Trading Statement

Filtrona plc 15 December 2006 FILTRONA PLC TRADING UPDATE ON PROGRESS IN 2006 Filtrona today issues a pre-close trading statement ahead of its results for the year ending 31 December 2006, which will be announced on 1 March 2007. Filtrona has continued to develop satisfactorily during 2006, in line with the Board's expectations, and underlying organic revenue growth in both Plastic and Fibre Technologies has continued to exceed historical growth rates. As expected, the first half benefit from foreign currency exchange movements has reversed in the second half of the year primarily due to the weaker US dollar. Plastic Technologies Plastic Technologies has maintained good revenue and profit growth. Protection and Finishing Products performed particularly well and has now grown to become Filtrona's largest profit contributing business, benefiting from the impact of new product ranges, ongoing expansion in continental Europe and Brazil, and the strength of the oil and gas sector. In Coated and Security Products, FractureCode is expanding to support both the first customer roll-out and the development of other licensees, although the tear tape business has experienced continuing soft demand for printed promotional tapes. The Plastic Profile and Sheet business has maintained its strong growth with the point of purchase and aerospace sectors again showing excellent results. In the second half, the Globalpack consumer packaging business has also performed consistently ahead of the comparable period last year due both to improved market conditions and a focused productivity improvement programme. Plastic Technologies is expected to maintain its strong growth in 2007 as it enhances its niche market positions through sustained investments in geographic and supply chain development, range expansion and new marketing programmes. Fibre Technologies Fibre Technologies has continued to deliver good revenue growth with improved profits following productivity gains in the Mexican Cigarette Filters business. The Fibertec Bonded Fibre Components business has produced good results with an encouraging performance in both household products and writing instruments. Looking forward, as highlighted at the half year, the market conditions for the Cigarette Filters business in 2007 will remain challenging as customers respond to mature and declining Western markets with significant capacity reconfiguration. Recent customer discussions indicate that Filtrona will experience a reduction in volumes of conventional carbon dual filters next year. The volume reductions will impact the Company's European facilities and its facilities in North America where, as previously indicated, a capacity review is already underway. In anticipation of weaker volumes, management has introduced a major cost reduction programme, which, together with increased volumes in Asia, will mitigate the impact from the reduction in activity. The cost reduction programme will require significant plant restructuring to improve productivity and, as a result, a restructuring charge of circa £5m is expected in 2007. Filtrona's strategy is to move the focus of the Cigarette Filters business towards the research and development of innovative and more complex filter solutions to enhance value to customers. This underpins the Company's confidence in the future prospects of the Cigarette Filters business to meet the growing demand for innovative filters for PREPs (potentially reduced exposure products) and other differentiated tobacco smoking products, and for research and development services. The Board remains confident that Filtrona will continue to make satisfactory underlying progress in 2007. Enquiries: Filtrona plc Finsbury Mark Harper, Chief Executive James Leviton Steve Dryden, Finance Director Gordon Simpson Tel: 01908 359 100 Tel: 020 7251 3801 This information is provided by RNS The company news service from the London Stock Exchange

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