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Scapa Group plc Investor presentation October 2014

Scapa Group plc · • Emerging market with large growth potential • Broad appeal across markets ... • Pulse Oximetry • Implantables • Point of Care Diagnostics – OTC

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Scapa Group plc Investor presentation October 2014

Scapa Group

Market Segments

Becoming contract manufacturer of choice

Current trend in Healthcare to outsource

B2B partnership strategy

Turn-Key solutions capabilities

Rapid speed to market

Broad technology portfolio

Vertical integration and strong manufacturing know-how

Single supplier, dual source

Trusted quality

Start up

Asia based strategy

Focus and targeted approach

Position as credible alternative supplier

Acquisitions being targeted

Need critical mass

Focused on Automotive, Cable, Retail and Distribution

Focused on sectors with critical mass and leverageable position

Address greater share of customer spend by offering solutions not just stand-alone products

Position as trusted supply chain partner

Customer orientated strategy

Electronics 5%

Healthcare 31%

Business Breakdown

Industrial 64%

Asia 6%

Europe 45% North America

49%

Revenue Geography Profit

Electronics -1%

Industrial 44%

Healthcare 57%

5 Year Financial Performance

Revenue £m

Share Price

Trading Profit £m

PBT£m

Trading Profit

Share Price Performance

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SCAPA GROUP FTSE 100 FTSE 250

FTSE AIM ALL-SHARE FTSE ALL SHARE FTSE UK TECHNOLOGY

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Adhesive Landscape

The adhesive space is dominated by a few large companies and multiple small companies with Scapa occupying a unique position of being mid-sized, independent and public

Select Adhesive Companies Revenue (Last Reported Fiscal Year)

£0

£50

£100

£150

£200

£250

Scap

a Gr

oup

plc

Lohm

ann

GmbH

ITW

(Sto

ckvi

s)Ch

ase

Corp

.Am

eric

an B

iltrit

e (T

ape

Divi

sion)

Adhe

sive

Rese

arch

Plas

to T

echn

olog

ies

Adch

emCo

llano

Adh

esiv

es A

GCo

veris

Adv

ance

d Co

atin

gsAd

vanc

ed M

edic

al S

olut

ions

(OEM

)Po

wer

band

Indu

strie

sW

alco

Cor

pora

tion

Tape

Mar

kTa

pe-O

Cor

pora

tion

Brite

-Lin

e Te

chno

logi

esSm

ith &

Nep

hew

(Gilb

erdy

ke)

Nor

gepl

aste

rLo

ypos

Hönl

e (A

dhes

ives

)Fi

rst W

ater

£0

£2,000

£4,000

£6,000

£8,000

£10,000

£12,000

£14,000

£16,000

£18,000

£20,000

Market Review Diversified Business Portfolio

HEALTHCARE

INDUSTRIAL

ELECTRONICS

Healthcare

Healthcare Growth

Transdermal / Drug Delivery

Medical Devices

Advanced Wound Care

Consumer Wellness

Calculated at current exchange rates Excludes Asia

45% £17.8m

28% £11.1m

23% £9.2m

4% £1.4m

31.5% £21.6m

30% £21.0m

36.5% £25.1m

2% £1.5m

FY12 FY14

Total revenue £39.5m Total revenue £69.2m

Skin Friendly Turn-Key Solutions

Design & Project Management

Bioflex® Performance Materials / Film Extrusion

Scapa Soft-Pro® Skin Friendly Adhesives

Coating

Converting & Assembly

Printing & Packaging

Sterilization Services

Logistics & Service

Skin Friendly Turn-Key Solutions

Trans-dermal Drug Delivery

Consumer Wellness

Medical Devices

Advanced Wound Care

Move Up the Value Chain • Promote value proposition • Business Development / Acquisitions to fill gaps

• Highly skilled and dedicated Healthcare sales team • C Suite sales

• Antimicrobials • Actives • MEDIFIX® mobile device fixation platform

• Fanatically reduce COGS • Continuous profit improvement

• One Global Healthcare QMS (SAP QMS Software validation)

• Global cGMP compliance plan

Improve Strategic Account Management

Innovation

Operational Efficiency – Margin Improvement

World Class HC Quality System

Strategic Building Blocks

Deliver Sustainable Profitable Growth

New Product Development Portfolio Map Combination products drive growth

Portfolio Initiatives

M A R K E T S

S I L I C O N E P L A T F O R M

High tack variants

Consumer Med Device

AWC Drug Delivery

Antimicrobials

AWC Consumer

Actives

P O L Y U R E T H A N E P L A T F O R M

Med Device Consumer

AWC Drug Delivery

High tack variants

Antimicrobials

AWC Consumer

Consumer

A C R Y L I C P L A T F O R M

Anti-fungal

Consumer AWC

MEDIFIX® Extended

Wear

Consumer Med Device

Actives

Consumer

Capability Enhancement on-going Substrate Evaluation on-going

Actives

Consumer

Deliver Sustainable Profitable Growth

Wearable technology sectors Home Health Revolution

Wearable Technology Sectors • Emerging market with large

growth potential

• Broad appeal across markets

• Growth driven by monitoring and treatment of chronic conditions

• Consumers taking more responsibility for own health

Relevant Wearable Technology Sectors

Medical

Vital Signs Monitoring

Chronic Disease Management

Pharmaceutical/ Drug Delivery

Wellness

Physiological Monitoring

Weight/ Energy Monitoring

Posture Correction

Sport/ Fitness

Sports Performance

Fitness Monitoring

Heating/ Cooling

Deliver Sustainable Profitable Growth

Electrical Lead e.g. EKG monitor, pulse oximetry

Stand alone e.g. Glucose, cardiac or oxygen monitor, athlete training device

Drug delivery e.g. Insulin pump

Complex materials and adhesive designs for simple solutions, compatible with all wearable

fixation constructions

Wearable Medical Device Fixation MEDIFIX Solutions™

MEDIFIX Solutions™

Enabling devices that live with you

Scapa Healthcare is the interface between the technology and the person.

Scapa Healthcare understands the diversity of the user base and designs to incorporate their needs.

• Aligns with the Healthcare value proposition and vertical integration

• Showcases Scapa’s expertise and capabilities in a new explosive market

• Opens new client base

Works across multiple technologies

Identifies unique users

Ease of Use Comfort Activity Wear-Time Safety

Design considerations guide success

Industrial

Industrial Revenue

Auto £22.9m

Segment Geography

North America £53.4m

Europe £92.3m

Cable £17.9m

Retail £30.5m

Distribution £54.4m

Gen. Ind. £20.0m

Total revenue FY 14 - £145.7m

Segment Focus and Strategy

Automotive Cable

Retail Distribution

Focus on wiring harness, protection, assemblies and seat

heating

Maximise our current market and design position at 20

OEMs including Peugeot, GM, Audi, Chrysler and VW.

Focus on product development aligned with fast changing

design requirements

Focus on strategic solutions selling through a dedicated

global organisation aligned with our customers’ footprints.

Focus on submarine, high voltage and fibre optics segments of the market which requires high reliability and carries significant cost of failure

Leverage strong reputation and market position in a very niche and concentrated customer base and competitive landscape

Leverage global footprint to service global supply chain

Focus on strategic solution selling through dedicated global organisation

Broaden product and service offerings to offer one stop solution

Leverage strong brands and distribution networks

Expand additional POS across geography and categories

Expand the product range beyond core tapes to adjacent

items to increase our shelf space

Broaden and exploit our digital strategy

Address broad and fragmented market across many markets and applications

Focus on areas where we have critical mass and competitive positioning

Maximise profitability through product portfolio management and operational efficiency

Multi-tiered engagement model to increase our services level

Leverage inside sales and digital strategy to lower cost to serve

Industrial Focus

Clear focus and strategy

Organisation and resources re-aligned to the new focus areas and strategy

Developing a solid pipeline of new opportunities

Strategic engagement with key customers across their global footprint is yielding immediate return

Acquisition Strategy

• Consolidate converting landscape – Highly fragmented, dominated by family-owned small

businesses – Opportunities for back-office synergies – Expand Advanced Wound Care and Consumer Wellness

customer base • Expand capabilities

– Adhesive technology (e.g. medical grade hot melt, UV) – Materials (e.g. hydrocolloids, oral soluble film, electrodes,

implantable polymers) – Expertise (welding (RF, impulse, thermal, ultrasonic), injection

moulding, Rx/DEA controlled substance handling)

• Diversify customer base • Further penetrate chosen

healthcare segments • Offer turn-key solutions across all

healthcare segments (e.g. medical device assembly, trans-dermal)

• Increase importance to customers

• Consolidate coating and converting landscape – Assets tend to be larger and sit within larger companies – Opportunity for back-office and manufacturing synergies

• Expand product offerings (e.g. surface protection, foams) • Innovative technologies with high barriers to entry

• Increase footprint efficiency • Improve operating profit margins • Diversify customer base • Increase importance to customers • Reduce sensitivity to cycles

• Gain scale – Opportunities pre-dominantly in Asia – OEMs increasingly focused on healthcare, particularly mobile

monitoring devices

• Drive growth and improve margins

Roadmap Considerations

Any acquisition should be accretive, diversify the service offering, allow Scapa to build high barriers to entry and leverage the global infrastructure.

Healthcare

Industrials

Electronics

Focus Objective

• Traditional • Advanced • NPWT • Ostomy • Regenerative

• Pulse Oximetry • Implantables • Point of Care

Diagnostics – OTC • Point of Care

Diagnostics - Rx

• First Aid • Respiratory • Scar / Burns • OTC Trans-Dermal • Oral Care • Foot Care

• Infusion Sets • Rx / DEA Trans-Dermal

• Coloplast • ConvaTec • Covidien • J&J • KCI / Systagenix • S&N

• Alere • CareFusion • J&J • Masimo • Medtronics • St. Jude Medical

• Bayer • GSK • J&J • P&G • Reckitt Benckiser • Unilever

• GSK • J&J • Roche • Medtronics • Novartis • Sanofi aventis

• Foams • Hydrogels • Hydrocolloids • Alginates • Antimicrobials

• Bioabsorable polymers • Cable • Electronics

• Hydrocolloids • Oral soluble films

• Actives • Films • Microneedles

• Coating • Converting • Labelling • Sterilisation

• Coating • Converting • Welding • Injection moulding • Sterilisation

• Coating • Converting • Labelling

• Coating • Converting • Labelling • Sterilisation • Rx / DEA

Healthcare: Landscape

World Class Bonding Solutions

Segment

Select Sub-Segments

Select Components

Key Capabilities

Wound Care Medical Device Consumer Wellness Drug Delivery

Illustrative Customers

Scapa’s healthcare segments contain diverse, addressable and fast growing markets

• Application – Primary application today is wire harness for OEM manufacturing – External usage – After-market

• Geography – Relationship with major Tier 1 suppliers

• Technology – Water-based versus PVC

• Geography – Primarily within Europe and Asia

• Geography – Primarily in France (Retail)

• Channel to market – Retail and distributors; limited OEMs

• Potential for growth but lacks scale and presence – Flexographic printing – Reflective – Surface protection (ski tape) – Sports (hockey) – White goods

Industrials Considerations

Meaningful scope for expansion within existing segments

World Class Bonding Solutions

Automotive

Cable

Building & Construction

General

Period End Update

Scapa Group plc (AIM: SCPA), a global supplier of bonding materials and solutions, is today providing a period end update for the six months ended 30 September 2014. Group revenue and trading profits* have seen good growth over the same period last year, despite currency headwinds, which have reduced since our trading update on 22 July. The trading profit* margin continues to improve and the Group delivered strong operating cash flow, contributing to a healthy balance sheet. Scapa is well positioned to make further good progress this year and the Board remains confident about the Group’s outlook. The Group expects to announce its interim results on 25 November 2014. *operating profits before exceptional items and amortisation