TIDMSCPA
RNS Number : 8035T
Scapa Group PLC
19 November 2019
19 November 2019
LEI No. 213800QIPVTK5ES5UU36
Scapa Group plc
Interim Results
Scapa Group plc (AIM: SCPA) ('Scapa' or 'the Group') today
announces its financial results for the six-month period ended 30
September 2019.
Commenting on the results Group Chief Executive, Heejae Chae
said:
"We are pleased to report a resilient financial result in the
first half of the year, despite the significant impact of the loss
of the ConvaTec contract. We have delivered strong revenue growth
and made good progress on our operational footprint plans for
integrating and streamlining the business. We anticipate that the
second half of the year will benefit from new products and
technology transfers from new and existing customers. In the
medium-term, we expect our operating leverage to unwind as we
realise the value from our strongest-ever pipeline. Whilst the
macro environment remains challenging in some of the markets in
which we operate, the Board remains confident of achieving its full
year expectations."
Group Financial Highlights:
-- Revenue grew 14.3% to GBP160.8m (2018: GBP140.7m); 10.4% on a constant currency basis(1)
-- Trading profit(2) fell 17.0% to GBP14.2m (2018: GBP17.1m);
20.7% on a constant currency basis(1) , representing a trading
profit margin reduction to 8.8% (2018: 12.2%); reported operating
profit fell to GBP0.1m (2018: GBP10.5m); reflecting the impact of
the loss of the ConvaTec contract
-- Adjusted earnings per share(3) decreased 15.7% to 7.0p (2018: 8.3p)
-- Underlying cash flow from operations improved to GBP18.9m (2018: GBP13.4m)
-- Net debt of GBP69.7m (31 March 2019: GBP55.7m) includes IFRS 16 impact of GBP8.6m
-- Pension deficit reduced to GBP6.4m (31 March 2019: GBP8.4m)
-- Scapa was successful in its motion to dismiss ConvaTec's
claim filed in May 2019, in New Jersey federal Court. Scapa's claim
against ConvaTec in Connecticut for damages in excess of US$83m has
been filed
Divisional Highlights
Healthcare:
-- Revenue increased 29.2% to GBP74.7m (2018: GBP57.8m); 22.7%
on a constant currency basis(1)
-- On a continuing basis(4) revenue increased 23.0% to GBP71.1m
(2018: 57.8m); 16.7% on a constant currency basis(1)
-- Trading profit(2) decreased 19.5% to GBP6.6m (2018: GBP8.2m);
24.1% reduction on a constant currency basis(1) reflecting the loss
of the ConvaTec contract
-- Trading profit margins at 8.8% (2018: 14.2%)
-- Continued realisation of synergies across the division, to
optimise its assets and enhance its capabilities, as well as to
meet the demands and expectations of its customers, including the
integration of Gargrave and the preparations in Knoxville
-- Over 100 programmes in the development pipeline, many of
which are expected to come to market in the near to medium term
-- New technology transfer agreement strengthens relationship
with existing leading consumer healthcare customer
Industrial:
-- Revenue increased 3.9% to GBP86.1m (2018: GBP82.9m); 1.5% on
a constant currency basis(1) , despite major market headwinds
-- Trading profit(2) decreased 7.3% to GBP10.2m (2018:
GBP11.0m); 9.7% decrease on a constant currency basis(1)
-- Trading profit margins reduced to 11.8% (2018: 13.3%);
largely due to product mix and increased overhead charges
-- 17% growth in Asia, driven by Consumer and Specialty
-- Growth in foundational portfolio; premium PVC, polyethylene
adhesives, double-sided tapes, thin-gauge coated adhesives and
mats
(1) Prior year results translated at current year's average
exchange rates
(2) Trading profit is before exceptional items, acquisition
costs, amortisation of intangible assets and legacy pension costs
(see Note 4)
(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) 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 Tel: 0161 301
Executive 7430
Oskar Zahn - Chief Financial
Officer
Numis Securities Limited Mark Lander, Freddie Barnfield Tel: 020 7260
(Nominated Adviser/Joint 1000
Broker)
Berenberg (Joint Broker) Chris Bowman, Toby Flaux Tel: 020 3207
7800
FTI Consulting (Media Relations) Brett Pollard, Victoria Foster Tel: 020 3727
Mitchell 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
Group Results
Scapa has continued to grow and delivered a sound trading
performance for the first half despite the loss of the ConvaTec
contract earlier in the year. Revenue grew 14.3% (10.4% on a
constant currency basis(1) ) to GBP160.8m (2018: GBP140.7m)
predominantly driven by Healthcare and the full period effect of
the Systagenix technology transfer (acquired in October 2018).
Group trading profit(2) reflects the impact of the loss of the
ConvaTec contract and fell 17.0% to GBP14.2m (2018: GBP17.1m),
resulting in a Group trading margin of 8.8% (2018: 12.2%). The
Group benefited from a weakened Sterling across the period, and on
a constant currency basis, trading profit fell 20.7% from last
year's first half performance.
Operating profit fell to GBP0.1m (2018: GBP10.5m) largely as a
result of the impact of the loss of the ConvaTec contract which has
resulted in exceptional write-offs totalling GBP9.2m (these are
explained in further detail below and in note 4). This resulted in
a loss before tax of GBP1.0m (2018: profit of GBP9.7m), with a
GBPNil (2018: GBP3.1m) taxation charge for the half year period,
with the underlying effective tax rate(3) for the period at 19.4%
(2018: 23.0%).
The basic loss per share was 0.6p (2018: earnings of 4.3p). When
adjusted for exceptional items, pension administration costs,
acquisition costs, amortisation and non-cash interest, earnings per
share was 7.0p (2018: 8.3p).
Exceptional items (note 4) in the period totalled GBP10.6m
(2018: GBP4.1m) with GBP9.2m relating to the loss of the ConvaTec
contract including asset and goodwill impairments of GBP3.5m, the
write-off of contract specific inventory of GBP4.6m, severance
costs of GBP0.1m and legal costs of GBP1.0m. Other exceptional
items included costs associated with the closure of one of the UK
Healthcare manufacturing sites following its integration into the
new Systagenix site, and the write-off of costs associated with an
abortive project.
Adjusted net debt(4) at GBP49.0m (31 March 2019: GBP43.7m) is
1.08x EBITDA(5) and included strengthening operating cash flows,
reflecting the continuing strong cash generation of the Group. The
increase in net debt from 31 March 2019 includes the Crawford
acquisition consideration of GBP1.4m and the investment associated
with the consolidation of manufacturing footprints.
STRATEGIC PRIORITIES AND BUSINESS OBJECTIVES
Scapa is organised into two business units serving the
Healthcare and Industrial markets, primarily in Europe and North
America. Each business unit has a specific strategy that it
follows:
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.
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.
BUSINESS UNITS
Healthcare
Statutory Continuing(6)
30 Sept 30 Sept 30 Sept 30 Sept
Six months ended 2019 2018 2019 2018
------------------ -------- -------- -------- --------
Revenue (GBPm) 74.7 57.8 71.1 57.8
Trading profit
(GBPm) 6.6 8.2 3.0 8.2
Trading margin
(%) 8.8% 14.2% 4.2% 14.2%
------------------ -------- -------- -------- --------
The strategy of our Healthcare business is to continue to be the
trusted strategic turn-key partner of choice for the world's
leading companies in advanced wound care, consumer wellness and
medical devices. We believe that significant further opportunities
exist to partner with our existing and new healthcare customers as
the medical device sector undergoes disruption.
Scapa has evolved from a roll stock supplier to a manufacturer
of turn-key products with full capabilities all the way from design
through manufacturing to distribution. We believe Scapa remains
well placed to play across the full outsourced spectrum:
- development pipeline of over 100 programmes
- driving innovation through our R&D teams
- leveraging our manufacturing expertise
- shortening development and launch timelines for new products
- providing uncompromising focus on quality and regulatory expertise, and
- improving margin as operating leverage unwinds against the
continued realisation of the pipeline
Healthcare revenue grew 29.2% (22.7% on a constant currency
basis) and on a continuing basis is 23.0% ahead of last year,
despite the loss of the ConvaTec volumes, with the full period
effect of the Systagenix technology transfer (acquired in October
2018). We anticipate that the second half of the year will benefit
from a strong pipeline of new products and technology transfers
from new and existing customers.
Healthcare trading profit fell to GBP6.6m (2018: GBP8.2m) and on
a continuing basis, trading profit reduced to GBP3.0m with the
business unit having been impacted by a loss of both margin and
overhead recovery following the loss of the ConvaTec contract. The
synergies realised from restructuring of our footprint are in line
with expectations.
We continue to make good progress in supporting our technology
transfers, with the Group acquiring Crawford Manufacturing Ltd for
GBP1.4m on 1 July 2019. We also continue to be the strategic
partner of choice for our existing customers having signed a new
technology transfer agreement to strengthen our relationship with a
leading consumer healthcare company during the first half of the
year. We anticipate that our technology transfers and new
programmes previously announced will continue to benefit revenue
during the second half of the year and that margins should
improve.
In addition, we continue to realise synergies across the
Healthcare unit. The integration of our Gargrave, UK site is
progressing in line with expectations. The closure of the
Dunstable, UK manufacturing site was completed in June 2019, which
will generate operational efficiencies through the consolidation of
Healthcare's manufacturing footprint within the Gargrave site.
Likewise, our new facility in Knoxville, Tennessee is primed for
growth following completed transfer of activities, which enabled us
to integrate the site's three existing buildings into a single site
of operation with significantly increased capacity.
Industrial
Six months 30 Sept 30 Sept
ended 2019 2018
---------------- -------- --------
Revenue (GBPm) 86.1 82.9
Trading profit
(GBPm) 10.2 11.0
Trading margin
(%) 11.8% 13.3%
---------------- -------- --------
Industrial revenue increased 3.9% to GBP86.1m (2018: GBP82.9m),
1.5% growth on a constant currency basis, as we continue to win
contracts for new and existing customers, despite strong market
headwinds, particularly in the automotive sector. We expect the
market-wide challenges to continue.
Trading profit for the period was GBP10.2m (2018: GBP11.0m), a
fall of 7.3% or 9.7% on a constant currency basis and Industrial
trading profit margins fell back to 11.8% from the 31 March 2019
position of 13.1% largely due to product mix and increased overhead
charges. The focus for the business unit continues to be to improve
shareholder returns with a medium-term target of mid-teens trading
margin.
In August 2019, Scapa Industrial celebrated the inauguration of
a new, purpose-built facility in Delhi, India, which is in addition
to the previously announced site in Chennai. This is the latest
milestone in the Industrial growth journey reflecting Scapa's
commitment to provide world-class manufacturing regionally for our
global strategic partners, with Scapa currently the second largest
tape manufacturer in India.
FINANCIALS
Balance sheet
Net assets at 30 September 2019 increased by GBP3.8m to
GBP143.2m (31 March 2019: GBP139.4m). Positive movements included
foreign exchange movements of GBP8.7m and movements in equity that
related to share options of GBP0.6m, offset to some extent by a
dividend of GBP4.5m, and a loss for the six-month period of
GBP1.0m.
The Group net debt balance was GBP69.7m (31 March 2019:
GBP55.7m), with the adjusted net debt reducing to GBP49.0m (31
March 2019: GBP43.7m) following adjustments relating to the
temporary finance lease for the new Knoxville facility (GBP12.1m)
and the impact of the adoption of IFRS 16 leases (GBP8.6m).
Pensions
The pension deficit decreased to GBP6.4m (31 March 2019:
GBP8.4m), with the UK defined benefit scheme reducing to GBPNil
(2018: GBP2.2m deficit) in the period despite the impact of a
deterioration in the discount rate applied to the long-term
liabilities, offset by the regular Company contribution and
improved returns on the scheme assets. One of the USA defined
benefit schemes is going through a buy-out process at the moment
with the expectation of reaching a full buy-out in advance of the
year end.
Cash resources
Net cash generated from operations was GBP13.5m (2018: GBP13.1m)
which increases to GBP18.9m (2018: GBP13.4m) before exceptional
items, reflecting the continued strong cash generation of the
business.
Capital expenditure in the period was GBP8.0m (2018: GBP4.5m).
The Company also made a small technology transfer acquisition for
net consideration of GBP1.4m.
Pension payments in excess of operating charge were GBP2.3m
(2018: GBP2.6m) and represent the deficit repair payments and
contributions to scheme expenses. Tax and interest outflows were
GBP2.8m (2018: GBP5.2m), and dividends totalling GBP4.5m (2018:
GBP3.7m) were paid during the first half year.
Dividend
A final dividend for the year ended 31 March 2019 of 2.9p per
share was paid on 23 August 2019 to all shareholders registered on
26 July 2019. In line with last year, the Board does not propose an
interim dividend but intends to maintain a progressive dividend
policy.
Principal risks and uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical results.
The Directors do not consider that these principal risks and
uncertainties have changed since publication of the annual report
for the year ended 31 March 2019.
Going concern
As stated in note 1 to these condensed financial statements, the
Directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period of not
less than 12 months from the date of this report. Accordingly, they
continue to adopt the going concern basis in preparing these
condensed financial statements.
Summary and outlook
Scapa has again delivered a solid first half performance with
growth in revenue, despite the significant impact of the loss of
the ConvaTec contract, resulting in reduced trading profit and
margins. There are further significant opportunities for both
business units to improve sales and margin performance through
rigorous execution of the strategy, in the short and longer term.
The Board remains confident of delivering its full year
expectations and in the Company's ability to drive shareholder
value.
L C Pentz
Chairman
19 November 2019
(1) Prior year results translated at current year's average
exchange rates
(2) Profit before tax, before net finance costs, exceptional
items, amortisation of intangible assets, acquisition costs and
legacy pension costs
(3) Adjusting operating profit and taxation for exceptional
items, pension administration costs, amortisation and non-cash
interest
(4) Adjusted net debt excludes the temporary finance lease for
Knoxville and the impact of IFRS 16
(5) EBITDA comprises trading profit before depreciation for the
last 12 months
(6) Group results before the impact of IFRS 15 provision release
for the Systagenix acquisition
CONSOLIDATED INCOME STATEMENT
For the half year ended 30 September 2019 (unaudited)
Half year Half year
ended ended Year ended
30 Sept 30 Sept 31 Mar
2019 2018 2019
All on operations note GBPm GBPm GBPm
--------------------------- ---- --------- --------- ----------
Revenue 2 160.8 140.7 311.8
Operating pro t 2 0.1 10.5 16.8
--------------------------- ---- --------- --------- ----------
Trading profit* 14.2 17.1 38.2
--------------------------- ---- --------- --------- ----------
Amortisation of intangible
assets (3.0) (2.3) (6.0)
Exceptional items 4 (10.6) (4.1) (12.8)
Acquisition Costs (0.1) - (2.0)
Pension administration
costs (0.4) (0.2) (0.6)
--------------------------- ---- --------- --------- ----------
Operating profit 2 0.1 10.5 16.8
--------------------------- ---- --------- --------- ----------
Net finance costs 7 (1.1) (0.8) (1.9)
--------------------------- ---- --------- --------- ----------
(Loss)/pro t on ordinary
activities before tax (1.0) 9.7 14.9
Taxation charge 8 - (3.1) (6.7)
--------------------------- ---- --------- --------- ----------
(Loss)/pro t for the
period (1.0) 6.6 8.2
--------------------------- ---- --------- --------- ----------
Weighted average number
of shares (m) 155.0 153.7 154.1
--------------------------- ---- --------- --------- ----------
Basic (loss)/earnings
per share (p) (0.6) 4.3 5.3
--------------------------- ---- --------- --------- ----------
Diluted (loss)/earnings
per share (p) (0.6) 4.2 5.2
--------------------------- ---- --------- --------- ----------
Adjusted earnings per
share (p)** 7.0 8.3 18.9
--------------------------- ---- --------- --------- ----------
* (Loss)/profit before tax, before net finance costs,
exceptional items, amortisation of intangible assets, acquisition
costs and legacy pension costs
** 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
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the half year ended 30 September 2019 (unaudited)
Half year
ended Half year ended Year ended
30 Sept 30 Sept 31 Mar
2019 2018 2019
All GBPm GBPm GBPm
------------------------------------------------- --------- --------------- ----------
(Loss)/profit for the period (1.0) 6.6 8.2
------------------------------------------------- --------- --------------- ----------
Items that may be reclassified subsequently
to profit and loss:
Exchange differences on translating foreign
operations 8.7 6.4 5.5
Actuarial gain - 9.0 9.4
Items that will not be reclassified subsequently
to profit and loss:
Deferred tax on actuarial gain - 0.2 (0.5)
Other comprehensive income for the period 8.7 15.6 14.4
------------------------------------------------- --------- --------------- ----------
Total comprehensive income for the period 7.7 22.2 22.6
------------------------------------------------- --------- --------------- ----------
CONSOLIDATED BALANCE SHEET
As at 30 September 2019 (unaudited)
Half year
ended Half year ended Year ended
30 Sept 30 Sept 31 Mar
2019 2018 2019
note GBPm GBPm GBPm
------------------------------------------- ---- --------- --------------- ----------
Assets
Non-current assets
Goodwill 12 111.2 71.4 108.3
Intangible assets 8.5 9.4 10.8
Property, plant and equipment 87.0 48.5 81.0
Right-of-use assets 8.4 - -
Deferred tax asset 7.0 5.0 4.3
Other receivables 0.2 0.2 0.2
------------------------------------------- ---- --------- --------------- ----------
222.3 134.5 204.6
Current assets
Inventory 48.2 39.2 45.9
Trade and other receivables 55.1 54.8 69.2
Current tax asset 0.1 0.1 1.1
Cash and cash equivalents 15 8.0 12.8 10.8
------------------------------------------- ---- --------- --------------- ----------
111.4 106.9 127.0
Liabilities
Current liabilities
Borrowings and other nancial liabilities (12.3) (1.0) (12.2)
Lease liabilities (1.9) - -
Trade and other payables (54.9) (52.4) (58.5)
Deferred consideration - (3.1) -
Current tax liabilities (0.6) (0.2) (1.2)
Provisions 14 (14.9) (3.9) (18.6)
------------------------------------------- ---- --------- --------------- ----------
(84.6) (60.6) (90.5)
------------------------------------------- ---- --------- --------------- ----------
Net current assets 26.8 46.3 36.5
------------------------------------------- ---- --------- --------------- ----------
Non-current liabilities
Borrowings and other financial liabilities (57.3) (17.6) (54.8)
Lease liabilities (6.7) - -
Trade and other payables (0.6) (0.1) (0.6)
Deferred consideration - (3.8) -
Deferred tax liabilities (6.5) (5.2) (6.0)
Non-current tax liabilities (3.8) (2.9) (3.8)
Retirement bene t obligations 13 (6.4) (9.8) (8.4)
Provisions 14 (24.6) (3.0) (28.1)
------------------------------------------- ---- --------- --------------- ----------
(105.9) (42.4) (101.7)
------------------------------------------- ---- --------- --------------- ----------
Net assets 143.2 138.4 139.4
------------------------------------------- ---- --------- --------------- ----------
Shareholders' equity
Ordinary shares 7.8 7.7 7.7
Share premium 1.0 0.9 1.0
Retained earnings 96.8 100.0 101.8
Translation reserve 37.6 29.8 28.9
------------------------------------------- ---- --------- --------------- ----------
Total shareholders' equity 143.2 138.4 139.4
------------------------------------------- ---- --------- --------------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the half year ended 30 September 2019 (unaudited)
Share Share Translation Retained Total
capital premium reserves earnings equity
GBPm GBPm GBPm GBPm GBPm
------------------------------------- -------- -------- ----------- --------- -------
Balance at 31 March 2018 7.7 0.4 23.4 87.4 118.9
Employee share option scheme -
value of employee services - - - 0.5 0.5
Dividends - - - (3.7) (3.7)
Issue of shares - 0.5 - - 0.5
------------------------------------- -------- -------- ----------- --------- -------
- 0.5 - (3.2) (2.7)
Currency translation differences - - 6.4 - 6.4
Actuarial gain on pension schemes - - - 9.0 9.0
Deferred tax on actuarial gain - - - 0.2 0.2
------------------------------------- -------- -------- ----------- --------- -------
Net income recognised directly in
equity - - 6.4 9.2 15.6
Profit for the period - - - 6.6 6.6
------------------------------------- -------- -------- ----------- --------- -------
Total comprehensive income - - 6.4 15.8 22.2
------------------------------------- -------- -------- ----------- --------- -------
Balance at 30 September 2018 7.7 0.9 29.8 100.0 138.4
Employee share option scheme -
value of employee services - - - 0.5 0.5
Issues of shares - 0.1 - - 0.1
- 0.1 - 0.5 0.6
Currency translation differences - - (0.9) - (0.9)
Actuarial gain on pension schemes - - - 0.4 0.4
Deferred tax on actuarial gain - - - (0.7) (0.7)
Net income recognised directly in
equity - - (0.9) (0.3) (1.2)
Profit for the period - - - 1.6 1.6
------------------------------------- -------- -------- ----------- --------- -------
Total comprehensive (expense)/income - - (0.9) 1.3 0.4
------------------------------------- -------- -------- ----------- --------- -------
Balance at 31 March 2019 7.7 1.0 28.9 101.8 139.4
Employee share option scheme -
value of employee services - - - 0.6 0.6
Equity-settled share based payments - - - (0.1) (0.1)
Dividends - - - (4.5) (4.5)
Issue of shares 0.1 - - - 0.1
------------------------------------- -------- -------- ----------- --------- -------
0.1 - - (4.0) (3.9)
Currency translation differences - - 8.7 - 8.7
Net income recognised directly in
equity - - 8.7 - 8.7
Loss for the period - - - (1.0) (1.0)
------------------------------------- -------- -------- ----------- --------- -------
Total comprehensive income/(expense) - - 8.7 (1.0) 7.7
------------------------------------- -------- -------- ----------- --------- -------
Balance at 30 September 2019 7.8 1.0 37.6 96.8 143.2
------------------------------------- -------- -------- ----------- --------- -------
CONSOLIDATED CASH FLOW STATEMENT
For the half year ended 30 September 2019 (unaudited)
Half year ended Half year ended Year ended
30 Sept 30 Sept 31 Mar
2019 2018 2019
All on note GBPm GBPm GBPm
------------------------------------------ ---- --------------- --------------- ----------
Cash flows from operating activities
Net cash ow from operations 15 13.5 13.1 20.4
------------------------------------------ ---- --------------- --------------- ----------
Cash generated from operations before
exceptional items 15 18.9 13.4 23.3
Cash out ow from exceptional items 15 (5.4) (0.3) (2.9)
------------------------------------------ ---- --------------- --------------- ----------
Net cash ow from operations 13.5 13.1 20.4
------------------------------------------ ---- --------------- --------------- ----------
Net interest paid (0.8) (0.6) (1.4)
Income tax paid (2.0) (4.6) (7.8)
------------------------------------------ ---- --------------- --------------- ----------
Net cash generated from operating
activities 10.7 7.9 11.2
------------------------------------------ ---- --------------- --------------- ----------
Cash ows (used in)/from investing
activities
Acquisition of subsidiary, net of
cash acquired 11 (1.4) - (32.3)
Purchase of property, plant and equipment (8.0) (4.5) (27.1)
Purchase of capitalised development
costs - (0.1) (0.1)
Proceeds from disposal of fixed assets 0.2 1.0
Net cash (used in)/generated from
investing activities (9.2) (4.6) (58.5)
------------------------------------------ ---- --------------- --------------- ----------
Cash ows (used in)/generated from
financing activities
Issue of shares - 0.5 0.6
Dividends (4.5) (3.7) (3.7)
Increase in borrowings and other
finance liabilities 14.7 15.4 123.2
Repayment of borrowings and other
finance liabilities (14.9) (21.4) (80.7)
------------------------------------------ ---- --------------- --------------- ----------
Net cash generated/(used in) from
financing activities (4.7) (9.2) 39.4
------------------------------------------ ---- --------------- --------------- ----------
Net decrease in cash
and cash equivalents (3.2) (5.9) (7.9)
Cash and cash equivalents at beginning
of the period 10.8 18.1 18.1
Exchange gains/(losses) on cash and
cash equivalents 0.4 0.6 0.6
------------------------------------------ ---- --------------- --------------- ----------
Total cash and cash equivalents at
end of period 15 8.0 12.8 10.8
------------------------------------------ ---- --------------- --------------- ----------
NOTES
1. GENERAL INFORMATION
Scapa Group plc ('the Company') and its subsidiaries (together
'the Group') manufacture bonding products and adhesive components
for applications in the healthcare and industrial markets. The
Group has manufacturing plants around the world and sells mainly in
countries within Europe, North America and Asia.
The Company is a limited liability company incorporated and
domiciled in the UK. The address of its registered office is 997
Manchester Road, Ashton-under-Lyne, Greater Manchester OL7 0ED. The
Company has its listing on the Alternative Investment Market.
The financial information for the period ended 30 September 2019
and similarly the period ended 30 September 2018 has been neither
audited nor reviewed by the auditor. The financial information for
the year ended 31 March 2019 has been based on information in the
audited financial statements for that period.
The interim condensed financial statements for the period ended
30 September 2019 do not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. A copy of the statutory
accounts for the year ended 31 March 2019 has been delivered to the
Registrar of Companies. The auditor's report on those accounts was
not qualified, did not include a reference to any matters to which
the auditor drew attention by way of emphasis without qualifying
the report and did not contain statements under section 498 (2) or
(3) of the Companies Act 2006.
Basis of preparation
The consolidated financial statements for Scapa Group plc are
prepared in accordance with IFRSs as adopted by the European Union.
AIM listed companies are not required to issue IAS 34 compliant
interim reports. Scapa Group plc complies with the majority of IAS
34 but does not produce a number of disclosures as they are
considered insignificant.
Accounting policies
From 1 April 2019 the Group has adopted IFRS 16 leases on a
modified retrospective basis and has elected to use the practical
expedient to assume the right-of-use assets value equals the lease
liability. Right-of-use assets and lease liabilities recognised
under IFRS 16 are presented separately on the face of the
Consolidated Balance Sheet. The Group has also elected to apply the
practical expedient which excludes lease agreements which are
short-term in nature or low value from being recognised according
to IFRS 16; these lease arrangements will continue to be charged
directly to the Consolidated Income Statement. Upon transition on 1
April 2019 the Group recognised a right-of-use asset and
corresponding financial lease liability of GBP9.3m.
As at 30 September 2019 the carrying values of right-of-use
assets of GBP8.4m comprises: land & buildings GBP7.3m, plant
& machinery GBP1.0m and IT GBP0.1m. The carrying value of
current lease liabilities at 30 September 2019 is GBP1.9m and
non-current lease liabilities is GBP6.7m.
Amounts recognised in respect of leases in the Consolidated
Income Statement for the six-month period to 30 September 2019
comprised: Right-of-use asset depreciation of GBP1.1m and interest
on lease liabilities GBP0.2m.
Critical accounting estimates, judgements and risks
The preparation of the interim condensed financial statements
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these interim condensed financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 March 2019.
A summary of the principal risks and uncertainties is below and
a more detailed explanation and how the Group seeks to mitigate the
risks can be found on pages 24 to 30 of the Annual Report, which is
available at www.scapa.com.
Health and safety - failure to work safely could result in
significant injury or loss of life, damage the reputation of the
Group and incur regulator intervention or fines
Acquisitions - poor decision-making on acquisitions could
adversely affect the Group's results, weakening shareholder
value
Business strategy - development of the wrong strategy by the
Board or the failure to implement its strategy effectively could
negatively impact on the Group's long-term growth prospects
Global economic and political environment - political and
economic uncertainty e.g. Brexit which affects market and financial
stability could adversely affect the Group's performance
Financial and treasury - the Group has significant operations
outside the UK and as such is exposed to movement in exchange
rates
Pensions- retirement liabilities fluctuate with changes in life
expectancy, inflation, asset performance and discount rate
assumptions
Customers - the Group benefits from good commercial
relationships with a number of key customers. Damage to these
relationships could have a direct, detrimental effect on the
Group's results
Raw material pricing - Group margin is susceptible to supplier
price increases
Human resources - availability of sufficient, skilled resource
may impact on our ability to achieve sustainable growth
ICT systems and infrastructure - the Group is reliant on ICT
systems in the effective planning and manufacture of product.
Significant disruption can interrupt manufacturing and support
process and potentially impact sales
Product quality - the Group is exposed to financial risk around
product liability, customer returns and ultimately customer trust
in Scapa as a supplier
Environment - failure to mitigate environmental impacts could
damage the reputation of the Group and result in the financial loss
associated with clean-up, fines and sanctions
Going concern
The Directors are satisfied that the Group's forecasts and
projections show that the Group should be able to operate within
its banking facilities and comply with its banking covenants. The
Group is exposed to a number of significant risks and
uncertainties, which could affect the Group's ability to meet its
banking covenants. The Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for a period of not less than 12 months from the date of
this report. Accordingly, they continue to adopt the going concern
basis in preparing the interim condensed financial statements.
2. SEGMENTAL REPORTING
The Group operates two standalone business units: Healthcare and
Industrial, supported by a strategic Corporate function. All
inter-segment transactions are made on an arm's length basis.
The Board relies primarily on turnover and trading profit to
assess the performance of the Group and make decisions about
resources to be allocated to each segment; assets and liabilities
are looked at geographically. Trading profit is reconciled to
operating profit on the face of the Income Statement.
The Board reviews the performance of the business using
information presented at constant exchange rates. The prior year
results have been restated at constant currency as shown on the
following pages.
Segment results - 30 September 2019
The segment results for the half year ended 30 September 2019
are as follows:
Healthcare Industrial Head office Group
GBPm GBPm GBPm GBPm
----------------------------------- ---------- ---------- ----------- ------
External revenue 74.7 86.1 - 160.8
----------------------------------- ---------- ---------- ----------- ------
Trading profit/(loss) 6.6 10.2 (2.6) 14.2
Amortisation of intangible assets (2.6) (0.4) - (3.0)
Exceptional items (10.6) - - (10.6)
Acquisition costs (0.1) - - (0.1)
Pension administration costs - - (0.4) (0.4)
----------------------------------- ---------- ---------- ----------- ------
Operating (loss)/profit (6.7) 9.8 (3.0) 0.1
Net finance costs (1.1)
----------------------------------- ---------- ---------- ----------- ------
Loss on ordinary activities before
tax (1.0)
Tax charge -
----------------------------------- ---------- ---------- ----------- ------
Loss for the period (1.0)
----------------------------------- ---------- ---------- ----------- ------
The revenue analysis below is based on the location of the
customer as follows:
Europe N America Asia Other Group
GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------ --------- ----- ----- -----
External revenue - 30 Sept 2019 71.5 69.9 12.3 7.1 160.8
-------------------------------- ------ --------- ----- ----- -----
External revenue - 30 Sept 2018 51.6 70.9 10.2 8.0 140.7
-------------------------------- ------ --------- ----- ----- -----
External revenue - 31 Mar 2019 128.8 145.7 22.4 14.9 311.8
-------------------------------- ------ --------- ----- ----- -----
The revenue based on the location of the selling company is as
follows:
Europe N America Asia Other Group
GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------ --------- ----- ----- -----
External revenue - 30 Sept 2019 71.0 78.7 10.0 1.1 160.8
-------------------------------- ------ --------- ----- ----- -----
External revenue - 30 Sept 2018 49.9 81.3 8.4 1.1 140.7
-------------------------------- ------ --------- ----- ----- -----
External revenue - 31 Mar 2019 124.3 167.3 18.2 2.0 311.8
-------------------------------- ------ --------- ----- ----- -----
The segment results for the half year ended 30 September 2018
are as follows:
Healthcare Industrial Head office Group
GBPm GBPm GBPm GBPm
---------------------------------- ---------- ---------- ----------- -----
External revenue 57.8 82.9 - 140.7
---------------------------------- ---------- ---------- ----------- -----
Trading profit/(loss) 8.2 11.0 (2.1) 17.1
Amortisation of intangible assets (2.0) (0.3) - (2.3)
Exceptional items (4.1) - - (4.1)
Pension administration costs - - (0.2) (0.2)
---------------------------------- ---------- ---------- ----------- -----
Operating profit/(loss) 2.1 10.7 (2.3) 10.5
Net finance costs (0.8)
---------------------------------- ---------- ---------- ----------- -----
Profit on ordinary activities before tax 9.7
Tax charge (3.1)
---------------------------------------------------------- ----------- -----
Profit for the period 6.6
---------------------------------------------------------- ----------- -----
The Board reviews the performance of the business using
information presented at constant exchange rates. The prior half
year results have been restated using this year's exchange rates as
follows:
Healthcare Industrial Head office Group
GBPm GBPm GBPm GBPm
------------------------------------------------- ---------- ---------- ----------- -----
External revenue 57.8 82.9 - 140.7
Foreign exchange 3.1 1.9 - 5.0
------------------------------------------------- ---------- ---------- ----------- -----
External revenue at constant exchange rates 60.9 84.8 - 145.7
------------------------------------------------- ---------- ---------- ----------- -----
Trading profit/(loss) 8.2 11.0 (2.1) 17.1
Foreign exchange 0.5 0.3 - 0.8
------------------------------------------------- ---------- ---------- ----------- -----
Trading profit/(loss) at constant exchange rates 8.7 11.3 (2.1) 17.9
------------------------------------------------- ---------- ---------- ----------- -----
Segment results - 31 March 2019
The segment results for the year ended 31 March 2019 are as
follows:
Healthcare Industrial Head office Group
GBPm GBPm GBPm GBPm
---------------------------------- ---------- ---------- ----------- ------
External revenue 141.3 170.5 - 311.8
---------------------------------- ---------- ---------- ----------- ------
Trading profit/(loss) 20.9 22.3 (5.0) 38.2
Amortisation of intangible assets (5.3) (0.7) - (6.0)
Exceptional items (11.3) (0.5) (1.0) (12.8)
Acquisition costs (2.0) - - (2.0)
Pension administration costs - - (0.6) (0.6)
---------------------------------- ---------- ---------- ----------- ------
Operating profit/(loss) 2.3 21.1 (6.6) 16.8
Net finance costs (1.9)
---------------------------------- ---------- ---------- ----------- ------
Profit on ordinary activities before tax 14.9
Tax charge (6.7)
---------------------------------------------------------- ----------- ------
Profit for the year 8.2
---------------------------------------------------------- ----------- ------
The Board reviews the performance of the business using
information presented at constant exchange rates. The prior year
results have been restated using this year's exchange rates as
follows:
Healthcare Industrial Head office Group
GBPm GBPm GBPm GBPm
---------------------------------- ---------- ---------- ----------- -----
External revenue 141.3 170.5 - 311.8
Foreign exchange 4.9 3.3 - 8.2
---------------------------------- ---------- ---------- ----------- -----
External revenue at constant
exchange rates 146.2 173.8 - 320.0
---------------------------------- ---------- ---------- ----------- -----
Trading profit/(loss) 20.9 22.3 (5.0) 38.2
Foreign exchange 0.7 0.6 - 1.3
---------------------------------- ---------- ---------- ----------- -----
Trading profit/(loss) at constant
exchange rates 21.6 22.9 (5.0) 39.5
---------------------------------- ---------- ---------- ----------- -----
3. SEGMENT ASSETS AND LIABILITIES
The Board does not review assets and liabilities by business
unit but by geographical area as reporting entity balance sheets
cannot be split accurately by business unit. The assets and
liabilities at 30 September 2019 and capital expenditure for the
period then ended can be analysed into geographical segments as
follows:
Europe N America Asia Head office Group
GBPm GBPm GBPm GBPm GBPm
----------------------------- ------ --------- ----- ----------- ------
Non-current assets* 94.4 118.3 2.0 0.6 215.3
Inventory 21.9 22.8 3.5 - 48.2
Trade receivables (net) 23.8 24.4 2.7 - 50.9
Trade payables (20.8) (17.7) (1.9) (0.9) (41.3)
Cash 2.7 3.2 2.0 0.1 8.0
Additions of property, plant
and equipment 4.8 2.6 0.6 - 8.0
----------------------------- ------ --------- ----- ----------- ------
*Non-current assets excluding deferred tax assets.
The assets and liabilities at 30 September 2018 and capital
expenditure for the period then ended were as follows:
Europe N America Asia Head office Group
GBPm GBPm GBPm GBPm GBPm
----------------------------- ------ --------- ----- ----------- ------
Non-current assets* 31.3 96.3 1.3 0.6 129.5
Inventory 16.4 20.2 2.6 - 39.2
Trade receivables (net) 19.8 27.7 1.9 - 49.4
Trade payables (20.5) (14.8) (1.3) (0.7) (37.3)
Cash 3.9 5.6 3.2 0.1 12.8
Additions of property, plant
and equipment 1.8 2.3 0.2 0.2 4.5
----------------------------- ------ --------- ----- ----------- ------
*Non-current assets excluding deferred tax assets.
The assets and liabilities at 31 March 2019 and capital
expenditure for the year then ended were as follows:
Europe N America Asia Head office Group
GBPm GBPm GBPm GBPm GBPm
----------------------------- ------ --------- ----- ----------- ------
Non-current assets* 87.9 111.1 0.7 0.6 200.3
Inventory 23.1 20.3 2.5 - 45.9
Trade receivables (net) 29.4 30.1 2.0 - 61.5
Trade payables (25.4) (16.5) (1.2) (1.0) (44.1)
Cash 3.7 4.0 3.1 - 10.8
Additions of property, plant
and equipment 5.5 20.8 0.5 0.3 27.1
----------------------------- ------ --------- ----- ----------- ------
*Non-current assets excluding deferred tax assets.
Unallocated head office items relate to assets and liabilities
incurred in the normal course of business for the Parent
Company.
3. Exceptional items
Half year ended Half year ended Year ended
30 Sept 30 Sept 31 Mar
2019 2018 2019
GBPm GBPm GBPm
---------------------------------------------- --------------- --------------- ----------
Operating income:
BioMed deferred consideration adjustment - - 6.8
Operating expenses:
Site closure costs (0.8) (2.2) (11.7)
Asset write-offs and accelerated depreciation - - (2.3)
Loss of major contract (6.0) - -
Goodwill impairment (3.2) - (4.6)
Abortive project costs (0.6) - -
Pension GMP Equalisation - - (1.0)
Acquisition costs - (1.9) -
---------------------------------------------- --------------- --------------- ----------
(10.6) (4.1) (12.8)
---------------------------------------------- --------------- --------------- ----------
Exceptional operating income
The prior year exceptional operating income related to the
release of deferred consideration relating to BioMed Laboratories
LLC due to the performance for current and future years not
supporting the achievement of the aspirational growth plans of the
former owners given at the time of acquisition.
Exceptional operating expenses
Exceptional items of GBP10.6m were booked in the period with
GBP9.2m of this relating directly to the loss of a key customer
contract, comprising inventory write-offs, legal costs, severance,
impairment of assets and goodwill associated with the manufacturing
entity. A further GBP0.6m was incurred relating to an abortive
project resulting in both asset and intangibles impairment during
the first half. Site closure costs totalling GBP0.8m were also
incurred in the period relating to the closure of the Dunstable
manufacturing facility as announced in September 2018, with the
facility fully closed in June 2019.
The 31 March 2019 exceptional operating expense related to the
closure of three Healthcare facilities (GBP11.7m) with the transfer
of these activities into the newly established Healthcare centres
of excellence in the USA and the UK, following a GBP2.2m
exceptional expense during the first half of the prior year for the
closure of the Dunstable facility. There were also additional asset
write-offs and accelerated depreciation of GBP2.3m that related to
these site closures. In addition, there was a goodwill impairment
in the prior year of GBP4.6m for the First Water facility following
an abortive customer project. The 31 March 2019 result included a
one-off pension GMP equalisation adjustment of GBP1.0m and the
Group also incurred acquisition costs of GBP1.9m during the first
half of the prior year, related to the acquisition of Systagenix
Wound Management Manufacturing Ltd which was announced in September
2018 and completed on 1 October 2018.
5. Key management compensation and Directors' remuneration
Half year Half year ended Year ended
ended 30 Sept 31 Mar
30 Sept 2018 2019
2019 GBPm GBPm
GBPm
-------------------------------------- --------- --------------- ----------
Short-term employment benefits 1.1 1.5 3.1
Post-employment benefits 0.1 0.1 0.2
Termination benefits - - 0.1
Share-based payments (including share
incentive plan) 0.5 0.4 0.8
-------------------------------------- --------- --------------- ----------
1.7 2.0 4.2
-------------------------------------- --------- --------------- ----------
Key management is considered by the Group to be the Executive
Team, which comprises certain senior employees, as defined in the
annual financial statements. The short-term employment benefits
include wages and salaries, bonuses, social security contributions
and non-monetary benefits.
6. Related party transactions
The pension schemes are related parties to the Group. There were
no contributions outstanding at the period end.
7. Net finance costs
Half year
Half year ended ended Year ended
30 Sept 30 Sept 31 Mar
2019 2018 2019
GBPm GBPm GBPm
---------------------------------------------- --------------- --------- ----------
Interest payable on bank loans and overdrafts (0.8) (0.6) (1.4)
Interest income on pension scheme assets
less interest on scheme liabilities - (0.2) (0.5)
Discount on provisions (0.1) - -
Lease interest (0.2) - -
---------------------------------------------- --------------- --------- ----------
Net finance costs (1.1) (0.8) (1.9)
---------------------------------------------- --------------- --------- ----------
8. Taxation
Half year
ended Half year ended Year ended
30 Sept 30 Sept 31 Mar
2019 2018 2019
GBPm GBPm GBPm
---------------------------------------------- --------- --------------- ----------
Current tax:
Tax on trading activities - current period (2.1) (2.3) (5.8)
Tax on trading activities - prior period (0.3) - 0.2
Tax on non-trading items - 0.2 (0.7)
---------------------------------------------- --------- --------------- ----------
Total current tax (2.4) (2.1) (6.3)
---------------------------------------------- --------- --------------- ----------
Deferred tax:
Tax on trading activities - current period (0.4) (0.6) (1.9)
Tax on trading activities - prior period 0.2 (0.9) (0.2)
Tax on non-trading items 2.6 0.5 1.7
---------------------------------------------- --------- --------------- ----------
Total deferred tax 2.4 (1.0) (0.4)
---------------------------------------------- --------- --------------- ----------
Tax income/(charge) on trading activities (2.6) (3.8) (7.7)
---------------------------------------------- --------- --------------- ----------
Tax (charge)/income on non-trading activities 2.6 0.7 1.0
---------------------------------------------- --------- --------------- ----------
Tax charge for the period - (3.1) (6.7)
---------------------------------------------- --------- --------------- ----------
9. Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period.
Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all potentially dilutive ordinary shares. Diluted
earnings per share has been calculated on share options in
existence at 30 September 2019.
Adjusted
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 period.
Half year Half year ended Year ended
ended 30 Sept 30 Sept 31 Mar
2019 2018 2019
------------------------------------------- -------------- --------------- ----------
(Loss)/profit attributable to equity
holders of the Company (GBPm) (1.0) 6.6 8.2
Weighted average number of ordinary shares
in issue (m) 155.0 153.7 154.1
Basic (loss)/earnings per share (p) (0.6) 4.3 5.3
Weighted average number of shares in
issue, including potentially dilutive
shares (m) 158.6 158.7 158.4
Diluted (loss)/earnings per share (p) (0.6) 4.2 5.2
Adjusted earnings per share (p) 7.0 8.3 18.9
------------------------------------------- -------------- --------------- ----------
10. Dividends
A final dividend for the year ended 31 March 2019 of 2.9p per
share was approved by shareholders at the 2019 AGM and was paid on
23 August 2019 to shareholders registered on 26 July 2019.
11. ACQUISITION OF SUBSIDIARY
On 1 July 2019 the Group acquired 100% of the share capital of
Crawford Manufacturing Ltd. Crawford is a manufacturer of advanced
wound care products and was acquired to support the technology
transfer activities of the Group. The company is based in Tarvin,
Cheshire, UK.
The amounts recognised in respect of the identifiable assets
acquired and liabilities assumed are as set out in the table
below:
Fair Value
GBPm
------------------------------------------ ----------
Net assets acquired
Separately identifiable intangible assets 0.4
Property, plant and machinery 0.5
Debtors and other assets 0.1
Inventory 0.3
Cash and cash equivalents -
Deferred tax (0.1)
Trade and other payables (0.5)
------------------------------------------ ----------
0.7
Goodwill 0.7
Total consideration 1.4
------------------------------------------ ----------
Satisfied by cash 1.4
------------------------------------------ ----------
Net cash outflow arising on acquisition:
------------------------------------------ ----------
Cash consideration 1.4
------------------------------------------ ----------
The goodwill and intangibles of GBP1.1m arising on consolidation
from the acquisition do not give rise to any deductible amounts for
tax purposes in the UK. Acquisition-related costs amounted to
GBP0.1m.
Crawford Manufacturing Ltd contributed GBP0.2m of revenue and
GBP0.1m loss to Group profit between the date of acquisition and 30
September 2019.
On 1 October 2018 the Group acquired 100% of the share capital
of Systagenix Wound Management Manufacturing Ltd. As at 31 March
2019 the Group reported the provisional net assets acquired.
During the period to 30 September 2019 the Group identified
additional liabilities of GBP1.1m within the hindsight period and
has reported below the final acquisition balance sheet.
Reported Final
31 Mar 30 Sept
2019 2019
GBPm GBPm
------------------------------------------ -------- --------
Net assets acquired
Separately identifiable intangible assets 5.0 5.0
Property, plant and machinery 18.4 18.4
Debtors and other assets 3.3 3.3
Inventory 6.7 6.7
Cash and cash equivalents 1.7 1.7
Deferred tax (1.3) (1.3)
Trade and other payables (4.4) (5.5)
------------------------------------------ -------- --------
29.4 28.3
Goodwill 40.4 41.5
Total consideration 69.8 69.8
------------------------------------------ -------- --------
12. GOODWILL
Half year Half year
ended ended
30 Sept 2019 30 Sept 2018
GBPm GBPm
---------------------------------------- ------------- -------------
Cost
1 April 138.2 90.9
Additions 1.8 -
Exchange differences 5.9 5.8
---------------------------------------- ------------- -------------
30 September 2019 145.9 96.7
---------------------------------------- ------------- -------------
Accumulated amortisation and impairment
1 April (29.9) (23.7)
Exchange differences (1.6) (1.6)
Impairment (3.2) -
---------------------------------------- ------------- -------------
30 September 2019 145.9 (25.3)
---------------------------------------- ------------- -------------
Net book value at 30 September 2019 111.2 71.4
---------------------------------------- ------------- -------------
During the period the loss of the ConvaTec contract triggered a
review of the carrying values of the cash-generating units that
supported that business. As a result, one of the cash-generating
units was impacted by the loss of volume to the extent that an
impairment of GBP3.2m goodwill has been recognised in the period
that was originally derived from the Markel Industries
acquisition.
Goodwill relates to the Acutek Medical operation of GBP15.7m
(2018: GBP14.7m), Webtec of GBP17.0m (2018: GBP16.0m), First Water
Limited of GBP2.1m (2018: GBP6.7m), EuroMed of GBP17.8m (2018:
GBP16.7m), Markel Industries of GBP1.7m (2018: GBP4.5m), BioMed
Laboratories of GBP14.7m (2018: GBP12.8m), Systagenix of GBP41.5m
(2018: GBPNil) and Crawford Manufacturing of GBP0.7m (2018:
GBPNil).
13. Retirement benefit schemes
Defined benefit schemes
The defined benefit obligation as at 30 September 2019 has been
adjusted for movements in contributions, financial and demographic
assumptions over the period.
The defined benefit plan assets have been updated to reflect
their market value at 30 September 2019. The change in the expected
return on assets has been recognised as an actuarial gain or loss
in the Statement of Comprehensive Income in accordance with the
Group's accounting policy.
14. Provisions
Reorganisation
and leasehold
commitments Contract Liability Environmental Total
GBPm GBPm GBPm GBPm
------------------------ -------------- ------------------ ------------- -----
At 31 March 2018 4.9 - 0.2 5.1
Charged in the period 2.9 - - 2.9
Released in the period (0.6) - - (0.6)
Utilised in the period (0.5) - - (0.5)
------------------------ -------------- ------------------ ------------- -----
At 30 September 2018 6.7 - 0.2 6.9
Charged in the period 9.9 35.8 - 45.7
Released in the period (0.1) (3.6) - (3.7)
Utilised in the period (2.1) - (0.1) (2.2)
------------------------ -------------- ------------------ ------------- -----
At 31 March 2019 14.4 32.2 0.1 46.7
Exchange differences 0.2 - - 0.2
Charged in the period 2.3 - - 2.3
Released in the period - (3.6) - (3.6)
Utilised in the period (6.1) - - (6.1)
------------------------ -------------- ------------------ ------------- -----
At 30 September 2019 10.8 28.6 0.1 39.5
------------------------ -------------- ------------------ ------------- -----
Analysis of provisions:
Current 7.7 7.2 - 14.9
Non-current 3.1 21.4 0.1 24.6
------------------------ -------------- ------------------ ------------- -----
At 30 September 2019 10.8 28.6 0.1 39.5
------------------------ -------------- ------------------ ------------- -----
15. Reconciliation of operating profit to operating cash flow
and reconciliation of net cash
Half year
Half year ended Year ended
ended 30 Sept 30 Sept 31 Mar
2019 2018 2019
GBPm GBPm GBPm
--------------------------------------------- -------------- --------- ----------
Operating profit 0.1 10.5 16.8
Adjustments for:
Depreciation and amortisation 8.7 5.5 13.7
Exceptional pension GMP equalisation - - 1.0
Impairment of tangible fixed assets 0.6 - 2.3
Impairment of intangibles 0.2 - -
Impairment of goodwill 3.2 - 4.6
Pensions payments in excess of charge (2.3) (2.6) (4.7)
Share options charge 0.6 0.5 1.0
Changes in working capital:
--------------------------------------------- -------------- --------- ----------
Inventories (0.3) (3.0) (3.2)
Trade debtors 13.0 4.9 (4.7)
Trade creditors (4.5) (3.6) 2.0
--------------------------------------------- -------------- --------- ----------
Changes in trading working capital 8.2 (1.7) (5.9)
Other debtors 3.7 1.4 (1.0)
Other creditors (1.4) (2.3) (4.6)
Deferred consideration - - (6.8)
Net movement in environmental provisions - - (0.1)
Net movement in reorganisation provisions
and
leasehold commitments (4.5) 1.8 7.7
Net movement in contract liability provision (3.6) - (3.6)
--------------------------------------------- -------------- --------- ----------
Cash generated from operations 13.5 13.1 20.4
--------------------------------------------- -------------- --------- ----------
Cash generated from operations before
exceptional items 18.9 13.4 23.3
Cash outflows from exceptional items (5.4) (0.3) (2.9)
--------------------------------------------- -------------- --------- ----------
Cash generated from operations 13.5 13.1 20.4
--------------------------------------------- -------------- --------- ----------
Analysis of cash and cash equivalents and borrowings
At 1 April Cash Exchange Other At 30 Sept
2019 flow movement Movements 2019
GBPm GBPm GBPm GBPm GBPm
--------------------------- ---------- ----- --------- ---------- ----------
Cash and cash equivalents 10.8 (3.2) 0.4 - 8.0
Borrowings within one year (12.2) 1.8 (0.8) (3.0) (14.2)
Borrowings after more than
one year (54.3) (1.6) (1.0) (6.6) (63.5)
--------------------------- ---------- ----- --------- ---------- ----------
Total borrowings (66.5) 0.2 (1.8) (9.6) (77.7)
--------------------------- ---------- ----- --------- ---------- ----------
Total (55.7) (3.0) (1.4) (9.6) (69.7)
--------------------------- ---------- ----- --------- ---------- ----------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FFDFMAFUSEIF
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