UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For MAY 18, 2005

BUNZL PLC

(Exact name of Registrant as specified in its charter)

ENGLAND

(Jurisdiction of incorporation or organisation)

110 Park Street, London W1K 6NX

(Address of principal executive offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ý  Form 40-F  o

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes  o  No ý

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): )

NOT APPLICABLE

INDEX

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. When considering what action you should take, you should seek your own personal financial advice immediately from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom, or, if not, from another appropriately authorised independent financial adviser.

If you have sold or otherwise transferred all of your Bunzl Shares, you should immediately forward this document and the accompanying documents to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee.

This document, which comprises listing particulars relating to Filtrona plc, has been prepared in accordance with the Listing Rules made under section 74 of the Financial Services and Markets Act 2000. A copy of this document has been delivered to the Registrar of Companies in England and Wales for registration as required by section 83 of that Act. This document has been prepared in connection with the demerger of the Filtrona Business of Bunzl plc (the “Demerger”) as described in this document, and assumes that, unless the context requires otherwise, the Demerger has become effective. A more detailed description of the Demerger is provided in Part 3 of this document.

Application has been made for the entire ordinary share capital of Filtrona, issued and to be issued, to be admitted to the Official List and to the London Stock Exchange’s market for listed securities. Admission to the Official List, together with admission to trading on the London Stock Exchange’s market for listed securities (“Admission”), constitutes admission to official listing on a stock exchange in the United Kingdom. These applications are subject to the passing of the resolution concerning the Demerger by Bunzl Shareholders at the Extraordinary General Meeting. It is currently expected that admission of the Filtrona Shares, to be issued to Bunzl Shareholders on Bunzl’s register of members at 7.00 a.m. on 6 June 2005 to the Official List and to trading on the London Stock Exchange’s market for listed securities will become effective and that unconditional dealings will commence in the Filtrona Shares at 8.00 a.m. on 6 June 2005. No application is currently intended to be made for the Filtrona Shares to be admitted to listing or dealing on any other exchange.

For a discussion of certain risk factors which might affect your holding of Filtrona Shares see “Risk factors” in Part 7 of this document.

FILTRONA PLC

(Incorporated and registered in England and Wales under the Companies Act 1985, Registered No. 5444653)

Introduction of up to 220,000,000 ordinary shares of

125 pence each to the Official List

Sponsored by JPMorgan Cazenove

JPMorgan Cazenove Limited (“JPMorgan Cazenove”), which is regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Bunzl and Filtrona and no one else in connection with the Demerger and Admission and will not be responsible to anyone other than Bunzl and Filtrona for providing the protections afforded to its customers or for providing advice in relation to the Demerger and Admission.

The distribution of this document in certain jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of any such jurisdiction.

The Filtrona Shares to be distributed in connection with the Demerger will not be, and are not required to be, registered with the SEC under the US Securities Act or any US state securities law. Neither the SEC nor any US state securities commission has approved or disapproved the Filtrona Shares or passed comment or opinion upon the accuracy or adequacy of this document. Any representation to the contrary is a criminal offence in the US.

No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representations must not be relied upon as having been so authorised. The information contained in this document is accurate as at the date of this document, regardless of the time of delivery of this document or of any Filtrona Shares. Neither the delivery of this document nor any issue and allotment made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of Filtrona since the date hereof or that the information in this document is correct as of any time subsequent to the date of this document.

THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY.

CONTENTS

Information regarding forward-looking statements

This document contains various forward-looking statements regarding events and trends that are subject to risks and uncertainties that could cause the actual results and financial position of the Group to differ materially from the information presented herein. Forward-looking statements include information concerning possible and assumed future results of the Group’s operations, earnings, economic conditions affecting the industries in which the Group operates and demand and other aspects of the Group’s business. When used in this document the words “estimate”, “project”, “intend”, “anticipate”, “believe”, “expect”, “should”, and similar expressions, as they relate to the Group or its management, are intended to identify such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Filtrona undertakes no obligation to update publicly or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise save in respect of any requirement under English statutory law or the Listing Rules. You should rely only on the information contained in this document. Filtrona has not, nor has JPMorgan Cazenove, authorised anyone to provide you with information different from that contained in this document. If anyone provides you with different or inconsistent information, you should not rely on it.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

(1)           Each of the times and dates in the above timetable is based on current expectations and is subject to change.

(2)           All references in this document to times are to London times unless otherwise stated.

Demerger helpline

A shareholder helpline is available on 0870 702 0100 (or +44 870 702 0100 if you are calling from outside the UK) from 8.30 a.m. to 5.30 p.m. Monday to Friday until 1 July 2005. The shareholder helpline will only be able to provide you with information contained in this document, the accompanying Circular and form of proxy and with information relating to the Bunzl Share Register and, after Admission, the Filtrona Share Register and, for legal reasons, will be unable to give advice on the merits of the Demerger, the Bunzl Share Consolidation, the Filtrona Share Consolidation, the Reduction of Capital or the Filtrona Share Incentive Plans or to provide financial or investment advice.

Overseas shareholders

Further details of the Demerger for Bunzl Shareholders who are citizens or residents of countries other than the United Kingdom and holders of Bunzl ADRs are set out in paragraph 3 of Part 3 of this document.

Tax

For a summary discussion of certain tax implications of holding Filtrona Shares for taxpayers resident in the United Kingdom or the United States see paragraphs 15 and 16 respectively of Part 8 of this document.

Anyone who is subject to tax in any other jurisdiction or who is in doubt as to his taxation position in respect of his Filtrona Shares should consult an appropriate professional adviser immediately.

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DIRECTORS, SECRETARY AND ADVISERS

Directors of the Company

J F Harris – Chairman

M J Harper – Chief Executive

S W Dryden – Finance Director

P J Drechsler – Non-executive Director

A R Auer – Non-executive Director

P Heiden – Non-executive Director

Company Secretary

S W Dryden

Registered and Head Office

Avebury House

201-249 Avebury Boulevard

Milton Keynes

MK9 1AU

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PART 1

KEY INFORMATION

The following information is in summary form and should be read in conjunction with the full text of this document from which it is derived. Financial information in this key information section has been extracted without material adjustment from the Accountants’ Reports in Parts 5 and 6 of this document. Bunzl Shareholders and holders of Bunzl ADRs should read the whole of this document, including Part 7 which discusses certain risk factors which might affect the holding of Filtrona Shares, and not just rely on the information set out below.

1.             Summary description of Filtrona

1.1          General

Filtrona is a business area of Bunzl plc, a UK listed, FTSE 100 support services company with a market capitalisation as at 16 May 2005 of approximately £2.3 billion. It is an international, market leading speciality plastic and fibre products supplier. On 28 February 2005 the Bunzl Board announced its proposal to demerge Filtrona to Bunzl Shareholders.

By concentrating on niche international markets Filtrona has been able to establish and develop strong positions in chosen product categories. Filtrona is segmented into Plastic Technologies and Fibre Technologies, each contributing similar levels of profits to the Bunzl Group. Plastic Technologies produces, sources and distributes protection and finishing products, self-adhesive tear tape and certain security products as well as proprietary and customised plastic extrusions and packaging items for consumer products. Fibre Technologies focuses on the production and supply of special filters for cigarettes and bonded fibre products such as reservoirs and wicks for writing instruments and printers, household products and medical diagnostic devices. The Directors believe that many of the markets and segments within which Filtrona operates have the desirable combination of good growth potential and robust defensive qualities.

Across these niche international markets, Filtrona has a number of market leading blue chip customers including Altria (Philip Morris), Boeing, British American Tobacco, Carlsberg, General Electric, General Motors, Hewlett Packard, Nestlé, Newell Rubbermaid, Reckitt Benckiser and Unilever. Filtrona’s emphasis on innovation, quality and service underpins these long standing customer relationships.

Filtrona is a well invested global business, headquartered in the UK, with 40 manufacturing facilities, 32 distribution outlets and sales offices and three research facilities spread across 22 countries in the Americas, Europe and Asia. Filtrona employs some 5,200 people and its senior management comprises an international team of nine individuals who have an average experience in the business of nearly 10 years.

In 2004, under UK GAAP, Filtrona generated annual sales of £477.5 million (2003: £452.6 million), EBITDA of £74.3 million (2003: £71.3 million) and operating profit before goodwill amortisation of £54.2 million (after an allocation of Bunzl corporate costs) (2003: £51.1 million). Plastic Technologies generated sales of £241.5 million (2003: £224.1 million) and operating profit before goodwill amortisation of £33.8 million (2003: £28.6 million) with an EBITA margin of 14%. Fibre Technologies generated sales of £236.0 million (2003: £228.5 million) and operating profit before goodwill amortisation of £27.8 million (2003: £31.1 million) with an EBITA margin of 12%. Of the total sales in 2004, approximately 43% originated from Europe, 39% from North America and 18% from the rest of the world. As at 31 December 2004 Filtrona had net operating assets of £261.2 million and net debt of £120.0 million. This information is extracted without material adjustment from the Accountants’ Report set out in Part 5 of this document. Investors should read the whole of this document and not rely solely on the summarised information set out above.

Application has been made for the Filtrona Shares to be admitted to the Official List and to the London Stock Exchange’s market for listed securities. Filtrona is to be classified within the FTSE Support Services sector and is expected to be a constituent of the FTSE 250 Index.

1.2          Plastic Technologies

Plastic Technologies produces, sources and distributes protection and finishing products, self-adhesive tear tape and certain security products as well as proprietary and customised plastic extrusions and packaging items for consumer products.

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Filtrona is a market leader in the substantial fragmented protection and finishing market supplying plastic caps and plugs for protecting and finishing industrial threads, pipes, flanges and tubes as well as parts to protect, restrain or insulate wires or electrical components. A broad product offering, sophisticated marketing and IT infrastructure, combined with an expanding international supply and distribution network, underpins its strengths in these low cost but critical components.

Filtrona is the global market leader in self-adhesive tear tape, which is used for the easy opening of fast moving consumer goods packaging (e.g. cigarettes and biscuits) as well as brand communication and security. The materials and printing technology, together with its international production and distribution capability, are the key sources of differentiation in a market where trends towards sophisticated value-added tapes for brand promotion, security and traceability are driving both volume and value growth.

Filtrona is also a supplier of extruded thermoplastic profiles, sheet and special tubing for a wide range of applications such as lighting, fencing, transportation, point of sale displays, refrigeration, medical supplies and traffic control. It is a market leader in the US and, through its Enitor business in the Netherlands, in Europe in its chosen product categories, where in these highly fragmented markets it benefits from economies of scale and broad distribution capability.

In addition Plastic Technologies, through Globalpack, is a market leading producer and supplier of packaging items for toiletries and cosmetics in the Brazilian market. Based in Brazil it supplies containers, closures and, through its joint venture Euro-Matic Filtrona, roll-on balls to the market leading producers of deodorant and cosmetic products.

1.3          Fibre Technologies

Fibre Technologies focuses on the production and supply of special filters for cigarettes and bonded fibre products such as reservoirs and wicks for writing instruments and printers, household products and medical diagnostic devices.

In the niche special filters market, Filtrona is the independent global market leader. The Directors expect that the increasing trend towards potentially reduced exposure products (PREPs), lower tar levels driven by legislation and higher value differentiated cigarettes will underpin strong growth in the special filters market.

Filtrona has utilised the bonded fibre capillary technology applied in the production of cigarette filters to develop enhanced manufacturing techniques for writing instrument ink reservoirs in which Filtrona is also now the global market leader. Bonded fibre technology has a wide variety of current and potential applications and Filtrona has a growing share of the medical diagnostic wick and reservoir market. It also supplies the wicks used in household fragrance products and is actively developing other commercial applications from this technology.

1.4          Strengths

(a)          Track record of profitable, cash generative growth

Filtrona’s long term sales growth has been strong, with an average annual sales growth over the past 10 years of 11% (12% at constant exchange rates). This has been driven by strong organic growth, which over the last 10 years has averaged 5% per annum (based on separately identifiable businesses) on a constant exchange rate basis, supplemented by a series of strategic acquisitions.

Filtrona has achieved consistent double-digit EBITA margins during this 10 year period (11.4% for the year ended 31 December 2004 under UK GAAP). The Directors believe that Filtrona’s commitment to customer service, technology leadership and geographic reach underpin this sustained margin and sales growth.

The business also has a strong track record of converting earnings into cash. Over the last three years Filtrona’s Cash Conversion Rate has averaged 73% despite significant investment in the business, particularly in 2004.

The 10 year financial information above has been extracted without material adjustment from the underlying consolidation schedules of Bunzl. Investors should read the whole of this document and not rely solely on the summarised information set out above.

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(b)          Favourable industry trends

Growth in demand for many of Filtrona’s products and services is further enhanced by certain market dynamics.

In Plastic Technologies, the tear tape market is experiencing an increasing trend towards more sophisticated value-added tapes for brand promotion, security and traceability. Filtrona is well positioned to benefit from this trend both as the global market leader for self-adhesive tear tape and with its materials and printing technology. The trend towards supplier consolidation (i.e. the move by large businesses to reduce the number of suppliers which they use) within industrial markets is expected by the Directors to continue to play to the strengths of the protection and finishing products business, which offers a wide and expanding product range. This trend is also likely to benefit Filtrona’s extrusion business with its multi-site manufacturing capability. In Brazil roll-on deodorant products continue to take market share from more traditional packaging formats.

In Fibre Technologies there is an increasing trend within the cigarette industry towards utilising special filters, as major multi-nationals focus on key brands with a special filter which provide differentiation from their competition. Special filters, where Filtrona is the global market leading independent manufacturer, are estimated by Filtrona currently to represent 12% of the total cigarette filter market. Special filter volumes are expected by the Directors to grow faster than the overall cigarette market as demand for lower tar levels continues to rise and as PREPs are introduced into the market. Investment in research and development has given Filtrona market leading capillary expertise which has driven product innovation in each of its key product lines. The development of the writing instrument market in Asia is accelerating and Filtrona is well positioned to serve this market from its new facility in Ningbo (near Shanghai), China.

(c)           Strong niche international market positions

Filtrona has strong positions within each of its niche markets, borne out by its world leading position in protection and finishing products, self-adhesive tear tape, special filters and certain bonded fibre components. The plastic profile and sheet market is significantly more fragmented but, within the US and the Netherlands where it is active, Filtrona is a leading supplier in its principal served markets. Through Globalpack, Filtrona has a strong market position in Brazil in packaging for the toiletries and cosmetics markets.

These leading positions within niche markets have enabled Filtrona to deliver high added value with excellent service from a position of being a low cost producer, thereby delivering attractive margins over a long period. The Directors believe that high levels of customer service, innovation and technology leadership, rapidly developing IT and distribution infrastructure and investment in capabilities and people are key sources of differentiation for Filtrona.

(d)          Long term blue chip customer relationships

Filtrona has developed its business by maintaining a close relationship with a portfolio of blue chip customers who are successful market leaders within their respective markets. The high standards of service and supply demanded by such customers have helped to drive continuous improvement throughout Filtrona.

Filtrona enjoys long standing and strong customer relationships and manages large customers via a key account management structure. This enables customers’ organisations to be accessed at different levels, thereby ensuring that Filtrona better understands and responds to their needs. Filtrona’s senior management has developed and maintains close relationships with corresponding senior management in Filtrona’s customers’ businesses.

(e)           Well invested global infrastructure

Filtrona has a strong capital investment policy and has a well invested and efficient production, sourcing and supply infrastructure. This ensures not only the high product quality that customers demand but also the levels of service and geographic reach that provide an important differentiator compared with competitors. Filtrona has effectively leveraged individual locations by offering sister businesses the opportunity to use the existing infrastructure and management to exploit new opportunities in a fast and cost effective manner.

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In Richmond (Virginia), São Paulo (Brazil), Bangalore (India) and Surabaya (Indonesia), existing Fibre Technologies locations have provided a base to accelerate the growth of the tear tape business. In Brazil Filtrona’s protection and finishing products business outsources local requirements to Globalpack and in China Filtrona’s protection and finishing products representative office is based at the fibre products facility in Ningbo. The experience of managing the extrusion facility in Monterrey (Mexico) has helped to facilitate a rapid and smooth start up of the new special filters facility there.

(f)            Experienced, stable management team

Filtrona’s senior management comprises an international team of nine individuals who have an average experience in the Filtrona Business of nearly 10 years. Senior management combines strong manufacturing process and product development know-how with a detailed knowledge of customers’ needs and hence excellent levels of service. The senior management team is supported by motivated and enthusiastic employees, which is evidenced by the low levels of staff turnover within the businesses.

(g)          Track record of successful acquisitions

Filtrona’s management has extensive experience of integrating acquisitions. Over the last five years, Filtrona has acquired 15 businesses and has spent £60 million (£55 million in Plastic Technologies, £5 million in Fibre Technologies) on acquisitions which have extended the global footprint, broadened the product offering within its chosen markets or provided access to key customers and leveraged Filtrona’s low cost product supply base. Paragraph 2 of Part 2 of this document contains further details of the Baumgartner Fibertec, Davidson Plastics and Skiffy Group acquisitions which have been the most significant acquisitions during the last five years.

Filtrona is highly selective in the acquisitions it makes, focusing on high levels of returns. The consistently high level of Return on Capital Employed that Filtrona has maintained, which has averaged 26% over the last three years (as set out in paragraph 1.6 below), is indicative of Filtrona’s ability to drive value from selective acquisitions.

(h)          High levels of corporate social responsibility

Filtrona has for many years adhered to policies with respect to business standards, health, safety and the environment.

Filtrona has a long standing commitment to achieving continual improvement in health and safety performance. ITC Filtrona in India became the first Bunzl company to gain OHSAS18001:1999 International Standard for Occupational Health and Safety Management Systems. PT Filtrona, the filters business in Indonesia, and Globalpack in Brazil, have attained SA8000 certification. SA8000 is a social accountability standard.

In the environmental aspects of its operations, all significant sites have attained ISO14001 environmental management accreditation except the recently acquired Skiffy Amsterdam, whose accreditation is currently being progressed. The high quality of the manufacturing locations is key to obtaining this accreditation and the significant manufacturing sites have also attained ISO9001 quality system accreditation.

(i)           Well positioned for future growth

The Directors believe that Filtrona is well positioned for future growth. Key drivers of growth are expected to be:

(i)            continued development of product lines in protection and finishing products and in plastic profile and sheet manufacturing;

(ii)           continued growth of brand promotion, security and track and trace opportunities;

(iii)          commercialisation of bonded fibre developments;

(iv)          new packaging formats at Globalpack driven by product innovation;

(v)           the development of more sophisticated filter products for PREPs leading to further special filter manufacturing outsourcing decisions by tobacco manufacturers;

(vi)          continued growth of high value-added bonded non-woven fibre products;

(vii)         the recently built manufacturing facilities in lower cost locations coming fully on stream; and

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(viii)        the emergence of Asia as a demand generator and source.

1.5          Strategy

Filtrona has pursued a consistent strategy of focusing its resources on niche international markets where it has, or can develop, a significant competitive advantage and which have good growth potential. The operations are strongly cash generative and have allowed complementary acquisitions to be funded out of internally generated cash.

Following the Demerger the Filtrona management team will continue this strategy independently, focusing on building Filtrona’s core activities and achieving sustainable profitable growth through organic investment and acquisitions, while maintaining its market leading positions and strong customer relationships.

The Filtrona business strategy is to continue to pursue the following:

(i)            enhancement of competitive position in each line of business;

(ii)           expansion and adaptation of the global footprint;

(iii)          reduction of production costs;

(iv)          improvement of service and supply chain efficiency; and

(v)           enhancement of the business through selective acquisitions.

1.6          Financial information

The table below, the contents of which have been extracted without material adjustment from the Accountants’ Reports in Parts 5 and 6 of this document, summarises the trading record of Filtrona for the three years ended 31 December 2004. Investors should read the whole of this document and not rely solely on the summarised information set out below.

Notes:

(1)           Operating profit is stated before charging interest, taxation and goodwill/intangible amortisation.

(2)           Trading cash flow is net cash inflow from operating activities less net cash outflow for capital expenditure.

(a)          Financial commentary

Sales grew in 2004 and 2003 under UK GAAP by 5.5% and 2.3% respectively. At constant exchange rates sales growth for 2004 and 2003 was 12.2% and 5.6% respectively.

Under UK GAAP operating profit before goodwill amortisation grew by 6.1% and 6.5% in 2004 and 2003 respectively. At constant exchange rates, growth for 2004 and 2003 was 14.6% and 11.3% respectively.

Accounting under IFRS reduced 2004 reported profit on ordinary activities before taxation by a combination of recurring and non-recurring adjustments which total £2.1 million. Recurring adjustments were the expensing of share options and the non-amortisation of goodwill and the amortisation of other intangible assets. Expensed share option costs were £1.1 million in 2004 and the amortisation charge reduced from £3.0 million under UK GAAP to £0.5 million under IFRS.

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Non-recurring IFRS charges in 2004 were:

(i)            the reduction in the carrying value of a manufacturing facility in Germany. Under UK GAAP, the £1.3 million charge was permitted to be offset against this facility’s revaluation reserve (under IFRS it is charged to the income statement); and

(ii)           £2.2 million of fair value adjustments which were recognised in goodwill under UK GAAP have been charged to the income statement under IFRS.

2.             Board and management

The Board consists of the Chairman, Chief Executive, Finance Director and three non-executive Directors as follows:

Jeff Harris (aged 57) - Chairman

Mr Harris was appointed Chairman of Filtrona on 12 May 2005. He was Chairman of Alliance UniChem plc from 2001 to 2005, having previously been Finance Director of UniChem plc since 1986, Chief Executive since 1992 and Chief Executive of the enlarged Alliance UniChem plc since 1997. He is also a non-executive director of Associated British Foods plc, Anzag AG and Bunzl.

Mark Harper (aged 49) - Chief Executive

Mr Harper joined Filtrona in 1986 and held a number of general management positions, including Managing Director of Moss Plastic Parts in Europe and President of Alliance Plastics in the US, before being appointed Managing Director of Filtrona in 1996. He was appointed to the Bunzl Board in 2004. On the Demerger becoming effective he will cease to be a director of Bunzl.

Steve Dryden (aged 37) - Finance Director

Mr Dryden was appointed Finance Director of Filtrona in 2002 and prior to that was Finance Director of a group of the Plastic Technologies businesses between 1999 and 2002 and Moss Plastic Parts between 1996 and 1998. Prior to joining Filtrona he worked in various finance positions in Rolls-Royce plc.

Paul Drechsler (aged 49) - non-executive Director

Mr Drechsler was appointed as a non-executive Director of Filtrona on 12 May 2005 and is the senior independent non-executive Director. He is Chief Executive of Wates Group, having been appointed in 2004. Prior to this he spent 25 years at Imperial Chemical Industries plc where his experience included positions in Brazil, the Netherlands and the US and Chairmanship of the ICI pension fund. He was appointed to the ICI board as an executive director in 1999.

Adrian Auer (aged 56) - non-executive Director

Mr Auer was appointed as a non-executive Director of Filtrona on 12 May 2005. He was Group Finance Director of RMC plc from 2002 to 2005 and at Taylor Woodrow plc from 2000 to 2002. He was previously Finance Director of Admiral plc and SWALEC (South Wales Electricity). He is currently a non-executive director of Bespak plc and Foseco plc and is the non-executive Chairman of Readymix plc.

Paul Heiden (aged 48) - non-executive Director

Mr Heiden was appointed a non-executive Director of Filtrona on 12 May 2005. He has been the Chief Executive of FKI plc since 2003. Previously with Hanson plc, he moved to Rolls-Royce plc in 1992, becoming the director responsible for its Industrial Businesses in 1997, and Finance Director in 1999. He will resign from the Bunzl Board on the Demerger becoming effective, having been a non-executive director since 1998.

3.             Current trading and prospects

In 2004 Filtrona again showed its strength as a global supplier of speciality products with excellent increases in sales and operating profit at constant exchange rates. The increases in the second half of 2004 were greater than those in the first and Filtrona has continued to trade strongly in 2005.

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The Directors expect Plastic Technologies to continue to grow as investments in marketing programmes, distribution infrastructure and new plant and equipment enhance Filtrona’s competitive position and capability.

In Fibre Technologies the Directors expect growth to continue as new facilities in Mexico and China come fully on stream and sustained investment in research and development delivers new products and applications.

Filtrona’s position as a leading supplier in the niche markets it serves and continued investment in lowering unit cost, improving service and supply chain efficiency, and in developing new products give the Directors confidence that Filtrona will sustain its positive development. As a result the Directors are confident in the financial and trading prospects of Filtrona for the current financial year.

4.             Dividends

The Directors consider that had the Demerger been effective throughout the year ended 31 December 2004, in the absence of unforeseen circumstances and taking into account the terms of the Demerger and the Filtrona Share Consolidation, the Directors would have recommended total dividends for the year ended 31 December 2004 of 5.9 pence per consolidated Filtrona Share.

Following the Demerger Filtrona will pursue a progressive dividend policy that will seek to provide growth in dividends per share while maintaining appropriate levels of dividend cover. It is expected that Filtrona will declare its first interim dividend at the time of its interim results, which will be announced on 30 August 2005, taking account of the performance of the Filtrona Business during the first half of 2005.

5.             Risk factors

See “Risk factors” in Part 7 of this document for a discussion of the risks that might affect your holding of Filtrona Shares.

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PART 2

INFORMATION ON FILTRONA

1.             Overview

Filtrona is a business area of Bunzl plc, a UK listed, FTSE 100 Support Services company with a market capitalisation of approximately £2.3 billion. It is an international, market leading speciality plastic and fibre products supplier which is segmented into Plastic Technologies and Fibre Technologies, each contributing similar levels of profits to Bunzl. Plastic Technologies produces, sources and distributes protection and finishing products, self-adhesive tear tape and certain security products as well as proprietary and customised plastic extrusions and packaging items for consumer products. Fibre Technologies focuses on the production and supply of special filters for cigarettes and bonded fibre products such as reservoirs and wicks for writing instruments and printers, household products and medical diagnostic devices. The Directors believe that many of the markets and segments within which Filtrona operates have the desirable combination of good growth potential and robust defensive qualities.

Across these niche international markets, Filtrona has a number of market leading blue chip customers including Altria (Philip Morris), Boeing, British American Tobacco, Carlsberg, General Electric, General Motors, Hewlett Packard, Nestlé, Newell Rubbermaid, Reckitt Benckiser and Unilever. Filtrona’s emphasis on value addition through innovation, quality and service underpins these long standing customer relationships.

Filtrona is a well invested global business, headquartered in the UK, with 40 manufacturing facilities, 32 distribution outlets and sales offices and three research facilities, spread across 22 countries in the Americas, Europe and Asia. Filtrona employs some 5,200 people and its international senior management team comprises nine individuals who have an average experience in the business of nearly 10 years.

In 2004 under UK GAAP, Filtrona generated annual sales of £477.5 million (2003: £452.6 million), EBITDA of £74.3 million (2003: £71.3 million) and operating profit before goodwill amortisation of £54.2 million (after an allocation of Bunzl corporate costs) (2003: £51.1 million). Plastic Technologies generated sales of £241.5 million (2003: £224.1 million) and operating profit before goodwill amortisation of £33.8 million (2003: £28.6 million) with an EBITA margin of 14%. Fibre Technologies generated sales of £236.0 million (2003: £228.5 million) and operating profit before goodwill amortisation of £27.8 million (2003: £31.1 million) with an EBITA margin of 12%.  Of the total sales in 2004, approximately 43% originated from Europe, 39% from North America and 18% from the rest of the world. As at 31 December 2004, Filtrona had net operating assets of £261.2 million and net debt of £120.0 million. This information is extracted without material adjustment from the Accountants’ Report set out in Part 5 of this document.

Investors should read the whole of this document and should not rely solely on the summarised information above.

2.             History

Filtrona’s strong competitive position has been developed over the last 10 years through significant investment in new global production and service capabilities. Significant new facilities have been established in China (Plastic and Fibre Technologies), India (Plastic Technologies), Mexico (Plastic and Fibre Technologies), the US (Plastic and Fibre Technologies) and Venezuela (Fibre Technologies) ensuring that Filtrona is better able to supply its multi-national customers and target growth from developing economies. Joint ventures have also provided the filters business with access to the growing markets of the Middle East and central Asia and, more recently, joint ventures have been established in Plastic Technologies relating to the supply of roll-on deodorant balls in Brazil and patented track and trace technology in coated and security products. A number of complementary niche businesses have also been acquired enhancing Filtrona’s product offering and geographical reach, including:

(i)            the entry in 1996 into the self-adhesive tear tape market through the acquisition of Payne for debt free consideration of £43.2 million;

(ii)           the addition of significant extra filter and bonded fibre technology and capacity in the US by the acquisition of American Filtrona Corporation in 1997 for £83.1 million (net of cash). This acquisition also added a significant extrusion business in the US to Filtrona’s existing Plastic Technologies business and united the Filtrona brand name, which had not previously been available for use by Bunzl in the US;

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(iii)          the acquisition in 1998 of Enitor, a leading Dutch extruder with annual sales prior to acquisition of €16 million;

(iv)          the purchase in 2000 of Davidson Plastics, a profile extrusion operation located in the US which had annual sales prior to acquisition of US$22 million, and Pexco, a specialist medical tubing extruder, which had annual sales prior to acquisition of US$7 million;

(v)           the acquisition in 2003 of Baumgartner Fibertec, a Swiss based business engaged in the development, manufacture and supply of cigarette filters and capillary reservoirs which, prior to acquisition, had annual sales of CHF40 million; and

(vi)          the purchase in 2004 for £19.2 million (debt free) of the Skiffy Group, based in the Netherlands, which provided expertise in the manufacture and supply of small nylon parts for protection and finishing applications and a significant additional number of potential new customers for the existing Plastic Technologies product range.

3.             Products and end markets

3.1          Protection and finishing

(a)          Products

Filtrona’s protection and finishing products business is an international sourcing and supply group, sourcing a wide range of products and tooling, particularly from Asia, to supplement its own production of injection moulded and dip moulded vinyl products for general protection, electrical, fastening and finishing applications. It operates in Europe through its Moss Plastic Parts and Skiffy brand names, and in the US through Alliance Plastics and Moulding Specialists.

These predominantly plastic components are low value but are critical to customers delivering their final product. Filtrona’s position as a leading supplier in this fragmented substantial market is based on excellent service and a broad product offering.

Production facilities are located in the UK, the Netherlands, Mexico, the US and Brazil, with some 300 injection moulding machines. Filtrona has a broad industrial customer base, with over 59,000 customers in Europe and the Americas, including a large number of blue chip customers such as Carlsberg, General Motors and Parker Hannifin. No one customer represents more than 3% of turnover.

(b)          Markets

Protection and finishing products include plugs and caps for holes, threads, corners, pipes and flanges which are used to protect customers’ products during transit, processing and finishing. The market for such products is fragmented, with end users including the automotive, general engineering, white goods, pneumatics, hydraulics and oil and gas industries.

The products within the electrical range protect, space, restrain, insulate and position wires for a number of end markets, including capital goods, automotive, white goods and lighting. Fasteners include nylon rivets, latches, clips, washers, spacers and bushes and are also used in similar end markets.

Finishing components are used for adding functionality and completing tubular and extruded products. Typical applications include office or school furniture, hospital equipment, commercial catering equipment, machinery and cabinets.

The market for protection and finishing products is highly fragmented with many smaller competitors based in North America and Europe. The Directors believe that none of these competitors can offer either the range or international supply capability of Filtrona.

(c)           Sources of differentiation

The breadth of the customer base is a key strength of the business. The Directors believe few competitors have the scale and supply chain competence to service economically so many customers with such an extensive range and that Filtrona’s distribution network, advanced IT systems and logistics capability provide real differentiation in the protection and finishing market.

The Directors believe that, given the critical nature of these low cost components, the breadth of product offering and quality of service are also key differentiators. Filtrona’s wide product range and quality of service are supported by an extensive library of approximately 20,000 moulds, catalogues in nine languages,

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35,000 SKUs and a global logistics and manufacturing capability. Filtrona also uses sophisticated business to business marketing techniques to drive high rates of new customer acquisition.

(d)          Growth drivers

Management is pursuing growth through continued investment in supply chain logistics and IT, as well as extending geographic coverage and the range of products offered. Filtrona’s sourcing capability is growing rapidly for both finished products and tooling and a new representative office has just been established in China, located at the Filtrona Fibertec Ningbo facility.

Furthermore, given the fragmentation of the market, the Directors believe there is ample scope for further selective value enhancing acquisitions.

3.2          Coated and security

(a)          Products

Filtrona, under the brands Payne, Morane and Laminex, provides self-adhesive tear tape, coated film products and identity systems, cards and accessories. It has locations in the UK, US, Brazil, Germany, France, Spain, India, Indonesia and Singapore. Filtrona is in the process of consolidating the brands under the name of Payne. Filtrona also has a joint venture which owns patented technology for individual item level track and trace, otherwise known as “pack DNA”.

Filtrona has pioneered the tear tape industry move away from wax tear tape to self-adhesive tape, which offers more efficient processing to its customers. Filtrona is now the global market leader in self-adhesive tear tape for easy opening, brand communication and security applications. Filtrona supplied over 29 million kilometres of tear tape in 2004 and has strong relationships with blue chip customers including Altria (Philip Morris), British American Tobacco, Kraft, Nestlé and United Biscuits.

Through its brand Morane (to be rebranded as Payne Coated Film Products), Filtrona supplies coated film products for encapsulation, lamination, industrial and document security applications. Over the last 30 years, Filtrona has been supplying the film to create unique national identity cards, national voting cards and printed security passports for governments and agencies worldwide.

Under the Laminex brand (to be rebranded Payne Security), Filtrona supplies identity systems, cards and accessories for security, health and safety and promotional use.

The Directors believe that FractureCode (its joint venture based in Denmark), which is currently undergoing a major trial with a leading blue chip consumer products company, is expected to become a high growth business. FractureCode has the potential to add value where customers require identification of items to an individual item level for track and trace and security applications.

(b)          Markets

Tear tape is a product which allows consumers to open product packaging easily. It also provides a promotional medium for marketing to consumers and can carry various anti-counterfeit features.

The tear tape market is split between wax tear tape and self-adhesive tear tape. Wax tear tape requires the tape to be passed through a molten wax bath before being applied to the packaging medium. Self-adhesive tear tape requires no wax to adhere to the packaging, is faster to apply and results in lower machine downtime compared with the wax alternative.

The higher volume tear tape customers are to be found in the tobacco industry, which has recognised the easy opening ability of tear tape. Certain customers have taken advantage of the use of tear tape as a brand promotion tool and as a medium to carry anti-counterfeit security measures effectively.

Further market growth is dependent upon Filtrona persuading fast moving consumer goods customers (who specify the type of packaging for their product) of the benefits that tear tape can bring to their products.

A variety of other products form the balance of the coated and security product portfolio. Items range from plastic sheet for laminating documents and simple PVC cards to higher value-added security documents and card identification systems.

The Directors expect the market for individual item identification to grow rapidly, as is evidenced by the growth in RFID (radio frequency identification) chip applications. FractureCode is an individual item

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system which does not involve the high cost of an electronic chip and can be printed onto standard product packaging, including tear tape, labels and cartons.

In the tear tape market Filtrona’s competitors are principally suppliers to the tobacco industry.

Competition in coated film products comes from a variety of European and US based manufacturers, with low priced competition from Korea and China.

(c)           Sources of differentiation

Within the tear tape market, Filtrona seeks to differentiate itself from the competition through technology, innovation and its global supply infrastructure. Since pioneering self-adhesive tear tape, Filtrona has sought to maintain its technological advantage over the competition, both in terms of materials and processes. Recent innovations include the development of printing technology that significantly improves brand security and customer communication. The Directors believe that the FractureCode track and trace technology is unique and can also be integrated into tear tape and other packaging media to provide further added value to customers.

Filtrona’s global infrastructure provides a low cost, flexible source of supply as well as penetration into higher growth emerging markets.

As a leading UK supplier of coated films for document encapsulation, the Morane business is highly regarded for its high quality, comprehensive range and excellent service level. Laminex is well regarded for its robust software and its highly efficient identity card bureau service.

(d)          Growth drivers

The Directors expect the self-adhesive tear tape market to grow over the next few years, driven by enhanced usage for easy opening in consumer goods applications outside the tobacco industry, particularly in the US, and for enhanced brand protection and security within the tobacco industry. Filtrona is well positioned to benefit from this trend, not only as the market leader with an international presence, but also through its combination of proprietary materials and printing technology. Developments in digital print technology will also open up opportunities for the printing of unique sequential numbers or codes onto tear tape which can be used for consumer promotions.

The increasing focus on document security (e.g. drivers’ licences, visas and passports) will enable the coated film products business to continue to develop value-added applications and the Directors expect the identity card market to continue its growth path.

The Directors believe that FractureCode is a new product and that the market has potential for strong growth.

3.3          Plastic profile and sheet

(a)          Products

Filtrona is a leading supplier in the US and the Netherlands of extruded thermoplastic profiles, sheet and speciality tubes in its chosen product categories. The products are proprietary and custom made to exacting customer standards and are used for a wide range of applications such as lighting, fencing, transportation, point of sale displays, refrigeration, medical supplies, aerospace, and traffic control.

(b)          Markets

Lighting products include thermoplastic lens wraps and sheet for fluorescent tube lighting for commercial, industrial and public sector applications. Filtrona is a leading supplier of these items in the US and Mexico.

Transportation products are made for aerospace and automotive customers. For example Filtrona’s extruded profiles can be found inside the passenger cabins on many of Boeing’s commercial aeroplanes. Filtrona also supplies extrusions which help in the positioning of passenger safety restraint systems. This market is growing as car manufacturers are increasingly offering multiple airbags as standard on their vehicles.

Filtrona is the leading US supplier of inserts for chain link fencing. This market has displayed growth assisted by the added emphasis on securing premises under the homeland security programme. Filtrona’s national supply capability is critical to success in this market.

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In the medical sector, Filtrona is an extruder of high quality medical tubes used in surgical procedures. Filtrona’s customers are increasingly requiring extra value-added features to be supplied along with the standard extruded medical tubing. This includes secondary coiling, banding, solvent bonding and packaging, which Filtrona is well placed to supply, both technically and geographically.

Filtrona supplies the point of sale products that are used in store to hold the pricing information in place on the shelf and also delivers the high response levels expected by retailers to support their promotional campaigns. In the point of sale sector, major retailers are re-branding and updating their images and stores with the trend moving towards the opening of more “super-centre” type locations. Filtrona conducted a survey in September 2003 which estimated the size of this market for all plastic purchases at US$5.0 billion in the US. In both the US and the Netherlands, Filtrona has a particularly strong position in the scanning profile market where the expertise in multiple polymer extrusion is critical to success.

Filtrona’s chosen markets are fragmented. The profile market, which represents over 90% of sales, is highly fragmented and is made up of much smaller local suppliers.

(c)           Sources of differentiation

Filtrona benefits from economies of scale compared with its smaller, more local competitors, both in terms of its cost base and in terms of service, exemplified by its multi-point supply. In addition, investment in sophisticated IT systems enables it to manage its business and its customer relationships efficiently.

Filtrona has built up relationships with key blue chip customers in this market, including Boeing, General Electric, Hussman and Wal-Mart.

(d)          Growth drivers

Management are driving growth through focusing on development of proprietary niche products and technologies in growing segments such as transportation, medical supplies and point of sale displays.

3.4          Consumer packaging

(a)          Products

In its consumer packaging business, Globalpack, Filtrona has a market leading position in the Brazilian market as a producer of packaging for toiletries and cosmetic items. Based in São Paulo, Globalpack supplies containers, tubes, closures and, through its joint venture Euro-Matic Filtrona, roll-on balls to the market leading producers of deodorant and cosmetic products.

(b)          Markets

Globalpack serves blue chip customers such as Avon, Johnson & Johnson, Natura and Unilever and has a unique position derived from the high level of innovative solutions provided to its customers. Globalpack supplies packaging using a range of processes including injection moulding, blow moulding, extrusion and printing and, as such, offers a full service range to its principal customers.

Globalpack, through Euro-Matic Filtrona, is the market leading supplier of roll-on deodorant balls in Brazil. This joint venture, combined with Globalpack’s capability in producing bottles, housings and caps, has positioned it as the leading supplier of roll-on deodorant packaging in the Brazilian market.

                The principal competitors to Globalpack are privately owned Brazilian companies and divisions of larger packaging groups.

(c)           Sources of differentiation

Globalpack is the only Brazilian supplier with the capability to produce a full roll-on deodorant packaging set (i.e. container, ball, housing and cap). It has a full print capability for the decoration of tubes and containers and is known for innovation and quality.

(d)          Growth drivers

The Brazilian cosmetics and toiletries market continues to expand with consumers’ disposable incomes. Globalpack will continue to drive growth through the innovative new packaging formats it is able to offer the blue chip cosmetics and toiletries suppliers, both in Brazil and in the surrounding region.

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3.5          Cigarette filters

(a)          Products

Filtrona produces a wide range of filters from monoacetate to multi-segment special filters with novel mouthpieces and sophisticated adsorbent materials. Filtrona’s special filters provide its customers with an opportunity to differentiate their products in the market relative to its competitors.

Fibre Technologies, with over 50 years of experience in the industry, is the largest independent producer of special filters for the cigarette market. It supplies cigarette filters to, among others, the top four global cigarette manufacturers, Altria (Philip Morris), British American Tobacco, Imperial Tobacco and Japan Tobacco International, which together represent some 44% of the cigarette market.

Filtrona has a relatively low share of the monoacetate market, as the larger tobacco companies tend to self-manufacture. Filtrona supplies cigarette filters into this market where multi-national customers require additional capacity or flexible production runs and to smaller independent cigarette manufacturers who do not wish to add complexity to their business. However, the Directors believe the key area of differential advantage in its business is the supply of special filters.

Cigarette filter specifications are individual to brands, blends and manufacturers and are created to fulfil identified market niches. Filtrona’s strategically positioned, well invested manufacturing facilities in 14 locations around the world ensure that filters are delivered in a timely and cost effective way to fulfil customer needs.

(b)          Markets

The market for cigarette filters includes monoacetate filters and special filters.

Monoacetate filters are manufactured from paper wrapped cellulose acetate tow. Cellulose acetate tow is a white, virtually tasteless filling material which is bonded with a plasticiser.

In special filters, additives like carbon or menthol are combined with a monoacetate filter to change the taste of the cigarette smoke and the performance of the filters. Multiple filter sections can be combined together, with additives, to form a multi-segment filter, or the monoacetate filter can itself be modified to alter performance of the filter.

Filtrona estimates that standard monoacetate filters account for approximately 88% of the cigarette filters market, with special filters accounting for the remaining 12%. The special filters share has grown from 11.7% of filtered cigarettes in 2003 to 12.2% in 2004.

The principal competition for Filtrona is from cigarette companies choosing to manufacture their filters in-house. The Directors believe that Filtrona’s expertise, technology, innovation, low cost production footprint and high quality customer service offers an advantage over self-manufacture of special filters and this has been recognised by the major tobacco manufacturers who source from Filtrona. While occasionally some volume is taken back in-house by its customers, historically Filtrona has been able to offset these movements through new outsourced business from within its current customer base.

(c)           Sources of differentiation

A global footprint is an important source of differentiation within the special filters market. Filtrona has operations in 14 locations spread across the world, with two in the US, one in Mexico, three in South America, four in Europe and four in the Middle East and Asia. This provides a low cost, flexible source of supply as well as important penetration into the higher growth emerging markets.

Technology, innovation and manufacturing flexibility are also important differentiators in the cigarette filters market. Filtrona’s commitment to research and innovation is underlined by the operation of the Technology Centre in the UK. The Technology Centre was designed to bring together laboratory services, product development, materials testing and process engineering in one facility. Together these disciplines help Filtrona to research and source the best available materials and develop filter production techniques for use in its plants throughout the world.

(d)          Growth drivers

Filtrona’s multi-national tobacco customers require Filtrona to supply special filters to support their brands in their chosen end use markets, but particularly in Russia, Japan, South Korea and Venezuela,

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where special filters have either a leading or rapidly growing market share. Filtrona provides a flexible service that can support the strong growth profile that a successful brand requires.

Filtrona customers also recognise the expertise that Filtrona has in the supply of special filters and are increasingly looking to outsource production in return for a simplification of their business and a reduction in their total costs.

Cigarettes with multi-segment filters are expected to account for a growing share of the future cigarette market. Filtrona is ideally placed to offer such filters to its global customer base and the Directors believe that this represents a significant future opportunity.

3.6          Bonded fibres

(a)          Products

Filtrona, under the Fibertec brand, supplies bonded fibre structures for use as functional components in consumer and industrial products including those shown in the table below. The facilities for the bonded fibre products are located in Richmond, Virginia (US), Reinbek (Germany) and Ningbo (China), although the markets for these products are global.

The Directors believe that Filtrona is the market leader in its primary market of bonded fibre ink reservoirs for high quality roller ball and fine liner pens, markers and highlighters. From this base Filtrona has expanded into wicking, filtration and absorptive components for medical devices, absorptive media and ink transfer wicks for inkjet printers, ink cartridges and other imprinting machines. It is also growing strongly in household product applications for bonded fibres, such as air fresheners and insect repellents.

The table below shows some of the applications for Filtrona’s core competence of capillary transfer science, as well as the key products for which Filtrona supplies components.

(b)          Technology

Capillary transfer science is the basis for many of the performance features and product functions of Filtrona’s bonded fibre products. Capillary action is the means by which fluid moves through porous channels within a medium due to surface tension.

Knowledge of the properties of the relevant fluid as well as the media substrate enables Filtrona to model capillary behaviour and to design bespoke transfer systems for a wide array of applications.

Filtrona has invested heavily in process equipment to lower the unit cost of production and is planning to relocate some of this equipment to China to exploit the regional market.

Bonded fibre products are highly adaptable to meet fluid transfer and storage requirements. Selection of a given fibre composition and structure can be made to optimise function and fit.

Bonded fibre products can provide one way or two way fluid transfer. A reservoir for printer cartridges, for example, must be able to be quickly filled, safely contain ink without leakage and release on demand over the product life cycle.

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Bonded fibre products may also serve as wicks, transferring fluids from one substrate to another using capillary action.

(c)           Markets

In Western Europe and North America, the market for ink reservoirs is relatively mature. However in the new developing economies in Asia and the Far East, ink reservoirs represent a growth market in which Filtrona has a strong position.

Filtrona’s assessment of the competition in the medical and household products markets is that it stems from alternative solutions rather than alternative fibre component suppliers.

(d)          Sources of differentiation

The Directors believe that long term investment in capillary fibre research has yielded industry leading technology and Filtrona is recognised as a leading innovator in the continuous bonding of fibres. Since its foundation in 1954, the business has patented more than 60 products in the US alone. This emphasis on focused innovation is a key differentiator in this market. Filtrona has a truly international supply position with customers on every continent supplied from Filtrona Fibertec’s existing European and US facilities and its new Chinese operation. The Directors believe that no other competitor can match Filtrona Fibertec’s global reach and service level.

(e)           Growth drivers

Growth is driven both through a combination of product innovation and expanding the use of existing technologies to provide new applications such as wicks and reservoirs for in vitro medical devices where Filtrona is now a leading provider. The new product development pipeline contains a number of significant products and applications in ink reservoirs, medical diagnostics, medicine dispensing and diesel filtration.

The new Filtrona Fibertec facility in Ningbo, China offers a dual benefit of being a low cost source of production as well as providing access to a growing local market.

4.             Joint ventures

4.1          Plastic Technologies

In 2000 Globalpack, Filtrona’s consumer packaging business in Brazil, established a joint venture with Euro-Matic, a leading international manufacturer of plastic balls for a variety of applications, in order to manufacture and supply roll-on deodorant balls. Combined with Globalpack’s ability to produce bottles, housings and caps, Euro-Matic Filtrona has helped position Globalpack as the leading supplier of roll-on deodorant packaging in the Brazilian market.

In 2002 Filtrona established a Danish based joint venture, FractureCode Corporation with ITO Technologies, in order to develop a new technology in conjunction with Filtrona’s existing self-adhesive tear tape business Payne. FractureCode is a patented process which can apply a unique identifying mark to tear tape or other packaging media with a randomly printed code, which enables customers to mark their products individually in such a way that they can be tracked throughout the distribution chain. It can also be used as a brand authentication device as it is very difficult to replicate. Initial trials of FractureCode, which has not yet been used in commercial production, have been encouraging.

4.2          Fibre Technologies

Most of Filtrona’s cigarette filters businesses are wholly-owned. However the filter businesses in Thailand, India and Jordan are operated through joint venture companies Filthai Company Limited, ITC Filtrona Limited and Filtrona Jordan respectively. Based in Bangkok, Filthai was established in the 1970s and manufactures and supplies monoacetate and special filters principally to the Thai market. ITC Filtrona was formed in 1993 in Bangalore to supply monoacetate filters to the local Indian market. Filtrona Jordan was set up in 1995 and is based near Amman, from where it manufactures and supplies monoacetate filters for both the local domestic market and exports. Together these companies accounted for less than 10% of Filtrona’s total cigarette filter sales in 2004.

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5.             Summary financial information

5.1          Trading information

The table below summarises the trading record of Filtrona for the three years ended 31 December 2004. The contents of the table and financial information set out in this section have been extracted without material adjustment from the Accountants’ Reports in Parts 5 and 6 of this document. Investors should read the whole of this document and not just rely solely on the summarised information set out below.

*              Before goodwill/intangible amortisation.

**           Disclosure not required under IAS 14.

5.2          Profit and loss - by business segment

(a) Plastic Technologies

Plastic Technologies sales were flat in 2003 compared with 2002 and grew by 7.8% in 2004 (at constant exchange rates, 4.3% and 14.7% respectively). 2004 benefited from nine months of the Skiffy acquisition. The organic sales growth in 2004 at constant exchange rates was 11.3%.

On a UK GAAP constant exchange rates basis, operating profit before goodwill amortisation increased by 6.3% in 2003 and increased by 25.7% in 2004. The acquisition of the Skiffy business was projected at the time of acquisition to contribute £l.8 million in 2004. Filtrona’s post-acquisition focus has improved Skiffy’s profit to £2.3 million in 2004. Organic operating profit before goodwill growth at constant exchange rates for Plastics Technologies on a UK GAAP basis was 19.0% in 2004. The return on sales improved as a result of the increased focus on current and new proprietary product ranges within Plastic Technologies.

(b) Fibre Technologies

Fibre Technologies sales grew by 4.7% in 2003 and 3.3% in 2004 (at constant exchange rates, 6.9% and 9.7% respectively). 2004 benefited from the full year effect of the Baumgartner Fibertec acquisition which contributed sales of £15.7 million in 2004, compared with £3.3 million for the three months in 2003.

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Excluding the impact of acquisitions, organic sales growth at constant exchange rates was 5.2% in 2003 and 4.0% in 2004.

On a UK GAAP constant exchange rates basis operating profit before goodwill amortisation increased by 9.0% in 2003 and fell by 4.1% in 2004. The 2004 reduction in operating profit was due to price positioning both in advance of volume growth and lower cost manufacture as well as the Baumgartner Fibertec business, which was loss making on purchase but achieved breakeven in 2004.

5.3                               Profit and loss – by geographical origin

Both Plastic Technologies and Fibre Technologies operate throughout the world. Sales to the rest of the world segment (i.e. excluding Europe and North America), which include many of the lower cost manufacturing regions, have grown as a proportion of the whole from 15.7% in 2002 to 18.1% in 2004.

5.4                               Corporate activities

Corporate activities include the Filtrona business area central costs and a proportion of Bunzl’s central costs allocated on a basis reflecting the proportion of those resources consumed by Filtrona. The Directors believe that the level of central costs in 2004 is representative of the resources required to run an independent public company.

5.5                               Cash flow and return on capital

Notes:

(1)                                  Operating profit is stated before charging interest, taxation and goodwill/intangible amortisation.

(2)                                  Trading cash flow is net cash inflow from operating activities less net cash outflow for capital expenditure.

5.6                               Cash flow

Under UK GAAP the Cash Conversion Rate averaged 73% over the last three years. In 2004 net capital expenditure increased by £9.1 million to be £13.3 million in excess of depreciation to invest in new facilities in Mexico and China to support the exploitation of new business opportunities. Working capital increased by £9.4 million in 2004 to support business growth and service enhancements through local stock availability of existing and new products.

5.7                               Return on capital

Inventory has increased throughout the period to support business growth and service enhancements through local stock availability of existing and new products. Debtors’ average payment days increased from 47 to 49 days, reflecting longer supply chains and growth in export markets with longer payment terms. Return on Capital Employed moved forward in 2002 and 2003 before dipping slightly in 2004. This was due to price positioning in Fibre Technologies in advance of both volume growth and lower cost manufacture, as well as the impact of the Baumgartner Fibertec acquisition, although partially offset by strong proprietary product growth in Plastic Technologies.

6.                                      Strategy and execution

6.1                               Overview

Filtrona’s strategy is to continue to grow profitably through investing organically and by acquisition in selected niche international markets within Plastic Technologies and Fibre Technologies. Within each business segment it is continually seeking to enhance its competitive position through product innovation, strengthen its sourcing and distribution capability, expand and adapt its global footprint to enhance its

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supply chain and reduce cost and invest in IT, people and production capability to deliver superior customer service and value.

6.2                               Enhance competitive position through innovation

The Directors believe that Filtrona’s robust competitive positions will be enhanced through the continued development of its product offering both from own manufacture and external sources. In each of the lines of business there will continue to be focus on product innovation and range development. In some of the businesses this will be driven by the established research and development functions and in others by further developing product management and sourcing functions.

Historically Filtrona has been able to use established locations within one line of business to offer rapid, low cost market entry for other businesses through overhead sharing. There are many examples of this within Filtrona, such as tear tape operations in cigarette filters and bonded fibres facilities, enabling the exploitation of new opportunities and servicing customers more quickly and cost effectively than competitors can achieve. This approach will continue as a key component of enhancing competitive positions rapidly.

6.3                               Expand and adapt the global footprint to improve supply chain and reduce cost

Filtrona has a comprehensive production and distribution footprint which can be flexed to respond to customers’ needs, whether they be product, cost or supply chain driven. Filtrona has a well invested machinery base that is flexible and relocatable. The current manufacturing locations are:

(i)                                     Americas – Brazil, Mexico, Paraguay, US and Venezuela;

(ii)                                  Europe – France, Germany, Italy, the Netherlands, Switzerland and the United Kingdom; and

(iii)                               Middle East and Asia – India, Indonesia, Jordan, Thailand and a recently completed facility in China.

The recent investment by the filters business in Monterrey, Mexico was assisted by the prior experience that Filtrona had developed from the plastic profile and sheet business that has operated there since 2000.

Similarly the recent investment in the Chinese facility is expected to accelerate the growth not only of the bonded fibre business but also the protection and finishing and the coated and security businesses in China.

6.4          Reduce production costs

Filtrona seeks to reduce its production costs through a combination of:

(i)            standardisation of operating policies and procedures including health and safety, environment and human resources;

(ii)           standardisation of production equipment and information systems;

(iii)          continued investment in a competitive manufacturing base with the latest high output machinery and tooling located in low unit labour cost locations; and

(iv)          a lean organisation with competent, well trained and experienced people.

6.5          Continue to enhance supply chain capability

Filtrona seeks to achieve supply chain and service excellence to add increased value to customers. Recent examples of this process are the opening of new warehousing arrangements in Russia and Korea to serve cigarette filter customers in these markets more effectively. These arrangements have not only facilitated just-in-time supply, they have also enabled customers to reduce inventories and to avoid the administration associated with importing products.

Filtrona will continue to build its distribution capability and geographic spread to assist growth. The recent opening of a new protection and finishing products distribution centre to serve the Czech Republic market follows on from the successful establishment of a distribution centre in Poland.

IT investment will continue to play a critical role in service enhancement. The enterprise resource planning packages in place have delivered significant improvement from the application of new technologies in areas such as finite scheduling and bar coding and business relationship management modules are in the process of implementation.

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6.6                               Selective acquisitions

Filtrona has made a number of selective acquisitions which have either strengthened a core competence, added geographic scale, brought new products into the portfolio or a combination of all three. There continues to be a number of acquisition targets which the Directors believe could supplement Filtrona’s underlying growth rate, and Filtrona plans to recruit a corporate development executive to increase the focus on this activity.

7.                                      Sales, marketing and purchasing

The sales, marketing and purchasing teams in Filtrona are based in the operating businesses and report through the senior management executive. The Directors believe it is critical to maintain this commercial focus within each line of business.

In Plastic Technologies larger customers are served by a key account structure. Smaller customers are reached through the marketing programme and a rapid sample service. Ultimately they are served by efficient telesales, internet or fax order entry.

In Fibre Technologies the relatively large size of the customers supports a key account approach that is closely linked to product development.

Filtrona’s top 10 customers represent 34% of Filtrona’s sales, but the fifth largest customer represents less than 2%. The principal area of customer concentration is within the tobacco industry. The Directors believe that differentiated products and a low cost supply chain mitigate the concentration risk.

The major element of supplier concentration again falls within the tobacco industry and relates specifically to the suppliers of cellulose acetate tow for cigarette filter production. This is a market served by five principal global suppliers all of whom supply Filtrona. The top 10 suppliers to Filtrona account for 53% of raw material purchases.

The Directors consider that alternative sources of supply exist for all major raw materials. These major materials include acetate tow, filter paper, polyester yarns, polypropylene film and various readily available engineering and commodity polymers.

8.                                      Board and management

The Board consists of Jeff Harris as Chairman, Mark Harper as Chief Executive, Steve Dryden as Finance Director and Paul Drechsler, Adrian Auer and Paul Heiden as independent non-executive Directors. Paul Heiden does not expect to serve beyond a transitional period.

Further details on the Directors are set out on page 8 and in Part 8 of this document.

9.                                      Current trading and prospects

In 2004 Filtrona again showed its strengths as a global supplier of speciality products with excellent increases in sales and operating profit at constant exchange rates. The increases in the second half of 2004 were greater than those in the first and Filtrona has continued to trade strongly in 2005.

The Directors expect Plastic Technologies to continue to grow as investments in marketing programmes, distribution infrastructure and new plant and equipment enhance Filtrona’s competitive position and capability.

In Fibre Technologies the Directors expect growth to continue as new facilities in Mexico and China come fully on stream and sustained investment in research and development delivers new products and applications.

Filtrona’s position as a leading supplier in the niche markets it serves and continued investment in lowering unit cost, improving service and supply chain efficiency, and in developing new products give the Directors confidence that Filtrona will sustain its positive development. As a result the Directors are confident in the financial and trading prospects of Filtrona for the current financial year.

10.                               Dividend policy

The Directors consider that had the Demerger been effective throughout the year ended 31 December 2004, in the absence of unforeseen circumstances and taking into account the terms of the Demerger and the Share Consolidation, the Directors would have recommended total dividends for the year ended 31 December 2004 of 5.9 pence per consolidated Filtrona Share.

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Following the Demerger Filtrona will pursue a progressive dividend policy that will seek to provide growth in dividends per share whilst maintaining appropriate levels of dividend cover. It is expected that Filtrona will declare its first interim dividend at the time of its interim results, which will be announced on 30 August 2005, taking account of the performance of the Filtrona Business during the first half of 2005.

11.                               Research and development

Filtrona’s worldwide R&D centre for the cigarette filters business is based in Jarrow in the UK and supports R&D activities on both proprietary and customer developments. The Directors expect that by the end of 2005 its dedicated filters R&D team will comprise 40 personnel. R&D is undertaken to identify solutions for producing new additives and product styles to assist customers in the selective reduction of smoke constituents, to develop lower cost production techniques and to develop new filter styles.

Fibertec’s worldwide R&D is centred in Richmond, Virginia (US), with some limited development work occurring in Reinbek (Germany). Fibertec’s dedicated R&D group focuses approximately 80% of its effort on customer driven projects and 20% on core technology projects. Principal research areas are in developing the knowledge and processes in the production of non-woven bonded fibres to give materials with different capillary transfer rates that support the identified needs in the current and prospective customer base.

In coated and security products, the global R&D centre and print studio is located at the Nottingham (UK) site where new print and security features are developed.

The FractureCode joint venture is responsible for its own software and application development.

Within the other lines of business the focus is on development rather than research. Development is driven by a combination of product marketing and engineering, resulting in either in-house development or outsourcing of the products concerned.

12.                               Employees

Senior management comprises an international team of nine individuals who have an average experience in the Filtrona Business of nearly 10 years. Senior management combines strong manufacturing process and product development know-how with a detailed knowledge of customers’ needs and, hence, excellent levels of service. The senior management team is supported by motivated and enthusiastic employees which is evidenced by the low levels of staff turnover within the businesses.

Filtrona has traditionally enjoyed good labour relations with the following locations having recognised union representation: Nottingham and Jarrow in the UK, Crissier in Switzerland, Buitenpost in the Netherlands, Reinbek in Germany and Richmond, Virginia and Columbia, South Carolina in the US.

In December 2004 employees in Switzerland took industrial action. This business was acquired from Baumgartner in October 2003 and Filtrona had not had the necessary time to build up constructive union relations prior to action being taken. The employees returned to work in January 2005. The business continuity planning within Filtrona enabled customer service to be maintained by production from other factories while the issues were resolved. The management at Filtrona Suisse is currently in consultation with the Filtrona Suisse works council relating to the potential closure of the facility in June 2005.

13.                               Corporate governance

The Board supports high standards of corporate governance. Following Admission the Board intends to comply with the Principles of Good Governance and Code of Best Practice 2003 (the “Combined Code”).

The Company will upon Admission comply with a code of securities dealings in relation to the Filtrona Shares which is based on, and is no less exacting than, the Model Code published in the Listing Rules. The code will apply to the Directors and relevant employees of the Group.

The Chairman of the Company will be Jeff Harris. Operational responsibility for the Group will lie with the Chief Executive, Mark Harper. Paul Drechsler will be the senior independent non-executive Director.

The Board has established three principal committees, the Audit Committee, the Remuneration Committee and the Nomination Committee, each of which will operate within written terms of reference approved by the Board.

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13.1                        Audit Committee

The Audit Committee will initially comprise Adrian Auer as Chairman, Paul Drechsler and Paul Heiden.

The Audit Committee will consist of not less than three members, at least one of which will have recent and relevant financial experience, and the quorum for meetings of the Audit Committee will be two members. Each of the members of the Audit Committee must be independent non-executive Directors. Appointments will be for a period of up to three years, extendable by no more than two additional three year periods, so long as members continue to be independent. The Audit Committee will meet as necessary and at least three times a year, including prior to the announcement of Group results when the external auditor will be in attendance for those discussions. The Finance Director will normally attend the meetings and the Chairman of the Audit Committee will report to the Board on the Audit Committee’s behalf as may be appropriate. While the Audit Committee has authority to investigate any areas of concern as to financial impropriety that arise and to obtain outside legal or other independent professional advice in connection therewith, its principal duties will include the following:

(a)                                  to monitor the integrity of all financial statements made by the Company and any formal announcements relating to the Company’s financial performance, reviewing significant financial reporting judgements contained in them;

(b)                                 to review and challenge where necessary accounting policies, methods, standards, presentation and disclosure;

(c)                                  to review the Company’s internal controls and, unless expressly addressed by a separate Board risk committee composed of independent Directors, or by the Board itself, to review the Company’s internal control and risk management systems;

(d)                                 to monitor and review the effectiveness of the Company’s internal audit function and financial controls in the context of the Company’s overall risk management system;

(e)                                  to make recommendations to the Board for it to put to the shareholders for their approval in general meeting, in relation to the appointment, re-appointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor;

(f)                                    to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements;

(g)                                 to develop and implement policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm; and

(h)                                 to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.

13.2                        Remuneration Committee

The Remuneration Committee will initially comprise Paul Drechsler as Chairman, Adrian Auer and Paul Heiden.

The Remuneration Committee will consist of not less than three members and the quorum for meetings of the Remuneration Committee will be two members. Each of the members of the Remuneration Committee must be independent non-executive Directors. The Remuneration Committee will meet at such times as may be necessary but will normally meet not less than three times a year. While the Chief Executive is not a member of the Remuneration Committee, he will normally attend the meetings except when the Remuneration Committee is considering matters concerning himself.

The purpose of the Remuneration Committee is to ensure that the Company’s executive Directors and senior executives are properly incentivised and fairly rewarded for their individual contributions to the Company’s overall performance having due regard to the interests of the shareholders and to the financial and commercial health of the Company.

The principal duties of the Remuneration Committee will include the following:

(a)                                  to make recommendations to the Board as to the framework or broad policy for the remuneration of the Chairman and the executive Directors of the Board and its cost;

(b)                                 to design and oversee all elements of executive Directors’ remuneration, including base salary, bonus, long term incentive plans, compensation in the event of early termination and pensions;

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(c)                                  to procure such information as it may consider necessary to make comparisons between the remuneration of the Company’s executive Directors and that of directors of other companies that it deems to be comparable;

(d)                                 to monitor and be sensitive to pay and employment conditions elsewhere in the Group. Subject to the Remuneration Committee’s purpose set out above, the Remuneration Committee shall use these comparisons to judge where to position the Company relative to other companies and the executive Directors relative to other employees;

(e)                                  to ensure that provisions regarding disclosure of remuneration, including pensions, as set out in the Directors’ Remuneration Report Regulations 2002 and the Combined Code, are fulfilled and make available the Remuneration Committee’s terms of reference; and

(f)                                    to monitor the policies and practices applied in setting the remuneration for senior executives directly below Board level and to make recommendations as appropriate.

13.3                        Nomination Committee

The Nomination Committee will initially comprise Jeff Harris as Chairman, Adrian Auer and Paul Drechsler.

The purpose of the Nomination Committee is to consider, and make recommendations to the Board concerning, the composition of the Board including proposed appointees to the Board, whether to fill any vacancies that may arise or to change the number of Board members.

The Nomination Committee will consist of the Chairman and non-executive Directors appointed by the Board. A majority of members of the Nomination Committee will be independent non-executive Directors. The quorum for meetings of the Nomination Committee must be two members. The Chairman of the Nomination Committee will be the Chairman of the Company or an independent non-executive Director, as appointed by the Board, but the Chairman of the Company will not chair the Nomination Committee when it is dealing with the appointment of a successor to the chairmanship of the Company.

The principal duties of the Nomination Committee will include the following:

(a)                                  to regularly review the structure, size and composition (including the skills, knowledge and experience) of the Board and make recommendations to the Board with regard to any changes;

(b)                                 to be responsible for identifying and nominating, for the approval of the Board, appropriate individuals to fill Board vacancies as and when they arise;

(c)                                  to evaluate the balance of skills, knowledge and experience on the Board and, in the light of this evaluation, prepare a description of the role and capabilities required for a particular appointment;

(d)                                 in identifying suitable candidates, where appropriate, to review internal candidates through a process of succession planning and/or (i) use open advertising or the services of external advisers to facilitate the search; (ii) consider candidates from a wide range of backgrounds; and (iii) consider candidates on merit and against objective criteria, taking care that appointees have enough time available to devote to the position;

(e)                                  to review annually the time required from a non-executive Director. Performance evaluation should be used to assess whether the non-executive Director is giving sufficient commitment to the role;

(f)                                    to give full consideration to succession planning in the course of its work, taking into account the challenges and opportunities facing the Company and what skills and expertise are therefore needed on the Board in the future;

(g)                                 to make a statement in the Annual Report about its activities and the process used for appointments and explain if external advice or open advertising has not been used;

(h)                                 to make available its terms of reference; and

(i)                                     to ensure that on appointment to the Board, non-executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of commitment, committee service and involvement outside Board meetings.

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PART 3

TERMS OF DEMERGER

1.                                      Details of the Demerger

1.1                               Demerger Dividend

The Demerger is conditional, inter alia, upon the passing at the EGM of the resolution numbered 1 set out in the EGM Notice (the “Demerger Resolution”) and the approval of the payment of the Demerger Dividend by the Bunzl Board. The Demerger will be effective immediately prior to Admission.

The Demerger will be implemented by Bunzl declaring a special dividend on the Bunzl Shares at the EGM (the “Demerger Dividend”). This dividend will be equal to the book value of Bunzl’s shareholding in Filtrona International Limited and will be satisfied by the allotment and issue by the Company of Filtrona Shares, credited as fully paid up, to Bunzl Shareholders on the Bunzl Share Register at the Demerger Record Time on the basis of:

one Filtrona Share for each Bunzl Share

held at the Demerger Record Time, save that the number of Filtrona Shares to be allotted and issued to each of David Williams and Paul Hussey will be reduced by the number of Filtrona Shares already held by them so that, upon the Demerger becoming effective, all Bunzl Shareholders (including David Williams and Paul Hussey) will hold one Filtrona Share for each Bunzl Share held at the Demerger Record Time.

In consideration for the issue of Filtrona Shares to Bunzl Shareholders, Bunzl will transfer to the Company the entire issued share capital of Filtrona International Limited. As a result Filtrona International Limited will become a wholly-owned subsidiary of the Company and the Company will in turn be owned by Bunzl Shareholders in the same proportions as they hold their Bunzl Shares at the Demerger Record Time.

The number of Filtrona Shares to be issued on Demerger is not expected to exceed 440 million based on the number of Bunzl Shares in issue on 16 May 2005 (the latest practicable date prior to the publication of this document) plus an estimate of the maximum number of additional Bunzl Shares that may be issued prior to the Demerger Record Time.

1.2                               Filtrona Share Consolidation

Upon Admission the share capital of the Company will be consolidated. Consequently Filtrona Shareholders will receive:

one consolidated Filtrona Share for every two non-consolidated Filtrona Shares

issued pursuant to the Demerger Dividend. For any Filtrona Shareholder whose holding of non-consolidated Filtrona Shares of nominal value 62 ¹¤₂ pence each is not exactly divisible by two, the resultant number of consolidated Filtrona Shares of nominal value 125 pence each that such Filtrona Shareholder receives will be rounded down to the nearest whole number and a fractional entitlement to a consolidated Filtrona Share will arise.

Individual fractional entitlements to consolidated Filtrona Shares will be aggregated and sold in the open market by JPMorgan Cazenove at the best price reasonably obtainable. The Company will retain the aggregate proceeds of sale of such consolidated Filtrona Shares, unless the aggregate amount to which any shareholder would be entitled, when aggregated with any amounts to which such shareholder is entitled in respect of any fractional entitlements under the Bunzl Share Consolidation (net of any commissions, dealing costs and administrative expenses) is £3 or more, in which case the net proceeds will be paid to each such shareholder proportionately to his entitlement, with cheques for such proceeds (including any such proceeds in respect of the Bunzl Share Consolidation) expected to be despatched to those entitled (at their risk) by 16 June 2005.

The number of Filtrona Shares in issue on Admission, and after the Filtrona Share Consolidation, is not expected to exceed 220,000,000 Filtrona Shares, based on the number of Bunzl Shares in issue on 16 May 2005 (the latest practicable date prior to the publication of this document) plus an estimate of the maximum number of additional Bunzl Shares that may be issued prior to the Demerger Record Time.

The initial Filtrona Shareholders have resolved to effect the Filtrona Share Consolidation upon Admission as described above.

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1.3                               Reduction of capital

Shortly after Admission and the Filtrona Share Consolidation becoming effective, the capital of Filtrona will, subject to the confirmation of the Court, be reduced by decreasing the nominal value of each Filtrona Share from 125 pence to 25 pence.

David Williams and Paul Hussey, as the initial Filtrona Shareholders, have resolved by a special resolution passed on 13 May 2005 (the “Reduction Resolution”) to reduce the share capital of Filtrona as described above. The text of the Reduction Resolution is as follows:

“THAT subject to and conditional on Admission and the Share Consolidation becoming effective, the nominal value of each Ordinary share be reduced from 125 pence to 25 pence”.

The Reduction of Capital will require the confirmation of the Court under section 135 of the Companies Act and, if so confirmed, will create distributable reserves on the balance sheet of Filtrona of approximately £220,000,000. This will provide Filtrona with, among other things, additional capacity for the payment of future dividends.

It is intended that any creditors or contingent creditors of Filtrona at the time the Reduction of Capital becomes effective will give their written consent to the Reduction of Capital and that, accordingly, there will be no requirement to take measures to protect creditors.

The Reduction of Capital is expected to become effective on 9 June 2005.

2.                                      Filtrona Shares

2.1                               Listing, settlement and dealings

Application has been made for the admission of the Filtrona Shares to the Official List in accordance with the Listing Rules and to trading on the London Stock Exchange’s market for listed securities. It is expected that Admission will become effective and dealings for normal settlement in the Filtrona Shares will commence at 8.00 a.m. on 6 June 2005.

The entitlement to receive Filtrona Shares pursuant to the Demerger is not transferable save to satisfy valid market claims.

For a transferee to be a registered holder of Bunzl Shares by the Demerger Record Time, a transfer of Bunzl Shares must be recorded on the Bunzl Share Register by 9.00 p.m. on 3 June 2005.

Bunzl Shareholders on the Bunzl Share Register at the Demerger Record Time will constitute the opening Filtrona Share Register.

2.2                               Filtrona Shares in certificated form

Bunzl Shareholders who hold their Bunzl Shares in certificated form at the Demerger Record Time will receive their entitlement to Filtrona Shares in certificated form.

It is expected that definitive certificates in respect of consolidated Filtrona Shares will be posted to entitled holders of Filtrona Shares (who hold their shares in certificated form) at their registered address on the Bunzl Share Register at the Demerger Record Time after the Reduction of Capital becomes effective and, in any event, by no later than 16 June 2005. In the case of joint holders, certificates will be despatched to the person whose name appears first in the Bunzl Share Register. Temporary documents of title will not be issued. Pending despatch of the certificates, transfers will be certified against the Filtrona Share Register by the Registrar. Share certificates will be despatched to Filtrona Shareholders at their own risk.

2.3                               Filtrona Shares in uncertificated form

Bunzl Shareholders who hold their Bunzl Shares in uncertificated form at the Demerger Record Time will receive Filtrona Shares in uncertificated form. It is expected that Filtrona Shares will be credited to the CREST account of the Bunzl Shareholder concerned on 6 June 2005.

CREST is a paperless settlement system enabling shares to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument. The Articles of Association will permit the holding of Filtrona Shares under the CREST system. The Company has applied for its shares to be admitted to CREST with effect from Admission.

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The Company reserves the right to issue Filtrona Shares to all entitled Bunzl Shareholders in certificated form if, for any reason, it wishes to do so.

2.4                               General

All mandates relating to payment of dividends on Bunzl Shares and all instructions given to Bunzl in relation to notices and other communications in force immediately prior to the Demerger Record Time will be, unless and until revoked or varied, deemed as from Demerger Record Time to be valid and effective mandates or instructions to Filtrona in relation to the corresponding holdings of Filtrona Shares.

3.                                      Overseas shareholders and Bunzl ADR holders

3.1                               United States

Bunzl has requested that the staff of the SEC confirm in a no-action letter that, among other things, the staff will not recommend that the SEC take enforcement action upon the distribution of Filtrona Shares to Bunzl Shareholders and holders of Bunzl ADRs without registration under the US Securities Act. Accordingly it is expected that registration under the US Securities Act of the Filtrona Shares to be distributed in the Demerger will not be required and the Filtrona Shares will not be so registered.

Bunzl Shareholders and/or holders of Bunzl ADRs who are citizens or residents of the United States are advised that the Filtrona Shares have not been and will not be registered under the US Exchange Act. Filtrona expects to obtain an exemption from the registration and reporting requirements of Section 12(g) of the US Exchange Act in reliance on Rule 12g3-2(b) thereunder. Pursuant to such exemption, so long as it has more than 300 shareholders resident in the United States, Filtrona will comply with the information supplying requirements of Rule 12g3-2(b), which requires Filtrona to furnish to the SEC information that (i) it has made or is required to make public in the United Kingdom; (ii) it has filed or is required to file with the UKLA and which was made public by the UKLA; or (iii) it has distributed or is required to distribute to its shareholders. Information that is furnished to the SEC by Filtrona may be obtained from the public reference facilities maintained by the SEC in Washington, DC at prescribed rates.

Shareholders and/or holders of Bunzl ADRs who are affiliates (within the meaning of the US Securities Act) of Bunzl or Filtrona before implementation of the Demerger or are affiliates of Bunzl or Filtrona after implementation of the Demerger will be subject to timing, manner of sale and volume restrictions on the sale of Filtrona Shares received in connection with the Demerger under Rule 145(d) under the US Securities Act.

The primary market for Filtrona Shares is expected to be the London Stock Exchange. Filtrona does not intend to list the Filtrona Shares on a US securities exchange or quote the Filtrona Shares on The National Association of Securities Dealers’ Automated Quotation system or on any other inter-dealer quotation system in the United States. Filtrona does not intend to take action to facilitate a market in Filtrona Shares in the United States. Consequently Filtrona believes that it is unlikely that an active trading market in the United States will develop for the Filtrona Shares.

Neither the SEC nor any US federal or state securities commission has registered, approved or disapproved the Filtrona Shares or passed comment or opinion upon the accuracy or adequacy of this document. Any representation to the contrary is a criminal offence in the United States.

3.2                               Bunzl ADR Holders

Bunzl ADR holders are advised that Filtrona does not propose to sponsor an American Depositary Receipt facility for the Filtrona Shares. On the effective date of the Demerger (currently expected to be 6 June 2005) holders of Bunzl ADRs will receive a pro rata distribution of the Filtrona Shares through the Depositary. The Filtrona Shares will be denominated in pounds sterling and will be listed on the London Stock Exchange. The Filtrona Shares will be distributed to registered holders of Bunzl ADRs in certificated form at their respective registered addresses. As it may be possible for any beneficial owner of Bunzl ADRs to hold the Filtrona Shares received in the Demerger, either in certificated form or through CREST, through the bank, broker, dealer, financial institution or other custodian or nominee through which such beneficial owner currently holds his Bunzl ADRs, each such beneficial owner of Bunzl ADRs is strongly recommended to seek advice from that entity regarding the Demerger. In addition beneficial owners of Bunzl ADRs holding through a bank, broker, dealer, financial institution or other custodian or nominee which in turn holds the Bunzl ADRs through the Depository Trust Company should contact such

27

bank, broker, dealer, financial institution or other custodian or nominee to coordinate the delivery of the Filtrona Shares to be distributed to such beneficial owners in the Demerger.

The Depositary shall pay the net cash proceeds payable with respect to any Bunzl ADR holder’s fractional entitlements to consolidated Filtrona Shares as described in paragraph 1.2 of Part 3 of this document (at such holder’s risk) in US dollars promptly after receipt from the selling agent.

3.2                               Other jurisdictions

Any person outside the UK who is resident in or who has a registered address in, or is a citizen of, an overseas territory and who is to receive Filtrona Shares pursuant to the Demerger should consult his professional advisers and satisfy himself as to the full observance of the laws of the relevant territory in connection therewith, including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territory.

The implications of the Demerger for overseas shareholders may be affected by the laws of their respective jurisdictions. Such overseas shareholders should inform themselves about and observe all applicable legal requirements.

In any case where the Company is advised that the allotment and issue of Filtrona Shares to a holder of Bunzl Shares with a registered address outside the UK would or may infringe the laws of any jurisdiction outside the UK, or necessitate compliance with any special requirement, the Directors may determine that such Filtrona Shares shall be issued to such overseas shareholder, and the overseas shareholder’s entitlement to Filtrona Shares pursuant to the Demerger shall then be sold on behalf of such overseas shareholder as soon as reasonably practicable thereafter at the best price which can reasonably be obtained at the time of sale, with the proceeds of such sale, net of sale and currency conversion expenses, being remitted to the overseas shareholder.

This document has been prepared for the purposes of complying with English law and the Listing Rules and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws of any jurisdiction outside the United Kingdom.

THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY, NOR SHALL THERE BE ANY SALE, ISSUE OR TRANSFER OF THE SECURITIES REFERRED TO IN THIS DOCUMENT IN ANY JURISDICTION IN CONTRAVENTION OF APPLICABLE LAW.

Overseas shareholders, including citizens or residents of the United States, should consult their own legal and tax advisers with respect to the legal and tax consequences of the Demerger in their particular circumstances.

4.                                      Continuing arrangements between Bunzl and Filtrona

Following the Demerger, Bunzl and the Company will each operate as separate publicly listed companies and neither Bunzl nor the Company will retain any shareholding in the other, although Bunzl’s employee benefit trust will acquire Filtrona Shares on Demerger by virtue of its holding of Bunzl Shares. Implementation of the Demerger and the relationship between Bunzl and the Company after Demerger is regulated by the Demerger Agreement and the Transitional Services Agreement, each entered into on 16 May 2005. For a description of the Demerger Agreement and of the Transitional Services Agreement see under “Material contracts” in paragraph 19 of Part 8 of this document.

Any business arrangement between any member of the Bunzl Group and any member of the Filtrona Group after the Demerger will be entered into at arms’ length and on normal commercial terms.

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PART 4

ACCOUNTANTS’ REPORT ON FILTRONA PLC

The Directors

Filtrona plc

201–249 Avebury Boulevard

Milton Keynes

MK9 1AU

JPMorgan Cazenove Limited

20 Moorgate

London

EC2R 6DA

17 May 2005

Dear Sirs

Filtrona plc Special Purpose Financial Information for the period from incorporation on 5 May 2005 to 10 May 2005

We report on the special purpose financial information set out below for the period from incorporation on 5 May 2005 to 10 May 2005 (the “special purpose financial information”).

Basis of preparation

The special purpose financial information has been prepared on the basis described in Note 1 and is based on special purpose financial statements drawn up by the Directors of Filtrona plc (the “underlying financial statements”) to which no adjustments to recognition or measurement were considered necessary.

Responsibility

The Directors of Filtrona plc are responsible for the preparation of the underlying financial statements.

The Directors of Filtrona plc are responsible for the Listing Particulars dated 17 May 2005 in which this report is included.

It is our responsibility to compile the special purpose financial information set out in our report from the underlying financial statements, to form an opinion on the special purpose financial information and to report our opinion to you.

Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular Reporting Standards issued by the Auditing Practices Board. Our work included an assessment of evidence relevant to the amounts and disclosures in the special purpose financial information. It also included an assessment of the accounting principles used and significant estimates and judgments made by those responsible for the preparation of the underlying financial statements and whether the policies are appropriate to the entity’s circumstances, consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we considered necessary to give reasonable assurance that the special purpose financial statements are free from material misstatement whether caused by fraud or other irregularity or error.

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Opinion

In our opinion, the special purpose financial statements give, for the purposes of the listing particulars dated 17 May 2005, a true and fair view of the state of affairs of Filtrona plc as at 10 May 2005 in accordance with the basis set out in Note 1.

Income statement

for the period to 10 May 2005

For the period from incorporation on 5 May 2005 to 10 May 2005 Filtrona plc did not trade. The profit attributable to the equity holders of Filtrona plc for the period is £nil.

Balance sheet

at 10 May 2005

Cash flow statement

for the period to 10 May 2005

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Statement of changes in total equity attributable to Filtrona plc’s equity holders

for the period ended 10 May 2005

The receipt of cash totalling £50,250 represents a contribution from Bunzl plc. This capital contribution is unconditional and therefore the amount standing in the capital contribution reserve is distributable.

1.                                      Notes

Filtrona plc was incorporated on 5 May 2005. Filtrona plc has not yet commenced business, no audited financial statements have been made up and no dividends have been declared or paid since the date of incorporation.

Accounting policies

Statement of compliance

The special purpose financial statements have been prepared in accordance with accounting standards endorsed for use by entities required to comply with Regulation EC1606/2002 (“accounting standards adopted for use in the European Union”). These are Filtrona plc’s first financial statements and IFRS 1 has been applied.

Basis of preparation

The special purpose financial statements are presented in sterling and prepared on a historical cost basis.

The preparation of these special purpose financial statements in conformity with accounting standards adopted for use in the European Union requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Cash and cash equivalents

Cash and cash equivalents, for the purposes of the cash flow statement, comprises cash in hand and deposits repayable on demand.

Financial instruments

Financial instruments are classified as financial liabilities where they contain a contractual obligation to deliver cash or another financial asset to another company.

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2.                                      Share capital

Each ordinary share entitles the holder of the share to one vote at a general meeting of Filtrona plc’s members. Filtrona plc’s ordinary shares are held by D M Williams and P N Hussey, both shareholders of Bunzl plc.

In addition, Filtrona plc has also issued redeemable preference shares (see note 3).

3.                                      Financial liabilities

Filtrona plc is authorised to issue 50,000 redeemable shares of £1 each. On 6 May 2005 Filtrona plc issued 50,000 redeemable preference shares with a nominal value of £1 each to Bunzl plc.

The preference shares carry no right to income by way of a dividend out of the profits of Filtrona plc. On a return of capital, whether or not on a winding up, other than redemption or purchase by Filtrona plc of any of its share capital, the holders of the redeemable preference shares are entitled to receive in sterling the nominal value of the preference shares out of the assets of Filtrona plc available for distribution in priority to the holders of any other class of shares in Filtrona plc.

Filtrona plc is entitled to redeem the preference shares at any time, and is obliged to redeem the preference shares on or before 28 June 2005. The amount payable on redemption of the preference shares is the nominal value of each redeemable preference share.

The preference shares have no voting rights.

4.                                      Post balance sheet events

Subsequent to the balance sheet date of 10 May 2005, the 50,000 redeemable preference shares of £1 each were redeemed for cash at par from existing resources on 11 May 2005. On that same day, D M Williams and P N Hussey were each issued four ordinary shares of 12 ¹¤₂ pence each.

On 13 May 2005 the 50,000 unissued redeemable preference shares of £1 each were redesignated as 80,000 ordinary shares of 62 ¹¤₂ pence each. In addition, the 699,599,990 unissued ordinary shares of 12 ¹¤₂ pence each were redesignated as 139,919,998 ordinary shares of 62 ¹¤₂ pence each. The issued share capital of 10 ordinary shares of 12 ¹¤₂ pence each was consolidated on the basis of five issued shares into one ordinary share of 62 ¹¤₂ pence each. On that same day the authorised share capital of Filtrona plc was increased from £87,500,000 to £625,000,000 by the creation of an additional 860,000,000 ordinary shares of nominal value 62 ¹¤₂ pence each.

An agreement was entered into on 16 May 2005 between Filtrona plc and Bunzl plc to effect the Demerger of the Filtrona Business and to govern the relationship between the Bunzl Group and the Filtrona Group following Demerger.

5.                                      Ultimate parent company

The Directors consider the ultimate parent company to be Bunzl plc. A copy of the group accounts of Bunzl plc may be obtained from its registered office, 110 Park Street, London W1K 6NX.

Yours faithfully

KPMG Audit Plc

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PART 5

ACCOUNTANTS’ REPORT ON THE FILTRONA GROUP

THREE YEARS’ UK GAAP

The Directors

Filtrona plc

201-249 Avebury Boulevard

Milton Keynes

MK9 1AU

JPMorgan Cazenove Limited

20 Moorgate

London

EC2R 6DA

17 May 2005

Dear Sirs

The Filtrona Group

We report on the financial information set out below. This financial information has been prepared for inclusion in the listing particulars dated 17 May 2005 (the “Listing Particulars”) of Filtrona plc.

The entities which, following the proposed demerger described in the Listing Particulars (the “Demerger”), will be owned by Filtrona plc are collectively referred to throughout this report as the “Filtrona Group”, “Filtrona” or the “Group”.

The Filtrona Group did not constitute a statutory sub-group within the Bunzl Group of companies (the “Bunzl Group”) during the period under review. For this reason, no consolidated statutory accounts for the Filtrona Group have previously been prepared.

For the purposes of the Demerger, the Directors of Filtrona plc have prepared special purpose accounts containing combined financial information for the Filtrona Group for the three years ended 31 December 2004. These special purpose accounts are based on financial returns for this period, prepared for consolidation purposes within the Bunzl Group by the companies in the Filtrona Group, and have been prepared on the basis set out in Section I to the financial information below.

Basis of preparation

The combined financial information set out below is based on audited special purpose combined financial statements for the three years ended 31 December 2004, prepared by the Filtrona Group for the purpose of supporting the Demerger of the Filtrona Group from Bunzl. The special purpose combined financial statements were prepared under UK GAAP and the accounting policies of Bunzl plc (“Bunzl”).

Responsibility

The special purpose combined financial statements of the Filtrona Group are the responsibility of the Directors of Filtrona plc who approved their issue.

The Directors of Filtrona plc are responsible for the contents of the Listing Particulars in which this report is included.

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It is our responsibility to compile the combined financial information set out in our report from the financial returns, to form an opinion on the combined financial information and to report our opinion to you.

Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular Reporting Standards issued by the Auditing Practices Board. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. The evidence included that previously obtained by KPMG Audit Plc relating to the audit of the consolidated financial statements of Bunzl and of the audited financial returns of the Filtrona Group. Our work also included an assessment of significant estimates and judgements made by those responsible for the preparation of the consolidated financial statements of Bunzl and the non-statutory accounts of the Filtrona Group, and whether the accounting policies are appropriate to the entity’s circumstances of the Filtrona Group, consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the combined financial information is free from material misstatement whether caused by fraud or other irregularity or error.

Opinion

In our opinion, the combined financial information gives, for the purposes of the Listing Particulars, a true and fair view of the combined state of affairs of the Filtrona Group as at the dates stated and of its combined results, total recognised gains and losses and combined cash flows for the years then ended.

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Combined profit and loss accounts

for the year ended 31 December

Sales and operating profit are from continuing operations.

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Combined balance sheets

as at 31 December

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Combined cash flow statements

for the year ended 31 December