THE strength of the pound hit API hard in the first six months, but that was largely disregarded by a market more interested in the packaging label firm's potential.

Pre-tax profits dropped 19% to #4.91m on turnover slightly ahead at #72m. That was after the sterling impact of #1.4m and a #1.1m charge for bringing together the Peerless and Whiley foil businesses at Livingston, where there are now about 180 people employed.

The underlying profits advance was a healthy 21%.

Whiley was affected by a downturn in the sale of foils to the whisky industry approaching #3m, as the Asian crises affected customers' sales in Thailand in particular - the company sells chiefly to the top end of the Scotch market.

Chief executive Michael Smith is expecting a better second half.

The first quarter was also depressed by de-stocking by UK tobacco manufacturers, although there has since been a strong recovery, and overall the group is experiencing a decided upward trend in volume sales.

Astor Universal, acquired in March for #30m, is promising to be a major contributor.

The interim dividend has been raised 10% to 5.42p.