19th Nov 2019 10:29
(Alliance News) - Adhesive products manufacturer Scapa Group PLC on Tuesday swung to an interim loss, after incurring one-off costs following the loss of a contract with medical devices maker ConvaTec Group PLC.
In the six months to September 30, Scapa reported a GBP1.0 million loss, from a profit of GBP9.7 million last year.
Revenue edged 3.9% higher year-on-year to GBP86.1 million from GBP82.9 million.
Scapa said it parted with GBP9.2 million in legal costs, severance fees, inventory write-offs and asset impairments, related to the loss of the ConvaTec deal.
In June, Scapa said it is seeking legal counsel after receiving notice from a ConvaTec unit, of the early termination of a supply agreement between the companies. Scapa then said it was seeking legal counsel and in July added that it was eyeing USD83.8 million in damages.
Exceptional items during the period totalled GBP10.6 million, more than twice the GBP4.1 million reported last year.
The loss of the ConvaTec contract contributed to a trading profit margin reduction to 8.8%, from 14.2% last year, Scapa said.
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."
Revenue from the Healthcare segment surged 29% year-on-year to GBP74.7 million, though there was more modest growth of 3.9% to GBP86.1 million in the Industrial division.
Scapa added: "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."
Scapa shares were 1.3% higher at 234.50 pence each in London on Tuesday morning.
By Eric Cunha; [email protected]
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Related Shares:
SCPA.LConvaTec