AGM 2006 Trading Statement

In the period since the issue of our Preliminary Results for 2005/06, little has changed to the general trading climate reported at that time. Sales for the first quarter have been in line with expectations and, on an underlying basis, are 3% up on last year. This gain relates to our European operations and reflects the improvement initiatives put into place last year.

Upward pressure on raw materials linked to the current high price of crude oil has continued through the quarter with full margin recovery an ongoing area of focus. Relentless cost reduction continues to be the way of life at Scapa with the already announced third phase of the major cost reduction programme to be put into place following the proposed disposal of our Megolon compounding business. This will bring total expenditure on the full programme to date to £3.8m, with projected annual savings of the same amount.

The sale of our Irish distribution business for £1m, which includes £0.4m of deferred consideration, was completed mid June and negotiations on the Sale and Purchase Agreement for our Megolon business are now at an advanced stage.

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