SWM Schweitzer Mauduit International Inc

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware									62-1612879
(State or other jurisdiction of incorporation)									(I.R.S. Employer Identification No.)
100 North Point Center East,			Suite 600
Alpharetta,			Georgia						30022
(Address of principal executive offices)									(Zip Code)

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Item 9.01    Financial Statements and Exhibits.

(a) Financial statements of business acquired.

The audited consolidated financial statements of Scapa and Subsidiaries as of March 31, 2021 and 2020, and for the year then ended are filed as Exhibit 99.1 to this Form 8-K/A and incorporated herein by reference.

(b) Pro forma financial information.

The unaudited pro forma condensed combined balance sheet as of December 31, 2020 and the unaudited pro forma condensed combined statements of income for the year ended December 31, 2020, and the accompanying notes, are attached as Exhibit 99.2 to this Form 8-K/A and incorporated herein by reference.

(c) Exhibits.

Exhibit No.                    Description of Exhibit

_________    _____________________________________________________________________

23.1    Consent of Deloitte LLP

99.1    Scapa Consolidated Financial Statements of March 31, 2021 and 2020

99.2    Unaudited pro forma condensed combined balance sheet as of December 31, 2020 and the unaudited pro forma condensed combined statements of income for the year ended December 31, 2020, and the accompanying notes.

104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

(Registrant)

By:			/s/ Andrew Wamser
			Andrew Wamser Executive Vice President and Chief Financial Officer

Dated: June 25, 2021

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Exhibit 23.1

Consent of Independent Auditors

We hereby consent to the incorporation by reference in Registration Statement Nos. 333- 105986, 333- 179933 and 333- 204120 on Form S-8 of Schweitzer-Mauduit International, Inc. of our report dated June 25, 2021, relating to the financial statements of Scapa Group plc and its subsidiaries appearing in this Current Report on Form 8-K/A dated June 25, 2021.

/s/ Deloitte & Touche LLP

Manchester, United Kingdom

June 25, 2021

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Scapa Group Ltd (formerly Scapa Group plc)

Financial statements 2021

Independent auditor’s report

To the Board of Directors of Scapa Group Limited,

We have audited the accompanying consolidated financial statements of Scapa Group Limited and subsidiaries (the "Company"), which comprise the consolidated balance sheets as of 31 March 2021 and 2020 and the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated cash flow statements for the years then ended and the related notes to the consolidated financial statements.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Scapa Group Limited and subsidiaries as of 31 March 2021 and 2020, and the results of their operations and their cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

DELOITTE LLP

June 25, 2021

1 Scapa Group plc Annual Report and Accounts 2021

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Consolidated Income Statements

for the years ended 31 March 2021 and 31 March 2020

									Year ended						Year ended
									31 March						31 March
									2021						2020
			All on continuing operations			Note			£m						£m
			Revenue			2			272.5						320.6
			Operating profit/(loss)			2, 3			8.3						(47.3)
			Finance costs			7			(2.8)						(3.7)
			Profit/(loss) on ordinary activities before tax						5.5						(51.0)
			Taxation (charge)/credit			8			(1.3)						1.5
			Profit/(loss) for the year						4.2						(49.5)

						Year ended						Year ended
						31 March						31 March
						2021						2020
All on continuing operations			Note			£m						£m
Profit/(loss) for the year						4.2						(49.5)
Items that may be reclassified subsequently to profit and loss:
Exchange differences on translating foreign operations						(10.4)						6.3
Actuarial loss			24			(6.4)						(1.3)
Items that will not be reclassified subsequently to profit and loss:
Deferred tax on actuarial loss						0.9						0.3
Other comprehensive (loss)/profit for the year						(15.9)						5.3
Total comprehensive loss for the year						(11.7)						(44.2)

2 Scapa Group plc Annual Report and Accounts 2021

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Consolidated Balance Sheets

as at 31 March 2021 and 31 March 2020

						31 March						31 March
						2021						2020
			Note			£m						£m
Assets
Non-current assets
Goodwill			11			56.7						61.1
Intangible assets			12			1.0						3.4
Property, plant and equipment			13			72.1						75.7
Right-of-use assets			14			17.8						19.9
Deferred tax asset			8			7.9						9.5
Other receivables						0.1						0.1
						155.6						169.7
Current assets
Inventory			15			37.1						41.5
Trade and other receivables			16			57.2						63.7
Current tax asset						2.7						0.2
Cash and cash equivalents			17			16.6						16.3
						113.6						121.7
Liabilities
Current liabilities
Borrowings and other financial liabilities			19			(15.1)						(0.1)
Lease liabilities			14			(13.7)						(2.5)
Trade and other payables			18			(56.8)						(56.8)
Current tax liabilities						(0.9)						(2.0)
Provisions			22			(8.1)						(13.6)
						(94.6)						(75.0)
Net current assets						19.0						46.7
Non-current liabilities
Borrowings and other financial liabilities			19			(31.6)						(71.0)
Lease liabilities			14			(4.5)						(17.7)
Trade and other payables			18			(0.5)						(0.6)
Deferred tax liabilities			8			(4.6)						(6.1)
Non-current tax liabilities						(2.3)						(2.1)
Retirement benefit obligations			24			(5.4)						(6.1)
Provisions			22			(13.3)						(20.4)
						(62.2)						(124.0)
Net assets						112.4						92.4
Shareholders’ equity
Ordinary shares			25			9.4						7.8
Share premium						1.3						1.0
Merger reserve			25			29.6						–
Retained earnings						47.3						48.4
Translation reserve						24.8						35.2
Total shareholders’ equity						112.4						92.4

3 Scapa Group plc Annual Report and Accounts 2021

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Consolidated Statements of Changes in Equity

for the years ended 31 March 2021 and March 2020

Share

Share

Merger

Translation

Retained

Total

capital

premium

reserve

reserves

earnings

equity

£m

£m

£m

£m

£m

£m

Balance at 31 March 2019

7.7

1.0

–

28.9

101.8

139.4

Employee share option scheme – value of employee services

–

–

–

–

1.6

1.6

Dividends to shareholders

–

–

–

–

(4.5)

(4.5)

Issue of shares

0.1

–

–

–

–

0.1

0.1

–

–

–

(2.9)

(2.8)

Currency translation differences

–

–

–

6.3

–

6.3

Actuarial loss on pension schemes

–

–

–

–

(1.3)

(1.3)

Deferred tax on actuarial loss

–

–

–

–

0.3

0.3

Net income recognized directly in equity

–

–

–

6.3

(1.0)

5.3

Loss for the period

–

–

–

–

(49.5)

(49.5)

Total comprehensive income/(loss)

–

–

–

6.3

(50.5)

(44.2)

Balance at 31 March 2020

7.8

1.0

–

35.2

48.4

92.4

Employee share option scheme – value of employee services

–

–

–

–

0.3

0.3

Credit to equity for equity-settled share based payments

–

–

–

–

(0.1)

(0.1)

Issue of shares

1.6

0.3

29.6

–

–

31.5

1.6

0.3

29.6

–

0.2

31.7

Currency translation differences

–

–

–

(10.4)

–

(10.4)

Actuarial loss on pension schemes

–

–

–

–

(6.4)

(6.4)

Deferred tax on actuarial loss

–

–

–

–

0.9

0.9

Net income recognized directly in equity

–

–

–

(10.4)

(5.5)

(15.9)

Profit for the period

–

–

–

–

4.2

4.2

Total comprehensive loss

–

–

–

(10.4)

(1.3)

(11.7)

Balance at 31 March 2021

9.4

1.3

29.6

24.8

47.3

112.4

4 Scapa Group plc Annual Report and Accounts 2021

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Consolidated Cash Flow Statements

for the years ended 31 March 2021 and March 2020

						Year ended						Year ended
						31 March						31 March
						2021						2020
All on continuing operations			Note			£m						£m
Cash flows from operating activities
Net cash flow from operations			27			9.0						20.6
Interest paid						(2.7)						(3.4)
Income tax paid						(4.2)						(3.3)
Net cash generated from operating activities						2.1						13.9
Cash flows used in investing activities
Acquisition of subsidiary, net of cash acquired						–						(1.4)
Purchase of property, plant and equipment			13			(8.1)						(16.5)
Net cash used in investing activities						(8.1)						(17.9)
Cash flows generated from financing activities
Issue of shares			25			31.5						0.1
Dividends						–						(4.5)
Increase in borrowings			27			16.7						28.8
Repayment of borrowings			27			(37.9)						(13.1)
Repayment of lease liabilities			27			(3.1)						(2.1)
Net cash generated from financing activities						7.2						9.2
Net increase in cash and cash equivalents						1.2						5.2
Cash and cash equivalents at beginning of the year						16.3						10.8
Exchange (losses)/gains on cash and cash equivalents						(0.9)						0.3
Total cash and cash equivalents at end of the year			17			16.6						16.3

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16 Scapa Group plc Annual Report and Accounts 2021

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2. Revenue Analysis

Revenue by location

Revenue is allocated based on the country in which the order is received. The revenue analysis based on the location of the customer is as follows:

			Europe			N America			Asia			Other			Group
			£m			£m			£m			£m			£m
External revenue – 31 March 2021			134.7			104.5			20.4			12.9			272.5
External revenue – 31 March 2020			141.0			140.3			24.6			14.7			320.6

			Europe			N America			Asia			Other			Group
			£m			£m			£m			£m			£m
External revenue – 31 March 2021			130.0			123.7			17.1			1.7			272.5
External revenue – 31 March 2020			139.2			159.0			20.3			2.1			320.6

17 Scapa Group plc Annual Report and Accounts 2021

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3. Operating profit/loss

The operating profit/loss for the year is stated after (charging)/crediting:

			2021			2020
			£m			£m
Revenue			272.5			320.6
Materials and overheads			(138.2)			(165.7)
Factory costs (excluding employee costs)			(28.1)			(30.0)
Outward freight costs			(7.0)			(7.2)
Directors’ and employees’ costs			(63.4)			(71.6)
Depreciation of tangible fixed assets:
– Owned assets			(9.0)			(9.1)
– Leased assets			(3.1)			(2.8)
Lease rentals:
– Land and buildings			(0.2)			(0.2)
– Plant, machinery and other			(0.2)			(0.3)
Repairs and maintenance costs			(3.7)			(4.0)
Research and development costs (excluding employee costs)			(1.1)			(1.7)
Foreign exchange losses			–			(0.6)
Amortisation of other intangible assets			(2.4)			(5.8)
Movement in inventory provision			–			1.2
Impairment loss recognised in trade receivables			(0.2)			(0.8)
Pension administration costs			(0.6)			(0.7)
Acquisition costs			–			(0.2)
Biomed indemnification payment			1.9			–
Gain on pension scheme buy-out			–			2.4
Loss of major contract			(3.4)			(7.2)
Site closure and reorganisation costs			(3.7)			(8.0)
Asset write-offs			–			(0.3)
Goodwill impairment			–			(52.2)
Intangible asset impairment			–			(2.1)
Pension GMP equalisation			(0.1)			–
Strategic review			(0.8)			(0.7)
Accelerated share options			(1.1)			–
Potential HSE penalty			0.2			(0.3)
			8.3			(47.3)

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19 Scapa Group plc Annual Report and Accounts 2021

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4. Employee benefit expense

			2021			2020
			£m			£m
Wages, salaries and other benefits			53.9			60.6
Social security costs			7.4			6.3
Share options granted and lapsed to Directors and employees			0.5			1.6
Pension costs – defined contribution plans (note 24)			2.5			2.8
Pension costs – defined benefit plans (note 24)			0.2			0.3
Gain on pension scheme buy-out (note 3)			–			(2.4)
Pension GMP equalisation (note 3)			0.1			–
			64.6			69.2

Average employee numbers			2021			2020
Europe			826			908
North America			535			612
Asia			80			73
			1,441			1,593

20 Scapa Group plc Annual Report and Accounts 2021

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5. Key management compensation and Directors’ remuneration

			2021															2020
						Non-															Non-
			Executive			Executive			Key									Executive			Executive			Key
			Directors			Directors			management			Total						Directors			Directors			management			Total
			£m			£m			£m			£m						£m			£m			£m			£m
Short-term employment benefits			2.2			0.3			0.8			3.3						1.4			0.3			0.3			2.0
Post-employment benefits			0.2			–			–			0.2						0.2			–			–			0.2
Share-based payments (including share incentive plan)			–			–			0.1			0.1						1.1			–			0.1			1.2
			2.4			0.3			0.9			3.6						2.7			0.3			0.4			3.4

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7. Finance costs

			2021			2020
			£m			£m
Interest payable on bank loans and overdrafts			(1.5)			(1.7)
Interest income on pension scheme assets less interest on scheme liabilities (note 24)			0.1			(0.1)
Discount on provisions			(0.2)			(0.2)
Lease interest			(1.2)			(1.7)
Net finance costs			(2.8)			(3.7)

22 Scapa Group plc Annual Report and Accounts 2021

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8. Taxation

Income tax charge

			2021			2020
			£m			£m
Total current tax			(0.6)			(3.3)
Total deferred tax			(0.7)			4.8
Tax (charge)/credit for the year			(1.3)			1.5

			2021			2020
			£m			£m
Profit/(loss) on ordinary activities before tax			5.5			(51.0)
Tax (charge)/credit at 19% (2020: 19%)			(1.0)			9.7
Movements to unrecognised deferred tax			0.3			(1.4)
Income not taxable and other deductions			0.4			(0.2)
Items not deductible for tax purposes and other taxable items			(0.6)			(4.6)
Effect of overseas tax rates being higher than UK tax rate			(1.0)			(1.2)
Adjustments in respect of prior years			0.6			(0.8)
Actual tax (charge)/credit for the year			(1.3)			1.5

			2021			2020
			£m			£m
Deferred tax assets:
– Losses			5.0			3.7
– Provisions and other temporary differences			1.4			1.4
– Retirement benefit liabilities			1.6			1.8
– Tax effect of intangibles			2.3			4.1
			10.3			11.0
Deferred tax liabilities:
– Accelerated tax depreciation			(3.3)			(2.8)
– Other temporary differences			(0.7)			(1.5)
– Tax effect of goodwill and intangibles			(3.0)			(3.3)
			(7.0)			(7.6)

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			2021			2020
			£m			£m
Deferred tax assets as above			10.3			11.0
– Deferred tax liabilities expect to be settled net			(2.4)			(1.5)
Deferred tax asset on the Balance Sheet			7.9			9.5
Deferred tax liabilities as above			(7.0)			(7.6)
– Deferred tax assets expect to be settled net			2.4			1.5
Deferred tax liability on the Balance Sheet			(4.6)			(6.1)

			2021			2020
Movement in deferred tax			£m			£m
Beginning of the year			3.4			(1.7)
Exchange differences			(0.3)			0.1
Income Statement charge			(0.7)			4.8
Acquisitions			–			(0.1)
Deferred tax on actuarial gain			0.9			0.3
End of the year			3.3			3.4

			2021			2020
Deferred tax items have not been recognised in respect of the following items			£m			£m
Accelerated capital allowances			3.5			3.9
Temporary differences			3.9			3.7
Pensions			(1.1)			–
Tax losses			3.2			2.5
Total			9.5			10.1

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			Fair value
			£m
Net assets acquired
Separately identifiable intangible assets			0.4
Property, plant and machinery			0.5
Debtors and other assets			0.1
Inventory			0.3
Cash and cash equivalents			–
Deferred tax			(0.1)
Trade and other payables			(0.5)
			0.7
Goodwill			0.7
Total consideration			1.4
Satisfied by cash			1.4
Net cash outflow arising on acquisition
Cash consideration			1.4

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26 Scapa Group plc Annual Report and Accounts 2021

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11. Goodwill

			2021			2020
			£m			£m
Cost
1 April			145.2			138.2
Additions			–			1.8
Exchange differences			(9.1)			5.2
31 March			136.1			145.2
Impairment
1 April			(84.1)			(29.9)
Exchange differences			4.7			(2.0)
Impairment			–			(52.2)
31 March			(79.4)			(84.1)
Net book value at 31 March			56.7			61.1

			As at 31 March 2021									As at 31 March 2020
Arising in:			£m			Discount rate						£m			Discount rate
Acutek			14.1			12.7%						15.6			15.0%
BioMed			–			12.7%						–			15.0%
EuroMed			15.9			12.7%						17.6			15.0%
First Water			2.1			12.7%						2.1			15.0%
Markel			1.2			13.4%						1.3			16.4%
Systagenix			13.2			12.7%						13.3			15.0%
Webtec			10.2			12.7%						11.2			15.0%
Crawford			–			12.6%						–			16.2%
			56.7									61.1

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28 Scapa Group plc Annual Report and Accounts 2021

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12. Other intangible assets

									Customer
			Patents and						lists and			Technology
			development			Customer			sales			and
			costs			relationships			pipeline			know-how			Total
			£m			£m			£m			£m			£m
Cost
1 April 2019			5.0			22.0			2.9			1.4			31.3
Exchange differences			0.2			0.7			–			–			0.9
Additions			–			–			–			–			–
Acquisition of subsidiary			–			0.4			–			–			0.4
31 March 2020			5.2			23.1			2.9			1.4			32.6
Exchange differences			(0.3)			(1.1)			–			–			(1.4)
Additions			–			–			–			–			–
Acquisition of subsidiary			–			–			–			–			–
31 March 2021			4.9			22.0			2.9			1.4			31.2
Amortisation
1 April 2019			(3.7)			(12.7)			(2.9)			(1.2)			(20.5)
Exchange differences			(0.2)			(0.4)			–			–			(0.6)
Charge for the year			(1.1)			(4.6)			–			(0.1)			(5.8)
Impairment			–			(2.3)			–			–			(2.3)
31 March 2020			(5.0)			(20.0)			(2.9)			(1.3)			(29.2)
Exchange differences			0.3			1.1			–			–			1.4
Charge for the year			(0.2)			(2.1)			–			(0.1)			(2.4)
31 March 2021			(4.9)			(21.0)			(2.9)			(1.4)			(30.2)
Carrying amount
31 March 2021			–			1.0			–			–			1.0
31 March 2020			0.2			3.1			–			0.1			3.4
Remaining useful economic life (years)			–			1			–			–			–

			As at 31 March 2021									As at 31 March 2020
Arising in:			£m			Discount rate						£m			Discount rate
BioMed			–			12.7%						–			15.0%
Crawford			0.2			12.7%						0.3			16.2%
EuroMed			–			12.7%						0.2			15.0%
First Water			–			12.7%						–			15.0%
Markel			–			13.4%						0.4			16.4%
Systagenix			0.8			12.7%						2.5			15.0%
			1.0									3.4

29 Scapa Group plc Annual Report and Accounts 2021

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13. Property, plant and equipment

			Freehold			Long						Furniture,						Assets
			land and			leasehold			Plant and			fittings and						under
			buildings			buildings			machinery			equipment			IT systems			construction			Total
			£m			£m			£m			£m			£m			£m			£m
Cost
1 April 2019			37.0			9.5			105.5			4.9			20.3			8.6			185.8
Exchange differences			1.2			0.1			2.4			0.1			0.2			0.2			4.2
Additions			2.4			0.2			8.6			0.5			0.2			4.6			16.5
Acquisition of subsidiary			–			–			0.2			0.1			–			–			0.3
Disposals			(0.1)			(1.6)			(11.9)			(0.9)			(2.1)			(0.3)			(16.9)
Transfer to Right-of-Use assets			(12.9)			–			(0.3)			–			–			–			(13.2)
Transfers			0.1			0.3			1.1			(0.1)			–			(1.4)			–
31 March 2020			27.7			8.5			105.6			4.6			18.6			11.7			176.7
Exchange differences			(1.1)			(0.2)			(3.9)			(0.1)			(0.4)			(0.1)			(5.8)
Additions			1.1			0.6			5.3			0.2			2.3			(1.4)			8.1
Disposals			–			(1.7)			(4.5)			(0.5)			(1.1)			–			(7.8)
Transfers			6.4			(3.8)			0.4			0.1			1.3			(5.2)			(0.8)
31 March 2021			34.1			3.4			102.9			4.3			20.7			5.0			170.4
Accumulated depreciation
1 April 2019			(7.1)			(5.4)			(70.4)			(3.0)			(18.9)			–			(104.8)
Exchange differences			(0.2)			(0.1)			(1.6)			(0.1)			(0.2)			–			(2.2)
Depreciation			(1.1)			(0.4)			(6.8)			(0.4)			(0.4)			–			(9.1)
Impairment			(0.1)			(0.1)			(1.2)			–			–			–			(1.4)
Disposals			0.1			1.6			11.7			0.8			2.1			–			16.3
Transfer to Right-of-Use depreciation			–			–			0.2			–			–			–			0.2
31 March 2020			(8.4)			(4.4)			(68.1)			(2.7)			(17.4)			–			(101.0)
Exchange differences			0.4			0.1			2.5			0.1			0.3			–			3.4
Depreciation			(1.2)			(0.2)			(6.8)			(0.4)			(0.4)			–			(9.0)
Impairment			–			–			(0.1)			–			–			(0.2)			(0.3)
Disposals			(0.2)			1.7			4.6			0.6			1.1			–			7.8
Transfers			(0.8)			0.8			1.7			–			(1.1)			0.2			0.8
31 March 2021			(10.2)			(2.0)			(66.2)			(2.4)			(17.5)			–			(98.3)
Carrying amount
31 March 2021			23.9			1.4			36.7			1.9			3.2			5.0			72.1
31 March 2020			19.3			4.1			37.5			1.9			1.2			11.7			75.7

30 Scapa Group plc Annual Report and Accounts 2021

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14. Leases

The Group leases many assets including land and buildings, vehicles, machinery and IT equipment. Information about leases for which the Group is a lessee is presented below.

Right-of-use assets

			Long
			leasehold			Plant and
			buildings			machinery			IT systems			Total
			£m			£m			£m			£m
Cost
1 April 2019 recognised on transition to IFRS 16			19.9			0.9			0.1			20.9
Exchange differences			1.0			–			–			1.0
Additions			0.3			0.3			0.1			0.7
Disposals			0.1			0.1			–			0.2
31 March 2020			21.3			1.3			0.2			22.8
Exchange differences			(1.7)			(0.1)			–			(1.8)
Additions			1.1			1.6			–			2.7
Disposals			(0.5)			(0.2)			–			(0.7)
31 March 2021			20.2			2.6			0.2			23.0
Accumulated depreciation
1 April 2019			–			–			–			–
Exchange difference			(0.1)			–			–			(0.1)
Depreciation			(2.3)			(0.4)			(0.1)			(2.8)
1 April 2020			(2.4)			(0.4)			(0.1)			(2.9)
Exchange difference			0.1			–			–			0.1
Depreciation			(2.5)			(0.5)			(0.1)			(3.1)
Disposals			0.5			0.1			0.1			0.7
31 March 2021			(4.3)			(0.8)			(0.1)			(5.2)
Carrying amount
31 March 2021			15.9			1.8			0.1			17.8
1 April 2020			18.9			0.9			0.1			19.9

Lease liabilities

			2021			2020
			£m			£m
Maturity analysis – contractual undiscounted cash flows
Less than one year			14.5			3.8
One to five years			4.6			17.6
More than five years			0.4			1.3
Total undiscounted lease liabilities at 31 March			19.5			22.7
Lease liabilities at March 2021			18.2			20.2
Current			13.7			2.5
Non-current			4.5			17.7

31 Scapa Group plc Annual Report and Accounts 2021

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Amounts recognised in profit or loss

			2021			2020
			£m			£m
Interest on lease liabilities			1.2			1.7
Expenses relating to short-term and low-value leases			0.4			0.5
Depreciation expense			3.0			2.8

32 Scapa Group plc Annual Report and Accounts 2021

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15. Inventory

			2021			2020
			£m			£m
Raw materials			19.6			18.4
Work in progress			7.8			8.8
Finished goods			9.7			14.3
			37.1			41.5

33 Scapa Group plc Annual Report and Accounts 2021

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16. Trade and other receivables

			2021			2020
			£m			£m
Amounts due within one year
Trade receivables			54.3			61.5
Less: provisions for impairment			(3.2)			(3.4)
Trade receivables – net			51.1			58.1
Other debtors			–			1.4
Prepayments and accrued income			6.1			4.2
Total amounts due within one year			57.2			63.7

			2021			2020
			£m			£m
Pounds Sterling			9.7			8.7
US Dollars			22.7			34.4
Euros			18.9			16.0
Other			5.8			4.6
			57.2			63.7

			2021			2020
			£m			£m
Less than one month			1.4			2.7
Between one and three months			0.2			0.3

			2021			2020
			£m			£m
Opening provision at 1 April 2020			3.4			1.8
Exchange difference			(0.1)			–
Charge for the year			0.2			1.7
Receivables written off in the year			(0.3)			(0.1)
Closing provision at 31 March 2021			3.2			3.4

34 Scapa Group plc Annual Report and Accounts 2021

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Aging of impaired trade receivables:

			2021			2020
			£m			£m
Less than one month			1.7			1.5
Between one and three months			0.4			0.2
Greater than three months			1.1			1.7

---

36 Scapa Group plc Annual Report and Accounts 2021

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18. Trade and other payables

			2021			2020
			£m			£m
Trade payables and trade accruals			44.9			45.1
Other taxes and social security			3.9			3.2
Other creditors			8.0			8.5
			56.8			56.8
Amounts due after more than one year
Trade and other payables			0.5			0.6

37 Scapa Group plc Annual Report and Accounts 2021

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19. Borrowings

			2021			2020
			£m			£m
Amounts due within one year
Bank loan			15.0			–
Other loans			0.1			0.1
			15.1			0.1
Amounts due after more than one year
Bank loan			31.6			71.0
			31.6			71.0
Total borrowings			46.7			71.1

			%
31 March 2021 – Bank loans and overdrafts			1.8%
31 March 2020 – Bank loans and overdrafts			2.0%

38 Scapa Group plc Annual Report and Accounts 2021

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The carrying amounts of the Group’s borrowings are denominated in the following currencies:

			2021			2020
			£m			£m
Pounds Sterling			46.7			64.9
US Dollars			–			6.2
			46.7			71.1

---

---

			Due within			One to			Two to
			one year			two years			five years
			£m			£m			£m
2021
Trade payables and trade accruals			44.9			–			–
Other taxes and social security			3.9			–			–
Other creditors			8.0			0.5			–
Lease liabilities			14.5			1.5			3.1
Loans and overdrafts			15.1			31.6			–
			86.4			33.6			3.1

			Due within			One to			Two to
			one year			two years			five years
			£m			£m			£m
2020
Trade payables and trade accruals			45.1			–			–
Other taxes and social security			3.2			–			–
Other creditors			8.5			0.6			–
Lease liabilities			3.8			14.7			2.9
Loans and overdrafts			0.1			–			71.0
			60.7			15.3			73.9

			Due within			One to			Two to
			one year			two years			five years
			£m			£m			£m
2021
Receivables			51.1			–			–
Cash and cash equivalents			16.6			–			–
			67.7			–			–
2020
Receivables			59.5			–			–
Cash and cash equivalents			16.3			–			–
			75.8			–			–

---

---

			2021			2020
Total equity (£m)			112.4			92.4
Total assets (£m)			269.2			291.4
Equity % ratio			42%			32%

43 Scapa Group plc Annual Report and Accounts 2021

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22. Provisions

			Reorganisation
			and leasehold			Contract
			commitments			liability			Environmental			Total
			£m			£m			£m			£m
At 1 April 2020			8.9			25.0			0.1			34.0
Additions in the year			1.3			–			–			1.3
Release in the year			(0.5)			(7.2)			–			(7.7)
Utilised in the year			(6.2)			–			–			(6.2)
At 31 March 2021			3.5			17.8			0.1			21.4
Analysis of provisions:
Current			0.8			7.2			0.1			8.1
Non-current			2.7			10.6			–			13.3
At 31 March 2021			3.5			17.8			0.1			21.4

			Reorganisation
			and leasehold			Contract
			commitments			liability			Environmental			Total
			£m			£m			£m			£m
At 1 April 2019			14.4			32.2			0.1			46.7
Additions in the year			12.8			–			–			12.8
Release in the year			(0.7)			(7.2)			–			(7.9)
Utilised in the year			(17.6)			–			–			(17.6)
At 31 March 2020			8.9			25.0			0.1			34.0
Analysis of provisions:
Current			6.3			7.2			0.1			13.6
Non-current			2.6			17.8			–			20.4
At 31 March 2020			8.9			25.0			0.1			34.0

---

---

---

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Italy

There is 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 in 2013. It has liabilities of £0.4m (2020: £0.5m).

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									France									Italy
			2021			2020						2021			2020						2021			2020						2021			2020
Discount rate			1.95%			2.25%						3.14%			4.25%						0.65%			1.40%						0.21%			(0.14)%
Salary rises			–			–						–			–						1.70%			1.70%						–			–
Price inflation (RPI)			3.25%			2.50%						–			–						1.70%			1.70%						2.00%			2.00%
Price inflation (CPI)			2.55%			1.55%						–			–						–			–						–			–
Future pension increases – RPI max 5%			3.17%			2.50%						–			–						–			–						–			–
Future pension increases – RPI max 3%			2.56%			2.16%						–			–						–			–						–			–
Amount of pension commuted for cash			25.00%			25.00%						–			–						–			–						–			–

---

			UK
			2021
			£m
Rate of inflation
Change in the year-end liabilities from a 0.5% increase in the assumed rate of inflation			4.7
Change in the year-end liabilities from a 0.5% decrease in the assumed rate of inflation			(4.6)
Discount rate
Change in the year-end liabilities from a 0.5% increase in the assumed rate of discount			(9.2m)
Change in the year-end liabilities from a 0.5% decrease in the assumed rate of discount			10.2m
Mortality
Life expectancy of members increases by one year			7.8m
Life expectancy of members decreases by one year			(7.7m)
Current pensioners (years):
Male life expectancy at age 65			85.5
Female life expectancy at age 65			87.5
Future pensioners (years):
Male life expectancy at age 65 (currently aged 45)			86.7
Female life expectancy at age 65 (currently aged 45)			89.0

49 Scapa Group plc Annual Report and Accounts 2021

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Overseas equities			10.3			18.3
Corporate bonds			84.3			75.1
Fixed interest government bonds			22.4			19.7
Index-linked government bonds			23.8			13.2
Property			2.6			1.9
Hedge funds			4.8			4.0
Cash and cash equivalents			2.6			7.1
Total market value of assets*			151.1			139.3
Present value of scheme liabilities			(145.1)			(135.1)
Surplus restriction			(6.0)			(4.2)
Net deficit in the scheme			–			–

			2021			2020
			Value			Value
French scheme			£m			£m
Present value of scheme liabilities			(3.6)			(4.0)
Net deficit in the scheme			(3.6)			(4.0)

			2021			2020
			Value			Value
Italian scheme			£m			£m
Present value of scheme liabilities			(0.4)			(0.5)
Net deficit in the scheme			(0.4)			(0.5)

			2021			2020
			Value			Value
North American scheme			£m			£m
Present value of scheme liabilities			(1.4)			(1.6)
Net deficit in the scheme			(1.4)			(1.6)

			2021			2020
			£m			£m
Current service cost			(0.2)			(0.3)
Buy-out gain in US scheme			–			2.4
Pension GMP equalisation			(0.1)			–
Total included within staff costs			(0.3)			2.1
Interest income on scheme assets less interest on scheme liabilities			0.1			(0.1)
Total included within finance costs			0.1			(0.1)
Total gain/(expense) charged through the Income Statement			(0.2)			2.0

50 Scapa Group plc Annual Report and Accounts 2021

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The amounts recognised in the Statement of Comprehensive Income are as follows:

			2021			2020
			£m			£m
Actual return less interest income on scheme assets			11.1			0.9
Experience gains arising on scheme liabilities			0.2			(2.1)
Changes in assumptions underlying the present value of the scheme liabilities:
– Financial assumptions			(15.8)			4.1
Change in surplus restriction			(1.9)			(4.2)
Total amounts recognised in the Statement of Comprehensive Income			(6.4)			(1.3)

Analysis of movements in scheme assets

			2021			2020
			£m			£m
Beginning of the year			139.3			153.0
Exchange differences			–			0.3
Expected return on scheme assets			3.1			3.2
Actual return less interest income on scheme assets			11.1			1.2
Contributions paid			7.0			1.9
Benefits paid			(9.5)			(10.3)
Settlement			–			(10.0)
End of the year			151.1			139.3

Analysis of movement in scheme liabilities

			2021			2020
			£m			£m
Beginning of the year			(141.2)			(161.4)
Exchange differences			–			(0.5)
Current service cost (included within staff costs)			(0.3)			(0.2)
Pension GMP equalisation (included within staff costs)			(0.1)			–
Interest on scheme liabilities			(3.0)			(3.8)
Experience gains			0.2			0.3
Changes in assumptions			(15.8)			4.1
Benefits paid			9.5			10.3
Settlement			–			10.0
End of the year			(150.7)			(141.2)

Analysis of movement in Balance Sheet liability

			2021			2020
			£m			£m
Beginning of the year			(6.1)			(8.4)
Exchange differences			0.3			(0.2)

51 Scapa Group plc Annual Report and Accounts 2021

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Income Statement expense			(0.2)			2.0
Statement of Comprehensive Income items			11.3			(1.3)
Changes in assumptions			(15.8)			4.1
Contributions paid			7.0			1.9
Surplus restriction			(1.9)			(4.2)
Net deficit in the schemes			(5.4)			(6.1)

Cumulative actuarial losses on pension schemes recognised in reserves total £25.0m (2020: £18.6m).

			2021			2020			2019			2018			2017
			IAS 19			IAS 19			IAS 19			IAS 19			IAS 19
			£m			£m			£m			£m			£m
Present value of defined benefit obligations			(150.7)			(141.2)			(161.4)			(169.1)			(195.6)
Fair value of plan assets			151.1			139.3			153.0			148.1			164.2
Adjustment relating to asset ceiling and minimum funding requirements			(6.1)			(4.2)			–			–			–
Deficit in the plan			(5.7)			(6.1)			(8.4)			(21.0)			(31.4)
Experience adjustments on plan liabilities			(15.6)			4.4			4.6			5.9			(24.5)
			(10.4%)			3.1%			2.9%			3.5%			(12.5%)
Experience adjustments on plan assets			11.1			1.2			5.2			1.1			17.6
			7.3%			0.9%			3.4%			0.7%			10.7%

52 Scapa Group plc Annual Report and Accounts 2021

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25. Share capital

			2021			2020
			£m			£m
Allotted, issued and fully paid
187,797,885 (2020: 155,242,923) shares of 5p each			9.4			7.8

On 14 May 2020 the Group placed an aggregate of 30,758,649 new ordinary shares of 5p each at a price of 105p per placing share to raise net proceeds of £31.6m after expenses. The placing shares represented approximately 19.99% of the Company’s existing issued share capital. The placing utilised a cash box structure, whereby the cash box entity issued redeemable preference shares in consideration for the receipt of the cash proceeds (net of issue costs) arising from the placing. The Company’s ordinary shares were issued as consideration for the transfer to it of the shares, which it did not already own, in the cash box entity. As a result, in the opinion of the Board, the placing qualified for merger relief under section 612 of Companies Act 2006 so that the excess of the value of the acquired shares in the cash box entity over the nominal value of the ordinary shares issued by the Company was credited to a merger reserve which is considered to be distributable.

The placing shares ranked par passu in all respects with the existing ordinary shares, including the right to receive all dividends and other distributions declared, made or paid after the date of the issue.

The Company has one class of ordinary shares which carry no rights to fixed income.

53 Scapa Group plc Annual Report and Accounts 2021

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26. Share options

Potential issues of ordinary shares

Certain senior managers and other staff hold options to subscribe for shares in the Company at prices ranging from nil pence per share to 273.0p per share under share option 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:

Number

Number

Average exercise

of options

of options

Scheme

Year of grant

price per share

Exercise period

2021

2020

Performance share plan

2013

nil p per share

up to 23 July 2023

–

4,000

Performance share plan

2014

nil p per share

up to 22 July 2024

–

5,000

Performance share plan

2015

nil p per share

up to 22 July 2025

–

25,234

Performance share plan

2016

nil p per share

up to 8 July 2026

162,013

199,907

Performance share plan

2017

nil p per share

up to 9 August 2027

–

181,556

Performance share plan

2017

nil p per share

up to 30 November 2027

–

31,645

Performance share plan

2018

nil p per share

up to 1 June 2028

227,510

287,211

Performance share plan

2019

nil p per share

up to 5 March 2029

70,855

70,855

Performance share plan

2019

nil p per share

up to 1 June 2029

1,334,483

1,794,785

Performance share plan

2020

nil p per share

up to 16 September 2030

1,435,342

–

Sharesave option plan 3-year

2018

273.00p

up to 1 September 2022

180,347

340,033

3,410,550

2,940,226

During the year the 4,000 options under the 2013 performance share plan, 5,000 under the 2014 performance share plan, 25,234 under the 2015 performance share plan and 37,894 options under the 2016 performance share plan were exercised, all other movements are for lapsed options and new grants.

All other movements from 2020 are lapsed options and new grants. As at 31 March 2021, 162,013 options were exercisable under the 2016 Performance share plan.

The Group operates several share option schemes. Options are exercisable at a price equal to the average quoted market price of the Group’s shares on the date of grant. Options are forfeited if the employee leaves the Group through resignation or dismissal before the options vest.

Equity-settled share options are measured at fair value at the date of grant. The fair value determined at the date of grant is expensed over the vesting period, based upon the Group’s estimate of shares that will eventually vest.

There are no cash-settled share options.

Fair value is measured by use of a Black Scholes model according to the relevant measures of performance. The models include adjustments, based upon management’s best estimate, for the effects of exercise restrictions, behavioural considerations and expected dividend payments. The option life is derived from models based upon these assumptions and other assumptions identified below.

54 Scapa Group plc Annual Report and Accounts 2021

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The Group recognised total expenses of £0.3m (2020: £1.6m) related to equity-settled share-based payments. This expense includes the charge for new options granted during the year net of release of charge for the options for which it has been concluded that vesting criteria will not be met.

Long Term Incentive Plans

The Company has two Long Term Incentive Plans; the Scapa Group plc 2011 Performance Share Plan (PSP) and the Scapa Group plc 2019 Long Term Incentive Plan (LTIP).

Options granted between 2011 to 2019 relate to the PSP, options granted in 2020 relate to the 2019 LTIP, details of the plans are outlined below:

PSP

PSP is a long-term incentive for Executive Directors, the Executive Team and key members of the Leadership Team. It was designed to encourage participants to deliver sustained profitable growth and enhanced shareholder value, and was based on trading EPS growth measured over a three year period. Reflected in the value of the awards were extremely stretching EPS growth targets requiring growth of a minimum of RPI+20% for a minimum threshold award to RPI+40% for maximum award. When determining the trading EPS growth, the impact of material acquisitions, disposals and changes in the issued share capital were disregarded to ensure that the EPS measurement was not artificially affected.

During the year the 2018 PSP award lapsed on the basis of the FY21 adjusted EPS not meeting the minimum threshold target.

2019 LTIP Scheme

The 2019 LTIP Scheme was introduced during 2019 with the options granted in 2020 under this scheme measurement criteria. This scheme is based on 50% EPS performance growth and 50% Total Shareholder Return (TSR) against the FTSE SmallCap (excluding IT) index. The EPS growth criteria was set as specific EPS targets of 11.4 pence (threshold) to 13.2 pence (maximum) and the TSR growth threshold was set at median with upper quartile growth achieving maximum vesting.

Following the approval of the purchase of Scapa by SWM Inc the remuneration committee applied it’s discretion in relation to disapplying the time criteria to schemes open in March 2021 and they assessed them for both performance and TSR conditions when determining the vesting award upon the sale of the business to SWM International Inc.

As a result of the likely transaction both the FY19 and FY20 LTIP scheme charges (non-TSR only) were accelerated to 14 April 2021 in-line with the IFRS2 guidance with the accelerated charge up to 31 March 2021 recorded of £1.1m.

The following tables show the inputs to the model used to calculate the fair value of equity-settled share options granted during the years ended 31 March 2021 and 31 March 2020 respectively:

			Performance
			Share Plan
			awarded
Year ended 31 March 2021			16 September 2020
Weighted average share price (p)			117
Weighted average exercise price (p)			Nil

55 Scapa Group plc Annual Report and Accounts 2021

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Weighted average fair value of options granted (p)			117
Expected volatility (%)			n/a
Expected life (months)			36
Risk free rate (%)			n/a

			Performance
			Share Plan
			awarded
Year ended 31 March 2020			20 June 2019
Weighted average share price (p)			196
Weighted average exercise price (p)			Nil
Weighted average fair value of options granted (p)			196
Expected volatility (%)			n/a
Expected life (months)			36
Risk free rate (%)			n/a

The expected volatility is based upon the historical volatility of the Group’s share price over the expected life of the option.

Sharesave

The Scapa Group 2018 Sharesave Scheme is an Inland Revenue approved Save-As-You-Earn (SAYE) share option scheme pursuant to which 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 are granted options to subscribe for shares in the Company at a discounted exercise price. The maximum amount that can be saved by a participant is £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%.

The movement in total outstanding options is provided below:

SAYE Plan

Performance Share Plan

Weighted

Weighted

average

average

Number

exercise

Number

exercise

of shares

price

of shares

price

Outstanding at 31 March 2019

487,991

273.0p

1,013,476

£Nil

Granted during the year

–

–

1,813,444

£Nil

Exercised during the year

–

–

(112,972)

£Nil

Forfeited and lapsed during the year

(147,958)

273.0p

(113,755)

£Nil

Outstanding at 31 March 2020

340,033

273.0p

2,600,193

£Nil

Granted during the year

–

–

1,472,415

£Nil]

Exercised during the year

–

–

(72,128)

£Nil]

Forfeited and lapsed during the year

(159,686)

273.0p

(770,277)

£Nil

Outstanding at 31 March 2021

180,347

273.0p

3,230,203

£Nil

Weighted average contractual remaining life:

56 Scapa Group plc Annual Report and Accounts 2021

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31 March 2021

0.8 years

8.1 years

31 March 2020

1.8 years

8.6 years

The weighted average share price at the date of exercise for share options exercised during the year was 210.1p.

Scapa Group 2015 Value Creation Plan

The Company implemented the Value Creation Plan (VCP) in 2015/16 to reward participants for creating value through growth in the Company’s share price. If defined share price targets are met on defined dates, the growth in excess of £1.95 (up to a maximum of £5.00) will be shared by the Plan’s participants. The total amount awarded to participants in the Plan was set as 5% of the number of shares in issue. The first measurement date was 31 March 2018 with a share price target of £3.00. The second measurement date was 31 March 2020 where the share price target was £4.00. Any rights obtained in March 2018 had to be held for 24 months before exercise. Any rights that were obtained in March 2020 had to be held for twelve months before exercise.

The first tranche of the VCP has vested with the gateway share price of £3.00 having been exceeded on 31 March 2018. Pursuant to the VCP rules, any vested amount would be reduced by amounts vesting under the PSP schemes vesting in financial years 2018, 2019 and 2020 respectively. The second tranche did not vest as the target share price was not achieved.

As at 31 March 2021 a total of 1,645,766 options remained to be exercised, these were equity settled upon the sale of the business to SWM International Inc on 15 April 2021.

57 Scapa Group plc Annual Report and Accounts 2021

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27. Reconciliation of operating profit to operating cash flow and reconciliation of net cash

						Year ended			Year ended
						31 March			31 March
						2021			2020
			All on continuing operations			£m			£m
			Profit for the year			4.2			(49.5)
			Adjustments for: Finance costs			2.8			3.7
			Taxation charge/(credit)			1.3			(1.5)
			Depreciation and amortisation			14.5			17.7
			Profit on disposal of land and buildings			–			0.5
			Exceptional pension GMP equalisation			0.1			–
			Impairment of tangible fixed assets			0.3			1.4
			Impairment of goodwill			–			52.2
			Impairment of intangible assets			–			2.3
			Pension payments in excess of charge			(6.7)			(1.6)
			Pension scheme buy-out			–			(2.4)
			Share option charge			0.3			1.6
			Changes in working capital:
			Inventories			2.5			5.4
			Trade debtors			3.9			5.0
			Trade creditors			1.6			(0.1)
			Net movement in trading working capital			8.0			10.3
			Net movement in other current debtors			(0.8)			1.9
			Net movement in other current creditors			(2.4)			(2.7)
			Net movement in reorganisation and leasehold commitment provisions			(5.4)			(6.1)
			Net movement in contract liability provision			(7.2)			(7.2)
			Cash generated from operations			9.0			20.6

Analysis of cash and cash equivalents and borrowings

			At 1 April			Cash			Exchange			Non-cash			At 31 March
			2020			flow			movement			movement			2021
			£m			£m			£m			£m			£m
Cash and cash equivalents			16.3			1.2			(0.9)			–			16.6
Borrowings within one year			(2.6)			0.7			0.7			(27.6)			(28.8)
Borrowings after more than one year			(88.3)			23.6			1.0			27.8			(35.9)
Total borrowings			(90.9)			24.3			1.7			0.2			(64.7)
Total			(74.6)			25.5			0.8			0.2			(48.1)

58 Scapa Group plc Annual Report and Accounts 2021

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28. Commitments

Capital commitments

The amount contracted but not provided for in the accounts at 31 March 2021 was £1.2m (2020: £0.9m).

At 31 March 2021 a total of £4.2m (2020: £4.2m) was authorised but not yet contracted.

29. Post balance sheet events

In February 2021 the Scapa Group plc Board recommended an offer from Schweitzer-Mauduit International Inc. (SWM Intl.) to acquire 100% of the share capital of the Group for £412.6m. The Shareholders voted in favour of the transaction and the decision was ratified by the High Court and completed on the 15th April 2021. Following the acquisition the ultimate parent undertaking and controlling party is SWM Intl Inc.

Following a cash injection of £61.2m through a share issue to SWM Intl. Group borrowings of £ 55.0m were repaid on 21 April 2021 and the facility was formally cancelled on 26 May 2021.

59 Scapa Group plc Annual Report and Accounts 2021

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Exhibit 99.2

This information and PricewaterhouseCoopers LLP’s (“PwC”) services (collectively, “Information”) are confidential and access, use and distribution are restricted. If you are not PwC’s client or otherwise authorized by PwC and its client, you may not access or use the Information.

PwC performed and prepared the Information at client’s direction and exclusively for client’s sole internal benefit and use pursuant to its client agreement. THE INFORMATION MAY NOT BE RELIED UPON BY ANY PERSON OR ENTITY OTHER THAN PWC’S CLIENT. PWC MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE INFORMATION AND EXPRESSLY DISCLAIMS ANY CONTRACTUAL OR OTHER DUTY, RESPONSIBILITY OR LIABILITY TO ANY PERSON OR ENTITY OTHER THAN ITS CLIENT.

The Information was performed or prepared in accordance with the Standards for Consulting Services of the American Institute of Certified Public Accountants (“AICPA”) and, where applicable, the AICPA Standards for Reports on the Application of Accounting Principles or the AICPA Statements on Standards for Tax Services. The Information does not constitute legal or investment advice, broker dealer services, a fairness or solvency opinion, an estimate of value, an audit, an examination of any type, an accounting or tax opinion, or other attestation or review services in accordance with standards of the AICPA, the Public Company Accounting Oversight Board or any other professional or regulatory body. The Services cannot provide assurance that matters of significance to Client will be disclosed and the Services are not intended or likely to identify or disclose fraud, error or misrepresentation, any financial statement misstatements or to identify or disclose any wrongdoing or noncompliance with laws and regulations. PwC provides no opinion or other form of assurance with respect to the Information. Client, in consultation with its independent accountants, is responsible for the presentation and preparation of its financial statements and related disclosures.

The Information shall be maintained in strict confidence and may not be discussed with, distributed or otherwise disclosed to any third party, in whole or in part, without PwC’s prior written consent, nor may the Information be associated with, referred to or quoted in any way in any offering memorandum, prospectus, registration statement, public filing, loan or other agreement. Information provided by or through third parties is provided “as is”, without any representations or warranties by PwC or such third parties. PwC and such third parties disclaim any contractual or other duty, responsibility or liability to Client or any other person or entity that accesses such information. Client has no obligation of confidentiality with respect to any information related to the tax structure or tax treatment of any transaction.

Client is responsible for the information used to prepare any prospective financial statements or other forward-looking information, including forecasts or projections (collectively, “PFI”) referred to in this report, and for any decisions, assumptions or projections relating to PFI or any outputs therefrom. PwC’s observations on PFI and any quantified alternatives, sensitivities or vulnerabilities do not represent PwC’s assurance, concurrence, conclusion or opinion on any PFI, nor PwC’s advocacy, endorsement or promotion of any results therefrom; they are only an illustration of PwC’s advice to Client regarding Client’s evaluation or determination of PFI. It is Client’s responsibility to make its own decisions regarding PFI. As events and circumstances frequently do not occur as expected, there may be material differences between PFI and actual results; PwC disclaims any responsibility and liability for PFI or based on any differences between PFI and any actual results achieved.

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Unaudited Pro Forma Condensed Combined Financial Information

Introduction

On January 27, 2021, Schweitzer-Mauduit International, Inc. (“SWM” or the “Company”) issued an announcement pursuant to Rule 2.7 of the United Kingdom City Code on Takeovers and Acquisitions disclosing the terms of a recommended cash offer to acquire the entire issued and to be issued ordinary shares of Scapa Group plc, a company incorporated in England and Wales (“Scapa”), to be effected through a scheme of arrangement (the “Scheme”) under Part 26 of the United Kingdom Companies Act 2006, as amended (the “Acquisition”). Scapa is a UK-based innovation, design, and manufacturing solutions provider for healthcare and industrial markets and has operations across North America, Europe and Asia.

On April 15, 2021 (the “Acquisition Date”), the Scheme became effective in accordance with its terms following delivery to the Registrar of Companies in England and Wales of the orders of the High Court of Justice of England and Wales sanctioning the Scheme, and the Acquisition was completed. The offer price for the Acquisition was £2.15 (approximately $2.96 based on an exchange rate of $1:£1.3788 on April 15, 2021) in cash for each ordinary share of Scapa, valuing the entire ordinary share capital of Scapa at approximately £412.6 million on a fully-diluted basis (approximately $568.9 million). The Company settled the offer consideration with payment to Scapa shareholders under the Scheme on April 29, 2021.

In connection with the Acquisition, the Company entered into amendments to its existing revolving credit facility dated September 25, 2018 (as amended, the “revolving credit facility”) to modify certain provisions in order to facilitate the Acquisition and borrowings under the existing revolving credit facility in connection with the Acquisition. The Company entered into an amendment to its existing credit agreement to, among other things, add a new $350 million Term Loan B facility (“Term Loan B Facility”) with a seven-year maturity which was funded on April 21, 2021. The proceeds from the Term Loan B Facility, together with $313 million of the Company’s existing $500 million revolving line of credit (the “Revolving Credit Facility”) under the Existing Credit Agreement, was used to finance the cash consideration payable to Scapa shareholders pursuant to the Acquisition, the required repayment of Scapa indebtedness, and expenses payable in connection with the Acquisition (including debt refinancing costs) (together the “Acquisition Costs”) (herein referred to as the “Financing”).

The pro forma financial information has been prepared by the Company in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the Securities and Exchange Commission on May 20, 2020. The following unaudited pro forma condensed combined financial statements of the Company as of and for the year ended December 31, 2020 are derived from the Company’s historical consolidated financial statements included in the Company’s filing on Form 10-K. The unaudited pro forma condensed combined financial statements are also derived from the historical consolidated financial statements of Scapa for the year ended March 31, 2021, which are included in the Company's Current Report on Form 8-K/A as Exhibit [99.1].

SWM and Scapa have different fiscal year ends (December 31 and March 31, respectively). As Scapa's fiscal year end of March 31 is within one fiscal quarter of SWM's fiscal year end of December 31, the pro forma condensed combined statement of income for the year ended December 31, 2020 includes Scapa's operating results for its respective fiscal year ended March 31, 2021 as permitted by Rule 11-02(c)(3) of Regulation S-X, which allows the combination of financial information for companies if their fiscal years end within one fiscal quarter of each other. To comply with SEC rules and regulations for companies with

2

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different fiscal year ends, the pro forma condensed combined financial information has been prepared utilizing periods that differ by less than one fiscal quarter.

The historical financial statements of SWM and Scapa have been adjusted in the accompanying Unaudited Pro Forma Condensed Combined Financial Information to give effect to pro forma events which are necessary to account for the Acquisition and the Financing, in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The unaudited pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable. Scapa’s historical financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The Acquisition is being accounted for as a business combination using the acquisition method with SWM as the accounting acquirer in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Under this method of accounting, the total cash consideration will be allocated to Scapa’s assets acquired and liabilities assumed based upon their estimated fair values at the Acquisition Date. The process of valuing the net assets of Scapa at the Acquisition Date, as well as evaluating accounting policies for conformity, is preliminary. Any differences between the fair value of the consideration transferred and the fair value of the assets acquired and liabilities assumed will be recorded as goodwill. Accordingly, the Acquisition consideration allocation and related adjustments reflected in this unaudited pro forma combined financial information are preliminary and subject to revision based on a final determination of fair value.

As a result of the foregoing, the unaudited pro forma condensed combined financial statements are based on the preliminary information available and management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed. The finalization of the Company’s purchase accounting assessment may result in changes to the valuation of assets acquired and liabilities assumed, particularly in regard to indefinite and definite-lived intangible assets and deferred tax assets and liabilities, which could be material. The Company will finalize the accounting for the business combination as soon as practicable within the measurement period in accordance with ASC 805, but in no event later than one year from the Acquisition Date.

The pro forma condensed combined financial statements and related notes are provided for illustrative purposes only and do not purport to represent what the combined company’s actual results of operations or financial position would have been had the Acquisition been completed on the dates indicated, nor are they necessarily indicative of the combined company’s future results of operations or financial position for any future period.

The following Unaudited Pro Forma Condensed Combined Financial Information gives effect to the Acquisition and Financing, which includes adjustments for the following:

•the conversion of Scapa’s historical financial statements from Pound Sterling to U.S. Dollars using the period-end rate at March 31, 2021 of $1.3786 per Pound Sterling for the unaudited condensed combined pro forma balance sheet and the weighted average of the monthly average rates during the year ended March 31, 2021 of $1.3020 per Pound Sterling for the unaudited condensed combined pro forma statement of income;

•certain adjustments to reflect Scapa’s historical financial information on a U.S. GAAP basis;

•certain reclassifications to conform Scapa’s historical financial statement presentation to SWM’s presentation;

3

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•application of the acquisition method of accounting under the provisions of ASC 805 and to reflect cash consideration of approximately $568.9 million;

•proceeds and uses of the Financing entered into in connection with the Acquisition; and

•non-recurring transaction costs in connection with the Acquisition.

4

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SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES Unaudited Pro Forma Condensed Combined Balance Sheet December 31, 2020 (In millions)
						Historical
						SWM						Scapa Adjusted ( Note 2)						Financing Adjustments (Note 4)												Transaction Accounting Adjustments (Note 5)												Pro Forma Condensed Combined
ASSETS
Cash and cash equivalents			$			54.7			$			22.9			$			648.6			4(a)						$			(662.9)			5(a)						$			63.3
Accounts receivable, net						148.5						78.9						—												(0.3)			5(i)									227.1
Inventories						179.7						51.1						—												2.9			5(b)									233.7
Income taxes receivable						6.2						3.7						—												—												9.9
Other current assets						7.3						—						—												—												7.3
Total current assets						396.4						156.6						648.6												(660.3)												541.3
Property, plant and equipment, net						339.0						114.5						—												41.0			5(c)									494.5
Deferred income tax benefits						2.6						10.9						—												—												13.5
Investment in equity affiliates						59.3						—						—												—												59.3
Goodwill						403.7						78.2						—												181.3			5(e)									663.2
Intangible assets						314.7						1.4						—												243.0			5(d)									559.1
Other assets						69.2						17.8						—												0.6			5(f)									87.6
Total assets			$			1,584.9			$			379.4			$			648.6									$			(194.4)									$			2,418.5
LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt			$			2.8			$			35.9			$			0.9			4(b)						$			(20.8)			5(i)						$			18.8
Accounts payable						60.5						78.3						—												—												138.8
Income taxes payable						2.7						1.2						—												—												3.9
Accrued expenses						100.9						15.0						—												(2.1)			5(g)									113.8
Total current liabilities						166.9						130.4						0.9												(22.9)												275.3
Long-term debt						590.5						43.6						647.7			4(b)									(43.6)			5(i)									1,238.2
Long-term income tax payable						17.7						3.2						—												—												20.9
Pension and other postretirement benefits						36.5						7.6						—												—												44.1
Deferred income tax liabilities						45.1						6.3						—												59.2			5(h)									110.6
Other liabilities						78.6						25.2						—												(2.6)			5(g)									101.2
Total liabilities						935.3						216.3						648.6												(9.9)												1,790.3
Stockholders' equity:
Preferred stock						—						—						—												—			5(k)									—
Common stock						3.1						13.0						—												(13.0)			5(k)									3.1
Additional paid-in-capital						92.2						42.6						—												(42.6)			5(k)									92.2
Retained earnings						666.2						73.3						—												(94.7)			5(k) 5(l)									644.8
Accumulated other comprehensive loss						(111.9)						34.2						—												(34.2)			5(k)									(111.9)
Total stockholders' equity						649.6						163.1						—												(184.5)												628.2
Total liabilities and stockholders' equity			$			1,584.9			$			379.4			$			648.6									$			(194.4)									$			2,418.5

See accompanying notes to unaudited pro forma condensed combined financial statements.

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SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES Unaudited Pro Forma Condensed Combined Statement of Income For the year ended December 31, 2020 (In millions, except per share amounts)
			Historical						Financing Adjustments (Note 4)
			SWM			Scapa Adjusted ( Note 2)									Transaction Accounting Adjustments (Note 5)						Pro Forma Condensed Combined
Net sales			$	1,074.4		$	354.8		$	—					$	(2.1)		5(g)			$	1,427.1
Cost of products sold			766.1			304.8			—						3.3			5(b) 5(c)			1,074.2
Gross profit			308.3			50.0			—						(5.4)						352.9
Selling expense			36.9			8.9			—						—						45.8
Research expense			13.8			4.6			—						—						18.4
General expense			116.9			20.4			—						37.7			5(d) 5(l)			175.0
Total nonmanufacturing expenses			167.6			33.9			—						37.7						239.2
Restructuring and impairment expense			11.9			4.8			—						—						16.7
Operating profit			128.8			11.3			—						(43.1)						97.0
Interest expense			30.5			3.4			25.8			4(c)			(3.4)			5(j)			56.3
Other (expense) income, net			(1.0)			0.3			—						—						(0.7)
Income from continuing operations before income taxes and income from equity affiliates			97.3			8.2			(25.8)						(39.7)						40.0
Provision for income taxes			18.4			1.7			(5.4)			5(h)			(8.3)			5(h)			6.4
Income (Loss) from equity affiliates, net of income taxes			4.9			—			—						—						4.9
Income from continuing operations			$	83.8		$	6.5		$	(20.4)					$	(31.4)					$	38.5
Income from continuing operations per share data:
Income from continuing operations per share - basic			$	2.72																	$	1.25
Income from continuing operations per share - diluted			$	2.69																	$	1.24
Weighted average shares outstanding:
Basic			30,832,700																		30,832,700
Diluted			31,104,200																		31,104,200

See accompanying notes to unaudited pro forma condensed combined financial statements.

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The pro forma financial information and related notes are prepared in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the Securities and Exchange Commission on May 20, 2020.

SWM’s historical financial statements were prepared in accordance with US GAAP and presented in U.S. dollars. Scapa’s historical financial statements were prepared in accordance with IFRS as issued by the IASB presented in Pound Sterling. As discussed in Note 2. Accounting Policy and Reclassification Adjustments, the historical Scapa’s financial statements were translated to U.S. dollars and certain reclassifications were made to align Scapa’s financial statement presentation with that of SWM.

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, with SWM as the accounting acquirer, and based on the historical consolidated financial statements of SWM and Scapa. Under ASC 805, assets acquired and liabilities assumed in a business combination are recognized and measured at their assumed Acquisition Date fair value, while transaction costs associated with the business combination are expensed as incurred. The excess of Acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.

The unaudited pro forma condensed combined balance sheet is presented as if the Acquisition had occurred on December 31, 2020 and the unaudited pro forma condensed combined statement of income for the year ended December 31, 2020 give effect to the Acquisition as if it occurred on January 1, 2020.

The unaudited pro forma combined financial information does not reflect any anticipated synergies or dissynergies, operating efficiencies or cost savings that may result from the Acquisition or any Acquisition and integration costs that may be incurred. The pro forma adjustments represent SWM’s best estimates and are based upon currently available information and certain assumptions that SWM believes are reasonable under the circumstances. SWM is not aware of any material transactions between SWM and Scapa during the periods presented. Accordingly, adjustments to eliminate transactions between SWM and Scapa have not been reflected in the unaudited pro forma combined financial information.

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Note 2. Accounting Policy and Reclassification Adjustments

Scapa’s historical financial statements were prepared in accordance with IFRS as issued by the IASB and presented in Pound Sterling. During the preparation of this pro forma financial information,, management performed a preliminary analysis of Scapa’s financial information to identify differences between IFRS as issued by IASB and U.S. GAAP, differences in accounting policies compared to those of SWM, and differences in financial statement presentation compared to the presentation of SWM. The conversion of Scapa’s historical financial statements from Pound Sterling to U.S. Dollars using the period-end rate at March 31, 2021 of $1.3786 per Pound Sterling for the unaudited condensed combined pro forma balance sheet and the weighted average of the monthly average rates during the year ended March 31, 2021 of $1.3020 per Pound Sterling for the unaudited condensed combined pro forma statement of income. At the time of preparing the unaudited pro forma combined financial information, other than the adjustments described herein, the Company is not aware of any other material differences.

Balance Sheet Adjustments

(in millions) SWM Line Item			Historical Scapa Presentation						Historical Scapa (GBP)						Historical Scapa (USD)						Adjustments						Historical Scapa Adjusted
Cash and cash equivalents			Cash and cash equivalents			£			16.6						$	22.9					$	—					$	22.9
Accounts receivable, net			Trade and other receivables						57.2						78.9						—						78.9
Inventories			Inventory						37.1						51.1						—						51.1
Income taxes receivable			Current tax asset						2.7						3.7						—						3.7
Other current assets									—						—						—						—
Total current assets									113.6						156.6						—						156.6
Property, plant and equipment, net			Property, plant and equipment						72.1						99.4						15.1			(a)			114.5
Deferred income tax benefits			Deferred tax asset						7.9						10.9						—						10.9
Goodwill			Goodwill						56.7						78.2						—						78.2
Intangible assets			Intangible assets						1.0						1.4						—						1.4
Other assets			Right-of-use assets						17.8						24.5						(15.1)			(a)			9.4
Other assets			Other receivables						0.1						0.1						8.3			(b)			8.4
Total assets						£			269.2						$	371.1					$	8.3					$	379.4
Liabilities and Shareholders' Equity
Current debt			Borrowings and other financial liabilities			£			15.1						$	20.8					$	15.1		(a)			$	35.9
Accounts payable			Trade and other payables						56.8						78.3						—						78.3
Income taxes payable			Current tax liabilities						0.9						1.2						—						1.2
Accrued expenses			Lease liabilities						13.7						18.9						(15.1)			(a)			3.8
Accrued expenses			Provisions						8.1						11.2						—						11.2
Total current liabilities									94.6						130.4						—						130.4
Long-term debt			Borrowings and other financial liabilities - NC						31.6						43.6						—						43.6
Long-term income tax payable			Non-current tax liabilities						2.3						3.2						—						3.2
Pension and other postretirement benefits			Retirement benefit obligations						5.4						7.4						0.2			(b)			7.6
Deferred income tax liabilities			Deferred tax liabilities						4.6						6.3						—						6.3

8

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Other liabilities			Trade and other payables - NC						0.5						0.7						—						0.7
Other liabilities			Provisions - NC						13.3						18.3						—						18.3
Other liabilities			Lease liabilities - NC						4.5						6.2						—						6.2
Total liabilities									156.8						216.1						0.2						216.3
Stockholders' equity:
Common stock			Ordinary shares						9.4						13.0						—						13.0
Additional paid-in-capital			Share premium						1.3						1.8						—						1.8
Additional paid-in-capital			Merger reserve						29.6						40.8						—						40.8
Retained earnings			Retained earnings						47.3						65.2						8.1			(b)			73.3
Accumulated other comprehensive loss			Translation reserve						24.8						34.2						—						34.2
Total stockholder’s equity									112.4						155.0						8.1						163.1
Total liabilities and equity						£			269.2						$	371.1					$	8.3					$	379.4

a.Adjustment to reclassify Scapa’s finance leases to align to SWM’s presentation.

b.Adjustment to reflect the pension asset of $8.3 million to other assets and pension obligation of $0.2 million to pension and other postretirement benefits related to an updated actuarial valuation report prepared in accordance with U.S. GAAP.

Statement of Income Adjustments

(in millions) SWM Line Item			Historical Scapa Presentation						Historical Scapa (GBP)						Historical Scapa (USD)						Adjustments									Historical Scapa Adjusted
Net sales			Revenue			£			272.5						$	354.8					$	—								$	354.8
Cost of products sold									233.9						304.5						0.3			(c) (d)						304.8
Gross profit									38.6						50.3						(0.3)									50.0
Selling expense									6.8						8.9						—									8.9
Research expense									3.5						4.6						—									4.6
General expense									16.3						21.2						(0.8)			(d)						20.4
Total manufacturing expenses									26.6						34.7						(0.8)									33.9
Restructuring and impairment expense									3.7						4.8						—									4.8
Operating profit			Operating profit/(loss)						8.3						10.8						0.5									11.3
Interest expense			Finance costs						2.8						3.6						(0.2)			(c)						3.4
Other (expense) income, net									—						—						0.3			(d)						0.3
Income from continuing operations before income taxes and income from equity affiliates									5.5						7.2						1.0									8.2
Provision for income taxes			Taxation (charge)/credit						1.3						1.7						—									1.7
Income (loss) from equity affiliates, net of income taxes									—						—						—									—
Income from continuing operations						£			4.2						$	5.5					$	1.0								$	6.5

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c.    Under IFRS, Scapa recognized right of use assets and lease liabilities for all leases and did not distinguish between operating leases and finance leases. Scapa recorded depreciation on the right of use assets and interest expense on the lease liabilities. Under U.S. GAAP, a straight-line operating expense is presented for operating leases under U.S. GAAP. The difference in the treatment resulted in a reclassification of $0.2 million from interest expense into cost of products sold.

d.    Under IFRS, Scapa calculated a net interest cost (income) by applying the discount rate to the net pension benefit obligation or asset, while U.S. GAAP requires companies to calculate a separate return on plan assets using an estimated long-term rate of return on plan assets. Adjustments reflect the removal of historical pension expense recorded by Scapa of $0.3 million and $0.8 million from cost of products sold and general expense, respectively, and the addition of $0.4 million and $0.3 million to cost of products sold and other income, respectively, related to net periodic benefit costs from an updated actuarial valuation report prepared in accordance with U.S. GAAP.

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Note 3. Consideration Transferred and Preliminary Fair Value of Net Assets Acquired

The Acquisition has been accounted for using the acquisition method of accounting in accordance with ASC 805, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their Acquisition Date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

The accounting for the business combination is based on currently available information and is considered preliminary. The final accounting for the business combination may differ materially from that presented in these unaudited pro forma condensed financial statements.

The following table summarizes the total consideration transferred to acquire Scapa:

(in millions)
Cash consideration(1)			$			568.9
Payment of Acquisition costs incurred by Scapa						8.5
Repayment of Scapa debt						64.1
Fair value of consideration transferred			$			641.5

(1)    Cash consideration represents the cash payment of £2.15 (approximately $2.96 based on an exchange rate of $1:£1.3788 on April 15, 2021) in cash for each ordinary share of Scapa, valuing the entire ordinary share capital of Scapa at approximately £413.0 million on a fully-diluted basis (approximately $568.9 million).

The following table summarizes the preliminary accounting for the business combination for the Acquisition:

(in millions)						Fair value at Acquisition Date
Cash & cash equivalents			$			22.9
Accounts receivable						78.6
Inventories						54.0
Income taxes receivable						3.7
Property, plant and equipment						155.5
Deferred income tax benefits						10.9
Intangible assets						244.4
Other assets						18.4
Total Assets						588.4
Accounts payable and accrued expenses						92.4
Deferred income tax liabilities						65.5
Finance lease liabilities reclassified to current debt						15.1
Pension and other postretirement benefits						7.6
Other long-term liabilities						25.8
Net assets acquired						382.0
Goodwill						259.5
Fair value of consideration transferred			$			641.5

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Note 4. Financing Adjustments

a.Reflects the preliminary adjustment to cash in connection with the Financing, as follows:

(in millions)
Proceeds received from Term Loan B Facility and Revolving Credit Facility(1)			$			350.0
Proceeds received from Revolving Credit Facility						313.0
Payment of Financing costs(2)						(14.4)
Pro forma adjustment to cash and cash equivalents			$			648.6

(1)    The Company used the proceeds from the $350.0 million Term Loan B Facility, together with $313.0 million of the Company’s existing $500.0 million Revolving Credit Facility, to finance the cash consideration payable to Scapa shareholders under the Scheme and expenses payable in connection with the Acquisition.

(2)    Represents the payment of capitalized financing costs incurred after December 31, 2020 related to the Term Loan B Facility and Revolving Credit Facility.

b.    To finance the cash consideration payable to Scapa shareholders pursuant to the Acquisition and expenses payable in connection with the Acquisition (including debt refinancing costs), SWM used the proceeds of the Term Loan B Facility, and $313.0 million of SWM’s existing $500.0 million Revolving Credit Facility under the Credit Agreement.

The pro forma adjustment to current debt to reflect the new Financing is as follows:

(in millions)
Proceeds received from Term Loan B Facility and Revolving Credit Facility to be repaid within one year			$			3.5
Less: Deferred financing costs to be amortized within one year						(2.6)
Pro forma adjustment to current debt			$			0.9

The pro forma adjustment to long-term debt to reflect the new Financing is as follows:

(in millions)
Proceeds received from Term Loan B Facility and Revolving Credit Facility			$			350.0
Proceeds received from Revolving Credit Facility						313.0
Less: Proceeds to be repaid within one year						(3.5)
Less: Deferred financing costs, excluding $2.6 million to be amortized within one year						(11.8)
Pro forma adjustment to long-term debt			$			647.7

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c.    The adjustments to interest expense reflect the expected interest expense to be incurred by SWM as a result of the Financing. The preliminary interest expense for the new debt incurred in connection with the Acquisition is as follows:

(in millions)						Weighted Average Interest Rate (1)						Debt						Interest expense for the year ended December 31, 2020
Term Loan B Facility						4.50%			$			350.0			$			15.8
Revolving Credit Facility						2.38%						313.0						7.4
Amortization of new and existing SWM debt issuance costs																		5.2
Total																		28.4
Less: Reversal of SWM historical amortization of existing deferred financing costs																		(2.6)
Pro forma adjustment to interest expense															$			25.8

(1)    A hypothetical 0.125% change in interest rate would result in a $0.8 million change in interest expense for the year ended December 31, 2020.

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Note 5. Transaction Accounting Adjustments

a.Reflects the preliminary adjustment to cash in connection with the Acquisition, as follows:

(in millions)
Proceeds used for Acquisition(1)			$			(568.9)
Repayment of Scapa debt(2)						(64.1)
Payment of Acquisition costs(3)						(29.9)
Pro forma adjustment to cash and cash equivalents			$			(662.9)

(1)    Represents consideration transferred as described in Note 3. Consideration Transferred and Preliminary Fair Value of Net Assets Acquired.

(2)    Represents repayment of Scapa debt as described in adjustment (h) below.

(3)    Represents nonrecurring Acquisition-related costs expected to be incurred by Scapa and SWM of $1.6 million and $17.6 million, respectively, the severance payment for certain Scapa employees of $2.2 million., and the payment of Scapa’s advisor fees of $8.5 million. Scapa and SWM historically incurred Acquisition-related costs of $0.8 million and $1.6 million, respectively, which are reflected in the historical statements of operations. These nonrecurring expenses are not anticipated to affect the combined statements of income beyond twelve months after the Acquisition Date.

b.    Reflects the preliminary estimated fair value adjustment to inventories acquired in the Acquisition, as follows:

(in millions)
Fair value of inventories acquired			$			54.0
Less: Scapa’s historical inventories						(51.1)
Pro forma adjustment to inventories			$			2.9

The unaudited pro forma condensed combined statement of income reflects an adjustment for the additional cost of products sold of $2.9 million related to the fair value adjustment of inventory acquired. Amortization of the inventory fair value is nonrecurring in nature and not anticipated to affect the combined statements of income beyond twelve months after the Acquisition Date.

c.    Reflects the preliminary estimated fair value adjustment to property, plant and equipment, net (“PP&E”) acquired in the Acquisition, the estimated useful lives, and the estimated depreciation expense related to the PP&E acquired, as follows:

(in millions)						Preliminary Fair Value						Estimated weighted average life (years)						Depreciation expense for the year ended December 31, 2020
Real property			$			38.2						20			$			1.9
Personal property						91.7						9						10.2
Other PP&E including assets under construction						10.5						N/A						—
Total estimated preliminary fair value of PP&E						140.4												12.1
Less: Scapa’s historical PP&E and depreciation expense						(99.4)												(11.7)
Pro forma adjustments			$			41.0									$			0.4

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The unaudited pro forma condensed combined statement of income reflects an adjustment for the incremental depreciation expense of $0.4 million to cost of products sold related to the fair value adjustment of PP&E acquired.

d.    The preliminary estimated fair market value of the identifiable intangible assets was determined using an income approach. The adjustment reflects the preliminary estimated fair value adjustment to the identifiable intangible assets acquired in the Acquisition, the estimated useful lives, and the estimated amortization expense related to the identified intangible assets, as follows:

(in millions)						Preliminary Fair Value						Estimated weighted average life (years)						Amortization expense for the year ended December 31, 2020
Tradenames			$			7.7						10			$			0.8
Technology						36.9						7						5.3
Customer relationships						199.8						15						13.3
Total estimated preliminary fair value of intangible assets						244.4												19.4
Less: Scapa’s historical intangible assets and amortization expense						(1.4)												(3.1)
Pro forma adjustments			$			243.0									$			16.3

The unaudited pro forma condensed combined statement of income reflects an adjustment for the incremental amortization expense of $16.3 million to general expenses related to the fair value adjustment of identifiable intangible assets acquired.

e.    Reflects the preliminary adjustment to goodwill as a result of the Acquisition, as follows:

(in millions)
Fair value of consideration transferred			$			641.5
Less: Fair value of net assets acquired						(382.0)
Total estimated goodwill						259.5
Less: Scapa’s historical goodwill						(78.2)
Pro forma net adjustment to goodwill			$			181.3

Goodwill represents the excess of the estimated Acquisition consideration over the preliminary fair value of the assets acquired and liabilities assumed as described in Note 3. Consideration Transferred and Preliminary Fair Value of Net Assets Acquired. The goodwill is attributable to the expected synergies of the combined business operations. The goodwill is not expected to be deductible for tax purposes.

f.    Reflects the preliminary adjustment to the right of use assets as a result of the Acquisition to align the right of use assets to the lease liabilities, as follows:

(in millions)
Historical Scapa lease liabilities			$			3.8
Historical Scapa lease liability - noncurrent						6.2
Less: Historical Scapa right of use assets						(9.4)
Pro forma adjustment to other assets for right of use assets			$			0.6

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g.    Reflects the preliminary estimated fair market value adjustment related to an unfavorable contract provision assumed in the Acquisition, as follows:

(in millions)
Unfavorable contract provision - current			$			7.8
Unfavorable contract provision - noncurrent						12.0
Total fair value of unfavorable contract provision						19.8
Historical Scapa unfavorable contract provision - current						(9.9)
Historical Scapa unfavorable contract provision - noncurrent						(14.6)
Less: Historical unfavorable contract provision value						(24.5)
Pro forma adjustment for unfavorable contract provision - current in accrued expenses			$			(2.1)
Pro forma adjustment for unfavorable contract provision - noncurrent in other liabilities			$			(2.6)

The unaudited pro forma condensed combined statement of income also reflects an adjustment for the annual release of the unfavorable contract provision of $2.1 million to net sales.

h.    Reflects an adjustment for the estimated deferred taxes and income tax effect related to the pro forma adjustments recorded herein. Tax-related adjustments are based upon an estimated tax rate of 21%, which approximates a blended statutory tax rate for significant tax jurisdictions where assets acquired and liabilities assumed reside. This rate does not reflect SWM’s effective tax rate, which includes other tax charges or benefits.

i.    Reflects an adjustment for the extinguishment of Scapa’s existing debt of $20.8 million of current debt, $43.6 million of long-term debt, and the derecognition of $0.3 million of deferred financing fees included in accounts receivable.

j.    Reflects an adjustment for the removal of Scapa’s historical interest expense of $3.4 million.

k.    Reflects an adjustment for the elimination of Scapa’s historical equity.

l.    Reflects an adjustment for nonrecurring Acquisition-related expenses expected to be incurred by Scapa and SWM of $1.6 million and $17.6 million, respectively, as well as post-combination compensation expense of $2.2 million with a corresponding reduction to retained earnings on the unaudited pro forma condensed combined balance sheet. These nonrecurring expenses are not anticipated to affect the combined statements of income beyond twelve months after the Acquisition Date.

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