Statement re Pension Deficit Funding Arrangements

13 March 2013

Scapa Group plc

Statement re Pension Deficit Funding Arrangements

Scapa Group plc a global supplier of bonding systems and solutions has today announced that it has reached agreement with the trustees for a merger of all its UK Pension funds and the implementation of an asset backed funding structure from March 2013.

The merged UK pension funds will be underpinned by an asset backed funding structure which will provide £3.75 million cash contributions per annum to the pension fund. The present value of this funding stream will be fully recognised as a pension fund asset in the 2012 triennial valuation and remove the combined deficit of £54.8m on a funding basis.

Key points:

·; A partnership between the Group and the pension funds will be formed which will hold the income and capital rights to a Group asset

·; The partnership is structured such that the trustees of the UK Pension funds will hold the income rights related to the asset over the life of the agreement with capital rights still ultimately controlled by the Group

·; This structure will generate an income to the UK Pension Funds which will total £3.75m per year, index linked and capped at 5%, over the life of the agreement

·; The life of the agreement is 25 years or until the pension funds are in surplus, whichever is earlier

·; The present value of this income stream is recognised as an asset of the pension funds which will be included in the 2012 triennial valuations and remove the combined funding deficit of £54.8m

·; The trustees have agreed to fully merge the UK pensions funds to form one single arrangement by 31 December 2013

·; The Group will agree to contribute towards the expenses of the combined fund, the contribution is capped at £350,000 per annum

·; The arrangement has inland revenue clearance and there is no significant effect on the tax position of the Group

·; The arrangement replaces all existing funding arrangements in place for the UK Pension Funds

·; The Group has structured the asset backed funding arrangement such that it does not impact on its consolidated accounting position and has adopted a policy such that accounting under IAS 19 will remain unchanged

The implementation of the asset backed funding structure continues the progress made to date in managing the Group's legacy pension deficit. It provides a more progressive and efficient way to manage the merged funds and legacy pension liabilities giving Scapa (and the trustees) a stable and less volatile basis for financing the long term pension liabilities with significantly lower annual cash funding than under an orthodox deficit funding plan.

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