Filtrona Demerger - Part II

Bunzl PLC
17 May 2005


PART II OF III

Bunzl plc

Proposed Demerger of Filtrona plc

Introduction

On 28 February 2005 Bunzl announced that it had decided it was the right time to
demerge its successful Filtrona organisation from its growing and highly
profitable Outsourcing Services business. Bunzl announces that documentation
will today be sent to Bunzl Shareholders confirming full details of the proposed
Demerger and separate listing of Filtrona plc ('Filtrona' or the 'Company').

The Demerger will establish Filtrona as a separately listed company. Bunzl will
continue to be listed on the Official List and the London Stock Exchange's
market for listed securities.

The Filtrona Shares are expected to commence trading on the London Stock
Exchange and admitted to the Official List on 6 June 2005.

It is expected that, initially, both Bunzl and Filtrona will be constituents of
the FTSE 250 Index. Bunzl will remain in and Filtrona will be part of the
Support Services sector.

The Demerger is to be effected by Bunzl declaring a special dividend equal to
the book value of Bunzl's shareholding in Filtrona International Limited, the
intermediate holding company of the Filtrona Group. This special dividend will
be satisfied on Demerger by the allotment and issue by Filtrona of Filtrona
Shares to Bunzl Shareholders on the Bunzl share register at the Demerger record
date on the basis of one Filtrona Share for each Bunzl Share held. This
requires, amongst other things, the approval of Bunzl Shareholders by ordinary
resolution at the Extraordinary General Meeting of the Company, to be held on 2
June 2005.

Immediately after the Demerger is effective, and upon admission of the Filtrona
Shares to the Official List of the UK Listing Authority, the share capital of
Filtrona will be consolidated on the basis of one consolidated Filtrona Share
for every two non-consolidated Filtrona Shares and the share capital of Bunzl
will be consolidated on the basis of seven consolidated Bunzl Shares for every
nine non-consolidated Bunzl Shares.

Overall, as a result of the Demerger and the share consolidations described
above, Bunzl Shareholders will receive:

        14 consolidated Bunzl Shares and 9 consolidated Filtrona Shares

  for every 18 non-consolidated Bunzl Shares held at the Demerger record date

In addition, shortly after the Demerger and the Filtrona share consolidation, it
is proposed that the capital of Filtrona will be reduced in order to create
distributable reserves in Filtrona. The reduction of capital was approved by a
special resolution of the current Filtrona Shareholders on 13 May 2005, and is
subject to the approval of the Court.

Background to and reasons for the Demerger

Since 1991 the structure of Bunzl has been simplified by selling businesses with
weaker returns and relatively poor competitive positions and reinvesting the
proceeds from these disposals to grow businesses where it has superior returns,
good international competitive positions and the potential to grow. The pursuit
of this strategy has resulted in Bunzl having two business streams, Outsourcing
Services and Filtrona, both of which have these features but which have little
or no commercial overlap between them. The Bunzl Board has therefore decided to
separate these two fundamentally different component parts by demerging the
Filtrona Business from Bunzl. Filtrona plc, the holding company of the demerged
Filtrona Business, will be an independent public company, while Bunzl will
become a simpler organisation concentrating on the Outsourcing Services business
stream. As such Bunzl will be a focused, international, value-added distribution
and outsourcing Group.

The Bunzl Board believes that the Demerger will benefit Bunzl Shareholders as
the separate businesses will be able to:

• focus on their own strategic objectives and develop appropriate
  organisations, structures and procedures to achieve these objectives;
• retain, motivate and recruit key personnel more effectively;
• develop appropriate capital structures and dividend policies; and
• develop their own focused investor base and access capital markets
  independently.

The Bunzl Board believes that shareholder value will be created through the
Demerger and that Filtrona and Bunzl will be strong businesses in their own
right, with good returns and good international competitive positions, and will
prosper as separate listed entities.

Information on Filtrona

Summary description of Filtrona

General

Filtrona is an international, market leading speciality plastic and fibre
products supplier. It is a business area of Bunzl which, by concentrating on
niche international markets, 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. Filtrona believes that many of the markets and
segments within which it 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,
Nestle, 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 million.

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.

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.

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.

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. Filtrona expects 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.

Strengths

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). Filtrona
believes that its 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.

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 Filtrona 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 Filtrona 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.

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. Filtrona
believes 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.

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.

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.

In Richmond (Virginia), Sao 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.

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.

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.

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,
is indicative of Filtrona's ability to drive value from selective acquisitions.

Well positioned for future growth

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

• continued development of product lines in protection and finishing
  products and in plastic profile and sheet manufacturing;
• continued growth of brand promotion, security and track and trace
  opportunities;
• commercialisation of bonded fibre developments;
• new packaging formats at Globalpack driven by product innovation;
• the development of more sophisticated filter products for PREPs
  leading to further special filter manufacturing outsourcing decisions by tobacco
  manufacturers;
• continued growth of high value-added bonded non-woven fibre products;
• the recently built manufacturing facilities in lower cost locations
  coming fully on stream; and
• the emergence of Asia as a demand generator and source.

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:

• enhancement of competitive position in each line of business;
• expansion and adaptation of the global footprint;
• reduction of production costs;
• improvement of service and supply chain efficiency; and
• enhancement of the business through selective acquisitions.

Financial information

The table below summarises the trading record of Filtrona for the three years
ended 31 December 2004.
                                      IFRS     UK GAAP    UK GAAP    UK GAAP
                                      2004     2004       2003       2002
                                      £m       £m         £m         £m

Sales                                 477.5    477.5      452.6      442.4
Operating profit (Note 1)             49.6     54.2       51.1       48.0
Profit on ordinary activities before
taxation                              47.3     49.4       45.7       41.2
Trading cash flow (Note 2)            30.7     30.7       44.4       36.4
Cash conversion rate                  62%      57%        87%        76%
Capital employed                      209.4    209.4      193.6      197.0
Return on capital employed            23.7%    25.9%      26.4%      24.4%

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

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.

Non-recurring IFRS charges in 2004 were:

  (i)  the reduction in the carrying value of the 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 tothe 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.

Terms of the Demerger

The Demerger is to be effected by Bunzl declaring a special dividend equal to
the book value of Bunzl's shareholding in Filtrona International Limited, the
intermediate holding company of the Filtrona Group. This special dividend will
be satisfied on Demerger by the allotment and issue by Filtrona of Filtrona
Shares to the Bunzl Shareholders on the Bunzl share register at the demerger
record date on the basis of one Filtrona Share for each Bunzl Share held. This
requires, among other things, the approval of Bunzl Shareholders by ordinary
resolution at the Extraordinary General Meeting to be held on 2 June 2005.

Immediately after the Demerger is effective, and upon Admission, the share
capital of Filtrona will be consolidated on the basis of one consolidated
Filtrona Share for every two non-consolidated Filtrona Shares and the share
capital of Bunzl will be consolidated on the basis of seven consolidated Bunzl
shares for every nine non-consolidated Bunzl Shares.

Overall, as a result of the Demerger and the share consolidations described
above, Bunzl Shareholders will receive:

        14 consolidated Bunzl Shares and 9 consolidated Filtrona Shares
  for every 18 non-consolidated Bunzl Shares held at the Demerger record date

In addition, shortly after the Demerger and the Filtrona share consolidation, it
is proposed that the capital of Filtrona will be reduced. This will create
distributable reserves in Filtrona.

The Filtrona Shares and the consolidated Bunzl Shares are expected to commence
trading on the London Stock Exchange and to be admitted to the Official List on
6 June 2005.

Filtrona Board

The Filtrona 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
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 at 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.


Filtrona 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.

Filtrona expects Plastics Technologies to continue to grow as investments in
marketing programmes, distribution infrastructure and new plant and equipment
enhance its competitive position and capability.

In Fibre Technologies Filtrona expects 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 Filtrona confidence that it will
sustain its positive development. As a result the Filtrona Board is confident in
the financial and trading prospects of Filtrona for the current financial year.

Filtrona dividends

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 Filtrona Board 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.

Post-Demerger Bunzl

Following the Demerger Bunzl will be a focused, international, value-added
distribution and outsourcing Group with operations in North America, Europe and
Australasia. Bunzl will be a leading supplier of a range of products, including
outsourced food packaging, disposable supplies and cleaning and safety products
for supermarkets, redistributors, caterers, food processors, hotels, contract
cleaners, non-food retail and other industrial users.

Bunzl's management team has a strong record of producing consistent, long term
sales and profits growth, with a high return on operating capital across the
Outsourcing Services business. Outsourcing Services' distribution capability,
extensive product offering and cost advantages have enabled Bunzl to grow in
line with its customers' expansion and to increase market share. Organic growth
has been further complemented by acquisitions to increase market presence in
established markets and develop Bunzl's service offering in new and developing
markets.

Following the Demerger, on a pro forma basis under IFRS, Bunzl would have
reported sales of £2,438.5 million and operating profit before intangible
amortisation of £173.8 million for the year ended 31 December 2004, with net
assets of £382.1 million and net debt of £306.5 million at 31 December 2004.


Bunzl current trading and prospects

Growth in sales and operating profit in Outsourcing Services increased during
2004 with second half growth being greater than that in the first half. Renewed
momentum in the US during the fourth quarter and the impact of achieving scale
advantage across Europe and Australasia have continued during 2005.

North America is expected to continue to grow as a result of renewed momentum in
acquisition activity and increased sales to higher growth areas such as
redistribution, food processors, convenience stores and the jan/san market.
Generally firm product prices, as a result of higher commodity input prices to
suppliers, should prevent growth being eroded by deflation, certainly in the
immediate future.

In Europe and Australasia growth is expected to continue as recent acquisitions
are integrated into the business. Future acquisition activity is expected to
expand Bunzl's geographic coverage and deepen its participation in existing
markets. The cost savings and efficiency gains associated with Bunzl's increased
scale should continue to deliver benefits.

Bunzl's strong focused competitive position in its international markets and its
ability to enhance growth through acquisitions give it confidence that it will
maintain its momentum and continue its positive development. As a result the
Bunzl Board is confident in the financial and trading prospects of Bunzl for the
current financial year.

Bunzl dividends

The Bunzl Board intends to declare an interim dividend at the time of Bunzl's
interim results on 30 August 2005 in respect of the six months ending 30 June
2005, having regard to the performance of the Outsourcing Services business.

Bunzl Board changes

On 28 February 2005 the Company announced that the Bunzl Board will appoint
Christoph Sander as Chief Executive of Bunzl on completion of the Demerger.
Anthony Habgood will remain as Chairman. The role of Deputy Chairman will cease
to exist on completion of the Demerger and Pat Dyer, currently Deputy Chairman,
will retire from the Bunzl Board at the end of 2005. Mark Harper and Paul
Heiden, who will join the Filtrona Board as Chief Executive and non-executive
director respectively, will resign from the Bunzl Board on completion of the
Demerger. The Bunzl Board will then constitute a Chairman, a Chief Executive and
two other executive Directors, four existing independent non-executive
Directors, of which Jeff Harris will continue to act as the senior independent
director and, in addition, Pat Dyer, who will continue to serve as a
non-executive director until the year end. Jeff Harris will also become Chairman
of Filtrona.

Extraordinary General Meeting

The documents to be posted to shareholders contain notice of an Extraordinary
General Meeting of Bunzl for 10.00 a.m. on 2 June 2005, to be held at One
Bunhill Row, London EC1Y 8YY.

At the Extraordinary General Meeting ordinary resolutions will be proposed:

  (i)   to approve the Demerger and the declaration of a special
        dividend in order to give effect to the Demerger;
  (ii)  to approve the Bunzl share consolidation
  (iii) to authorise the Bunzl Directors to implement the Demerger
        and the Bunzl share consolidation; and
  (iv)  to update the Bunzl Directors' authority in relation to the
        purchase by Bunzl of its own shares

Timetable                                                             2005

Extraordinary General Meeting of Bunzl                      10.00 a.m. on 2 June
                                                                          
Latest time and date for transfers of Bunzl Shares to be     9.00 p.m. on 3 June
registered in order for the transferee to be registered at            
the Demerger record date

Demerger record date                                         7.00 a.m. on 6 June
                                                                          
Expected effective date of Demerger, share consolidations,   8.00 a.m. on 6 June
admission and commencement of dealings in Filtrona Shares              
and consolidated Bunzl Shares on the London Stock Exchange 
and crediting of Filtrona Shares and consolidated Bunzl 
Shares to CREST accounts

Analysts' meeting

There will be a presentation to analysts at 11.15 a.m. today at JPMorgan
Cazenove, 20 Moorgate, London, EC2R 6DA. Coffee will be served from 10.45 a.m.

Enquiries

Bunzl plc                                          Tel: [phone]

Anthony Habgood, Chairman
David Williams, Finance Director

Filtrona plc                                       Tel: [phone]
Mark Harper, Chief Executive
Steve Dryden, Finance Director

JPMorgan Cazenove                                  Tel: [phone]
Julian Cazalet
Nick Garrett
Robert Constant

Finsbury                                           Tel: [phone]
Roland Rudd
Morgan Bone

This announcement shall not constitute or form any part of any offer or
invitation to subscribe for, underwrite or otherwise acquire, or any
solicitation of any offer to purchase or subscribe for, any shares in Filtrona
plc ('Filtrona' or the 'Company'). This announcement (or any part of it) shall
not form the basis of, or be relied on in connection with, any contract to
purchase or subscribe for any shares in Filtrona or any commitment whatsoever.

This announcement (i) does not constitute listing particulars, within the
meaning of section 79 of the Financial Services and Markets Act 2000 ('FSMA');
(ii) does not, and does not purport to, comply with the provisions of the said
section 79 or of the Listing Rules made by the UK Listing Authority pursuant to
section 74 of FSMA (the 'Listing Rules'); and (iii) does not contain all of the
information required to be contained in listing particulars published in
accordance with the aforementioned provisions. You are referred to the Listing
Particulars to be published by the Company on 17 May 2005 for a description of
the Company, the businesses of the Filtrona group of companies (the 'Group') and
certain risk factors relevant to the group.

This announcement contains various forward-looking statements regarding events
and trends that are subject to risk and uncertainties that could cause the
actual results and financial position of the company to differ materially from
the information presented herein. Forward-looking statements include information
concerning possible and assumed future results of the company's operations,
earnings, economic conditions affecting the industries in which the company
operates and demand and other aspects of the group's businesses. When used in
this announcement the words 'estimate', 'project', 'intend', 'anticipate',
'believe', 'expect', 'should', and similar expressions, as they relate to the
company or its management, are intended to identify such 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.

The distribution of this announcement in certain jurisdictions may be restricted
by law, and persons into whose possession this announcement 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 announcement. Any representation
to the contrary is a criminal offence in the United States.

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






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