Investor Presentation - October 2014

Scapa Group plc
Investor presentation
October 2014
Scapa Group
Market Segments
Focused on Automotive, Cable, Retail
and Distribution
Becoming contract manufacturer of
choice


Current trend in Healthcare to outsource


B2B partnership strategy
Focused on sectors with critical mass
and leverageable position

Address greater share of customer
spend by offering solutions not just
stand-alone products


Turn-Key solutions capabilities

Rapid speed to market

Broad technology portfolio


Vertical integration and strong
manufacturing know-how
Position as trusted supply chain
partner

Customer orientated strategy

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
Business Breakdown
Electronics 5%
Industrial
64%
Healthcare
31%
Revenue
Electronics -1%
Industrial
44%
Healthcare
57%
Profit
Asia 6%
North America
49%
Europe
45%
Geography
5 Year Financial Performance
Revenue £m
PBT£m
Trading
TradingProfit
Profit£m
Share Price
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Share Price Performance
1000
900
800
700
600
500
400
300
200
100
0
SCAPA GROUP
FTSE 100
FTSE 250
FTSE AIM ALL-SHARE
FTSE ALL SHARE
FTSE UK TECHNOLOGY
£2,000
£0
£0
Adhesive Research
Adchem
First Water
Hönle (Adhesives)
Loypos
Norgeplaster
Smith & Nephew (Gilberdyke)
Brite-Line Technologies
Tape-O Corporation
TapeMark
Walco Corporation
Powerband Industries
Advanced Medical Solutions (OEM)
Coveris Advanced Coatings
Collano Adhesives AG
£6,000
Plasto Technologies
£10,000
Chase Corp.
£12,000
American Biltrite (Tape Division)
£14,000
ITW (Stockvis)
£16,000
Scapa Group plc
£20,000
Lohmann GmbH
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)
£250
£18,000
£200
£150
£8,000
£100
£50
£4,000
HEALTHCARE
Market Review
INDUSTRIAL
Diversified Business
Portfolio
ELECTRONICS
Healthcare
Healthcare Growth
FY12
FY14
4%
£1.4m
45%
£17.8m
31.5%
£21.6m
23%
£9.2m
28%
£11.1m
30%
£21.0m
Total revenue £39.5m
Medical
Devices
Calculated at current exchange rates
Excludes Asia
2%
£1.5m
36.5%
£25.1m
Total revenue £69.2m
Consumer
Wellness
Advanced
Wound Care
Transdermal /
Drug Delivery
Skin Friendly Turn-Key Solutions
Logistics &
Service
Sterilization
Services
Printing &
Packaging
Converting &
Assembly
Coating
Scapa Soft-Pro®
Skin Friendly Adhesives
Bioflex® Performance
Materials / Film Extrusion
Design & Project
Management
Strategic Building Blocks
Advanced
Wound Care
Consumer
Wellness
Medical
Devices
Trans-dermal
Drug Delivery
Move Up the Value Chain
Improve Strategic Account Management
Innovation
Operational Efficiency – Margin Improvement
World Class HC Quality System
Skin Friendly Turn-Key Solutions
• 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
New Product Development Portfolio Map
Combination products drive growth
Portfolio Initiatives
SILICONE
P L AT F O R M
ACRYLIC
P L AT F O R M
P O LY U R E T H A N E
P L AT F O R M
High tack
variants
Antimicrobials
Actives
Consumer
Med Device
AWC
Consumer
Consumer
AWC
Drug Delivery
High tack
variants
Antimicrobials
Actives
Actives
Anti-fungal
Med Device
Consumer
AWC
Consumer
Consumer
Consumer
AWC
Consumer
AWC
Drug Delivery
MARKETS
Capability Enhancement on-going
Substrate Evaluation on-going
Deliver Sustainable Profitable Growth
MEDIFIX®
Extended
Wear
Consumer
Med Device
Home Health Revolution
Wearable technology sectors
Wearable Technology
Sectors
Relevant Wearable Technology Sectors
• Emerging market with large
growth potential
Medical
• Broad appeal across markets
Vital Signs
Monitoring
Physiological
Monitoring
Sports
Performance
Chronic Disease
Management
Weight/ Energy
Monitoring
Fitness
Monitoring
Pharmaceutical/
Drug Delivery
Posture
Heating/
Correction
Cooling
• Growth driven by monitoring
and treatment of chronic
conditions
• Consumers taking more
responsibility for own health
Deliver Sustainable Profitable Growth
Wellness
Sport/ Fitness
MEDIFIX Solutions™
Wearable Medical Device Fixation
MEDIFIX Solutions™
Stand alone
e.g. Glucose, cardiac or
oxygen monitor, athlete
training device
Electrical Lead
e.g. EKG monitor,
pulse oximetry
Works across multiple
technologies
Enabling devices that live with you
Scapa Healthcare is the interface between the
technology and the person.
Drug delivery
e.g. Insulin pump
Complex materials and adhesive
designs for simple solutions,
compatible with all wearable
fixation constructions
Scapa Healthcare understands the diversity of the user
base and designs to incorporate their needs.
• Aligns with the Healthcare value proposition and
vertical integration
Identifies unique users
• Showcases Scapa’s expertise and capabilities in a
new explosive market
• Opens new client base
Design considerations
guide success
Deliver Sustainable Profitable Growth
Ease of Use Comfort
Activity
Wear-Time
Safety
Industrial
Industrial Revenue
Total revenue FY 14 - £145.7m
Gen. Ind.
£20.0m
Auto
£22.9m
Cable
£17.9m
Distribution
£54.4m
Retail
£30.5m
Segment
North America
£53.4m
Europe
£92.3m
Geography
Segment Focus and Strategy
Retail

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
Automotive

Distribution

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
Cable

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
Focus on product development aligned with fast changing

Leverage global footprint to service global supply chain
design requirements

Focus on strategic solution selling through dedicated global
organisation

Broaden product and service offerings to offer one stop
solution
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 strategic solutions selling through a dedicated
global organisation aligned with our customers’ footprints.
Industrial Focus

Clear focus and strategy

Organisation and resources re-aligned to the new focus areas
and strategy

Strategic engagement with key customers across their global
footprint is yielding immediate return

Developing a solid pipeline of new opportunities
Acquisition Strategy
Roadmap Considerations
Any acquisition should be accretive, diversify the service offering, allow Scapa to build high barriers to
entry and leverage the global infrastructure.
Focus
Objective
Healthcare
• 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
Industrials
• 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
•
•
•
•
•
• Drive growth and improve margins
Electronics
• Gain scale
– Opportunities pre-dominantly in Asia
– OEMs increasingly focused on healthcare, particularly mobile
monitoring devices
Increase footprint efficiency
Improve operating profit margins
Diversify customer base
Increase importance to customers
Reduce sensitivity to cycles
Healthcare: Landscape
Scapa’s healthcare segments contain diverse, addressable and fast growing markets
Segment
•
•
•
•
•
Traditional
Advanced
NPWT
Ostomy
Regenerative
• Pulse Oximetry
• Implantables
• Point of Care
Diagnostics – OTC
• Point of Care
Diagnostics - Rx
Illustrative
Customers
•
•
•
•
•
•
Coloplast
ConvaTec
Covidien
J&J
KCI / Systagenix
S&N
•
•
•
•
•
•
Select
Components
•
•
•
•
•
Foams
Hydrogels
Hydrocolloids
Alginates
Antimicrobials
• Bioabsorable polymers
• Cable
• Electronics
Key
Capabilities
•
•
•
•
Coating
Converting
Labelling
Sterilisation
•
•
•
•
•
Select SubSegments
World Class Bonding Solutions
Consumer
Wellness
Medical Device
Wound Care
Alere
CareFusion
J&J
Masimo
Medtronics
St. Jude Medical
Coating
Converting
Welding
Injection moulding
Sterilisation
Drug Delivery
•
•
•
•
•
•
First Aid
Respiratory
Scar / Burns
OTC Trans-Dermal
Oral Care
Foot Care
• Infusion Sets
• Rx / DEA Trans-Dermal
•
•
•
•
•
•
Bayer
GSK
J&J
P&G
Reckitt Benckiser
Unilever
•
•
•
•
•
•
GSK
J&J
Roche
Medtronics
Novartis
Sanofi aventis
• Hydrocolloids
• Oral soluble films
• Actives
• Films
• Microneedles
• Coating
• Converting
• Labelling
•
•
•
•
•
Coating
Converting
Labelling
Sterilisation
Rx / DEA
Industrials Considerations
Meaningful scope for expansion within existing segments
Automotive
Cable
Building &
Construction
General
• 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
World Class Bonding Solutions
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