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Upgrades in store for Scapa

RESULTS: Scapa has made a habit of under-promising and over-delivering, as yet another excellent set of financial results demonstrates
May 28, 2014

Scapa (SCPA) continued to cut costs and grow profits in the year to 31 March, just as management promised. Despite little help from end markets, the Manchester-based tapes and adhesives supplier widened its gross margin to 6.9 per cent from 6.6 per cent, while growing revenues organically across the group in the high single digits. At its healthcare division, turnover even increased 21 per cent.

IC TIP: Buy at 112p

As a result, pre-tax profits climbed an impressive 17 per cent and adjusted EPS rose 31 per cent to 7.2p a share. A £12m non-cash charge arising from a lowering of the applicable UK corporation tax rate largely explains the differences in reported figures in the table.

Good earnings visibility in the healthcare division, and good sales momentum in the industrial and electronics divisions, gave management confidence to double the final dividend, which was only reinstated last year. Analysts at N+1 Singer upgraded their adjusted EPS estimates for the current year by 16 per cent to 7.3p (from 6.9p for the year just ended), rising to 7.8p in fiscal 2016, citing trading momentum and the lower tax rate.

SCAPA (SCPA)

ORD PRICE:112pMARKET VALUE:£ 165m
TOUCH:111-112p12-MONTH HIGH:130pLOW: 76p
DIVIDEND YIELD:0.9%PE RATIO:NA
NET ASSET VALUE:32p*NET CASH:£5.4m

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2010177-5.2-1.9nil
20111926.12.4nil
201219610.54.5nil
2013 (restated)2099.60.80.5
201422611.2-4.61.0
% change+8+17-+100

Ex-div: 23 Jul

Payment: 22 Aug

*Includes intangible assets of £27.5m, or 19p a share