British Polythene Industries PLC (“BPI”) is issuing its Interim Management Statement for the period from 1 January 2011 to date, ahead of its Annual General Meeting to be held today in Greenock at 12 noon.
We indicated in our Preliminary Announcement on 7th March that we had commenced the year well, and that the first few months would show a better outcome than last year.
As anticipated, March and April have been good months and your Board can now confirm that, barring unforeseen circumstances, the first half will produce a better result, at the operating level, than the similar period in 2010. This encouraging progress is despite continuing pressure from raw material costs which have now risen to unprecedented levels.
In addition, the results will show a restructuring credit of some £1.9 million, being the profit on the reported sale in January of a surplus property in Essex.
We also anticipate an increase in finance charges, partly from the higher rates we are paying after renewing our banking facilities at the end of last year, and partly because our borrowings have not dropped as sharply as we had planned, due to additional working capital associated with raw material price increases in this financial year. Despite the increase in working capital, we currently anticipate that our borrowings will be lower at the end of June than twelve months previously.
Our current order book is leaner than two months ago, but the warm weather in April has accelerated demand from the agricultural market. Although we can now see an improved first half, it is far too early to predict any outcome for the second half until summer is well behind us.
Group Pension Scheme
The Company has agreed with the trustees of the UK defined benefit pension scheme a property backed cash payment plan under which the Company will provide £1.8 million per annum to the scheme for a period of 20 years starting in January 2012. The present value of this additional funding stream has been recognised as an asset of the scheme at a current value of approximately £20 million. This reduction in the deficit as it appears on the Group’s balance sheet will be offset by a matching non-controlling interest in equity. Should the scheme have a funding surplus in the future, there is a mechanism for the payments to cease.
In line with the Board’s announcement on 7 March 2011 to recommend a further dividend of 7.85p per share (to take the total dividends for the year ended 31 December 2010 to 11.5p per share (2009: 11.0p)), the Board is declaring a second interim dividend of 7.85p per share, payable on 21 July 2011 to those shareholders on the register at the close of business on 18 March 2011. This dividend has been declared by the Board rather than being considered at the Company’s Annual General Meeting due to an administrative error which resulted in the relevant resolution to approve the dividend being omitted from the notice of this year’s Annual General Meeting.
As previously announced, the European Commission (“EC”) and the Office of Fair Trading (“OFT”) are conducting enquiries into the agricultural films market. We have recently received and responded to a request for information from the EC and have continued to co-operate with the OFT’s enquiries. We are not, however, able to ascertain the likely timetable for resolving these matters with either the EC or OFT.