20th Nov 2018 10:15
LONDON (Alliance News) - Adhesive tapes manufacturer Scapa Group PLC said Tuesday interim profit declined due to costs associated with the "transformational" acquisition of a medical wound dressing firm.
For the six months ended September 30, pretax profit dropped 37% to GBP9.7 million from GBP15.4 million the year prior. This was after revenue dipped 3.4% to GBP140.7 million from GBP145.6 million the year before.
Profit performance was also hurt by GBP4.1 million in exceptional costs, compared to GBP1.4 million in exceptional gains the year prior. These were the result of GBP2.2 million costs for the closure of a site and a further GBP1.9 million in acquisition costs.
"The first half has delivered a solid trading performance and continued good progress in the transformation of Scapa from an industrial tape company to a group with two businesses that are global and market leaders," Scapa Chief Executive Heejae Chae said. "The Industrial business is one of the leading global tape companies with strong profit margins and cash flow. The Healthcare business is now a world leading strategic turn-key partner to major global healthcare companies."
Scapa acquired the Systagenix manufacturing operations operations from Acelity LP Inc for GBP31 million in September.
"The acquisition, by way of a technology transfer, of the R&D and manufacturing assets of Systagenix and the exclusive five-year development and supply agreement for Systagenix advanced wound care products to Acelity is a milestone in Scapa's development, completing our Healthcare journey from a roll stock supplier to a fully integrated healthcare company with extensive technologies and capabilities in the markets we serve," Chae added.
Scapa did not propose an interim dividend, in line with the year prior.
"We have now completed three technology transfers in the last twelve months with an aggregate annualised revenue exceeding GBP40 million," Chae continued. "We believe that further opportunities to partner with our healthcare customers exist as the medical device sector undergoes disruption."
"Whilst the macro environment remains challenging, we anticipate the profit for the year will be in line with expectations, excluding the impact of the Systagenix healthcare transaction," Chae said. "This transformative transaction is expected to be modestly earnings dilutive in the current year and materially accretive from financial 2020 onwards."
Shares in Scapa were 5.2% lower at 407.80 pence on Tuesday.
Related Shares:
SCPA.L