Annual Report and Accounts 2012 - Scapa

Annual Report and Accounts 2012 

Growing smarter 

Secure sustainable returns 

Scapa Group plc

Highlights 

A global business 

that’s close to its customers 

Industrial Healthcare Electronics 

Highlights of the year 

– Product rationalisation and 

margin focus has delivered strong 

improvements in margin 

– Consumer sector continues 

to perform well with focus on 

product extension and point 

of sales acquisition 

– Investment in growth regions 

(India and Brazil) delivering results 

– Shifting product portfolio in 

Industrial Assembly sector and 

specification work for OEM 

business solutions 

Revenue 

£145.9m 

+0.2% 

Trading profit 

£7.2m 

+67.4% 

Trading margin 

4.9% 

+1.9% 


– New experienced management 

team in place focused on 

driving growth 

– Successful completion and 

integration of WEBTEC acquisition 

– Ability to offer true turn-key 

capabilities from raw materials, 

coating, converting, sterilisation, 

printing and packaging 

– Launch of skin-friendly Scapa 

Soft-Pro silicone adhesive range 

Revenue 

£39.5m 

+16.9% 


£5.5m 

+27.9% 


13.9% 

+1.2% 


– Completion and build-up of product 

range for Electronics solutions 

– Obtained first specifications at 

global mobile phone producer and 

touch panel 

– Leveraging Scapa’s global footprint 

to focus on Electronics markets and 

design centres 

– Maximising market and operational 

focus on Electronics segment 

through redesigned product 

portfolio, withdrawing commodity 

products 

Revenue 

£10.2m 

-20.9% 

Trading loss 

-£0.8m 

(-) 


-7.8% 

-10.9%

Sector split 

Electronics 

Healthcare 

Profit by sector % 

Industrial £7.2m 

+67.4% 

Healthcare £5.5m 

+27.9% 

Electronics -£0.8m 

(-) 

Global split 

Europe North America Asia 


– Trading profits increased 

78.8% to £5.9m 

– Trading margins increased 

to 5.5% (2011: 3.1%) 

– Continued to rationalise product 

range rebalancing mix towards 

value add products 

– Consumer, cable, pipeline and 

emerging market products 

performed strongly 

Revenue 

£107.9m 

+1.1% 


£5.9m 

+78.8% 


5.5% 

+2.4% 

Industrial 

Revenue by sector % 

Industrial £145.9m 

+0.2% 

Healthcare £39.5m 

+16.9% 

Electronics £10.2m 

-20.9% 

Healthcare 

Electronics 

Industrial 


– Trading profits increased 

28.3% to £6.8m 

– Trading margins increased 

to 8.9% (2011: 7.3%) 

– Good growth in consumer and 

transportation market products 

– Consolidated growth in 

healthcare and added WEBTEC 

to the portfolio of business 

Revenue 

£76.6m 

+5.4% 


£6.8m 

+28.3% 


8.9% 

+1.6% 

Asia 

North America 

Europe 

Profit by region % 

Europe £5.9m 

+78.8% 

North America £6.8m 

+28.3% 

Asia -£0.8m 

(-) 

Revenue by region % 

Europe £107.9m 

+1.1% 

North America £76.6m 

+5.4% 

Asia £11.1m 

-14% 

Asia 


– Established new presence in 

India to support growth and local 

customer base 

– New line commissioned and fully 

operational early 2011 

– Invested in Sales and R&D 

functions to help drive future 

growth in the region 

– Closed commodity cloth line 

in Korea in 2012 

Revenue 

£11.1m 

-14.0% 

Trading loss 

-£0.8m 

(-) 


-7.2% 

-10.3% 

Europe 

North America

Contents 

Overview 

Contents – 

Highlights – 

Chairman’s Statement 1 

Business Review 2-15 

Industrial 4 

Healthcare 6 

Electronics 8 

Health & Safety 12 

Principal Risks and Uncertainties 14 

Governance 16-33 

Corporate and Social Responsibility 16 

Board of Directors 18 

Leadership Team 19 

Report of the Directors 20 

Directors’ Remuneration Report 23 

Corporate Governance 29 

Financial Statements 34-86 

Statement of Directors’ Responsibilities 34 

Independent Auditor’s Report 35 

Consolidated Income Statement 36 

Consolidated Statement 

of Comprehensive Income 36 

Consolidated Balance Sheet 37 

Consolidated Statement 

of Changes in Equity 38 

Consolidated Cash Flow Statement 39 

Group Accounting Policies 40 

Notes on the Accounts 47 

Five Year Summaries 74 

Parent Company 

Financial Statements 75 

Independent Auditor’s Report 76 

Company Balance Sheet 77 

Statement of Accounting Policies 78 

Notes on the Accounts 80 

Who we are 

As a global manufacturer of bonding 

materials and solutions, Scapa is at 

the forefront of adhesive technology 

for the Industrial, Healthcare and 

Electronics markets. 

What we do 

Through an application driven 

focus, we support our global 

OEMs, distributors and consumers 

in maximising their product 

performance and process efficiency. 

Performance 

Financial highlights 

– Revenue grew 1.7% to £195.6m 

(2011: £192.3m) 

– Trading profit* increased 33.8% 

to £10.7m (2011: £8.0m) 

– Profit before tax increased 72.1% 

to £10.5m (2011: £6.1m) 

– Trading margins improved 

progressively to 5.5% for the year 

(2011: 4.2%) 

– Basic earnings per share increased 

87.5% to 4.5p (2011: 2.4p) 

Operational highlights 

– Industrial trading margins 

increased to 4.9% (2011: 3.0%) 

– Healthcare trading margins 

increased to 13.9% (2011: 12.7%) 

– Successful completion and 

integration of WEBTEC acquisition 

– New Healthcare leadership team 

appointed to deliver new strategy 

– Self-help strategy continues to deliver 

good growth in cash and profits 

– Investments made in emerging 

economies of Brazil and India 

– Strong balance sheet to support 

strategic investment 

Revenue 

£195.6m 

+1.7% 

Trading profit* 

£10.7m 

+33.8% 

Profit before tax 

£10.5m 

+72.1% 

Earnings per share 

4.5p 

+87.5% 

* Operating profit before exceptional items and amortisation of intangible assets.

Chairman’s Statement 

A focus on sustainable profit 

Chairman’s Statement 

I am delighted to report another year of profit growth and progress 

for the Group. Our continued focus on higher quality revenues, 

operational efficiency, cost control and good cash management 

delivered strong operating profit and cash flow. 

Overview 

Against a backdrop of slowing economic growth and a turbulent 

macro-economic environment, during the fiscal year 2012 we 

continued to deliver on our strategy of margin improvement and 

cash generation through self-help measures. Whilst we are pleased 

with the progress, we believe that the opportunity for further 

improvement remains, and a number of new initiatives will be 

implemented during the current year. 

In addition to driving organic growth of profit and cash generation, 

we acquired WEBTEC Converting LLC (WEBTEC) in December 

2011. WEBTEC is a leading contract manufacturer and full-service 

converter, printer and packager of adhesive-backed medical 

devices. WEBTEC’s capabilities combined with our material 

expertise enable us to provide turn-key solutions to the Healthcare 

market. The acquisition provides us with a strong platform for 

our Healthcare division, augments our management expertise 

and takes us further toward our goal of balancing our business 

portfolio across our three market divisions – Industrial, Healthcare 

and Electronics. 

Financial highlights 

Revenues grew 1.7% to £195.6m. Trading profit grew by a healthy 

33.8% to £10.7m. Profit before tax increased 72.1% to £10.5m and 

basic earnings per share increased 87.5% to 4.5p, both including 

non-recurring items. 

Strong cash flow and efficient working capital management 

ensured that we ended the year with net cash of £7.0m (2011: 

£18.8m), a good result following the acquisition of WEBTEC for 

an initial cash consideration of £18.0m (US$28.8m). 

No dividend is proposed for the year. The future recommendation 

of dividends will remain under review as the Group continues 

to make progress towards sustainable profitability and cash 

generation. 

“I am delighted to report 

another year of profit 

growth and progress for 

the Group.” 

People 

As always, on behalf of the Board I would like to thank all of 

Scapa’s employees around the world for their energy, commitment, 

dedication and hard work over the last financial year. Our people 

are an invaluable asset of the Group and are core to the further 

improvement of our performance and the achievement of our goals. 

Board and Governance 

The Board understands that a commitment to the highest 

standards of corporate governance is key to managing our 

business effectively and maintaining investor confidence. The 

Board has a thorough understanding of the business, knows its 

senior people and creates a culture which is conducive to open 

debate on the key issues, at the right level and at the right time. 

Good governance adds value and reduces risk; therefore we 

look to sustain, continually develop and improve our governance 

arrangements. As in previous years, the Board carried out a 

self-assessment of its performance to ensure that our corporate 

governance arrangements meet the needs of the business and 

corporate governance best practice. The results of this exercise 

showed that our arrangements accord with best practice and that 

the Board’s mix of skills and experience meet the current needs of 

our business and will support the next phase of our development. 

Outlook 

The new financial year has commenced with our business 

performing in line with expectations. We continue to be mindful 

of the current macro-economic issues but we are well positioned 

to continue to execute the self-help agenda and to invest in 

repositioning the Group towards higher value added business. We 

look forward to making further progress in the new financial year. 

J A S Wallace 

Chairman 

Scapa Group plc Annual Report and Accounts 2012 1 

Overview 

Business Review 

Governance 

Financial Statements


“We are delivering on our strategy 

of margin improvement and cash 

generation through self-help measures.” 

Heejae Chae, Group Chief Executive 

2 Scapa Group plc Annual Report and Accounts 2012 

Overview 

2011/12 saw the Group build on its strategy of self-help and 

deliver improved operating profit, margins and cash generation. 

In December 2011 we also completed the acquisition of WEBTEC 

Converting LLC (WEBTEC) which complemented our organic 

growth and maintained our focus on improving the quality of 

our revenue streams and high margin products and markets. 

In the past year we have delivered against the core objectives 

outlined in May 2011. We have: 

– continued the market-focused strategy concentrating on higher 

quality revenue streams; 

– further driven improvements in margin and cash generation 

and returns from our asset base through focus on self-help 

measures of cost out, operational efficiencies, centralisation 

and supply chain optimisation; 

– strengthened the commercial and operational management 

team across the Group; and 

– invested in opportunities to grow our business for the medium 

and longer term. 

At the core of our strategy for sustainable growth is a deep 

understanding of our markets, a global footprint that allows close 

working relationships with leading international partners and 

extensive technical knowledge to support the development 

of application-specific bonding material solutions. 

Results 

2012 

£m 

2011 

£m 

Revenue 195.6 192.3 

Trading profit 10.7 8.0 

Exceptional items and amortisation of intangibles 1.0 – 

Operating profit 11.7 8.0 

Net finance costs (1.2) (1.9) 

Profit on ordinary activities before tax 10.5 6.1 

Basics earnings per share (p) 4.5 2.4

“Our goal is to deliver sustainable and 

profitable growth through focus on 

higher quality revenue streams from a 

balanced portfolio of business across 

Industrial, Healthcare and Electronics.” 

Group revenue in the year was £195.6m (2011: £192.3m) with the 

acquisition of WEBTEC contributing £5.4m. In line with our strategy 

of improving the quality of our revenue by reducing complexity 

and removing low margin cash consuming business, revenue 

reduced by 1.1%, excluding the contribution from WEBTEC. The 

split between the first and second half of the financial year was 

50.4% and 49.6% respectively, including the contribution from the 

acquisition. There was no material movement in revenue for the 

effects of exchange rates in the year. 

Trading profit increased 33.8% to £10.7m (2011: £8.0m). Group 

trading margin improved to 5.5% (2011: 4.2%). The contribution 

to trading profit from WEBTEC in the year amounted to £0.5m. 

Industrial 

The Industrial market is the largest segment of the Group’s 

revenue, accounting for 74.6%. Its overall revenue remained in line 

with the prior year at £145.9m (2011: £145.6m) reflecting further 

and deliberate rationalisation of its product range. As reported in 

the interim results good growth was experienced in the Consumer 

and Cable markets. Trading profit increased 67.4% to £7.2m 

(2011: £4.3m) and trading margins increased to 4.9% (2011: 3.0%) 

reflecting both the improved product base and cost efficiencies. 

Healthcare 

Healthcare revenue increased by 16.9% to £39.5m (2011: £33.8m) 

on the back of improving market penetration and the growing 

level of opportunities for Scapa in this market. Healthcare revenue 

accounted for 20.2% of the Group’s revenue and, on a pro-forma 

basis including WEBTEC, this increases to approximately 26.3%, 

improving and diversifying the revenue mix of the Group and taking 

us a step closer to our objective of a balanced market portfolio of 

revenue. Trading profit increased 27.9% to £5.5m (2011: £4.3m), 

delivering an improved margin of 13.9% (2011: 12.7%). 

Electronics 

As expected, Electronics revenue decreased to £10.2m (2011: 

£12.9m) and the division returned an operating loss of £0.8m (2011: 

£0.4m profit) driven by lower revenue and additional investments 

in research and development (R&D) and sales. We continued to 

move away from commodity business with limited growth potential 

during the year, closing our cloth tape line in Korea in December 

2011. As highlighted in November, our new production line and 

R&D laboratory came on line during the year and we have seen 

some pleasing design-in successes as we build up a new product 

portfolio. We continue to invest in this business for future growth 

and we believe that Electronics will see an improved performance 

in the next fiscal year. 


Overview Business Review 

Governance 



Industrial 

Within the broad Industrial market, Scapa is able 

to accommodate the diverse performance requirements 

of market segments from construction to aerospace. 

Our extensive product portfolio and impressive 

converting capabilities ensure that we can provide 

a solution for any application. 

Business highlights 

– Continued product rationalisation and margin 

focus has delivered strong improvements 

in margin 

– Consumer segment sector continued to perform 

well through product extension and focus on 

point of sale acquisition 

Market overview 

Industrial is the largest segment for the Group covering wide 

range of markets including industrial assembly, cable, construction, 

transportation and consumer. Approximately, 40% of the segment 

is classified as consumables which are standard products that 

are sold in final end user formats through distributors and retail 

channels such as Travis Perkins, Walmart and Costco. The other 

portion of the segment is application-specific products that 

are designed in and sold through either our direct sales force 

or third parties. 

As one of the few bonding solution suppliers with a global 

footprint, we have a unique competitive proposition to address 

global customers who require a global supply chain solution. As 

customer requirements change, we have expanded our footprint 

to match their needs. During the past year, we have established 

our presence in India and Brazil to serve the existing global 

customers as well as to participate in opportunities at the fast 

growing local economies. 

Strategy 

Whilst the Industrial business covers a broad range of markets, we 

can classify the unit into two broad categories based on the end 

application of the products. For consumables, the strategy is to 

leverage our brands and our significant distribution network. We 

sell our consumables products under the brands including Barnier 

and Renfrew which have significant recognition in their respective 

markets. Our strategy is to expand our product portfolio through 

product extension as well as introduction of products beyond the 

core tapes which we can outsource and sell under our brands. 

We also sell our products through distributors, major retailers 

such as Walmart, Costco and 700 Travis Perkins stores, and 

over 3,700 retail outlets throughout Europe. We continue to focus 

on expanding our Point-of-Sale (POS) network to push through 

our expanding product range. The remaining part of Industrial is 

application-specific products that are designed in at the Original 

Equipment Manufacturers (OEM). 


– Cable segment growth driven by the 

infrastructure investments in the developing 

economies 

– Investments into growth regions (India and Brazil) 

delivering results 

– Transportation performed well and improved 

margin benefiting from overall market strength 

– Roll-out of a new product range of acrylic foams 

for Industrial applications 

Our main markets are cables, pipeline, and transportation. Our 

strategy for this segment is to gain a deep understanding of our 

core markets, close working relationships with leading global 

partners, extensive technical knowledge and global footprint 

to develop specialised bonding material solutions. 

Financial performance 

Industrial revenue was £145.9m, in line with the prior year. We have 

continued to improve our product mix and margin and rationalised 

our products which were not competitive or added complexity 

without any strategic benefit. Offsetting the rationalised revenues, 

consumer products performed well and the shift of our focus to 

acquisition of point of sale and leveraging the brands to introduce 

new non-tape products have had a positive impact. Cable, pipeline 

and transportation products also made positive contributions 

as we transitioned towards more application-specific products 

and leveraged our global footprint. This strategy has yielded an 

improvement in margins as trading profit increased to £7.2m 

(2011: £4.3m), a 67.4% increase on the prior year.

Revenue 

£145.9m +0.2% 

74.6% of Group revenue 


£7.2m +67.4% 

67.3% of Group trading profit 


4.9% +1.9% 

www.barniersystem.com 

Barnier System 

Buildings generate an extremely 

large quantity of harmful gases such 

as CO2. Coming under particular 

scrutiny of governments, consumers 

and environmentalists, the construction 

industry constantly aims to improve 

its performance in terms of energy, 

materials and waste. 

Scapa’s Barnier System, a complete 

range of products for bonding, sealing 

and protection applications, which 

combine the latest technology and 

adhesives, has proven itself for more 

than 15 years. The system includes 

16 products, all designed around the 

requirements of professional builders 

and complies with the latest government 

standards and European regulations. 

With Barnier System, builders can create 

the optimal insulating seal for houses, 

achieving temperature and humidity 

control, thus saving valuable energy. 


2011 


2011 

£4.3m 

£145.9m 

£145.6m 

£7.2m 



Governance 



Healthcare 

Scapa Healthcare is a leading global developer and 

manufacturer of innovative life-enhancing healthcare 

technologies in the areas of Medical Devices, Consumer 

Wellness, Advanced Wound Care and Transdermal/Drug 

Delivery systems offering a broad range of turn-key 

skin-friendly solutions. 


– Successful completion and integration of the 

WEBTEC acquisition 

– New experienced management team in place 

focused on driving growth 

– Ability to offer true turn-key capabilities from raw 

materials, coating, converting, sterilisation, printing 

and packaging 

This year has seen an expansion through acquisition and 

realignment of the core healthcare business. We acquired 

WEBTEC to complete our total turn-key offering and, to reflect 

these changes, our Medical business is now known as ‘Scapa 

Healthcare’, thus reflecting the broader market we now serve. 

WEBTEC acquisition 

The successful completion of the WEBTEC acquisition brings 

a well-invested business which complements our existing 

healthcare operations in the US and the UK. We are able to 

support our global B2B partners through all aspects of product 

development, including raw materials, coating, converting, 

sterilisation, printing and packaging. WEBTEC has a solid partner 

base which further strengthens our presence in markets such as 

Consumer Wellness, Medical Devices and Advanced Wound Care. 

WEBTEC’s benchmark level of quality and manufacturing 

is recognised throughout the industry. 

New management team 

We have invested in a new Global Healthcare team, with the 

appointment of Joe Davin as President of Scapa Healthcare, 

Professor Steven Percival as Global Healthcare R&D Director and 

new heads in Sales and Marketing. This team has the expertise, 

experience and knowledge to continue to expand and grow the 

Scapa Healthcare business. 

Research and Development 

We have expanded our investments in research and development, 

and fine-tuned the process by which we evaluate technologies 

and opportunities. We have also launched our global stage gate 

process, to ensure that projects are delivered on time and in 

budget. There are now two key elements to our R&D function; 

one is primary research, which is not part of our manufacturing 

operation but takes place with our academic university links and 

supports our ‘next generation’ product pipelines. The other is 

the development departments, which are integrated within our 

operational sites. These are focused on supporting existing product 

specification changes and line extensions through to producing 

and delivering complete new product ranges. 


– Launch of the skin-friendly Scapa Soft-Pro 

silicone adhesive range 

– Strengthened our strategic partnerships with Dow 

Corning and Bayer to offer a range of adhesives 

Turn-key capabilities from a single source 

Our turn-key solutions provide customers with a reliable, trusted, 

regulated, safe and cost-effective partnership, without sacrificing 

quality, compliance, intellectual protection, or patient satisfaction. 

We can now offer a complete design and project management 

service, tailor-made to meet our customers’ requirements. As a 

global manufacturer of raw materials, we produce a comprehensive 

range of high performing substrates, such as our Bio-Flex ® 

Polyurethane Films, Polyethylene and PVC Foams as well as 

Nonwovens and Hydrocolloids. These can be used in a variety 

of applications and form the foundation of our turn-key capabilities. 

Recognised quality 

As a highly regulated business, we have a very strict approach to 

the quality and care of our products and processes. We are subject 

to regular audits from our customers and regulatory authorities, 

including the MHRA (Medicines and Healthcare products 

Regulatory Agency) and the FDA (Food & Drug Administration) 

to ensure that we maintain our high standards and remain fully 

compliant. We are proud that this was recognised recently when 

we were awarded the Johnson & Johnson Supplier Relationship 

Management Award for the second consecutive year. 

Strategy 

With the Healthcare ‘Skin-Friendly Turn-Key’ growth strategy 

now in place, we are ideally positioned to offer significant growth 

technology, combined with service and cost improvements. This 

along with positive global demographic trends and access to 

a strong established customer base are integral to the future 

success of the Scapa Healthcare business. 


Healthcare grew 16.9% including contribution from WEBTEC, 

acquired in December 2011. Excluding WEBTEC, the Healthcare 

segment grew by only 1.0%, affected by a natural end to the 

product life cycle of a specific customer programme. In addition, 

in line with Group strategy we continue to rationalise our product 

range. During FY13, we will benefit from a full contribution from 

WEBTEC; more importantly, the acquisition brings exciting 

opportunities to the Group with existing as well as new 

potential customers.

Revenue 

£39.5m +16.9% 

20.2%of Group revenue 


£5.5m +27.9% 

51.4% of Group trading profit 


13.9% +1.2% 

Skin-friendly solutions 

Our Soft-Pro silicone adhesive 

technology allows us to provide partners 

entry into the expanding ‘Skin-Friendly’ 

market, which is currently estimated at over 

US$350 million worldwide and growing in 

excess of 20% per year. Following our initial 

launch of the skin-friendly silicone adhesives 

with a leading healthcare company, we 

have further strengthened our position 

in the dynamic market with a number of 

branded partners. During 2012 we will 

continue to expand our Soft-Pro silicone 

range and work with partners covering 

different sales channels and applications. 

Our strategic alliance with Dow Corning 

has continued to strengthen our global 

position, ensuring that we are able to 

offer rapid product modifications and 

produce potentially groundbreaking new 

technologies. We are also delighted to be 

working in partnership with Bayer to offer 

the unique Levagel breathable adhesive. 

We are currently involved in clinical trials 

for several key applications. 


2011 


2011 

£4.3m 

£33.8m 

£39.5m 

£5.5m 



Governance 



Electronics 

Scapa provides the latest technical tape solutions for 

the ongoing development and improvement of electrical 

devices from smartphones to home appliances. Working 

with global OEMs, we create application-specific solutions 

for enhanced product performance and design. 


– Market entry with first projects in the acrylic foam 

sector and Optical Clear Adhesives (OCA) to add 

value to customer products 

– Maximised market and operational focus on 

Electronics segment through rationalised product 

portfolio, closing commodity cloth product line 

in Korea 

Market overview 

Consumer Electronics including telecom and home appliances 

are continuing to grow globally. While growth in the TV and PC 

sector is still flat, demand in home appliances, mobile/smartphones 

and tablet PCs continue to perform strongly, where new product 

development, process innovation and total cost reduction are 

leading attributes. New design and functionalities require new 

assembly methods and thermal solutions that ask for functions 

beyond traditional tape and bonding technologies. The highly 

dynamic and fast-changing market environment is continuously 

making demands on the supply chain to innovate. Scapa is 

building up strong partnerships, leveraging our global presence 

and service throughout the value chain. We are helping OEM 

product design by introducing new products which contribute 

to the manufacturing process, enhancing re-workability and 

functionality improvements and adding new functionalities 

beyond traditional bonding solutions. 

Strategy 

Scapa partners with market leading Electronic OEMs, driving 

innovation through direct and early stage engagement. Our focus is 

on consumer electronics, mobile phones, tablets and white goods 

markets. Our product range includes OCA and Electro Magnetically 

Interference (EMI) solutions, as well as Acrylic Foam Tape (AFT) and 

Acrylic Film Foam Tape (AFFT). 

Core to this strategy is getting access into local OEMs and ODM 

by leveraging local and global reference points and building 

direct sales capability to local first tier OEMs, ODMs and contract 

manufacturers. We are positioning Scapa as a full-service supplier 

providing solutions for bonding, EMI and thermal management 

solutions to the OEM supply chain covering up to converting in 

selected areas and products. Early engagement with the OEMs 

at development stage is a critical success factor; thus investment 

in application development resources will continue. 


– New value-add products added to the 

portfolio including OCA for use in the 

touch-panel applications 

– Obtained first specifications at global 

mobile phone producer for touch panel 

– Continued build-up of product range 

for Electronics 


Electronics accounts for 5.2% of the Group’s revenue. Overall 

revenue in the year declined 20.9% as we continue to reposition 

Asia towards the Electronics market and transition away from 

commodity-based products. The investments we have made in the 

new production line and R&D laboratory which was commissioned 

in April 2011 are starting to produce positive results and have 

enabled us to finally close the legacy cloth line in the latter part 

of this year. We have achieved a number of design wins which 

should deliver during the year and we continue to build a pipeline 

of opportunities in the market.

Revenue 

£10.2m -20.9% 

5.2% 

of Group revenue 


-£0.8m (-) 

-7.5% of Group trading profit 


-7.8% -10.9% 

AFFT/AFT 

With electronic devices becoming 

increasingly more compact, manufacturers 

are constantly striving to reduce the size 

and weight of their own products. Scapa’s 

Acrylic Foam Film Tape (AFFT) and Acrylic 

Foam Tape (AFT) provide electronics 

manufacturers with a space saving, 

alternative bonding solution to mechanical 

fixings within a broad range of products 

from tablet PCs and smartphones 

to cameras and home appliances. 

They are proven to provide considerable 

protection from external influences by 

cushioning and absorbing impact and 

damping vibration. In addition, the product 

lifetime is extended due to their excellent 

UV, chemical and moisture resistance, 

ensuring that the end user enjoys long, 

uninterrupted performance. 


2011 


£10.2m 

-£0.8m 

2011 

£12.9m 

£0.4m 



Governance 



Europe 

Revenue in Europe increased to £107.9m (2011: £106.7m), a 

1.1% increase as we continue to rationalise our product range, 

rebalancing the product mix by transitioning towards more value 

add products in our chosen markets. The decrease in revenue 

from lower margin products was replaced through improved 

penetration of our consumer, cable, pipeline and emerging 

technology products which are more application-specific and 

deliver better margins. As a consequence trading profit improved 

by 78.8% to £5.9m (2011: £3.3m) improving the margin to 5.5% 

(2011: 3.1%). 

North America 

Revenue in North America was £76.6m (2011: £72.7m), 

a 5.4% increase. The strong growth of Healthcare last year 

was consolidated this year with the acquisition of WEBTEC, 

contributing an additional £5.4m in revenue. The strategy of product 

rationalisation was also implemented in North America, where the 

consequent reduction in revenue was broadly offset by strong 

performance in consumer and transportation products. Trading 

profit improved by 28.3% to £6.8m (2011: £5.3m) with margin 

improving to 8.9% (2011: 7.3%). 

Asia 

We continue to invest in our Asian operations and maintain 

the strategy of concentrating on more value added business, 

specifically in the Electronics and white goods markets. As a result 

of the closure of the legacy cloth line in the latter part of this year, 

revenue declined to £11.1m (2011: £12.9m). We continue to invest in 

emerging markets, establishing a new presence in India to support 

the local customer base and further investing in sales and R&D 

functions to secure the platform for future growth. As a result the 

region made an operating loss of £0.8m (2011: £0.4m profit). 

Exceptional items and intangible amortisation 

Total Group operating profit of £11.7m (2011: £8.0m) includes a net 

exceptional credit of £1.4m (2011: £Nil) and intangible amortisation 

costs of £0.4m (2011: £Nil). The exceptional credit is made up of 

pension service credits of £2.1m following the closure of the US 

defined benefit pension scheme and deficit repair project-work 

carried out in the UK netted against an exceptional cost of £0.7m 

relating to the acquisition of WEBTEC in December 2011. 

Finance costs 

Net finance costs decreased to £1.2m (2011: £1.9m) and comprise 

net interest payable of £0.3m (2011: £0.3m) and notional interest of 

£0.9m (2011: £1.6m). The net interest payable related to the £20.0m 

multicurrency facility put in place in December 2011. The Group’s 

interest cost exposure risk is fully mitigated through an interest rate 

swap entered into in January 2012. The notional interest relates 

to the defined benefit pension plans and the unwinding of the 

discount on the asbestos provision and assets. 

Taxation 

The Group’s tax charge of £4.0m (2011: £2.6m) includes a £3.4m 

charge (2011: £2.1m) on operating activities and a £0.6m charge 

(2011: £0.5m) arising from a change in the UK corporation tax rate. 

The operating activities charge is made up of £1.4m of deferred 

tax and £2.0m of current tax. The announcement during the year 

of the future UK corporation tax rate reduction from 26% to 24% 

had a deferred tax impact of £1.2m (2011: £1.2m), of which £0.6m 

has been charged through the profit and loss account with the 

residue following the pension’s movement through reserves. The 

headline effective rate of tax for the Group is 38.1% (2011: 42.6%) 

and is impacted by another charge following the reduction in 

the UK’s corporation tax rate and from exceptional items which 

are not taxable. The effective rate excluding these exceptional 

items is 35.8% (2011: 34.4%). This underlying rate is higher than 

the UK standard rate of 26% due mainly to the Group operating 

in territories which have a higher statutory tax rate than the UK. 

Despite the high effective rate, the Group’s cash tax payment in the 

year was again relatively small at £0.9m (2011: £Nil) as the Group 


continues to benefit from its brought forward tax losses. As noted 

in the interim accounts, with continued profitability our cash tax will 

increase as our brought forward losses are utilised and we move to 

payments on account in some jurisdictions. 

Balance Sheet 

The Group Balance Sheet remains strong with only a small 

reduction in net assets from £68.6m in 2011 to £66.1m in the 

current year. The composition of the Balance Sheet has changed 

significantly with the acquisition of WEBTEC; the Group has 

increased borrowings to £9.9m (2011: £2.2m) and non-current 

assets have increased £23.6m predominantly from the acquisition 

of WEBTEC’s goodwill and other intangible assets of £19.6m. Net 

cash at the end of the year was £7.0m (2011: £18.8m). 

Financial risk management/treasury/credit management 

In the normal course of business the Group is exposed to certain 

financial risks, principally foreign exchange, interest rate risk, 

liquidity risk and credit risk. Foreign exchange risk is managed 

predominantly through forward contracts and central decisions 

on hedging investments and borrowings. All forward contract 

movements are recognised in the Income Statement at the 

Balance Sheet date. During January 2012 the Group entered into 

an interest rate swap transaction to hedge the effects of interest 

rate movements on its US Dollar borrowings. The Group does not 

hedge account for the swap and the movements in fair value are 

taken directly to the Income Statement. Liquidity risk is centrally 

managed by the Group in conjunction with risk management 

policies and procedures that are reviewed and approved by the 

Board. Subject to certain conditions and policy excesses, the 

Group manages its credit risk of sales made from North America 

and Europe through credit insurance. In addition tight credit control 

and a clear central policy and process mean that the Group has 

very low overdue trading debts and has an excellent track record 

of recovery. 

Acquisition 

In December 2011 the Group acquired the business and assets 

of WEBTEC for an initial cash consideration of US$28.8m 

(£18.0m). Depending on the achievement of operating profit 

targets over the two calendar years following acquisition, additional 

payments of US$10.0m and US$5.0m respectively will become 

payable, bringing total consideration to £27.2m (discounted). 

The addition of WEBTEC’s conversion and packaging capability 

brings additional technology and know-how to the Group 

and complements Scapa’s materials expertise and coating 

technologies; it also introduces a broader customer base and 

several new key customer contracts. Intangible assets of £7.0m 

and goodwill of £13.0m have been recognised on acquisition, 

with £0.4m of the intangible assets being amortised in the year. 

Earnings per share 

Basic earnings per share was 4.5p (2011: 2.4p) including 

non-recurring items. 

Cash flow 

Cash generated by operations before exceptional items and 

working capital movements increased by 8.8% to £9.9m (2011: 

£9.1m). Capital expenditure increased to £2.6m net of the acquired 

assets of WEBTEC (2011: £1.6m) and was below the depreciation 

charge of £4.6m. The net cash outflow in respect of acquisitions 

and disposals was £20.4m (2011: £1.3m). Net cash was £7.0m 

(2011: £18.8m including restricted cash). 

Pensions 

The IAS 19 pension deficit has increased by £3.9m to £38.9m 

(2011: £35.0m). During the first half of 2011/12 the US final salary 

pension scheme was closed, creating a curtailment gain of £1.1m 

that has been recognised in operating profit. This curtailment 

gain predominantly offsets increases in the overseas liabilities 

arising from the reduction in the rate used to discount the future 

commitments, creating an overall increase in the overseas deficits 

of £0.3m.

KPIs 

Return on sales (*1) 

5.5% 

Trading profit growth 

33.8% 

Return on capital employed (*2) 

4.3% 

Lost time injury frequency rate (*3) 

1.4 

Net cash flow (*4) 

£10.7m 

Interest cover (*5) 

56x 

(*1) Trading profit/sales 

(*2) Profit after tax/total assets – current liabilities 

(*3) Accidents per 200,000 worked hours 

(*4) Cash generated from operations before exceptional items 

(*5) EBITDA/net interest payable 

The three UK defined benefit schemes, which are closed to new 

members and to future accrual, represent the largest portion of 

the deficit and increased £3.6m to £32.4m (2011: £28.8m). The 

net movement in the UK deficits was the result of increases in 

asset values of £6.6m which were lower than the increases in 

total liabilities of £10.2m, the latter being mainly the impact of the 

change in discount rate from 5.6% to 4.75%. Despite the large 

movement in the discount rate the overall increase in liabilities has 

been contained by gains on two projects concluded in the period: 

a pension increase exchange project crystalised a net gain of 

£1.0m in operating profit and £0.8m in reserves, and the successful 

conclusion of the pensioner equalisation project saw the provision 

made for equalisation costs reduce by £4.1m. 

The Group’s cash contributions to defined benefit pension 

schemes increased £2.0m to £6.4m (2011: £4.4m). The UK 

contributed £1.4m to this increase, £0.5m being contribution 

deferral from the prior year, £0.3m of RPI and costs associated 

with liability management activities and finally £0.6m which included 

the £0.3m prior year PPF fee after a delay caused by appealing the 

levy assessment. 

As noted above, the Group continues to recognise the deferred 

tax asset of £9.8m (2011: £9.4m) in respect of future pension deficit 

reduction payments which gain tax relief at the time of payment 

(as opposed to accrual). The pension deficit, net of deferred tax, 

is therefore £29.1m (2011: £25.6m) which includes a provision in 

the UK schemes for future administration and PPF levy costs of 

around £7.4m (2011: £5.3m). 

Asbestos litigation 

The Group carries a liability and equal and opposite insurance 

asset in relation to asbestos product liability issues in the United 

States of £20.5m (2011: £19.9m). The Group continues to hold the 

view that Scapa’s products have not been the cause of any alleged 

personal injury and we therefore continue to adopt the same robust 

stance with respect to all of the remaining personal injury claims in 

the USA arising from businesses sold in 1999. The best estimate 

of total claims filed across varying jurisdictions in the United States 

against Waycross which are still pending is approximately 7,172 

(2011: 8,116), down almost 27,000 since the peak of approximately 

34,000 in 2004. The Group undertook a review of the asset and 

liability during the year and the Directors concluded that the current 

level of the provision is appropriate. The only movement in the 

provision and assets from the prior year relates to foreign exchange 

movements as the liability is in dollars, and the unwind of the 

discount. 

Shareholder funds 

Shareholder funds have decreased £2.5m to £66.1m 

(2011: £68.6m) reflecting a net pension loss in the period of 

£7.7m (2011: £0.9m gain), profit after tax of £6.5m (2011: £3.5m), 

movements in equity relating to share issues and share options 

adding £0.5m (2011: £0.4m), unfavourable currency impact on 

overseas asset values of £1.2m (2011: £0.8m) and tax charges 

of £0.6m (2011: £0.7m). 

Going concern 

The Directors have formed a judgement at the time of approving 

the financial statements that there is a reasonable expectation that 

the Company and the Group have adequate resources to continue 

in operational existence for the foreseeable future. In forming this 

view, the Directors have reviewed the Group’s budget and cash 

flow forecasts against undrawn facilities of £11.2m (2011: £9.1m) 

and the availability of financing in the market. The Directors 

also reviewed downside sensitivity analysis over the forecast 

period, thereby taking into account the uncertainties arising 

from the current economic climate. For this reason the Directors 

continue to adopt the going concern basis in preparing the 

financial statements. 



Governance 



Health & Safety – 

review of performance 

During the year we have continued to drive improvements in 

Health & Safety metrics and culture across the Group. This priority 

continues to be strongly reinforced by the Board with regular 

reviews of the performance. The key metric, Lost Time Injury 

Frequency Rate (LTIFR), improved year-on-year by over 40% to 

1.4 lost time accidents per 200,000 hours. Key focus areas remain: 

– Machine guarding improvements; 

– Chemical handling; 

– Material lifting, movement and handling; 

– Solvent management and handling; 

– Workplace transportation; 

– Noise; and 

– Employee training. 

In addition, our employee engagement safety opportunity 

identification has identified over 2,000 further opportunities for 

improvement across our sites – this remains a critical part of 

the employee engagement activities. All sites within the Group 

continue to report key performance indicators on a monthly basis 

and are audited at least twice per year against a standard Group 

template to ensure compliance with Group policies and to identify 

opportunities for improvement. All Lost Time Incidents and Serious 

Incidents continue to be reviewed by the Group Operations Director 

and, in the most serious cases, by the Group Board. 

Improving safety culture 

Scapa considers the safety of its employees and the communities 

in which we operate to be a top priority. Our ultimate aim is 

to ensure that no employee is harmed whilst engaged in Scapa 

Group activities. Scapa and its employees agree that delivery 

of this goal is a shared responsibility and will only be achieved by 

constantly working together and driving key employee engagement 

activities to improve our safety culture. The Board continues 

to believe that it is the leadership behaviours, from the Board 

of Directors right through the organisation, which will drive the 

improvements in safety culture. Standards of performance are set 

and reviewed by the Board through safety-related KPIs that form 

an integral part of the Group’s operational review process. 

Health & Safety – 2012/13 goals 

The ultimate goal for all sites will be to achieve zero Lost Time 

Incidents and zero lost days – anything less would send 

a message that some level of injury is acceptable. We aim to 

continue to drive year-on-year improvement metrics and the Board 

has again targeted a 20% improvement in all safety-related KPIs. 

Supporting this critical objective of improving the safety culture, 

bonus payments will be made to Directors and Senior 

Managers which are, in part, related to achievement of key 

Health & Safety goals. 

Environmental 

Scapa Group plc continues to recognise the importance of 

managing the consumption of the world’s natural resources as 

well as providing a safe and healthy working environment for our 

employees and the communities in which we operate. As the 

Scapa business grows then the consumption of resources will 

grow on an absolute basis – as such, the Group continues to focus 

on reducing the resources consumed on a per unit basis. 


Air emissions 

Scapa actively seeks to minimise the discharge of VOCs and 

particulates into the atmosphere. Solvent-based adhesive coating 

processes are used at many Scapa locations. Evaporated solvents 

are effectively captured and destroyed or recycled using well 

maintained thermal oxidisers or solvent recovery systems. All 

solvent manufacturing sites undergo strict internal and external 

third party audits to ensure compliance with best practice. 

Solvent consumption 

Whilst Scapa uses solvent-based adhesive systems across some 

of its global manufacturing locations, work continues within our 

R&D teams to look at replacement adhesive systems that will 

further eliminate or reduce our solvent consumption. Within all 

our business units, we offer a comprehensive range of solventless 

adhesive tape solutions and will continue to look at new and 

innovative adhesive solutions. 

Utility consumption 

Gas and electricity remain significant inputs to Scapa 

manufacturing processes in all regions and constant reduction of 

energy usage is a key driver of our environmental programmes. We 

have and will continue to implement energy management solutions 

across our various sites to help reduce energy consumption. 

Targeted investment to drive self-help reduction of waste 

The Group continues to drive its ‘self-help’ agenda to identify 

internal efficiency improvements that will eliminate non value 

added activities across the Group. Targeted improvement activities 

and implementation of Lean activities across all manufacturing 

sites will lead to further reductions in manufacturing waste and 

our environmental footprint. Examples of improvement activities 

through the last year include: 

– We continue to target the overall reduction of manufacturing 

waste at all sites and have begun to further extend our 

recycling programme; 

– In Valence, France, we have upgraded one of our key coaters 

to improve the energy utilisation and control systems; 

– In Renfrew, Canada, we have installed energy efficiency lighting 

throughout the facility; 

– In Windsor, USA, we have continued the work started last year 

to upgrade one of our adhesive coating lines that will achieve 

a step change reduction in solvent usage; 

– In many of our sites, we continue to identify and invest 

in opportunities to upgrade control and drive systems 

to modern energy efficient equipment. 

Suppliers 

Scapa Group plc firmly believes in being a good corporate citizen. 

Our customers must be able to trust that we and our supply chains 

are robust and are acting in a socially responsible manner. To 

achieve this we must have robust procurement and supply chain 

policies and procedures in place that specifically address the issue 

of Corporate Social Responsibility (CSR) in the supply chain. 

The scope of these policies takes in the whole of the supply chain 

from the selection of raw materials, how third parties manufacture 

products and components, through the in-house manufacturing 

and packaging processes and on to final delivery to the customer.

Lost Time Accidents (LTAs) 

FY12 

FY11 

FY10 

FY09 

FY08 

15 

18 

0 5 10 15 20 25 30 35 40 

28 

39 

39 

During 2012/13, Scapa will undertake an assessment of its 

current procurement and supply chain policies, reference 

appropriate United Nations Universal Declaration of Human 

Rights, International Labour Organisation Conventions and other 

Globally relevant ‘CSR’ standards and, if appropriate, re-issue 

these policies. 

Through the Global Procurement teams we will then agree the 

priority supply chains, execute these policies and apply controls 

to ensure compliance. 



Governance 



Principal Risks and Uncertainties 

Risk is an inherent part of doing business. A successful risk 

management process balances risks and rewards and relies on 

sound judgement of their impact and likelihood. The Group Board 

has overall responsibility for ensuring the Group has an effective 

risk management framework aligned to our objectives. 

Risk Impact 

The senior management team, Audit Committee and Board review 

risks which could affect the Group throughout the year. Risk and 

issue tracking systems are reviewed by our internal auditors on 

a regular basis to ensure that the framework is in line with good 

practice in risk management and that identified mitigation plans 

are being adhered to. 

Business strategy If the Board develops the wrong business strategy or fails to implement its strategy 

effectively, this could have a negative impact on long-term growth prospects 

Financial and treasury risk The main financial risks we face are around the availability and cost of funding and 

foreign exchange rates 

Customer Over-reliance on particular markets or customers could put pressure on pricing, 

margins and profitability 

Raw material pricing Where our material prices are too high it will be difficult for the Group to remain 

competitive 

Pensions Liabilities increase due to increasing life expectancy, inflation, poor performance 

in investments compounded by fluctuations in the discount rate 

Acquisitions and disposals Poor decision making on restructuring adversely affects the Group’s results 

weakening shareholder value 

Human resources We employ around 1,200 members of staff who are critical to the achievement of our 

objectives. Being able to attract, develop and retain the right people is essential to the 

growth, efficiency and sustainability of our business 

ICT systems and infrastructure The Group relies heavily on its ICT systems and infrastructure and interruptions 

to these services could have a significant impact on the business 

Product quality If our products are not up to the required quality and health and safety standards, 

this could impact on financial performance due to customer returns, product liability 

claims and ultimately affect customer trust in Scapa as a supplier 

Health & Safety Failure to ensure safe working practices leading to injury or loss of life 

Legal proceedings Potential litigation including claims arising from alleged exposure to asbestoscontaining 

products 

14 Scapa Group plc Annual Report and Accounts 2012

We take the view that the policies and monitoring systems which 

are in place and which have been reviewed regularly throughout 

the year remain sufficient to effectively manage the risks 

associated with our business. 

Key controls and mitigating factors 

– Clear strategy in place which is reviewed by the Board on a regular basis 

– Progress against the strategy is monitored by senior management and the Board 

on an ongoing basis 

– Risks relating to the achievement of the Group’s strategy are reviewed regularly 

– All treasury policies are approved at Board level 

– Corporate Treasury is not intended to be a profit centre 

– The Group uses simple projects to hedge exposure with no speculative currency 

risk exposure 

– Diverse range of customers with no specific weight towards one customer 

– Credit limits set based on Group policy, with limits monitored regularly and customers 

put on ‘stop’ as appropriate 

– Expansion into new markets helps spread risk and encourage growth 

– Credit insurance for worldwide turnover of North America and Europe 

– Global supply chain function now in place with clear cost reduction targets 

– No final salary pensions schemes are open at the Group 

– Closure of all schemes to future accrual in the UK 

– Ongoing liability management programme 

– Active de-risking investment strategy for assets 

– Significant internal and external due diligence processes 

– Acquisitions and disposals approved by the Board 

– Monitoring of business portfolio and structure at senior management and Board level 

– Integration planning for acquisitions across Finance, Operations, HR and Commercial 

– Performance management system in place 

– Succession and development planning process being rolled out across the business 

– Reward and recognition programmes linked to performance utilised at all levels 

– Employee communication and engagement programmes in place 

– Group and site based business continuity and disaster recovery processes in place 

– Multi-site back up of electronic data 

– System architecture encourages resilience due to implementation of dual node solution 

– Annual test of disaster recovery for key systems 

– Minimum exposure from current e-commerce transactions 

– Third party quality systems accreditation 

– Internal quality audit processes are in place with issue resolution tracking 

– Known problems are being addressed with rigorous root cause and corrective action 

to ensure they do not reoccur 

– In process and final product quality checks take place 

– Clear policies and procedures in place supported by training programmes to ensure that 

staff are aware of Group procedure 

– Group Head of Health & Safety has redesigned the approach to Health & Safety 

Management during the year 

– Health & Safety audit programme designed to monitor and improve compliance 

– Best practice shared between sites 

– Legal advisory teams for defence and insurance coverage 

– Monitoring adequacy of insurance 

– Product liability insurance many times higher than potential liabilities 

– Specialist advisers in each field supporting in-house General Counsel 

The table below outlines the principal risks and uncertainties 

which the Group faces together with relevant key controls and 

mitigating factors. The list does not constitute a list of all risks faced 

by the Group and the risks are not presented in priority order. 



Governance 


Governance 

Corporate and 

Social Responsibility 

The Christie case study 

2012 celebrates Scapa’s second year of a three-year fundraising 

partnership with The Christie, the charity that supports the 

renowned Christie Hospital in Manchester. One of Europe’s 

leading cancer centres, The Christie Hospital treats over 40,000 

patients a year. Based in Manchester it serves a population of 3.2 

million across Greater Manchester and Cheshire, but as a national 

specialist around 15% of patients are referred from other parts 

of the UK. 

The Christie is also an international leader in research, with 

world first breakthroughs for over 100 years. Cancer research 

in Manchester, most of which is undertaken on The Christie site, 

has been officially ranked the best in the UK. Over the past 

18 months, Scapa employees have taken part in a number of 

events, including a mountain climb up Ben Lomond in Scotland, 

the Manchester United Charity Challenge Cup and the recent 

2012 BUPA Great Manchester Run, raising an impressive £16,000 

for The Christie Charity. 

Partnering with The Christie has also had a positive impact on 

Scapa employees, as working together towards these joint goals 

has improved employees’ team spirit and inter-departmental 

communication. It also enables Scapa to make a real difference 

to the community in which our global headquarters are located. 

Scapa Chief Executive Heejae Chae, who also took part in this 

year’s Great Manchester Run, commented “It is always so fulfilling, 

both for individuals and for Scapa as a business, to give our time 

and effort to such a worthwhile cause, one which is at the heart 

of our community.” 

Excellence Commitment Integrity Responsibility Teamwork 

An exceptional, World 

Class ethos, where 

people pursue and attain 

their highest potential, 

employing creativity, 

innovation and risk-taking 

High energy, 

enjoyment, flexibility 

and enthusiasm – a 

passion for our business 


Honesty, trust and 

mutual respect for 

everyone in our business, 

our customers and in our 

communities 

We do what is right 

for the environment, 

our people and our 

communities 

Partnership and 

collaboration, working 

together to achieve 

a common goal

Introduction 

At the heart of how Scapa does business are our Company 

Values of Excellence, Commitment, Integrity, Responsibility and 

Teamwork. These values support the operational delivery of our 

strategy and help us to maintain strong relationships with our 

stakeholders, including customers, investors, suppliers, employees 

and communities. 

Business conduct 

The Scapa Code of Conduct is a summary in one document of the 

principles, values, standards and rules of behaviour that guide the 

decisions, procedures and systems of our business. The Code sets 

out the standards that everyone in Scapa is expected to meet and 

provides specific guidance to leaders and all employees on how 

they should behave. The Code of Conduct has been translated into 

local languages and has been issued to all employees across the 

Group, and covers the following areas of behaviour: 

– health, safety and environment; 

– fair employment practices; 

– community and charity involvement; 

– recording of time, costs and materials; 

– bribery and inducements; 

– controllership; 

– use of company information technology; 

– use of company physical assets; 

– personal information; 

– conflicts of interest; 

– intellectual property; 

– share transactions and inside information; and 

– competition and anti-trust. 

Included within the Code are details about how employees can 

raise concerns about any of these topics. In addition, in September 

2011 the Scapa Board formally adopted the Group Corruption and 

Anti-Bribery Policy. The objective of this policy is the prevention, 

identification and earliest possible detection of any potential bribery 

or corruption issues for Scapa. As part of the development of this 

policy, training was provided to all senior leaders on UK legislation 

and the Company’s policy and approach to such matters. 

Community involvement 

Scapa recognises its responsibility to the communities in which 

we operate. As part of this responsibility Scapa Group has agreed 

a formal three-year partnership with The Christie Charity that 

supports Christie Hospital to fundraise. The Christie Hospital 

is one of Europe’s leading cancer centres, treating over 40,000 

patients a year. Based in Manchester it serves a population 

of 3.2 million across Greater Manchester and Cheshire, but as 

a national specialist around 15% of patients are referred from other 

parts of the country. As part of this partnership Scapa employees 

have completed a number of fundraising activities including the 

Healthcare team climbing Loch Lomond and a team of employees 

entering the BUPA Great Manchester Run. 

To further strengthen our links with the North West of England 

Scapa announced in January 2012 their partnership with the 

Hallé and The Bridgewater Hall. The Hallé, whose home is the 

iconic Bridgewater Hall in Manchester, ranks among the UK’s 

top symphonic ensembles. As a Corporate Sponsor, Scapa enjoys 

access to many first rate performances from the Hallé, a benefit 

that is being shared with our employees. 

The Company also supports employee led community activity. 

Our Windsor CT, USA facility has been supporting the American 

Cancer Society’s Making Strides Against Breast Cancer for seven 

years. Our Valence site in France is involved with ‘School for the 

Second Chance’, an organisation that supports teenagers who 

have dropped out of school. Employees at our Ashton facility 

donated Christmas presents to the children’s charity Barnado’s 

in 2011. 

Employee engagement 

The success of the execution of business strategy is dependent 

upon employees being fully engaged and committed. Scapa has 

worked hard to strengthen employee communications. Activities 

in this area include wider use of our Company Intranet site, 

a monthly newsletter translated into all key languages and local 

based team briefs. 2011 also saw the launch of the CEO Awards; 

this Group-wide award programme is designed to recognise, 

celebrate and share excellence in three categories: 

– continuous improvement; 

– service excellence; and 

– innovation. 

The Award was well supported across the business with over 

60 entrants from all parts of the Scapa family. The overall Award 

winners were invited to attend the Group Leadership Conference 

in May 2012 where their achievements were celebrated at an 

Award dinner. 

Reward and Benefits 

In the area of Reward and Benefits, Scapa is striving to provide 

a cost-effective and innovative approach that is valued by 

employees and reflects performance. The 2012 salary review has 

seen the link between pay and performance strengthened and the 

Group bonus scheme has been designed to support business 

cash and profit objectives. In the UK we have introduced salary 

sacrifice for pensions, bicycles and the opportunity to buy holidays 

is a first step towards flexible working arrangements. 

Developing leadership capability 

The alignment of employee objectives to performance and 

business strategy has been strengthened through the formal 

implementation of a Group-wide online performance management 

tool for senior employees called MyPerformance. The system 

for 2012 will include newly revised Scapa leadership competencies 

which will be used both for the identification and development 

of talent. 



Governance 


Governance 

Board of Directors 

H R Chae 

Group Chief Executive 

Heejae Chae joined the Board as 

Executive Director in September 2009 

and subsequently became Group Chief 

Executive in November 2009. Prior 

to joining Scapa, Heejae was Group 

Chief Executive of Volex Group plc. 

He was previously the Group General 

Manager, Radio Frequency Worldwide, 

for Amphenol Corporation. He spent the 

early part of his career in finance at The 

Blackstone Group and Credit Suisse 

First Boston before moving into industry. 

R J Perry 

Non-Executive Director 

Richard Perry was appointed to the 

Scapa Board in June 2005 and is 

Chairman of the Audit Committee. 

Richard is currently Group Finance 

Director of Fenner plc to which position 

he was appointed in 1994. He was 

formerly a senior audit partner with 

Price Waterhouse. 


P Edwards 

Group Finance Director 

Paul Edwards joined the Board in 

September 2010 as Group Finance 

Director. Prior to joining Scapa he 

was Group Finance Director of 

NCC Group plc. Paul is a Chartered 

Management Accountant and MBA 

and spent the earlier part of his 

career in manufacturing, logistics 

and services sectors. 

M C Buzzacott 

Non-Executive Director 

Mike Buzzacott joined the Board in 

March 2008 and is currently Chairman 

of the Remuneration Committee. Mike 

spent 35 years with BP Chemicals 

before retiring as Group Vice President 

Petrochemicals in 2004. Mike has 

extensive experience of the global 

chemicals industry. He is currently Non- 

Executive Director at Genus PLC and is 

a former Director of Croda International 

Plc and Rexam PLC. 

J A S Wallace 

Chairman 

James Wallace joined the Board in 

August 2007 and became Chairman 

in October 2007. He is currently 

also Chairman of the Nominations 

Committee. An accountant by 

qualification, he spent the majority 

of his very successful executive career 

at Pifco Holdings PLC until 2001. 

James has held various Non-Executive 

Director positions and was Chairman 

of Bodycote plc from January 2002 

until April 2008. Currently James 

is a Non-Executive Director of 

Manchester Airport Group plc.

Leadership Team 

L-R: Ian Marchant, Tracy Sheedy, Ralf Seufert, Heejae Chae, Randy Holmes, Joe Davin, Paul Edwards. 

I R Marchant 

Group Operations Director 

Ian Marchant joined the Company in 

February 2010 as Group Operations 

Director. Prior to joining Scapa, Ian 

held a number of senior management 

positions with two international 

manufacturing businesses, Avon Rubber 

plc and General Electric Inc. 

R Holmes 

Director of Global Development 

Randy Holmes joined Scapa as Director 

of Global Development through the 

acquisition of WEBTEC Converting 

in December 2011. He has spent most 

of his professional career in contract 

manufacturing of adhesive backed 

medical devices. As Founder and CEO 

of WEBTEC, Randy had a vision to 

create a company that offered turn-key 

solutions to the medical device industry 

with a major emphasis on quality, 

service and employee satisfaction. 

T Sheedy 

Group HR Director 

Tracy Sheedy joined Scapa in 

September 2010 as Group HR Director. 

Before joining the Company, Tracy was 

Head of Organisation and Capability 

Development with BAE Systems. 

Prior to this role Tracy held senior 

HR roles with ConvaTec, Georgia 

Pacific and Monsanto. 

J Davin 

Group President Healthcare 

Joe Davin joined Scapa as Group 

President Healthcare in September 

2011. He has over 30 years of 

experience in the medical equipment 

industry. His most recent role was Group 

President at Spacelabs Healthcare, 

a global provider of patient monitoring, 

anaesthesia, diagnostic cardiology 

and clinical information solutions with 

US$215m in turnover. 

R Seufert 

Group Commercial Director 

Ralf Seufert joined Scapa as Group 

Commercial Director in October 2010. 

Before joining Scapa he was VP Sales 

& Marketing and member of the Board 

at Quadrant Plastic Composites AG in 

Switzerland. He has previously worked 

for GE Advanced Materials in senior 

management positions for global 

application development and sales. 



Governance 


Report of the Directors 

The Directors present their Annual Report and the audited financial statements for the year ended 31 March 2012. 

Principal activities and business review 

Scapa Group plc is the holding company for a global group of companies operating in the manufacture of bonding materials and 

solutions. A review of the performance and future development of the Group’s business is contained on pages 1 to 33 and forms part 

of this report. 

Results and dividends 

Trading profit, before tax, exceptional items and amortisation was £10.7m (2011: £8.0m), an increase of £2.7m. Exceptional items in 

the year were £1.4m income (2011: £Nil). No interim dividend was paid to shareholders (2011: £Nil). The Directors do not recommend 

payment of a final dividend (2011: £Nil). 

A profit before tax of £10.5m (2011: £6.1m) was recorded for the year ended 31 March 2012, with basic and diluted earnings per 

share of 4.5p and 4.3p respectively (2011: 2.4p and 2.3p respectively). 

Going concern 

In presenting the annual and interim financial statements, the Directors aim to present a balanced and understandable assessment 

of the Group’s position and prospects. After making enquiries, the Directors have a reasonable expectation that the Group has 

adequate resources to continue in operational existence for the foreseeable future. In arriving at this conclusion the Directors have 

considered the committed facility and assume that the facility can be operated as contracted for the foreseeable future because there 

is sufficient headroom in the facility covenants. In performing this analysis the Directors reviewed downside sensitivity analysis over the 

forecast period thereby taking into account the uncertainties arising from the current economic climate. The Group continues to adopt 

the going concern basis in preparing the financial statements. 

Annual General Meeting 

The Annual General Meeting will be held on 24 July 2012 at the offices of Addleshaw Goddard LLP, 100 Barbirolli Square, 

Manchester, M2 3AB. Details of the business to be considered at the Annual General Meeting and the Notice of Meeting is included 

in a separate document. 

Purchase of own shares 

At the forthcoming Annual General Meeting, the Directors will once again seek shareholders’ approval, by way of special resolution, 

for the grant of an authority for the Company to make market purchases of its own shares. The authority sought will relate to up to 

approximately 10% of the issued share capital and will continue until the Company’s next Annual General Meeting. The Directors 

consider that the grant of the power for the Company to make market purchases of the Company’s shares would be beneficial for the 

Company and accordingly they recommend this special resolution to shareholders. The Directors would only exercise the authority 

sought if they believed such purchase was likely to result in an increase in earnings per share and it would be in the interests of 

shareholders generally. The minimum price to be paid will be the shares’ nominal value of 5p and the maximum price will be no 

more than 5% above average middle market quotations for the shares on the five days before the shares are purchased. 

Board of Directors 

The names of the present Directors and their biographical details are shown on page 18. 

In accordance with the Articles of Association, the Director retiring by rotation is Mr H R Chae. The Board has evaluated the 

performance and effectiveness of Mr Chae and recommends him for re-election. 

The interests of the Directors in the shares of the Company as at 31 March 2011 and 31 March 2012 are shown in the Directors’ 

Remuneration Report, which forms part of this report, as are details of the Directors’ service contracts or letters of appointment. 

No third party indemnity provisions have been in place for any of the Directors during the year. 

Employees and employment policies 

Scapa is committed to the principle of equal opportunity in employment and to ensuring that no applicant or employee receives 

less favourable treatment on the grounds of gender, marital status, age, race, colour, nationality, ethnic or national origin, religion, 

disability, sexuality or unrelated criminal convictions. 

Scapa applies employment policies which are believed to be fair and equitable and which ensure that entry into, and progression 

within, the Company is determined solely by application of job criteria and personal ability and competency. 

Scapa aims to give full and fair consideration to the possibility of employing disabled persons wherever suitable opportunities exist. 

Employees who become disabled are given every opportunity and assistance to continue in their positions or be trained for other 

suitable positions. 

Scapa recognises the importance of good communications with employees and acknowledges that there should be clear channels 

of communication and opportunities for consultation and dialogue on issues which affect both business performance and employees’ 

working lives. As a global business, the mechanisms for achieving this aim vary between different countries and between different 

businesses within the Group but include in-house newsletters, bulletins and briefing sessions. 


Scapa has a combination of unionised and non-unionised operations across the world and is committed to fostering positive 

employee relations at all of its locations. Training and links with the educational sector reinforce Scapa’s commitment to employee 

involvement and development. 

The Sharesave share option plan gives the opportunity to all UK employees with qualifying service to participate in the equity of the 

Company. As at 31 March 2012, 135 employees were members of the scheme with 1,521,244 options over shares (these include 

the Executive Directors). 

Supplier payment policy 

The Company’s policy, which is also applied by the Group, is to settle terms of payment with suppliers when agreeing the terms 

of each transaction, to ensure that suppliers are made aware of the terms of payment, and abide by the terms of payment. Supplier 

payment days based on non-labour cost of goods sold are 75 days (2011: 74 days). 

Research and Development 

The Group’s spend on research and development is disclosed in note 3 and is focused on developing new derivative product 

applications for addressing and resolving customer and market requirements. 

Health and Safety 

One of Scapa’s primary objectives is to achieve high standards of safety for its employees. Health and Safety is the first standing 

item on Group Board Meetings and Leadership Team Agendas. Appropriate senior executives, managers and supervisors have 

defined responsibilities for health and safety and are expected to ensure that the Company’s health and safety policy is adhered 

to. These responsibilities are reviewed regularly on a national and regional basis to ensure appropriate policy development. 

Scapa continues to implement a programme of regular health and safety audits. These audits are undertaken across Scapa’s 

manufacturing sites. The purpose of the audit programme is to ensure compliance with health and safety legislation, best safety 

practices and aims to secure the wellbeing of everyone affected by Scapa’s manufacturing operations. 

Financial risk management 

The Group’s approach to managing financial risk is covered in note 23. 

Business ethics 

The Company requires compliance by its companies and employees with the laws and standards of conduct of the countries 

in which it does business. This includes legislation implementing anti-corruption and competition law compliance. Employees 

are required to avoid conflicts of interest regarding Company business, to act lawfully and ethically, and to be responsible for 

communicating in good faith any non-compliance issues of which they become aware. 

The Company and all senior employees are formally subscribed to a Code of Conduct to document and confirm such compliance. 

Political and charitable donations 

It is not corporate policy to make any political donations and, accordingly, no political donations were made during this year. 

Charitable donations made during this year amounted to £17,896 (2011: £12,159). The majority of charitable donations made, 

on a discretionary basis, are to organisations based in the vicinity of Scapa sites, especially organisations which support health 

and educational causes. 

Share options 

Details of the Company’s share capital and options over the Company’s shares under the Company’s employee share plans are 

given in note 27 of the accounts. 

Major shareholders 

On 31 March 2012, the Company had been notified, in accordance with Chapter 5 of the Disclosure and Transparency Rules, of the 

following voting rights as a shareholder of the Company: 

Cazenove Capital Management 14.98% 

Schroders plc 11.01% 

Rights & Issues Investment Trust 7.14% 

Bank of America 6.84% 

Old Mutual Asset Managers (UK) Ltd 5.41% 

River & Mercantile Asset Management 4.95% 

Investec Asset Management 4.90% 

Cazenove UK Dynamic Absolute Return Fund 4.79% 

Howson Tattersall Investment Counsel 3.90% 

SFM UK Management 3.71% 

Lowland Investment Company Plc 3.02% 

Between 31 March 2012 and 23 May 2012, the Company has been notified that Cazenove Capital Management has an interest of 

13.17%, Schroders plc has an interest of 12.17% and Bank of America has a holding of 6.89%. 


% 


Governance 


Report of the Directors continued 

Takeover directive 

The Company has only one class of ordinary share and these shares have equal voting rights. The nature of individual Directors’ 

holdings is disclosed on page 27. There are no other significant holdings of any individual. 

Auditor and disclosure of information to auditor 

So far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware. Each Director has 

taken all the steps that he/she ought to have taken as a Director in order to make himself aware of any relevant audit information and 

to establish that the Company’s auditor is aware of that information. 

The auditor, Deloitte LLP, has indicated its willingness to continue in office and a resolution that they be re-appointed will be proposed 

at the Annual General Meeting. 

Corporate governance 

The Company’s statement on Corporate Governance can be found in the Corporate Governance Report on pages 29 to 33 of 

these financial statements. The Corporate Governance Report forms part of this Directors’ Report and is incorporated into it by 

cross-reference. 

By order of the Board Registered Office: 

P Edwards 


29 May 2012 


Manchester Road 

Ashton-under-Lyne 

Greater Manchester 

OL7 0ED

Directors’ Remuneration Report 

This report has been prepared in accordance with the Directors’ Remuneration Report Regulations 2008, although the Regulations do 

not strictly apply to an AIM listed company. A resolution to approve the report will be proposed at the Annual General Meeting 2012. 

The parts of the report which are subject to audit by Deloitte LLP are indicated with an asterisk (*). All other parts of the Directors’ 

Remuneration Report are unaudited. 

The responsibilities of the Remuneration Committee (the ‘Committee’) are to agree the policy for the remuneration of the Chief 

Executive and Group Finance Director and other Senior Executives and within the terms of this policy determine total individual 

remuneration packages including base pay, long-term incentives, short-term incentives and pension. In addition the Remuneration 

Committee also agrees the policy for the remuneration of other senior managers and within the terms of this policy determines longterm 

incentive plans. The Committee also determines recruitment terms, employment conditions and considers issues relating to 

termination of employment. 

The members of the Remuneration Committee are Non-Executive Directors, Michael Buzzacott (Chairman of the Remuneration 

Committee), James Wallace (Chairman, Scapa Group plc) and Richard Perry (Senior Independent Non-Executive Director). The 

members of the Committee have no personal financial interest in the Company other than as shareholders and the fees paid to them 

as Non-Executive Directors. The Company Secretary acts as secretary to the Committee. The Chief Executive is not a member of the 

Committee but is invited to attend meetings if appropriate. He is not present when the Committee considers issues relating to his 

remuneration. 

In 2011 the Committee met on four occasions, and all members of the Committee attended on each occasion. The Committee liaises 

with the Chief Executive regarding proposals concerning the remuneration of the Group Finance Director and other Senior Executives. 

The Committee has access to advice where it considers appropriate. In 2011, the Committee has taken advice on the Performance 

Share Plan from Deloitte LLP. During the year, the Committee also received material assistance and advice on Remuneration policy 

from the Group HR Director. Salary market data was obtained from Towers Watson Data Services. 

Remuneration strategy 

The Committee’s strategy for the remuneration of Executives Directors and Senior Executives is to provide a structure that is aligned 

to the interests of shareholders and as such is competitive in the market place to attract, retain and motivate Executive Directors and 

Senior Executives to deliver profitable growth for the Company. All elements of remuneration relate to individual and company 

performance, with maximum potential awards being earned through the achievement of challenging performance targets. 

Components of remuneration 

Base salaries 

Purpose Policy for executives Policy for all employees 

The purpose of this monthly paid, 

cash award is to provide base salary 

levels that reflect market data for 

senior roles of a similar level of 

responsibility and also recognise 

the individual’s skills, experience 

and performance. 

The policy is that base salary for 

Executive Directors and Senior Executives 

are reviewed on an annual basis by the 

Remuneration Committee and by the 

Chief Executive as appropriate. Market 

data for this purpose is obtained from 

the Towers Watson Manufacturing, 

Distribution and Services Survey and it is 

the policy to set base salary at or around 

the median of this data. This survey 

provides competitive data based on 

functional roles from a range of over 

300 companies. Changes to the Chief 

Executive’s salary are effective 1 January; 

changes to other executives are effective 

1 April. 

All employees were eligible to receive pay 

increases in 2011/12. A salary budget based 

on market data was established for each 

country in which the Company operates. 

Where applicable, increases were negotiated 

with local trade union or works council 

representatives. Professional and senior 

employee increases were based on 

performance and where available 

comparative benchmark data. 



Governance 


Directors’ Remuneration Report continued 

Annual bonus 


The purpose of this annual cash 

award is to drive and reward annual 

performance of individual executives 

relating to financial and non-financial 

metrics. 


The policy is that each Executive Director 

and other Senior Executives are eligible 

to receive an annual cash bonus targeted 

between 50% and 100% of salary for the 

financial year 2011/12. For exceptional 

outperformance of targets a potential 

maximum of 140% of the individual 

executive’s bonus target could be 

paid. The payment was determined 

by three criteria: 

– 40% based on Group Trading Profit 

improvement targets; 

– 40% based on Group Cash Flow 

performance; 

– 20% based on personal objectives 

agreed between the executive 

and Chief Executive and recorded 

and monitored through a formal 

performance management system. 

The Company operates various Commercial 

and Operations bonus plans to provide 

short-term rewards and recognition for 

a range of employees based on the 

achievement of stretching performance 

targets. 

In 2011/12 both Group Cash Flow and Operating Profit improved substantially and, dependent on achievement of personal 

objectives, the Executive Directors and Senior Executives had the opportunity to earn up to 60% of their bonus target. Bonus 

payments are not pensionable. 

In respect of 2012/13 the Committee has decided that the structure of the bonus plan should be maintained but a further element of 

functional based objectives will be added: 

– 60% based on Group Operating Profit improvement targets; 

– 20% based on Personal objectives agreed between the executive and Chief Executive and recorded and monitored through a 

formal performance management system; 

– 20% based on specific functional, measurable objectives agreed between the executive and Chief Executive. 

For exceptional performance relating to Group operating profit payments, Executive Directors and Senior Executives can earn 130% 

of their target bonus potential. 

Pension provision* 


The purpose of this provision is to 

provide competitive and flexible 

retirement benefits. 

The policy is to provide Executive 

Directors with monthly contributions 

directly into their own independent 

pension arrangements. In 2011/12 

Heejae Chae, Chief Executive Officer, 

received a pension contribution of 

£50,000. Paul Edwards, Group Finance 

Director, receives 20% of base pay as a 

pension contribution. 

All other Senior Executives participate in 

pension arrangements provided for all 

employees in the relevant country. 

All employees across the Group are eligible 

to participate in pension arrangements, 

provided by the State and/or by the 

Company as relevant. In the UK the 

Company operates a defined contribution 

pension plan available to all employees. Both 

the Company and employees contribute to 

these pension arrangements. 

In September 2011 the Company froze the Defined Salary pension plan available to employees in the USA. This plan had been closed 

to new members for some years. To recompense employees for this reduction in benefit, additional Company contributions have 

been made available to participants in the USA money purchase pension plan. 

Effective from April 2012 UK based employees are able to contribute to the Company pension plan via Salary Exchange.

Other benefits 


The purpose of other benefits is to 

provide competitive and cost effective 

benefits to Executive Directors and 

Senior Executives which reflect the 

international aspects of their roles. 

The Executive Directors are entitled to 

cash car allowances paid monthly, private 

medical insurance in the UK, permanent 

health insurance and life assurance. In 

addition, the Chief Executive participates 

in the USA contributory private medical 

insurance plan. 

Other Senior Executives participate in 

benefit plans commensurate with 

arrangements in the relevant country. 

Employees across the Group are eligible 

to participate in a range of benefit plans 

relevant to the geography in which they 

live and work. 

Long Term Incentive Plan 

The purpose of the Long Term Incentive Plan is to drive and reward the delivery of sustained long-term EPS performance aligned to 

the interest of shareholders. 

The policy is that LTIPs are based on the 2004 and 2011 Performance Share Plans. The plans have been designed to provide 

progressive levels of reward in the form of Company shares for the achievement of challenging levels of sustained performance. 

The key measure for the plans is the growth of EPS. 

Awards under the plans are granted to Executive Directors and Senior Executives in the form of a grant of Nil cost options over shares 

with vesting taking place at the expiry of the three-year performance period of the plan, subject to the attainment of EPS performance 

targets. 

In 2011 a new Performance Share Plan was adopted at the AGM to replace the 2004 Performance Share Plan. Options under the 

2004 plan have been issued intermittently and it is the intention in future to issue options on an annual basis under the terms of the 

new plan and subject to headroom. 

The Performance Share Plan awards made in 2009 to Heejae Chae, Chief Executive Officer, have met the vesting criteria of a headline 

EPS of 4.5 pence on 31 March 2012. As a result 100% of the 500,000 award granted in 2009 will vest in September 2012. No other 

awards were granted in 2009. The performance criteria for awards made in 2010 require the headline EPS at March 2013 to be 

8.8 pence. 50% of awards will vest if the target is met, 75% will vest for outperformance by one penny and 100% will vest for 

outperformance by two pence. The performance criteria for awards made in 2011 require the headline EPS at March 2014 to be 

10.1 pence. 50% of the awards will vest if the target is met, 75% will vest for outperformance by one penny and 100% will vest for 

outperformance by two pence. 

In 2011, UK based employees were invited to participate in the Company’s SAYE plan, a savings related share option plan approved 

by the Inland Revenue. 

Share price incentive plan 

The purpose of this plan is to provide a meaningful incentive to Executive Directors and some Senior Executives hired prior to 

December 2010 to achieve an outstanding, challenging and sustainable increase in value for the Company’s shareholders. At the time 

the scheme was introduced, the share price was 14.5 pence. 

The policy is that if in the four year period commencing 1 July 2011 the mid-market price of the Company’s shares equals or exceeds 

£1.00, for a consecutive 30 day period, the scheme will reward the Executive Directors and some Senior Executives with a payment 

equal to 12 months basic salary. If the mid-market price equals or exceeds £1.50 per share for 30 consecutive days within the four 

year life of the scheme, the total payment will be equal to twice the basic salary of the relevant Executive Director or Senior Executive. 

In this financial year the share price did not achieve £1.00 and therefore no payment under this scheme was made. 

This one-off incentive scheme was created because the low share price at the time restricted the Company’s ability to issue 

Performance Share Plans. 



Governance 



Executive Directors’ emoluments* 


2011/12 

£ 

2010/11 

£ 

Heejae Chae, Chief Executive 

Base salary 313,750 281,164 

Car allowance 12,000 12,000 

Annual bonus 207,103 171,510 

Pension contribution 50,000 56,233 

Other benefits 15,435 1,066 

Total 598,288 521,973 

Paul Edwards, Group Finance Director 

Base salary 181,125 92,055 

Car allowance 10,000 5,000 

Annual bonus 115,179 56,153 

Pension contribution 36,225 18,411 

Other benefits 3,792 850 

Total 346,321 172,469 ‡ 

‡ Mr Edwards joined Scapa in September 2010 

Aggregate emoluments for all Executive and Non-Executive Directors for the year ended 31 March 2012 were £1,126,609 (2011: 

£861,776). No Director waived emoluments in respect of the years ending 31 March 2012 or 31 March 2011. 

Non-Executive Directors’ remuneration* 

The remuneration policy for Non-Executive Directors is determined by the Board. Remuneration comprises an annual fee for acting 

as a Non-Executive Director of the Company and an additional fee for acting as the Chairman of a Board Committee. Non-Executive 

Directors are not eligible to participate in the Company pension schemes nor any incentive plans. 

Non-Executive Directors’ remuneration for the year to 31 March 2012 is set out in the following table: 

Total Fees £ 


Total Fees £ 

2011 

J A S Wallace 100,000 90,000 

R J Perry 42,000 40,667 

M C Buzzacott 40,000 36,667 

The Company repays the reasonable expenses they incur in carrying out their duties as Directors. 

182,000 167,334

Directors’ interests 

As of 31 March 2012 the Directors and their immediate families had the following beneficial interests in the Company’s shares and 

options to subscribe for shares: 

Shares 

SAYE* 

31 March 2012 31 March 2011 

Performance 

Share Plan* Shares SAYE 

Performance 

Share Plan 

H R Chae 390,709 2011/12 21,126 2009/10 500,000 372,335 - 2009/10 500,000 

2010/11 1,000,000 2010/11 1,000,000 

2011/12 300,000 

P Edwards 250,000 2011/12 21,126 2010/11 750,000 250,000 - 2010/11 750,000 

2011/12 150,000 

J A S Wallace 820,000 800,000 

R J Perry 350,000 350,000 

M C Buzzacott 240,000 240,000 

2,050,709 42,252 2,700,000 2,012,335 2,250,000 

The 2011/12 SAYE shares have an exercise price of 42.6p. All of the other share options are nil cost options. All of the Directors’ 

shareholdings in the Company derive from purchases made in the open market. No shares have been acquired by the Directors 

as a result of the exercise of share options or by virtue of any Company-sponsored incentive scheme. 

From the end of the financial year until 28 May 2012 there have been no changes in the above interests. 

The market price of the Company’s shares at the end of the financial year was 62.75p and the range of market prices during the year 

was between 33.75p and 62.75p. 

It is the policy of the Remuneration Committee that Executive Directors should, over a reasonable period from the date of their 

appointment, acquire – whether by market purchase or the exercise of share options – and retain a shareholding of a value not 

less than 12 months’ basic salary. 

Service contracts of Executive Directors 

Mr Chae has a service agreement with the Company on a rolling one-year basis, effective from 7 September 2009, which is 

terminable by twelve months’ notice in writing by either party. The Company may also terminate Mr Chae’s service agreement at any 

time with immediate effect on payment in lieu of notice equivalent to 12 months’ salary plus contractual entitlements, including bonus. 

Mr Edwards has a service agreement with the Company on a rolling one-year basis, effective from 20 September 2010, which is 

terminable by twelve months’ notice in writing by the Company and by six months’ notice in writing by Mr Edwards. The Company 

may also terminate Mr Edward’s service agreement at any time with immediate effect on payment of 12 months’ basic salary. 

There are no express provisions for compensation payable upon early termination of an Executive Director’s contract as at the date 

of termination other than as detailed above. 

It is Company policy that all executive appointments to the Board will have contract notice periods of no longer than twelve months. 

Terms of appointment of Non-Executive Directors 

The Chairman and Non-Executive Directors have letters of appointment for an initial term of three years subject to earlier termination 

by either party on written notice. In each case these terms can be extended by mutual agreement. They have no entitlement to 

contractual termination payments. The dates of their initial appointments and current term expiry dates are set out below: 

Original appointment date Expiry date of current term 

J A S Wallace 30 August 2007 29 August 2013 

R J Perry 2 June 2005 1 June 2014 

M C Buzzacott 1 March 2008 28 February 2014 



Governance 



Performance graph 

The graph below shows the Company’s TSR (Total Shareholder Return) compared to the FTSE AIM All Share Index over the last five 

years. TSR is defined as share price growth plus reinvested dividends. In the opinion of the Directors, the FTSE AIM All Share Index is 

the most appropriate index against which the TSR of Scapa Group plc should be measured because it is an index of similar sized 

companies to Scapa Group plc. 

Relative Returns Analysis of Scapa versus Sector (rebased to 100) 

Value if £100 invested at 2 April 2007 

300 

250 

200 

150 

100 

50 

0 

02/04/2007 

01/04/2008 

Scapa FTSE AIM 

M C Buzzacott 

Chairman, Remuneration Committee 



01/04/2009 

31/03/2010 

31/03/2011 

31/03/2012

Corporate Governance 

“ Good governance helps engender prudent 

but effective management and Scapa remains 

committed to its Corporate Governance responsibilities.” 

James Wallace 

Corporate Governance 

The Company’s shares are traded on the Alternative Investment Market (AIM) of the London Stock Exchange. As a result, the 

Company is not bound to strict observance of the 2010 UK Corporate Governance Code (‘the Code’). It is the Company’s policy, 

however, to adhere to the principles of good governance. Throughout the year ended 31 March 2012, the Company has been in 

compliance with the provisions set out in the Code. 

The Board 

The Group is controlled through its Board of Directors. The Board’s main roles are to create value for shareholders, provide 

entrepreneurial leadership of the Group, approve the Group’s strategic objectives and ensure that the necessary financial and other 

resources are made available to enable those objectives to be met. The Board, which meets at least six times in each calendar year, 

has a schedule of matters reserved for its approval. The full Board met six times during the 2011/12 financial year. Each member 

attended all of the meetings during the term of his appointment. 

The specific responsibilities reserved to the Board include setting Group strategy and approving an annual budget and medium-term 

projections; reviewing operational and financial performance; approving major acquisitions, divestments and capital expenditure; 

reviewing the Group’s systems of financial control and risk management; ensuring that appropriate management development and 

succession plans are in place and reviewing the environmental, health and safety performance of the Group. The Board delegates 

matters not reserved to the Board concerning the management of the business to the Leadership Team. 

The roles of the Chairman and Chief Executive 

The division of responsibilities between the Chairman of the Board and the Chief Executive is clearly defined. The Chairman leads 

the Board in the determination of its strategy and in the achievement of its objectives. The Chairman is responsible for organising 

the business of the Board, ensuring its effectiveness and setting its agenda. The Chairman is a Non-Executive Director and has no 

involvement in the day-to-day business of the Group. The Chairman facilitates the effective contribution of Non-Executive Directors 

and constructive relations between Executive and Non-Executive Directors, ensures Directors receive accurate, timely and clear 

information and facilitates effective communication with shareholders. 

The Chief Executive has direct charge of the Group on a day-to-day basis and is accountable to the Board for the financial and 

operational performance of the Group. 

Senior Independent Director 

Mr Perry is currently the Senior Independent Director. The Senior Independent Director is available to meet shareholders on request 

and to ensure that the Board is aware of shareholder concerns not resolved through the existing mechanisms for investor 

communication. 

Directors and Directors’ independence 

As at 31 March 2012 the Board comprised the Non-Executive Chairman, two independent Non-Executive Directors and two 

Executive Directors. The names of the current Directors together with their biographical details and any other directorships are set 

out on page 18. All the Directors served throughout the period under review. The Non-Executive Directors constructively challenge 

and help develop proposals on strategy and bring strong, independent judgement, knowledge and experience to the Board’s 

deliberations. 

The Non-Executive Directors meet formally, at least once a year, without the Executive Directors and also meet informally on other 

occasions. 

The Directors are given access to independent professional advice at the Group’s expense, when the Directors deem it is necessary 

in order for them to carry out their responsibilities. 

The Group maintains, for its Directors and officers, liability insurance for any claims or series of claims against them in that capacity. 

The Board considers all of its Non-Executive Directors to be independent in character and judgement. No Non-Executive Director 

has been an employee of the Group; has or had within the last three years a material business relationship with the Group; receives 

remuneration other than a Director’s fee; has close family ties with any of the Group’s advisers, Directors or senior employees; holds 

cross-directorships or has significant links with other Directors through involvement in other companies or bodies; or represents 

a significant shareholder. 



Governance 


Corporate Governance continued 

Professional development 

On appointment each Director takes part in an induction programme when they receive comprehensive information about the Group, 

the role of the Board and the matters reserved for its decision, the terms of reference and membership of the Board and Committees, 

and the powers delegated to those Committees, the Group’s corporate governance practices and procedures, including the powers 

reserved to the Group’s most senior executives, and the latest financial information about the Group. This is supplemented by visits 

to key locations and meetings with key senior executives. Throughout their period in office the Directors are updated on the Group’s 

business, the competitive environments in which it operates, corporate social responsibility matters and other changes affecting the 

Group and the industry it operates in as a whole. 

Performance evaluation 

The Board has established a formal process, led by the Chairman, for the annual evaluation of the performance of the Board, its 

Committees and individual Directors. The Directors are made aware on appointment that their performance will be subject to an 

evaluation. 

Each year every Board member is obliged to complete a performance evaluation questionnaire. This questionnaire provides a 

framework for the evaluation process, and provides the Chairman with a means of making year-to-year comparisons. The 

questionnaire covers the Board, the Remuneration Committee, the Nominations Committee and the Audit Committee. The 

questionnaire includes specific references to the objectives of the Board and Committees and the effectiveness of the individual 

Directors. The Chairman collates the results from the completed questionnaire and the results are discussed at Board/Committee 

level and objectives are agreed for the following year. 

Led by the Senior Independent Director the Directors meet annually, without the presence of the Chairman, to conduct a performance 

evaluation of the Chairman. A similar method to that described above is employed. 

Re-election 

Subject to the Company’s Articles of Association, the Companies Acts and satisfactory performance evaluation, Non-Executive 

Directors are appointed for an initial period of three years. Before the third and sixth anniversary of the Non-Executive Director’s 

appointment, the Director discusses with the Board whether it is appropriate for a further three-year term to be served. The 

reappointment of Directors who have served for more than nine years (if any) is subject to annual review. The Directors who are 

subject to re-election at the 2012 Annual General Meeting are listed in the Board of Directors paragraph in the Report of the Directors. 

The Company Secretary 

The Company Secretary is responsible for advising the Board through the Chairman on all governance matters. The Directors have 

access to the advice and services of the Company Secretary. The Company’s Articles of Association and the schedule of matters 

reserved to the Board for decision provide that the appointment and removal of the Company Secretary is a matter for the full Board. 

Information 

Board reports and papers are circulated to the Directors in advance of the relevant Board or Committee meeting. These papers are 

supplemented by information specifically requested by the Directors from time to time. Minutes of Board and Committee meetings are 

circulated to all Board members. 

The Non-Executive Directors receive monthly management accounts and regular management reports and information which enable 

them to scrutinise the Group’s and management’s performance against agreed objectives. 

Relations with shareholders 

The Chairman gives feedback to the Board on issues raised with him by major shareholders. This is supplemented by twice-yearly 

feedback to the Board on meetings between management and investors, and external brokers’ reports on the Group are circulated 

to all Directors. The Annual General Meeting is normally attended by all Directors and shareholders are invited to ask questions during 

the meeting and to meet with Directors after the formal proceedings have ended. 

The Group maintains a corporate web site (www.scapa.com) which contains information on company activities, financial information 

and published financial results. The Group has discussions with institutional shareholders on a range of issues affecting its 

performance. These include meetings following the announcement of the annual and interim results with the Group’s largest 

institutional shareholders on an individual basis. In addition, the Group responds to individual ad hoc requests for discussions from 

institutional shareholders. The Senior Independent Director is available to shareholders if they have concerns, which contact through 

the normal channels of Chairman, Chief Executive or Group Finance Director has failed to resolve or for which such contact is 

inappropriate. 

All shareholders, including private investors, have an opportunity at the Annual General Meeting to put questions to members of the 

Board on matters relating to the Group’s operation and performance. The Notice calling the Annual General Meeting is despatched 

at least 20 working days before the meeting. Separate resolutions are proposed at the Annual General Meeting on each substantially 

separate issue. The Chairman discloses to the meeting the number of proxy votes received for and against each resolution following 

the show of hands on that resolution. 


Internal control system 

In accordance with the Turnbull Guidance on internal control, the Board confirms that there is an ongoing process for identifying, 

evaluating and managing the significant risks to the achievement of the Group’s strategic objectives. The process has been reviewed 

regularly throughout the period by the Audit Committee up to the date of this report, and accords with the requirements of the Code 

relating to internal control and the revised guidance on internal control published in October 2005 (the Turnbull Guidance). The 

effectiveness of this process has been reviewed regularly throughout the period by the Audit Committee, which reports its findings 

for consideration by the Board. 

The Board has carried out a review of the effectiveness of the system of internal controls, and that review covered all material controls 

(financial, operational, risk management and compliance). 

The processes used by the Audit Committee to review the effectiveness of the system of internal control include: 

– at least a six-monthly formal review of the Group’s Risk Profile to assess potential risk areas and action plans to address these 

issues, as declared by senior management 

– the review of internal and external audit plans 

– a quarterly review of the implementation of internal audit recommendations 

– a six-monthly review of the status of management actions associated with the issues arising from the risk management 

– the review of declared financial control self-assessments against minimum control standards across all locations with 

a finance presence 

The Leadership Team meets regularly to review and identify potential areas of business risk and action plans have been established 

to address these areas. Progress against these plans is monitored on a regular basis by the senior management team, the Audit 

Committee and the Board. 

The Board has overall responsibility for maintaining and reviewing the effectiveness of the Group’s system of internal controls. The 

internal control systems are designed to meet the Group’s particular needs and the risks to which it is exposed. They are designed to 

manage rather than eliminate the risk to the achievement of business objectives, and can only provide reasonable and not absolute 

assurance against material misstatement or loss. 

Control environment and risk assessment 

The Group operates a Risk Management Policy and support processes which ensure structured risk identification, assessment 

and treatment of risk outside of agreed appetite levels as the risks relate to the Group achieving its business objectives. The risk 

management processes are an integral part of the internal control environment. Other processes include strategic planning, the 

appointment of senior managers and a clear organisational structure in which levels of authority and accountability are well defined, 

and regularly reviewed. There is a recognition of personal responsibility and accountability by members of the management teams 

of the individual operating units. 

Wherever practical, duties are segregated and a high degree of management control is exercised through review by executives 

of historical and forecast financial information. In addition, the Group has reporting systems that identify major financial and other 

business risks within the Group. 

Financial and business performance is regularly monitored, and operating units are responsible for meeting the defined reporting 

timetables and compliance with the Group accounting and Treasury manuals which set out accounting policies, controls and 

definitions. Financial reporting follows generally accepted accounting practice in all areas. 

Central review and approval procedures are in place in respect of major areas of risk such as acquisitions and disposals, major 

contracts, capital expenditure, litigation, treasury management, taxation and environmental issues. Compliance with legislation 

is closely monitored and reviewed regularly to ensure any new legislation is taken into account, including compliance with 

environmental legislation. High standards and defined targets are set for safety, health and environmental performance. 

Information systems 

Comprehensive information systems are maintained at Group and operating unit levels, and are subject to scrutiny by the Board. 

These include: 

– detailed budgeting and forecasting procedures, with an annual budget approval process 

– monthly consideration of actual results compared with budgets and forecasts 

– regular review of the Group’s capital expenditure, with detailed appraisal and review procedures, defined authority levels and 

post-investment performance reviews 

Regular executive and Board meetings, combined with ongoing business unit based operational reviews are held with a view to 

ensuring variances and discrepancies are identified and investigated on a timely basis. The Company also reports to shareholders 

half-yearly. 



Governance 


Corporate Governance continued 

Internal audit 

The Group Risk and Assurance function provides an internal audit capability. Against an agreed mandate, this function performs 

independent internal control reviews and facilitates standardised and structured risk assessment across the Group. 

Group Risk and Assurance reviews internal controls in all key activities of the Group, typically over a three-year cycle. It also acts 

as a service to the businesses by assisting with the continuous improvement of controls and procedures. Actions are agreed in 

response to its recommendations and these are reviewed by the Board and are followed up regularly to ensure that satisfactory 

control is maintained using a formal issues tracking process. 

In line with the Group’s Internal Audit Charter, an internal audit plan is approved by the Audit Committee each year. This targets the 

most significant areas of risk to provide assurance that key controls are effectively designed and consistently operated. Audit reports 

are produced to convey the extent of control assurance derived from the formal testing of controls. Quarterly summary reports are 

presented by the Group Risk & Assurance function to the Audit Committee to convey: 

– an up-to-date view of the Group’s risk profile 

– details of internal audits undertaken during the period 

– an overall assessment of the Group’s control environment 

– the status of management actions arising from the risk management and internal assurance processes 

The Group Risk and Assurance team has no operational responsibility or authority over any of the activities it has reviewed during the 

year, nor has the team designed the control frameworks in place. The Group Risk and Assurance team members do not hold shares 

in the Company. This ensures that the team is sufficiently objective and independent of the areas under review to avoid prejudice and 

conflicts of interest. 

Whistle-blowing policy 

The Group has a whistle-blowing policy which is made available to all employees. The policy exists to encourage all employees to 

raise concerns they have about others in the business or the way in which the business is run, regardless of seniority. Significant 

matters raised through the whistle-blowing process are reported to the Audit Committee. 

Nominations Committee 

The Nominations Committee comprises Mr Wallace, Mr Perry and Mr Buzzacott. Mr Wallace acts as Chairman of the Committee. 

The Nominations Committee met once during the year. All members of the Committee attended the meeting. Non-Committee 

members were also invited to attend. The Nominations Committee’s terms of reference can be found on the Group’s web site 

(www.scapa.com). 

The Nominations Committee considers the mix of skills and experiences that the Board requires and seeks the appointment 

of Directors to meet its assessment of what is required to ensure that the Board is effective in discharging its responsibilities. 

Remuneration Committee 

During the year the Remuneration Committee comprised Mr Buzzacott, Mr Perry and Mr Wallace. Mr Buzzacott acted as Chairman 

of the Committee throughout the year. The Remuneration Committee met six times during the year. When necessary non-Committee 

members were also invited to attend. All members of the Remuneration Committee attended all of the meetings. 

The Committee’s principal responsibilities are: 

– setting, reviewing and recommending to the Board for approval the Group’s overall remuneration policy and strategy 

– setting, reviewing and approving individual remuneration packages for Executive Directors including terms and conditions 

of employment and any changes to the packages 

– reviewing the salary structure and terms, conditions and benefits of employment of other specified senior executives 

– approving the rules, and launch, of any Group share, share option or cash based incentive scheme and the grant, award, 

allocation or issue of shares, share options or payments under such schemes 

In addition the Committee regularly reviews the Group’s remuneration policy in relation to its competitors and industry norms, 

compensation commitment and contract periods. 

From time to time the Board employs Remuneration consultants. The Remuneration Committee’s terms of reference are available 

on the Group’s web site (www.scapa.com). 

Audit Committee 

During the year the Audit Committee comprised Mr Perry, Mr Wallace and Mr Buzzacott. Mr Perry acted as Chairman of the 

Committee throughout the year. Mr Perry is Group Finance Director of Fenner plc, a listed company, and can therefore be considered 

to possess recent and relevant financial experience. 

The members of the Committee are the independent Non-Executive Directors. 

The Audit Committee met five times during the year and all members attended all of the meetings. 


Under its terms of reference, the Audit Committee monitors the integrity of the Group’s financial statements and any formal 

announcements relating to the Group’s performance. The Committee is responsible for monitoring the effectiveness of the external 

audit process and making recommendations to the Board in relation to the appointment, re-appointment and remuneration of the 

external auditor. It is responsible for ensuring that an appropriate relationship between the Group and the external auditor is 

maintained, including reviewing non-audit services and fees. It also reviews annually the Group’s systems of internal control and the 

processes for monitoring and evaluating the risks facing the Group. The Committee also reviews the effectiveness of the internal audit 

function. The Committee reviews its terms of reference and its effectiveness annually and recommends to the Board any changes 

required as a result of the review. 

The Committee meets with Executive Directors and management, as well as privately with both external audit and the Head of Risk. 

The Committee’s terms of reference are displayed on the Group’s website (www.scapa.com). 

In 2011/12 the Audit Committee discharged its responsibilities by: 

– reviewing the Group’s draft annual financial statements and interim results statement prior to Board approval and reviewing the 

external auditor’s detailed reports thereon 

– reviewing the appropriateness of the Group’s accounting policies 

– reviewing regularly the potential impact in the Group’s financial statements of certain critical accounting estimates and judgements 

– reviewing and approving the audit fee and reviewing non-audit fees payable to the Group’s external auditor 

– reviewing the external auditor’s plan for the audit of the Group’s accounts, which included key areas of extended scope work, 

key risks on the accounts, confirmation of auditor independence and approving the terms of engagement for the audit 

– reviewing reports on the Group’s systems of internal control and its effectiveness, reporting to the Board on the results of the 

review and receiving regular updates on key risk areas of financial control 

– reviewing the internal audit function, terms of reference, its work programme and reports on its work during the year 

The Audit Committee also monitors the Group’s whistle-blowing procedures, ensuring that appropriate arrangements are in place 

for employees to be able to raise matters of possible impropriety in confidence, with suitable subsequent follow-up action. 

Auditor’s independence and objectivity 

Deloitte LLP was appointed as the Company’s auditor for 2011/12 following a competitive tender exercise which was overseen by 

the Audit Committee. Deloitte LLP best met the Audit Committee’s required criteria. 

The Audit Committee monitors regularly the non-audit services being provided to the Group by its external auditor to check these 

services do not impair their independence or objectivity, and that the Group maintains a sufficient choice of appropriately qualified 

audit firms. Prior approval of the Audit Committee is required for any services provided by the external auditor where the fee is likely 

to be in excess of £10,000. In any case activities that may be perceived to be in conflict with the role of the external auditor must be 

submitted to the Committee for approval prior to engagement, regardless of the amounts involved. 

The Audit Committee regularly reviews all services being provided by the external auditor in order to review the independence 

and objectivity of the external auditor, taking into consideration relevant professional and regulatory requirements, so that these 

are not impaired by the provision of permissible non-audit services. 

Details of the amounts paid to the external auditor during the year for audit and other services are set out in note 3 to the 

financial statements. 

During the year the auditor provided non-audit services, other than audit related services, in the form of due diligence investigations 

on potential acquisitions. The external auditor was engaged to provide these services since they are widely recognised as one of the 

market leaders in these areas and have a local presence in the overseas country where the acquisition was being considered. None 

of the due diligence work was advisory in nature. 

Auditor objectivity and independence was safeguarded in these instances through the advice being provided by partners and staff 

who have no involvement in the audit of the financial statements plus an independent audit partner reviewing any audit work in these 

areas. The due diligence work was also reviewed by an independent transaction services specialist partner in the audit firm. 

Share capital structures 

Please refer to the takeover directive section in the Report of the Directors and note 26 for further details. 

By order of the Board 

P Edwards 





Governance 


Statement of Directors’ Responsibilities 

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and 

regulations. 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the directors are required 

to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the 

European Union and have elected to prepare the Parent Company financial statements in accordance with United Kingdom Generally 

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must 

not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the 

profit or loss of the Company for that period. 

In preparing the Parent Company financial statements, the Directors are required to: 

– select suitable accounting policies and then apply them consistently 

– make judgements and accounting estimates that are reasonable and prudent 

– state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and 

explained in the financial statements 

– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue 

in business 

In preparing the Group financial statements, International Accounting Standard 1 requires that the Directors: 

– properly select and apply accounting policies 

– present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable 

information 

– provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to 

understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial 

performance 

– make an assessment of the Company’s ability to continue as a going concern 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s 

transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that 

the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company 

and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s 

website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from 

legislation in other jurisdictions. 

Responsibility statement 

We confirm that to the best of our knowledge: 

– the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the 

assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as 

a whole 

– the management report, which is incorporated into the Directors’ report, includes a fair review of the development and 

performance of the business and the position of the Company and the undertakings included in the consolidation taken 

as a whole, together with a description of the principal risks and uncertainties that they face 

By order of the Board 

H R Chae 

Chief Executive Officer 



Independent Auditor’s Report 

to the Members of Scapa Group plc 

We have audited the Group financial statements of Scapa Group plc for the year ended 31 March 2012 which comprise the 

Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the 

Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement, and the related notes 1 to 30. The financial 

reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards 

(IFRSs) as adopted by the European Union. 

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 

2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to 

state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume 

responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for 

the opinions we have formed. 

Respective responsibilities of Directors and auditor 

As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the Group 

financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on 

the Group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those 

standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. 

Scope of the audit of the financial statements 

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable 

assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an 

assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied 

and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation 

of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material 

inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies 

we consider the implications for our report. 

Opinion on financial statements 

In our opinion the Group financial statements: 

– give a true and fair view of the state of the Group’s affairs as at 31 March 2012 and of its profit for the year then ended; 

– have been properly prepared in accordance with IFRSs as adopted by the European Union; and 

– have been prepared in accordance with the requirements of the Companies Act 2006. 

Opinion on other matter prescribed by the Companies Act 2006 

In our opinion the information given in the Directors’ Report for the financial year for which the Group financial statements are 

prepared is consistent with the Group financial statements. 

Matters on which we are required to report by exception 

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, 

in our opinion: 

– certain disclosures of Directors’ remuneration specified by law are not made; or 

– we have not received all the information and explanations we require for our audit. 

Other matter 

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the 

provisions of the Companies Act 2006 that would have applied were the company a quoted company. 

Although not required to do so, the Directors have voluntarily chosen to make a corporate governance statement detailing the extent 

of their compliance with the UK Corporate Governance Code. We reviewed: 

– the directors’ statement, contained within the Business Review, in relation to going concern; 

– the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK 

Corporate Governance Code specified for our review; and 

– certain elements of the report to shareholders by the Board on Directors’ remuneration. 

We have reported separately on the Parent Company financial statements of Scapa Group plc for the year ended 31 March 2012. 

Patrick Loftus (Senior Statutory Auditor) 

for and on behalf of Deloitte LLP 

Chartered Accountants and Statutory Auditor 

Manchester 




Governance 


Consolidated Income Statement 

For the year ended 31 March 2012 

All on continuing operations 


note 

Year ended 

31 March 


£m 

Year ended 

31 March 

2011 

£m 

Revenue 1 195.6 192.3 

Operating profit 1, 3 11.7 8.0 

Trading profit* 10.7 8.0 

Amortisation of intangible assets (0.4) – 

Exceptional items 4 1.4 – 

Operating profit 11.7 8.0 

Interest payable 8 (0.3) (0.3) 

(0.3) (0.3) 

Net discount on provisions 8 (0.2) (0.2) 

IAS 19 finance costs 8 (0.7) (1.4) 

Net finance costs (1.2) (1.9) 


Taxation on operating activities (3.4) (2.1) 

Impact of change in tax rate on deferred tax (0.6) (0.5) 

Taxation charge 9 (4.0) (2.6) 

Profit for the year 6.5 3.5 

Weighted average number of shares 10 145.3 144.8 

Basic earnings per share (p) 10 4.5 2.4 

Diluted earnings per share (p) 10 4.3 2.3 

Consolidated Statement of Comprehensive Income 


Year ended Year ended 

31 March 31 March 


2011 

All on continuing operations note 

£m 

£m 

Profit for the year 6.5 3.5 

Exchange differences on translating foreign operations (1.2) (0.9) 

Actuarial (loss)/gain 25 (10.9) 1.2 

Deferred tax on actuarial loss/(gain) 3.2 (0.3) 

Effect of reduction in UK corporation tax on deferred tax (0.6) (0.7) 

Deferred tax on foreign exchange – 0.1 

Other comprehensive (expense)/income for the year (9.5) 0.4 

Total comprehensive (expense)/income for the year (3.0) 2.9 

The notes on pages 40 to 73 form part of these accounts. 

* Operating profit before exceptional items and amortisation of intangible assets.

Consolidated Balance Sheet 

As at 31 March 2012 

note 

31 March 


£m 

31 March 

2011 

£m 

Assets 

Non-current assets 

Goodwill 13 25.1 12.1 

Intangible assets 14 6.6 – 

Property, plant and equipment 15 40.4 37.6 

Deferred tax asset 9 28.3 27.6 

Other receivables 19 19.6 19.1 

120.0 96.4 

Current assets 

Assets held for resale 16 0.6 0.6 

Inventory 18 20.8 21.6 

Trade and other receivables 19 36.9 34.9 

Current tax asset 0.1 0.3 

Restricted cash 17 – 6.3 

Cash and cash equivalents 20 16.9 14.7 

75.3 78.4 

Liabilities 

Current liabilities 

Financial liabilities: 

– Borrowings and other financial liabilities 22 (0.4) (1.7) 

– Derivative financial instruments 23 – (0.1) 

Trade and other payables 21 (34.0) (32.0) 

Deferred consideration (6.3) – 

Current tax liabilities (1.3) (0.6) 

Provisions 24 (2.0) (3.0) 

(44.0) (37.4) 

Net current assets 31.3 41.0 

Non-current liabilities 

Financial liabilities: 

– Borrowings and other financial liabilities 22 (9.5) (0.5) 

Trade and other payables 21 (0.7) (1.2) 

Deferred consideration (2.9) – 

Deferred tax liabilities 9 (4.8) (4.6) 

Non-current tax liabilities (1.5) (1.3) 

Retirement benefit obligations 25 (38.9) (35.0) 

Provisions 24 (26.9) (26.2) 

(85.2) (68.8) 

Net assets 66.1 68.6 

Shareholders’ equity 

Ordinary shares 26 7.3 7.3 

Share premium 0.2 0.1 

Retained earnings 41.0 42.4 

Translation reserve 17.6 18.8 

Total shareholders’ equity 66.1 68.6 

The notes on pages 40 to 73 form part of these accounts. These accounts were approved by the Directors on 29 May 2012. 

H R Chae 


P Edwards 

Finance Director 

Registered in England No. 826179 



Governance 


Consolidated Statement of Changes in Equity 



Share 

premium 

£m 

Share 

capital 

£m 

Translation 

reserves 

£m 

Retained 

earnings 

£m 

Balance at 31 March 2010 – 7.2 19.6 38.5 65.3 

Issue of share capital 0.1 0.1 – – 0.2 

Employee share option scheme – value of employee services – – – 0.2 0.2 

Currency translation differences – – (0.9) – (0.9) 

Actuarial gain on pension schemes – – – 1.2 1.2 

Deferred tax on actuarial gain – – – (0.3) (0.3) 

Effect of reduction in UK corporation rate on deferred tax – – – (0.7) (0.7) 

Deferred tax on foreign exchange – – 0.1 – 0.1 

Net income recognised directly in equity – – (0.8) 0.2 (0.6) 

Profit for the period – – – 3.5 3.5 

Total comprehensive income – – (0.8) 3.7 2.9 

Balance at 31 March 2011 0.1 7.3 18.8 42.4 68.6 

Issue of share capital 0.1 – – – 0.1 

Employee share option scheme – value of employee services – – – 0.4 0.4 

Currency translation differences – – (1.2) – (1.2) 

Actuarial loss on pension schemes – – – (10.9) (10.9) 

Deferred tax on actuarial gain – – – 3.2 3.2 

Effect of reduction in UK corporation rate on deferred tax – – – (0.6) (0.6) 

Net expense recognised directly in equity – – (1.2) (8.3) (9.5) 

Profit for the period – – – 6.5 6.5 

Total comprehensive expense – – (1.2) (1.8) (3.0) 

Balance at 31 March 2012 0.2 7.3 17.6 41.0 66.1 

Total 

equity 

£m

Consolidated Cash Flow Statement 


All on continuing operations note 

Cash flows from operating activities 

Year ended 

31 March 


£m 

Year ended 

31 March 

2011 

£m 

Net cash flow from operations 23 9.9 9.1 

Cash generated from operations before exceptional items 23 10.7 10.8 

Cash outflows from exceptional items 23 (0.8) (1.7) 

Net cash flow from operations 9.9 9.1 

Net interest paid (0.2) (0.2) 

Income tax paid (0.9) – 

Net cash generated from operating activities 8.8 8.9 

Cash flows (used in)/from investing activities 

Acquisition of subsidiary (18.0) – 

Purchase of property, plant and equipment (2.6) (1.6) 

Proceeds from sale of property, plant and equipment 0.2 0.3 

Net cash used in investing activities (20.4) (1.3) 

Cash flows from/(used in) financing activities 

Issue of shares 0.1 0.1 

Other non-current investment movement 6.3 – 

Increase in borrowings 15.4 – 

Repayment of borrowings (6.5) (2.2) 

Net cash from financing activities 15.3 (2.1) 

Net increase in cash and cash equivalents 3.7 5.5 

Cash and cash equivalents at beginning of the year 17 13.2 7.8 

Exchange losses on cash and cash equivalents (0.2) (0.1) 

Cash and cash equivalents at end of the year 17 16.7 13.2 



Governance 


Group Accounting Policies 

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, Manchester, OL7 0ED. The Company has its listing on the Alternative Investment Market. 

These consolidated financial statements have been approved for issue by the Board of Directors on 29 May 2012. 

A summary of the more important Group accounting policies applied in the preparation of these consolidated financial statements 

is set out below. 

Basis of preparation 

The consolidated financial statements of Scapa Group plc have been prepared in accordance with International Financial Reporting 

Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC interpretations and the Companies Act 2006 

applicable to companies reporting under IFRSs. The consolidated financial statements have been prepared under the historical cost 

convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value 

through the Income Statement. 

Going concern 

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have 

adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt a going concern basis 

of accounting in preparing the financial statements. Further detail is contained in the Business Review. 

Early adoption of standards 

The Group has not early adopted any standards. 

New accounting standards and IFRIC interpretations 

The following standards and amendments to existing standards became mandatory during the year: 

IAS 24, ‘Related party disclosures’ (revised 2009). 

Amendment to IFRIC 14, ‘IAS 19 – The limit on defined benefit assets, minimum funding requirements and their interaction’. 

Amendment to IAS 32, ‘Financial instruments: Presentation – Classification of rights issues’. 

Amendment to IFRS 1, ‘First-time adoption of International Financial Reporting Standards – Limited exemption from comparative IFRS 

7 disclosures for first-time adopters’. 

Where applicable the changes in the above standards have been reflected in the Group financial statements. The effect of these 

changes is not material to the Group accounts for the year ending 31 March 2012. 

The following standards and amendments to existing standards have been published but are not mandatory for the Group’s financial 

statements in the year ending 31 March 2012 (and in some cases had not been adopted by the EU): 

Amendments to IFRS 1 (March 2012), Government Loans 

Amendments to IAS 32 (Dec 2011), Offsetting Financial Assets and Financial Liabilities 

Amendments to IFRS 7 (Dec 2011), Disclosures – Offsetting Financial Assets and Financial Liabilities 

IFRS 9, Financial Instruments. 

Amendments to IAS 1 (June 2011), Presentation of Items of Other Comprehensive Income. 

IAS 19 (revised June 2011), Employee Benefits. 

IFRS 13, Fair Value Measurement. 

IFRS 12, Disclosure of Interests in Other Entities. 

IFRS 11, Joint Arrangements. 

IFRS 10, Consolidated Financial Statements. 

IAS 28 (revised May 2011), Investments in Associates and Joint Ventures. 

IAS 27 (revised May 2011), Separate Financial Statements. 

Amendments to IAS 12 (Dec 2010), Deferred Tax: Recovery of Underlying Assets. 

Amendments to IFRS 1 (Dec 2010), Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters. 

Amendments to IFRS 7 (Oct 2010), Disclosures – Transfers of Financial Assets. 


Consolidation 

The consolidated financial statements include those of the Parent Company and its subsidiary undertakings up to 31 March in each 

year prepared under IFRSs. Subsidiary undertakings are entities over which the Group has the power to govern their financial and 

operational policies generally accompanying a shareholding of more than half of the voting rights. The results of subsidiary 

undertakings acquired or disposed of during the year are included from the date of acquisition or up to the date of disposal 

respectively, using the purchase method of accounting. 

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised 

losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies 

of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. 

Segmental reporting 

IFRS 8 Operating Segments requires that the segments should be reported on the same basis as the internal reporting information 

that is provided to the chief operating decision-maker. The Group adopts this policy and the chief operating decision-maker has been 

identified as the Board of Directors. The Directors consider there to be three reportable segments, being the main customer groups 

which the Group serves in: Industrial, Healthcare and Electronics (business units). This year has seen an expansion through 

acquisition and realignment of the core medical business. To reflect the changes made within our medical business, this is now 

known as Healthcare. 

Internal reports reviewed regularly by the Board provide information to allow the chief operating decision-maker to allocate resources 

and make decisions about the operations. The internal reporting focuses on these business units. 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. Trading profit is reconciled to operating profit on the face of the Income Statement. 

Revenue recognition 

Revenue comprises the fair value for the sale of goods, net of value-added tax, rebates and discounts and after eliminating sales 

within the Group. Revenue is recognised as follows: 

(a) Sales of goods 

Sales of goods are recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer, 

and when the Group entity has no continuing managerial involvement nor effective control over the goods. 

Where items are sold with a right of return, accumulated experience is used to estimate and provide for such returns at the time 

of sale. 

(b) Interest income 

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be 

measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest 

rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset 

to that asset’s net carrying amount on initial recognition. 

Operating profit 

Operating profit is defined as trading profit after exceptional items and the amortisation of intangible assets. 

Leases 

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating 

leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Income Statement 

on a straight-line basis over the period of the lease. 

Leases in which substantially all of the risks and rewards of ownership are transferred to the Group are classified as finance leases. 

Finance leases are recognised as assets and liabilities in the Balance Sheet at the present value of the minimum lease payments. 

The interest rate implicit in the lease is used as the discount rate in calculating the present value of the cash outflows. Where the 

Group does not obtain ownership of the asset at the end of the lease period, the asset is depreciated over the shorter of its useful life 

and the lease term. Where ownership does pass to the Group at the end of the lease period, the policy for depreciating the asset is 

consistent with that for depreciable assets that are owned. 

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance 

charge is calculated based on the amount of borrowing outstanding, and is charged against profits over the primary lease period. 

Government grants 

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received 

and the Group will comply with all attached conditions. 

Government grants relate to tangible fixed assets and are treated as deferred income and are credited to the Income Statement over 

the expected useful lives of the assets concerned. 



Governance 


Group Accounting Policies continued 

Research and development expenditure 

Research expenditure is expensed as incurred. Costs associated with developing or enhancing existing product lines are recognised 

as an expense as incurred. 

Development costs are assessed as to whether they meet the IAS 38 criteria for capitalisation. No costs have been incurred by the 

Group which meet those criteria. 

Exceptional items 

Items which are both material and non-recurring in nature are presented as exceptional items so as to provide a better indication 

of the Group’s underlying business performance and are shown separately on the face of the Income Statement. Items classed as 

exceptional in the Income Statement are treated as exceptional in the cash flow until the items are fully unwound. 

Foreign currency translation 

(a) Functional and presentation currency 

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic 

environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Sterling. 

(b) Transactions and balances 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the 

transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year 

end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement, 

except when deferred in equity as qualifying net investment hedges. 

(c) Group companies 

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have 

a functional currency different from the presentation currency are translated into the presentation currency as follows: 

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; 

(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a 

reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and 

expenses are translated at the dates of the transactions). 

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of long-term 

borrowings that are considered to form part of that net investment, are taken to the translation reserve within shareholders’ 

equity. When a foreign operation is sold, such exchange differences are recognised in the Income Statement as part of the gain 

or loss on sale. 

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity 

and translated at the closing rate. 

Business combinations and goodwill 

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition 

is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity 

instruments issued by the Group in exchange for control of the acquire. Acquisition-related costs are recognised in profit or loss as 

incurred, and are normally treated as exceptional. 

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration 

arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of 

acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of 

contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair 

value of contingent consideration classified as equity are not recognised. 

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, 

the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted 

during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about 

facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of 

that date. 

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts 

and circumstances that existed as of the acquisition date, and is subject to a maximum of one year. 

Goodwill is tested annually for impairment, or when an indication of impairment is identified, and carried at cost less accumulated 

impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. 

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units represents 

the Group’s investment in each site. 


Property, plant and equipment (including land and buildings) 

Land and buildings comprise mainly factories and offices. All property, plant and equipment is stated at historical cost less 

accumulated depreciation and impairment. Historical cost includes expenditure directly attributable to the acquisition of the items. 

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is 

probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured 

reliably. All other repairs and maintenance are charged to the Income Statement when incurred. 

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to reduce their cost to their residual 

values over their estimated useful lives, as follows: 

– Freehold buildings: 40 years 

– Leasehold buildings: life of the lease 

– Plant and machinery: 5-20 years 

– Furniture, fittings and equipment: 5-20 years 

– IT systems and software: 3-8 years 

Assets held in the course of construction are not depreciated until they are brought into use. 

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s 

carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated 

recoverable amount. 

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Income 

Statement within operating profit. 

Assets held for sale 

Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Assets are moved to 

held for sale when they are in a state ready for sale and where management is committed to the sale, and where it is highly possible 

that the sale will complete within one year from the date of classification. Assets held under for sale are not depreciated and any costs 

associated with their upkeep are disclosed separately. 

Intangible assets 

The Group’s intangible assets have all been acquired and there are no internally generated intangibles. 

All acquired intangible assets are measured at cost and are amortised on a straight-line basis over their estimated useful lives. All of 

the Group’s intangible assets have finite lives, the lengths of which are disclosed separately under the notes in the accounts. 

Impairment of assets 

Assets, such as goodwill, that have an indefinite useful life, are not subject to amortisation and instead are tested annually for 

impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in 

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which 

the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s sale value less costs 

to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are 

separately identifiable cash flows (cash-generating units). 

Value in use is determined based on the estimated future cash inflows and outflows derived from the continued use of the asset and 

from its ultimate disposal. These forecasts form the basis of the Group’s annual budget, have been signed off by the Board and are 

the best estimates available to management in assessing future profitability. These cash flows are discounted using the Group’s pretax 

weighted average cost of capital of 6.2% (2011: 11.2%), adjusted to reflect any risks specific to the asset for which the estimated 

future cash flows have not already been adjusted (see note 13). 

Where the recoverable amount of assets (other than goodwill) subsequently materially increases, impairment losses recognised 

in previous periods will be reversed. 

Financial instruments 

The Group classifies its financial instruments in the following categories: financial assets and liabilities at fair value through profit 

or loss and loans, receivables and payables. The classification depends on the purpose for which the instruments were acquired. 

Management determines the classification of its instruments at initial recognition and re-evaluates this at every reporting date. 

(a) Financial assets and liabilities measured at fair value through profit and loss 

Financial assets and liabilities are measured at fair value. Instruments in this category are classified as current if they are either held 

for trading or are expected to be realised within 12 months of the Balance Sheet date. Hedge accounting is only applied for net 

investment hedges, with changes in fair value being taken directly to the translation reserve where hedge accounting is achieved. 

Changes in fair values of cash flow hedges are taken through the Income Statement. 



Governance 



(b) Loans, receivables and payables 

Loans, receivables and payables are non-derivative financial assets and liabilities with fixed or determinable payments that are not 

quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor or creditor with no 

intention of trading the receivable or payable. They are included in current assets or liabilities, except for maturities greater than 

12 months after the Balance Sheet date. These are classified as non-current assets or liabilities. Loans and receivables are included 

in trade and other receivables or trade and other payables in the Balance Sheet. Loans, receivables and payables are measured at 

invoice or historic cost less any impairment. 

Inventories 

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. 

The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production 

overheads allocated on a systematic basis (based on normal operating capacity). It excludes borrowing costs. Net realisable value is 

the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Provision is made for obsolete, 

slow moving and defective inventory on a line by line basis, or by grouping similar or related items, by reference to accumulated 

experience. 

Trade receivables 

Trade receivables are recognised initially at invoice value, less provision for impairment. A provision for impairment of trade 

receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according 

to the original terms of receivables. The provision is recognised in the Income Statement as an operating charge. 

Insurance receivables 

Where some or all of the cost of a provision is reimbursed by another party, the Group recognises that reimbursement when it is 

virtually certain it will be received. 

Cash and cash equivalents 

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with 

original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities 

on the Balance Sheet. 

Share capital 

Ordinary shares are classified as equity. 

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in 

which the dividends are approved by the Company’s shareholders or in respect of interim dividends when approved by Directors. 

Trade payables 

Trade payables are recognised at their initial fair value. 

Borrowings 

Borrowings are recognised initially at fair value, net of transaction costs incurred and subsequently stated at amortised cost. Interest 

charges are recognised in the Income Statement over the period of the borrowings, using the effective interest method. 

Borrowings are classified as current liabilities unless the Group has a right to defer settlement of the liability for at least 12 months 

after the Balance Sheet date. 

Deferred taxation 

The charge for taxation, comprising both UK and non-UK taxation, is based on the taxable profits for the year and also takes into 

account deferred taxation. Deferred taxation is provided in full, using the liability method, on temporary differences arising between 

the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred 

taxation arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the 

transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred taxation is determined using tax rates 

(and laws) that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply when the related 

deferred income tax asset is realised or the deferred income tax liability is settled. 

Deferred taxation assets are recognised to the extent that it is probable that future taxable profit will be available against which the 

temporary differences can be utilised. 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax 

liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle on a net basis. 

Employee benefits 

(a) Pension obligations 

Group companies operate various pension schemes. The schemes are funded through payments to trustee-administered funds, 

determined by periodic actuarial calculations. The Group has both defined benefit and defined contribution plans. A defined benefit 

plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on 

one or more factors such as age, years of service and compensation. 


The liability recognised in the Balance Sheet in respect of defined benefit pension plans is the present value of the defined benefit 

obligation at the Balance Sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains 

or losses and past service costs. The defined benefit obligation is calculated by independent actuaries using the projected unit credit 

method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using 

interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have 

terms to maturity approximating to the terms of the related pension liability. 

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to 

shareholders’ equity. 

Past-service costs are recognised immediately in the Income Statement, unless the changes to the pension plan are conditional on 

the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised 

on a straight-line basis over the vesting period. 

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no 

legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits 

relating to employee service in the current and prior periods. 

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a 

mandatory, contractual or voluntary basis. The contributions are recognised as employee benefit expense when they are due. 

Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. 

(b) Share-based compensation 

The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange 

for the grant of the options is calculated using appropriate valuation models and is recognised as an expense over the vesting period. 

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted. At each 

balance sheet date, the entity revises its estimates of the number of options that are expected to become exercisable. 

It recognises the impact of the revision of original estimates, if any, in the Income Statement, and a corresponding adjustment to 

equity, over the remaining vesting period. 

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share 

premium when the options are exercised. 

(c) Holiday pay 

The Group recognises an asset or liability relating to holiday pay obligations at the Balance Sheet date. Movements in the period 

are taken to the Income Statement. 

(d) Bonus plans 

The Group recognises a liability and an expense for bonuses based on a pre-determined formula for key performance indicators. 

The Group recognises a provision where contractually obliged or where past practice has created a constructive obligation. 

(e) Share price incentive plan 

The Group accounts for the share price incentive plan in line with IAS 19 as the basis of compensation is not an award of shares and 

therefore does not fall under the remit of IFRS 2. 

Provisions 

Provisions for environmental restoration, restructuring costs and legal claims are recognised when the Group has a present legal or 

constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the 

obligation and the amount has been reliably estimated. 

Where the effect is material, provisions are discounted in line with IAS 37 using a pre-tax nominal discount rate. The discount rate 

does not reflect risks for which the estimated future outflows have already been adjusted. 

Critical accounting estimates and judgements 

The Group’s accounting policies have been set by management and approved by the Audit Committee. The application of these 

accounting policies to specific scenarios requires reasonable estimates and assumptions to be made concerning the future. These 

are continually evaluated based on historical experience and expectations of future events. The resulting accounting estimates will, 

by definition, seldom equal the related actual results. 

Under IFRSs estimates or judgements are considered critical where they involve a significant risk of causing a material adjustment to 

the carrying amounts of assets and liabilities from period to period. This may be because the estimate or judgement involves matters 

which are highly uncertain, or because different estimation methods or assumptions could reasonably have been used. 



Governance 



Critical judgements and estimates have been made in the following areas when preparing the Group’s accounts: 

1 Impairment of goodwill and property, plant and equipment – see note 13. The Group tests annually whether goodwill has suffered 

any impairment, and tests tangible assets where indication of impairment exists. For goodwill the recoverable amounts of cashgenerating 

units are determined on a value-in-use basis; determining this value requires the use of estimates. The main estimates 

are around the forecasted cash flows, which are based on approved budgets and a growth rate of 3.0% per annum in years 1-5 

and no growth thereafter. The assumptions used are considered the best available and reasonable. Any reasonable change in the 

assumptions would not result in an impairment. 

2 Calculation of provisions – the key assumptions used to calculate the Asbestos litigation provision and the sensitivity of those 

assumptions to change is contained within note 24. The assumptions used are considered the best available and reasonable. 

3 Calculation of insurance receivable – see note 24. There is a residual level of uncertainty around any insurance policy until such 

time it is actually drawn down upon and therefore the actual value of all accessible insurance may differ from the evaluation in note 

24. Given that the total accessible value of all relevant insurance policies is significantly in excess of any reasonable range of 

outcomes, the Board’s view is that this will not lead to any material financial impact on Scapa. 

4 Retirement benefit liabilities – the key assumptions used to calculate the pensions deficit and the sensitivity of those assumptions 

to change is contained within note 25. The assumptions used are considered the best available and reasonable. 

5 Taxation – see note 9. The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in 

determining the worldwide provisions for income taxes and the recognition of deferred tax assets. The recognition of deferred tax 

is based on the availability of suitable future taxable profits of a specific business unit in a specific tax jurisdiction and satisfies the 

relevant recognition criteria. The assumptions used are considered the best available and reasonable. A significant deterioration in 

results would need to occur in order to result in an impairment of the deferred tax recognised. 

6 Contingent consideration – the future amount of any consideration payable for an acquisition is recognised where it is probable 

that the amount will be paid, and where the amount can be estimated reliably. In deciding whether the contingent consideration 

for WEBTEC is probable to be paid, the Group have considered the available forecasts, the trading since acquisition and the 

absolute targets required to be met for payment. Carrying the full amounts for the contingent consideration is reasonable on this 

basis. A subsequent adjustment to the actual amount payable will be adjusted through the cost of the acquisition. 


Notes on the Accounts 

1. Segmental reporting 

Business unit segments 

The Group trades across three business units: Industrial, Healthcare and Electronics, and in three main geographical areas: Europe, 

North America and Asia. All inter-segment transactions are made on an arms-length basis. The Group has continued to focus more 

on business units than geographical areas for strategic planning of the Group. 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 consistent exchange rates. The prior year results 

have been restated as shown on the following page. 

Segment results 

The segment results for the year ended 31 March 2012 are as follows: 

Industrial 

£m 

Healthcare 

£m 

Electronics 

£m 

Head Office 

£m 

External revenue 145.9 39.5 10.2 – 195.6 

Trading profit/(loss) 7.2 5.5 (0.8) (1.2) 10.7 

Amortisation of intangible assets 

Exceptional items and movements in 

– (0.4) – – (0.4) 

exceptional provisions 0.9 (0.1) – 0.6 1.4 

Operating profit/(loss) 8.1 5.0 (0.8) (0.6) 11.7 

Net finance costs (1.2) 

Profit on ordinary activities before tax 10.5 

Tax charge (4.0) 

Profit for the year 6.5 

Europe 

£m 

N America 

£m 

Asia 

£m 

Eliminations 

£m 

Head office 

£m 

External revenue 107.9 76.6 11.1 – – 195.6 

Inter-segment revenue 5.1 2.3 0.8 (8.2) – – 

Total revenue 113.0 78.9 11.9 (8.2) – 195.6 

Trading profit/(loss) 5.9 6.8 (0.8) – (1.2) 10.7 

Amortisation of intangible assets 

Exceptional items and movements in 

– (0.4) – – – (0.4) 

exceptional provisions 0.4 0.4 – – 0.6 1.4 

Operating profit/(loss) 6.3 6.8 (0.8) – (0.6) 11.7 





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: 

Europe 

£m 

N America 

£m 

External revenue 96.5 69.2 29.9 195.6 

There are no single customers with greater than 10% share of revenue in any segment. 

Asia 

£m 

Group 

£m 

Group 

£m 

Group 

£m 



Governance 


Notes on the Accounts continued 

1. Segmental reporting continued 

The segment results for the year ended 31 March 2011 are as follows: 


Industrial 

£m 

Healthcare 

£m 

Electronics 

£m 

Head Office 

£m 


Trading profit/(loss) 4.3 4.3 0.4 (1.0) 8.0 

Operating profit/(loss) 4.3 4.3 0.4 (1.0) 8.0 





Europe 

£m 

N America 

£m 

Asia 

£m 

Eliminations 

£m 

Head office 

£m 

External revenue 106.7 72.7 12.9 – – 192.3 

Inter-segment revenue 4.5 2.7 1.2 (8.4) – – 

Total revenue 111.2 75.4 14.1 (8.4) – 192.3 

Trading profit/(loss) 3.3 5.3 0.4 – (1.0) 8.0 

Operating profit/(loss) 3.3 5.3 0.4 – (1.0) 8.0 





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: 

Europe 

£m 

N America 

£m 

External revenue 94.7 66.9 30.7 192.3 

The Board reviews the performance of the business using information presented at consistent exchange rates. The prior year results 

have been restated using this year’s exchange rates as follows: 

Europe 

£m 

N America 

£m 

Asia 

£m 

Asia 

£m 

Head office 

£m 


Foreign exchange 1.8 (1.5) 0.1 – 0.4 

Underlying external revenue 108.5 71.2 13.0 – 192.7 

Trading profit/(loss) 3.3 5.3 0.4 (1.0) 8.0 

Foreign exchange 0.2 (0.2) – – – 

Underlying trading profit/(loss) 3.5 5.1 0.4 (1.0) 8.0 

2. Segment assets and liabilities 

The chief operating decision maker does not review assets and liabilities by business unit but by geographical area. The assets and 

liabilities at 31 March 2012 and capital expenditure for the year then ended can be analysed into geographical segments as follows: 

Europe 

£m 

N America 

£m 

Asia 

£m 

Head office 

£m 

Inventory 10.3 8.7 1.8 – 20.8 

Trade receivables 19.4 11.9 1.8 – 33.1 

Trade payables (15.7) (5.9) (0.6) (0.9) (23.1) 

Cash 8.0 3.1 1.8 4.0 16.9 

Additions of property, plant and equipment 1.7 0.9 0.3 0.2 3.1 

Group 

£m 

Group 

£m 

Group 

£m 

Group 

£m 

Group 

£m

2. Segment assets and liabilities continued 

The assets and liabilities at 31 March 2011 and capital expenditure for the year then ended were as follows: 

Europe 

£m 

N America 

£m 

Asia 

£m 

Head office 

£m 

Inventory 12.5 7.2 1.9 – 21.6 

Trade receivables 20.9 8.4 1.7 – 31.0 

Trade payables (16.4) (3.9) (0.9) (1.1) (22.3) 

Cash 5.0 2.7 1.8 5.2 14.7 

Additions of property, plant and equipment 0.8 0.5 0.8 – 2.1 

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

3. Operating profit note 

The operating profit for the year is stated after: 

Revenue 195.6 192.3 

Materials and overheads (96.9) (93.8) 

Factory costs (15.8) (16.8) 

Outward freight costs (6.5) (7.0) 

Directors and employees costs (51.1) (50.9) 

Depreciation of tangible fixed assets 

– owned assets (4.5) (4.8) 

– leased assets (0.1) (0.1) 

Operating lease rentals 

– land and buildings (2.0) (1.6) 

– plant, machinery and other (1.1) (1.4) 

Repairs and maintenance costs (2.3) (2.6) 

Research and development costs (2.4) (2.5) 

Amortisation of government grants received 0.3 0.1 

Movement in fair value of financial instruments 0.1 (0.1) 

Foreign exchange gains/(losses) 0.2 (0.4) 

Amortisation of intangible assets (0.4) – 

Profit/(loss) on disposal of property, plant and equipment 0.1 (0.3) 

Write-down of inventory (0.7) – 

The analysis of auditor’s remuneration is as follows: 

Audit fees parent company 62.0 80.0 

Audit fees subsidiary undertakings 217.0 155.0 

Tax services 86.0 56.0 

Internal audit services 10.0 – 

Services related to remuneration 12.0 – 

Pension related services – 13.0 

Corporate finance services 115.0 – 


Total 

£m 


Total 

£’000 

Group 

£m 

2011 

Total 

£m 

2011 

Total 

£’000 

502.0 304.0 

The amounts for the prior year were remunerated to the previous auditor of the Group. Deloitte LLP was not appointed statutory 

auditor to the Group at the time the corporate finance services were contracted. 

Total audit fees were £279,000 (2011: £235,000). Total non-audit fees were £223,000 (2011: £69,000). 



Governance 



4. Exceptional items 

Operating Expenses: 

WEBTEC acquisition costs (0.7) – 

Operating Income: 

US pension closure curtailment 1.1 – 

UK pension past service credit 1.0 – 



£m 

2011 

£m 

1.4 – 

During the year there were three items of a material and non-recurring nature that give a better indication of trading profitability when 

treated as exceptional. 

In December 2011 the Group acquired the assets and trade of WEBTEC Converting LLC (WEBTEC) for an initial consideration of 

US$28.8m. The costs of the acquisition, which included mainly due diligence and legal costs, amounted to £0.7m (2011: £Nil). 

As disclosed in the interim accounts, the Group closed its US final salary pension scheme during the six months to September 2011. 

The closure crystallised a curtailment gain of £1.1m (2011: £Nil). The movement from the interim relates to foreign exchange and the 

finalisation of the curtailment calculation. 

During the second half of 2011/12, the Group concluded a second pensions project which had a material impact on operating profit. 

A pensions increase exchange offer was made to members and £1.0m (2011: £Nil) was recognised in operating profit relating to 

pensioners taking up the offer. In addition to this pensioner uptake, the Company also made provision for pension increase exchange 

offers to be made to all deferred members at the point of retirement. The future benefit from this offer, £0.8m (2011: £Nil), has been 

recognised through reserves. 

In the year ended 31 March 2011 there were no items of a material and non-recurring nature. 

5. Employee benefit expense 

Wages, salaries and other benefits 42.2 41.8 

Social security costs 6.4 6.9 

Share options granted to Directors and employees 0.4 0.2 

Pension costs – defined contribution plans (note 25) 1.4 1.3 

Pension costs – defined benefit plans (note 25) 0.7 0.7 

51.1 50.9 

Pension curtailments and service costs (2.1) – 

Average employee numbers 


£m 

2011 

£m 

49.0 50.9 

2012 2011 

Europe 640 700 

North America 414 399 

Asia 113 108 

6. Key management compensation and Directors’ remuneration 

Directors 

£m 

Key 

Management 

£m 

1,167 1,207 


Total 

£m 

Directors 

£m 

Key 

Management 

£m 

Short-term employment benefits 0.9 1.4 2.3 0.7 0.7 1.4 

Post employment benefits 0.1 0.1 0.2 0.1 0.1 0.2 

Termination benefit – 0.1 0.1 0.1 – 0.1 

Share based payments 

0.1 

(including share incentive plan) 0.6 0.3 0.9 – 0.1 

1.6 1.9 3.5 0.9 0.9 1.8 

Total 

£m

6. Key management compensation and Directors’ remuneration continued 

Key management is defined as the Leadership Team, two new members of which joined part way through the year and two left 

during the year. 

The short-term employment benefits include wages and salaries, bonuses, social security contributions and non-monetary benefits. 

7. Related Party Transactions 

In addition to compensation listed under note 6, as part of the WEBTEC acquisition the Group has provided for deferred consideration 

payments of US$10.0m and US$5.0m due on the achievement of certain performance targets over the next two years. Randy 

Holmes (Director of Global Development) is part owner of the company that will be paid these contingent amounts. 

The Group has incurred £0.1m of property lease costs during the year, 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 year end and full details of 

transactions within the pension schemes are detailed in note 25. 

8. Net finance costs 

Interest payable on bank loans and overdrafts 0.3 0.3 

Expected return on pension scheme assets less interest on scheme liabilities 0.7 1.4 

Discount on assets (0.6) (0.6) 

Discount on provisions 0.8 0.8 

Net finance costs 1.2 1.9 

9. Taxation 

Income tax charge 

Current tax: 

Tax on ordinary activities – current year (2.2) (0.6) 

Tax on ordinary activities – prior year 0.2 (0.4) 

(2.0) (1.0) 

Deferred tax: 

Tax on ordinary activities – current year (1.5) (1.5) 

Tax on ordinary activities – prior year 0.1 0.4 

Effect of reduction in UK corporation tax rate to 24% (2011: 26%) (0.6) (0.5) 


£m 


£m 

2011 

£m 

2011 

£m 

(2.0) (1.6) 

Tax charge for the year (4.0) (2.6) 

The actual tax on the Group’s profit before tax differs from the theoretical amount using the UK corporation tax rate as follows: 


Theoretical tax charge at 26% (2011: 28%) (2.7) (1.7) 


Income not taxable and other deductions 0.8 0.5 

Items not deductible for tax purposes and other taxable items (0.7) (0.3) 

Effect of overseas tax rates being higher than UK tax rate (1.1) (0.6) 

Adjustments in respect of prior years 0.3 – 

Actual tax charge for the year (4.0) (2.6) 


£m 

2011 

£m 



Governance 



9. Taxation continued 

Deferred income tax 

The deferred tax balances included in these accounts are attributable to the following: 

Deferred tax assets: 

– losses 9.9 10.7 

– accelerated tax depreciation 0.7 0.1 

– litigation and other provisions 6.5 6.1 

– tax effect of intangibles 0.2 0.1 

– retirement benefit liabilities 9.8 9.4 



£m 

2011 

£m 

27.1 26.4 

Deferred tax liabilities: 

– other short-term timing differences (0.4) (0.5) 

– provision for potential tax liability (3.2) (2.9) 

(3.6) (3.4) 

As required by IAS 12, deferred tax assets and liabilities may only be offset where they arise in the same jurisdictions and are therefore 

presented on the Balance Sheet as follows: 

Deferred tax assets as above: 27.1 26.4 

– other timing differences on assets moved to liabilities (0.1) (0.1) 

– accelerated tax depreciation liabilities/assets in different countries 1.3 1.3 

Deferred tax asset on the Balance Sheet 28.3 27.6 

Deferred tax liabilities as above: (3.6) (3.4) 

– other timing differences on liabilities moved to assets 0.1 0.1 

– accelerated tax depreciation liabilities/assets in different countries (1.3) (1.3) 

Deferred tax liability on the Balance Sheet (4.8) (4.6) 

Tax losses amounting to £0.7m (2011: £1.3m) have not been recognised due to the uncertainty over the utilisation of the underlying 

tax losses in each jurisdiction. 

Included within the recognised deferred tax asset on losses of £9.9m above is £2.8m in relation to Scapa Group plc and £0.4m in 

relation to Asia entities, both of which made a loss in the current year. The gross non-trading tax losses carried forward for future 

utilisation against taxable profits in Scapa Group plc is £11.6m and in Asia entities is £1.8m. Based on current forecasts management 

have a reasonable expectation that these assets will be utilised despite the losses made. 

Movement in deferred tax 

Beginning of the year 23.0 25.9 

Income Statement charge (1.4) (1.1) 


Exchange differences on translating foreign operations (0.1) (0.4) 

Deferred tax on actuarial gains/losses 3.2 (0.3) 

Other comprehensive income effect of reduction in UK corporation tax rate to 24% (2011: 26%) (0.6) (0.7) 

Deferred tax on foreign exchange – 0.1 

End of year 23.5 23.0 


£m 


£m 

2011 

£m 

2011 

£m

9. Taxation continued 

Movement in unrecognised deferred tax 


Prior year adjustments (0.3) (0.2) 

Current year movement (0.3) (1.0) 

Exchange differences on translating foreign operations – 0.1 


In addition to the change in rate of corporation tax disclosed above within the note on taxation, a number of further changes to the UK 

corporation tax system were announced in the March 2012 UK Budget statement. Legislation to reduce the main rate of corporation 

tax from 24% to 23% from 1 April 2013 is expected to be included in the Finance Act 2012. A further reduction to the main rate is 

proposed to reduce the rate by 1% per annum to 22% by 1 April 2014. These further changes had not been substantively enacted 

at the Balance Sheet date and therefore are not included in these financial statements. 

The effect of the changes expected to be enacted in the Finance Act 2012 would be to reduce the deferred tax asset provided 

at the Balance Sheet date by £0.6m. This £0.6m decrease in the deferred tax asset would decrease profit by £0.3m. This is due 

to the reduction in the corporation tax rate from 24% to 23% with effect from 1 April 2013. 

The proposed reductions of the main rate of corporation tax by 1% per year to 22% by 1 April 2014 are expected to be enacted 

separately each year. The overall effect of the further changes from 23% to 22%, if these applied to the deferred tax balance at the 

Balance Sheet date, would be to reduce the deferred tax asset by £0.6m (being £0.6m recognised in 2014). 

10. 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 year. 


£m 

2011 

£m 


Profit attributable to equity holders of the Company (£m) 6.5 3.5 

Weighted average number of ordinary shares in issue (m) 145.3 144.8 

Basic earnings per share (p) 4.5 2.4 

Weighted average number of shares in issue, including potentially dilutive shares (m) 150.5 148.6 

Diluted earnings per share (p) 4.3 2.3 

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 (150,517,112). Diluted earnings per share has been calculated on share options in 

existence at 31 March 2012. 

11. Dividend per share 

No dividend is proposed for the year ended 31 March 2012 (prior year £Nil). 

12. Acquisition of subsidiary 

On 22 December 2011 the Group acquired the entire issued share capital of WEBTEC, a US based leading contract manufacturer 

and full-service converter, printer and packager of adhesive-backed medical devices that are distributed worldwide. The primary 

reason for the acquisition was to provide the Company with further commercial opportunities and broaden the Group’s medical 

technology portfolio. 



Governance 



12. Acquisition of subsidiary continued 


Book value 

£m 

Fair value 

£m 

Identifiable net assets acquired 

Intangible assets (see note 14) – 7.0 

Property, plant and equipment 5.2 4.8 

Inventories 2.1 1.9 

Trade and other receivables 3.1 3.0 

Cash and cash equivalents – – 

Trade and other payables (2.1) (2.5) 

8.3 14.2 

Goodwill 13.0 

Total consideration 27.2 

Goodwill is denominated in US Dollars in line with WEBTEC’s functional currency. The goodwill is recorded at the closing dollar rate 

on 31 March 2012. 

£m 

Satisfied by 

Cash: paid on 22 December 2011 18.0 

Contingent consideration 9.2 

The fair value of the contingent consideration arrangement of £9.2m was calculated using management’s best estimate of the 

operating profit performance, discounting where appropriate. The payout is expected over the next two years in line with the maturity 

analysis in note 23 but exact timing is dependent upon the profits of the WEBTEC business. 

£m 

Net cash flow arising on acquisition 

Cash consideration 18.0 

Cash acquired – 

The goodwill arising on the acquisition of WEBTEC of £13.0m consists of the skills and technical capabilities of the employees who 

joined the Group and synergies that are expected to be achieved as a result of the transaction and the competitive advantage gained. 

Goodwill is deductible for income tax purposes. 

The fair value of inventory has been reduced to provide for certain slow-moving products. Payables at fair value include a £0.4m 

provision for dilapidations on the three leased buildings. Trade receivables have been written down by £0.1m to their carrying value. 

The total costs for the transaction amounted to £0.7m, included in exceptional costs for the year. 

WEBTEC contributed £5.4m revenue and £0.5m to the Group’s profit before tax for the period between the date of acquisition and 

the Balance Sheet date. If the acquisition of WEBTEC had been completed on the first day of the financial year, Group revenues for 

the period would have been £211.8m and Group profit before tax would have been £12.0m. These figures have been estimated 

based on an extrapolation of results achieved in the period since acquisition. 

27.2 

18.0

13. Goodwill 

Cost 

1 April 34.2 45.8 

Exchange differences – (1.7) 

Acquisition of WEBTEC 13.0 – 

Disposals – (9.9) 

31 March 47.2 34.2 

Accumulated amortisation and impairment 

1 April (22.1) (33.1) 

Exchange differences – 1.1 

Disposals – 9.9 

31 March (22.1) (22.1) 

Net book value at 31 March 25.1 12.1 

The carrying value of the Group’s goodwill is not subject to annual amortisation and was tested for impairment at March 2012. 

The recoverable amount has been determined on a value-in-use basis on each cash-generating unit using the management 

approved 12-month forecasts for each cash-generating unit. The base 12-month projection is inflated by 3.0% up to year 5, which 

management believe does not exceed the long-term average growth rate for the industry, and then kept constant for years 6-10. 

These cash flows are then discounted at the Group’s weighted cost of capital rate of 6.2% and adjusted for specific risk factors that 

take into account the sensitivities of the projection (10%). Terminal values are assumed in the calculations. A reduction in the growth 

rate in years 1-5 to 0% would not affect the conclusion of the review. An increase in the specific risk factor to 40% would not affect 

the conclusion of the review. 

The Group’s weighted average cost of capital has reduced from 11.2% in the prior year to 6.2% for the year ending 31 March 2012. 

This reduction reflects the reduced cost of equity and the weighted average cost of debt which has fallen substantially by entering the 

new committed facility during the year. The cost of equity has fallen as a result of falling risk free rates in the market and a reduction in 

a Scapa specific risk premium following consecutive years of profits and share price growth. 

Goodwill relates to the Acutek Medical operation (North America) £12.1m (2011: £12.1m) and WEBTEC medical operation (North 

America) £13.0m (2011: £Nil). 

14. Other intangible assets 

Contracts in 

progress 

£m 

Customer 

relationships 

£m 

Customer lists and 

sales pipeline 

£m 


£m 

Technology and 

know-how 

£m 

Cost 

1 April 2011 – – – – – 

Recognised on acquisition of WEBTEC 1.1 3.3 2.2 0.4 7.0 

31 March 2012 

Amortisation 

1.1 3.3 2.2 0.4 7.0 

1 April 2011 – – – – – 

Charge for the year (0.1) (0.2) (0.1) – (0.4) 

31 March 2012 (0.1) (0.2) (0.1) – (0.4) 

Carrying amount 

31 March 2012 1.0 3.1 2.1 0.4 6.6 

31 March 2011 – – – – – 

Remaining useful economic life 2.5 years 4.5 years 5.75 years 5.75 years – 

The acquisition of WEBTEC in December 2011 brought significant benefit to the Group in terms of customers, relationships and 

technology ‘know-how’. These benefits have been valued under IFRS3 using estimates of useful lives and discounted cash flows of 

expected income. The values are being amortised over useful economic lives of three to six years. The three year period is being used 

on the committed contracts and the longer period is being used for the technology and know-how where the benefits are likely to 

crystallise over a longer period. No value has been assigned to brand names, as WEBTEC is a contract manufacturer and inherent 

brand value resides with customers not the manufacturer. 

2011 

£m 

Total 

£m 



Governance 



15. Property, plant and equipment 

Freehold land 

and buildings 

£m 


Long leasehold 

buildings 

£m 

Plant and 

machinery 

£m 

Furniture, fittings 

and equipment 

£m 

IT 

systems 

£m 

Assets under 

construction 

£m 

Cost 

1 April 2010 20.3 7.9 88.3 5.2 19.7 0.4 141.8 

Exchange differences 0.4 – 0.7 0.1 (0.1) – 1.1 

Additions – – 0.9 0.2 0.2 0.8 2.1 

Disposals (0.1) – (5.8) (0.1) (1.2) – (7.2) 

Transfers – – 0.4 – 0.1 (0.5) – 

Transfer to asset held for sale (1.1) – – – – – (1.1) 

31 March 2011 and 1 April 2011 19.5 7.9 84.5 5.4 18.7 0.7 136.7 

Exchange differences (0.3) – (0.8) (0.1) (0.1) – (1.3) 

Additions – – 1.6 0.1 0.3 1.1 3.1 

Acquisition of subsidiary – 0.4 4.3 0.1 – – 4.8 

Disposals – – (1.8) (0.3) (0.8) – (2.9) 

Transfers – – 1.2 – – (1.2) – 

31 March 2012 19.2 8.3 89.0 5.2 18.1 0.6 140.4 

Accumulated depreciation 

1 April 2010 (9.3) (4.0) (66.3) (4.6) (16.0) – (100.2) 

Exchange differences (0.2) – (0.7) (0.1) – – (1.0) 

Depreciation (0.6) (0.2) (3.1) (0.1) (0.9) – (4.9) 

Disposals – – 5.1 0.2 1.2 – 6.5 

Transfer to asset held for sale 0.5 – – – – – 0.5 

31 March 2011 and 1 April 2011 (9.6) (4.2) (65.0) (4.6) (15.7) – (99.1) 

Exchange differences 0.1 – 0.6 0.1 0.1 – 0.9 

Depreciation (0.3) (0.2) (3.0) (0.2) (0.9) – (4.6) 

Disposals – – 1.7 0.3 0.8 – 2.8 

31 March 2012 (9.8) (4.4) (65.7) (4.4) (15.7) – (100.0) 

Carrying amount 

31 March 2012 9.4 3.9 23.3 0.8 2.4 0.6 40.4 

31 March 2011 9.9 3.7 19.5 0.8 3.0 0.7 37.6 

The Group has not revalued any item of property, plant and equipment. During the year there were no events or changes in 

circumstances that would indicate the carrying value of tangible fixed assets may not be recoverable. 

Assets held under finance leases, capitalised and included in property, plant and equipment are as follows: 

Cost 1.4 1.4 

Accumulated depreciation (0.3) (0.2) 

Net book amount 1.1 1.2 

During the year ending March 2012 there were no events or changes in circumstance that would indicate the carrying value of 

tangible fixed assets may not be recoverable. 


£m 

Total 

£m 

2011 

£m

16. Assets held for sale 

During the year ending March 2011 the dormant site in Carlstadt USA was moved to assets held for sale as there was a sale 

progressing on the property and the site is vacant and ready for immediate sale. During the twelve months ending March 2012 

this sale transaction fell through. Subsequently additional offers have been received on the property and management are actively 

progressing an offer with the expectation of contractual exchange during 2012/13. The value on the Balance Sheet reflects the 

depreciated historic cost of the site and the marketed value of the site, less costs to sell, are not significantly higher. There has 

been no depreciation charged on the site and no material expenditure incurred during the year. 

17. Restricted cash 

Under the terms of the agreement for the sale of the Papermaking Products and Services business dated 1 July 1999, Scapa Dryer 

Fabrics Inc. (SDFI), which is party to the asbestos litigation described in note 24, made certain undertakings to the purchaser, J M 

Voith AG, regarding the disposition of US$40.0m of the total sale proceeds (of which approximately US$10.0m was in respect of SDFI 

business and net assets sold). This required that this sum be retained as cash on deposit from the date of the agreement, effectively 

as security against the cost of any successful asbestos claims made against the purchaser as successor to the business. In 2003 and 

2006 amounts were repaid to the Group companies who had loaned the funds for the deposit totalling US$20.0m and US$10.0m 

respectively. The remaining balance of US$10.0m became unrestricted on 1 January 2012. 

18. Inventory 

Raw materials 7.9 7.8 

Work in progress 5.1 6.0 

Finished goods 7.8 7.8 


£m 

2011 

£m 

20.8 21.6 

The material and overhead element of inventory recognised as an expense and included in the Income Statement amounted to 

£96.9m (2011: £93.8m). There is no material difference between the Balance Sheet value and the fair value less costs to sell. 

19. Trade and other receivables 


£m 

Amounts due within one year: 

Trade receivables 34.0 31.6 

Less: provisions for impairment (0.7) (0.6) 

Trade receivables – net 33.3 31.0 

Other debtors 2.2 2.6 

Prepayments and accrued income 1.4 1.3 

Total amounts due within one year 36.9 34.9 

Amounts due after more than one year: 


Total amounts due after more than one year 19.6 19.1 

Included in other debtors is an amount of £20.5m (2011: £19.9m), of which £19.4m (2011: £18.8m) is due after more than one year. 

This has been discounted at a risk free rate of 3.35% due to the long-term nature of the receivable (insurance receivable for asbestos 

claims – see note 24. All other receivables above are stated at fair value. 

In addition £0.2m (2011: £0.3m) of other debtors is due after more than one year; this is not discounted since the impact is 

immaterial. 

The carrying amounts of these receivables are denominated in the following currencies: 

Pounds Sterling 4.0 4.0 

US Dollars 13.0 28.7 

Euros 15.7 17.4 

Other 4.2 3.9 


£m 

2011 

£m 

2011 

£m 

36.9 54.0 

All amounts due after more than one year are denominated in US Dollars. Management review individual receivables and provide for 

overdue amounts specifically. 



Governance 



19. Trade and other receivables continued 

The movement in the impairment provision for trade receivables was as follows: 

Opening provision at 1 April 0.6 0.5 

Charge for the year 0.2 0.4 

Receivables written off in the year (0.1) (0.3) 

Closing provision at 31 March 0.7 0.6 

All amounts provided for in the impairment provision are greater than three months old. 

At the year end, the following trade receivables balances were overdue. All of the below are stated net of any impairment provisions 

and relate to a number of customers for whom there is no recent history of default: 

Less than one month 1.9 1.8 

Between 1-3 months 0.2 0.4 

Greater than 3 months – – 



£m 


£m 

2011 

£m 

2011 

£m 

2.1 2.2 

Overdue analysis includes impact of foreign exchange movements. Historically customer default is low. The ‘credit quality’ of the year 

end receivables balance is considered high. As such all the above amounts are considered recoverable. 

20. Cash and cash equivalents 

Cash and bank overdrafts include the following for the purposes of the Cash Flow Statement: 

Cash and cash equivalents 16.9 14.7 

Bank overdrafts – note 22 (0.2) (1.5) 

21. Trade and other payables 


£m 

2011 

£m 

16.7 13.2 


Trade payables 23.1 22.3 

Other taxes and social security 4.3 3.9 

Other creditors 6.6 5.8 


£m 

2011 

£m 

34.0 32.0 



The carrying amounts of these payables are denominated in the following currencies: 

0.7 1.2 


US Dollars 7.7 5.5 

Euros 14.3 16.3 

Other 3.8 4.4 


£m 

2011 

£m 

34.0 33.2 

Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for 

trade purchases is 75 days (2011: 74 days), stated using the non-labour element of cost of goods sold. The Group has financial risk 

management policies in place to ensure all payables are paid within the pre-agreed credit terms.

22. Borrowings 


Bank overdrafts 0.2 1.5 

Finance lease creditor 0.2 0.2 


£m 

2011 

£m 

0.4 1.7 


Bank loan 9.2 – 

Finance lease creditor 0.3 0.5 

Total borrowings 9.9 2.2 

During the year the Group entered into a £20.0m multi-currency facility. The principal features of this facility are:- 

– the Group may borrow up to £20.0m subject to satisfaction of the requirements of the facility 

– it is unsecured 

– it is repayable in June 2015 

– the margin on the loan is based on a sliding scale determined by the Group’s leverage; it is currently 1.75% above US Libor 

– the Group has in place a cross guarantee between the Parent Company and its main trading subsidiaries in respect of the 

facility obligations 

To allow for the acquisition of WEBTEC, £9.4m (US$15.0m) was drawn down in US Dollars and remains drawn at the Balance Sheet 

date. The bank loan shown above is stated net of unamortised debt arrangement costs. The Dollar interest rate exposure is mitigated 

via swap contracts entered into in January 2012 – see note 23. The translational exposure on the Dollar borrowings is substantially 

mitigated by the Dollar assets acquired in the WEBTEC transaction. 

During the year, the Group paid down and exited overdrafts in Korea with Worri Bank which were secured over land and buildings. 

The carrying value of borrowings is approximate to their fair value. 

The effective interest rates at the Balance Sheet date were as follows (these include the swap interest rates): 

Sterling Euros 

US and 

Canadian Dollars 

Other 

currencies 

31 March 2012 – Bank loans and overdrafts – 2.8% 2.5% – 

31 March 2011 – Bank overdrafts – 1.3% – 7.5% 

The carrying amounts of the Group’s borrowings are denominated in the following currencies: 


Euros 0.3 1.3 

US Dollars 9.2 – 

Other currencies – 0.2 


£m 

2011 

£m 

9.9 2.2 

Movements in forward currency contracts used to hedge against the exposure to exchange differences due to the timing of cash 

flows are taken through the Income Statement as it is not Group policy to hedge account for these instruments. At 31 March 2012 

financial liabilities have been recognised in the Balance Sheet relating to the fair values of derivative financial instruments in place and 

total less than £0.1m (2011: £0.1m), see note 23. 

The Group has the following undrawn borrowing facilities (this includes committed and uncommitted): 

Bank loan 10.6 – 

Overdrafts 0.6 9.1 


£m 

2011 

£m 



Governance 



23. Derivative financial instruments 

The Group’s activities expose it to a variety of financial risks: foreign exchange risk, interest-rate risk, credit risk, liquidity risk and 

capital risk. The Group’s overall risk management procedures focus on the unpredictability of financial markets and seek to minimise 

potential adverse effects on the Group’s financial performance. Risk management is carried out by the Group finance department (in 

close co-operation with the operating units) under policies approved by the Board of Directors. 

– Foreign exchange risk 

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with 

respect to the US Dollar, Canadian Dollar and the Euro. Foreign exchange risk arises from future commercial transactions, recognised 

assets and liabilities and net investments in foreign operations. As the Group has certain investments in foreign operations, these net 

assets are exposed to foreign currency translation risk. 

To manage its foreign exchange risk the Group uses foreign currency bank balances, and makes some use of foreign currency 

forward contracts to avoid short-term fluctuations in currencies. In addition, purchases of large items of capital in foreign currency 

are covered by forward contracts at the point of authorisation. 

At the year end the Group had forward contracts to sell Canadian Dollars into US Dollars and to sell Euros into Sterling. These 

contracts are valued based on year end exchange rate. An analysis of the sensitivity of the year end position relative to these forward 

contracts is provided below. 

At 31 March 2012, if the Canadian Dollar had closed 10% weaker/stronger against the US Dollar (with all other variables held 

constant), pre-tax profit would have been unaffected because of the low value of forward contracts in place at the year end. 

At 31 March 2012, if Sterling had closed 10% weaker/stronger against the Euro (with all other variables held constant), pre-tax profit 

would have been reduced/increased by £0.2m owing to the effects of forward contracts in place at the year end. 

– Forward foreign exchange contracts 

It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency payments and receipts. 

The contracts are primarily denominated in the currencies of the Group’s principal markets. Fair value is determined using quoted 

forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts. 


Notional amount 


£m 

Fair value 


£m 


2011 

£m 

Fair value 

2011 

£m 

Current 

Forward foreign exchange contracts 2.9 – 4.0 0.1 

Hedge accounting has not been applied to these derivative financial instruments. 

– Interest-rate risk 

The Group is exposed to interest rate risk as it has borrowings at floating rates. Interest rate risk is evaluated periodically to consider 

interest rate views and defined risk appetite; to seek to ensure reasonable economic strategies are applied, by either positioning the 

Balance Sheet or protecting interest expense through different interest rate cycles. Deposit risk is managed by spreading deposits 

across high credit rated institutions, and capping the maximum deposit with an institution at one time. 

The Group entered into an interest rate swap instrument during the year. This instrument enabled the Group to mitigate interest rate 

fluctuation risk. Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate 

interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing 

the cash flow exposures on the issued variable rate debt held. The fair value of the interest rate swaps at the reporting date is 

determined by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contracts. 

The following table details the notional principal amounts and remaining terms of interest rate swap contracts outstanding at the 

reporting date: 

Trade date Effective date Termination date Currency 



£m 

Fair value 


£m 

Fixed rate 

% 

Outstanding receive fixed 

pay floating contracts 25 January 2012 8 March 2012 8 March 2015 USD 18.8 – 0.78% 

The fair value of the interest rate swaps at 31 March 2012 was determined by discounting the future cash flows using yield curve data 

at the reporting date. The interest rate swaps settle on a quarterly basis. The Group will settle the difference between the fixed and 

floating interest rate on a net basis. Hedge accounting has not been applied to these derivative instruments.

23. Derivative financial instruments continued 

– Liquidity risk 

The Group maintains a mixture of committed long-term and short-term facilities designed to ensure that the Group has sufficient cash 

funds available for operations and planned investment. 

Liquidity Tables 

The following tables detail the Group’s contractual maturity for financial instruments. The tables are drawn up on the undiscounted 

cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables exclude asbestosrelated 

assets and liabilities. 

Due within one year 

£m 

One to two years 

£m 

Two to five years 

£m 


Trade payables 23.1 – – 

Other taxes and social security 4.3 – – 

Other creditors 6.6 0.7 – 

Finance lease 0.2 0.3 – 

Deferred consideration 6.3 2.9 – 

Bank loans and overdrafts 0.2 – 9.4 


£m 

40.7 3.9 9.4 


£m 


£m 

2011 

Trade payables 22.3 – – 

Other taxes and social security 3.9 – – 

Other creditors 5.8 1.2 – 

Finance lease 0.2 0.5 – 

Bank loans and overdrafts 1.5 – – 

33.7 1.7 – 

There are no items with a maturity greater than five years. The bank loans in the above tables are stated before any unamortised 

arrangement costs. 

The following tables detail the Group’s contractual maturity for financial assets. The tables are drawn up based on the undiscounted 

contracted maturities of those financial assets. 


£m 


£m 


£m 


Receivables 35.8 0.2 – 

Cash and cash equivalents 16.9 – – 


£m 

52.7 0.2 – 


£m 


£m 

2011 

Receivables 33.8 0.3 – 

Cash and cash equivalents 14.7 – – 

48.5 0.3 – 



Governance 



23. Derivative financial instruments continued 

– Credit risk 

The Group has no significant concentrations of credit risk. It has policies in place to ensure that sales of products are made to 

customers with an appropriate credit history. Derivative counterparties and cash transactions are spread across a number of financial 

institutions. The European and North American businesses obtain third party credit insurance on worldwide sales, subject to specific 

exclusions, excesses and total policy limits. The majority of sales from Europe and North America are covered by the insurer. 

The credit risk position for our major customers is detailed below. This shows a fairly predictable level of credit utilisation across 

the regions and years, and highlights that there is no concentration of credit risk with respect to trade receivables. 

Europe 

The top five customers by balance at 31 March 2012 had a total receivable of £2.0m, versus their cumulative credit limit of £3.1m. 

The top five customers at 31 March 2011 had a total receivable of £3.3m versus their cumulative credit limit of £5.4m. 

North America 


The top five customers at 31 March 2011 had a total receivable of £2.3m, versus their cumulative credit limit of £3.3m. 

Asia 


The top five customers at 31 March 2011 had a total receivable of £0.4m, versus their cumulative credit limit of £0.7m. 

– Capital risk 

The Group’s primary objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order 

to provide returns for shareholders and benefits for other stakeholders. The Group must ensure that sufficient capital resources are 

available for working capital requirements and meeting principal and interest payments as they fall due. 

24. Provisions 

Reorganisation and 

Asbestos Asbestos leasehold 

litigation claims litigation costs commitments Environmental 

Total 

£m 

£m 

£m 

£m 

£m 

At 1 April 2011 19.9 5.7 3.0 0.6 29.2 

Additions in the year – – 0.8 – 0.8 

Acquisition of subsidiary – – 0.4 – 0.4 

Utilised in the year – (0.4) (1.2) (0.2) (1.8) 

Released in the year – – (0.5) – (0.5) 

Unwinding of discount 0.6 0.2 – – 0.8 

At 31 March 2012 20.5 5.5 2.5 0.4 28.9 

Analysis of provisions: 

Current 1.1 0.3 0.4 0.2 2.0 

Non-current 19.4 5.2 2.1 0.2 26.9 

At 31 March 2012 20.5 5.5 2.5 0.4 28.9 

Product litigation claims 

Under both its own name, Scapa Waycross Inc (Waycross) and its previous name Scapa Dryer Fabrics Inc (SDFI), Waycross is one of 

many co-defendants in law suits pending in the United States in which plaintiffs are claiming damages arising from alleged exposure 

to products manufactured which contained asbestos. The use of asbestos was discontinued by SDFI in 1979 and the last asbestos 

containing dryer felt was sold in 1980. 

Waycross did not manufacture asbestos, but products it sold used sub-components that did contain asbestos thread. The asbestos 

components were used in the final product in such a manner that causes the Group to believe, based on tests conducted on its 

behalf together with expert medical and industrial hygiene opinion, that the products were safe. Scapa is vigorously defending all its 

cases and intends to resist all asbestos claims. The best estimate of total claims filed, across varying jurisdictions in the United States 

against Waycross which are still pending is approximately 7,172 (2011: 8,116). Due to the fact that some claims may have been jointly 

filed in separate jurisdictions, or some claims have yet to be notified, there can be no guarantee that the number of claims filed 

presented is an absolute position. 

Waycross has tried 11 cases to verdict while only ever paying two final adverse judgements to date. Subsequent to the first 

judgement in March 2010, the Group recognised a liability and insurance asset for potential claims arising from the pending asbestos 

cases. (The March 2010 judgement was lost after appeal with US$0.9 awarded to three plaintiffs and was paid in full by Scapa’s 

insurers). The recognised liability and asset were calculated with professional advisers Gnarus Advisors LLC (‘Gnarus’) using an 

accepted methodology called the ‘Nicholson’ study – which is used in many asbestos valuations and has been accepted by the 

courts on numerous occasions. 


24. Provisions continued 

During the year to March 2012 the Group have received an updated report from Gnarus Advisers LLC to reconfirm its estimates of 

Waycross’s total liability for asbestos claims. The report reconfirmed that the provision recognised is still within the ranges predicted 

by the model. Sensitivities were applied to the model to determine the impact of changes to the key assumptions as noted below. 

The results indicated that the provision recognised is within the sensitised range. The key assumptions made in assessing the 

appropriate level of the provisions were as follows: 

– the number of people likely to have been exposed to Waycross/SDFI’s products – almost exclusively paper mill workers who were 

in active employment prior to 1980; 

– the rate of claim filing (also known as ‘propensity to sue’); 

– the rate of successful dismissal of claims filed; 

– the average amount to pay in respect of successful claims; 

– Waycross’s pending cases by type of disease claimed; and 

– the future trend of legal costs 

The first assumption is very favourable for Scapa. The products were sold to and used exclusively in a very narrow and well defined 

set of circumstances. Scapa also has a full record of the customers, locations and dates of sales of the product in question – creating 

a very high evidential hurdle. 

The provision is discounted using a risk free rate of 3.35%; the unwind of the discount is applied to both the asset and the liability. The 

provision and receivable are held in US Dollars and converted at the year end exchange rate. The provision covers the time horizon to 

2053 which is the date when the Nicholson model predicts the last incidence of mesothelioma from any source at all in the USA. 

As in any long-term projection of this nature (41 year estimation period) there remains significant uncertainty associated with the future 

level of asbestos claims and the costs arising out of related litigation. There can be no guarantee that the assumptions used to 

estimate the provision will result in an accurate prediction of the actual costs that may be incurred and, as a result, the provision may 

be subject to potentially material revision from time to time if new information becomes available as a result of future events. However 

the updated results support the carrying of the liability and it is the Board opinion that the liability on the Balance Sheet at 31 March 

2012 is appropriate, with the only changes being for foreign exchange movements and discount unwind. 

Product liability insurance asset 

Based on work performed by Dickstein Shapiro LLP, a prominent Washington DC law firm with expertise in the field of evaluating 

insurance coverage and the likelihood of recovery for asbestos-related claims, the Group has established the existence of insurance 

coverage to a level of certainty sufficient to recognise an insurance asset equal to the provision. 

It should be noted that there is a residual level of uncertainty around any insurance policy until such time it is actually drawn down 

upon and therefore the actual value of all accessible insurance may differ from the evaluation above. Given that the value of insurance 

policies is significantly in excess of any reasonable range of claims outcomes, the Board’s view is that this will not lead to any material 

financial impact on Scapa. In addition, the Board is of the view that any potential asbestos liabilities are ring-fenced within the nontrading 

sub-group of the North American business. This view is based on the principle of American law that a shareholder (including 

a parent corporation) is generally not liable for a separate legal entity’s obligations. 

Asbestos litigation costs 

Under the terms of a cost-sharing agreement entered into in 1996 the Group’s primary insurance carriers provided 50% of the 

defence costs associated with the asbestos-related claims. This share was renegotiated to 75% with effect from 1 April 2006. 

The litigation provision of £5.5m (2011: £5.7m) represents Scapa’s forecast share of defence costs over the lifetime of this issue 

and is consistent with the basis of calculation of the indemnity provision. 

Reorganisation and leasehold commitments 

The £2.5m (2011: £3.0m) reorganisation provision relates to dilapidations for leasehold property of £1.3m (2011: £0.9m), £0.7m 

(2011: £0.7m) for a land value guarantee related to the Megolon disposal in 2007 and £0.5m (2011: £1.0m) in relation to 

reorganisation costs. 

Whilst the timing of the economic benefits relating to the non-current provisions cannot be ascertained with any degree of 

certainty, the leasehold commitments are expected to take place within the next 1-2 years. 

Environmental provisions 

Environmental provisions relate to expected costs required to clean up environmental contamination of a number of sites in both 

Europe of £0.2m (2011: £0.3m) and North America of £0.2m (2011: £0.3m). The Group expects the majority of the spend against 

the environmental provisions to be incurred over the next three years. 



Governance 



25. Retirement benefit liabilities 

The Group operates several defined contribution and defined benefit schemes for employees in the UK and overseas. 

Defined contribution schemes 

The Group operates a number of defined contribution schemes. Employer’s contributions are charged to the Income Statement 

as incurred. The total pension cost for the Group in respect of these schemes for the year ended 31 March 2012 was £1.4m 

(2011: £1.3m). The assets of these schemes are held in independently administered funds. 

Defined benefit schemes 

The total amounts recognised in the Group financial statements for defined benefit schemes are summarised on pages 65 to 69. 

a) UK schemes 

All three UK defined benefit schemes are now closed to new members and to future accrual. The schemes are now therefore wholly 

funded by the sponsoring employers. The assets of the schemes are held separately from Company assets under Trust. 

The funding position of the three principal UK schemes, the Scapa Group Retirement Benefits Scheme, the Scapa Group Senior 

Retirement Benefits Scheme and Scapa Tapes UK Ltd Pension Plan, was reassessed as at April 2009 by independent qualified 

actuaries using the projected unit method of valuation (the ‘2009 Triennial Review’). 

Following the 2009 Triennial Review the Company agreed revised cash contributions designed to repair the deficits as at 

1 April 2009. The revised agreement included three years’ contribution deferrals of £0.5m per annum subject to Group cash flow 

performance. These contributions total £2.9m on an annualised basis, are subject to RPI indexation each year and are split as follows: 

– £0.6m per annum (for three years, £0.7m thereafter to 2023 (Scapa Group Retirement Benefits Scheme); 

– £1.7m per annum (for three years, £2.0m thereafter to 2028 (Scapa Group Senior Retirement Benefits Scheme); and 

– £0.6m per annum (for three years, £0.7m thereafter to 2036 (Scapa Tapes UK Ltd Pension Plan). 

The next triennial review is underway and expected to complete within 18 months of 1 April 2012. 

The Group also pays the PPF levies and any excess administrative costs associated with each of the funds above, the payment 

in the current year being £1.3m (2011: £0.5m). The increase is owing to two years’ PPF being paid during 2011/12 after a delay 

caused by the Company appealing data used to calculate the levy. In addition, project activity to offer a Pension Increase Exchange to 

the UK schemes also increased administration costs. Total annual cash contributions into the defined benefit schemes were therefore 

£4.8m (2011: £3.4m). 

During the year a Pension Increase Exchange offer was made to pensioners. A gain of £1.0m was recognised through the Income 

Statement based on those members taking the offer; an additional gain of £0.8m has been recognised through reserves as an 

assumption of those deferred members who will take up the Pension Increase Exchange offer on retirement. 

The IAS 19 Retirement Benefits valuations have been updated by the scheme actuaries, in order to assess the liabilities of the 

schemes at 31 March 2012. Scheme assets are stated at their market value at 31 March 2012. 

b) Overseas schemes 

The Group operates a number of pension schemes in different countries, both of a defined benefit and defined contribution nature. 

In addition, in certain countries, the Group must provide for various employee termination benefits. These are accounted for as if they 

were defined benefit pension schemes. The total defined benefit pension charge to operating profit for the Group in respect of 

overseas pension schemes for the year ended 31 March 2012 was £0.7m (2011: £0.7m). Offset against this charge is a curtailment 

credit of £1.1m (2011: £Nil) following the closure of the US final salary pension scheme. The forecasted future contributions into these 

schemes are expected to be similar to the current year contributions. 

Defined benefit schemes are set up under separate trust funds and liabilities are generally assessed annually in accordance with the 

advice of independent actuaries. Details of the Group’s material overseas defined benefit schemes are as follows: 

North America 

The Group operates a funded defined benefit scheme and two unfunded pension plans in North America. The defined benefit scheme 

was closed during the period and a curtailment gain of £1.1m has been recognised through the Income Statement. The disclosures 

are based on the most recent actuarial valuations of liabilities and asset market values at 31 March 2012. 

Korea 

The Group operates an unfunded termination indemnity, with payments made to employees on retirement or termination of service. 

France, Italy and Switzerland 

The Group operates an unfunded statutory retirement benefit scheme in France (liabilities: £2.5m), with payments made to employees 

on retirement, and an unfunded statutory termination indemnity plan in Italy, with payments made to employees on retirement or 

termination of service. The Italian scheme is closed to future accrual following changes in local legislation (liabilities: £0.9m). In addition 

the Company has an insured retirement fund in Switzerland that is accounted for under IAS 19. This scheme has been recognised in 

the year as the net deficit reached £0.1m (2011: £Nil). 


25. Retirement benefit liabilities continued 

Set out below are the key financial assumptions used to calculate scheme liabilities under IAS 19. Given the relative size of the 

schemes, the age profile and sensitivities are only provided for the UK. 

UK North America Korea France, Italy & Switzerland 

2012 2011 2012 2011 2012 2011 2012 2011 

Discount rate 4.75% 5.6% 4.75% 5.75% – – 2.6%-4.0% 4.25%-4.85% 

Salary rises – – 4.0% 4.0% – – 1.85%-2.0% 2.0% 

Price inflation (RPI) 3.0% 3.4% 3.0% 3.0% – – 2.0%-2.25% 2.25% 

Price inflation (CPI) 2.2% 2.4% – – – – – – 

Pension rises 2.6%-3.4% 2.8%-3.6% – – – – 1.4% – 

Deferred pension rises 2.2% 2.4% – – – – – – 

Due to the size of the Korean scheme a full actuarial valuation is not performed on an annual basis. 

The salary increase assumption is no longer relevant in the UK as all UK schemes are now closed to future accrual. All UK schemes 

include an allowance for administration expenses and PPF levy in the value of accrued benefits. 

The expected investment returns have been calculated using the weighted average of the expected investment returns for the 

different asset classes. The expected return on investments for the UK schemes are set out in the table below, the expected return on 

investment for the overseas schemes is not a key judgement given the small asset values. 

The IAS 19 calculations have been performed using PCx00 mortality tables adjusted to allow medium cohort and 1% improvements 

per annum. The approximate average ages this translates to are shown below for the UK schemes: 

UK 


Age to which current non-pensioners are expected to live: 

– Men aged 55 now 85.0 

– Women aged 55 now 88.7 

Age to which current pensioners are expected to live: 

– Men aged 68 now 85.9 

– Women aged 68 now 88.9 

Actuarial assumption sensitivities 

The calculation of the schemes’ deficits is sensitive to changes in the underlying assumptions. The following tables show the 

approximate effect of changes in the key assumptions on the UK schemes’ liabilities (and deficit) at the year end. These are 

approximate and only show the likely effect of an assumption being adjusted whilst all other assumptions remain the same. 

Note that sensitivities are not provided for the overseas schemes because the materiality of the results is not significant. 

UK 


£m 

Rate of inflation 

Change in the year end liabilities from a 0.1% increase in the assumed rate of inflation (1.0) 

Change in the year end liabilities from a 0.1% decrease in the assumed rate of inflation 1.0 

Discount rate 

Change in the year end liabilities from a 0.1% increase in the assumed rate of discount 2.1 

Change in the year end liabilities from a 0.1% decrease in the assumed rate of discount (2.1) 

Mortality 

Change in assumptions to long cohort projection with a minimum of 0.75% improvement (6.6) 



Governance 




The amounts recognised in the Balance Sheet are determined as follows: 

UK Schemes 



Expected 

rate of return 

2012 Value 

£m 

2011 

Expected 


2011 Value 

£m 

Equities 7.85% 58.3 7.85% 53.4 

Bonds 4.70% 22.8 5.60% 28.4 

Gilts 3.1% 31.9 4.10% 24.3 

Other 3.1% 0.4 4.00% 0.7 

Total market value of assets 113.4 106.8 

Present value of scheme liabilities (145.8) (135.6) 

Net deficit in the schemes (32.4) (28.8) 

French and Italian Schemes 


£m 

2011 Value 

£m 


Net deficit in the schemes (3.4) 

Swiss Scheme 


£m 

(3.2) 

2011 Value 

£m 

Total market value of assets 10.3 – 

Present value of scheme liabilities (10.4) – 

Net deficit in the scheme (0.1) 

Expected return on plan assets is 2.66% (2011: 2.66%) 

Korean Scheme 


£m 

2011 Value 

£m 


Net deficit in the schemes (0.2) (0.2) 

North American Schemes 


Expected 



£m 

2011 

Expected 


– 

2011 Value 

£m 

Equities 8.9% 4.5 8.9% 4.3 

Bonds 4.4% 4.7 4.3% 4.3 

Other 3.1% 0.5 3.2% 0.5 

Total market value of assets 9.7 9.1 


Net deficit in the schemes (2.8) (2.8)


The amounts recognised in the Income Statement are as follows: 


£m 

Europe Others Total 

Current service cost 

(included within staff costs) (0.4) (0.1) (0.3) (0.6) (0.7) (0.7) 

Past service cost 

(included within staff costs) 1.0 – – – 1.0 – 

Settlement (included within staff costs) – – 1.1 – 1.1 – 

Expected return on scheme assets 6.7 6.3 0.6 0.6 7.3 6.9 

Interest on scheme liabilities (7.4) (7.7) (0.6) (0.6) (8.0) (8.3) 

Total included within finance costs (0.7) (1.4) – – (0.7) (1.4) 

Total expenses charged through the 

Income Statement (0.1) (1.5) 0.8 (0.6) 0.7 (2.1) 

2011 

£m 

The amounts recognised in the Statement of Comprehensive Income are as follows: 


£m 


£m 

2011 

£m 


£m 

2011 

£m 


Actual return less expected return 

on scheme assets 

Experience (losses)/ gains arising 

2.6 1.4 (0.1) 0.4 2.5 1.8 

on scheme liabilities 

Changes in assumptions underlying the 

(11.6) 0.6 – – (11.6) 0.6 

present value of the scheme liabilities 

Total amounts recognised in the Statement 

(0.3) – (1.5) (1.2) (1.8) (1.2) 

of Comprehensive Income (9.3) 2.0 (1.6) (0.8) (10.9) 1.2 

The amounts recognised in the Balance Sheet are as follows: 

Analysis of movements in scheme assets 


£m 

2011 

£m 


£m 

2011 

£m 


£m 

2011 

£m 


Beginning of the year 106.8 103.8 9.1 8.4 115.9 112.2 

Exchange differences (0.2) – – (0.5) (0.2) (0.5) 

Expected return on scheme assets 

Actual return less expected return 

6.7 6.3 0.6 0.6 7.3 6.9 

on scheme assets 13.5 1.4 (0.1) 0.4 13.4 1.8 

Contributions paid 5.6 3.6 0.8 0.8 6.4 4.4 

Benefits paid (8.7) (8.3) (0.7) (0.6) (9.4) (8.9) 

End of the year 123.7 106.8 9.7 9.1 133.4 115.9 

2011 

£m 


£m 

2011 

£m 


£m 

2011 

£m 



Governance 




Analysis of movement in scheme liabilities 



£m 


Beginning of the year (138.8) (139.9) (12.1) (10.9) (150.9) (150.8) 

Exchange differences 0.1 – – 0.6 0.1 0.6 

Current service cost (staff costs) (0.4) (0.1) (0.3) (0.6) (0.7) (0.7) 

Past service cost 1.0 – – – 1.0 – 

Settlement (including within staff costs) – – 1.1 – 1.1 – 

Interest on scheme liabilities (7.4) (7.7) (0.6) (0.6) (8.0) (8.3) 

Experience (losses)/ gains (11.6) 0.6 (1.5) – (13.1) 0.6 

Changes in assumptions (11.2) – – (1.2) (11.2) (1.2) 

Benefits paid 8.7 8.3 0.7 0.6 9.4 8.9 

End of the year (159.6) (138.8) (12.7) (12.1) (172.3) (150.9) 

Experience losses in Europe are after £4.1m gain (2011: £Nil) from pension equalisation and £0.8m gain (2011: £Nil) from pension 

increase exchange. 

Analysis of movement in Balance Sheet liability 



£m 

Beginning of the year (32.0) (36.1) (3.0) (2.5) (35.0) (38.6) 

Exchange differences (0.1) – – 0.1 (0.1) 0.1 

Income Statement expense 

Statement of Comprehensive 

(0.1) (1.5) 0.8 (0.6) 0.7 (2.1) 

Income items (9.3) 2.0 (1.6) (0.8) (10.9) 1.2 

Contributions paid 5.6 3.6 0.8 0.8 6.4 4.4 

Net deficit in the schemes (35.9) (32.0) (3.0) (3.0) (38.9) (35.0) 

End of the year (32.0) (3.0) (35.0) 

Cumulative actuarial losses on pension schemes recognised in reserves total £20.5m (2011: £9.6m). 

Europe 


2011 

2010 

2009 

2008 

£m 

£m 

£m 

£m 

£m 

Present value of defined benefit obligation (159.6) (138.8) (139.9) (130.7) (136.5) 

Fair value of plan assets 123.7 106.8 103.8 84.9 94.3 

Deficit in the plan (35.9) (32.0) (36.1) (45.8) (42.2) 

Experience adjustments on plan liabilities (22.8) 0.5 (9.6) 8.1 10.6 

Experience adjustments on plan assets 13.5 1.4 17.1 (14.3) (1.5) 

Others 



Unrecognised past service cost – – – 0.1 0.1 


Experience adjustments on plan liabilities (1.5) – (1.6) 0.1 (0.2) 

Experience adjustments on plan assets (0.1) 0.4 2.6 (2.9) (0.4) 

2011 

£m 

2011 

£m 


£m 


£m 


£m 

2011 

£m 

2011 

£m 

2011 

£m 

2010 

£m 


£m 


£m 

2009 

£m 

2011 

£m 

2011 

£m 

2008 

£m


Total 



Unrecognised past service cost – – – 0.1 0.1 


Experience adjustments on plan liabilities (24.3) 0.5 (11.2) 8.2 10.4 

(14.1%) – (7.4%) 5.9% 7.3% 

Experience adjustments on plan assets 13.4 1.8 19.7 (17.2) (1.9) 

10.0% 1.6% 17.6% (19.1%) (1.9%) 

26. Share capital 

Allotted, issued and fully paid 

146,006,979 (2011: 145,095,883) shares of 5p each 7.3 7.3 

The movement in share capital relates to share options (see below). 

Potential issues of ordinary shares 

Certain senior managers hold options to subscribe for shares in the Company at prices ranging from nil pence per share to 94.5 

pence per share under the share options schemes approved by shareholders. The number of shares subject to options, the periods 

in which they were granted, and the periods in which they may be exercised are given below: 

Scheme Year of grant 


£m 

2011 

£m 

2010 

£m 

Average exercise 

price per share Exercise period 

2009 

£m 


£m 

Number of 

options 


2008 

£m 

2011 

£m 

Number of 

options 

2011 

Executive share option plan 2000-2002 49p-94.5p up to 20 June 2012 17,500 78,500 

Executive share option plan 2006 22.25p up to 31 August 2016 150,000 250,000 

Executive share option plan 2007 29.25p up to 20 August 2017 250,000 400,000 

Executive share option plan 2007 32.75p up to 10 December 2017 125,000 300,000 

Executive share option plan 2008 27.75p up to 7 July 2018 75,000 200,000 

US stock option plan 2000-2002 49p-94.5p up to 20 June 2012 5,000 44,500 

Performance share plan 2009 nil pence per share up to 6 September 2019 500,000 500,000 

Performance share plan 2010 nil pence per share up to 8 June 2020 1,775,000 2,500,000 

Performance share plan 2010 nil pence per share up to 29 November 2020 1,500,000 1,500,000 

Performance share plan 2011 nil pence per share up to 27 July 2021 755,000 – 

Performance share plan 2011 nil pence per share up to 1 December 2021 300,000 – 

Sharesave option plan 3 year 2008 24.6p up to 1 September 2011 – 13,266 

Sharesave option plan 5 year 2008 24.6p up to 1 September 2013 210,337 234,921 

Sharesave option plan 3 year 2009 13p up to 1 September 2012 – 1,025,470 

Sharesave option plan 5 year 2009 13p up to 1 September 2014 488,489 488,489 

Sharesave option plan 3 year 2012 42.6p up to 1 September 2015 633,689 – 

Sharesave option plan 5 year 2012 42.6p up to 1 September 2017 188,729 – 

6,973,744 7,535,146 

During the year 911,096 options under the 2008 and 2009 Sharesave option plans were exercised. All other movements from 2011 

are expired/lapsed options and new grants. 



Governance 



27. Share options 


Number of shares 


Weighted average 

exercise price Number of shares 

2011 

Weighted average 

exercise price 

Outstanding at the beginning of the year 7,535,146 10.2p 6,667,827 32.9p 

Granted during the year 1,992,418 17.6p 4,000,000 – 

Exercised during the year 911,096 13.2p 333,015 23.2p 

Forfeited and lapsed during the year 1,642,724 21.6p 2,799,666 48.2p 

Outstanding at the end of the year 6,973,744 9.2p 7,535,146 10.2p 

There are no outstanding share options exercisable at the end of the year. The weighted average exercise price includes nil cost 

options. 

Share options were granted during the year under the 2011 Performance Share Plan to the two Executive Directors and to certain 

senior employees. The inputs into the Black Scholes model are as follows: 

1 Dec 2011 

(Employees) 

27 Jun 2011 

(Employees) 

27 Jun 2011 

(Directors) 

8 Jun 2010 

(Employees) 

8 Jun 2010 

(Directors) 

29 Nov 2010 

(Employees) 

29 Nov 2010 

(Directors) 

Number of share options granted 300,000 420,000 450,000 1,500,000 1,000,000 750,000 750,000 

Number of share options outstanding at 

31 March 2012 300,000 305,000 450,000 775,000 1,000,000 750,000 750,000 

Weighted average share price 49.5p 58.3p 58.3p 13.0p 13.0p 28.0p 28.0p 

Weighted average exercise price – – – – – – – 

Expected life 36 months 36 months 36 months 36 months 36 months 36 months 36 months 

For zero exercise price share options, the fair value of the share options approximates to the share price at the date of grant. 

During the year 822,418 share options were issued under the Sharesave Option Plan. The inputs into the Black Scholes model 

are as follows: 

3-Year Plan 

(Employees) 

3-Year Plan 

(Directors) 

5-Year Plan 

(Employees) 

Number of share options 591,437 42,252 188,729 

Weighted average share price 54.5p 54.5p 54.5p 

Weighted average exercise price 42.6p 42.6p 42.6p 

Expected volatility 54.3% 54.3% 54.3% 

Expected life 36 months 36 months 60 months 

Risk-free rate 0.56% 0.56% 1.03% 

The Group recognised total expenses of £0.4m (2011: £0.2m) related to equity-settled share-based payment transactions. This 

expense includes the charge for the new options granted during the year net of the release of charge for the options for which it 

has been concluded that vesting criteria will not be met. 

Executive Share Options (2004 Plan) 

The Company operates an Executive Share Option plan for senior executives in the UK and overseas, namely the Scapa Group plc 

2004 Executive Share Option Plan which was approved by shareholders at the Company’s Annual General Meeting on 22 July 2004. 

The 2004 Plan provides a potential reward in shares for improvement in Company performance reflected in the share price. 

The option provides the opportunity to purchase shares at a fixed exercise price dependent on achievement of predetermined 

performance targets. 

The 2004 Plan has two parts: an Unapproved Discretionary Share Option Plan (the ‘Unapproved Part’) and an addendum containing 

an Inland Revenue approved Discretionary Share Option Plan (the ‘Approved Part’). The Approved Part of the 2004 Plan can be used 

to grant options to UK residents with an aggregate value not exceeding £30,000. All other grants of options over and above the 

£30,000 threshold and those made to overseas employees are granted under the Unapproved Part of the 2004 Plan. Options 

only become exercisable, in normal circumstances, three years after the date of grant and then may only be exercised if certain 

performance criteria are met. Options remain exercisable until the tenth anniversary of their date of grant, after which they lapse. 

The ability to exercise the option is dependent upon the achievement of predetermined performance targets based on growth 

in adjusted earnings per share (EPS) over changes in the retail price index (RPI).

27. Share options continued 

US Stock Option Plan 

Under the 1994 US Stock Option Plan (which expired on 21 July 2004), options may be granted over shares at the prevailing market 

price and are exercisable between the third and tenth anniversary of grant, provided certain criteria have been met. 

Long Term Incentive Plan 

The Company has a long-term incentive plan that operates based on the 2004 and 2011 Performance Share Plans. 

Options granted in 2009/10 and 2010/11 relate to the incentive plan known as the Scapa Group plc 2004 Performance Share Plan 

which was approved by shareholders at the Annual General Meeting on 22 July 2004. Awards under the plan take the form of either 

an annual allocation of ordinary shares or a grant of nil cost options over shares with a market value at the time of grant equivalent to 

a maximum of 100% of basic salary at that time with vesting taking place at the expiry of the three-year performance period of the 

plan, subject to attainment of the performance targets. 

Awards in the form of an allocation of ordinary shares lapse at the end of the three-year performance period to the extent that the 

performance conditions have not been met. Awards in the form of a nil cost option remain exercisable until their tenth anniversary 

of the date of grant, subject to achievement of the performance conditions, after which they lapse. 

Options granted in 2011/12 relate to the 2011 incentive plan known as the Scapa Group plc 2011 Performance Share Plan, details 

of which can be found in the Directors’ Remuneration Report contained in these accounts. 

Sharesave 

The Scapa Group 2011 Sharesave Scheme is an Inland Revenue approved Save-As-You-Earn share option scheme. Options are 

usually offered annually, subject to approval by the Group Board, following the publication of the Company’s preliminary results to 

eligible employees (including Executive Directors) in the United Kingdom who have worked a minimum six month qualifying period 

and agree to save a fixed amount for three or five years under an approved savings contract. Inland Revenue rules limit the maximum 

amount that can be saved by a participant to £250 per month. In normal circumstances options are exercisable for six months 

following the completion of a savings contract using the proceeds from that contract. The exercise price is based on the market value 

of the shares as of the date of grant, less a discount of 20%. 



Governance 



28. Reconciliation of operating profit to operating cash flow, and reconciliation of net cash 

All on continuing operations 


Year ended 

31 March 


£m 

Year ended 

31 March 

2011 

£m 

Operating profit 

Adjustments for: 

11.7 8.0 

Depreciation and amortisation 5.0 4.9 

(Profit)/loss on disposal of fixed assets (0.1) 0.3 

Pensions payments in excess of charge (5.4) (3.5) 

Pension curtailments and past service charges (2.1) – 

Movement in fair value of financial instruments (0.1) 0.1 

Share options charge 0.4 0.1 

Grant income released 

Changes in working capital: 

(0.3) (0.1) 

– Inventories 2.4 (0.7) 

– Trade debtors (0.5) 1.6 

– Trade creditors (0.1) (0.8) 

Changes in trading working capital 1.8 0.1 



Net movement in environmental provisions (0.2) (0.1) 

Net movement in reorganisation provisions (0.9) (0.6) 

Net movement in asbestos litigation cost provisions (0.4) (1.6) 

Net movement in asbestos litigation claims provisions – – 

Net movement in asbestos insurance receivable – – 

Cash generated from operations 9.9 9.1 

Cash generated from operations before exceptional items 10.7 10.8 

Cash outflows from exceptional items (0.8) (1.7) 

Cash generated from operations 9.9 9.1 

Analysis of cash and cash equivalents and borrowings 

At 1 April 

2011 

£m 

Cash 

flow 

£m 

Exchange 

movement 

£m 

At 31 March 


£m 

Cash and cash equivalents 14.7 2.4 (0.2) 16.9 

Overdrafts (1.5) 1.3 – (0.2) 

13.2 3.7 (0.2) 16.7 

Borrowings within one year (0.2) – – (0.2) 

Borrowings after more than one year (0.5) (9.0) – (9.5) 

(0.7) (9.0) – (9.7) 

Total 12.5 (5.3) (0.2) 7.0

29. Commitments 

Capital commitments 

The amount contracted but not provided for in the accounts at 31 March 2012 was £0.1m (2011: £0.1m). 

At 31 March 2012 a total of £0.3m (2011: £Nil) was authorised but not yet contracted. 

Operating lease commitments 

At 31 March 2012 the Group has lease agreements in respect of various assets for which payments extend as follows: 

Commitments under leases: 

Property 

£m 


Vehicles, plant and 

equipment 

£m 

Property 

£m 

2011 

Vehicles, plant and 

equipment 

£m 

Within one year 1.9 0.8 1.9 0.7 

More than one year and less than five years 4.3 1.1 4.6 0.7 

After five years 0.5 – – – 

Total operating lease commitments 6.7 1.9 6.5 1.4 

30. Obligations under finance lease 

Minimum lease payments Present value of minimum lease payments 

2012 2011 2012 2011 

Within one year 0.2 0.3 0.2 0.2 

In the second to fifth years inclusive 0.4 0.6 0.3 0.5 

0.6 0.9 0.5 0.7 

Less: future finance charges (0.1) (0.2) – – 

Present value of lease obligations 0.5 0.7 0.5 0.7 

The present value of minimum lease payments is denominated in the following currencies: 

Minimum lease payments 


Sterling 0.4 0.6 

Euro 0.1 0.1 

0.5 0.7 

It is Group policy to lease certain of its fixtures and equipment under finance leases. The Group has lease agreements in the UK with 

a lease period from 2009 to 2014 and in France with a lease period from 2006 to 2015. The average borrowing rate is 6.6% (2011: 

6.6%). Interest rates are fixed at contract date. All leases are on a fixed repayment basis and no arrangements have been entered into 

for contingent rental payments. The fair value of the Group’s lease obligations approximates to their carrying amount. The Group’s 

obligations under finance leases are secured by the lessors’ rights over the leased assets. 



Governance 


Five Year Summaries 

Five Year Financial Summary (unaudited) 

Group revenue 195.6 192.3 176.7 174.0 170.1 

Group profits/(losses) 

Profit/(loss) before taxation and exceptional items 9.1 6.1 (2.1) (3.4) 7.7 

Exceptional items (operating income/(charges) 1.4 – (3.1) (5.9) (0.3) 

Profit/(loss) before taxation 

Taxation 

10.5 6.1 (5.2) (9.3) 7.4 

– Taxation (charge)/credit on operating activities (3.4) (2.1) 1.4 1.6 (2.9) 

– Taxation on exceptional items – – 1.0 1.8 – 

– Impact of change in tax rate 

– Exceptional recognition of previously unrecognised 

(0.6) (0.5) – – – 

deferred tax assets – – – 16.8 – 



£m 

2011 

£m 

2010 

£m 

2009 

£m 

2008 

£m 

(4.0) (2.6) 2.4 20.2 (2.9) 

Profit/(loss) after taxation 6.5 3.5 (2.8) 10.9 4.5 

Headline earnings/(loss) per share (p) 4.5 2.4 (0.5) (1.2) 3.3 

Net cash equivalents 7.0 12.5 4.8 6.8 14.8 

Shareholders’ funds – equity 66.1 68.6 65.3 62.3 41.2 

Net assets per share (p) 45.3 47.4 45.1 43.0 28.5 

Exchange rates (unaudited) 

2012 2011 2010 2009 2008 

US$ 

– Closing 1.60 1.60 1.52 1.43 1.99 

– Average 

Canadian $ 

1.60 1.56 1.58 1.73 2.00 

– Closing 1.60 1.56 1.54 1.80 2.04 

– Average 

Euro 

1.59 1.58 1.74 1.92 2.08 

– Closing 1.20 1.13 1.12 1.08 1.25 

– Average 1.16 1.17 1.13 1.21 1.42

Scapa Group plc 

Parent Company Financial Statements 

The separate financial statements of Scapa Group plc are presented on pages 77 to 86, as required by the Companies Act 2006 

(‘the Act’). The Group has elected not to adopt International Financial Reporting Standards in the individual company accounts 

for the Parent Company and subsidiary undertakings, and accordingly these financial statements have been prepared under UK 

accounting standards and in accordance with the Act. They are therefore presented separately to the Group consolidated financial 

statements which have been prepared under International Financial Reporting Standards. 



Governance 


Independent Auditor’s Report 

to the Members of Scapa Group plc 

We have audited the Parent Company financial statements of Scapa Group plc for the year ended 31 March 2012 which comprise 

the Parent Company Balance Sheet and the related notes 1 to 15. The financial reporting framework that has been applied in their 

preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). 

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 

2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state 

to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume 

responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for 

the opinions we have formed. 

Respective responsibilities of directors and auditor 

As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the Parent 

Company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express 

an opinion on the Parent Company financial statements in accordance with applicable law and International Standards on Auditing 

(UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. 

Scope of the audit of the financial statements 

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable 

assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an 

assessment of: whether the accounting policies are appropriate to the Parent Company’s circumstances and have been consistently 

applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall 

presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to 

identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements 

or inconsistencies we consider the implications for our report. 

Opinion on financial statements 

In our opinion the parent company financial statements: 

– give a true and fair view of the state of the Company’s affairs as at 31 March 2012; 

– have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and 

– have been prepared in accordance with the requirements of the Companies Act 2006. 

Opinion on other matter prescribed by the Companies Act 2006 

In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared 

is consistent with the Parent Company financial statements. 

Matters on which we are required to report by exception 

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our 

opinion: 

– adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been 

received from branches not visited by us; or 

– the Parent Company financial statements are not in agreement with the accounting records and returns; or 

– certain disclosures of Directors’ remuneration specified by law are not made; or 

– we have not received all the information and explanations we require for our audit. 

Other matter 

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the 

provisions of the Companies Act 2006 that would have applied were the company a quoted company. 

Although not required to do so, the Directors have voluntarily chosen to make a corporate governance statement detailing the extent 

of their compliance with the UK Corporate Governance Code. We reviewed: 

– the directors’ statement, contained within the Business Review, in relation to going concern; 

– the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK 

Corporate Governance Code specified for our review; and 

– certain elements of the report to shareholders by the Board on directors’ remuneration. 

We have reported separately on the Parent Company financial statements of Scapa Group plc for the year ended 31 March 2012. 

Patrick Loftus (Senior Statutory Auditor) 

for and on behalf of Deloitte LLP 

Chartered Accountants and Statutory Auditor 

Manchester 



Company Balance Sheet 

As at 31 March 2012 

note 

31 March 


£m 

31 March 

2011 

£m 

Fixed assets 

Tangible fixed assets 3 0.6 0.6 

Investments in subsidiary undertakings 4 159.0 158.9 

159.6 159.5 

Current assets 

Debtors: amounts due within one year 5 4.5 3.3 

Cash and cash equivalents 2.4 5.2 

Debtors: amounts due after more than one year 5 61.5 58.0 

Deferred tax asset 6 4.9 4.8 

73.3 71.3 

Creditors – amounts falling due within one year 

Bank loans and overdrafts 7 – – 

Creditors 8 (3.9) (3.8) 

(3.9) (3.8) 

Net current assets 69.4 67.5 

Total assets less current liabilities 229.0 227.0 

Creditors – amounts falling due after more than one year 

Creditors 8 (52.6) (46.8) 

(52.6) (46.8) 

Provisions for liabilities and charges 9 (0.8) (0.8) 

Net assets excluding pension liability 175.6 179.4 

Net pension liability 12 (11.6) (10.8) 

Net assets 164.0 168.6 

Shareholders’ funds 

Called-up share capital 10 7.3 7.3 

Share premium 0.2 0.1 

Other reserves 11 10.1 10.1 

Profit and loss account 11 146.4 151.1 

Shareholders’ funds – equity 164.0 168.6 

The notes on pages 78 to 86 form part of these accounts. 

The financial statements of Scapa Group plc, registered number 826179, were approved by the Board of Directors and authorised for 

issue on 29 May 2012. They were signed on its behalf by: 

H R Chae 


P Edwards 

Finance Director 



Governance 


Statement of Accounting Policies 

Basis of accounting 

These financial statements have been prepared on a going concern basis under the historical cost convention, as modified by 

revaluation of certain financial instruments in accordance with the Companies Act 2006 and applicable UK accounting standards. 

A summary of the Company’s principal accounting policies is set out below. These have been applied consistently throughout 

the year and prior year. 

Going concern 

The Directors have at the time of approving the financial statements a reasonable expectation that the Company has adequate 

resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of 

accounting in preparing the financial statements. Further detail is contained in the Directors’ report on page 20. 

Tangible fixed assets 

Tangible fixed assets are stated at cost less cumulative depreciation and impairment. Depreciation is provided on the basis of writing 

off the cost of the relevant assets over their expected useful lives. The Company applies the straight line method. The effect is to 

reduce the cost of plant, machinery and fixtures to estimated residual value over a period of 5-20 years. 

Taxation 

Current tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been substantively 

enacted by the balance sheet date. 

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where 

transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at 

the balance sheet date. Timing differences are differences between the Company’s taxable profits and losses and its results as stated 

in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which 

they are recognised in the financial statements. 

A net deferred tax asset is regarded as recoverable and therefore recognised only to the extent that, on the basis of all available 

evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the 

underlying timing differences can be deducted. 

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are 

expected to reverse based on tax rates and laws that have been substantively enacted by the balance sheet date. Deferred tax is 

measured on a non-discounted basis. 

Provisions 

Provisions are made in accordance with FRS 12 where an obligation exists for a future liability in respect of a past event and where 

the amount of obligation can be reliably estimated. Provision is made for vacant and sub-let leasehold properties to the extent that 

future rental payments are expected to exceed future rental income and for all other known liabilities which exist at the Balance Sheet 

date, based on management’s best estimate as to the cost of settling these liabilities. 

Pension costs 

For defined benefit schemes the amounts charged to operating profit are the current service costs and gains and losses on 

settlements and curtailments. They are included as part of staff costs. Past service costs are recognised immediately in the profit 

and loss account if the benefits have vested. If the benefits have not vested immediately, the costs are recognised over the period 

until vesting occurs. Actuarial gains and losses are recognised immediately in the Statement of Total Recognised Gains and Losses. 

Defined benefit schemes are funded, with the assets of the scheme held separately from those of the Group, in separate trustee 

administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the 

projected unit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent 

currency and term to the scheme liabilities. The actuarial valuations are obtained annually and are updated at each balance sheet 

date. The resulting defined benefit asset or liability, net of the related deferred tax, is presented separately after other net assets on 

the face of the Balance Sheet. 

For defined contribution schemes the amount charged to the profit and loss account in respect of pension costs and other postretirement 

benefits is the contributions payable in the year. Differences between contributions payable in the year and contributions 

actually paid are shown as either accruals or prepayments in the Balance Sheet. 

Fixed asset investments 

Fixed asset investments are stated at cost, less provision for any impairment in value. Where circumstances indicate that there may 

have been impairment in the carrying value of a tangible or intangible fixed asset, an impairment review is carried out using cash flows 

from approved forecasts and projections discounted at the Group’s weighted average cost of capital. 

Share-based payments 

The fair value of employee share options plans is calculated using the appropriate valuation models in accordance with FRS 20 

‘Share-based payments’. The resulting cost is charged to the profit and loss account over the vesting period of the options. The value 

of the charge is adjusted to reflect expected and actual levels of options vesting. Where share options are granted to employees of 

subsidiary companies, the cost is debited to the carrying value of the subsidiary investments. 


Foreign currencies 

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities 

denominated in foreign currencies are translated into Sterling at the rate of exchange at the Balance Sheet date. Exchange differences 

on borrowings (including differences arising due to currency swaps) taken out to hedge overseas equity investments and on long-term 

loans which are considered equivalent to equity are taken to the translation reserve. All other differences are taken to the profit and 

loss account. 

Cash flow statement 

The Company is a wholly-owned subsidiary of Scapa Group plc and is included in the consolidated financial statements of Scapa 

Group plc which are publicly available. Consequently, the Company has taken advantage of the exemption from preparing a cash 

flow statement under the terms of FRS 1 ‘Cash Flow Statements’ (revised 1996). 

Consolidation 

Consolidated accounts for the company are prepared under International Accounting Standards and as a result these financial 

statements present information about the Company only. 

Related parties 

The Directors’ Remuneration Report can be found in the Group accounts. There are no other related party transactions. The 

Company is exempt under the terms of FRS 8 from disclosing related party transactions with entities that are wholly owned 

subsidiaries. 



Governance 


Notes on the Accounts 

1. Profit and loss account 

The Company loss for the year is £1.2m (2011: £3.2m profit). As permitted by Section 408 of the Companies Act 2006 a separate 

profit and loss account has not been presented. Profit on ordinary activities before taxation is stated after charging: 

Depreciation of tangible fixed assets, owned 0.2 0.2 

Foreign exchange losses 0.2 0.6 

Directors’ and employee costs 4.1 3.1 

2. Fees payable to the Company’s auditor 


Auditor’s remuneration 

– Audit of the Company 62.0 80.0 

– Remuneration services 11.0 – 

– Corporate finance services 115.0 – 

– Tax services – 5.0 

– Pension schemes – 13.0 

– Other services – 9.0 



£m 


£’000 

2011 

£m 

2011 

£’000 

188.0 107.0 

Total audit fees were £62,000 (2011: £80,000). Total non-audit fees were £126,000 (2011: 27,000). The amounts for the prior year 

were remunerated to the previous auditor of the Company. 

3. Tangible fixed assets 

Plant, equipment 

fixtures and 

computer 

systems 

£m 

Cost 

At 1 April 2011 11.6 

Additions 0.2 

At 31 March 2012 11.8 

Depreciation 

At 1 April 2011 (11.0) 

Depreciation (0.2) 

At 31 March 2012 (11.2) 

Net book value at 31 March 2012 0.6 

Net book value at 31 March 2011 0.6

4. Investments 

Shares in Group 

undertakings 

£m 

Cost 

At 1 April 2011 175.3 

Capital contributions 0.1 

At 31 March 2012 175.4 

Provision for impairment 

At 1 April 2011 (16.4) 

At 31 March 2012 (16.4) 

Net book value at 31 March 2012 159.0 

Net book value at 31 March 2011 158.9 

The carrying value of the Company’s investments and other tangible fixed assets has not been reassessed at 31 March 2012 

as there has been no indication of an impairment trigger. 

The principal subsidiaries of the parent undertaking are shown in note 15. 

5. Debtors 


£m 


Amounts owed by subsidiary undertakings 3.4 2.3 

Group relief receivable 0.7 0.6 


Prepayments and accrued income 0.3 0.3 



Amounts owed by subsidiary undertakings 61.5 58.0 


6. Deferred tax 

The deferred tax assets at 31 March are as follows: 

– Accelerated capital allowances 1.9 2.0 

– Losses and short-term timing differences 3.0 2.8 


£m 

2011 

£m 

2011 

£m 

4.9 4.8 

– Pension liabilities 3.6 3.8 

8.5 8.6 

The movement in the deferred tax asset in the year is as follows: 

– (Charge)/credit to the profit and loss account (0.6) 0.2 

– Reduction in assets due to rate change charged to the profit and loss account (0.4) (0.3) 

– Reduction in assets due to rate change charged to STRGL (0.3) (0.3) 

– Pension movement to STRGL 1.2 – 

At 31 March (0.1) (0.4) 

Based on current forecasts management have a reasonable expectation that the deferred tax assets will be utilised despite the losses 

made; refer to note 9 in the Group accounts. 



Governance 



7. Bank loans and overdrafts 

During the year the Company with other members of the Group entered into a £20.0m multi-currency facility. The principal features 

of this facility are: 

– the Group may borrow up to £20.0m subject to satisfaction of the requirements of the facility 

– it is unsecured 

– it is repayable in June 2015 

– the margin on the loan is based on a sliding scale determined by the Group’s leverage; it is currently 1.7% above US Libor 

– the Group has in place a cross guarantee between the Parent Company and its main trading subsidiaries in respect of the 

facility obligations 

The effective interest rate at the Balance Sheet date was as follows (these exclude the swap interest rates): 

31 March 2012 

Bank loans 2.3% 

31 March 2011 

Invoice discount facility 2.5% 

The Company, along with other subsidiaries in the Group, has the following undrawn borrowing facilities, being the unused portion of 

the £20.0m committed facility: 

Floating rate 10.6 4.0 

Prior year facility was the unused portion of the invoice discount facility. 

8. Creditors 



£m 

2011 

£m 

10.6 4.0 


Amounts owed to subsidiary undertakings 1.1 1.6 

Other creditors, including taxation and social security 2.8 2.2 



Amounts owed to subsidiary undertakings 52.6 46.8 


The terms of loans owed to subsidiary undertakings vary; expiry of these ranges from 2015-2020. 

9. Provisions 

At 1 April 0.8 0.7 

Utilised in the year (0.1) – 

Additions in the year 0.1 0.1 

At 31 March 0.8 0.8 

Part of the provision relates to the Megolon disposal in 2007. Under the Sale and Purchase Agreement the acquirer can require 

Scapa to make good any shortfall to an agreed value on the sale of certain property within 42 months of acquisition. A third party 

valuation in 2009 indicated a shortfall at that time of £0.7m. The remaining provision relates to reorganisation costs. 


£m 


£m 

2011 

£m 

2011 

£m

10. Share capital 

Allotted, issued and fully paid 

146,006,979 (2011: 145,095,883) shares of 5p each 7.3 7.3 

The movement in share capital relates to share options (see note 27 of the Group accounts). 

Month of exercise Number of shares issued 

May 2011 5,463 

June 2011 77,080 

September 2011 83,624 

February 2012 676,434 

March 2012 68,495 

Share options 

Potential issues of ordinary shares and share options for the Company are disclosed in note 27 of the Group accounts. 

11. Reconciliation of shareholders’ funds 

Share 

capital 

£m 

Share 

Premium 

£m 

Other 

reserves 

£m 


£m 

Profit and loss 

Account 

£m 

2011 

£m 

911,096 

Balance at 1 April 2011 7.3 0.1 10.1 151.1 168.6 

Issue of share capital – 0.1 – – 0.1 

Share options – – – 0.4 0.4 

Actuarial loss – – – (4.8) (4.8) 

Deferred tax on actuarial loss – – – 1.2 1.2 

Loss for the period – – – (1.2) (1.2) 

Deferred tax on change in UK tax rate – – – (0.3) (0.3) 

Balance at 31 March 2012 7.3 0.2 10.1 146.4 164.0 

Profit for the year includes dividends paid by Group companies of £Nil (2011: £5.0m). 

The Board considers the other reserves to be non-distributable. 

12. Pension schemes 

The Company operates several defined benefit schemes and a defined contribution scheme for employees in the UK. 

UK Pension schemes 

(a) Defined contribution scheme 

The Company operates a defined contribution scheme in the UK. Employer’s contributions are charged to the profit and loss 

account as incurred. The total pension cost for the Company in respect of this scheme for the year ended 31 March 2012 was 

£0.2m (2011: £0.1m). 

(b) Defined benefit schemes 

The UK defined benefit schemes are closed to new members and future accrual and are therefore funded by contributions from 

members as defined in the scheme rules, and by the employing company at a rate assessed by the scheme actuary as sufficient 

to meet the balance of costs determined following the triennial fund reviews. The assets of the schemes are held separately from 

Company assets under Trust. 

The FRS 17 ‘Retirement Benefits’ valuations have been updated by the scheme actuaries, in order to assess the liabilities of the 

schemes at 31 March 2012. Scheme assets are stated at their market value at 31 March 2012. 

Total 

£m 



Governance 



12. Pension schemes continued 

The financial assumptions used to calculate scheme liabilities under FRS 17 for the UK defined benefit schemes are as follows: 


2012 2011 2010 

Discount rate 4.75% 5.6% 5.7% 

Price inflation per annum (RPI) 3.0% 3.4% 3.4% 

Price inflation per annum (CPI) 2.2% 2.4% – 

Increases to pensions in payment 2.6%-3.4% 2.8%-3.6% 2.8%-3.6% 

Increases to deferred pensions 2.2% 2.4% 3.4% 

The market value of assets in the schemes at the Balance Sheet date, and the expected rates of return and the present value of the 

scheme liabilities at each balance sheet date are as follows: 

Expected 


At 31 March 2012 At 31 March 2011 At 31 March 2010 

Market value 

£m 

Expected 


Market value 

£m 

Expected 


Market value 

£m 

Equities 7.85% 31.5 7.85% 27.7 7.85% 17.4 

Bonds 4.7% 26.3 4.1%-5.6% 26.9 4.4%-5.7% 35.9 

Other 3.1% 0.2 4.0% 0.4 4.0% 0.6 

Total market value of assets 58.0 55.0 53.9 

Present value of scheme liabilities (73.2) (69.6) (70.5) 

Net deficit in the schemes (15.2) (14.6) (16.6) 

Deferred tax asset 3.6 3.8 4.6 

Net pension deficit (11.6) (10.8) (12.0) 

The following amounts have been recognised in the profit and loss account and Statement of Total Recognised Gains and Losses 

for the year ended 31 March 2012 in respect of the Company’s defined benefit schemes: 

Profit and loss account 

Past service cost (included within staff costs) 

Other finance costs 

0.6 – 

– expected return on pension scheme assets 3.5 3.3 

– interest on pension scheme liabilities (3.7) (3.9) 

Net finance cost (0.2) (0.6) 

Total expenses charged through the Income Statement 0.4 (0.6) 

Analysis of movements in scheme assets 


Expected return on scheme assets 3.5 3.3 

Actuarial gains/(losses) 0.1 (0.2) 

Contributions 3.8 2.6 

Benefits paid (4.4) (4.6) 


Analysis of movements in scheme liabilities 

Beginning of the year (69.6) (70.5) 

Interest on scheme liabilities (3.7) (3.9) 

Benefits paid 4.4 4.6 

Past service cost (included within staff costs) 0.6 – 

Actuarial (losses)/gains (4.9) 0.2 

End of year (73.2) (69.6) 


£m 


£m 

2011 

£m 

2011 

£m

12. Pension schemes continued 

Five Year Summary 




Experience adjustments on plan liabilities (4.9) 0.1 (6.0) – (1.1) 

Experience adjustments on plan assets 0.1 (0.2) 7.2 (7.6) (1.3) 

13. Employee benefit expense 

Wages and salaries 3.3 2.7 

Social security costs 0.3 0.2 

Share options granted to directors and employees 0.3 0.1 

Pension costs – defined contribution plans 0.2 0.1 


£m 

2011 

£m 

2010 

£m 

2009 

£m 


£m 

2008 

£m 

2011 

£m 

4.1 3.1 


Average employee numbers 32 26 

14. Dividend per share 

No dividend is proposed for the year ending 31 March 2012 (2011: £Nil). 



Governance 



15. Principal subsidiaries 

As at 31 March 2012 the principal subsidiaries of the Company were: 

Holding and Management Companies Country of Incorporation 

Porritts & Spencer Ltd* England Holding company 

Lindsay and Williams Ltd* England Holding company 

Scapa North America Inc USA Holding company 

Scapa Holdings (Georgia) Inc USA Holding company 

Scapa Holdings GmbH Germany Holding company 

Scapa Group Holdings GmbH Austria Holding company 

Scapa (HK) Holdings Ltd Hong Kong Holding company 

Technical Tapes Companies 

Scapa Tapes North America Ltd Canada 

Groupe Scapa France SAS France 

Scapa Deutschland GmbH Germany 

Scapa Italia SpA Italy 

Scapa (Schweiz) AG Switzerland 

Scapa UK Ltd England 

Scapa Tapes North America (Windsor) Inc USA 

Scapa Tapes North America (Carlstadt) Inc USA 

Scapa Brasil Ltda Brazil 

Scapa Tapes (Korea) Co. Ltd Korea 

Scapa Hong Kong Ltd Hong Kong 

Scapa Tapes Malaysia Sdn Bhd Malaysia 

Scapa (Shanghai) International Trading Company Ltd China 

Scapa Tapes Benelux BV** Netherlands 

Scapa Ibérica, S.A.*** Spain 

All the shareholdings are ordinary shares. 

* Denotes the undertakings which are held directly by Scapa Group plc. All the subsidiaries listed are wholly owned and are incorporated in and operate from 

the countries named. 

** Scapa Tapes Benelux BV was in a winding up process at the year end and was formally liquidated in May 2012. 

*** Scapa Ibérica, S.A. was put into liquidation during the year. 


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Scapa 

Americas 

Scapa Asia Scapa North America Scapa South America 

T +852 2439 4330 T +1 860 688 8000 T +55 11 2589 6003 

Scapa Europe 

Brazil, São Paulo 

Canada, Renfrew 

USA, Inglewood 

USA, Knoxville 

USA, Syracuse 

USA, Windsor 

UK Switzerland Germany France Italy 

T +44 (0) 161 301 7400 T +41 71 844 5656 T +49 (0) 621 470 910 T +33 (0) 475 44 80 00 T +39 0161 867 311 

www.scapa.com 


Europe 

Germany, Mannheim 

France, Valence 

Italy, Ghislarengo 

Switzerland, Rorschach 

United Kingdom, Dunstable 

United Kingdom, Manchester 

United Kingdom, Luton 


Asia 

China, Hong Kong 

China, Shanghai 

China, Schenzhen 

India, Chennai 

Korea, Anyang 

Korea, Chungyang 

Korea, Seoul 

Malaysia, Shah Alam 

Thailand, Pathumtanee

Annual Report and Accounts 2012 - Scapa

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