API pays first dividend in 12 years

STOCKPORT and Salford packaging firm API Group has reinstated its dividend after a break of 12 years.

The group which specialises in laminated board and paper packaging for consumer goods, such as boxes for bottles of whisky, grew rapidly under previous management in the early part of the last decade and became mired in debt.

During the last five years a new management team, led by chief executive Andrew Turner and finance director Chris Smith, have turned the business around and used spare cash to pay down debt.

But Mr Smith said they are now keen to reinstate the dividend which should attract a wider mix of investors to the business which is listed on the Alternative Investment Market (AIM). The company will pay an interim dividend of 0.7p.

He said: “It’s part of the change in the investment proposition of this company, it’s not just a recovery stock, it’s a balanced investment. It also gives us some yield and the markets are looking for yield.”

Half-year figures for the six months to the end of September show pre-tax profits fell to £2.9m from £4m, on sales of £56.9m, down from £58.8m. Mr Smith said the slip in performance reflected the strong first half last year and the timing of contracts. “This year it’s going to be the other way around,” he said.

The laminates arm recorded sales of £28m, down 7.2% while foils enjoyed a 9% increase to £14.4m from European sales. In the US revenue fell 3.1% to £11.9m. The Salford-based holographics business, which helps companies tackle fraud and counterfeiting by developing holographic logos on packaging, reported a 9.7% decline in sales to £4.5m. API is now cutting costs to get the business to a break even position which will lead to several voluntary redundancies amongst the 90-strong workforce.

The group employs 200 people in Poynton, near Stockport and Salford and a further 320 at sites in Scotland, the US, Europe and Asia. During the period API refinanced a £13.5m facility with HSBC, switching from Barclays.