Preliminary Results 2019

Delivered record revenue and trading profit

Preliminary Results 2019

LEI No. 213800QIPVTK5ES5UU36    

21 May 2019

Scapa Group plc
Preliminary Results

Scapa Group plc (AIM: SCPA) today announces its Preliminary Results for the year ended 31 March 2019.

Group Financial Highlights:
• Delivered record revenue and trading profit¹ 
• Revenue grew 7.0% to £311.8m (2018: £291.5m); 6.9% on a constant currency basis2 
• Trading profit¹ increased 10.7% to £38.2m (2018: £34.5m); 10.1% on a constant currency basis 2
• Adjusted earnings per share3 increased 3.8% to 18.9p (2018: 18.2p) 
• Basic earnings per share of 5.3p (2018: 15.4p); reflecting business reorganisation and site closures
• Adjusted net debt4 of £43.7m (2018: £3.8m) is after the acquisition of the Systagenix manufacturing facility for a cash consideration of £34.0m and includes the one-off stock build of £2.9m for the Dunstable and Knoxville site moves
• Pension deficit significantly reduced to £8.4m (2018: £21.0m)
• Final dividend increased 20.8% to 2.9p (2018: 2.4p)

Group Operational Highlights: 
• Investment in Board and executive leadership teams with key appointments, including Oskar Zahn as Chief Financial Officer, Joe Doherty as an Executive Director and Healthcare President, Sevan Demirdogen as an Executive Director and President & Vice-President, and Juliet Thompson as a Non-Executive Director
• Heejae Chae intends to step down as Group Chief Executive (announced today – see separate press release)

Divisional Highlights 

Healthcare:
• Revenue increased 25.3% to £141.3m (2018: £112.8m); 24.4% on a constant currency basis2
• On a continuing basis5 revenue increased 22.1% to £137.7m (2018: £112.8m); 21.2% on a constant currency basis2. This includes the benefit of the BioMed and Systagenix acquisitions
• Trading profit¹ of £20.9m (2018: £17.4m) is 20.1% higher and on a continuing basis5 is £17.3m (2018: £17.4m)
• Organic trading profit margins increased to 16.0% (2018: 15.2%)
• Established two Healthcare Centres of Excellence:- 
   - Integration of the R&D and manufacturing assets of Systagenix progressing well ahead of expectations in Gargrave, UK
   - Completed investment programme in purpose-built site in Knoxville, US
• Invested in expanding BioMed capabilities to enhance Scapa’s value proposition beyond adhesives to meet customer/market demand

Industrial:
• Revenue of £170.5m (2018: £178.7m) was 4.6% lower due to adverse macro conditions; 4.3% lower on a constant currency basis2
• Trading profit¹ of £22.3m (2018: £22.5m) and organic trading profit margins increased to 13.1% (2018: 12.6%). 
• Industrial business on track to 15.0% trading profit margin target
• Continued to focus on Return on Capital Employed (ROCE); cost-to-serve optimisation delivered
• Asia grew 8.4% predominantly in India; opened a new manufacturing site in Chennai, India, to support the fast-growing Consumer and Automotive markets

Commenting on the results Chief Executive, Heejae Chae said:
“FY 2019 was a transformational year when Scapa took definitive steps to cement a leading position in Healthcare. We have delivered a record profit and crossed the £300m revenue milestone for the first time. The acquisition, by way of a technology transfer of the R&D and manufacturing assets of Systagenix, advances our offering across the continuum of the Healthcare value chain and validates our strategy.  Our Industrial business is now a truly global business that is highly profitable and cash-generative.  As we enter the next phase of growth, we have refreshed and strengthened our Leadership Team, which positions us well to meet the increasing demands of our customers.  I am confident that we have the right strategy and capabilities in place to continue to deliver.”

For full press release and presentation see Reports and Presentations

1Trading Profit is before exceptional items, acquisition costs, amortisation of intangible assets and legacy pension costs (see Note 5)
2 Prior year results translated at current year’s average exchange rates
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 Adjusted net debt excludes temporary finance lease for Knoxville site
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 plc Heejae Chae – Group Chief Executive
Oskar Zahn – Chief Financial Officer 
Tel: 0161 301 7430

Numis Securities Limited (Nominated Adviser/Joint Broker) 
Mark Lander, Richard Thomas 
Tel: 020 7260 1000

Berenberg (Joint Broker) Chris Bowman 
Tel: 020 3207 7800

FTI Consulting (Media Relations) 
Brett Pollard, Victoria Foster Mitchell 
Tel: 020 3727 1000

About Scapa Group plc 
Scapa Group plc 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 Reports and Presentations