API looks a better buy
API Group has announced a much healthier set of results which will make it more attractive as it begins the process of sounding out buyers.
The Poynton-based business, which makes specialist foils and packaging materials, unveiled a 14% growth in sales in the year to March 31 to £113.9m (2011: £100m), while pre-tax profits rose by 77% to £5.1m (£2.9m).
The company has endured a couple of torrid years but has showed significant signs of progress since extracting itself from a costly Chinese venture last year.
Once signs of improvements began to filter through, a group of shareholders began lobbying for the company to put itself up for sale – a process which it has said will be explored during the third quarter of 2012.
Its laminates business proved to be the greatest growth driver, with sales up by 24% to £54.8m, which it attributed to brand owners investing more in packaging spend. Operating profits in the division also increased by £500,000 to £5.7m.
The Salford-based Holographics division was the firm’s most profitable, though. It experienced a 21% increase in sales to £13m (£10.8m), but operating profits climbed by £1m to £1.6m as it focused on providing more services to security, ID and product authentication companies.
Moreover, despite increasing capital investment in equipment – including a new laminates line at Poynton to £3.5m (£2.1m), the firm increased cash flow and by the end of the year its net debt had shrunk to £3.6m (£8.5m). Net assets also climbed by 39% to £21.3m (£15.3m).
Chairman Richard Wright said: “It is pleasing to report another substantial improvement in the group’s financial results, in spite of the challenging economic conditions and pressures from higher raw material costs. ”
“A second year of strong cash flow has transformed the Group’s balance sheet. With a robust pipeline of growth projects and management focus on improving the profitability of the European foils business, the board is confident of making further progress in the current financial year.”
