BPB BECOMES GLOBAL PLASTERBOARD MARKET LEADER

• Acquisition of the US wallboard business of James Hardie for US$345 million (£243 million), an important step forward in BPB's strategy in North America
  
• Placing of 30 million new BPB ordinary shares to raise approximately £100 million
  
• Trading Update for 2001/02, with an expected underlying PBT of over £150 million

ACQUISITION OF JAMES HARDIE GYPSUM

BPB plc ("BPB") announces that it has reached agreement for the acquisition of all the issued share capital of James Hardie Gypsum Inc and Western Mining and Minerals Inc ("JHG") which together comprise the US wallboard business of James Hardie Industries NV, subject to regulatory approval and other technical conditions, with completion expected by May 2002. The purchase consideration is US$345 million (£243 million) in cash on a debt-free basis and will be financed using existing committed debt facilities and the proceeds from a proposed placing of 30 million new ordinary shares (representing 6.5% of BPB's current issued ordinary share capital) raising approximately £100 million (the "Placing"). Further information on the Placing is provided below.

The North American wallboard market represents over 50% of world demand and JHG holds a share of almost 7.5% of the US market, selling around 2.2 billion square feet of wallboard per annum from its 3 plants in Seattle (Washington), Las Vegas (Nevada) and Nashville (Arkansas). JHG employs just under 600 people and has secure sources of gypsum; its Western Mine has more than sufficient reserves of high purity, low-cost gypsum to supply the Las Vegas plant for over 50 years.

For the year to 31 March 2001, JHG had sales of US$279 million, EBITDA of US$57 million and EBIT of US$42 million; the gross assets at 31 March 2001 were US$277 million. JHG's published results for the 9 months to 31 December 2001 were sales of US$182 million, EBITDA of US$9 million and an EBIT loss of US$3 million, although third quarter EBIT amounted to US$5 million. Gross assets at 31 December 2001 were US$268 million.

Completion of the acquisition will mark an important step forward in BPB's strategy of strengthening its direct presence in the huge US internal linings market, a process which was established in July 2000 with the acquisition of the wallboard and ceiling tile businesses of Celotex. It will increase BPB's North American market share to 16%, take its manufacturing capacity up to around 6 billion square feet and provide opportunities to lower the group's annual operating costs in North America by more than US$10 million over the next 18 months.

The acquisition is expected to be earnings enhancing (before goodwill amortisation) in BPB's fiscal year 2002/03. (This statement should not be construed as a profit forecast, nor interpreted to mean that BPB's earnings in that year will necessarily exceed BPB's earnings for completed financial periods).

Commenting on the deal, Richard Cousins, BPB's Chief Executive said:

"Following this acquisition BPB will be the global number one in plasterboard selling over one billion square metres per annum and be the third largest player in the world's biggest plasterboard market, with 13 well-located low-cost plants spread across North America."

PROPOSED PLACING OF NEW BPB SHARES

To finance part of the purchase price, BPB intends to raise approximately £100 million through an equity offering of 30 million new ordinary shares ("Placing Shares") to institutional investors.

The Placing will be conducted by way of a bookbuilt offering to new and existing eligible institutional investors in the UK and internationally. Cazenove & Co. Ltd ("Cazenove") and Hoare Govett Limited ("Hoare Govett") are joint bookrunners to the Placing.

The book is expected to close no later than 4.30 pm (London time) on Thursday 14 March 2002 and dealings are expected to commence in the Placing Shares by no later than Tuesday 19 March 2002, although Cazenove and Hoare Govett, in consultation with BPB, reserve the right at their discretion to close the book at any time.

The Placing Shares will be credited as fully paid and rank pari passu in all respects with the existing ordinary shares, including the right to receive the final dividend for the year ending 31 March 2002. Details of the number of Placing Shares to be issued and the price at which they are to be offered are expected to be determined and announced as soon as practicable after the bookbuilding exercise closes. The Placing is conditional on the matters set out in the Appendix to this announcement and will be conducted in accordance with the terms and conditions set out in the Appendix.

Application will be made to the United Kingdom Listing Authority (the "UKLA") for the Placing Shares to be admitted to the Official List maintained by the UKLA, and for such shares to be admitted to trading by London Stock Exchange plc on its market for listed securities.

BPB TRADING UPDATE

This trading update precedes the publication of the group's preliminary results for the year to 31 March 2002, due on 30 May.

FULL YEAR PERFORMANCE EXPECTATIONS

• Sales up 5% to over £1.65 billion, driven by BPB's US results and continued volume growth across Europe, Canada and Rest of the World.
  
• Underlying profit before tax (pre-goodwill and exceptional items) of over £150 million, down on last year's £163 million but ahead of current consensus expectation. Second half profits will be up more than 50% on the comparative period, continuing the group performance recovery reported last November.
  
• North America has moved into profit in the second half, due mainly to a recovery in US wallboard selling prices in the Autumn and the achievement of cost savings ahead of schedule, restricting full year operating loss to no more than £12 million (2001: £2 million loss) after charging £4.4 million of plant closure and related redundancy charges.
  
• European operating margin and profit is expected to be in line with last year despite lower volumes and prices in Germany, a further £4 million restructuring charge in Central Europe and reduced profits from paperboard activities.
  
• Redundancy costs group-wide will be close to £9 million (£12 million last year).
  
• Overall, group EBITDA is expected to be just above 16.0% of sales and operating profit will be in the region of £180 million (2001: £185 million).
  
• Net interest cost will increase 10% to £30 million reflecting a higher level of average net debt, although the year-end position is expected to be below the £496 million reported as at the end of September 2001.
  
• The group's full year tax rate is expected to increase to around 37% (last year re-stated for FRS19 to 33%) due to unrelieved US trading losses incurred in the first six months.
  
• In the absence of any exceptional charges, reported profit before tax is expected to rise by circa 5% to around £145 million.

GROUP TRADING CONDITIONS

• Global plasterboard volumes, including acquisitions (but excluding the purchase of JHG), will increase around 12% to over 800 million square metres, up 6% on a like-for-like basis.
  
• North American volumes will increase by over 15% on a like-for-like basis following stronger than expected sales in the second half.
  
• European volumes will grow around 5% in the second half, offsetting a first half restricted by a significant downturn in construction activity in Germany, to give year-on-year growth of 2%. Full year German sales have declined by almost 10% but strong growth has been achieved in Italy, Spain, Portugal and most of Eastern Europe.
  
• US wallboard prices reached a low in July around the mid-$60's per 1,000 square feet, although subsequent price improvements raised average selling prices around 40% by the end of September. Since then, seasonal weakness has seen price levels edge back to the low-$80's although a 15% price increase has recently been announced.
  
• Plasterboard selling prices across Europe have eased somewhat during a year when cost inflation pressures have reduced.
  
• Plaster sales volumes will increase by 2% on a like-for-like basis. Including acquisitions in Egypt and Turkey, total volumes will increase by over 15% to more than 4 million tonnes.
  
• Actions to secure the North American restructuring target of at least US$50 million of annualised savings by March 2003 are now 80% in place. To date, US employee numbers have been reduced by more than 30%, and £18 million of operating costs have been eliminated in North America in this current year contributing to further group-wide savings of over 1.5% of turnover.

SECOND HALF KEY TRENDS

• US markets have held up better than anticipated at the time of the interim results statement, with improved wallboard selling prices and all of BPB's plants running at high utilisation rates to meet demand. These factors, underpinned by a more competitive regional cost base, are driving North America's improving profitability.
  
• Growth in European building material volumes, particularly in Western and Southern Europe, strengthened as the period progressed, with the effect of slightly weaker overall selling prices being mostly offset by easing cost inflation and additional operating efficiencies. Excluding the impact of further restructuring costs and disappointing paperboard selling prices, the European profit margin remained strong.

NOTES TO EDITORS

• BPB is a world leader in the supply of plasterboard, plasters, insulation, ceiling tiles and related products for internal linings, serving growing markets for building systems in over 50 countries.
  
• On 25 November 1998 the Commission of the European Communities commenced an industry-wide investigation into alleged infringement of Article 81 of the Treaty of Rome within the European gypsum industry. BPB has responded fully to a Statement of Objections from the Commission, which was also addressed to other industry participants, and has attended an oral hearing in Brussels together with those other participants. Following the Commission's review of responses from all relevant parties it will issue a Decision, which is now unlikely to be published before this Summer.
  
• Group results for the year to 31 March 2002, together with the recommended final dividend, will be announced on 30 May 2002.

This announcement is for information purposes only and does not constitute an offer for sale or subscription for any securities of the Company in any jurisdiction.

The distribution of this announcement and the Placing and/or the issue of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, Cazenove & Co. Ltd or Hoare Govett Limited that would permit an offer of such Placing Shares or possession or distribution of this announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company, Cazenove & Co. Ltd and Hoare Govett Limited to inform themselves about and to observe any such restrictions. This announcement and the information contained herein is not for publication or distribution to persons in the United States, Canada, Australia, Japan or in any jurisdiction in which such publication or distribution is unlawful. This announcement is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. The Placing Shares have not been, and will not be, registered under the US Securities Act of 1933. There will be no public offering of securities in the United States.

This announcement includes "forward-looking statements". All statements other than statements of historical fact included in this announcement, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's products), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company or those markets and economies to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. You should not place undue reliance on forward-looking statements which speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Cazenove & Co. Ltd, which is regulated by the Financial Services Authority, is acting for the Company in connection with the Placing and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Cazenove & Co. Ltd nor for providing advice in relation to the Placing. Cazenove & Co. Ltd can be contacted at 12 Tokenhouse Yard, London EC2R 7AN.

Hoare Govett Limited, which is regulated by the Financial Services Authority, is acting for the Company in connection with the Placing and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Hoare Govett Limited nor for providing advice in relation to the Placing. Hoare Govett Limited can be contacted at 250 Bishopsgate, London EC2M 4AA.

N M Rothschild & Sons Limited ("Rothschild") is acting for the Company in connection with the acquisition and no one else and will not be responsible to anyone other than the Company for providing the protections offered to clients of Rothschild nor for providing advice in relation to the acquisition or any other matters referred to in this announcement.

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