Stocks round-up: Shoe Zone, Scapa, Speedy Hire, Silence Therapeutics

Today’s results were a mixed bag, with some big winners offset by dividend disappointment elsewhere.

Shoe Zone (LSE:SHOE) and Scapa (LSE:SCPA) were among popular stocks under pressure today, as the fall-out from the Covid-19 pandemic continues to be felt by investors in smaller companies.

There was at least some better news in the wake of results from Speedy Hire and paper products group James Cropper, while Silence Therapeutics (LSE:SLN) rose another 7% after reporting “exceptional progress” in securing more high-value partnerships for its technologies.

For many of the companies reporting today, their figures were skewed by the onset of the pandemic, just as the finishing line for their respective reporting periods loomed into view.

Shoe Zone, for example, had been sitting on a 2.6% rise in annual revenues for the period to February, only to end the half-year with sales 6% lower at £68.9 million after being forced to close its 490 stores 10 days before the end of the trading period.

The repercussions for investors have been significant, with high-yielding Shoe Zone being forced to pull its previously announced 2019 dividend in order to save £4 million and then today ditching the half-year award, which had been 3.5p a share last time.

Some 416 stores have since re-opened but, with social distancing measures in place, including limits on the number of customers at any one time. Buy One Get One Free promotions are also continuing online, albeit not at the levels seen during the crisis when the company needed to sell stock in order to generate cash as quickly as possible.

While cash conservation continues to be the focus, the group is confident that its current level of funding will be sufficient, as long as sales return to a “high proportion” of previous levels.

Shoe Zone shares fell 4% to 84.4p, having been more than 200p last summer when it impressed the City with record full-year profits. They were at a low of 60p in early April.

Source: TradingView. Past performance is not a guide to future performance.

Scapa is another highly-regarded stock whose fortunes have slumped this year, although the deterioration for the former AIM ten-bagger was already in motion before the pandemic due to a profits warning in mid-February.

That was when the adhesives specialist reported slower-than-expected progress in reducing costs in its healthcare division following the surprise loss of its biggest customer, as well as adverse trading conditions affecting its industrials business.

The company's recovery hopes have been dealt a further blow by Covid-19, with shares today down another 13% in the wake of annual results to 104.2p - near the lowest level in six years.

Manchester-based Scapa had once been one of the star performers of AIM as expansion through acquisition helped shares to eventually peak at more than 500p in the summer of 2017. A difficult 2019 followed due to the ConvaTec contract loss, prompting CEO Heejae Chae to reverse his decision to leave.

He said today that a recent equity raise, which was oversubscribed almost three times, and a debt-refinancing to provide additional liquidity had strengthened the balance sheet.

Chae added:

“Whilst we recognise the past year has been difficult, we are confident these actions, alongside cost saving initiatives, will enable Scapa to cement its strong market position.”

The 3% share price rally for Speedy Hire (LSE:SDY) came after CEO Russell Down said in annual results that he had been encouraged by the tool hire company's performance over the past three months. At current revenues it should be able to operate throughout the 2021 financial year within existing banking facilities and without breaching any covenant tests.

Speedy said it had retained a significant proportion of its business through the crisis, with UK and Ireland hire revenue for June set to be about 17% below the prior year. Measures taken by the group meant it still generated cash for the months of April and May, although having also taken advantage of Government support it has decided not to declare a dividend.

Speedy, whose shares rose almost a penny to 56.6p, reassured investors that its dividend policy had not fundamentally changed, and that it will still consider the possibility of an interim pay-out in November.

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James Cropper (LSE:CRPR) also won't be paying a final dividend, despite a record year in which revenues surged to £105 million and pre-tax profits more than doubled to £5.5 million. The result was buoyed by a £5.4 million rebound in its paper division from a £2 million loss last time.

The group's products range from materials essential for a hydrogen fuel cell to a bespoke colour and texture for brand packaging. It pointed out that the last time the company cancelled a dividend payment was in its loss-making year of 1976, with today's decision part of an “all-encompassing” cash preservation programme against the impact of Covid-19.

Chairman Mark Cropper said:

“Looking beyond the here and now, I believe there are now two additional questions to ask: can we grow our way out of the current economic environment and can we do so in a way that respects our environment, people and communities like never before? I would answer yes and yes."

The company's shares, which have rallied sharply since their April low of 690p, were 3% higher at 1,140p today.

Silence Therapeutics was up 4% to 441p after it reported progress on the clinical development of its lead assets, with no significant disruption to its operations from Covid-19.

Silence enjoyed a stunning return to form in 2019, with the original member of AIM from 1995 transformed by a collaboration with US firm Mallinckrodt Pharmaceuticals for the commercialisation of its RNAi Therapeutics technology.

It also reported a strong cash position today, with balances at the end of May buoyed by a recent agreement with AstraZeneca (LSE:AZN). Silence is entitled to receive a further $40 million from Astra no later than the first half of 2021.

Chairman Iain Ross said:

"Our significantly strengthened balance sheet ensures that we are in a robust position to weather any uncertainty whilst equipping us with the capital to further accelerate our important RNAi programmes and platform."