Investor Presentation - Oct 2011

World Class Tape Solutions

Scapa Group plcOperations Update

October 2011

Operations


• Leverage global footprint to achieve economies of scale

• Optimise operational effectiveness

• Implement global supply chain structure and strategy

• Expand Asian manufacturing

• Instil highest level of Environmental, Health & Safety

Footprint


Operations Manufacturing Clusters

• UK – Ashton & Dunstable

• Mainland Europe – Valence (France), Ghislarengo (Italy), Rorschach (Switzerland)

• NA (East) – Renfrew (Canada), Windsor (US)

• NA (West) – Inglewood (US)

• Asia – Korea, China (conversion)

Scapa is a global developer and manufacturer of specialist technical tapes for the Medical, Industrial, Consumer, Transportation, Electronics and Energy markets.

World class, inspired, market driven team, focused on optimising customer & shareholder value through responsible, agile delivery of specialist tape solutions.

Footprint – Market Focus


• Dunstable• Windsor, InglewoodMedical

• KoreaElectronics

• Rorschach, Renfrew, Ashton• Valence, Windsor, Ghislarengo, Dunstable Industrial

• GhislarengoTransportation

Footprint – Site Competence


Ashton

• Calendared rubber & plastics. Water based acrylics

• Slitting & packing

Dunstable

• Solvent Acrylics. Foam –PVC & PU

• Adhesive – PU & solvent-less liquids

• Die cutting & converting

Ghislarengo

• Solvent rubber adhesives. PVC substrates


Inglewood

• Finishing• Die cutting & converting

Korea

• Acrylic Foam Tape• Calendared rubber

Renfrew

• Calendared rubber & plastics


Rorschach

• Solvent rubber & silicone adhesives. Solvent & water based acrylics


Valence

• Solvent rubber adhesives• PU liquid sealants• Slitting & packing

Windsor

• Solvent acrylic adhesives• Slitting

Process Flow


Film Extrusion

Adhesive Mixing

Coating Slitting

Converting

PackingRaw Material


Future Shape

Medical

Electronics

Industrial

Phase 1 – Implementing The Basics� Service and Quality improvements� Cost Out and execution rigour� Capacity management� Consolidate satellite sites� Supply Chain infrastructure� EHS Infrastructure

Phase 2 – Fit For Purpose• Medical

� Quality/Regulatory expertise� “Clean” facilities -> Building upgrades• Component sourcing• Assembly -> Sterilisation -> Packaging� Project Management for NPD introduction• Customer intimacy at all levels

• Electronics� Local manufacturing• Bolt on acquisition(s) -> China, India� Project Management for NPD introduction• Component sourcing• Components -> Assembly

• Industrial� Make/Buy for full product range� Excellence in converting, finishing &

distribution• Localised Late Point Customisation� Faster NPD cycle

2010/11 £192mConsumerEmergingIndustrialMedicalTransportationAsia

Operational Strategy-making progress


Status• RLIP stable over last 12 months ~80%-85% • Day-to-day & month-to-month Service & Overdues

dashboard driving process

Focus Update• Sales & Operations Planning Process

• Improve in EU.....started in Q1• Start in NA.......starting in Q2

• Product simplification -> radical surgery in Industrial....good progress in REN, starting in ASH, DUN, still work in progress

• Capacity Management (-> price elasticity, LT mgmt)• Optimise coating ->2x5/3x5 shift optimisation• Slitting -> Flexibility

• Customer Care Improvements.....<3day order confirmation 93%-95%

• Customer Expectation Management• Critical FGS & WIP management....Global Demand

Planning Manager appointed• NPD Implementation.....Stage Gate operational in EU• Utilise SAP tools

Service


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Status• Customer Complaints reduced by ~60% over 24

months• 30 day closure rate ~80%

Focus Update• Simplify ICS Complaints process....new intranet

system in place• Quality systems gap audit

• To ISO13485 Medical• DUN, WIN, ING complete• Customer audits

• Sharepoint development.....in place• “Top 5” review process.....ongoing and moving to a

‘process’ focus• Supplier Quality.....just starting• Training....8D Structured Problem solving

complete..next step SPC 1-0-1

Quality


Focus Update

• Coating machine utilisation/uptime......now measuring Coater utilisation and changeover times

• Coating excellence ......targeted capex upgrades at Windsor, Valence, Ghislarengo

• Material scrap projects.......project deck execution• Quality improvements.....moving from single events

to process focus• Product simplification (-> Industrial surgery)

.....beginning but still work to do• Project deck development and execution• Lean opportunities

Cost Out

Status

• Metric . Variable Cost Productivity – Reduction in last year’s variable costs adjusted for Vol/Mix, PPV and exceptionals (eg inventory revaluations)

• Material. Starting to see some VCP – scrap reductions

• Labour. Continued efficiency improvements. Direct headcount (37) VLY

• OVC . Improvements largely D&L and M&R cost control

• Base Cost. ‘Control’ and ‘offset’ mindset well in place, now driving cost reductions. Indirect headcount (8) VLY


• Branly – Dismantle 109 cloth stenter, calender

(EHS), Corona treatment (EHS), 107 line, internal double mill cylinder (EHS), internal rubber piston mixer (EHS), Z-blade mixer (EHS), water based adhesive turbine

– 105 coating line (end Q3)• Palissy

– 2 rewinding rolls, 2 old packing lines replaced by new line (mid Q3)

– FA300 arrival (Q4) will eliminate 4 more machines

• Rorschach– >30 pieces equipment ‘pensioned off’’– Exited Finimat products– Exited some low volume Industrial

• Ashton– ALS small converting cell simplification– PIB Cell. Moved closer to create cell– Cable Cell. Relocated SE600 to create cell– Conversion Cell. Moved 8 assets to

rationalise into higher utilisation cell

• Renfrew – Duct Tape. Rationalised 7 product groups

to 2– Gaffer Tape. Rationalised 10 colours to 3– Consumer Tapes. 618 active SKU’s now

reduced to 342• Dunstable

– In process of relocating Luton slitter to Dunstable

– Rationalised Industrial Foam conversion to predominately logs

– Exited Hydrocolloid manufacture• Korea

– Cloth line exit. Currently building transfer stocks

Lots done but still lots to do!

Cost Out-Simplification

Investing in Electronics


R&D Laboratory

• Installation during January-March• Location close to key customers• Pilot UV Coater for product development• Development solvent coater• Environmental conditioning, product testing &

validation

AFT Capacity Expansion

• Installation during January-February• Validation through March-May• Now in production for some product• Delivers high performance Foam Tape for Electronics

& Solar applications• 2x today’s capacity


Phase 1� Leadership in place� Organisation diagnostic� Spend analysis� Systems data/analysis

Phase 2� Supplier Engagement� Skills Upgrade• Implement Organisation Design• Systems/data Configuration

Phase 3� Opportunity Short List• Identify ‘preferred suppliers’• Implement Systems/data configuration & controls• Link to NPD process

Phase 4• Optimise procurement operations• Rationalise suppliers -> Preferred• “Design in to NPD”

Supply Chain-Procurement


Group Procurement

Manager

Europe

Sites

Utilities

Indirect

NA

Sites

Utilities

Indirect

Asia GCL’s

GCL Chemicals

GCL Substrates

GCL Outsourced Products

Demand Planning

Organisation

� Phil Spibey (ex SSL International plc, ICI plc) joined as Head of Global Supply Chain - May 2011. Heading up Supply Chain function and driving through opportunities

� Graham Lanty joined as Global Category Procurement Manager – Chemicals –September 2011. (ex Rentokil, Danone and Novartis)

� Recruitment for permanent Global Category Procurement Manager – Substrates underway (interim currently in place)

� New resources also in place – ROR, VAL & REN

� Global Demand Planning Manager, Craig Fletcher (ex SSL, Reckitt Benckiser) in place Sept

Procurement Organisation

World Class Tape SolutionsMore detailed drill down on 3 major spend categories

Procurement Spend


LDPE: ~GBP3.9m annual spendSites: Ashton, Renfrew

Key activities: - Implemented cost model pricing.- Tabled a 7% price decrease Sept ‘11 – awaiting response from 2 key vendors.

Cotton: ~GBP1.3m annual spend

Sites: Ashton, Renfrew, Valence

Key activities: - BKS Mills, India Cotton. 14-20% price negotiation wefJune ‘11. - Consolidation of REN & VAL spend via BKS. Anticipate circa £150k savings this FY. However prices TOO low creating supply stop

Paper: ~GBP4.2m annual spendSites: Mainly Windsor, Rorschach, Dunstable

Key Activities:- Key driver of liner prices- Cost Pricing models in place- Fighting price increases

Nylon: ~GBP2.3m annual spendSites: Ashton, Windsor

Key activities:- Establish cost model pricing to understanding drivers of Nylon 66 products- Aggressively fight off proposed cost increase- Q3 look for alternatives for current sources

Category Spend


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38 0

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65 5

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05/09/2011

SICOM RSS3 US Cents/kg SICOM TSR 20 Nymex Crude Oil US$/barrel TOCOM

Rubber ~GBP5.5m pa

• Natural Rubber . ~GBP2.6m pa• Sites: Ashton, Renfrew, Valence, Rorschach,Ghislarengo• Synthetic Rubber. ~GBP3.0m pa• Sites: All

• Synthetic, Affected by chemicals pricing structure. Cost increases driven from upstream manufacturers.• Natural Rubber. Except 1 PO, all purchases for this fiscal > FY12 standard cost. Anticipate Ashton’s Dec YTD

PPV to be ~GBP45k adverse.• Long lead times as Far East source leading to ‘delay’ from PO to PPV impact, currently procuring Q4 requirements• Pale Crepe NR. Consolidation of spend from ROR+VAL+GHIS. Validation of alternative vendors underway. Circa

8% saving pa GBP20k plus release of safety stock. Expected implementation Oct 11

Category Spend


Data

• Next steps to improve transparency of PPV reporting

– inclusion of Freight, Duty, Customs charges into PO/Item code PPV analysis

– expand current PPV material families and therefore reporting to more relevant families ie Cloths – split into Cotton, Polyester, Nylons, Other cloths

– preparation and communication of Site Spend Maps – showing spend by materials Group/commodities

Functional Effectiveness

• Global Procurement Reporting • standard format focusing on Costs (PPV

detailed reporting and understanding, plus cost avoidance activities)

• quality (reporting and management of supplier complaints)

• supplier service • inventory and creditors• Implemented ‘Pilot’ report June 2011.

• Indirect Costs• elevated Procurement to be

gatekeepers of indirect costs• procurement network have identified

and are driving out costs across sites/regions

Phase 2 – Next Steps

Working Capital


Raw 17.9 days

FGS 18.4 days

WIP 11.4 days

Raw 13.1 days

FGS 14.8 days

WIP 11.1 days

Status� Rebalancing FGS to support

On Time Delivery� Critical Materials� Liquidating FGS� Order sizes/MOQ’s

Focus• FGS A/B/C Structure• Drive back through external

Supply Chain� Warehouse consolidation

Apr-Jun 2009 July 2011

Status

� Leadership in place (ex Centrica plc, United Utilities plc, ABP plc, Textron Inc)

� Drive Safety Opportunities “Find It, Fix It”

� Baseline audit of key sites complete

� Integrated Risk Management System roll out to track issues/actions

Focus

� Regular Site EHS Audits

� Process safety of solvent/flammable based facilities

� Extend deployment of Intranet based IRMS

• Develop Group Policies & Standards

• Communications

• Competence & Training

• Targeted capex to deal with legacy issues

• Prioritised Risk based approach to future capex

Health & Safety



Per

form

ance

2011

IRMS/Sharepoint• EHS team uses IRMS

• IRMS compliments reporting

• All mgmt actions targeted yrly

• Facility layer of risks visible on SP

2012 2013+

SimplificationStandardisationSystemisation

DSEAR/Fire ATEX

Lifting & Handling

Chemical Handling

DSEAR/Fire/ATEX• DSEAR/ATEX risks ID’d

• RA carried out & risks controlled

• Static & earth bonding stds

• Site e’ees aware of risks

Lifting & Handling• All lifting activities identified

• Full lifting assessment done

• Minimal lifting carried out SFAIRP

• E’ees trained in safe lifting tech

Chemical Handling• Full chemical identification at sites

• Do I need it? What for?

• Have I got the full assessment for it

• Is it stored and handled as per

MSDS

IRMS/Sharepoint• Managers use IRMS• Facility layer of risks visible on

SP• Layered risks support yrly plan• HML influences capex decns

DSEAR/Fire/ATEX• DSEAR/ATEX risks amber• Scapa std for DSEAR/ATEX • HML areas mapped on SS• Capital reflects risk profile needs

Chemical Handling• 100% of chems ID’d • Risks assessed and recorded• HML areas mapped on SS• Minimal amount stored any 1 time

IRMS/Sharepoint• Supervisors use IRMS

• Risks visibly controlled on SP

• Yearly plan demands Risk input

• E’ees report all SO’s on IRMS

• All actions closed out in time

period

DSEAR/Fire/ATEX• DSEAR/ATEX risks – green

• Scapa std fully adopted in place

• Solvent replacements evaluated

• Full solvent ext audit

Chemical Handling• Safer chems ID’d and assessed

• 100% RA’s completed

• REACH updated

• Bunding 110% of chemical

Machine Guarding

Machine Guarding• All sites carry out MG survey

• All sites plan MG works

• All sites progress MG works

• Verified by SPG/IM visits

Lifting & Handling• Yearly plan includes MH

• 95% of lifting activities controlled

• HML areas mapped on SS

• Capital reflects risk profile needs

Machine Guarding• 75% of MG risks controlled

• HML risk areas mapped on SS

• Capital reflects risk profile needs

• Verified by risk mapping

Lifting & Handling• L&H risks green

• 90% of L&H automated out

• Insurance rebate on L&H risk

• No e’ees have ergonomic issues

Machine Guarding• 95% of MG risks controlled

• MG std for Scapa adopted

• Ear & eye protection not needed

• Verified via full site audit/review

EHS Roadmap


NA-4

WindsorSyracuseCarlstadtInglewood Renfrew

EU-8

AshtonDunstable (3)Valence (2)GhislarengoRorschach

BarcelonaMannheim

Asia-4

Korea

ShanghaiShenzhenMalaysia

Current Actions�Carlstadt - remediation �Barcelona – complete�Bellegarde – remediation� Mannheim – end Dec

Operational Footprint


Enablers• Lean/Cost Out

• Waste reduction• Set up reduction• Material substitutions• Process capability/repeatability

• Quality• Robust process design• Supplier quality• Process capability/repeatability• Business Process Mapping

• Procurement• Global structure• Supplier management• Regional indirect spend consolidation• LCC sourcing

• Environment, Health & Safety• Formal audit programme• Incident management• Audit tracking• Inspection routines• Risk reductions

• Employee Engagement• Aligned Goals & Objectives• Performance management• Communications

Service

CostQuality

Implementing The Basics• Service and Quality improvements• Cost Out and execution rigour• Capacity management• Consolidate satellite sites• Supply Chain infrastructure• EHS Infrastructure

Operational Effectiveness-Summary


Questions

Documents

Investor Presentation - Oct 2011