Scapa Group plc
Interim Results
Scapa Group plc (AIM: SCPA) ('Scapa' or 'the Group') today announces its financial results for the six-month period ended 30 September 2019.
Commenting on the results Group Chief Executive, Heejae Chae said:
“We are pleased to report a resilient financial result in the first half of the year, despite the significant impact of the loss of the ConvaTec contract. We have delivered strong revenue growth and made good progress on our operational footprint plans for integrating and streamlining the business. We anticipate that the second half of the year will benefit from new products and technology transfers from new and existing customers. In the medium-term, we expect our operating leverage to unwind as we realise the value from our strongest-ever pipeline. Whilst the macro environment remains challenging in some of the markets in which we operate, the Board remains confident of achieving its full year expectations.”
Group Financial Highlights:
- Revenue grew 14.3% to £160.8m (2018: £140.7m); 10.4% on a constant currency basis1
- Trading profit2 fell 17.0% to £14.2m (2018: £17.1m); 20.7% on a constant currency basis1, representing a trading profit margin reduction to 8.8% (2018: 12.2%); reported operating profit fell to £0.1m (2018: £10.5m); reflecting the impact of the loss of the ConvaTec contract
- Adjusted earnings per share3 decreased 15.7% to 7.0p (2018: 8.3p)
- Underlying cash flow from operations improved to £18.9m (2018: £13.4m)
- Net debt of £69.7m (31 March 2019: £55.7m) includes IFRS 16 impact of £8.6m
- Pension deficit reduced to £6.4m (31 March 2019: £8.4m)
- Scapa was successful in its motion to dismiss ConvaTec's claim filed in May 2019, in New Jersey federal Court. Scapa's claim against ConvaTec in Connecticut for damages in excess of US$83m has been filed
Divisional Highlights
Healthcare:
- Revenue increased 29.2% to £74.7m (2018: £57.8m); 22.7% on a constant currency basis1
- On a continuing basis4 revenue increased 23.0% to £71.1m (2018: 57.8m); 16.7% on a constant currency basis1
- Trading profit2 decreased 19.5% to £6.6m (2018: £8.2m); 24.1% reduction on a constant currency basis1 reflecting the loss of the ConvaTec contract
- Trading profit margins at 8.8% (2018: 14.2%)
- Continued realisation of synergies across the division, to optimise its assets and enhance its capabilities, as well as to meet the demands and expectations of its customers, including the integration of Gargrave and the preparations in Knoxville
- Over 100 programmes in the development pipeline, many of which are expected to come to market in the near to medium term
- New technology transfer agreement strengthens relationship with existing leading consumer healthcare customer
Industrial:
- Revenue increased 3.9% to £86.1m (2018: £82.9m); 1.5% on a constant currency basis1, despite major market headwinds
- Trading profit2 decreased 7.3% to £10.2m (2018: £11.0m); 9.7% decrease on a constant currency basis1
- Trading profit margins reduced to 11.8% (2018: 13.3%); largely due to product mix and increased overhead charges
- 17% growth in Asia, driven by Consumer and Specialty
- Growth in foundational portfolio; premium PVC, polyethylene adhesives, double-sided tapes, thin-gauge coated adhesives and mats