Half Yearly Report

26 November 2013

Scapa Group plc

Interim Results

Scapa Group plc, a global manufacturer of bonding materials and solutions, today announces its Interim Results for the six months ended 30 September 2013.

Financial Highlights

§ Revenue grew 8.1% to £111.6m (2012: £103.2m)

§ Trading profit* increased 13.8% to £7.4m (2012: £6.5m)

§ Profit before tax improved 20.8% to £5.8m (2012: £4.8m)

§ Trading profit* margins continued to improve to 6.6% (2012: 6.3%)

§ Adjusted earnings per share* increased 20.0% to 3.0p (2012: 2.5p)

§ Net cash of £3.9m (31 March 2013: £2.2m)

Operational Highlights

§ Continued successful pursuit of self-help and growth agenda

§ Growth across all our end markets

§ Healthcare revenue increased 15.4% to £32.3m (2012: £28.0m)

§ Industrial revenue increased 5.6% to £73.8m (2012: £69.9m)

§ Healthcare strategy to become a key outsourcing partner to global customers is proving successful

§ WEBTEC plant moved to 24/7 operations to meet demand following highly successful new programme launch

§ Further facility rationalisation being undertaken to monetise assets

Commenting on the results Chief Executive, Heejae Chae said:

"The Group has delivered another period of growth in revenue and profits, with strong financial and strategic progress by Healthcare in particular. We remain confident in the growth potential of the business and that the Group will deliver full year results in line with management expectations."

* Before exceptional items, amortisation of intangible assets and legacy pension administration and finance costs

For further information:

Scapa Group plc Heejae Chae - Chief Executive Tel: 0161 301 7430

Scapa Group plc Paul Edwards - Finance Director Tel: 0161 301 7430

Numis Securities Limited Mark Lander/Richard Thomas Tel: 0207 260 1000

(Nominated adviser)

N+1 Singer Nick Owen Tel: 0207 496 3182

Weber Shandwick Financial PR Nick Oborne Tel: 0207 067 0700

Interim Management Report

Scapa Group has delivered a strong first half performance despite the challenging market conditions. Group revenue and earnings for the first half of our financial year have shown good growth over the same period last year. We continue to make progress towards achieving our strategic objectives as we reposition our portfolio and focus on growth and higher quality revenue streams, expanding our margins and pursuing our continued self-help agenda.

Group results

Revenue for the six months was up 8.1% at £111.6m (2012: £103.2m), with all our markets showing growth from the prior year. Trading profit for the period was £7.4m (2012: £6.5m), increasing margins to 6.6% (2012: 6.3%).

Current year exceptional items include profit on disposal of properties of £1.2m, in line with post Balance Sheet events disclosed as at 31 March 2013, £0.3m abortive acquisition costs and £0.3m restructuring costs.

Pre-tax profit increased to £5.8m (2012: £4.8m). Taxation charges for the period were £2.8m (2012: £2.4m). Removing the exceptional items, pension administration costs and amortisation, the underlying effective tax rate for the period is 34.7% (31 March 2013: 38.3%). Basic earnings per share was 2.0p (2012: 1.6p). When fully diluted and adjusted for exceptional items, legacy pension administration costs and amortisation, earnings per share was 3.0p (2012: 2.5p).

Markets

Our Healthcare business offers customers skin friendly turn-key solutions - from design services, coating and laminating right through to converting, packaging and sterilisation.

Our Healthcare strategy to become a key outsourcing partner to our global Healthcare customers is proving successful, and in the first half we enjoyed strong revenue growth from existing customers as we further expanded our service and product offerings to become an integrated partner in their supply chain strategy.

Healthcare revenue is up 15.4% on the same period in the prior year (12.9% at constant exchange rates). This growth was driven by new and existing programmes in the the wound care sector, offsetting a decline in consumer healthcare. Trading profit increased 38.2% to £4.7m and accounted for 63.5% of the Group's total trading profit. Trading margin was 14.6%, ahead of the prior year 12.1%, and the same as reported for the 12 months to 31 March 2013.

We are maintaining our investment in growth, and increased demand following a successful new product launch has seen the move to 24/7 production at WEBTEC, our plant in Knoxville. The investment and associated one-off costs related to the launch and ramp up of the new programme will continue in the second half of the year.

Our pipeline for Healthcare remains strong as we see increased opportunity to work deeper with our customers in providing product development and turn-key solutions, ensuring we enhance our relationship and become a key strategic partner in their supply chain. Building on the success at our existing customers, we have made significant progress on programmes at new global customers which should come online towards the end of the year. Good visibility of revenue gives confidence that we will continue to make further progress this year and we remain positive about the outlook for our Healthcare business.

Industrial revenue was £73.8m (2012: £69.9m), an increase of 5.6%. At a constant exchange rate the growth reduces to 2.4%. Trading profit for the period increased 7.9% to £4.1m (2012: £3.8m), aided by volume and our continued focus on operational efficiencies.

 The growth in Industrial was driven by our focus on sectors where we have competitive advantage, strong market positions and the opportunity to gain additional market share.

Within OEM, added focus in Automotive and Cable resulted in double digit growth in both sectors, which should continue to grow as our investment into new products and customer acquisitions yields further market share gain.

Within Consumables, the drive to gain market share to combat the weak European construction market has yielded additional shelf space at current retailers through product and brand extensions. We also gained new retail channels through the acquisition of new customers, a buildings material group in the UK and a hypermarket chain in North America. The performance in the remaining Consumables sector reflected the macro environments of the regions in which we compete.

The outlook for the Industrial segment is positive, reflecting both our sector focus and the improving overall macro environments in North America and Europe, although we do not foresee any significant near term upswings in the current economic cycle.

Revenue in the period was up 3.8% over the prior year, driven by further in-roads with some major electronic customers. Our AFT (Acrylic Foam Tape) saw year on year growth of 39.0% and we expect continued momentum with this product. Costs remained broadly in line with the prior year and the trading loss reduced to 3.6% (2012: 3.8% loss).

We succeeded in winning EMC (Electromagnetic Compatability) application designed-in business into a new tablet launch and with the same customer are actively involved in a series of additional tablet programmes. In addition, we received a mass production order for thermal conductive tape from a major TV brand towards the end of the financial period.

While the macro environment for Electronics remains uncertain and sometimes volatile, the outlook remains positive. The Group will continue to review progress in this sector against potential that exists in this market and elsewhere.

Net assets at 30 September 2013 totalled £64.3m (31 March 2013: £65.6m). The reduction is in part owing to foreign exchange movements on the translation of assets and liabilities of £4.3m. The Group cash balance was £12.7m (31 March 2013: £12.6m).

Working capital increased moderately to £25.1m (31 March 2013: £22.8m), largely as a result of the increase in sales.

Pensions

The retirement benefit obligation decreased to £38.0m (31 March 2013: £41.2m). The Group's retirement benefit obligation has been restated under IAS19 (revised). The most significant impact for the Group of the revised standard is the release of provisions for future scheme management costs. Previously these were held within the retirement obligation on the Balance Sheet and the associated costs were not separated out in the Income Statement. At 31 March 2013 the Group's liability under IAS19 (revised) was £41.2m versus £46.2m as previously reported under IAS19.

Net cash generated from operations was £2.1m (2012: £5.8m) after an increase in trading working capital of £2.6m due to sales growth. Capital expenditure was £2.0m (2012: £2.0m) and related mainly to investments in Healthcare to increase capacity and improve efficiency. During the period we disposed of two sites within the Group and the proceeds from these transactions were £4.3m. Pension payments in excess of operating charge were £2.7m (2012: £2.3m) and represent the deficit repair payments and contribution to scheme expenses as agreed at the latest triennial funding review. Tax and interest outflows were £1.9m (2012: £1.9m). After dividends of £0.7m (2012: Nil), closing net cash was £3.9m (31 March 2013: £2.2m).

A final dividend for the year ended 31 March 2013 of 0.5p per share was paid on the 23 August 2013. As last year, the Board does not propose an interim dividend but intends to maintain a progressive dividend policy at each year end.

The principal risks and uncertainties affecting the Group remain those set out in the 2013 Annual Report. Those which are most likely to impact the performance of the Group in the remaining months of the financial year are movements in exchange rates and global commodity prices.

Due to the global nature of the Group, a large proportion of its revenue is derived from overseas, of which a significant amount is generated in US Dollars and Euros. As a consequence, the Group is affected by movements in exchange rates. The Group uses a number of commodity type products in its core production operations, predominantly cloths, rubbers and resins and, with limited buying power influence in the very short term, the Group could be affected by sharp movements in the global prices for these commodities.

Summary and Outlook

The Group delivered a good first half result. We are well positioned to address opportunities that arise in our end markets and we remain confident in the growth potential of the business. Scapa remains on track to make continued progress into the second half of the year and to deliver full year results in line with management expectations.

26 November 2013

Consolidated Income Statement

For the half year ended 30 September 2013 (unaudited)

* Before exceptional items, amortisation of intangible assets and legacy pension administration and finance costs

Consolidated Balance Sheet

As at 30 September 2013 (unaudited)

Consolidated Statement of Changes in Equity

For the half year ended 30 September 2013 (unaudited)

Consolidated Cash Flow Statement

For the half year ended 30 September 2013 (unaudited)

* Exceptional items include provision movements on items charged to the Income Statement in prior years.

Notes

1. General information

Scapa Group plc (the Company) and its subsidiaries (together the Group) manufacture and sell technical adhesive tapes. 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 2013 and similarly the period ended 30 September 2012 has been neither audited nor reviewed by the auditor. The financial information for the year ended 31 March 2013 has been based on information in the audited financial statements for that period.

The information for the year ended 31 March 2013 and the interim condensed financial statements for the period ended 30 September 2013 does 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 2013 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 annual 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 IAS34 compliant interims. Scapa Group plc complies with the majority of IAS34 but does not produce a number of additional disclosures that are not considered significant.

Restatement of comparatives

The comparative information presented in this report for 2013 has been restated in line with IAS19 (revised). Details of the impact are given in Note 11.

Accounting policies

With the exception of the adoption of IAS19 (revised), as disclosed below, the same accounting policies, presentation and methods of computation are followed in the interim condensed financial statements as applied in the Group's latest annual audited financial statements.

IAS19 (revised) - Employee benefits

The revised standard on employee benefits has been implemented by the Group from 1 April 2013. The related amendments have impacted the accounting for the Group's defined benefit scheme by reclassifying pension scheme administration costs to operating costs in the Income Statement where previously they have been charged to the admin expense reserve held on the Balance Sheet, and replacing the interest costs and expected return on assets with a net interest charge on the net defined benefit liability. All relevant comparatives have been restated.

Critical accounting estimates and judgements

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 2013.

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 the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the interim condensed financial statements.

2. Segmental reporting

The Group trades across three business units: Healthcare, Industrial and Electronics, and in three main geographical areas: Europe, North America and Asia. All inter-segment transactions are made on an arm's length basis. The Group has continued to focus more on business units than geographical areas for strategic planning. Geographical information is presented to provide supplementary information about the areas in which the Group operates for the benefit of investors.

The chief operating decision maker relies primarily on turnover and trading profit to assess the performance of the Group and make decisions about resources to be allocated to the 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 as shown on the following pages.

Segment results - 30 September 2013

The segment results for the half year ended 30 September 2013 are as follows:

Revenue is allocated based on the country in which the order is received. All revenue relates to the sale of goods. The revenue analysis based on the location of the customer is as follows:

Segment results - 30 September 2012

The segment results for the half year ended 30 September 2012 are as follows:

Revenue is allocated based on the country in which the order is received. All revenue relates to the sale of goods. The revenue analysis based on the location of the customer is as follows:

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:

Segment results - 31 March 2013

The segment results for the year ended 31 March 2013 are as follows:

Revenue is allocated based on the country in which the order is received. All revenue relates to the sale of goods. The revenue analysis based on the location of the customer is as follows:

There are no single customers with greater than 10% of the total external revenue of the Group.

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:

The Group's revenue from external customers, based upon the location where the sale occurred, and information about its segment assets (non-current assets excluding financial instruments, deferred tax assets and other financial assets) are detailed below:

The chief operating decision maker does not review assets and liabilities by business unit but by geographical area. The assets and liabilities at 30 September 2013 and capital expenditure for the period then ended can be analysed into geographical segments as follows:

The assets and liabilities at 30 September 2012 and capital expenditure for the period then ended were as follows:

The assets and liabilities at 31 March 2013 and capital expenditure for the year then ended were as follows:

Unallocated head office items relate to assets and liabilities incurred in the normal course of business for theParent Company.

4. Exceptional items

The profit on disposal of properties is lower than expected at 31 March 2013 owing to higher than expected environmental clean-up costs at the sites concerned.

5. Key management compensation

Key management is defined as the Leadership Team, 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

As part of the WEBTEC acquisition in 2011, the Group has paid £5.1m of the deferred consideration during 2013 and provided for a final deferred consideration payment of £4.3m due on the achievement of certain performance targets over the year. Randy Holmes (Director of Global Development) is part owner of the company that received and will receive the deferred consideration.

The Group has incurred £0.1m of property lease costs during the period, payable to HPB Investments, a company owned in part by Randy Holmes. The lease expires in August 2019 and the annual lease cost is £0.2m.

The pension schemes are related parties to the Group. There were no contributions outstanding at the period end.

7. Net financial expenses

8. Taxation

In addition to the change in rate of corporation tax to 21% disclosed above within the note on taxation, a further reduction to the main rate will reduce the rate by 1% per annum to 20% from 1 April 2015.

The effect of the proposed reduction of the main rate of corporation tax by 1% to 20% from 1 April 2015, if this applied to the deferred tax balance at the Balance Sheet date, would be to reduce the deferred tax asset by £0.3m.

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 2013.

10. Dividends

A final dividend for the year ended 31 March 2013 of 0.5p per share was declared by the Directors at their meeting on 28 May 2013. The dividend was paid on 23 August 2013 to shareholders registered on 26 July 2013.

11. Retirement benefit schemes

Defined benefit schemes

The defined benefit obligation as at 30 September 2013 is calculated on a year-to-date basis, using the latest actuarial valuation.

The defined benefit plan assets have been updated to reflect their market value at 30 September 2013. Differences between the expected return on assets have been recognised as an actuarial gain or loss in the Statement of Comprehensive Income in accordance with the Group's accounting policy.

Prior period restatement

The accounting for the Group's defined benefit obligation has been impacted by IAS19 (revised) and its related amendments. The most significant change for the Group is the release of provisions for future scheme management costs. Previously these were held within the retirement obligation on the Balance Sheet and the associated costs were not separated out in the Income Statement. In addition the interest cost and the expected return on plan assets have been replaced with a net interest charge on the net defined benefit liability. The pension administration costs for the current period are £0.4m (2012: £0.9m); the IAS 19 finance costs are £0.8m (2012: £0.6m). Prior year comparatives have been restated and details of the impact are given in the tables below.

Impact on the retirement benefits obligation and deferred tax asset

Impact on the Consolidated Income Statement

Impact on the Consolidated Statement of Comprehensive Income

12. Provisions

13. Reconciliation of operating profit to operating cash flow and reconciliation of net cash

Analysis of cash and cash equivalents and borrowings