API Group plc recently provided an update on trading for the year ending 31 March 2010 ahead of the scheduled announcement of its full year results on 3 June 2010. After a difficult first half, the Group's performance in the second six months of the financial year was ahead of expectations and the Board now expects to report a positive result, at operating profit level, for the year as a whole.
While market conditions remain uncertain, Group sales for the second half advanced by approximately 10% compared to the previous six months and profitability in Europe recovered strongly. Despite higher volumes, limited progress has been made in reducing losses at the Group's 51%-owned subsidiary in China. As a consequence, the Board of API has commenced a strategic review of its investment in China and expects to take a non-cash impairment charge against fixed assets of approximately ÂGBP2.6 million (net of minority interest) in the Group's year end accounts.
The Group continues to operate well within its main banking covenants. During April 2010, a new, $7.6 million asset-backed lending facility was completed in the US. Part of the proceeds will be used to pay down higher interest rate debt in the UK and to re-balance gearing across the Group's global operations.
