Scapa Group PLC

Scapa shares under pressure as CEO resigns and pre-tax profit halves

“I remain confident of Scapa's ability to deliver increased returns to our shareholders,” said chief executive Heejae Chae

Scapa raised its full-year dividend by 20.8% to 2.9p per share

Scapa Group plc (LON:SCPA) shares slipped after the maker of industrial tape and adhesives announced the resignation of its chief executive Heejae Chae alongside a halving of annual pre-tax profit.

Chae, who has been the AIM-listed firm's chief executive for the past 10 years, will remain in the role to ensure a smooth transition once a successor is found.

"It was a difficult decision to step away from my post as group chief executive of Scapa, but I feel now is the right time to bring in new leadership to deliver the next phase of our growth strategy,” he said.

READ: Scapa Group profit slides as healthcare margins contract, shares dip

“I have been with the company through many chapters of its growth, from a predominantly industrial business to a significant sized international company now predominantly healthcare focused,” Chae added.

Chairman Larry Pentz said Chae has delivered “significant growth, greatly improved efficiency and built firm foundations” during his tenure, which has set a “strategic blueprint that will continue to drive future growth”.

Pre-tax profits halve on one-off costs 

Separately, the group reported profit before tax of £14.9mln for the year to the end of March, a drop from £28.8mln in 2018 due to an exceptional charge of £12.8mln related to a provision for a potential increase in pension liabilities, the closure of sites and asset write-offs.

Excluding one-off items, adjusted pre-tax profit rose to £36.8mln from £27.6mln.

Trading profit – the group’s preferred measure – increased to £38.2mln from £34.5mln last year on a reported basis. But on a constant currency and continuing basis, trading profit fell by 0.3%.

Group revenue gained 7% on a reported basis, or 5.6% on a continuing and constant currency basis, to £311.8mln.

The healthcare business, which supplies wound dressings and topical skin care, delivered a 25.3% rise in revenue to £141.3mln and a 20.1% hike in trading profit to £20.9mln, supported by the acquisitions of BioMed Laboratories and Systagenix Wound Management.

That offset a weaker performance in the industrial business, which makes adhesive tapes, films and foams. Industrial revenue was 4.6% lower to £170.5mln and trading profit dipped 0.9% to £22.3mln with Scapa blaming “adverse macro conditions”.

Scapa raised its dividend by 20.8% to 2.9p per share.

Scapa 'confident' of ability to deliver increased shareholder returns

Looking ahead, the company said it would continue to focus on margin improvement and cash generation to support future growth in the industrial business.

In healthcare, Scapa said the technology transfer of Systagenix's research and development and manufacturing capabilities from a customer was a “transformative transaction” that will help deliver long-term sustainable growth as it expands its offering.

“I remain confident of Scapa's ability to deliver increased returns to our shareholders,” outgoing CEO Chae said.]

Scapa shares fell 13% to 324p in morning trading. 

Quick facts: Scapa Group PLC

Price: £2.47

Market: AIM
Market Cap: £383.33 m

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