The short-term drivers that bind Scapa (SCPA) to customers of the group’s adhesive-based products can seem a little elusive. Particularly so when chief executive Heejae Chae says the industrial division – still a greater contributor to profits and sales than the healthcare business – has “never been about growth”, as he did when he walked us through half-year numbers. Consequently, Mr Chae and his team bear a greater responsibility than most public companies when it comes to managing shareholder expectations.
As Scapa’s valuation attests, they’ve been adept at this, along with an even tougher job of building a group whose annual revenues should soon pass £300m. For that to happen this financial year, organic growth may need to step up. In the six months to September, the top line was again handed a free pass by favourable currency movements; all things being equal, revenue increased 1.3 per cent in the industrial segment and just 2.1 per cent in the higher-margin and expansive healthcare division.
At the group level, profits were also nicely boosted by a smart deal to reclassify a shuttered Swiss facility as commercial property, thereby doubling the site’s eventual on-sale value. The resulting exceptional gain of £7.4m all but covers August’s acquisition of Connecticut-based Markel Industries, a manufacturer of adhesive floor mats which Scapa expects to be earnings-accretive in the first full year of ownership.
On average, analysts expect pre-tax profit of £33.2m and adjusted EPS of 17.1p for the year to March 2018, against £22.8m and 14.8p in FY2017.
SCAPA (SCPA) | ||||
ORD PRICE: | 476p | MARKET VALUE: | £730m | |
TOUCH: | 475-477p | 12-MONTH HIGH: | 522p | LOW: 283p |
DIVIDEND YIELD: | 0.4% | PE RATIO: | 33 | |
NET ASSET VALUE: | 72p* | NET DEBT: | 3% |
Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2016 | 135 | 8.5 | 4.5 | nil |
2017 | 146 | 15.4 | 7.5 | nil |
% change | +8 | +81 | +67 | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes intangible assets of £64.5m, or 42p a share |