It is approaching 12 months since Scapa (SCPA) launched legal action against medical technology group ConvaTec (CTEC), formerly Scapa’s biggest healthcare customer, over its decision to exit a contract worth $30m (£24m). The matter remains unresolved, and the impact of the lost contract sat among a raft of exceptional charges amounting to £68.4m for the year. Once one-offs are disregarded, adjusted operating profit was 29 per cent down on the prior year.
Much of the remaining write-downs are connected both with past performance and Scapa’s gloomy prospects as a result of coronavirus. The group invested heavily in its Texas BioMed facility, while the potential costs of coronavirus were also factored in. While year-to-date trading is better than initially envisaged under its Covid-19 modelling, management admits that the pace of recovery is slower than expected. Scapa expects the pandemic to bring first-half industrial and healthcare revenues down by 35 per cent and 29 per cent, respectively.
It was also announced that after three years in his role, Scapa chairman Larry Pentz will not seek re-election. Chris Brinsmead, who is chairman of healthcare businesses Collagen Solutions and Proveca, will take over in August.
Broker Berenberg forecasts adjusted EPS of 2.6p for March 2021, rising to 11.6p in FY2022.
| SCAPA (SCPA) | ||||
| ORD PRICE: | 105p | MARKET VALUE: | £196m | |
| TOUCH: | 105-106p | 12-MONTH HIGH: | 295p | LOW: 90p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 50p* | NET DEBT: | 81%** | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 247 | 9.80 | 4.10 | 1.8 |
| 2017 | 280 | 21.8 | 11.6 | 2.0 |
| 2018 | 292 | 28.8 | 15.4 | 2.4 |
| 2019 | 312 | 14.9 | 5.30 | 2.9 |
| 2020 | 321 | -51.0 | -31.9 | nil |
| % change | +3 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £64.5m, or 35p a share **Includes lease liabilities of £20.2m | ||||
