BPB has entered into a long-term supply arrangement for substantial quantities of plasterboard liner from the St Regis paper division of DS Smith Plc, complementing last year’s successful sourcing of greater volumes of European liner from Tecnokarton, BPB’s 29% owned German associate.

The new arrangement represents an important part of BPB’s global plasterboard liner sourcing strategy, aimed at reducing operating costs while strengthening security of supply from a range of third parties and facilitating management’s sharpened focus on developing BPB’s growing core plasterboard and plasters business.

With the trend in the paperboard industry towards lower grammage and lower cost papers, made possible by increasingly large-scale investment in new capacity, BPB’s remaining paper mill (located at Aberdeen and producing higher grammage liner from what is now a relatively narrow-width paper machine) has become uncompetitive despite the hard work of everyone involved with the site. It is therefore with considerable regret that BPB proposes to close the operation. Consultations with employees are now underway regarding the likely mill closure during this Summer which could result in around 270 redundancies.

At this preliminary stage, it is estimated that a mill closure would give rise to a pre-tax exceptional charge of around £35 million to cover asset write-down, redundancy and other site closure costs, and would mark BPB’s exit from the in-house manufacture of paperboard.

Commenting on the group’s new source of long-term liner supply, Richard Cousins, BPB chief executive said:

“This additional liner supply arrangement will provide BPB with substantial long-term economic benefit and strengthen the group’s structural efficiency in the global sourcing of a key raw material. The likely closure of the Aberdeen mill would mark the group’s exit from paperboard manufacture and facilitate our sharper focus on BPB’s growing core plasterboard and plasters business.”

Notes to editors

• The group’s paperboard mill at Purfleet in the UK was closed in December 2003 and resulted in an operating exceptional charge in 2003/04 of £28.8 million.



• BPB is the world leader in the supply of plasterboard and gypsum plasters, and a major supplier of insulation, ceiling tiles and related products for interiors, serving growing markets for building systems in over 50 countries.



• A trading update for 2004/05 will be published by BPB on 17 March 2005, ahead of the group’s announcement of preliminary results and recommended final dividend for the year to 31 March 2005 on 19 May 2005.



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Contacts:
Richard Cousins, Chief Executive (01753 898911)
Paul Hollingworth, Finance Director (01753 898822)
James Murgatroyd/Faeth Birch, Finsbury (020 7251 3801)
Available on BPB’s website: www.bpb.com