Interim Results 2019

Scapa Group Ltd (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

Division 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

¹ Prior year results translated at current year’s average exchange rates
² Trading profit is before exceptional items, acquisition costs, amortisation of intangible assets and legacy pension costs (see Note 4)
³ Adjusted earnings per share is calculated by dividing the trading profit, less cash interest, less tax on operating activities by the weighted average number of ordinary shares in issue during the year
⁴ Excluding IFRS 15 provision release. A contract liability provision was created as a result of the acquisition of Systagenix in line with the requirements of IFRS 15 and this is excluded on a ‘continuing’ basis as it represents a non-cash item. This provision will be released on a straight-line basis over a five-year period, in line with the exclusive supply contract

 

For further information:

Scapa Group Ltd	Heejae Chae – Group Chief Executive Oskar Zahn – Chief Financial Officer	Tel: 0161 301 7430
Numis Securities Limited (Nominated Adviser/Joint Broker)	Mark Lander, Freddie Barnfield	Tel: 020 7260 1000
Berenberg (Joint Broker)	Chris Bowman, Toby Flaux	Tel: 020 3207 7800
FTI Consulting (Media Relations)	Brett Pollard, Victoria Foster Mitchell	Tel: 020 3727 1000

 

About Scapa Group Ltd

Scapa Group Ltd is a diversified Healthcare and Industrial company focused on bringing best-in-class innovation, design and manufacturing solutions to its customers.

Healthcare

Scapa Healthcare is the trusted strategic partner of choice for the world's leading companies in Advanced Wound Care, Consumer Wellness and Medical Device Fixation. We partner with the top global MedTech companies to develop and manufacture innovative skin friendly medical device fixation and topical solutions, from inception through to market delivery, from our state-of-the-art facilities.

For further information, please visit www.scapahealthcare.com

Industrial

Scapa Industrial is a global supplier of bonding solutions and manufacturer of adhesive-based products which offer meaningful value in industrial applications due to their lightweight, easy-to-apply properties. We are recognised for our unparalleled range of products, including adhesive tapes, films and foams, and we can engineer custom designs for even the most unique applications.

For further information, please visit www.scapaindustrial.com

For full press release and presentation see Results and Presentations