In the year to 30 September sales at the speciality packaging group fell 2.4% to 176.2m, and although operating profits tripled to 600,000, margins remain measly at just 0.34%.

API also revealed that it could sell off all or part of its underperforming Converted Products division, which includes Learoyd Packaging.

A 5.4m exceptional charge in the division pushed the groups pre-tax loss up to 7.1m (2002: 4.3m).

Chairman David Hudd said: The future of the Converted Products division remains under review and we are actively exploring options for withdrawal from underperforming businesses.

The 43.1m turnover division includes Tenza and Learoyd, where performance showed improvement, whereas that of the Coated Products, Filmcast and Morris Plastics businesses deteriorated.

In Foils and Laminates, APIs biggest division with sales of 106.7m, the core foils business based in Livingston performed well, and despite a 10% fall in UK sales the strengthening Euro improved APIs competitive position on the continent.

However, the Salford holographic security foils business lost orders and was a black spot, and here too API is exploring a number of options for the future of the plant.

Group-wide, API is close to completing a reorganisation programme that is expected to show annual savings of 3m from next year. It has also consolidated the management of its Foils and Laminates and Metallised Paper divisions to reduce overheads and maximise purchasing power.

The API board is also proposing to cancel the companys share premium account in order to eliminate the accumulated deficit on the profit and loss account and to create distributable reserves which would be available to pay dividends to shareholders and to fund market repurchases of the companys shares.

APIs share price fell 0.7p to 70.3p on the news.