROUP CASH FLOW STATEMENT for the year ended 30 September 2005 ___________________________________________________________________________________________________________________ 2005 2004 £'000 £'000Reconciliation of operating loss to net cash inflow from operating activitiesGroup operating profit / (loss) 460 (7,593)Amortisation and depreciation less government grants 4,607 6,852Impairment charge against tangible fixed assets 212 6,665Loss / (profit) on disposal of fixed assets, other than land & buildings 149 (1)Increase in stocks (892) (287)Decrease / (increase) in debtors 6,043 (2,000)(Decrease) / increase in creditors (6,424) 490Decrease in provisions (590) (90)Net cash inflow from operating activities 3,565 4,036 Cash outflow of £672,000 (2004: £1,896,000) resulted from operating exceptional items incurred during the year 2005 2005 2004 2004 £'000 £'000 £'000 £'000Cash flow statementNet cash inflow from operating activities 3,565 4,036Returns on investment and servicing of financeInterest paid (1,483) (1,410)Interest received 117 73Dividends paid to minority interests (788) (2,154) (790) (2,127) TaxationUK - 18Overseas (563) (563) (680) (662) Capital expenditure and financial investmentPayments to acquire tangible fixed assets (4,806) (3,393)Receipts from sales of tangible fixed assets 50 216Payments to acquire investments - (4,756) (490) (3,667) Acquisitions and disposalsSale of subsidiary undertakings 8,057 2,119Net (cash) / overdrafts disposed of with subsidiary (24) 219undertakingsAcquisition (1,069) 6,964 (43) 2,295 Net cash flow before management of liquid resources andfinancing 3,056 (125)Management of liquid resources - 1,335 Financing(Decrease) / increase in short term borrowing (575) 1,775Decrease in long term borrowing (4,735) (200)Issue of ordinary share capital 340 -Cash received from ESOP trust 347 -Increase in cash in the period (1,567) 2,785Exchange movement 244 (462)Balance sheet movement in net cash (1,323) 2,323 GROUP CASH FLOW STATEMENT for the year ended 30 September 2005 ___________________________________________________________________________________________________________________ Notes to the cash flow 2004 Cash Acquisition Exchange Other 2005statement flow non-cash movements £'000 £'000 £'000 £'000 £'000 £'000A. Analysis of net debt Cash at bank and in hand 11,719 (1,567) - 244 - 10,396Short term borrowing (2,575) 575 (102) - - (2,102)Long term borrowing (19,679) 4,735 - - (36) (14,980)Net debt (10,535) 3,743 (102) 244 (36) (6,686) 2005 2004 £'000 £'000B. Reconciliation of net cash flow to movement in net debt (Decrease) / increase in cash (1,567) 2,785Decrease in short term investments - (1,335)Decrease / (increase) in short term borrowing 575 (1,775)Decrease in long term borrowing 4,735 200Change in net debt resulting from cash flows 3,743 (125)Exchange movement 244 (552)Loans assumed on acquisition (102) -Other (36) (37)Movement in net debt 3,849 (714)Net debt at start of period (10,535) (9,821)Net debt at end of period (6,686) (10,535) OTHER STATEMENTS for the year ended 30 September 2005 ___________________________________________________________________________________________________________________ 2005 2004 £'000 £'000Statement of total recognised gains and losses Loss for the financial year excluding share of losses of joint venture (17,896) (25,295)Share of joint venture's losses for the year (55) (91)Loss attributable to shareholders (17,951) (25,386)Currency translation differences on foreign currency net investments 439 (1,503)Total recognised gains and losses relating to the year (17,512) (26,889)Prior year adjustment - (435)Total gains and losses recognised since previous annual report and accounts (17,512) (27,324) 2005 2004 £'000 £'000Reconciliation of movements in shareholders' funds Loss attributable to shareholders (17,951) (25,386)New shares issued net of costs 340 -Exercise of share options to acquire shares held by the ESOP trust 347 -Goodwill reinstated on sale of a subsidiary 7,917 14,365Currency translation differences on foreign currency net investments 439 (1,503)Net deduction from shareholders' funds (8,908) (12,524) Opening shareholders' funds 39,885 52,409Closing shareholders' funds 30,977 39,885 NOTES SEGMENTAL ANALYSIS Analysis of turnover by destination 2005 2005 2004 2004 £'000 £'000 £'000 £'000United KingdomContinuing operations 40,460 42,375Discontinued operations 6,024 46,484 24,965 67,340 Continental EuropeContinuing operations 26,516 27,933Discontinued operations 5,474 31,990 29,189 57,122 AmericasContinuing operations 22,205 24,952Discontinued operations 181 22,386 719 25,671 Rest of WorldContinuing operations 16,389 16,182Discontinued operations 1,101 17,490 3,230 19,412 118,350 169,545 Analysis by origin Turnover Profit/(loss) before Net operating assets interest and tax 2005 2004 2005 2004 2005 2004 £'000 £'000 £'000 £'000 £'000 £'000United Kingdom - continuing 71,342 75,080 1,663 2,340 16,950 34,282United Kingdom - discontinued 12,631 57,714 (1,213) (2,778) - - 83,973 132,794 450 (438) 16,950 34,282 Continental Europe - continuing 871 1,008 112 166 290 - Americas - continuing 21,873 21,817 430 (200) 11,844 11,512Americas - discontinued 143 389 (307) (358) - - 22,016 22,206 123 (558) 11,844 11,512 Rest of World - continuing 11,484 13,537 1,066 2,248 6,487 6,383Rest of World - discontinued 6 - - - - - 11,490 13,537 1,066 2,248 6,487 6,383 118,350 169,545 1,751 1,418 35,571 52,177Share of joint venture - - (55) (91) - -Exceptional items and goodwill - (17,328) -amortisation - (23,476) -Non operating assets - - - - 866 (6,783) 118,350 169,545 (15,632) (22,149) 36,437 45,394 NOTES (cont'd) __________________________________________________________________________________________________________________ Analysis by activity Turnover Profit/(loss) before Net operating assets interest and tax 2005 2004 2005 2004 2005 2004 £'000 £'000 £'000 £'000 £'000 £'000Continuing - Foils & Laminates 105,570 111,442 5,502 6,774 35,571 36,927Continuing - Central costs - - (2,231) (2,220) - - 105,570 111,442 3,271 4,554 35,571 36,927Discontinued - Metallised Paper 3,340 22,959 (693) (2,679) - 2,476Discontinued - Converted Products 9,297 34,755 (520) (99) - 12,774Discontinued - Chromagem 143 389 (307) (358) - - 12,780 58,103 (1,520) (3,136) - 15,250 118,350 169,545 1,751 1,418 35,571 52,177Share of joint venture - - (55) (91) - -Exceptional items and goodwill -amortisation - (17,328) (23,476) - -Non operating assets - - - - 866 (6,783) 118,350 169,545 (15,632) (22,149) 36,437 45,394 OPERATING LOSS 2005 2004 £'000 £'000Exceptional items charged against operating loss comprise Restructuring of operating businesses 672 1,896Impairment of tangible assets 212 6,665 884 8,561 EARNINGS PER SHARE 2005 2004 pence £'000 pence £'000Earnings per share are based on Loss attributable to shareholders (53.6) (17,951) (76.3) (25,386)Add exceptional items 2.6 884 25.7 8,561Add goodwill amortisation 1.2 407 1.4 450Add loss on disposal of discontinued operations 47.9 16,037 43.5 14,465Adjusted loss attributable to ordinary shareholders (1.9) (623) (5.7) (1,910)Basic weighted average number of ordinary shares 33,468,246 33,262,578 BASIS OF PREPARATION The accounts have been prepared on the basis of the accounting policies set outin the Group's Annual Report and Accounts for the year ended 30 September 2004. PUBLICATION OF ABRIDGED ACCOUNTS The preliminary announcement figures for the year ended 30 September 2005 andthe comparative figures for the year ended 30 September 2004 are an abridgedversion of the Group's statutory accounts which carry an unqualified auditreport and do not contain a statement under S237 (2) or (3) of the Companies Act1985. The Group's audited statutory accounts for the year ended 30 September2005 will be filed in due course with the Registrar of Companies. The Group'saudited statutory accounts for the year ended 30 September 2004 have been filedwith the Registrar of Companies. The Annual Report and Accounts for the year ended 30 September 2005 will beposted to shareholders by 3 January 2006 prior to the Annual General Meeting on1 February 2006. Copies of the Annual Report and Accounts will be available tomembers of the public from 4 January 2006 at the Group's registered office atSecond Avenue, Poynton Industrial Estate, Poynton, Cheshire SK12 1ND. CONTINGENT LIABILITIES The consideration for the sale of the Converted Products Division includes adeferred element totalling £2.0 million. It is payable in January 2007 and,should the purchaser default, it is guaranteed by an independent insurancecompany. A potential claim has recently been received from the purchasers of theConverted Products Division, Tri-Q Limited which may affect the recoverabilityof £750,000 of the deferred consideration. The Directors consider that any claimwill be unsuccessful and will robustly defend any legal action. Legal adviceobtained indicates that a successful outcome is probable and consequently, noprovision against the recoverability of the deferred consideration has been madein the accounts. INTERNATIONAL FINANCIAL REPORTING STANDARDS The accounts for the six months ending 31 March 2006 will be prepared underInternational Financial Reporting Standards (IFRS). Had the accounts for theyear ended 30 September 2005 been prepared using these standards, the reportedloss after taxation would have been £0.4 million lower and shareholders' equityat 30 September 2005, which under UK GAAP was £31.0 million would have been£22.8 million. The reduction in shareholders' equity relates mainly to a changein the method of accounting for the deficit on the Group's defined benefitpension scheme. The decrease in the reported loss after taxation resultsprincipally from ceasing to amortise goodwill. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Abrdn Property