Scapa Group plc
(“Scapa”, the “Company” or the “Group”)
Interim Results
First half results ahead of COVID-19 plan
Revenue and profitability expected to continue to improve in the second half
Scapa Group plc (AIM: SCPA), the diversified Healthcare and Industrial company focused on bringing best-in-class innovation, design and manufacturing solutions to its customers, today announces its unaudited financial results for the six-month period ended 30 September 2020.
Financial Highlights:
• As previously disclosed in the October trading update, revenue declined 24.1% to £122.0m (2019: £160.8m)
• Revenue improved 23.0% sequentially from Q1 to Q2 as demand begins to return to prior year level
• Trading profit1 of £5.5m (2019: £14.2m) impacted by reduced volumes but offset by targeted cost savings and government subsidies
• Basic loss per share improved to 0.2p (2019: loss of 0.6p)
• Adjusted net debt2 reduced to £21.8m (31 March 2020: £54.4m) due to reduction of working capital and net proceeds from the equity placement in May 2020 of £31.6m
• Net debt reduced to £40.4m (31 March 2020: £74.6m) includes IFRS 16 impact of £18.6m
• Bank net debt / EBITDA3 of 0.7x
Divisional Highlights
Healthcare:
· Demand across the segments has been impacted by the postponement of elective surgeries and reduced footfall across the retail channels; early signs of improvement in Q3, albeit cautious given the recent global resurgence of COVID-19 infections
· Revenue decreased 26.2% to £55.1m (2019: £74.7m) with declines seen in Wound Care and Medical Devices
· Consumer grew 2.9% driven by two technology transfers completed last year
· Trading profit1 decreased to £1.3m (2019: £6.6m); impacted by lower volume but offset by targeted cost control measures and government subsidies
· Completed planned consolidation of Dunstable and Inglewood sites into Gargrave and Knoxville, respectively; cost benefit from right-sizing expected in H2
Industrial:
· Revenue decreased 22.3% to £66.9m (2019: £86.1m); demand has recovered to pre-COVID-19 levels at the end of Q2, which is expected to positively impact revenues in H2
· The recovery from Q1 has been seen across all segments and geographies particularly in Construction and Automotive
· Trading profit1 decreased to £6.1m (2019: £10.2m); impacted by lower volume but offset by a positive product mix and targeted cost control measures
· New programme wins in Automotive, Cable and Consumer
· Product expansion, including facemasks, antibacterial wipes and eco-friendly roofing solutions, reflecting, as detailed in the full year results, the Company's flexibility to respond to market needs
Outlook Highlights
· Return to pre-COVID-19 demand levels in Industrial and encouraging progress in Healthcare are driving momentum
· Whilst uncertainty remains given the recent global resurgence of COVID-19 infections, revenue in both divisions in H2 is expected to exceed H1, with earnings benefitting from additional volumes and cost improvement programmes already implemented
· As a result of this momentum, we continue to track ahead of our COVID plan
1 Profit before net finance costs, exceptional items, amortisation of intangible assets, acquisition costs and legacy pension costs
2 Adjusted net debt excludes lease liabilities
3 EBITDA comprises trading profit before depreciation for the last 12 months
4 Adjusting operating profit and taxation for exceptional items, pension administration costs, amortisation and non-cash interest
5 Group results before the impact of IFRS 15 provision release for the Systagenix acquisition
Commenting on the results Group Chief Executive, Heejae Chae said:
“We delivered first half results ahead of our COVID-19 plan and the Board's expectations, demonstrating the herculean effort by everyone in the organisation in response to the pandemic. As a designated essential business, we have maintained operations throughout the pandemic and supported our commercial partners thanks to the dedication of our colleagues around the world. The swift actions we took at the beginning of the pandemic have helped to mitigate effects on our profitability and cash generation, as well as to continue to service our customers. As demand returns to pre-COVID-19 levels, we have the agility to meet this demand, positioning us well to capture additional market share. We have taken strategic and operational actions to position us better both in terms of profitability and to further strengthen the Balance Sheet. Whilst mindful of the recent global resurgence of COVID-19 infections, we expect that revenue and profitability will continue to improve during the second half of the financial year.”