Scapa (SCPA) was pushed into a first-half loss by medical technology group ConvaTec’s (CTEC) decision to exit a supply deal early, over which Scapa is pursuing $83m (£64m) in damages.
The loss of the ConvaTec contract drove Scapa’s healthcare trading profits down for the period, with an associated loss of margin and overhead recovery contributing to a drop of 24.1 per cent to £6.6m. This also brought £9.2m in exceptional write-offs, including a £3.2m goodwill impairment. Healthcare revenues benefited, however, from a full contribution from October 2018 acquisition Systagenix – the deal that prompted ConvaTec to abandon its contract with Scapa. ConvaTec contends that the acquisition was in breach of its agreement with Scapa, which was worth $30m in annual revenues to Scapa’s healthcare business.
The group’s industrial arm fared little better in terms of trading profits, which fell by 9.7 per cent to £10.2m on a constant currency basis. Revenues increased in spite of market headwinds, particularly in the automotive space, and the company expects these to persist.
Berenberg forecasts adjusted pre-tax profits for the March 2020 year-end of £27.9m, rising to £30.9m in FY2021.
SCAPA (SCPA) | ||||
ORD PRICE: | 232p | MARKET VALUE: | £360m | |
TOUCH: | 232-233p | 12-MONTH HIGH: | 434p | LOW: 145p |
DIVIDEND YIELD: | NIL | PE RATIO: | 145 | |
NET ASSET VALUE: | 92p* | NET DEBT: | 43%** |
Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 141 | 9.7 | 4.3 | nil |
2019 | 161 | -1.0 | -0.6 | nil |
% change | +14 | - | - | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes intangible assets of £119.7m, or 77p a share. **Excludes lease liabilities of £8.6m |